Edgar Filing: Teucrium Commodity Trust

Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2011.

¨	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		61-1604335
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

232 Hidden Lake Road, Building A

Brattleboro, Vermont 05301

(Address of principal executive offices) (Zip code)

(802) 257-1617

(Registrant’s telephone number, including area code)

N/A

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

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

x Yes ¨ No

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

x Yes ¨ No

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

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

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

¨ Yes x No

TEUCRIUM COMMODITY TRUST

Table of Contents

		Page
Part I. FINANCIAL INFORMATION

Item 1. Financial Statements.		3

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.		94

Item 3. Quantitative and Qualitative Disclosures About Market Risk.		109

Item 4. Controls and Procedures.		109

Part II. OTHER INFORMATION

Item 1. Legal Proceedings.		109

Item 1A. Risk Factors.		109

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		109

Item 3. Defaults Upon Senior Securities.		111

Item 4. Reserved.		111

Item 5. Other Information.		111

Item 6. Exhibits.		111

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Index to Financial Statements

Documents		Page
TEUCRIUM COMMODITY TRUST		5

Statements of Assets and Liabilities at September 30, 2011 (Unaudited) and December 31, 2010		5

Schedule of Investments (Unaudited) at September 30, 2011		6

Statements of Operations (Unaudited) for the three and nine months ended September 30, 2011, for the three months ended September 30, 2010 and from commencement of operations (June 9, 2010) through September 30, 2010		7

Statement of Changes in Net Assets (Unaudited) for the nine months ended September 30, 2011 and from commencement of operations (June 9, 2010) through September 30, 2010		8

Statement of Cash Flows (Unaudited) for the nine months ended September 30, 2011 and from commencement of operations (June 9, 2010) through September 30, 2010		9

Notes to Financial Statements		10

TEUCRIUM CORN FUND		18

Statements of Assets and Liabilities at September 30, 2011 (Unaudited) and December 31, 2010		18

Schedule of Investments (Unaudited) at September 30, 2011		19

Statements of Operations (Unaudited) ) for the three and nine months ended September 30, 2011, for the three months ended September 30, 2010 and from commencement of operations (June 9, 2010) through September 30, 2010		20

Statement of Changes in Net Assets (Unaudited) for the nine months ended September 30, 2011 and from commencement of operations (June 9, 2010) through September 30, 2010		21

Statement of Cash Flows (Unaudited) for the nine months ended September 30, 2011 and from commencement of operations (June 9, 2010) through September 30, 2010		22

Notes to Financial Statements		23

TEUCRIUM NATURAL GAS FUND		31

Statements of Assets and Liabilities at September 30, 2011 (Unaudited) and December 31, 2010		31

Schedule of Investments (Unaudited) at September 30, 2011		32

Statements of Operations (Unaudited) for the three months ending September 30, 2011 and from commencement of operations (February 1, 2011) through September 30, 2011		33

Statement of Changes in Net Assets (Unaudited) from commencement of operations (February 1, 2011) through September 30, 2011		34

Statement of Cash Flows (Unaudited) from commencement of operations (February 1, 2011) through September 30, 2011		35

Notes to Financial Statements		36

TEUCRIUM WTI CRUDE OIL FUND		43

Statements of Assets and Liabilities at September 30, 2011 (Unaudited) and December 31, 2010		43

Schedule of Investments (Unaudited) at September 30, 2011		44

Statements of Operations (Unaudited) for the three months ending September 30, 2011 and from commencement of operations (February 23, 2011) through September 30, 2011		45

Statement of Changes in Net Assets (Unaudited) from commencement of operations (February 23, 2011) through September 30, 2011		46

Statement of Cash Flows (Unaudited) from commencement of operations (February 23, 2011) through September 30, 2011		47

Notes to Financial Statements		48

TEUCRIUM SOYBEAN FUND		55

Statements of Assets and Liabilities at September 30, 2011 (Unaudited) and December 31, 2010		55

Schedule of Investments (Unaudited) at September 30, 2011		56

Statements of Operations (Unaudited) from commencement of operations (September 19, 2011) through September 30, 2011		57

