Company Quick10K Filing
Quick10K
Teucrium Commodity Trust
10-Q 2019-06-30 Quarter: 2019-06-30
10-Q 2019-03-31 Quarter: 2019-03-31
S-1 2019-03-29 Public Filing
S-1 2019-03-29 Public Filing
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-11-03 Quarter: 2014-11-03
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2018-12-19 Regulation FD
8-K 2018-10-10 Officers
8-K 2018-09-13 Officers
8-K 2018-09-06 Officers
8-K 2018-02-01 Other Events
LFIN Longfin 2,124
FZMD Fuse Medical 75
RSCF Reflect Scientific 4
FTFC First Trinity Financial 0
AEI26 AEI Income & Growth Fund 26 0
MDXG Mimedx Group 0
NRBT Novus Robotics 0
DCAC Danielsorate Advisory Company 0
IMN Glassbridge Enterprises 0
ABFF Ceres Abingdon 0
TCT 2019-06-30
Part I. Financial Information
Note 1 – Organization and Operation
Note 2 – Principal Contracts and Agreements
Note 3 – Summary of Significant Accounting Policies
Note 4 – Fair Value Measurements
Note 5 – Derivative Instruments and Hedging Activities
Note 6 - Organizational and Offering Costs
Note 7 – Detail of The Net Assets and Shares Outstanding of The Funds That Are A Series of The Trust
Note 8 – Subsequent Events
Note 1 – Organization and Operation
Note 2 – Principal Contracts and Agreements
Note 3 – Summary of Significant Accounting Policies
Note 4 – Fair Value Measurements
Note 5 – Derivative Instruments and Hedging Activities
Note 6 – Financial Highlights
Note 7 – Organizational and Offering Costs
Note 8 – Subsequent Events
Note 1 – Organization and Operation
Note 2 – Principal Contracts and Agreements
Note 3 – Summary of Significant Accounting Policies
Note 4 – Fair Value Measurements
Note 5 – Derivative Instruments and Hedging Activities
Note 6 – Financial Highlights
Note 7 – Organizational and Offering Costs
Note 8 – Subsequent Events
Note 1 – Organization and Operation
Note 3 – Summary of Significant Accounting Policies
Note 4 – Fair Value Measurements
Note 5 – Derivative Instruments and Hedging Activities
Note 6 – Financial Highlights
Note 7 – Organizational and Offering Costs
Note 8 – Subsequent Events
Note 1 – Organization and Operation
Note 2 – Principal Contracts and Agreements
Note 3 – Summary of Significant Accounting Policies
Note 4 – Fair Value Measurements
Note 5 – Derivative Instruments and Hedging Activities
Note 6 – Financial Highlights
Note 7 – Organizational and Offering Costs
Note 8 – Subsequent Events
Note 1 – Organization and Operation
Note 2 – Principal Contracts and Agreements
Note 3 – Summary of Significant Accounting Policies
Note 4 – Fair Value Measurements
Note 5 – Financial Highlights
Note 6 – Organizational and Offering Costs
Note 7 – Subsequent Events
Item 2. Management’S Discussion and Analysis of Financial Condition and Results of Operations.
Part II. Other Information
EX-31.1 ex31-1.htm
EX-31.2 ex31-2.htm
EX-32.1 ex32-1.htm
EX-32.2 ex32-2.htm

Teucrium Commodity Trust Earnings 2019-06-30

TCT 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 tctr-10q_06302019.htm QUARTERLY REPORT  


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
 
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2019.
 
 
 
OR
 
 
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from                   to                   .
 
 
 
Commission File Number: 001-34765
 
Teucrium Commodity Trust
(Exact name of registrant as specified in its charter)
 
 
Delaware
27-0724963
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
 
 
 
Three Main Street, Suite 215
Burlington, VT 05401
(Address of principal executive offices) (Zip code)
(802) 540-0019
(Registrant’s telephone number, including area code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒   Yes ☐  No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
☒   Yes ☐  No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer ☐
Accelerated filer ☒
Non-accelerated filer ☐
Smaller reporting company 
(Do not check if a smaller reporting company)
Emerging growth company ☐
 
If an emerging growth company, indicate by a check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐   Yes ☒   No
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practicable date.
 
 
 
Total Number of
Outstanding Shares as of
August 7, 2019
 
Teucrium Corn Fund
 6,000,004
Teucrium Sugar Fund
 1,350,004
 
Teucrium Soybean Fund
 2,050,004
 
Teucrium Wheat Fund
 9,550,004
Teucrium Agricultural Fund
 75,002

 
1
 
 
TEUCRIUM COMMODITY TRUST
Table of Contents
 
 
 
2
 
 
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Index to Financial Statements
Documents
 
Page
TEUCRIUM COMMODITY TRUST
 
 
 
4
 
5
 
7
 
8
 
9
 
10
TEUCRIUM CORN FUND
 
 
 
23
 
24
 
26
 
26
 
27
 
28
TEUCRIUM SOYBEAN FUND
 
 
 
40
 
41
 
43
 
44
 
45
 
46
TEUCRIUM SUGAR FUND
 
 
 
59
 
60
 
62
 
63
 
64
 
65
TEUCRIUM WHEAT FUND
 
 
 
79
 
80
 
82
 
83
 
84
 
85
TEUCRIUM AGRICULTURAL FUND
 
 
 
98
 
99
 
100
 
101
 
102
 
103

 
 
3
 
 
 
TEUCRIUM COMMODITY TRUST
 COMBINED STATEMENTS OF ASSETS AND LIABILITIES
 
 
June 30, 2019
 
 
December 31, 2018
 
 
 
(Unaudited)
 
 
 
 
Assets
 
 
 
 
 
 
Cash and cash equivalents
 $200,343,594 
 $159,250,322 
Interest receivable
  1,151 
  113 
Other assets
  230,035 
  24,455 
Equity in trading accounts:
    
    
   Commodity futures contracts
  9,226,814 
  569,742 
   Due from broker
  129,680 
  10,972,275 
      Total equity in trading accounts
  9,356,494 
  11,542,017 
Total assets
  209,931,274 
 170,816,907 
 
    
    
Liabilities
    
    
Management fee payable to Sponsor
  157,586 
  135,263 
Payable for purchases of commercial paper
  - 
  14,951,548 
Other liabilities
  99,818 
  109,342 
Equity in trading accounts:
    
    
   Commodity futures contracts
  1,425,971 
  5,369,594 
   Due to broker
  10,217,018 
  - 
      Total equity in trading accounts
  11,642,989 
  5,369,594 
Total liabilities
  11,900,393 
  20,565,747 
 
    
    
Net Assets
 $198,030,881 
 $150,251,160 
 
The accompanying notes are an integral part of these financial statements.
 
4
 
 
 
TEUCRIUM COMMODITY TRUST
 COMBINED SCHEDULE OF INVESTMENTS
June 30, 2019
(Unaudited)
 
 
 
 
 
 
Percentage of
 
 
 
 
Description: Assets
 
Fair Value
 
 
Net Assets
 
 
Shares
 
 
 
 
 
 
 
 
 
 
 
Cash equivalents
 
 
 
 
 
 
 
 
 
Money market funds
 
 
 
 
 
 
 
 
 
    Fidelity Institutional Money Market Funds - Government Portfolio (cost $3,163)
 $3,163 
  0.00%
  3,163 
 
    
    
    
 
    
    
 
 Principal Amount
 
U.S. Treasury Obligations
    
    
    
U.S. Treasury Bills 2.02% (cost: $8,141,122 due 7/30/2019) (a)(b)
 $8,142,925 
  4.11%
  8,156,000 
 
    
    
    
Commercial Paper
    
    
    
