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Part I. FINANCIAL INFORMATION

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Item 1. Abridged Banking Statements.

 

Index to Abridged Banking Statements

 

 

  

United States Accustomed Gas Fund, LP

Condensed Statements of Banking Condition

At September 30, 2018 (Unaudited) and December 31, 2017

 

 

* On January 4, 2018, there was a 1-for-4 reverse share split. Absolute shares outstanding, net asset bulk per allotment and bazaar bulk per allotment acquire been adapted to reflect the 1-for-4 about-face allotment breach on a attendant basis.

 

See accompanying addendum to abridged banking statements.

 

  

United States Accustomed Gas Fund, LP

Condensed Agenda of Investments (Unaudited)

At September 30, 2018

 

Notional

Amount

Number of

Contracts

Value/

Unrealized Gain (Loss) on Open Commodity Contracts

% of Partners’

Capital

 

Principal

Amount

Market

Value

 

 

See accompanying addendum to abridged banking statements.

 

  

United States Accustomed Gas Fund, LP

Condensed Statements of Operations (Unaudited)

For the three and nine months concluded September 30, 2018 and 2017

  

Three months ended

September 30, 2018

Three months ended

September 30, 2017

Nine months ended September 30, 2018

Nine months ended September 30, 2017 

 

* Absorption assets does not beat paid in affectionate of 5%.

 

** On January 4, 2018, there was a 1-for-4 reverse allotment split. Absolute shares outstanding, net asset bulk per allotment and bazaar bulk per allotment acquire been adapted to reflect the 1-for-4 about-face allotment breach on a attendant basis.

 

See accompanying addendum to condensed financial statements.

 

  

United States Accustomed Gas Fund, LP

Condensed Anniversary of Changes in Partners’ Basic (Unaudited)

For the nine months concluded September 30, 2018

 

 

* On January 4, 2018, there was a 1-for-4 reverse share split. Absolute shares outstanding, net asset bulk per allotment and bazaar bulk per allotment acquire been adapted to reflect the 1-for-4 about-face allotment breach on a attendant basis.

 

See accompanying addendum to condensed financial statements.

 

  

United States Accustomed Gas Fund, LP

Condensed Statements of Banknote Flows (Unaudited)

For the nine months concluded September 30, 2018 and 2017

 

Nine months ended

September 30, 2018

Nine months ended

September 30, 2017

 

See accompanying addendum to abridged banking statements.

  

  

United States Accustomed Gas Fund, LP

Notes to Abridged Banking Statements

For the aeon concluded September 30, 2018 (Unaudited)

 

NOTE 1 — ORGANIZATION AND BUSINESS

 

The United States Accustomed Gas Fund, LP (“UNG”) was organized as a bound affiliation beneath the laws of the accompaniment of Delaware on September 11, 2006. UNG is a article basin that issues bound affiliation shares (“shares”) that may be purchased and awash on the NYSE Arca, Inc. (the “NYSE Arca”). Above-mentioned to November 25, 2008, UNG’s shares traded on the American Stock Barter (the “AMEX”). UNG will abide in perpetuity, unless concluded eventually aloft the accident of one or added contest as declared in its Fifth Amended and Restated Acceding of Bound Affiliation anachronous as of December 15, 2017 (the “LP Agreement”). The advance objective of UNG is for the circadian changes in allotment acceding of its shares’ per allotment net asset bulk (“NAV”) to reflect the circadian changes in allotment acceding of the bulk of accustomed gas delivered at the Henry Hub, Louisiana as abstinent by the daily changes in the bulk of the futures adjustment on accustomed gas as traded on the New York Mercantile Barter (the “NYMEX”) that is the a ages adjustment to expire, except aback the a ages adjustment is aural two weeks of expiration, in which case it will be abstinent by the futures adjustment that is the aing ages adjustment to expire (the “Benchmark Futures Contract”), less UNG’s expenses.

 

UNG’s advance algid is not for its NAV or bazaar bulk of shares to equal, in dollar terms, the atom bulk of accustomed gas or any accurate futures contract based on accustomed gas, nor is UNG’s advance algid for the allotment change in its NAV to reflect the percentage change of the bulk of any accurate futures adjustment as abstinent over a time period greater than one day .

 

United States Article Funds LLC (“USCF”), the accustomed accomplice of UNG, believes that it is not applied to administer the portfolio to accomplish such an advance ambition aback investing in Accustomed Gas Futures Affairs (as authentic below) and Added Accustomed Gas-Related Investments (as authentic below). The net assets of UNG abide primarily of investments in futures affairs for accustomed gas that are traded on the NYMEX, ICE Futures Exchange (“ICE Futures”) or added U.S. and adopted exchanges (collectively, “Natural Gas Futures Contracts”) and, to a bottom extent, in acclimation to accede with authoritative requirements or in appearance of bazaar conditions, added accustomed gas-related investments such as cash-settled options on accustomed gas Futures Contracts, advanced affairs for accustomed gas, austere bandy contracts, and non-exchange traded over-the-counter (“OTC”) affairs that are based on the bulk of accustomed gas, awkward oil and added petroleum-based fuels, as able-bodied as futures affairs for awkward oil, diesel-heating oil, gasoline and added petroleum-based fuels and indices based on the aloft (collectively, “Other Accustomed Gas-Related Investments”). Bazaar conditions that USCF currently anticipates could anniversary UNG to advance in Added Accustomed Gas-Related Investments including those acceptance UNG to admission greater clamminess or to assassinate affairs with added favorable pricing. For accessibility and unless contrarily specified, Natural Gas Futures Affairs and Added Accustomed Gas-Related Investments collectively are referred to as “Natural Gas Interests” in this anniversary address on Form 10-Q. As of September 30, 2018, UNG captivated 8,654 NG Futures November 2018 Affairs traded on the NYMEX and 6,000 LD1 H Futures November 2018 Affairs traded on the ICE Futures US.

 

UNG commenced advance operations on April 18, 2007 and has a budgetary year catastrophe on December 31. USCF is amenable for the administration of UNG. USCF is a associate of the National Futures Affiliation (the “NFA”) and became registered as a article basin abettor with the Article Futures Trading Commission (the “CFTC”) able December 1, 2005 and a swaps aing on August 8, 2013. USCF is additionally the accustomed partner of the United States Oil Fund, LP (“USO”), the United States 12 Ages Oil Fund, LP (“USL”), the United States Gasoline Fund, LP (“UGA”) and the United States Diesel-Heating Oil Fund, LP (“UHN”), which listed their bound affiliation shares on the AMEX beneath the ticker syms “USO” on April 10, 2006, “USL” on December 6, 2007, “UGA” on February 26, 2008 and “UHN” on April 9, 2008, respectively. As a aftereffect of the acquisition of the AMEX by NYSE Euronext, anniversary of USO’s, USL’s, UGA’s and UHN’s shares commenced trading on the NYSE Arca on November 25, 2008. USCF is additionally the accustomed accomplice of the United States Abbreviate Oil Fund, LP (“DNO”), the United States 12 Ages Accustomed Gas Fund, LP (“UNL”) and the United States Brent Oil Fund, LP (“BNO”), which listed their bound affiliation shares on the NYSE Arca beneath the ticker syms “DNO” on September 24, 2009, “UNL” on November 18, 2009 and “BNO” on June 2, 2010, respectively. USCF is additionally the sponsor of the United States Article Index Armamentarium (“USCI”), the United States Copper Index Armamentarium (“CPER”), the United States Agriculture Index Armamentarium (“USAG”) and the USCF Canadian Awkward Oil Index Armamentarium (“UCCO”), anniversary a alternation of the United States Commodity Index Funds Trust. USCI, CPER and USAG listed their shares on the NYSE Arca beneath the ticker syms “USCI” on August 10, 2010, “CPER” on November 15, 2011 and “USAG” on April 13, 2012, respectively. UCCO is currently in allotment and has not commenced operations.

 

On August 7, 2018, the Board of Directors of USCF accustomed and accustomed the closing and defalcation for anniversary of USAG, DNO and UHN calm with a plan of liquidation for anniversary of USAG, DNO and UHN. Anniversary of the United States Article Index Funds Affirmation (“USCIFT”), of which USAG is a series, DNO and UHN filed a accustomed address on Form 8-K anachronous August 8, 2018 with the SEC that included, as an exhibit, the press release, the applicative plan of liquidation, and, in the case of DNO and UHN, a archetype of the apprehension of required withdrawal from the bound affiliation beatific to shareholders. In addition, anniversary of USAG, DNO and UHN filed a prospectus supplement with the SEC anachronous August 8, 2018. Anniversary of the filings is additionally accessible on USCF’s website at www.uscfinvestments.com.

 

The defalcation date for anniversary of USAG, DNO and UHN was September 12, 2018 and the accretion of the defalcation were beatific to all absolute shareholders of USAG, DNO and UHN, respectively, on or about September 13, 2018, with a consecutive administration of added defalcation accretion beatific to UHN shareholders on or about September 18, 2018. Anniversary of USAG, DNO and UHN additionally filed a post-effective alteration to the allotment statement with the SEC to aish the alms of registered and unsold shares of USAG, DNO and UHN, respectively, and the NYSE Arca filed Forms 25 to aftereffect the abandonment of the listings for shares of anniversary of USAG, DNO and UHN.

 

  

In addition, USCF is the sponsor of the USCF Funds Trust, a Delaware accustomed trust, and anniversary of its series, the United States 3x Oil Armamentarium (“USOU”) and the United States 3x Abbreviate Oil Armamentarium (“USOD”), which commenced operations on July 20, 2017.

 

All funds listed previously, added than UCCO, are referred to collectively herein as the “Related Accessible Funds.”

 

UNG issues shares to assertive accustomed purchasers (“Authorized Participants”) by alms baskets consisting of 100,000 shares (“Creation Baskets”) through ALPS Distributors, Inc., as the business abettor (the “Marketing Agent”). The acquirement bulk for a Conception Bassinet is based aloft the NAV of a allotment affected anon afterwards the aing of the bulk trading affair on the NYSE Arca on the day the order to actualize the bassinet is appropriately received.

 

In addition, Accustomed Participants pay UNG a $1,000 fee for anniversary acclimation placed to actualize one or added Conception Baskets or to redeem one or added baskets (“Redemption Baskets”), consisting of 100,000 shares. Shares may be purchased or awash on a nationally accustomed antithesis barter in abate increments than a Conception Bassinet or Accretion Basket. Shares purchased or awash on a nationally accustomed antithesis barter are not purchased or awash at the per allotment NAV of UNG but rather at bazaar prices quoted on such exchange.

 

In April 2007, UNG initially registered 30,000,000 shares on Form S-1 with the U.S. Antithesis and Barter Bureau (the “SEC”). On April 18, 2007, UNG listed its shares on the AMEX beneath the ticker attribute “UNG” and switched to trading on the NYSE Arca beneath the aforementioned ticker sym on November 25, 2008. On that day, UNG accustomed its antecedent per allotment NAV by ambience the bulk at $50.00 and issued 200,000 shares in barter for $10,001,000. UNG additionally commenced advance operations on April 18, 2007, by purchasing Accustomed Gas Futures Contracts traded on the NYMEX based on accustomed gas. As of September 30, 2018, UNG had registered a absolute of 2,080,000,000 shares.

 

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On February 21, 2012, afterwards the aing of trading on the NYSE Arca, UNG accomplished a 1-for-4 about-face allotment breach and post-split shares of UNG began trading on February 22, 2012. As a aftereffect of the about-face allotment split, every four pre-split shares of UNG were automatically exchanged for one post-split share. Immediately above-mentioned to the about-face allotment split, there were 174,297,828 shares of UNG issued and outstanding, apery a per share NAV of $5.51. Immediately afterwards the about-face allotment split, the cardinal of issued and outstanding shares of UNG decreased to 43,574,457, not accounting for apportioned shares, and the per allotment NAV added to $22.04. In affiliation with the about-face allotment split, the CUSIP cardinal for UNG’s shares afflicted to 912318201. UNG’s ticker sym, “UNG,” did not change.

 

On January 4, 2018, afterwards the aing of trading on the NYSE Arca, UNG accomplished a 1-for-4 about-face allotment breach and post-split shares of UNG began trading on January 5, 2018. As a aftereffect of the about-face allotment split, every four pre-split shares of UNG were automatically exchanged for one post-split share. Immediately above-mentioned to the about-face split, there were 97,466,476 shares of UNG issued and outstanding, apery a per allotment NAV of $5.69. Immediately afterwards the about-face allotment split, the cardinal of issued and outstanding shares of UNG decreased to 24,366,619, not accounting for apportioned shares, and the per allotment NAV added to $22.76. In affiliation with the about-face allotment split, the CUSIP cardinal for UNG’s shares afflicted to 912318300. UNG’s ticker sym, “UNG,” did not change.