Statement of Changes in Net Assets (Unaudited) from commencement of operations (September 19, 2011) through September 30, 2011		58

Statement of Cash Flows (Unaudited) from commencement of operations (September 19, 2011) through September 30, 2011		59

Notes to Financial Statements		60

TEUCRIUM SUGAR FUND		67

Statements of Assets and Liabilities at September 30, 2011 (Unaudited) and December 31, 2010		67

Schedule of Investments (Unaudited) at September 30, 2011		68

Statements of Operations (Unaudited) from commencement of operations (September 19, 2011) through September 30, 2011		69

Statement of Changes in Net Assets (Unaudited) from commencement of operations (September 19, 2011) through September 30, 2011		70

Statement of Cash Flows (Unaudited) from commencement of operations (September 19, 2011) through September 30, 2011		71

Notes to Financial Statements		72

TEUCRIUM WHEAT FUND		79

Statements of Assets and Liabilities at September 30, 2011 (Unaudited) and December 31, 2010		79

Schedule of Investments (Unaudited) at September 30, 2011		80

Statements of Operations (Unaudited) from commencement of operations (September 19, 2011) through September 30, 2011		81

Statement of Changes in Net Assets (Unaudited) from commencement of operations (September 19, 2011) through September 30, 2011		82

Statement of Cash Flows (Unaudited) from commencement of operations (September 19, 2011) through September 30, 2011		83

Notes to Financial Statements		84

TEUCRIUM AGRICULTURAL FUND		90

Statement of Assets and Liabilities at September 30, 2011 (Unaudited)		90

Notes to Statement of Assets and Liabilities		91

TEUCRIUM COMMODITY TRUST

STATEMENTS OF ASSETS AND LIABILITIES

	September 30, 2011		December 31, 2010
	(Unaudited)
Assets

Equity in BNY Mellon trading accounts:
Cash and cash equivalents	$	113,964,717	$	39,311,038
Commodity futures contracts		-		5,178,219
Collateral, due from broker		18,776,599		-
Interest receivable		830		5,246
Other assets		625,224		12,526
Total assets		133,367,370		44,507,029

Liabilities

Commodity futures contracts		15,318,753		-
Collateral, due to broker		-		1,496,045
Management fee payable to Sponsor		102,457		34,328
Other liabilities		194,295		12,217
Total liabilities		15,615,505		1,542,590

Net assets	$	117,751,865	$	42,964,439

The accompanying notes are an integral part of these financial statements.

TEUCRIUM COMMODITY TRUST

SCHEDULE OF INVESTMENTS

September 30, 2011

(Unaudited)

	Fair		Percentage of			Notional
Description: Assets	Value		Net Assets			Amount

Cash equivalents
United States Treasury obligations
U.S. Treasury bills, 0.015%, due October 20, 2011	$	9,999,940		8.49	%	$	10,000,000
U.S. Treasury bills, 0.001%, due November 17, 2011		9,999,870		8.49			10,000,000
Total U.S. Treasury obligations		19,999,810		16.98

Money market funds
Dreyfus Cash Management Plus		93,964,807		79.80

Total cash equivalents	$	113,964,617		96.78	%

	Fair		Percentage of			Notional
Description: Liabilities	Value		Net Assets			Amount
Commodity futures contracts
United States corn futures contracts
CBOT corn futures (1,186 contracts, settlement date March 14, 2012)	$	5,542,419		4.71	%	$	35,920,975
CBOT corn futures (1,005 contracts, settlement date May 14, 2012)		6,580,458		5.59			30,828,375
CBOT corn futures (1,328 contracts, settlement date December 14, 2012)		1,295,724		1.10			37,565,800

United States natural gas futures contracts
NYMEX natural gas futures (11 contracts, settlement date February 27, 2012)		97,504		0.08			452,100
NYMEX natural gas futures (11 contracts, settlement date March 28, 2012)		49,634		0.04			450,670
NYMEX natural gas futures (11 contracts, settlement date September 26, 2012)		15,303		0.01			470,470
NYMEX natural gas futures (10 contracts, settlement date October 29, 2012)		6,729		0.00			443,800