Boston Scientific Corporation 2.77% (cost: $12,418,180 due 8/09/2019)
  12,462,895 
  6.29 
  12,500,000 
Boston Scientific Corporation 2.75% (cost: $4,949,400 due 8/12/2019)
  4,984,134 
  2.52 
  5,000,000 
Broadcom Inc. 2.67% (cost: $12,475,156 due 7/16/2019)
  12,486,198 
  6.31 
  12,500,000 
Enable Midstream Partners, LP 2.93% (cost: $4,977,042 due 7/24/2019)
  4,990,736 
  2.52 
  5,000,000 
Enable Midstream Partners, LP 2.91% (cost: $4,977,600 due 8/05/2019)
  4,986,000 
  2.52 
  5,000,000 
Enable Midstream Partners, LP 2.83% (cost: $9,930,000 due 9/18/2019)
  9,938,556 
  5.02 
  10,000,000 
Energy Transfer Operating, L.P. 2.72% (cost: $2,497,938 due 7/05/2019)
  2,499,250 
  1.26 
  2,500,000 
Energy Transfer Operating, L.P. 2.72% (cost: $14,986,500 due 7/10/2019)
  14,989,875 
  7.57 
  15,000,000 
General Motors Financial Company, Inc. 2.67% (cost: $4,991,534 due 7/10/2019)
  4,996,687 
  2.52 
  5,000,000 
General Motors Financial Company, Inc. 2.68% (cost: $4,981,898 due 7/25/2019)
  4,991,134 
  2.52 
  5,000,000 
General Motors Financial Company, Inc. 2.68% (cost: $9,940,375 due 9/03/2019)
  9,952,888 
  5.03 
  10,000,000 
Royal Caribbean Cruises Ltd. 2.69% (cost: $7,484,981 due 7/01/2019)
  7,500,000 
  3.79 
  7,500,000 
Total Commercial Paper (cost: $94,630,604)
 $94,778,353 
  47.87%
    
Total cash equivalents
 $102,924,441 
  51.98%
    
 
    
    
 
Notional Amount
 
 
    
    
 
(Long Exposure)
 
Commodity futures contracts
    
    
    
United States corn futures contracts
    
    
    
CBOT corn futures SEP19 (1,561 contracts)
 $2,243,475 
  1.13%
 $33,151,738 
CBOT corn futures DEC19 (1,318 contracts)
  629,613 
  0.32 
  28,435,850 
CBOT corn futures DEC20 (1,675 contracts)
  353,525 
  0.18 
  34,819,062 
 
    
    
    
United States soybean futures contracts
    
    
    
CBOT soybean futures NOV19 (250 contracts)
  496,100 
  0.25 
  11,537,500 
CBOT soybean futures JAN20 (212 contacts)
  887,625 
  0.45 
  9,905,700 
CBOT soybean futures NOV20 (244 contracts)
  47,500 
  0.02 
  11,608,300 
 
    
    
    
United States sugar futures contracts
    
    
    
ICE sugar futures MAR20 (228 contracts)
  77,426 
  0.04 
  3,460,128 
 
    
    
    
United States wheat futures contracts
    
    
    
CBOT wheat futures SEP19 (776 contracts)
  2,599,787 
  1.31 
  20,457,300 
CBOT wheat futures DEC20 (733 contracts)
  1,891,763 
  0.96 
  20,652,275 
Total commodity futures contracts
 $9,226,814 
  4.66%
 $174,027,853 
 
    
    
    
 
    
 
Percentage of
 
 
Notional Amount
 
Description: Liabilities
 
Fair Value
 
 
 Net Assets
 
 
(Long Exposure)
 
 
    
    
    
Commodity futures contracts
    
    
    
United States sugar futures contracts
    
    
    
ICE sugar futures MAY20 (195 contracts)
 $12,869 
  0.01%
 $2,976,792 
ICE sugar futures MAR21 (219 contracts)
  87,327 
  0.04 
  3,492,787 
 
    
    
    
United States wheat futures contracts
    
    
    
CBOT wheat futures DEC19 (653 contracts)
  1,325,775 
  0.67 
  17,582,025 
Total commodity futures contracts
 $1,425,971 
  0.72%
 $24,051,604 
 
    
    
    
Exchange-traded funds*
    
    
 
Shares
 
Teucrium Corn Fund
 $371,682 
  0.19%
  22,658 
Teucrium Soybean Fund
  380,232 
  0.19 
  24,181 
Teucrium Sugar Fund
  376,978 
  0.19 
  53,124 
Teucrium Wheat Fund
  380,036 
  0.19 
  66,037 
Total exchange-traded funds (cost $1,954,184)
 $1,508,928 
  0.76%
    
 
*The Trust eliminates the shares owned by the Teucrium Agricultural Fund from its combined statements of assets and liabilities due to the fact that these represent holdings of the Underlying Funds owned by the Teucrium Agricultural Fund, which are included as shares outstanding of the Underlying Funds.
(a) Discount yield at the time of purchase
(b) All of the security is held by the broker as collateral for open futures contracts.
 
The accompanying notes are an integral part of these financial statements.
 
 
5
 
 
TEUCRIUM COMMODITY TRUST 
 
COMBINED SCHEDULE OF INVESTMENTS
December 31, 2018
 
Description: Assets
 
Fair Value
 
 
Percentage of
Net Assets
 
 
Shares
 
 
 
 
 
 
 
 
 
 
 
Cash equivalents
 
 
 
 
 
 
 
 
 
Money market funds
 
 
 
 
 
 
 
 
 
Fidelity Institutional Money Market Funds - Government Portfolio (cost $3,262)
 $3,262 
  0.00%
  3,262 
 
    
    
    
 
    
    
 
 Principal Amount
 
Commercial Paper
    
    
    
CNH Industrial Capital LLC 2.63% (cost: $9,939,333 due 1/10/2019)
 $9,993,500 
  6.65%
  10,000,000 
Enable Midstream Partners, LP 2.83% (cost: $2,484,445 due 1/11/2019)
  2,498,056 
  1.66 
  2,500,000 
Enable Midstream Partners, LP 2.98% (cost: $2,488,528 due 1/16/2019)
  2,496,927 
  1.66 
  2,500,000 
Enable Midstream Partners, LP 2.75% (cost: $4,982,938 due 1/10/2019)
  4,996,588 
  3.33 
  5,000,000 
Enable Midstream Partners, LP 3.04% (cost: $9,924,850 due 2/28/2019)
  9,951,570 
  6.62 
  10,000,000 
Enbridge Energy Partners, L.P. 2.96% (cost: $2,490,844 due 1/10/2019)
  2,498,169 
  1.66 
  2,500,000 
Enbridge Energy Partners, L.P. 2.98% (cost: $4,983,612 due 1/15/2019)
  4,994,264 
  3.32 
  5,000,000 
Energy Transfer Operating, L.P. 2.80% (cost: $4,986,486 due 1/4/2019)
  4,998,842 
  3.33 
  5,000,000 
Energy Transfer Operating, L.P. 3.10% (cost: $9,975,269 due 1/31/2019)
  9,975,269 
  6.64 
  10,000,000 
Ford Motor Credit Company LLC 2.63% (cost: $4,967,500 due 1/3/2019)
  4,999,278 
  3.33 
  5,000,000 
Ford Motor Credit Company LLC 2.68% (cost: $4,967,612 due 1/18/2019)
  4,993,744 
  3.32 
  5,000,000 
Ford Motor Credit Company LLC 2.81% (cost: $2,483,783 due 2/6/2019)
  2,493,050 
  1.66 
  2,500,000 
General Motors Financial Company, Inc. 2.83% (cost: $4,976,278 due 3/5/2019)
  4,976,278 
  3.31 
  5,000,000 
Humana Inc. 2.91% (cost: $4,969,200 due 2/11/2019)
  4,983,600 
  3.32 
  5,000,000 
Royal Caribbean Cruises Ltd. 2.73% (cost: $7,483,063 due 1/2/2019)
  7,499,427 
  4.99 
  7,500,000 
Royal Caribbean Cruises Ltd. 2.77% (cost: $4,988,924 due 1/2/2019)
  4,999,618 
  3.33 
  5,000,000 
Total Commercial Paper (total cost: $87,092,665)
 $87,348,180 
  58.13%
    