 

The accompanying unaudited abridged financial statements acquire been able in accordance with Aphorism 10-01 of Adjustment S-X promulgated by the SEC and, therefore, do not include all advice and comment acknowledgment adapted beneath about accustomed accounting attack in the United States of America (“U.S. GAAP”). The banking advice included herein is unaudited; however, such banking advice reflects all adjustments, consisting alone of accustomed alternating adjustments, which are, in the assessment of USCF, all-important for the fair presentation of the abridged banking statements for the acting period.

 

  

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The banking statements acquire been prepared in acquiescence with U.S. GAAP as abundant in the Banking Accounting Standards Board’s (“FASB”) Accounting Standards Codification. UNG is an advance aggregation and follows the accounting and advertisement advice in FASB Topic 946.

 

Revenue Recognition

 

Commodity futures contracts, advanced contracts, physical t and accompanying options are recorded on the barter date. All such affairs are recorded on the articular cost basis and apparent to bazaar daily. Abeyant assets or losses on accessible affairs are reflected in the condensed statements of financial activity and represent the aberration amid the aboriginal adjustment bulk and the bazaar bulk (as bent by exchange settlement prices for futures affairs and accompanying options and banknote banker prices at a agreed time for advanced contracts, physical commodities, and their accompanying options) as of the aftermost business day of the year or as of the aftermost date of the condensed financial statements. Changes in the abeyant assets or losses amid periods are reflected in the abridged statements of operations. UNG earns assets on funds captivated at the babysitter or a futures bureau merchant (“FCM”) at prevailing bazaar rates earned on such investments.

 

Brokerage Commissions

 

Brokerage commissions on all accessible commodity futures affairs are accrued on a full-turn basis.

 

Income Taxes

 

UNG is not accountable to federal assets taxes; each partner letters his/her allocable allotment of income, gain, accident deductions or credits on his/her own assets tax return.

 

In accordance with U.S. GAAP, UNG is required to actuate whether a tax position is added acceptable than not to be abiding aloft assay by the applicative demanding authority, including resolution of any tax accompanying appeals or activity processes, based on the abstruse claim of the position. UNG files an assets tax acknowledgment in the U.S. federal administration and may book assets tax allotment in assorted U.S. states. UNG is not subject to assets tax acknowledgment examinations by aloft demanding authorities for years afore 2015. The tax anniversary accustomed is abstinent as the better bulk of anniversary that has a greater than fifty percent likelihood of actuality accomplished aloft ultimate settlement. De-recognition of a tax anniversary ahead accustomed after-effects in UNG recording a tax accountability that reduces net assets. However, UNG’s conclusions regarding this activity may be accountable to analysis and acclimation at a afterwards date based on factors including, but not bound to, on-going analysis of and changes to tax laws, regulations and interpretations thereof. UNG recognizes absorption accrued accompanying to unrecognized tax allowances and penalties accompanying to anonymous tax allowances in assets tax fees payable, if assessed. No absorption bulk or penalties acquire been accustomed as of and for the period concluded September 30, 2018.

 

Creations and Redemptions

 

Authorized Participants may acquirement Creation Baskets or redeem Accretion Baskets alone in blocks of 100,000 shares at a bulk according to the NAV of the shares calculated shortly afterwards the aing of the bulk trading affair on the NYSE Arca on the day the acclimation is placed.

 

UNG receives or pays the accretion from shares awash or adored aural two business canicule afterwards the barter date of the acquirement or redemption. The amounts due from Authorized Participants are reflected in UNG’s abridged statements of banking activity as receivable for shares awash and amounts payable to Accustomed Participants aloft accretion are reflected as payable for shares redeemed.

 

Authorized Participants pay UNG a transaction fee of $1,000 for anniversary acclimation placed to actualize one or added Conception Baskets or to redeem one or added Accretion Baskets.

 

  

Partnership Capital and Allocation of Partnership Income and Losses

 

Profit or accident shall be allocated amid the partners of UNG in admeasurement to the cardinal of shares anniversary partner holds as of the aing of anniversary month. USCF may revise, alter or contrarily adapt this adjustment of allocation as declared in the LP Agreement .

 

Calculation of Per Allotment NAV

 

UNG’s per allotment NAV is affected on anniversary NYSE Arca trading day by demography the accustomed bazaar bulk of its absolute assets, adding any liabilities and adding that bulk by the absolute cardinal of shares outstanding. UNG uses the closing bulk for the affairs on the accordant barter on that day to determine the bulk of affairs captivated on such exchange.

 

Net Assets (Loss) Per Share

 

Net assets (loss) per allotment is the difference between the per allotment NAV at the alpha of anniversary aeon and at the end of anniversary period. The abounding boilerplate cardinal of shares outstanding was computed for purposes of advice net assets (loss) per abounding boilerplate share. The abounding boilerplate shares are equal to the cardinal of shares outstanding at the end of the period, adapted appropriately for shares added and adored based on the bulk of time the shares were outstanding during such period. There were no shares captivated by USCF at September 30, 2018. 

 

Offering Costs

 

Offering costs incurred in affiliation with the allotment of added shares afterwards the antecedent allotment of shares are borne by UNG. These costs accommodate registration fees paid to authoritative agencies and all legal, accounting, press and added costs associated with such offerings. These costs are accounted for as a deferred allegation and thereafter amortized to bulk over twelve months on a straight-line base or a beneath aeon if warranted.

 

Cash Equivalents

 

Cash equivalents accommodate money bazaar funds and abrupt deposits or time deposits with aboriginal adeptness dates of six months or less.

 

Reclassification

 

Certain amounts in the accompanying condensed financial statements were reclassified to accommodate to the accustomed presentation.

 

Use of Estimates

 

The alertness of abridged banking statements in acquiescence with U.S. GAAP requires USCF to accomplish estimates and assumptions that affect the appear bulk of assets and liabilities and acknowledgment of accidental assets and liabilities at the date of the abridged banking statements, and the appear amounts of the acquirement and costs during the advertisement period. Absolute after-effects may alter from those estimates and assumptions.

 

New Accounting Pronouncements

 

In November 2016, the FASB issued Accounting Standards Amend No. 2016-18, “Statement of Banknote Flows (Topic 230): Belted Cash” (“ASU 2016-18”), which amends ASC 230 to accommodate advice on the allocation and presentation of changes in belted banknote and belted banknote equivalents on the anniversary of banknote flows. The ASU is able for anniversary periods alpha afterwards December 15, 2017, and acting periods within those anniversary periods. At this time, administration has evaluated the implications of these changes on the banking statements and adopted with no absolute impact.

 

Other

 

On January 4, 2018, afterwards the aing of the NYSA Arca, UNG accomplished a 1-for-4 about-face assemblage breach and post-split units of UNG began trading on January 5, 2018. The unaudited condensed banking advice in this anniversary address on Form 10-Q gives aftereffect to the about-face breach and the post-split of units as if they had been completed on January 1, 2018. 

 

The unaudited abridged banking advice and pro forma financial information, as able-bodied as the absolute banking advice as of and for the year concluded December 31, 2017, was acquired from UNG’s historical banking statements. The abridged banking statements in this anniversary address on Form 10-Q are presented in accordance with Accounting Standards Codification 260 for purposes of presenting the 4-for-1 about-face breach on absolute base for all periods reported.

 

  

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

 

USCF Administration Fee

 

Under the LP Agreement, USCF is responsible for advance the assets of UNG in accordance with the objectives and behavior of UNG. In addition, USCF has abiding for one or added third parties to accommodate administrative, custody, accounting, alteration bureau and added all-important casework to UNG. For these services, UNG is contractually answerable to pay USCF a fee, which is paid monthly, according to 0.60% per annum of boilerplate circadian absolute net assets of $1,000,000,000 or beneath and 0.50% per annum of boilerplate circadian absolute net assets that are greater than $1,000,000,000.

 

Ongoing Allotment Fees and Added Alms Expenses

 

UNG pays all costs and costs associated with the advancing allotment of its shares consecutive to the antecedent offering. These costs accommodate allotment or added fees paid to authoritative agencies in affiliation with the activity and auction of shares, and all legal, accounting, press and added expenses associated with such activity and sale. For the nine months concluded September 30, 2018 and 2017, UNG incurred $68,542 and $163,361, respectively, in allotment fees and added alms expenses.

 

Independent Directors’ and Officers’ Expenses

 

UNG is amenable for advantageous its allocation of the directors’ and officers’ accountability allowance for UNG and the Accompanying Accessible Funds and the fees and costs of the absolute admiral who additionally serve as analysis board associates of UNG and the Accompanying Accessible Funds. UNG shares the fees and costs on a pro rata base with anniversary Accompanying Accessible Fund, as declared above, based on the about assets of anniversary Related Public Armamentarium computed on a circadian basis. These fees and costs for the year ending December 31, 2018 are estimated to be a absolute of $66,700 for UNG and, in the accumulated for UNG and the Accompanying Accessible Funds, $536,200. 

 

Licensing Fees

 

As discussed in Agenda 4 below, UNG entered into a licensing acceding with the NYMEX on April 10, 2006, as adapted on October 20, 2011. Pursuant to the agreement, UNG and the Related Accessible Funds, added than BNO, USCI, CPER, USOU and USOD, pay a licensing fee that is according to 0.015% on all net assets. During the nine months concluded September 30, 2018 and 2017, UNG incurred $42,164 and $52,454, respectively, beneath this arrangement. 

 

Investor Tax Advertisement Cost

 

The fees and costs associated with UNG’s audit costs and tax accounting and advertisement requirements are paid by UNG. These costs are estimated to be $900,000 for the year catastrophe December 31, 2018. Tax advertisement costs alter amid years due to the cardinal of shareholders during any accustomed year.

 

Other Costs and Fees 

 

In accession to the fees declared above, UNG pays all allowance fees and added costs in affiliation with the operation of UNG, excluding costs and costs paid by USCF as outlined in Note 4 – Affairs and Agreements below.

 

NOTE 4 — CONTRACTS AND AGREEMENTS

 

Marketing Abettor Agreement

 

UNG is affair to a business abettor agreement, dated as of April 17, 2007, as adapted from time to time, with the Business Abettor and USCF, whereby the Business Abettor provides certain business casework for UNG as categorical in the agreement. The fee of the Business Agent, which is borne by USCF, is equal to 0.06% on UNG’s assets up to $3 billion and 0.04% on UNG’s assets in antithesis of $3 billion. In no accident may the accumulated compensation paid to the Business Abettor and any associate of USCF for distribution-related casework beat 10% of the gross accretion of UNG’s offering.

 

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

  

Brown Brothers Harriman & Co. Agreements

 

UNG is also affair to a custodian agreement, anachronous March 5, 2007, as adapted from time to time, with Brown Brothers Harriman & Co. (“BBH&Co.”) and USCF, whereby BBH&Co. holds investments on anniversary of UNG. USCF pays the fees of the custodian, which are determined by the parties from time to time. In addition, UNG is affair to an authoritative bureau agreement, anachronous March 5, 2007, as amended from time to time, with USCF and BBH&Co., whereby BBH&Co. acts as the authoritative agent, alteration abettor and registrar for UNG. USCF additionally pays the fees of BBH&Co. for its casework beneath such acceding and such fees are determined by the parties from time to time.

 

Currently, USCF pays BBH&Co. for its services, in the aloft capacities, a minimum bulk of $75,000 annually for its custody, armamentarium accounting and armamentarium administration services rendered to UNG and anniversary of the Accompanying Accessible Funds, as able-bodied as a $20,000 anniversary fee for its alteration bureau services. In addition, USCF pays BBH&Co. an asset-based allegation of (a) 0.06% for the aboriginal $500 actor of the Accompanying Accessible Funds’ combined net assets, (b) 0.0465% for the Accompanying Accessible Funds’ accumulated net assets greater than $500 actor but beneath than $1 billion, and (c) 0.035% already the Accompanying Accessible Funds’ accumulated net assets beat $1 billion. The anniversary minimum amount will not administer if the asset-based allegation for all accounts in the accumulated exceeds $75,000. USCF additionally pays BBH&Co. transaction fees alignment from $7 to $15 per transaction.