United States WTI crude oil futures contracts
WTI crude oil futures (21 contracts, settlement date November 18, 2011)		385,237		0.33			1,665,930
WTI crude oil futures (18 contracts, settlement date May 22, 2012)		421,543		0.36			1,450,080
WTI crude oil futures (20 contracts, settlement date November 16, 2012)		313,465		0.27			1,644,800

United States soybean futures contracts
CBOT soybean futures (13 contracts, settlement date January 13, 2012)		115,427		0.10			773,175
CBOT soybean futures (11 contracts, settlement date March 14, 2012)		97,394		0.08			659,038
CBOT soybean futures (13 contracts, settlement date November 14, 2012)		95,927		0.08			776,425

United States sugar futures contracts
ICE sugar futures (31 contracts, settlement date April 30, 2012)		25,044		0.02			854,112
ICE sugar futures (27 contracts, settlement date June 29, 2012)		108		0.00			720,014
ICE sugar futures (32 contracts, settlement date February 28, 2013)		21,598		0.02			833,997

United States wheat futures contracts
CBOT wheat futures (24 contracts, settlement date March 14, 2012)		96,396		0.08			775,800
CBOT wheat futures (20 contracts, settlement date May 14, 2012)		79,830		0.07			668,500
CBOT wheat futures (22 contracts, settlement date December 14, 2012)		79,013		0.07			787,875
Total commodity futures contracts	$	15,318,753		13.01	%	$	117,741,936

The accompanying notes are an integral part of these financial statements.

TEUCRIUM COMMODITY TRUST

STATEMENTS OF OPERATIONS

(Unaudited)

									From the commencement
	Three months ended			Three months ended		Nine months ended			of operations (June 9, 2010)
	September 30, 2011			September 30, 2010		September 30, 2011			through September 30, 2010
Income
Realized and unrealized gain (loss) on trading of commodity futures contracts:
Realized gain on commodity futures contracts	$	9,853,860		$	1,289,305	$	15,385,612		$	1,290,285
Net change in unrealized appreciation or depreciation on commodity futures contracts		(10,012,182	)		810,334		(20,496,972	)		1,014,829
Interest income		8,947			5,796		50,185			6,405
Total (loss) income		(149,375	)		2,105,435		(5,061,175	)		2,311,519

Expenses
Management fees		328,413			22,239		788,567			25,323
Professional fees		144,878			44,121		437,746			52,131
Distribution and marketing fees		187,910			23,019		484,014			29,249
Custodian fees and expenses		76,886			32,564		239,354			40,351
Brokerage commissions		29,212			-		60,399			-
Other expenses		47,256			14,158		144,655			17,600
Total expenses		814,555			136,101		2,154,735			164,654

Net (loss) income	$	(963,930	)	$	1,969,334	$	(7,215,910	)	$	2,146,865

The accompanying notes are an integral part of these financial statements.

TEUCRIUM COMMODITY TRUST

STATEMENTS OF CHANGES IN NET ASSETS

(Unaudited)

				From the commencement
	Nine months ended			of operations (June 9, 2010)
	September 30, 2011			through September 30, 2010
Operations
Net (loss) income	$	(7,215,910	)	$	2,146,865

Capital transactions
Issuance of shares		111,123,203			19,462,153
Redemption of shares		(29,119,867	)		(5,364,242	)
Cash proceeds for future series		-			500
Total capital transactions		82,003,336			14,098,411
Net change in net assets		74,787,426			16,245,276

Net assets, beginning of period		42,964,439			100

Net assets, end of period	$	117,751,865		$	16,245,376

The accompanying notes are an integral part of these financial statements.