Total Cash Equivalents
 $87,351,442 
  58.13%
    
 
    
    
    
 
    
    
 
Notional Amount
 
 
    
    
 
(Long Exposure)
 
Commodity futures contracts
    
    
    
United States corn futures contracts
    
    
    
CBOT corn futures MAY19 (1,030 contracts)
 $107,363 
  0.07%
 $19,724,500 
 
    
    
    
United States soybean futures contracts
    
    
    
CBOT soybean futures MAR19 (218 contracts)
  228,400 
  0.15
  9,755,500 
 
    
    
    
United States sugar futures contracts
    
    
    
ICE sugar futures MAY19 (278 contracts)
  29,254 
  0.02 
  3,767,456 
ICE sugar futures JUL19 (235 contracts)
  204,725 
  0.14 
  3,221,568 
Total commodity futures contracts
 $569,742 
  0.38%
 $36,469,024 
 
    
    
    
 
    
 
Percentage of
 
 
Notional Amount
 
Description: Liabilities
 
Fair Value
 
 
 Net Assets
 
 
(Long Exposure)
 
 
    
    
    
Commodity futures contracts
    
    
    
United States corn futures contracts
    
    
    
CBOT corn futures JUL19 (866 contracts)
 $348,200 
  0.23%
 $16,919,475 
CBOT corn futures DEC19 (993 contracts)
  949,088 
  0.63 
  19,735,875 
 
    
    
    
United States soybean futures contracts
    
    
    
CBOT soybean futures MAY19 (185 contracts)
  35,688 
  0.02 
  8,396,688 
CBOT soybean futures NOV19 (209 contracts)
  3,562 
  0.00 
  9,773,363 
 
    
    
    
United States sugar futures contracts
    
    
    
ICE sugar futures MAR20 (257 contracts)
  47,656 
  0.03 
  3,785,096 
 
    
    
    
United States wheat futures contracts
    
    
    
CBOT wheat futures MAY19 (756 contracts)
  1,367,838 
  0.91 
  19,296,900 
CBOT wheat futures JUL19 (637 contracts)
  544,812 
  0.36 
  16,514,225 
CBOT wheat futures DEC19 (713 contracts)
  2,072,750 
  1.38 
  19,340,125 
Total commodity futures contracts
 $5,369,594 
  3.56%
 $113,761,747 
 
    
    
    
Exchange-traded funds*
    
    
 
Shares
 
Teucrium Corn Fund
 $383,506 
  0.26%
  23,808 
Teucrium Soybean Fund
  381,970 
  0.25 
  23,581 
Teucrium Sugar Fund
  374,067 
  0.25 
  52,924 
Teucrium Wheat Fund
  383,743 
  0.26 
  64,537 
Total exchange-traded funds (cost $2,021,172)
 $1,523,286 
  1.02%
    
 
*The Trust eliminates the shares owned by the Teucrium Agricultural Fund from its combined statements of assets and liabilities due to the fact that these represent holdings of the Underlying Funds owned by the Teucrium Agricultural Fund, which are included as shares outstanding of the Underlying Funds.
 
  The accompanying notes are an integral part of these financial statements.
 
 
6
 
 
TEUCRIUM COMMODITY TRUST
COMBINED STATEMENTS OF OPERATIONS
(Unaudited)
 
 
 
Three months ended
 
 
Three months ended
 
 
Six months ended
 
 
Six months ended
 
 
 
June 30, 2019
 
 
June 30, 2018
 
 
June 30, 2019
 
 
June 30, 2018
 
Income
 
 
 
 
 
 
 
 
 
 
 
 
Realized and unrealized gain (loss) on trading of commodity futures contracts:
  
 
  
 
  
 
  
 
    Realized (loss) gain on commodity futures contracts
 $(7,714,964)
 $4,467,596 
 $(12,321,045)
 $6,692,509 
    Net change in unrealized appreciation or (depreciation) on commodity futures contracts
  17,277,425 
  (12,318,563)
  12,600,695 
  (7,253,850)
Interest income
  1,101,771 
  879,030 
  2,087,816 
  1,519,669 
    Total income (loss)
  10,664,232 
  (6,971,937)
  2,367,466 
  958,328 
 
    
    
    
    
Expenses
    
    
    
    
Management fees
  412,685 
  433,254 
  779,348 
  815,838 
Professional fees
  333,153 
  426,230 
  635,234 
  701,997 
Distribution and marketing fees
  729,998 
  807,165 
  1,297,194 
  1,562,969 
Custodian fees and expenses
  89,371 
  99,544 
  173,420 
  184,022 
Business permits and licenses fees
  22,360 
  26,959 
  54,306 
  87,727 
General and administrative expenses
  81,706 
  89,688 
  145,425 
  157,885 
Brokerage commissions
  13,144 
  46,147 
  41,273 
  88,724 
Other expenses
  7,661 
  32,848 
  15,562 
  66,139 
   Total expenses
  1,690,078 
  1,961,835 
  3,141,762 
  3,665,301 
 
    
    
    
    
Expenses waived by the Sponsor
  (98,526)
  (379,836)
  (232,643)
  (642,134)
 
    
    
    
    
Total expenses, net
  1,591,552 
  1,581,999 
  2,909,119 
  3,023,167 
 
    
    
    
    
Net income (loss)
 $9,072,680 
 $(8,553,936)
 $(541,653)
 $(2,064,839)
 
The accompanying notes are an integral part of these financial statements.
 
 
7
 
 
TEUCRIUM COMMODITY TRUST
 COMBINED STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
 
 
Six months ended
 
 
Six months ended
 
 
 
June 30, 2019
 
 
June 30, 2018
 
Operations
 
 
 
 
 
 
Net loss
 $(541,653)
 $(2,064,839)
Capital transactions
    
    
      Issuance of Shares
  61,931,985 
  53,863,007 
      Redemption of Shares
  (13,611,950)
  (22,602,148)
      Net change in the cost of the Underlying Funds
  1,339 
  (574,895)
Total capital transactions
  48,321,374 
  30,685,964 
 
    
    
Net change in net assets
  47,779,721 
  28,621,125 
 
    
    
Net assets, beginning of period
  150,251,160 
  142,946,752 
 
    
    
Net assets, end of period
 $198,030,881 
 $171,567,877 
 
The accompanying notes are an integral part of these financial statements.
 
 
8
 
 
TEUCRIUM COMMODITY TRUST
 COMBINED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
Six months ended
 
 
Six months ended
 
 
 
June 30, 2019
 
 
June 30, 2018
 
Cash flows from operating activities:
 
 
 
 
 
 
Net loss
 $(541,653)
 $(2,064,839)
 
Adjustments to reconcile net loss to net cash used in operating activities:
 
    
Net change in unrealized appreciation or (depreciation) on commodity futures contracts
  (12,600,695)
  7,253,850 
Changes in operating assets and liabilities:
    
    
Due from broker
  10,842,595 
  (13,310,837)
Interest receivable
  (1,038)
  250 
Other assets
  (205,580)
  (135,575)
Due to broker
  10,217,018 
  - 
Management fee payable to Sponsor
  22,323 
  20,919 
Payable for purchases of commercial paper
  (14,951,548)
  - 
Other liabilities
  (9,524)
  71,287 
     Net cash used in operating activities
  (7,228,102)
  (8,164,945)
 
    
    
Cash flows from financing activities:
    
    
              Proceeds from sale of Shares
  61,931,985 
  53,863,007 
              Redemption of Shares
  (13,611,950)
  (22,602,148)
              Net change in cost of the Underlying Funds
  1,339 
  (574,895)
     Net cash provided by financing activities
  48,321,374 
  30,685,964 
 
    
    
Net change in cash and cash equivalents
  41,093,272 
  22,521,019 
Cash and cash equivalents cash beginning of period
  159,250,322 
  137,945,626 
Cash and cash equivalents end of period
 $200,343,594 
 $160,466,645 
 
The accompanying notes are an integral part of these financial statements.
 