 

Brokerage and Futures Bureau Merchant Agreements

 

On October 8, 2013, UNG entered into a brokerage agreement with RBC Basic Markets, LLC (“RBC Capital” or “RBC”) to serve as UNG’s FCM able October 10, 2013. The acceding with RBC requires it to accommodate casework to UNG in affiliation with the acquirement and auction of Natural Gas Futures Affairs and Added Accustomed Gas-Related Investments that may be purchased and awash by or through RBC Basic for UNG’s account. In accordance with the agreement, RBC Basic charges UNG commissions of about $7 to $8 per round-turn trade, including applicative exchange, clearing and NFA fees for Natural Gas Futures Affairs and options on Accustomed Gas Futures Contracts. Such fees accommodate those incurred aback purchasing Natural Gas Futures Affairs and options on Natural Gas Futures Affairs aback UNG issues shares as a aftereffect of a Conception Basket, as able-bodied as fees incurred aback selling Natural Gas Futures Affairs and options on Natural Gas Futures Affairs aback UNG redeems shares as a aftereffect of a Accretion Basket. Such fees are additionally incurred when Natural Gas Futures Affairs and options on Natural Gas Futures Affairs are purchased or adored for the purpose of rebalancing the portfolio. UNG additionally incurs commissions to brokers for the acquirement and auction of Natural Gas Futures Contracts, Added Accustomed Gas-Related Investments or concise obligations of the United States of two years or less (“Treasuries”).

 

For the nine months ended

September 30, 2018

For the nine months ended

September 30, 2017

 

The abatement in absolute commissions accrued to brokers for the nine months concluded September 30, 2018, compared to the nine months concluded September 30, 2017, was due primarily to a lower number of natural gas futures affairs actuality captivated and traded.

 

NYMEX Licensing Agreement

 

UNG and the NYMEX entered into a licensing agreement on April 10, 2006, as adapted on October 20, 2011, whereby UNG was accustomed a non-exclusive authorization to use assertive of the NYMEX’s acclimation prices and annual marks. Beneath the licensing agreement, UNG and the Accompanying Accessible Funds, added than BNO, USCI, CPER, USAG, USOU and USOD, pay the NYMEX an asset-based fee for the license, the acceding of which are declared in Note 3. UNG especially disclaims any affiliation with the NYMEX or endorsement of UNG by the NYMEX and acknowledges that “NYMEX” and “New York Mercantile Exchange” are registered trademarks of the NYMEX. 

 

 

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

 

UNG may appoint in the trading of futures contracts, options on futures contracts, austere swaps and OTC swaps (collectively, “derivatives”). UNG is exposed to both bazaar risk, which is the accident arising from changes in the bazaar bulk of the contracts, and acclaim risk, which is the risk of abortion by accession affair to accomplish according to the acceding of a contract.

 

UNG may admission into futures contracts, options on futures affairs and austere swaps to accretion acknowledgment to changes in the bulk of an basal commodity. A futures contract obligates the agent to bear (and the client to accept) the approaching commitment of a authentic abundance and blazon of a commodity at a authentic time and place. Some futures affairs may alarm for concrete commitment of the asset, while others are acclimatized in cash. The acknowledged obligations of a client or agent may about be annoyed by demography or authoritative concrete commitment of the underlying article or by authoritative an offsetting auction or acquirement of an identical futures adjustment on the aforementioned or affiliated exchange before the appointed date of delivery. Austere swaps are agreements that are acceptable to be austere by a clearinghouse, e.g., ICE Bright Europe, and accommodate the efficiencies and allowances that centralized allowance on an barter offers to traders of futures contracts, including acclaim accident intermediation and the adeptness to annual positions accomplished with altered counterparties.

 

The acquirement and auction of futures contracts, options on futures affairs and austere swaps crave allowance deposits with an FCM. Added deposits may be all-important for any loss on adjustment value. The Article Barter Act requires an FCM to choose all chump affairs and assets from the FCM’s proprietary activities.

 

Futures contracts, options on futures contracts and austere swaps involve, to capricious degrees, elements of bazaar accident (specifically article bulk risk) and acknowledgment to loss in antithesis of the bulk of aberration margin. The face or adjustment amounts reflect the admeasurement of the absolute exposure UNG has in the accurate classes of instruments. Added risks associated with the use of futures affairs are an amiss correlation between movements in the bulk of the futures affairs and the bazaar bulk of the basal antithesis and the achievability of an illiquid bazaar for a futures contract. Affairs and affairs options on futures affairs exposes investors to the risks of purchasing or affairs futures contracts.

 

All of the futures affairs captivated by UNG through September 30, 2018 were exchange-traded. The risks associated with exchange-traded affairs are about perceived to be less than those associated with OTC swaps since, in OTC swaps, a affair charge await alone on the acclaim of its corresponding alone counterparties. However, in the future, if UNG were to admission into non-exchange traded contracts, it would be accountable to the acclaim accident associated with counterparty non-performance. The acclaim accident from counterparty non-performance associated with such instruments is the net unrealized gain, if any, on the transaction. UNG has acclaim accident beneath its futures affairs aback the sole counterparty to all domestic and adopted futures affairs is the clearinghouse for the barter on which the accordant affairs are traded. In addition, UNG bears the accident of banking abortion by the allowance broker.

 

UNG’s cash and added property, such as Treasuries, deposited with an FCM are advised commingled with all added chump funds, accountable to the FCM’s segregation requirements. In the accident of an FCM’s insolvency, accretion may be bound to a pro rata allotment of absolute funds available. It is accessible that the recovered bulk could be beneath than the absolute of banknote and added acreage deposited. The defalcation of an FCM could aftereffect in the complete accident of UNG’s assets acquaint with that FCM; however, the majority of UNG’s assets are held in investments in Treasuries, cash and/or banknote equivalents with UNG’s babysitter and would not be impacted by the insolvency of an FCM. The abortion or defalcation of UNG’s custodian, however, could aftereffect in a abundant accident of UNG’s assets.

 

USCF invests a allocation of UNG’s banknote in money bazaar funds that seek to advance a abiding per allotment NAV. UNG is exposed to any accident of accident associated with an investment in such money bazaar funds. As of September 30, 2018 and December 31, 2017, UNG captivated investments in money bazaar funds in the amounts of $7,200,000 and $20,000,000, respectively. UNG also holds banknote deposits with its custodian. Pursuant to a written agreement with BBH&Co., uninvested abrupt banknote balances are swept to adopted branches of U.S. adapted and domiciled banks located in Toronto, Canada; London, United Kingdom; Grand Cayman, Cayman Islands; and Nassau, Bahamas; which are accountable to U.S. regulation and authoritative oversight. As of September 30, 2018 and December 31, 2017, UNG captivated banknote deposits and investments in Treasuries in the amounts of $294,378,855 and $631,938,294, respectively, with the babysitter and FCM. Some or all of these amounts may be accountable to accident should UNG’s babysitter and/or FCM cease operations.

 

For derivatives, risks appear from changes in the bazaar bulk of the contracts. Theoretically, UNG is apparent to bazaar accident according to the bulk of futures affairs purchased and absolute accountability on such affairs awash short. As both a client and a agent of options, UNG pays or receives a exceptional at the alpha and then bears the accident of abortive changes in the bulk of the adjustment basal the option.

 

UNG’s policy is to continuously monitor its acknowledgment to bazaar and counterparty accident through the use of a array of financial, position and acclaim acknowledgment reporting controls and procedures. In addition, UNG has a activity of acute analysis of the acclaim continuing of anniversary agent or counterparty with which it conducts business.

 

The banking instruments captivated by UNG are reported in its abridged statements of banking activity at bazaar or fair value, or at accustomed amounts that almost fair value, because of their awful aqueous attributes and concise maturity.

 

  

NOTE 6 — FINANCIAL HIGHLIGHTS

 

The afterward table presents per allotment performance data and added added banking abstracts for the nine months concluded September 30, 2018 and 2017 for the shareholders. This information has been acquired from advice presented in the abridged banking statements.

 

 

 

 

 

Total allotment are affected based on the change in bulk during the period. An alone shareholder’s absolute acknowledgment and arrangement may alter from the aloft absolute allotment and ratios based on the timing of contributions to and withdrawals from UNG.

 

NOTE 7 — FAIR VALUE OF FINANCIAL INSTRUMENTS

 

UNG ethics its investments in accordance with Accounting Standards Codification 820 – Fair Bulk Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for barometer fair bulk in about accustomed accounting principles, and expands disclosures about fair bulk measurement. The changes to accomplished convenance consistent from the appliance of ASC 820 chronicle to the analogue of fair value, the methods acclimated to admeasurement fair value, and the broadcast disclosures about fair bulk measurement. ASC 820 establishes a fair bulk bureaucracy that distinguishes between: (1) bazaar actor assumptions developed based on bazaar abstracts acquired from sources absolute of UNG (observable inputs) and (2) UNG’s own assumptions about bazaar actor assumptions developed based on the best advice accessible beneath the affairs (unobservable inputs). The three levels authentic by the ASC 820 hierarchy are as follows:

 

Level I – Quoted prices (unadjusted) in alive markets for identical assets or liabilities that the advertisement article has the adeptness to admission at the measurement date.

 

Level II – Inputs added than quoted prices included aural Akin I that are appreciable for the asset or liability, either anon or indirectly. Akin II assets include the following: quoted prices for similar assets or liabilities in alive markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs added than quoted prices that are appreciable for the asset or liability, and inputs that are acquired principally from or corroborated by appreciable bazaar abstracts by alternation or added agency (market-corroborated inputs).

 

Level III – Airy appraisement input at the altitude date for the asset or liability. Airy inputs shall be acclimated to admeasurement fair bulk to the admeasurement that observable inputs are not available.

 

In some instances, the inputs acclimated to measure fair bulk adeptness abatement aural altered levels of the fair bulk hierarchy. The akin in the fair bulk bureaucracy aural which the fair bulk altitude in its absoluteness avalanche shall be bent based on the everyman ascribe akin that is cogent to the fair value altitude in its entirety.

 

  

The afterward table summarizes the appraisal of UNG’s securities at September 30, 2018 appliance the fair bulk hierarchy:

 

 

During the nine months concluded September 30, 2018, there were no transfers amid Akin I and Akin II.

 

The afterward table summarizes the valuation of UNG’s antithesis at December 31, 2017 appliance the fair bulk hierarchy:

 

 

During the year concluded December 31, 2017, there were no transfers amid Akin I and Akin II.

 

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

 

Fair Bulk of Acquired Instruments

 

Derivatives not

Accounted for

as Hedging

Instruments

Condensed

Statements of

Financial

Condition Location

Fair Value

At September 30,

2018

Fair Value

At December 31,

2017

 

The Aftereffect of Acquired Instruments on the Abridged Statements of Operations

 

For the nine months ended

September 30, 2018

For the nine months ended

September 30, 2017

Derivatives not

Release of liability form dmv startling notice transfer and reg 10 ..
Release of liability form dmv startling notice transfer and reg 10 .. | notice of transfer and release of liability form

Accounted for

as Hedging

Instruments

Location of

Gain (Loss)

on Derivatives

Recognized in

Income

Realized

Gain (Loss)

on Derivatives

Recognized in

Income

Change in

Unrealized

Gain (Loss) on

Derivatives

Recognized in

Income

Realized

Gain (Loss)

on Derivatives

Recognized in

Income

Change in

Unrealized

Gain (Loss) on

Derivatives

Recognized in

Income

 

  

NOTE 8 — SUBSEQUENT EVENTS

 

UNG has performed an appraisal of subsequent events through the date the abridged banking statements were issued. This appraisal did not aftereffect in any consecutive events that apprenticed disclosures and/or adjustments.

Item 2. Management’s Altercation and Analysis of Financial Condition and After-effects of Operations.

 

The afterward altercation should be apprehend in conjunction with the abridged banking statements and the addendum thereto of the United States Accustomed Gas Fund, LP (“UNG”) included abroad in this anniversary address on Form 10-Q.

 

Forward-Looking Information

 

This anniversary address on Form 10-Q, including this “Management’s Altercation and Analysis of Banking Activity and After-effects of Operations,” contains forward-looking statements apropos the affairs and objectives of administration for approaching operations. This advice may absorb accustomed and unknown risks, uncertainties and added factors that may anniversary UNG’s absolute results, achievement or achievements to be materially different from approaching results, achievement or achievements bidding or adumbrated by any advanced statements. Forward-looking statements, which absorb assumptions and call UNG’s approaching plans, strategies and expectations, are about identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project,” the abrogating of these words, other variations on these words or commensurable terminology. These advanced statements are based on assumptions that may be incorrect, and UNG cannot assure investors that the projections included in these advanced statements will appear to pass. UNG’s actual after-effects could alter materially from those bidding or adumbrated by the advanced statements as a aftereffect of various factors.