TEUCRIUM COMMODITY TRUST

STATEMENTS OF CASH FLOWS

(Unaudited)

				From the commencement
	Nine months ended			of operations (June 9, 2010)
	September 30, 2011			through September 30, 2010
Cash flows from operating activities:
Net (loss) income	$	(7,215,910	)	$	2,146,865
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Net change in unrealized appreciation or depreciation on commodity futures contracts		20,496,972			(1,014,829	)
Changes in operating assets and liabilities:
Collateral, due from broker		(18,776,599	)		-
Interest receivable		4,416			(2,480	)
Other assets		(612,698	)		(13,521	)
Collateral, due to broker		(1,496,045	)		380,886
Management fee payable to Sponsor		68,129			10,674
Other liabilities		182,078			64,969
Net cash (used in) provided by operating activities		(7,349,657	)		1,572,564

Cash flows from financing activities:
Proceeds from sale of shares		111,123,203			19,462,153
Redemption of shares		(29,119,867	)		(5,364,242)
Proceeds from sale of shares of future Trust series		-			500
Net cash provided by financing activities		82,003,336			14,098,411

Net change in cash and cash equivalents		74,653,679			15,670,975
Cash and cash equivalents, beginning of period		39,311,038			100
Cash and cash equivalents, end of period	$	113,964,717		$	15,671,075

The accompanying notes are an integral part of these financial statements.

NOTES TO FINANCIAL STATEMENTS

September 30, 2011

(Unaudited)

Note 1 – Organization and Operation

Teucrium Commodity Trust (“Trust”) is a Delaware statutory trust organized on September 11, 2009, and is a series trust. The Teucrium Corn Fund (“CORN”) was the first commodity pool that is a series of the Trust, and as of June 9, 2010, shares of CORN could be purchased and sold on the New York Stock Exchange (“NYSE”) Arca. In 2010, registration statements were also filed to register units of the Teucrium WTI Crude Oil Fund (“CRUD”), Teucrium Natural Gas Fund (“NAGS”), Teucrium Sugar Fund (“CANE”), Teucrium Soybean Fund (“SOYB”), and Teucrium Wheat Fund (“WEAT”), which would represent additional future series of the Trust. On April 22, 2011, an initial registration statement to register units was filed with the Securities and Exchange Commission (“SEC”) for the Teucrium Agricultural Fund (“TAGS”). This would represent an additional series of the Trust. All these series of the Trust for which registration statements had been filed and/or approved as of September 30, 2011 are collectively referred to as the “Funds” and singularly as the “Fund.” The Funds issue common units, called the “Shares,” representing fractional undivided beneficial interests in the Fund. The Trust and the Funds operate pursuant to the Trust’s Second Amended and Restated Declaration of Trust and Trust Agreement (the “Trust Agreement”).

On October 22, 2010, the Forms S-1 for NAGS and CRUD were declared effective by the SEC. On January 31, 2011, four Creation Baskets for NAGS were issued representing 200,000 shares and $5,000,000. NAGS began trading on the NYSE Arca on February 1, 2011. On February 22, 2011, four Creation Baskets for CRUD were issued representing 100,000 shares and $5,000,000. CRUD began trading on the NYSE Arca on February 23, 2011. Amended registration statements for CANE, SOYB and WEAT were filed with the SEC on March 9, 2011, and, on June 17, 2011, the Forms S-1 for CANE, SOYB and WEAT were declared effective by the SEC. On September 16, 2011, two initial Creation Baskets for each Fund, representing 100,000 shares and $2,500,000, for CANE, SOYB, and WEAT were issued. On September 19, 2011, CANE, SOYB and WEAT started trading on the NYSE Arca. The Teucrium Corn Fund, the Teucrium Natural Gas Fund, the Teucrium WTI Crude Oil Fund, the Teucrium Sugar Fund, the Teucrium Soybean Fund and the Teucrium Wheat Fund are collectively referred to herein as the “Operating Funds” and singularly referred to as an “Operating Fund.” As of September 30, 2011, the Form S-1 for TAGS has not yet been declared effective by the SEC.

The specific investment objective of each Fund and information regarding the organization and operation of each Fund are included in each Fund’s financial statements and accompanying notes, as well as in other sections of this Form 10-Q filing. In general, the investment objective of each Fund is to have the daily changes in percentage terms of its Shares’ Net Asset Value (“NAV”) reflect the daily changes in percentage terms of a weighted average of the closing settlement prices for certain Futures Contracts for the commodity specified for that Fund.