 
9
 
 
NOTES TO COMBINED FINANCIAL STATEMENTS
June 30, 2019
(Unaudited)
 
Note 1 – Organization and Operation
 
Teucrium Commodity Trust (“Trust”), a Delaware statutory trust organized on September 11, 2009, is a series trust consisting of five series: Teucrium Corn Fund (“CORN”), Teucrium Sugar Fund (“CANE”), Teucrium Soybean Fund (“SOYB”), Teucrium Wheat Fund (“WEAT”), and Teucrium Agricultural Fund (“TAGS”). All these series of the Trust are collectively referred to as the “Funds” and singularly as the “Fund.” Each Fund is a commodity pool that is a series of the Trust. The Funds issue common units, called the “Shares,” representing fractional undivided beneficial interests in a Fund. Effective as of April 29, 2019, the Trust and the Funds operate pursuant to the Trust’s Fifth Amended and Restated Declaration of Trust and Trust Agreement (the “Trust Agreement”).
 
On June 5, 2010, the initial Form S-1 for CORN was declared effective by the U.S. Securities and Exchange Commission (“SEC”). On June 8, 2010, four Creation Baskets for CORN were issued representing 200,000 shares and $5,000,000. CORN began trading on the New York Stock Exchange (“NYSE”) Arca on June 9, 2010. As of June 30, 2019, CORN offered its shares pursuant to a registration statement that was declared effective on April 29, 2016.
 
On June 17, 2011, the initial Forms S-1 for CANE, SOYB, and WEAT were declared effective by the SEC. On September 16, 2011, two Creation Baskets were issued for each Fund, representing 100,000 shares and $2,500,000, for CANE, SOYB, and WEAT. On September 19, 2011, CANE, SOYB, and WEAT started trading on the NYSE Arca. The current registration statements for CANE and SOYB were declared effective by the SEC on April 30, 2018. The registration statements for SOYB and CANE registered an additional 5,000,000 shares each. The current registration statement for WEAT was declared effective on April 29, 2019. This registration statement for WEAT registered an additional 30,000,000 shares.
 
On February 10, 2012, the Form S-1 for TAGS was declared effective by the SEC. On March 27, 2012, six Creation Baskets for TAGS were issued representing 300,000 shares and $15,000,000. TAGS began trading on the NYSE Arca on March 28, 2012. The current registration statement for TAGS was declared effective by the SEC on April 30, 2018.
 
The Sponsor is a member of the National Futures Association (the "NFA") and became a commodity pool operator ("CPO") registered with the Commodity Futures Trading Commission (the "CFTC") effective November 10, 2009. The Sponsor registered as a Commodity Trading Advisor ("CTA") with the CFTC effective September 8, 2017.
 
The accompanying unaudited financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X promulgated by the SEC and, therefore, do not include all information and footnote disclosures required under accounting principles generally accepted in the United States of America (“GAAP”). The financial information included herein is unaudited; however, such financial information reflects all adjustments which are, in the opinion of management, necessary for the fair presentation of the Fund’s financial statements for the interim period. It is suggested that these interim financial statements be read in conjunction with the financial statements and related notes included in the Trust’s Annual Report on Form 10-K, as well as the most recent Form S-1 filing, as applicable. The operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results to be expected for the full year ending December 31, 2019.
 
Subject to the terms of the Trust Agreement, Teucrium Trading, LLC in its capacity as the Sponsor (“Sponsor”) may terminate a Fund at any time, regardless of whether the Fund has incurred losses, including, for instance, if it determines that the Fund’s aggregate net assets in relation to its operating expenses make the continued operation of the Fund unreasonable or imprudent. However, no level of losses will require the Sponsor to terminate a Fund.

Note 2 – Principal Contracts and Agreements
 
The Sponsor employs U.S. Bank N.A. as the Custodian for the Funds. The principal business address for U.S. Bank N.A is 1555 North Rivercenter Drive, Suite 302, Milwaukee, Wisconsin 53212. U.S. Bank N.A. is a Wisconsin state chartered bank subject to regulation by the Board of Governors of the Federal Reserve System and the Wisconsin State Banking Department. The principal address for U.S. Bancorp Fund Services, LLC doing business as U.S. Bank Global Fund Services ("Fund Services") is 615 E. Michigan Street, Milwaukee, WI 53202. In addition, effective on the Conversion Date, Fund Services, a wholly owned subsidiary of U.S. Bank, commenced serving as administrator for each Fund, performing certain administrative and accounting services and preparing certain SEC reports on behalf of the Funds, and also became the registrar and transfer agent for each Fund’s Shares. For such services, U.S. Bank and Fund Services will receive an asset based fee, subject to a minimum annual fee.
 
For custody services, the Funds will pay to U.S. Bank N.A. 0.0075% of average gross assets up to $1 billion, and .0050% of average gross assets over $1 billion, annually, plus certain per-transaction charges. For Transfer Agency, Fund Accounting and Fund Administration services, which are based on the total assets for all the Funds in the Trust, the Funds will pay to USBFS 0.06% of average gross assets on the first $250 million, 0.05% on the next $250 million, 0.04% on the next $500 million and 0.03% on the balance over $1 billion annually. A combined minimum annual fee of up to $64,500 for custody, transfer agency, accounting and administrative services is assessed per Fund. These services are recorded in custodian fees and expenses on the combined statements of operations. A summary of these expenses is included below.
 
 
10
 
 
The Sponsor employs Foreside Fund Services, LLC (“Foreside” or the “Distributor”) as the Distributor for the Funds. The Distribution Services Agreement among the Distributor and the Sponsor calls for the Distributor to work with the Custodian in connection with the receipt and processing of orders for Creation Baskets and Redemption Baskets and the review and approval of all Fund sales literature and advertising materials. The Distributor and the Sponsor have also entered into a Securities Activities and Service Agreement (the “SASA”) under which certain employees and officers of the Sponsor are licensed as registered representatives or registered principals of the Distributor, under Financial Industry Regulatory Authority (“FINRA”) rules. For its services as the Distributor, Foreside receives a fee of 0.01% of the Fund’s average daily net assets and an aggregate annual fee of $100,000 for all Teucrium Funds, along with certain expense reimbursements. For its services under the SASA, Foreside receives a fee of $5,000 per registered representative and $1,000 per registered location. These services are recorded in distribution and marketing fees on the combined statements of operations. A summary of these expenses is included below. Pursuant to a Consulting Services Agreement, Foreside Consulting Services, LLC, performs certain consulting support services for the Trust's Sponsor. Additionally, Foreside Distributors, LLC performs certain distribution consulting services pursuant to a Distribution Consulting Agreement with the Trust's Sponsor.
 
ED&F Man Capital Markets, Inc. (“ED&F Man”) serves as the Underlying Funds’ clearing broker to execute and clear the Underlying Funds’ futures and provide other brokerage-related services. ED&F Man is registered as a FCM with the U.S. CFTC and is a member of the NFA. ED&F Man is also registered as a broker/dealer with the U.S. Securities and Exchange Commission and is a member of the FINRA. ED&F Man is a clearing member of ICE Futures U.S., Inc., Chicago Board of Trade, Chicago Mercantile Exchange, New York Mercantile Exchange, and all other major United States commodity exchanges. For Corn, Soybean, Sugar and Wheat Futures Contracts ED&F Man is paid $9.00 per round turn. These expenses are recorded in brokerage commissions on the combined statements of operations. A summary of these expenses is included below.
 
The sole Trustee of the Trust is Wilmington Trust Company, a Delaware banking corporation. The Trustee will accept service of legal process on the Trust in the State of Delaware and will make certain filings under the Delaware Statutory Trust Act. For its services, the Trustee receives an annual fee of $3,300 from the Trust. These services are recorded in business permits and licenses fees on the combined statements of operations. A summary of these expenses is included below.
 