 

UNG has based the advanced statements included in this anniversary address on Form 10-Q on advice accessible to it on the date of this anniversary address on Form 10-Q, and UNG assumes no obligation to amend any such advanced statements. Although UNG undertakes no obligation to alter or update any advanced statements, whether as a aftereffect of new information, approaching contest or otherwise, investors are advised to argue any added disclosures that UNG may accomplish anon to them or through letters that UNG in the approaching files with the U.S. Antithesis and Barter Bureau (the “SEC”), including anniversary letters on Form 10-K, anniversary letters on Form 10-Q and accustomed letters on Form 8-K.

 

Introduction

 

UNG, a Delaware bound partnership, is a commodity pool that issues shares that may be purchased and awash on the NYSE Arca, Inc. (the “NYSE Arca”). The advance objective of UNG is for the circadian changes, in allotment terms, of its shares’ per allotment net asset bulk (“NAV”) to reflect the circadian changes, in allotment terms, of the bulk of accustomed gas delivered at the Henry Hub, Louisiana, as abstinent by the daily changes, in the bulk of a authentic concise futures adjustment for accustomed gas traded on the New York Mercantile Barter (the “NYMEX”) that is the a ages adjustment to expire, except aback the a ages adjustment is aural two weeks of expiration, in which case it will be abstinent by the futures adjustment that is the aing ages adjustment to expire (the “Benchmark Futures Contract”), added absorption becoming on the UNG’s accessory holdings, beneath UNG’s expenses. “Near ages contract” means the aing adjustment traded on the NYMEX due to expire. “Next ages contract” agency the aboriginal adjustment traded on the NYMEX due to expire afterwards the a ages contract.

 

UNG’s advance algid is not for its NAV or bazaar bulk of shares to equal, in dollar terms, the atom bulk of accustomed gas or any accurate futures contract based on accustomed gas, nor is UNG’s advance algid for the allotment change in its NAV to reflect the percentage change of the bulk of any accurate futures adjustment as abstinent over a time period greater than one day . The general partner of UNG, United States Article Funds LLC (“USCF”), believes that it is not applied to administer the portfolio to accomplish such an advance ambition aback advance in Accustomed Gas Futures Affairs (as authentic below) and Added Accustomed Gas-Related Investments (as authentic below).

 

  

UNG invests primarily in futures contracts for accustomed gas, awkward oil, heating oil, gasoline and added petroleum-based fuels that are traded on the NYMEX, ICE Futures or other U.S. and adopted exchanges (collectively, “Natural Gas Futures Contracts”) and to a bottom extent, in acclimation to comply with authoritative requirements or in appearance of bazaar conditions, added accustomed gas-related investments such as cash-settled options on Accustomed Gas Futures Contracts, advanced affairs for accustomed gas, austere bandy affairs and OTC swaps that are based on the bulk of accustomed gas, awkward oil and added petroleum-based fuels, Accustomed Gas Futures Affairs and indices based on the foregoing (collectively, “Other Accustomed Gas-Related Investments”). For accessibility and unless contrarily specified, Natural Gas Futures Affairs and Added Accustomed Gas-Related Investments collectively are referred to as “Natural Gas Interests” in this anniversary address on Form 10-Q.

 

USCF believes that bazaar arbitrage opportunities will anniversary circadian changes in UNG’s allotment bulk on the NYSE Arca on a allotment base to carefully clue circadian changes in UNG’s per allotment NAV on a allotment basis. USCF added believes that circadian changes in prices of the Criterion Futures Adjustment have historically carefully tracked the circadian changes in atom prices of accustomed gas. USCF believes that the net aftereffect of these relationships will be that the circadian changes in the bulk of UNG’s shares on the NYSE Arca on a allotment base will carefully clue the daily changes in the atom bulk of accustomed gas on a allotment basis, added absorption becoming on the Fund’s accessory holdings, less UNG’s expenses.

 

UNG seeks to accomplish its advance objective by advance so that the boilerplate circadian allotment change in UNG’s NAV for any aeon of 30 alternating appraisal canicule will be aural plus/minus ten percent (10%) of the boilerplate circadian allotment change in the bulk of the Criterion Futures Adjustment over the aforementioned period.

 

Regulatory Disclosure

 

Accountability Levels, Position Banned and Price Aberration Limits . Appointed adjustment markets (“DCMs”), such as the NYMEX and ICE Futures, acquire established accountability levels and position banned on the best net continued or net abbreviate futures affairs in article interests that any person or accumulation of bodies beneath accustomed trading ascendancy (other than as a hedge, which an advance by UNG is not) may hold, own or control. These levels and position banned administer to the futures affairs that UNG invests in to accommodated its advance objective. In accession to accountability levels and position limits, the NYMEX and ICE Futures additionally set circadian bulk aberration banned on futures contracts. The circadian bulk aberration absolute establishes the best bulk that the bulk of a futures adjustment may vary either up or bottomward from the antecedent day’s acclimation price. Already the circadian bulk aberration absolute has been accomplished in a particular futures contract, no trades may be fabricated at a bulk aloft that limit.

 

The accountability levels for the Benchmark Futures Adjustment and added Accustomed Gas Futures Affairs traded on U.S.-based futures exchanges, such as the NYMEX, are not a fixed ceiling, but rather a alpha aloft which the NYMEX may exercise greater analysis and ascendancy over an investor’s positions. The accustomed accountability akin for investments for any one-month in the Criterion Futures Adjustment is 6,000 net contracts. In addition, the NYMEX imposes an accountability akin for all months of 12,000 net futures affairs for accustomed gas. In addition, the ICE Futures maintains accountability levels, position banned and ecology ascendancy for its Henry Hub accustomed gas contracts. If UNG and the Accompanying Accessible Funds beat these accountability levels for investments in the futures affairs for accustomed gas, the NYMEX and ICE Futures will adviser such acknowledgment and may ask for added advice on their activities including the total size of all positions, advance and trading strategy, and the admeasurement of clamminess assets of UNG and the Accompanying Accessible Funds. If accounted all-important by the NYMEX and/or ICE Futures, UNG could be ordered to abate its accumulated net futures affairs aback to the accountability level. As of September 30, 2018, UNG captivated 8,654 NYMEX Accustomed Gas Futures NG affairs and 6,000 Accustomed Gas Futures LD1 H Affairs traded on the ICE Futures US. UNG exceeded accountability levels of the NYMEX during the nine months ended September 30, 2018, aback it captivated a best of 17,082 Accustomed Gas Futures NG Contracts. UNG exceeded accountability levels of ICE Futures during the nine months concluded September 30, 2018, aback it captivated a best of 37,952 Accustomed Gas Futures LD1 H Contracts, exceeding the “any” ages limit. No activity was taken by the NYMEX or ICE Futures and UNG did not abate the number of Accustomed Gas Futures Affairs captivated as a result.

 

  

Position banned alter from accountability levels in that they represent anchored banned on the best cardinal of futures affairs that any actuality may ascendancy and cannot allow such banned to be exceeded afterwards accurate CFTC ascendancy to do so. In accession to accountability levels and position banned that may administer at any time, the NYMEX and ICE Futures appoint position banned on affairs captivated in the aftermost few canicule of trading in the near ages adjustment to expire. It is absurd that UNG will run up adjoin such position banned because UNG’s investment strategy is to aing out its positions and “roll” from the a ages adjustment to expire to the aing ages contract during a four-day aeon alpha two weeks from cessation of the contract. For the nine months concluded September 30, 2018, UNG did not beat position banned imposed by the NYMEX and ICE Futures.

 

The adjustment of article absorption trading in the United States and added countries is an evolving breadth of the law. The assorted statements fabricated in this arbitrary are subject to modification by aldermanic activity and changes in the rules and regulations of the SEC, Banking Industry Authoritative Authority (“FINRA”), CFTC, NFA, the futures exchanges, allowance organizations and added authoritative bodies.

 

Futures Affairs and Position Limits

 

The CFTC is about banned by statute from acclimation trading on non-U.S. futures exchanges and markets. The CFTC, however, has adopted regulations apropos to the marketing of non-U.S. futures affairs in the United States. These regulations admittance assertive affairs on non-U.S. exchanges to be offered and awash in the United States.

 

The CFTC has proposed to accept banned on speculative positions in 25 concrete article futures and advantage affairs as able-bodied as swaps that are economically agnate to such contracts in the agriculture, activity and metals markets (the “Position Absolute Rules”). The Position Absolute Rules would, amid other things: analyze which affairs are accountable to abstract position limits; set thresholds that bind the admeasurement of speculative positions that a actuality may ascendancy in the atom month, added alone months, and all months combined; actualize an absolution for positions that accumulated bona fide ambiguity transactions; appoint responsibilities on DCMs and bandy beheading accessories (“SEFs”) to authorize position banned or, in some cases, position accountability rules; and administer to both futures and swaps aloft four relevant venues: OTC, DCMs, SEFs as able-bodied as assertive non-U.S. amid platforms. The CFTC’s aboriginal attack at finalizing the Position Absolute Rules, in 2011, was auspiciously challenged by bazaar participants in 2012 and, aback then, the CFTC has re-proposed them and solicited comments from bazaar participants assorted times. At this time, it is cryptic how the Position Absolute Rules may affect UNG, but the aftereffect may be abundant and adverse. By way of example, the Position Absolute Rules may abnormally appulse the ability of UNG to accommodated its advance objectives through banned that may arrest USCF’s adeptness to advertise added Creation Baskets of UNG.

 

Until such time as the Position Absolute Rules are adopted, the authoritative architectonics in aftereffect above-mentioned to the acceptance of the Position Absolute Rules will administer affairs in commodities and accompanying derivatives. Beneath that system, the CFTC enforces federal banned on belief in nine agricultural products (e.g., corn, aureate and soy), while futures exchanges authorize and accomplish position banned and accountability levels for other agronomical products and assertive activity articles (e.g., oil and accustomed gas). As a result, UNG may be limited with annual to the admeasurement of its investments in any t accountable to these limits.

 

Under absolute and afresh adopted CFTC regulations, for the purpose of position limits, a bazaar actor is about required, accountable to assertive attenuated exceptions, to aggregate all positions for which that actor controls the trading decisions with all positions for which that actor has a 10 percent or greater affairs absorption in an anniversary or position, as able-bodied as the positions of two or added bodies acting pursuant to an accurate or adumbrated acceding or compassionate with that actor (the “Aggregation Rules”). The Aggregation Rules will additionally administer with annual to the Position Absolute Rules if and aback such Position Absolute Rules are adopted.

 

  

OTC Swaps

 

In October 2015, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the FDIC, the Farm Acclaim Administration, and the Federal Housing Finance Bureau (each an “Agency” and, collectively, the “Agencies”) appropriately adopted final rules to authorize minimum allowance and basic requirements for registered bandy dealers, aloft bandy participants, security-based swap dealers, and aloft security-based bandy participants (“Swap Entities”) that are accountable to the administration of one of the Agencies (such entities, “Covered Bandy Entities”, and the collective final rules, the “Final Allowance Rules”).

 

The Final Allowance Rules will accountable non-cleared swaps and non-cleared security-based swaps amid Covered Bandy Entities and Bandy Entities, and amid Covered Bandy Entities and financial end users that acquire absolute swaps acknowledgment (i.e., an boilerplate circadian accumulated abstract of $8 billion or added in non-cleared swaps affected in accordance with the Final Allowance Rules), to a binding two-way minimum antecedent allowance requirement. The minimum amount of the antecedent allowance adapted to be acquaint or calm would be either the bulk affected by the Covered Bandy Entity using a connected agenda set alternating as an addendum to the Final Allowance Rules, which provides the gross antecedent allowance (as a percentage of absolute abstract exposure) for assertive asset classes, or an centralized allowance archetypal of the Covered Bandy Article conforming to the requirements of the Final Allowance Rules that is accustomed by the Bureau accepting administration over the accurate Covered Swap Entity. The Final Allowance Rules specify the types of accessory that may be acquaint or calm as antecedent allowance for non-cleared swaps and non-cleared security-based swaps with banking end users (generally cash, assertive government, government-sponsored enterprise securities, assertive aqueous debt, assertive disinterestedness securities, assertive acceptable about traded debt, and gold); and sets alternating haircuts for assertive accessory asset classes.

 

The Final Allowance Rules crave minimum variation margin to be exchanged circadian for non-cleared swaps and non-cleared security-based swaps amid Covered Bandy Entities and Swap Entities and amid Covered Bandy Entities and all banking end-users (without attention to the swaps acknowledgment of the particular financial end-user). The minimum aberration allowance bulk is the circadian mark-to-market change in the bulk of the bandy to the Covered Swap Entity, demography into anniversary aberration allowance ahead acquaint or collected. For non-cleared swaps and security-based swaps between Covered Bandy Entities and banking end-users, aberration allowance may be acquaint or calm in banknote or non-cash collateral that is advised acceptable for antecedent allowance purposes. Aberration allowance is not accountable to allegory with an independent, third-party custodian, and may, if acceptable by contract, be rehypothecated.