The accompanying unaudited financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission (the “SEC”) and, therefore, do not include all information and footnote 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 Trust’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 and Form 10-K/A, as applicable. The operating results from January 1, 2011 through September 30, 2011 are not necessarily indicative of the results to be expected for the full year ending December 31, 2011.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America as detailed in the Financial Accounting Standards Board’s Accounting Standards Codification and include the accounts of the Trust, CORN, NAGS, CRUD, CANE, SOYB, WEAT and TAGS. For the year ended December 31, 2010, the operations of the Trust consist entirely of the operations of CORN, which commenced operations on June 9, 2010. For the period January 1, 2011 through September 30, 2011, the operations of the Trust contain the results of CORN, NAGS, CRUD, SOYB, CANE, and WEAT for the months during which each Fund was trading.

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 statement 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 statement of operations. Interest on cash equivalents and deposits with the Futures Commission Merchant are recognized on the accrual basis. The Funds earn interest on its assets denominated in U.S. dollars on deposit with the Futures Commission Merchant at a rate equal to 85% of the overnight of Federal Funds Rate. In addition, the Funds earn interest on funds held at the custodian at prevailing market rates for such investments.

Brokerage Commissions

Brokerage commissions on all open commodity futures contracts are accrued on a full-turn basis.

Income Taxes

For tax purposes, the Funds will be treated as partnerships. Therefore, the Funds do not record a provision for income taxes because the partners 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.

In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 740-10, “Accounting for Uncertainty in Income Taxes,” 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. The Funds are subject to income tax examinations by major taxing authorities for all tax years since inception. The tax benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. De-recognition of a tax benefit previously recognized results in 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 September 30, 2011 or December 31, 2010. 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, on-going analysis of and changes to tax laws, regulations, and interpretations thereof.

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 period ended September 30, 2011 and the year ended December 31, 2010.

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.

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.

Cash Equivalents

Cash equivalents are highly-liquid investments with original maturity dates of three months or less at inception. The Trust reported its cash equivalents in the 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. The Trust has a substantial portion of its assets on deposit with banks. Assets deposited with the bank may, at times, exceed federally insured limits. The Trust had a balance of $93,964,807 and $39,310,538 in money market funds at September 30, 2011 and December 31, 2010, respectively; these balances are included in cash and cash equivalents on the statements of assets and liabilities. The Trust also had investments in United States Treasury Bills with a maturity of three months or less with a fair value of $19,999,810 on September 30, 2011 and $0 on December 31, 2010.

Collateral, Due from/to Broker

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 (ranging upward from less than 2%) 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 counterparties, so the counterparties 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 its 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.

Sponsor Fee

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. For the performance of this service, the Funds 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 pays 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, the Financial Industry Regulatory Authority (“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 are allocated by the Sponsor to the respective funds based on activity drivers deemed most appropriate by the Sponsor for such expenses.

Use of Estimates

The preparation of financial statements in conformity with 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 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 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 securities. 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 security to security and is affected by a wide variety of factors including, the type of security, whether the security 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 securities existed. Accordingly, the degree of judgment exercised by the Fund in determining fair value is greatest for securities 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.

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 securities. This condition could cause a security 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 Net Asset Value (“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 September 30, 2011, 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, whereas, on June 30, 2011, two of the Corn Futures Contract months that were traded on the CBOT and held by CORN were in a “limit down” condition, and in the opinion of the Trust and CORN, the reported value at the close of the market on that day did not fairly value the contracts held by the Fund. Therefore, the Trust and the Fund used alternative verifiable sources to value the CBOT futures held by the Fund which were in a “limit down” condition on June 30, 2011, and the financial statements of the Fund were adjusted accordingly.

The Funds and the Trust record their derivative activities at fair value. Gains and losses from derivative contracts are included in the statement of operations. Derivative contracts include futures contracts related to commodity prices. Futures, which are listed on a national securities exchange, such as the CBOT or the New York Mercantile Exchange (“NYMEX”), 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.

New Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS.” ASU No. 2011-04 clarifies existing requirements for measuring fair value and for disclosure about fair value measurements in converged guidance of the FASB and the International Accounting Standards Board. The amendments are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted. The implementation of ASU No. 2011-04 is not expected to have a material impact on financial statement disclosures for the Trust or the Funds.