The Sponsor employs Exchange Traded Concepts, LLC ("ETC") as the Marketing Agent, providing certain marketing consulting services in connection with the content strategy and e-mail marketing for the Funds. For its services as the Marketing Agent, ETC receives $5,000 a month and 0.02% of the Fund's average daily net assets, when assets are above the combined amount of $160 million. These services are recorded in distribution and marketing fees on the combined statements of the operations. A summary of these expenses is included below:
 
 
 
Three months ended June 30, 2019
 
 
Three months ended June 30, 2018
 
 
Six months ended June 30, 2019
 
 
Six months ended June 30, 2018
 
Amount Recognized for Custody Services
 $89,371 
 $99,544 
 $173,420 
 $184,022
 
Amount of Custody Services Waived
 $5,951 
 $31,268 
 $19,567 
 $44,439
 
 
    
    
    
    
Amount Recognized for Distribution Services
 $35,502 
 $39,053 
 $73,407 
 $87,201
 
Amount of Distribution Services Waived
 $2,294 
 $6,930 
 $3,900 
 $21,591
 
 
    
    
    
    
Amount Recognized for Brokerage Commissions
 $13,144 
 $46,147 
 $41,272 
 $88,724
 
Amount of Brokerage Commissions Waived
 $- 
 $- 
 $- 
 $- 
 
    
    
    
    
Amount Recognized for Wilmington Trust
 $- 
 $- 
 $- 
 $- 
Amount of Wilmington Trust Waived
 $- 
 $- 
 $- 
 $- 
 
    
    
    
    
Amount Recognized for Marketing Agent
 $15,000
 
 $-
 
 $15,000
 
 $-
 
Amount of Marketing Agent Waived
 $491
 
 $-
 
 $491
 
 $-
 
 
 
11
 
 
Note 3 – Summary of Significant Accounting Policies
 
Basis of Presentation
 
The accompanying financial statements have been prepared on a combined basis in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) as detailed in the Financial Accounting Standards Board’s Accounting Standards Codification and include the accounts of the Trust, CORN, CANE, SOYB, WEAT and TAGS. Refer to the accompanying separate financial statements for each Fund for more detailed information. For the periods represented by the financial statements herein the operations of the Trust contain the results of CORN, SOYB, CANE, WEAT, and TAGS except for eliminations for TAGS as explained below for the months during which each Fund was in operation.
 
Given the investment objective of TAGS as described in Note 1 above, TAGS will buy, sell and hold, as part of its normal operations, shares of the four Underlying Funds. The Trust eliminates the shares of the other series of the Trust owned by the Teucrium Agricultural Fund from its combined statements of assets and liabilities. The Trust eliminates the net change in unrealized appreciation or depreciation on securities owned by the Teucrium Agricultural Fund from its combined statements of operations. The combined statements of changes in net assets and cash flows present a net presentation of the purchases and sales of the Underlying Funds of TAGS.
 
Revenue Recognition
 
Commodity futures contracts are recorded on the trade date. All such transactions are recorded on the identified cost basis and marked to market daily. Unrealized appreciation or depreciation on commodity futures contracts are reflected in the combined statements of operations as the difference between the original contract amount and the fair market value as of the last business day of the year or as of the last date of the financial statements. Changes in the appreciation or depreciation between periods are reflected in the combined statements of operations. Interest on cash equivalents with financial institutions are recognized on the accrual basis. The Funds earn interest on funds held at the custodian and other financial institutions at prevailing market rates for such investments.
 
Beginning in October 2017, the Sponsor began investing a portion of cash in commercial paper, which is deemed a cash equivalent based on the rating and duration of contracts as described in the notes to the combined financial statements and reflected in cash and cash equivalents on the combined statements of assets and liabilities and in cash and cash equivalents cash on the combined statements of cash flows. Accretion on these investments are recognized using the effective interest method in U.S. dollars and included in interest income on the combined statements of operations.
 
Beginning in February of 2019, the Sponsor began investing a portion of the cash held by the broker in short term Treasury Bills as collateral for open futures contracts. Accretion on these investments are recognized using the effective interest method in U.S. dollars and included in interest income on the combined statements of operations.
 
The Sponsor adopted ASC 606, Revenue from Contracts With Customers, for the year ended December 31, 2018. The adoption did not have a material impact on the financial statements of the Trust or the Funds.
 
Brokerage Commissions
 
Brokerage commissions on all open commodity futures contracts are accrued on the trade date and on a full-turn basis.
 
 Income Taxes
 
The Trust is organized and will be operated as a Delaware statutory trust. For federal income tax purposes, each Fund will be treated as a publicly traded partnership. A publicly traded partnership is generally treated as a corporation for federal income tax purposes unless 90% or more of the publicly traded partnership’s gross income for each taxable year of its existence consists of qualifying income as defined in section 7704(d) of the Internal Revenue Code of 1986, as amended. Qualifying income is defined as generally including, in pertinent part, interest (other than from a financial business), dividends, and gains from the sale or disposition of capital assets held for the production of interest or dividends. In the case of a partnership of which a principal activity is the buying and selling of commodities, other than as inventory, or of futures, forwards and options with respect to commodities, qualifying income also includes income and gains from commodities and from futures, forwards, options with respect to commodities and, provided the partnership is a trader or investor with respect to such assets, swaps and other notional principal contracts with respect to commodities. Each Fund expects that at least 90% of the Fund’s gross income for each taxable year will consist of qualifying income and that the Fund will be taxed as a partnership for federal income tax purposes. Therefore, the Funds do not record a provision for income taxes because the shareholders report their share of a Fund’s income or loss on their income tax returns. The financial statements reflect the Funds’ transactions without adjustment, if any, required for income tax purposes.
 
The Funds are required to determine whether a tax position is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Funds file income tax returns in the U.S. federal jurisdiction, and may file income tax returns in various U.S. states and foreign jurisdictions. For all tax years 2016 to 2018, the Funds remain subject to income tax examinations by major taxing authorities. The tax benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. De-recognition of a tax benefit previously recognized results in the Funds recording a tax liability that reduces net assets. Based on their analysis, the Funds have determined that they have not incurred any liability for unrecognized tax benefits as of June 30, 2019 and for the years ended December 31, 2018, 2017, and 2016. However, the Funds’ conclusions regarding this policy may be subject to review and adjustment at a later date based on factors including, but not limited to, ongoing analysis of and changes to tax laws, regulations, and interpretations thereof.
 
 
12
 
 
The Funds recognize interest accrued related to unrecognized tax benefits and penalties related to unrecognized tax benefits in income tax fees payable, if assessed. No interest expense or penalties have been recognized as of and for the three and six months ended June 30, 2019 and 2018.
 
The Funds may be subject to potential examination by U.S. federal, U.S. state, or foreign jurisdictional authorities in the area of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions, and compliance with U.S. federal, U.S. state and foreign tax laws. The Funds’ management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months. In the opinion of the Sponsor, the 2017 Tax Cuts and Jobs Act, will not have a significant impact on the Trust or the Funds and did not have a significant impact on the financial statements of the Trust and the Funds.
 
Creations and Redemptions
 
Authorized Purchasers may purchase Creation Baskets from each Fund. The amount of the proceeds required to purchase a Creation Basket will be equal to the NAV of the shares in the Creation Basket determined as of 4:00 p.m. New York time on the day the order to create the basket is properly received.
 
Authorized Purchasers may redeem shares from each Fund only in blocks of shares called “Redemption Baskets.” The amount of the redemption proceeds for a Redemption Basket will be equal to the NAV of the shares in the Redemption Basket determined as of 4:00 p.m. New York time on the day the order to redeem the basket is properly received.
 
Each Fund receives or pays the proceeds from shares sold or redeemed within three business days after the trade date of the purchase or redemption. The amounts due from Authorized Purchasers are reflected in the statements of assets and liabilities as receivable for shares sold. Amounts payable to Authorized Purchasers upon redemption are reflected in the statements of assets and liabilities as payable for shares redeemed.
 