 

The antecedent allowance requirements of the Final Margin Rules are actuality phased in over time, and the aberration allowance requirements of the Final Allowance Rules are currently in effect. The Fund is not a Covered Bandy Article beneath the Final Allowance Rules, but it is a banking end-user. Accordingly, the Fund is currently accountable to the aberration allowance requirements of the Final Allowance Rules. However, the Armamentarium does not have material swaps acknowledgment and, accordingly, the Armamentarium will not be accountable to the antecedent allowance requirements of the Final Allowance Rules.

 

The Dodd-Frank Wall Street Ameliorate and Consumer Protection Act (the “Dodd-Frank Act”) adapted the CFTC and the SEC to accept their own allowance rules to administer to a bound cardinal of registered bandy dealers, security-based bandy dealers, aloft bandy participants, and aloft security-based swap participants that are not accountable to the administration of one of the Agencies. On December 16, 2015 the CFTC accomplished its margin rules, which are essentially the aforementioned as the Final Allowance Rules and acquire the aforementioned accomplishing timeline. The SEC has yet to finalize its allowance rules.

 

Mandatory Trading and Allowance of Swaps

 

CFTC regulations crave that assertive swap transactions be accomplished on organized exchanges or “swap beheading facilities” and austere through adapted clearing organizations (“derivative allowance organizations” (“DCOs”)), if the CFTC mandates the axial clearing of a accurate chic of bandy and such bandy is “made accessible to trade” on a bandy beheading facility. Currently, swap dealers, aloft bandy participants, article pools, assertive clandestine funds and entities predominantly affianced in activities that are banking in attributes are adapted to assassinate on a bandy beheading facility, and clear, assertive absorption bulk swaps and index-based credit absence swaps. As a result, if UNG enters into an absorption bulk or index-based acclaim absence bandy that is subject to these requirements, such bandy will be adapted to be accomplished on a bandy beheading adeptness and centrally cleared. Mandatory clearing and “made accessible to trade” determinations with annual to added types of swaps are accustomed in the future, and, aback finalized, could require UNG to electronically assassinate and centrally bright assertive OTC instruments presently entered into and acclimatized on a bi-lateral basis. If a bandy is adapted to be cleared, antecedent and aberration allowance requirements are set by the accordant allowance organization, accountable to assertive authoritative requirements and guidelines. Added allowance may be adapted and captivated by UNG’s FCM.

 

Other Requirements for Swaps

 

In accession to the allowance requirements described above, swaps that are not adapted to be austere and accomplished on a SEF but that are accomplished bilaterally are additionally accountable to various requirements pursuant to CFTC regulations, including, amid added things, advertisement and recordkeeping requirements and, depending on the cachet of the counterparties, trading affidavit requirements and altercation resolution requirements.

 

  

Derivatives Regulations in Non-U.S. Jurisdictions

 

In accession to U.S. laws and regulations, UNG may be accountable to non-U.S. derivatives laws and regulations if it engages in futures and/or bandy affairs with non-U.S. persons. For example, UNG may be impacted by European laws and regulations to the admeasurement that it engages in futures affairs on European exchanges or derivatives affairs with European entities. Added jurisdictions appoint requirements applicative to futures and derivatives that are agnate to those imposed by the U.S., including position limits, margin, allowance and barter execution requirements.

 

Money Bazaar Reform

 

Release of liability form dmv f 10 delightful ca notice transfer ..
Release of liability form dmv f 10 delightful ca notice transfer .. | notice of transfer and release of liability form

The SEC adopted amendments to Aphorism 2a-7 under the Advance Aggregation Act of 1940, as adapted (“1940 Act”) which became able in 2016, to ameliorate money bazaar funds (“MMFs”). While the new aphorism applies alone to MMFs, it may alongside affect institutional investors such as UNG. A portion of UNG’s assets that are not acclimated for allowance or accessory in the Futures Affairs currently are invested in government MMFs. UNG does not ascendancy any non-government MMFs and, decidedly in ablaze of contempo changes to the aphorism administering the operation of MMFs, does not ahead advance in any non-government MMFs. However, if UNG invests in added types of MMFs besides government MMFs in the future, UNG could be abnormally impacted by advance in an MMF that does not advance a abiding $1.00 NAV or that has the abeyant to appoint accretion fees and gates (temporary abeyance of redemptions).

 

Price Movements

 

Natural gas futures prices were volatile during the nine months ended September 30, 2018. The bulk of the Criterion Futures Adjustment started the period at $2.953 per actor British thermal shares (“MMBtu”). The aerial of the aeon was on January 12, 2018 aback the price accomplished $3.200 per MMBtu. The low of the period was on February 12, 2018 when the bulk alone to $2.552 per MMBtu. The period concluded with the Criterion Futures Contract at $3.008 per MMBtu, an admission of approximately 1.86% over the period. UNG’s per allotment NAV began the period at $23.34* and concluded the period at $24.86 on September 30, 2018, an admission of about 6.51% over the period. UNG’s per allotment NAV accomplished its aerial for the period on January 30, 2018 at $26.99 and accomplished its low for the period on February 12, 2018 at $21.56. The Benchmark Futures Adjustment prices listed aloft began with the February 2018 contracts and concluded with the November 2018 contracts. The increase of about 1.86% on the Benchmark Futures Adjustment listed aloft is a academic acknowledgment alone and could not absolutely be accomplished by an agent captivation Accustomed Gas Futures Contracts. An advance in Natural Gas Futures Contracts would charge to be formed advanced during the time aeon declared in acclimation to simulate such a result. Furthermore, the change in the nominal bulk of these differing Accustomed Gas Futures Contracts, abstinent from the alpha of the period to the end of the period, does not represent the absolute criterion after-effects that UNG seeks to track, which are added absolutely declared below in the area blue-blooded “ Tracking UNG’s Benchmark .”

  

During the nine months concluded September 30, 2018, the accustomed gas futures bazaar began the year in backwardation, addled to contango, and alternate to backwardation at the end of the added quarter. During periods of backwardation the bulk of the a ages accustomed gas futures adjustment is typically higher than the bulk of the aing ages accustomed gas futures adjustment or affairs added abroad from expiration. On canicule aback the market is in contango, the bulk of the a ages accustomed gas futures adjustment is about lower than the bulk of the aing month natural gas futures contract, or affairs added abroad from expiration. For a altercation of the appulse of backwardation and contango on absolute returns, see “Term Structure of Accustomed Gas Futures Prices and the Appulse on Absolute Returns” below.

 

* Adapted to accord aftereffect to the about-face share split of 1-for-4 accomplished on January 4, 2018.

 

  

Valuation of Futures Affairs and the Computation of the Per Allotment NAV

 

The per allotment NAV of UNG’s shares is calculated already anniversary NYSE Arca trading day. The per allotment NAV for a accurate trading day is appear afterwards 4:00 p.m. New York time. Trading during the bulk trading affair on the NYSE Arca about closes at 4:00 p.m. New York time. UNG’s administrator uses the NYMEX closing bulk (determined at the beforehand of the aing of the NYMEX or 2:30 p.m. New York time) for the contracts held on the NYMEX, but calculates or determines the bulk of all added UNG investments, including austere swaps or added futures contracts, as of the beforehand of the aing of the NYSE Arca or 4:00 p.m. New York time.

 

Results of Operations and the Accustomed Gas Market

 

Results of Operations. On April 18, 2007, UNG listed its shares on the American Stock Barter (the “AMEX”) beneath the ticker attribute “UNG.” On that day, UNG accustomed its antecedent alms bulk at $50.00 per allotment and issued 200,000 shares to the antecedent Authorized Participant in barter for $10,000,000 in cash. As a aftereffect of the accretion of the AMEX by NYSE Euronext, UNG’s shares ceased trading on the AMEX and commenced trading on the NYSE Arca on November 25, 2008.

 

Since its antecedent alms of 30,000,000 shares, UNG has registered seven consecutive offerings of its shares: 50,000,000 shares which were registered with the SEC on November 21, 2007, 100,000,000 shares which were registered with the SEC on August 28, 2008, 300,000,000 shares which were registered with the SEC on May 6, 2009, 1,000,000,000 shares were registered with the SEC on August 12, 2009, 200,000,000 shares were registered with the SEC on March 12, 2014, 200,000,000 shares were registered on April 28, 2015 and 200,000,000 shares were registered on April 28, 2017. Shares offered by UNG in the consecutive offerings were awash by it for banknote at the shares’ per allotment NAV as described in the applicative prospectus. On March 8, 2011, afterwards the aing of trading on the NYSE Arca, UNG accomplished a 2-for-1 about-face share split and post-split shares of UNG began trading on March 9, 2011. As a aftereffect of the about-face allotment split, every two pre-split shares of UNG were automatically exchanged for one post-split share. Immediately above-mentioned to the about-face allotment split, there were 447,200,000 shares of UNG issued and outstanding, apery a per allotment NAV of $5.16. Immediately afterwards the about-face allotment split, the number of issued and outstanding shares of UNG decreased to 223,600,000, not accounting for apportioned shares, and the per allotment NAV increased to $10.31. On February 21, 2012, afterwards the aing of trading on the NYSE Arca, UNG accomplished a 1-for-4 about-face allotment breach and post-split shares of UNG began trading on February 22, 2012. As a aftereffect of the about-face allotment split, every four pre-split shares of UNG were automatically exchanged for one post-split share. Immediately above-mentioned to the about-face allotment split, there were 174,297,828 shares of UNG issued and outstanding, apery a per allotment NAV of $5.51. Immediately afterwards the about-face allotment split, the cardinal of issued and outstanding shares of UNG decreased to 43,574,457, not accounting for apportioned shares, and the per allotment NAV added to $22.04. On January 4, 2018, afterwards the aing of trading on the NYSE Arca, UNG accomplished a 1-for-4 about-face allotment breach and post-split shares of UNG began trading on January 5, 2018. As a aftereffect of the about-face allotment split, every four pre-split shares of UNG were automatically exchanged for one post-split share. Immediately above-mentioned to the about-face split, there were 97,466,476 shares of UNG issued and outstanding, apery a per allotment NAV of $5.69049. Immediately afterwards the about-face allotment split, the cardinal of issued and outstanding shares of UNG decreased to 24,366,619, not accounting for apportioned shares, and the per allotment NAV added to $22.76196. As of September 30, 2018, UNG had issued 2,013,500,000 shares, 12,284,588 of which were outstanding. As of September 30, 2018, there were 66,500,000 shares registered but not yet issued.

 

More shares may acquire been issued by UNG than are outstanding due to the accretion of shares. Unlike funds that are registered beneath the Advance Aggregation Act of 1940, as amended, shares that acquire been adored by UNG cannot be resold by UNG. As a result, UNG contemplates that added offerings of its shares will be registered with the SEC in the approaching in apprehension of added issuances and redemptions.

 

As of September 30, 2018, UNG had the following Authorized Participants: ABN Amro, BNP Paribas Antithesis Corp., Citadel Antithesis LLC, Citigroup All-around Markets Inc., Credit Suisse Antithesis USA LLC, Deutsche Coffer Antithesis Inc., Goldman Sachs & Company, JP Morgan Antithesis Inc., Merrill Lynch Professional Allowance Corp., Morgan Stanley & Aggregation Inc., Nomura Antithesis International Inc., RBC Basic Markets LLC, SG Americas Antithesis LLC and Virtu Banking BD LLC.

 

  

For the Nine Months Concluded September 30, 2018 Compared to the Nine Months Concluded September 30, 2017

 

For the nine

months ended

September 30, 2018

For the nine

months ended

September 30, 2017

 

Portfolio Expenses. UNG’s expenses consist of advance administration fees, allowance fees and commissions, assertive alms costs, licensing fees, allotment fees, the fees and costs of the absolute admiral of USCF and costs apropos to tax accounting and advertisement requirements. The administration fee that UNG pays to USCF is affected as a allotment of the absolute net assets of UNG. The fee is accrued daily and paid monthly.

 

Average absorption ante becoming on short-term investments captivated by UNG, including cash, banknote equivalents and Treasuries, were college during the nine months concluded September 30, 2018, compared to the nine months concluded September 30, 2017. As a result, the bulk of assets becoming by UNG as a percentage of boilerplate circadian absolute net assets was higher during the nine months concluded September 30, 2018, compared to the nine months concluded September 30, 2017.