Note 3 – 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 2. The following table presents information about the Trust’s assets and liabilities measured at fair value as of September 30, 2011 and assets as of December 31, 2010:

September 30, 2011

							Balance
							as of
							September 30,
	Level 1		Level 2		Level 3		2011
Assets:
Cash equivalents	$	113,964,617	$	-	$	-	$	113,964,617

							Balance
							as of
							September 30,
	Level 1		Level 2		Level 3		2011
Liabilities:
Commodity futures contracts
Corn futures contracts	$	13,418,601	$	-	$	-	$	13,418,601
Natural gas futures contracts		169,170		-		-		169,170
WTI crude oil futures contracts		1,120,245		-		-		1,120,245
Soybean futures contracts		308,748		-		-		308,748
Sugar futures contracts		46,750		-		-		46,750
Wheat futures contracts		255,239		-		-		255,239
Total commodity futures contracts	$	15,318,753	$	-	$	-	$	15,318,753

December 31, 2010

							Balance
							as of
							December 31,
	Level 1		Level 2		Level 3		2010
Assets:
Cash equivalents	$	39,310,538	$	-	$	-	$	39,310,538
Corn futures contracts		5,178,219		-		-		5,178,219
Total	$	44,488,757	$	-	$	-	$	44,488,757

Transfers into and out of each level of the fair value hierarchy for the corn futures contracts valued using alternative verifiable sources due to a "limit-down" condition for the period January 1, 2011 through September 30, 2011 were as follows:

Transfers

into

out of

into

out of

into

out of

Level 1

Level 2

Level 3

Assets (at fair value)

Derivative contracts

Corn future contracts

9,140,288

Transfers

into

out of

into

out of

into

out of

Level 1

Level 2

Level 3

Liabilities (at fair value)

Derivative contracts

Corn future contracts

5,938,713

Note 4 - 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 counterparty risk due to inability of its counterparties to meet the terms of their contracts. For the three months ended September 30, 2011, the Operating Funds invested in commodity futures contracts and Chicago Mercantile Exchange Calendar Swaps. Cleared Corn Swaps have standardized terms similar to, and are priced by reference to, a corresponding Benchmark Component Futures Contract. Additionally, Other Corn Interests that do not have standardized terms and are not exchange-traded, referred to as “over-the-counter” Corn Interests, can generally be structured as the parties to the Corn Interest contract desire. Therefore, each Fund might enter into multiple Cleared Swaps and/or over-the-counter Interests intended to exactly replicate the performance of each of the Benchmark Component Futures Contracts for the Fund, or a single over-the-counter Interest designed to replicate the performance of the Benchmark as a whole. Assuming that there is no default by a counterparty to an over-the-counter Interest, the performance of the Interest will necessarily correlate exactly with the performance of the Benchmark or the applicable Benchmark Component Futures Contract. As of September 30, 2011, the Operating Funds had investments 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 Futures Commission Merchant (“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 counterparty risk since futures contracts are exchange-traded; and the exchange’s clearinghouse, as the counterparty 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 tables identify the fair value amounts of derivative instruments included in the statements of assets and liabilities as derivative contracts, categorized by primary underlying risk, at September 30, 2011 (unaudited) and December 31, 2010. Balances are presented on a gross basis, prior to the application of the impact of counterparty and collateral netting. Total derivative assets and liabilities are adjusted on an aggregate basis to take into consideration the effects of master netting arrangements and have been reduced by the application of cash collateral receivables and payables with its counterparties. The following tables also identify the net gain and loss amounts included in the statement of operations as realized and unrealized gain on trading of commodity futures contracts, categorized by primary underlying risk, for the period ended September 30, 2011 (unaudited) and from commencement of operations through September 30, 2010.