There are a minimum number of baskets and associated Shares specified for each Fund in the Fund’s respective prospectus, as amended from time to time. If a Fund experienced redemptions that caused the number of Shares outstanding to decrease to the minimum level of Shares required to be outstanding, until the minimum number of Shares is again exceeded through the purchase of a new Creation Basket, there can be no more redemptions by an Authorized Purchaser. These minimum levels are as follows:
 
CORN: 50,000 shares representing 2 baskets 
SOYB: 50,000 shares representing 2 baskets 
CANE: 50,000 shares representing 2 baskets 
WEAT: 50,000 shares representing 2 baskets 
TAGS: 50,000 shares representing 4 baskets
 
Cash and Cash Equivalents
 
Cash equivalents are highly liquid investments with maturity dates of 90 days or less when acquired. The Trust reported its cash equivalents in the combined statements of assets and liabilities at market value, or at carrying amounts that approximate fair value, because of their highly liquid nature and short term maturities. Each Fund that is a series of the Trust has the balance of its cash equivalents on deposit with financial institutions. The Trust holds a balance in money market funds that is included in cash and cash equivalents on the combined statements of assets and liabilities. Effective in the second quarter 2015, the Sponsor invested a portion of the available cash for the Funds in alternative demand deposit savings accounts, which is classified as cash and not as cash equivalents. Assets deposited with the bank may, at times, exceed federally insured limits. Effective in the fourth quarter 2017, the Sponsor invested a portion of the available cash for the Funds in investment grade commercial paper with durations of 90 days or less, which is classified as a cash equivalent and is not FDIC insured. Effective February 2019, the Sponsor began investing a portion of the cash held by the broker in short term Treasury Bills as collateral for open futures contracts, which is classified as a cash equivalent and is not FDIC insured.
 
 
 
June 30, 2019
 
 
December 31, 2018
 
Money Market Funds
 $3,163 
 $3,262 
Demand Deposit Savings Accounts
  97,419,153 
  71,898,880 
Commercial Paper
  94,778,353 
  87,348,180 
Treasury Bills
  8,142,925 
  - 
Total cash and cash equivalents as presented on the Statement of Assets and Liabilities
 $200,343,594 
 $159,250,322 
 
Due from/to Broker
 
The amount recorded by the Trust for the amount due from and to the clearing broker includes, but is not limited to, cash held by the broker, amounts payable to the clearing broker related to open transactions and payables for commodities futures accounts liquidating to an equity balance on the clearing broker’s records.
 
 
13
 
 
Margin is the minimum amount of funds that must be deposited by a commodity interest trader with the trader’s broker to initiate and maintain an open position in futures contracts. A margin deposit acts to assure the trader’s performance of the futures contracts purchased or sold. Futures contracts are customarily bought and sold on initial margin that represents a very small percentage of the aggregate purchase or sales price of the contract. Because of such low margin requirements, price fluctuations occurring in the futures markets may create profits and losses that, in relation to the amount invested, are greater than are customary in other forms of investment or speculation. As discussed below, adverse price changes in the futures contract may result in margin requirements that greatly exceed the initial margin. In addition, the amount of margin required in connection with a particular futures contract is set from time to time by the exchange on which the contract is traded and may be modified from time to time by the exchange during the term of the contract. Brokerage firms, such as the Funds’ clearing brokers, carrying accounts for traders in commodity interest contracts generally require higher amounts of margin as a matter of policy to further protect themselves. Over-the-counter trading generally involves the extension of credit between counter-parties, so the counter-parties may agree to require the posting of collateral by one or both parties to address credit exposure.
 
When a trader purchases an option, there is no margin requirement; however, the option premium must be paid in full. When a trader sells an option, on the other hand, he or she is required to deposit margin in an amount determined by the margin requirements established for the underlying interest and, in addition, an amount substantially equal to the current premium for the option. The margin requirements imposed on the selling of options, although adjusted to reflect the probability that out-of-the-money options will not be exercised, can in fact be higher than those imposed in dealing in the futures markets directly. Complicated margin requirements apply to spreads and conversions, which are complex trading strategies in which a trader acquires a mixture of options positions and positions in the underlying interest.
 
Ongoing or “maintenance” margin requirements are computed each day by a trader’s clearing broker. When the market value of a particular open futures contract changes to a point where the margin on deposit does not satisfy maintenance margin requirements, a margin call is made by the broker. If the margin call is not met within a reasonable time, the broker may close out the trader’s position. With respect to the Funds’ trading, the Funds (and not their shareholders personally) are subject to margin calls.
 
Finally, many major U.S. exchanges have passed certain cross margining arrangements involving procedures pursuant to which the futures and options positions held in an account would, in the case of some accounts, be aggregated, and margin requirements would be assessed on a portfolio basis, measuring the total risk of the combined positions.
 
Payable/Receivable for Securities Purchased/Sold
 
Due from/to broker for investments in securities are securities transactions pending settlement. The Trust and the Funds are subject to credit risk to the extent any broker with whom it conducts business is unable to fulfill contractual obligations on its behalf. The management of the Trust and the Funds monitors the financial condition of such brokers and does not anticipate any losses from these counter-parties. Since the inception of the Fund, the principal broker through which the Trust and TAGS can execute securities transactions for TAGS is the Bank of New York Mellon Capital Markets.
 
Sponsor Fee, Allocation of Expenses and Related Party Transactions
 
The Fund’s sponsor is Teucrium Trading, LLC (the “Sponsor”). The Sponsor is responsible for investing the assets of the Funds in accordance with the objectives and policies of each Fund. In addition, the Sponsor arranges for one or more third parties to provide administrative, custodial, accounting, transfer agency and other necessary services to the Trust and the Funds. In addition, the Sponsor elected not to outsource services directly attributable to the Trust and the Funds such as accounting, financial reporting, regulatory compliance and trading activities. In addition, the Funds, except for TAGS which has no such fee, are contractually obligated to pay a monthly management fee to the Sponsor, based on average daily net assets, at a rate equal to 1.00% per annum.
 
The Funds pay for all brokerage fees, taxes and other expenses, including licensing fees for the use of intellectual property, registration or other fees paid to the SEC, FINRA (formerly the National Association of Securities Dealers) or any other regulatory agency in connection with the offer and sale of subsequent Shares, after its initial registration, and all legal, accounting, printing and other expenses associated therewith. The Funds also pay the fees and expenses associated with the Trust’s tax accounting and reporting requirements. Certain aggregate expenses common to all Funds within the Trust are allocated by the Sponsor to the respective Fund based on activity drivers deemed most appropriate by the Sponsor for such expenses, including but not limited to relative assets under management and creation order activity.
 
These aggregate common expenses include, but are not limited to, legal, auditing, accounting and financial reporting, tax-preparation, regulatory compliance, trading activities, and insurance costs, as well as fees paid to the Distributor, which are included in the related line item in the combined statements of operations. A portion of these aggregate common expenses are related to the Sponsor or related parties of principals of the Sponsor; these are necessary services to the Trust and the Funds, which are primarily the cost of performing accounting and financial reporting, regulatory compliance, and trading activities that are directly attributable to the Trust and the Funds. Such expenses are primarily included as distribution and marketing fees.
 
 
14
 
 
 
 
Three months ended June 30, 2019
 
 
Three months ended June 30, 2018
 
 
Six months ended June 30, 2019
 
 
Six months ended June 30, 2018
 
Recognized Related Party Transactions
 $426,792 
 $472,586 
 $1,117,600 
 $1,452,851 
Waived Related Party Transactions
 $39,877 
 $122,390 
 $76,557 
 $251,171 
 
The Sponsor has the ability to elect to pay certain expenses on behalf of the Funds or waive the management fee. This election is subject to change by the Sponsor, at its discretion. Expenses paid by the Sponsor and Management fees waived by the Sponsor are, if applicable, presented as waived expenses in the statements of operations for each Fund. The Sponsor has determined that there would be no recovery sought for the amounts below in any future period.