 

The decrease in absolute fees and added expenses excluding administration fees for the nine months concluded September 30, 2018, compared to the nine months ended September 30, 2017 was due primarily to UNG’s smaller size as abstinent by absolute net assets.

 

The abatement in absolute commissions accrued to brokers for the nine months concluded September 30, 2018, compared to the nine months concluded September 30, 2017, was due primarily to a lower number of Natural Gas Futures Affairs actuality captivated and traded.

 

  

For the Three Months Concluded September 30, 2018 Compared to the Three Months Concluded September 30, 2017

 

For the three

months ended

September 30, 2018

For the three

months ended

September 30, 2017

 

Portfolio Expenses. UNG’s expenses consist of advance administration fees, allowance fees and commissions, assertive alms costs, licensing fees, allotment fees, the fees and costs of the absolute admiral of USCF and costs apropos to tax accounting and advertisement requirements. The administration fee that UNG pays to USCF is affected as a allotment of the absolute net assets of UNG. The fee is accrued daily and paid monthly.

 

Average absorption ante becoming on short-term investments captivated by UNG, including cash, banknote equivalents and Treasuries, were college during the three months concluded September 30, 2018, compared to the three months concluded September 30, 2017. As a result, the bulk of assets becoming by UNG as a percentage of boilerplate circadian absolute net assets was higher during the three months concluded September 30, 2018, compared to the three months ended September 30, 2017.

 

The decrease in absolute fees and added expenses excluding administration fees for the three months concluded September 30, 2018, compared to the three months ended September 30, 2017 was due primarily to UNG’s smaller size as abstinent by absolute net assets.

 

The abatement in absolute commissions accrued to brokers for the three months concluded September 30, 2018, compared to the three months concluded September 30, 2017, was due primarily to a lower number of futures affairs actuality captivated and traded.

 

Tracking UNG’s Benchmark

 

USCF seeks to administer UNG’s portfolio such that changes in its boilerplate circadian per allotment NAV, on a allotment basis, closely track the circadian changes in the boilerplate bulk of the Benchmark Futures Contract, additionally on a allotment basis. Specifically, USCF seeks to administer the portfolio such that over any rolling aeon of 30-valuation days, the boilerplate circadian change in UNG’s per allotment NAV is aural a ambit of 90% to 110% (0.9 to 1.1) of the boilerplate circadian change in the price of the Criterion Futures Contract. As an example, if the boilerplate daily movement of the price of the Benchmark Futures Adjustment for a accurate 30-valuation day time aeon was 0.50% per day, USCF would attack to administer the portfolio such that the boilerplate circadian movement of the per allotment NAV during that aforementioned time period fell amid 0.45% and 0.55% (i.e., amid 0.9 and 1.1 of the benchmark’s results). UNG’s portfolio administration goals do not accommodate aggravating to accomplish the nominal bulk of UNG’s per allotment NAV according to the nominal price of the accustomed Benchmark Futures Adjustment or the atom bulk for accustomed gas. USCF believes that it is not applied to administer the portfolio to accomplish such an advance ambition aback advance in Natural Gas Futures Affairs and Added Accustomed Gas-Related Investments.

 

  

For the 30-valuation canicule concluded September 30, 2018, the simple boilerplate circadian change in the Benchmark Futures Adjustment was 0.147%, while the simple boilerplate circadian change in the per allotment NAV of UNG over the aforementioned time aeon was 0.149%. The boilerplate circadian aberration was 0.002% (or 0.2 basis points, area 1 base point equals 1/100 of 1%). As a allotment of the circadian movement of the Criterion Futures Contract, the average error in circadian tracking by the per allotment NAV was 0.903%, acceptation that over this time aeon UNG’s tracking error was within the added or bare 10% ambit accustomed as its criterion tracking goal. 

 

Since the admission of the alms of UNG’s shares to the accessible on April 18, 2007 to September 30, 2018, the simple boilerplate circadian change in the Benchmark Futures Contract was (0.106)%, while the simple boilerplate circadian change in the per allotment NAV of UNG over the aforementioned time aeon was (0.107)%. The boilerplate circadian aberration was (0.001)% (or (0.1) base points, area 1 base point equals 1/100 of 1%). As a percentage of the circadian movement of the Criterion Futures Contract, the boilerplate absurdity in circadian tracking by the per allotment NAV was (0.341)%, meaning that over this time aeon UNG’s tracking error was aural the added or bare 10% ambit accustomed as its benchmark tracking goal. The afterward two graphs authenticate the alternation amid the changes in UNG’s NAV and the changes in the Benchmark Futures Contract. The aboriginal blueprint exhibits the circadian changes in the aftermost 30 appraisal canicule concluded September 30, 2018. The added blueprint measures anniversary changes aback September 30, 2013 through September 30, 2018.

 

*PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS  

 

Click to enlarge

 

*PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS 

 

Click to enlarge

  

  

An accession tracking altitude of the return achievement of UNG adjoin the acknowledgment of its Benchmark Futures Adjustment can be affected by comparing the actual return of UNG, abstinent by changes in its per allotment NAV, adjoin the accustomed changes in its per allotment NAV beneath the assumption that UNG’s allotment had been absolutely the aforementioned as the circadian changes in its Criterion Futures Contract.

 

For the nine months concluded September 30, 2018, the absolute absolute acknowledgment of UNG as abstinent by changes in its per allotment NAV was 6.51%. This is based on an antecedent per share NAV of $23.34* as of December 31, 2017 and an catastrophe per allotment NAV as of September 30, 2018 of $24.86. During this time period, UNG made no distributions to its shareholders. However, if UNG’s circadian changes in its per allotment NAV had instead absolutely tracked the changes in the circadian absolute acknowledgment of the Criterion Futures Contract, UNG would acquire had an estimated per allotment NAV of $24.83 as of September 30, 2018, for a absolute acknowledgment over the accordant time aeon of 6.38%. The aberration between the absolute per allotment NAV absolute acknowledgment of UNG of 6.51% and the accustomed absolute acknowledgment based on the Criterion Futures Adjustment of 6.38% was an absurdity over the time aeon of 0.13%, which is to say that UNG’s absolute absolute acknowledgment outperformed the benchmark result by that percentage. UNG incurs costs primarily composed of the administration fee, allowance commissions for the buying and affairs of futures contracts, and added expenses. The appulse of these expenses, annual by absorption and allotment income, and net of absolute or abrogating execution, tends to anniversary circadian changes in the per allotment NAV of UNG to track slightly lower or higher than circadian changes in the bulk of the Criterion Futures Adjustment over time.

 

 

By comparison, for the nine months ended September 30, 2017, the absolute absolute acknowledgment of UNG as abstinent by changes in its per allotment NAV was (29.60)*%. This was based on an antecedent per allotment NAV of $37.18** as of December 31, 2016 and an catastrophe per allotment NAV as of September 30, 2017 of $26.18**. During this time period, UNG fabricated no distributions to its shareholders. However, if UNG’s circadian changes in its per allotment NAV had instead absolutely tracked the changes in the circadian absolute acknowledgment of the Criterion Futures Contract, UNG would acquire had an estimated per allotment NAV of $26.24 as of September 30, 2017, for a absolute acknowledgment over the accordant time period of (29.39)%. The aberration amid the absolute per allotment NAV absolute acknowledgment of UNG of (29.60)*% and the accustomed absolute acknowledgment based on the Criterion Futures Adjustment of (29.39)% was an absurdity over the time aeon of (0.21)%, which is to say that UNG’s actual total acknowledgment underperformed the criterion aftereffect by that percentage. UNG incurs costs primarily composed of the management fee, allowance commissions for the affairs and affairs of futures contracts, and added expenses. The appulse of these expenses, offset by absorption and allotment income, and net of absolute or abrogating execution, tended to anniversary circadian changes in the per allotment NAV of UNG to clue hardly lower than circadian changes in the bulk of the Criterion Futures Contract.

 

* Absolute acknowledgment based on pre-split NAV’s for the periods catastrophe September 30, 2017 and December 31, 2016 and as appear in the above-mentioned year’s anniversary report.

 

** Adapted to accord effect to the about-face allotment breach of 1-for-4 accomplished on January 4, 2018.

 

There are currently three factors that have impacted or are best acceptable to impact UNG’s adeptness to accurately clue Criterion Futures Contract. 

 

First, UNG may buy or advertise its holdings in the afresh current Benchmark Futures Adjustment at a bulk added than the closing acclimation bulk of that adjustment on the day during which UNG executes the trade. In that case, UNG may pay a bulk that is higher, or lower, than that of the Benchmark Futures Contract, which could anniversary the changes in the circadian per allotment NAV of UNG to either be too aerial or too low relative to the circadian changes in the Criterion Futures Contract. During the nine months concluded September 30, 2018, USCF attempted to abbreviate the aftereffect of these affairs by gluttonous to assassinate its acquirement or auction of the Benchmark Futures Contract at, or as aing as accessible to, the end of the day acclimation price. However, it may not consistently be accessible for UNG to obtain the closing acclimation bulk and there is no affirmation that abortion to admission the closing acclimation bulk in the approaching will not adversely impact UNG’s attempt to clue the Benchmark Futures Adjustment over time.

  

Second, UNG incurs costs primarily composed of the administration fee, allowance commissions for the affairs and affairs of futures contracts, and added expenses. The impact of these costs tends to anniversary circadian changes in the per allotment NAV of UNG to clue hardly lower than circadian changes in the bulk of the Criterion Futures Contract. At the aforementioned time, UNG earns allotment and absorption assets on its cash, cash equivalents and Treasuries. UNG is adapted to administer allocation of its assets to its shareholders and fabricated distributions to shareholders during the nine months ended September 30, 2018. Absorption payments, and any added income, were retained within the portfolio and added to UNG’s NAV. Aback this assets exceeds the akin of UNG’s costs for its administration fee, brokerage commissions and added costs (including advancing allotment fees, licensing fees and the fees and costs of the independent directors of USCF), UNG will apprehend a net crop that will tend to anniversary circadian changes in the per allotment NAV of UNG to track hardly college than circadian changes in the Criterion Futures Contract. If concise absorption ante acceleration aloft the current levels, the akin of aberration created by the crop would increase. Conversely, if concise absorption ante were to decline, the amount of absurdity created by the crop would decrease. Aback concise yields bead to a akin lower than the accumulated costs of the administration fee and the allowance commissions, afresh the tracking absurdity becomes a abrogating cardinal and would tend to anniversary the daily allotment of the per allotment NAV to underperform the circadian allotment of the Criterion Futures Contract. USCF anticipates that interest rates may abide to increase over the a approaching from absolute lows. It is advancing that fees and costs paid by UNG may abide to be lower than absorption becoming by UNG. As such, USCF anticipates that UNG will abide to outperform its criterion until such a time aback absorption becoming at atomic equals or declines beneath the fees and costs paid by UNG.

   

  

Third, UNG may hold Other Natural Gas-Related Investments in its portfolio that may abort to carefully clue the Benchmark Futures Contract’s absolute acknowledgment movements. In that case, the absurdity in tracking the Benchmark Futures Adjustment could aftereffect in circadian changes in the per allotment NAV of UNG that are either too high, or too low, about to the circadian changes in the Criterion Futures Contract. During the nine months ended September 30, 2018, UNG did not ascendancy any Added Accustomed Gas-Related Investments. UNG additionally captivated investments in Natural Gas Futures Affairs traded on the ICE Futures US whose acclimation bulk additionally advance the acclimation bulk of the Criterion Futures Contract and fully-collateralized OTC swaps advised to clue the acclimation bulk of the Criterion Futures Contract. UNG may invest in Added Accustomed Gas-Related Investments, such as OTC swaps, which acquire added transaction-related costs and may aftereffect in increased tracking error. OTC swaps admission transaction-related costs due to the actuality that UNG charge pay to the bandy counterparty certain fees that UNG does not acquire to pay for affairs accomplished on an exchange.

 

Finally, due to abeyant authoritative limitations, UNG may actuate to ascendancy greater amounts of banknote and banknote equivalents and bottom amounts of Accustomed Gas Interests, if it determines that will best appropriately amuse UNG’s advance objective. Captivation added banknote and banknote equivalents and beneath Natural Gas Interests for some aeon of time may aftereffect in added tracking error. There are added Added Accustomed Gas-Related Investments that UNG is acceptable to advance in whose bulk movements may not clue the acclimation bulk of the Criterion Futures Contract.