 
 
CORN
 
 
SOYB
 
 
CANE
 
 
WEAT
 
 
TAGS
 
 
TRUST
 
Three months ended June 30, 2019
 $- 
 $33,391 
 $57,954 
 $- 
 $7,181 
 $98,526 
Three months ended June 30, 2018
 $98,041 
 $84,485 
 $66,209 
 $121,015 
 $10,086 
 $379,836 
Six months ended June 30, 2019
 $5,639 
 $96,303 
 $99,436 
 $2,500 
 $28,765 
 $232,643 
Six months ended June 30, 2018
 $138,723 
 $184,427 
 $146,899 
 $144,784 
 $27,172
 $642,134 
 
Use of Estimates
 
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of the revenue and expenses during the reporting period. Actual results could differ from those estimates.
 
Fair Value - Definition and Hierarchy
 
In accordance with U.S. GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.
 
In determining fair value, the Trust uses various valuation approaches. In accordance with U.S. GAAP, a fair value hierarchy for inputs is used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Trust. Unobservable inputs reflect the Trust’s assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs as follows:
 
Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Trust has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 futures contracts held by CORN, SOYB, CANE and WEAT, the securities of the Underlying Funds held by TAGS, and any other securities held by any Fund, together referenced throughout this filing as “financial instruments.” Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.
 
Level 2 - Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
 
Level 3 - Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
 
The availability of valuation techniques and observable inputs can vary from financial instrument to financial instrument and is affected by a wide variety of factors including, the type of financial instrument, whether the financial instrument is new and not yet established in the marketplace, and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Those estimated values do not necessarily represent the amounts that may be ultimately realized due to the occurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the financial instruments existed. Accordingly, the degree of judgment exercised by the Fund in determining fair value is greatest for financial instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy, within which the fair value measurement in its entirety falls, is determined based on the lowest level input that is significant to the fair value measurement.
 
 
15
 
 
Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Trust’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Trust uses prices and inputs that are current as of the measurement date, including periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many financial instruments. This condition could cause a financial instrument to be reclassified to a lower level within the fair value hierarchy. For instance, when Corn Futures Contracts on the Chicago Board of Trade (“CBOT”) are not actively trading due to a “limit-up” or ‘limit-down” condition, meaning that the change in the Corn Futures Contracts has exceeded the limits established, the Trust and the Fund will revert to alternative verifiable sources of valuation of its assets. When such a situation exists on a quarter close, the Sponsor will calculate the NAV on a particular day using the Level 1 valuation, but will later recalculate the NAV for the impacted Fund based upon the valuation inputs from these alternative verifiable sources (Level 2 or Level 3) and will report such NAV in its applicable financial statements and reports.
 
On June 30, 2019 and December 31, 2018, in the opinion of the Trust, the reported value at the close of the market for each commodity contract fairly reflected the value of the futures and no alternative valuations were required. The determination is made as of the settlement of the futures contracts on the last day of trading for the reporting period. In making the determination of a Level 1 or Level 2 transfer, the Funds consider the average volume of the specific underlying futures contracts traded on the relevant exchange for the periods being reported.
 
For the three and six months ended June 30, 2019 and year ended December 31, 2018, the Funds did not have any significant transfers between any of the levels of the fair value hierarchy.
 
The Funds and the Trust record their derivative activities at fair value. Gains and losses from derivative contracts are included in the statements of operations. Derivative contracts include futures contracts related to commodity prices. Futures, which are listed on a national securities exchange, such as the CBOT and the ICE, or reported on another national market, are generally categorized in Level 1 of the fair value hierarchy. OTC derivatives contracts (such as forward and swap contracts), which may be valued using models, depending on whether significant inputs are observable or unobservable, are categorized in Levels 2 or 3 of the fair value hierarchy.
 
Investments in the securities of the Underlying Funds are freely traded and listed on the NYSE Arca. These investments are valued at the NAV of the Underlying Fund as of the valuation date as calculated by the administrator based on the exchange-quoted prices of the commodity futures contracts held by the Underlying Fund.
 
Expenses
 
Expenses are recorded using the accrual method of accounting.
 
New Accounting Pronouncements
 
The Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-04: Codification Improvements to Topic 326, Financial Instruments Credit Losses, Topic 815, Derivatives and hedging, and Topic 825, Financial Instruments. The amendments clarify and improve areas of guidance related to the recently issued standards on credit losses, hedging, and recognition and measurement, specifically relating to ASU 2017-12. The amendments were adopted for the quarter ended June 30, 2019; the adoption did not have a material impact on the financial statements and disclosures of the Trust or the Funds.
 
The FASB issued ASU2019-01: "Leases (Topic 842): Codification Improvements. These amendments align the guidance for fair value of underlying assets by lessors that are not manufacturers or dealers in Topic 842 with that of existing guidance. The amendments will be effective for fiscal years and interim periods beginning after December 15, 2019 and may be adopted early. The Sponsor is evaluating the impacts but the amendment is not expected to have a material impact on the financial statements of the Trust or the Funds.
 
The FASB issued ASU 2018-13: “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. These amendments modify public and private company fair value disclosure requirements. While some disclosures were removed or modified, others were added. The guidance is a result of the FASB’s test of the principals developed to improve the effectiveness of disclosures in the notes to the financial statements. The amendments will be effective for fiscal years and interim periods beginning after December 15, 2019 and may be adopted early. The Sponsor is evaluating the impacts, specifically, the removal, modification and addition to the fair value disclosures of the Trust or the Funds.
 
The FASB issued ASU 2018-05, “Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118." These amendments add guidance to the FASB Accounting Standards Codification regarding the Tax Cuts and Jobs Act (Act). The amendments were adopted for the quarter ended March 31, 2018; the adoption did not have a material impact on the financial statements and disclosures of the Trust or the Funds.
 
The FASB issued ASU 2017-13, “Revenue Recognition (Topic 605), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments”. The amendment amends the early adoption date option for certain companies related to adoption of ASU No. 2014-09 and ASU No. 2016-02. The SEC staff stated the SEC would not object to a public business entity that otherwise would not meet the definition of a public business entity except for a requirement to include or the inclusion of its financial statements or financial information in another entity’s filing with the SEC adopting ASC Topic 842 for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. This amendment is not expected to have a material impact on the financial statements and disclosures of the Trust or the Funds.
 
The FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”. These amendments refine and expand hedge accounting for both financial (e.g., interest rate) and commodity risks. Its provisions create more transparency around how economic results are presented, both on the face of the financial statements and in the footnotes. It also makes certain targeted improvements to simplify the application of hedge accounting guidance. The amendments were adopted for the quarter ended March 31, 2019; the adoption did not have a material impact on the financial statements and disclosures of the Trust or the Funds.
 
 
16
 
 
The FASB issued ASU 2016-02, “Leases (Topic 842).” The amendments in this update increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments were adopted for the quarter ended March 31, 2019; the adoption did not have a material impact on the financial statements and disclosures of the Trust or the Funds.
 
Note 4 – Fair Value Measurements
 
The Trust’s assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy as described in the Trust’s significant accounting policies in Note 3. The following table presents information about the Trust’s assets and liabilities measured at fair value as of June 30, 2019 and December 31, 2018:
 
June 30, 2019
 
Assets:
 
Level 1
 
 
Level 2
 
 
Level 3
 
 
Balance as of
June 30, 2019
 
Cash Equivalents
 $102,924,441
 
 $- 
 $- 
 $102,924,441
 
Commodity Futures Contracts
    
    
    
    
 Corn futures contracts
  3,226,613
 
  -
 
  -
 
  3,226,613
 
Soybeans futures contracts
  1,431,225
 
  - 
  - 
  1,431,225
 
Sugar futures contracts
  74,426
 
  - 
  - 
  74,426
 
Wheat futures contracts
  4,491,550
 
  - 
  - 
  4,491,550
 
Total
 $112,151,255
 
 $- 
 $- 
 $112,151,255
 
 
    
    
    
    
 
    
    
    
    
Liabilities:
  Level 1 
 
Level 2
 
 
Level 3
 
 
Balance as of
June 30, 2019
 
Commodity Futures Contracts
    
    
    