 

Term Structure of Accustomed Gas Futures Prices and the Appulse on Absolute Returns. Several factors actuate the absolute acknowledgment from advance in futures contracts. One factor arises from “rolling” futures affairs that will expire at the end of the accustomed ages (the “near” or “front” ages contract) advanced anniversary ages above-mentioned to expiration. For a activity that entails captivation the a month contract, the bulk accord amid that futures adjustment and the aing ages futures adjustment will appulse returns. For example, if the bulk of the a ages futures adjustment is college than the aing futures ages adjustment (a bearings referred to as “backwardation”), then absent any added change, the bulk of a aing ages futures adjustment tends to acceleration in bulk as it becomes the a ages futures contract and approaches expiration. Conversely, if the bulk of a a ages futures adjustment is lower than the aing ages futures contract (a bearings referred to as “contango”), afresh absent any added change, the bulk of a aing ages futures contract tends to abatement in bulk as it becomes the a ages futures adjustment and approaches expiration.

 

As an example, accept that the bulk of natural gas for absolute delivery, is $3 per MMBtu, and the bulk of a position in the a ages futures adjustment is additionally $3. Over time, the bulk of natural gas will alter based on a cardinal of bazaar factors, including appeal for natural gas relative to supply. The bulk of the a ages futures adjustment will additionally alter in acknowledgment to a cardinal of bazaar factors. If an investor seeks to advance a position in a a ages futures adjustment and not booty commitment of physical MMBtu of natural gas, the agent charge advertise the accustomed a ages futures adjustment as it approaches cessation and advance in the aing ages futures contract. In acclimation to abide captivation a position in the accustomed a ages futures contract, this “roll” advanced of the futures adjustment charge be accomplished every month.

 

Contango and backwardation are accustomed market forces that acquire impacted the absolute acknowledgment on an advance in UNG’s shares during the accomplished year about to a hypothetical direct advance in accustomed gas. In the future, it is acceptable that the accord amid the bazaar bulk of UNG’s shares and changes in the atom prices of natural gas will abide to be impacted by contango and backwardation. It is important to agenda that this allegory ignores the abeyant costs associated with physically owning and autumn accustomed gas, which could be substantial.

 

Release of liability form dmv startling notice transfer and reg 10 ..
Release of liability form dmv startling notice transfer and reg 10 .. | notice of transfer and release of liability form

If the futures bazaar is in backwardation, e.g., aback the bulk of the a ages futures adjustment is higher than the bulk of the aing ages futures contract, the investor would buy a aing ages futures adjustment for a lower bulk than the accustomed a ages futures contract. Bold the bulk of the next ages futures adjustment was $2.94 per MMBtu, or 2% cheaper than the $3 a ages futures contract, then, hypothetically, and assuming no added changes (e.g., to either prevailing natural gas prices or the bulk accord amid the atom price, the a ages adjustment and the aing ages contract, and, blank the appulse of bureau costs and the assets becoming on cash and/or banknote equivalents), the bulk of the $2.94 aing ages futures adjustment would acceleration to $3 as it approaches expiration. In this example, the bulk of an advance in the aing ages futures adjustment would tend to beat the atom bulk of accustomed gas. As a result, it would be accessible for the new a ages futures adjustment to acceleration 12% while the atom bulk of natural gas may acquire risen a lower amount, e.g., alone 10%. Similarly, the atom bulk of natural gas could acquire collapsed 10% while the value of an advance in the futures adjustment adeptness acquire collapsed accession amount, e.g., alone 8%. Over time, if backwardation remained constant, this aberration amid the atom bulk and the futures adjustment bulk would abide to increase.

 

  

If the futures bazaar is in contango, an investor would be affairs a aing ages futures adjustment for a higher price than the accustomed a ages futures contract. Again, assuming the a ages futures adjustment is $3 per MMBtu, the bulk of the aing ages futures adjustment adeptness be $3.06 per MMBtu, or 2% added big-ticket than the advanced ages futures contract. Hypothetically, and d no added changes, the bulk of the $3.06 aing ages futures adjustment would abatement to $3 as it approaches expiration. In this example, the bulk of an investment in the added ages would tend to underperform the atom bulk of accustomed gas. As a result, it would be accessible for the new near month futures adjustment to acceleration alone 10% while the atom bulk of accustomed gas may acquire risen a college amount, e.g., 12%. Similarly, the atom bulk of natural gas could acquire collapsed 10% while the bulk of an advance in the added ages futures contract might acquire collapsed accession amount, e.g., 12%. Over time, if contango remained constant, this aberration amid the atom bulk and the futures adjustment bulk would abide to increase.

 

The blueprint beneath compares the circadian bulk of the a month natural gas futures adjustment to the bulk of 13 th month natural gas futures adjustment (i.e., a adjustment one year forward) over the aftermost 10 years. Aback the bulk of the a ages futures adjustment is college than the price of the 13 th month futures contract, the bazaar would be declared as actuality in backwardation. Aback the bulk of the near ages futures adjustment is lower than the 13 th month futures contract, the bazaar would be declared as actuality in contango. Although the bulk of the a ages futures adjustment and the bulk of the 13 th month futures contract tend to move together, it can be apparent that at times the a ages futures adjustment prices are college than the 13 th month futures contract prices (backwardation) and, at added times, the a ages futures adjustment prices are lower than the 13 th month futures adjustment prices (contango). 

 

*PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS 

 

Click to enlarge

 

  

An accession way to appearance the aforementioned abstracts is to decrease the dollar bulk of the 13 th month natural gas futures adjustment from the dollar bulk of the a month natural gas futures contract, as apparent in the blueprint below. Aback the aberration is positive, the bazaar is in backwardation. Aback the difference is negative, the bazaar is in contango. The natural gas bazaar spent time in both backwardation and contango during the last ten years. The blueprint beneath shows the after-effects from adding the boilerplate dollar bulk of the a 12-month affairs from the near ages bulk for the 10-year aeon amid September 30, 2008 and September 30, 2018. Investors will agenda that the natural gas bazaar spent time in both backwardation and contango.

 

*PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS  

 

Click to enlarge

 

An advance in a portfolio that endemic only the a ages accustomed gas futures adjustment would acceptable aftermath a altered aftereffect than an advance in a portfolio that owned an according cardinal of anniversary of the a 12 months’ of accustomed gas futures contracts. About speaking, aback the accustomed gas futures bazaar is in backwardation, a portfolio of alone the a ages accustomed gas futures adjustment may tend to acquire a college total return than a portfolio of 12 months’ of the accustomed gas futures contract. Conversely, if the accustomed gas futures market was in contango, the portfolio absolute alone 12 months’ of accustomed gas futures affairs may tend to beat the portfolio holding alone the a ages accustomed gas futures contract.  

 

Historically, the accustomed gas futures markets have accomplished periods of contango and backwardation. Because accustomed gas appeal is seasonal, it is accessible for the bulk of Natural Gas Futures Affairs for commitment aural one or two months to rapidly move from backwardation into contango and aback again within the almost abbreviate aeon of time of beneath than one year. However, at the end of November 2014, all-around accustomed gas inventories grew rapidly afterwards two years of balmy winters and the bazaar was primarily in contango through 2017. This year saw a abrupt period of backwardation due to acute winter acclimate in January. The bazaar additionally alternate to backwardation at the end of the added quarter of 2018 as accustomed gas inventories grew slower than in years past.

 

Periods of contango or backwardation do not materially appulse UNG’s advance algid of accepting the circadian allotment changes in its per allotment NAV clue the daily percentage changes in the bulk of the Benchmark Futures Adjustment aback the appulse of backwardation and contango tend to equally impact the circadian allotment changes in bulk of both UNG’s shares and the Criterion Futures Contract. It is absurd to predict with any bulk of authoritativeness whether backwardation or contango will action in the future. It is acceptable that both conditions will action during altered periods and, because of the melancholia attributes of accustomed gas demand, both may action aural a distinct year’s time.

 

  

Natural Gas Market. During the nine months concluded September 30, 2018, accustomed gas prices in the United States were awful volatile, skyrocketing and afresh falling during January and aboriginal February afore allowance into tighter, advancement angled ambit for the blow of the aboriginal bisected of 2018. Prices in the third division were inclement yet again, announcement a “rising ‘W’” arrangement afore catastrophe the division at the accomplished akin aback January, at $3.008, 1.57% lower than the alpha of the year. Accumulator levels were agilely beneath prior year and five-year boilerplate levels for the absolute quarter, catastrophe 18% beneath both of those levels appropriately at division end. As of September 30, 2018, the bulk of accustomed gas in accumulator stood at 2,866 billion cubic feet. While both calm appeal and U.S. exports of accustomed gas acquire increased, the able-bodied adeptness of the U.S. activity industry to accommodated appeal has kept somewhat of a ceiling on prices. However, the U.S. has beneath accustomed gas in accumulator branch into abatement and winter than at atomic the accomplished half-decade. Should an awfully algid winter action and/or exports increase, afresh accustomed gas could assuredly become scarcer than it has been in a long time.

  

Natural Gas Bulk Movements in Comparison to Added Activity Bolt and Advance Categories. USCF believes that investors frequently admeasurement the bulk to which prices or absolute allotment of one advance or asset chic move up or bottomward in bulk in concert with accession advance or asset class. Statistically, such a admeasurement is usually done by barometer the alternation of the bulk movements of the two altered investments or asset classes over some aeon of time. The alternation is scaled amid 1 and -1, area 1 indicates that the two investment options move up or bottomward in bulk or bulk together, accustomed as “positive correlation,” and -1 indicates that they move in absolutely adverse directions, accustomed as “negative correlation.” A alternation of 0 would beggarly that the movements of the two are neither absolutely nor abnormally correlated, accustomed as “non-correlation.” That is, the advance options sometimes move up and bottomward calm and added times move in adverse directions.

 

For the ten-year time aeon amid September 30, 2008 and September 30, 2018, the table beneath compares the anniversary movements of accustomed gas prices adjoin the anniversary movements of the prices of several added activity commodities, such as awkward oil, diesel-heating oil, and unleaded gasoline, as able-bodied as several major non-commodity advance asset classes, such as ample cap U.S. equities, U.S. government bonds and all-around equities. It can be apparent that over this accurate time period, the movement of accustomed gas on a anniversary base was neither acerb activated nor inversely activated with the movements of ample cap U.S. equities, U.S. Government bonds, all-around equities, awkward oil, diesel-heating oil, or unleaded gasoline.

 

*PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

 

 

Source: Bloomberg, NYMEX

 

 

The table beneath covers a added recent, but much shorter, ambit of dates than the aloft table. Over the one year aeon concluded September 30, 2018, the movement of accustomed gas was neither acerb activated nor inversely activated with ample cap U.S. equities, U.S. government bonds, all-around equities, diesel-heating oil or unleaded gasoline. Movement of accustomed gas was somewhat abnormally activated with awkward oil.

 

*PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

 

 

Source: Bloomberg, NYMEX

 

Investors are cautioned that the historical price relationships amid accustomed gas and assorted added activity commodities, as able-bodied as added advance asset classes, as measured by alternation may not be reliable predictors of approaching bulk movements and alternation results. The after-effects pictured aloft would have been altered if a altered ambit of dates had been selected. USCF believes that accustomed gas has historically not demonstrated a able alternation with equities or bonds over continued periods of time. However, USCF additionally believes that in the approaching it is possible that accustomed gas could acquire abiding alternation after-effects that announce prices of accustomed gas added carefully clue the movements of equities or bonds. In addition, USCF believes that, aback abstinent over time periods beneath than ten years, there will always be some periods area the alternation of accustomed gas to equities and bonds will be either added acerb absolutely activated or more acerb abnormally activated than the continued appellation absolute after-effects suggest.

 

The correlations amid accustomed gas, crude oil, diesel-heating oil and gasoline are accordant because USCF endeavors to advance UNG’s assets in Accustomed Gas Futures Contracts and Added Accustomed Gas-Related Investments so that circadian changes in allotment acceding in UNG’s per allotment NAV associate as closely as accessible with circadian changes in allotment acceding in the bulk of the Criterion Futures Contract. If assertive added fuel-based commodity futures affairs do not carefully associate with the accustomed gas futures contract, afresh their use could advance to greater tracking error. As acclaimed above, USCF additionally believes that the changes in allotment acceding in the bulk of the Criterion Futures Contract will carefully associate with changes in allotment acceding in the atom bulk of accustomed gas.

 

 

Critical Accounting Policies

 

Preparation of the abridged banking statements and accompanying disclosures in acquiescence with accounting attack about accustomed in the United States of America requires the application of adapted accounting rules and guidance, as able-bodied as the use of estimates. UNG’s appliance of these policies involves judgments and absolute after-effects may alter from the estimates used.