    
Sugar futures contracts
 $100,196 
  - 
  - 
 $100,196 
Wheat futures contracts
  1,325,775 
  - 
  - 
  1,325,775 
Total
 $1,425,971 
 $- 
 $- 
 $1,425,971 
 
December 31, 2018
 
Assets:
 
Level 1
 
 
Level 2
 
 
Level 3
 
 
Balance as of December 31, 2018
 
Cash Equivalents
 $87,351,442
 
 $-
 
 $-
 
 $87,351,442
 
Commodity Futures Contracts
    
    
    
    
Corn futures contracts
  107,363 
  - 
  - 
  107,363 
Soybeans futures contracts
  228,400 
  - 
  - 
  228,400 
Sugar futures contracts
  233,979 
  - 
  - 
  233,979 
Total
 $87,921,185
 
 $-
 
 $-
 
 $87,921,185
 
 
    
    
    
    
 
    
    
    
    
Liabilities:
  Level 1 
 
Level 2
 
 
Level 3
 
 
Balance as of December 31, 2018
 
Commodity Futures Contracts
    
    
    
    
Corn futures contracts
 $1,297,288
 
 $-
 
 $-
 
 $1,297,288
 
Soybeans futures contracts
  39,250 
  - 
  - 
  39,250 
Sugar futures contracts
  47,656 
  - 
  - 
  47,656 
Wheat futures contracts
  3,985,400 
  - 
  - 
  3,985,400 
Total
 $5,369,594
 
 $-
 
 $-
 
 $5,369,594
 
 
 
17
 
 
For the six months ended June 30, 2019 and year ended December 31, 2018, the Funds did not have any significant transfers between any of the levels of the fair value hierarchy.
 
See the Fair Value - Definition and Hierarchy section in Note 3 above for an explanation of the transfers into and out of each level of the fair value hierarchy.
 
Note 5 – Derivative Instruments and Hedging Activities
 
In the normal course of business, the Funds utilize derivative contracts in connection with its proprietary trading activities. Investments in derivative contracts are subject to additional risks that can result in a loss of all or part of an investment. The Funds’ derivative activities and exposure to derivative contracts are classified by the following primary underlying risks: interest rate, credit, commodity price, and equity price risks. In addition to its primary underlying risks, the Funds are also subject to additional counter-party risk due to inability of its counter-parties to meet the terms of their contracts. For the three and six months ended June 30, 2019 and year ended December 31, 2018, the Funds invested only in commodity futures contracts specifically related to each Fund.
 
Futures Contracts
 
The Funds are subject to commodity price risk in the normal course of pursuing their investment objectives. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date.
 
The purchase and sale of futures contracts requires margin deposits with a FCM. Subsequent payments (variation margin) are made or received by each Fund each day, depending on the daily fluctuations in the value of the contract, and are recorded as unrealized gains or losses by each Fund. Futures contracts may reduce the Funds’ exposure to counter-party risk since futures contracts are exchange-traded; and the exchange’s clearinghouse, as the counter-party to all exchange-traded futures, guarantees the futures against default.
 
The Commodity Exchange Act requires an FCM to segregate all customer transactions and assets from the FCM’s proprietary activities. A customer’s cash and other equity deposited with an FCM are considered commingled with all other customer funds subject to the FCM’s segregation requirements. In the event of an FCM’s insolvency, recovery may be limited to each Fund’s pro rata share of segregated customer funds available. It is possible that the recovery amount could be less than the total of cash and other equity deposited.
 
The following table discloses information about offsetting assets and liabilities presented in the statements of assets and liabilities to enable users of these financial statements to evaluate the effect or potential effect of netting arrangements for recognized assets and liabilities. These recognized assets and liabilities are presented as defined in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update (“ASU”) No. 2011-11 “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities” and subsequently clarified in FASB ASU 2013-01 “Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities.”
 
The following table also identifies the fair value amounts of derivative instruments included in the statements of assets and liabilities as derivative contracts, categorized by primary underlying risk and held by the FCM, ED&F Man as of June 30, 2019 and December 31, 2018.
 
Offsetting of Financial Assets and Derivative Assets as of June 30, 2019
 
 
(i)
 
 
(ii)
 
 
(iii) = (i)-(ii)
 
  (iv)      
 
(v)=(iii)-(iv)
 
 
   
   
   
 
Gross Amount Not Offset in the Statement of Assets and Liabilities
 
   
Description
 
Gross Amount of Recognized Assets
 
 
Gross Amount Offset in the Statement of Assets and Liabilities
 
 
Net Amount Presented in the Statement of Assets and Liabilities
 
 
Futures Contracts Available for Offset
 
 
Due to Broker
 
 
Net Amount
 
Commodity Price
   
   
   
   
   
   
Corn futures contracts
 $3,226,613 
 $- 
 $3,226,613 
 $- 
 $3,226,613
 
 $-
 
Soybeans futures contracts
 $1,431,225 
 $- 
 $1,431,225 
 $- 
 $738,351 
 $692,874 
Sugar futures contracts
 $77,426 
 $- 
 $77,426 
 $77,426 
 $- 
 $- 
Wheat futures contracts
 $4,491,550 
 $- 
 $4,491,550 
 $1,325,775 
 $3,165,775 
 $- 
 
 
 
18
 
 
Offsetting of Financial Liabilities and Derivative Liabilities as of June 30, 2019
 
 
(i)
 
 
(ii)
 
 
(iii) = (i)-(ii)
 
 (iv)       
 
(v)=(iii)-(iv)
 
 
   
   
   
 
Gross Amount Not Offset in the Statement of Assets and Liabilities
 
   
Description
 
Gross Amount of Recognized Liabilities
 
 
Gross Amount Offset in the Statement of Assets and Liabilities
 
 
Net Amount Presented in the Statement of Assets and Liabilities
 
 
Futures Contracts Available for Offset
 
 
Due from Broker
 
 
Net Amount
 
Commodity Price
   
   
   
   
   
   
Sugar futures contracts
 $100,196 
 $- 
 $100,196 
 $77,426 
 $22,770 
 $- 
Wheat futures contracts
 $1,325,775 
 $- 
 $1,325,775 
 $1,325,775 
 $- 
 $- 
 
Offsetting of Financial Assets and Derivative Assets as of December 31, 2018
 
 
 
(i)
 
 
(ii)
 
 
(iii) = (i-ii)
 
  (iv)     
 
(v) = (iii)-(iv)
 
 
 
 
 
 
 
 
 
 
 
  
Gross Amount Not Offset in the Statement of Assets and Liabilities
 
 

 
Description
 
Gross Amount of Recognized Assets
 
 
Gross Amount Offset in the Statement of Assets and Liabilities
 
 
Net Amount Presented in the Statement of Assets and Liabilities
 
 
Futures Contracts Available for Offset
 
 
Due to Broker
 
 
Net Amount
 
Commodity Price
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corn futures contracts
 $107,363 
 $- 
 $107,363 
 $107,363 
 
 
 
 $- 
Soybeans futures contracts
 $228,400 
 $- 
 $228,400 
 $39,250 
 $- 
 $189,150 
Sugar futures contracts
 $233,979 
 $- 
 $233,979 
 $47,656 
 $- 
 $186,323 
 
19
 
 
Offsetting of Financial Liabilities and Derivative Liabilities as of December 31, 2018
 
 
 
(i)
 
 
(ii)
 
 
(iii) = (i-ii)
 
  (iv)     
 
(v) = (iii)-(iv)
 
 
 
 
 
 
 
 
 
 
 
  
Gross Amount Not Offset in the Statement of Assets and Liabilities
 
 

 
Description
 
Gross Amount of Recognized Liabilities
 
 
Gross Amount Offset in the Statement of Assets and Liabilities
 
 
Net Amount Presented in the Statement of Assets and Liabilities
 
 
Futures Contracts Available for Offset
 
 
Due from Broker
 
 
Net Amount
 
Commodity Price
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corn futures contracts
 $1,297,288 
 $- 
 $1,297,288 
 $107,363 
 $1,189,925 
 $- 
Soybeans futures contracts
 $39,250 
 $-