 

USCF has evaluated the attributes and types of estimates that it makes in advancing UNG’s condensed banking statements and accompanying disclosures and has bent that the appraisal of its investments, which are not traded on a United States or internationally accustomed futures barter (such as advanced affairs and OTC swaps) involves a analytical accounting policy. The ethics which are acclimated by UNG for its Natural Gas Futures Affairs are provided by its article agent who uses bazaar prices aback available, while OTC swaps are admired based on the present bulk of estimated approaching banknote flows that would be accustomed from or paid to a third affair in acclimation of these derivative affairs above-mentioned to their commitment date and admired on a circadian basis. In addition, UNG estimates absorption and dividend income on a circadian base appliance prevailing ante becoming on its banknote and banknote equivalents. These estimates are adapted to the actual amount accustomed on a anniversary base and the difference, if any, is not advised material.

 

Liquidity and Basic Resources

 

UNG has not made, and does not anticipate making, use of borrowings or added curve of acclaim to accommodated its obligations. UNG has met, and it is advancing that UNG will abide to meet, its clamminess needs in the accustomed advance of business from the accretion of the auction of its investments, or from the Treasuries, banknote and/or banknote equivalents that it intends to ascendancy at all times. UNG’s clamminess needs include: redeeming shares, accouterment allowance deposits for its existing Natural Gas Futures Affairs or the acquirement of additional Natural Gas Futures Affairs and announcement accessory for its OTC swaps, if applicable, and acquittal of its expenses, abbreviated beneath under “Contractual Obligations.”

 

UNG currently generates banknote primarily from: (i) the auction of baskets consisting of 100,000 shares (“Creation Baskets”) and (ii) assets becoming on Treasuries, cash and/or banknote equivalents. UNG has allocated essentially all of its net assets to trading in Natural Gas Interests. UNG invests in Natural Gas Interests to the fullest admeasurement accessible afterwards actuality leveraged or clumsy to amuse its accustomed or potential allowance or accessory obligations with annual to its investments in Natural Gas Futures Affairs and Added Natural Gas-Related Investments. A cogent allocation of UNG’s NAV is captivated in banknote and banknote equivalents that are acclimated as allowance and as accessory for its trading in Natural Gas Interests. The antithesis of the assets is captivated in UNG’s anniversary at its custodian coffer and in investments in Treasuries at the FCM. Assets accustomed from UNG’s investments in money bazaar funds and Treasuries is paid to UNG. During the nine months concluded September 30, 2018, UNG’s costs did not beat the income UNG earned and the banknote becoming from the auction of Conception Baskets and the accretion of Accretion Baskets. During the nine months ended September 30, 2018, UNG did not charge to use added assets to pay expenses. To the admeasurement costs beat income, UNG’s NAV will be abnormally impacted.

 

UNG’s investments in Natural Gas Interests may be accountable to periods of illiquidity because of bazaar conditions, authoritative considerations and added reasons. For example, best article exchanges absolute the fluctuations in futures affairs prices during a distinct day by regulations referred to as “daily limits.” During a distinct day, no trades may be accomplished at prices aloft the circadian limit. Already the price of a futures adjustment has added or decreased by an bulk according to the circadian limit, positions in the affairs can neither be taken nor asleep unless the traders are accommodating to aftereffect trades at or aural the authentic circadian limit. In addition, when UNG is invested in OTC swaps, those OTC swaps acquire actual bound clamminess aback they are adjourned agreements that are not transferable by UNG except with the accord of its counterparty, and alike if accord were granted, there may not be an accessible transferee. If UNG invests in OTC swaps in the future, such bazaar altitude or acknowledged banned could prevent UNG from promptly liquidating its positions in Accustomed Gas Futures Contracts. During the nine months concluded September 30, 2018, UNG did not acquirement or liquidate any of its positions while circadian banned were in effect; however, UNG cannot adumbrate whether such an accident may action in the future.

 

Since the antecedent alms of shares, UNG has been amenable for costs apropos to: (i) administration fees, (ii) allowance fees and commissions, (iii) licensing fees for the use of bookish property, (iv) advancing allotment costs in affiliation with offers and sales of its shares consecutive to the antecedent offering, (v) added expenses, including tax advertisement costs, (vi) fees and costs of the absolute admiral of USCF and (vii) added amazing costs not in the accustomed advance of business, while USCF has been amenable for expenses relating to the fees of UNG’s Business Agent, Administrator and Babysitter and allotment costs apropos to the antecedent offering of shares. If USCF and UNG are bootless in adopting acceptable funds to awning these corresponding costs or in analysis any other source of funding, UNG will aish and investors may lose all or allotment of their investment.

 

 

Market Risk

 

Trading in Natural Gas Futures Contracts and Added Accustomed Gas-Related Investments, such as forwards, involves UNG entering into acknowledged commitments to purchase or sell natural gas at a authentic date in the future. The accumulated bazaar bulk of the affairs will decidedly exceed UNG’s future banknote requirements since UNG intends to aing out its accessible positions above-mentioned to settlement. As a result, UNG is generally only accountable to the accident of accident arising from the change in bulk of the contracts. UNG considers the “fair value” of its acquired instruments to be the abeyant accretion or accident on the contracts. The bazaar accident associated with UNG’s commitments to purchase natural gas is bound to the accumulated bazaar bulk of the affairs held. However, should UNG admission into a contractual commitment to advertise accustomed gas, it would be adapted to accomplish commitment of the accustomed gas at the adjustment price, repurchase the contract at prevailing prices or achieve in cash. Aback there are no banned on the approaching bulk of accustomed gas, the bazaar risk to UNG could be unlimited.

 

UNG’s exposure to bazaar accident depends on a cardinal of factors, including the markets for accustomed gas, the animation of absorption ante and adopted barter rates, the liquidity of the Natural Gas Futures Affairs and Added Accustomed Gas-Related Investments markets and the relationships among the affairs captivated by UNG. Drastic bazaar occurrences could ultimately advance to the accident of all or essentially all of an investor’s capital.

 

Credit Risk

 

When UNG enters into Natural Gas Futures Affairs and Added Accustomed Gas-Related Investments, it is apparent to the acclaim accident that the counterparty will not be able to accommodated its obligations. The counterparty for the Natural Gas Futures Affairs traded on the Futures Exchanges and on best added futures exchanges is the clearinghouse associated with the accurate exchange. In general, in addition to allowance adapted to be acquaint by the clearinghouse in affiliation with austere trades, clearinghouses are backed by their members who may be adapted to allotment in the banking accountability consistent from the abortion of one of their associates and, therefore, this added associate abutment should decidedly abate acclaim risk. UNG is not currently a associate of any clearinghouse. Some adopted exchanges are not backed by their clearinghouse associates but may be backed by a bunch of banks or added financial institutions. There can be no affirmation that any counterparty, clearinghouse, or their associates or their banking backers will satisfy their obligations to UNG in such circumstances.

 

USCF attempts to administer the acclaim accident of UNG by afterward assorted trading limitations and policies. In particular, UNG about posts allowance and/or holds aqueous assets that are about according to the bazaar bulk of its obligations to counterparties beneath the Natural Gas Futures Contracts and Added Accustomed Gas-Related Investments it holds. USCF has implemented procedures that include, but are not bound to, executing and allowance trades alone with creditworthy parties and/or acute the announcement of accessory or allowance by such parties for the anniversary of UNG to absolute its acclaim exposure. An FCM, aback acting on anniversary of UNG in accepting orders to purchase or sell Natural Gas Futures Affairs on United States exchanges, is adapted by CFTC regulations to alone anniversary for and choose as acceptance to UNG, all assets of UNG apropos to domestic Natural Gas Futures Affairs trading. These FCMs are not accustomed to commingle UNG’s assets with their added assets. In addition, the CFTC requires futures commission merchants to ascendancy in a defended account UNG’s assets accompanying to foreign Natural Gas Futures Affairs trading and, in some cases, to austere swaps accomplished through the FCM. Similarly, beneath its accustomed OTC agreements, UNG requires that accessory it posts or receives be acquaint with its custodian, and beneath agreements amid the custodian, UNG and its counterparties, such collateral is segregated. 

 

In the future, UNG may acquirement OTC swaps, see “Item 3. Quantitative and Qualitative Disclosures About Bazaar Risk”  in this quarterly report on Form 10-Q for a altercation of OTC swaps.

 

As of September 30, 2018, UNG captivated cash deposits and investments in Treasuries and money bazaar funds in the bulk of $301,578,855 with the babysitter and FCM. Some or all of these amounts captivated by a babysitter or an FCM, as applicable, may be accountable to accident should UNG’s babysitter or FCM, as applicable, cease operations.

 

  

Off Antithesis Area Financing

 

As of September 30, 2018, UNG had no loan guarantee, acclaim abutment or added asymmetric area arrange of any affectionate added than agreements entered into in the normal course of business, which may accommodate apology accoutrement apropos to assertive risks that annual providers undertake in performing casework which are in the best interests of UNG. While UNG’s acknowledgment beneath these apology accoutrement cannot be estimated, they are not accustomed to acquire a absolute appulse on UNG’s banking position.

 

European Absolute Debt

 

UNG had no direct acknowledgment to European sovereign debt as of September 30, 2018 and has no direct acknowledgment to European absolute debt as of the filing of this quarterly address on Form 10-Q.

 

Redemption Bassinet Obligation

 

In acclimation to accommodated its advance algid and pay its acknowledged obligations declared below, UNG requires clamminess to redeem shares, which redemptions charge be in blocks of 100,000 shares alleged “Redemption Baskets.” UNG has to date annoyed this obligation by advantageous from the cash or banknote equivalents it holds or through the auction of its Treasuries in an bulk commensurable to the cardinal of shares being redeemed.

 

Contractual Obligations

 

UNG’s primary acknowledged obligations are with USCF. In acknowledgment for its services, USCF is advantaged to a administration fee affected circadian and paid anniversary as a anchored percentage of UNG’s NAV, currently 0.60% for a NAV of $1 billion or less, and thereafter of 0.50% for a NAV aloft $1 billion.

 

USCF agreed to pay the start-up costs associated with the accumulation of UNG, primarily its legal, accounting and added costs in affiliation with USCF’s allotment with the CFTC as a CPO and the allotment and advertisement of UNG and its shares with the SEC, FINRA and NYSE Arca (formerly, AMEX), respectively. However, aback UNG’s antecedent alms of shares, alms costs incurred in affiliation with registering and advertisement additional shares of UNG acquire been anon borne on an advancing base by UNG, and not by USCF.

 

USCF pays the fees of the Business Abettor and the fees of BBH&Co., as able-bodied as BBH&Co.’s fees for assuming authoritative services, including those in connection with the alertness of UNG’s abridged banking statements and its SEC, NFA and CFTC reports. USCF and UNG acquire additionally entered into a licensing acceding with the NYMEX pursuant to which UNG and the Accompanying Accessible Funds, added than BNO, USCI, CPER, USAG, USOU and USOD, pay a licensing fee to the NYMEX. UNG additionally pays the fees and costs associated with its tax accounting and reporting requirements.

 

In accession to USCF’s administration fee, UNG pays its allowance fees (including fees to an FCM), OTC banker spreads, any licensing fees for the use of bookish property, and, consecutive to the antecedent offering, allotment and added fees paid to the SEC, FINRA, or added authoritative agencies in connection with the activity and auction of shares, as able-bodied as legal, printing, accounting and added costs associated therewith, and extraordinary expenses. The closing are costs not incurred in the accustomed advance of UNG’s business, including costs apropos to the indemnification of any actuality adjoin liabilities and obligations to the admeasurement acceptable by law and beneath the LP Agreement, the bringing or arresting of accomplishments in law or in disinterestedness or contrarily administering activity and incurring acknowledged costs and the settlement of claims and litigation. Bureau payments to an FCM are on a contract-by-contract, or annular turn, basis. UNG additionally pays a portion of the fees and costs of the absolute admiral of USCF. See Note 3 to the Notes to Abridged Banking Statements (Unaudited) in Item 1 of this anniversary address on Form 10-Q.

 

The parties cannot ahead the bulk of payments that will be adapted beneath these arrange for approaching periods, as UNG’s per allotment NAVs and trading levels to meet its advance algid will not be accustomed until a approaching date. These agreements are able for a specific appellation agreed upon by the parties with an advantage to renew, or, in some cases, are in aftereffect for the continuance of UNG’s existence. Either party may aish these agreements beforehand for assertive affidavit declared in the agreements.

 

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As of September 30, 2018, UNG’s portfolio consisted of 8,654 Accustomed Gas Futures NG Affairs traded on the NYMEX and 6,000 Accustomed Gas Futures LD1 H Affairs traded on the ICE Futures. For a account of UNG’s accustomed holdings, amuse see UNG’s website at www.uscfinvestments.com.  

  

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