At September 30, 2011, the fair value of derivative instruments was as follows:

Primary underlying risk	Asset derivatives		Liability derivatives
Commodity price
Corn futures contracts	$	-	$	(13,418,601	)
Natural gas futures contracts		-		(169,170	)
WTI crude oil futures contracts		-		(1,120,245	)
Soybean futures contracts		-		(308,748	)
Sugar futures contracts		-		(46,750	)
Wheat futures contracts		-		(255,239	)
Total	$	-	$	(15,318,753	)

At December 31, 2010, the fair value of derivative instruments was as follows:

Primary underlying risk	Asset derivatives
Commodity price
Corn futures contracts	$	5,178,219

The following is a summary of realized and unrealized gains (losses) of the derivative instruments utilized by the Trust:

For the period July 1, 2011 to September 30, 2011

	Realized gain (loss) on			Net change in unrealized loss
Primary underlying risk	derivative instruments			on derivative instruments
Commodity price
Corn futures contracts	$	10,147,450		$	(8,334,377	)
Natural gas futures contracts		(213,080	)		(112,162	)
WTI crude oil futures contracts		(45,320)			(954,906	)
Soybean futures contracts		148			(308,748	)
Sugar futures contracts		(35,682	)		(46,750	)
Wheat futures contracts		344			(255,239	)
Total	$	9,853,860		$	(10,012,182	)

For the period July1, 2010 to September 30, 2010

	Realized gain (loss) on		Net change in unrealized gain
Primary underlying risk	derivative instruments		on derivative instruments
Commodity price
Corn futures contracts	$	1,289,305	$	810,334

For the period January 1, 2011 to September 30, 2011

	Realized gain (loss) on			Net change in unrealized loss
Primary underlying risk	derivative instruments			on derivative instruments
Commodity price
Corn futures contracts	$	15,823,273		$	(18,596,820	)
Natural gas futures contracts		(541,020	)		(169,170	)
Oil futures contracts		138,549			(1,120,245	)
Soybean futures contracts		148			(308,748	)
Sugar futures contracts		(35,682	)		(46,750	)
Wheat futures contracts		344			(255,239	)
Total	$	15,385,612		$	(20,496,972	)

For the period from commencement of operations (June 9, 2010) to September 30, 2010

	Realized gain (loss) on		Net change in unrealized gain
Primary underlying risk	derivative instruments		on derivative instruments
Commodity price
Corn futures contracts	$	1,290,285	$	1,014,829

Volume of Derivative Activities

At September 30, 2011, the notional amounts and number of contracts, categorized by primary underlying risk, were as follows:

	Long exposure
	Notional		Number
Primary underlying risk	amounts		of contracts
Commodity price
Corn futures contracts	$	104,315,150		3,519
Natural gas futures contracts		1,817,040		43
Crude oil futures contracts		4,760,810		59
Soybean futures contracts		2,208,638		37
Sugar futures contracts		2,408,123		90
Wheat futures contracts		2,232,175		66
Total	$	117,741,936		3,814

At December 31, 2010, the notional amounts and number of contracts, categorized by primary underlying risk, are as follows:

	Long exposure
	Notional		Number
Primary underlying risk	amounts		of contracts
Commodity price
Corn futures contracts	$	42,979,000		1,411

Note 5 - Organizational and Offering Costs

Expenses incurred in organizing of the Trust and the initial offering of the shares, including applicable SEC registration fees, were borne directly by the Sponsor for the Operating Funds and will be borne directly by the Sponsor for any series of the Trust which is not yet operating or will be issued in the future. The Trust will not be obligated to reimburse the Sponsor.

Note 6 – Subsequent Events

For the period October 1, 2011 through November 9, 2011, CORN had three Redemption Baskets representing 300,000 shares and $12,588,325.

On October 31, 2011, the Fund filed a Form 8-K with the SEC which described modifications to the contractual relationship with Foreside Fund Services, LLC (“Foreside”), the Trust and the Sponsor. Foreside will continue to serve as the distributor for the Fund; however, as of October 1, 2011, the Distribution Consulting and Marketing Services Agreement that was previously in place between the parties has been terminated.

TEUCRIUM CORN FUND

STATEMENTS OF ASSETS AND LIABILITIES

	September 30, 2011		December 31, 2010
	(Unaudited)
Assets

Equity in BNY Mellon trading accounts:
Cash and cash equivalents	$	101,333,977	$	39,310,538
Commodity futures contracts		-		5,178,219
Collateral, due from broker		16,184,201		-
Interest receivable		757		5,246
Other assets		313,272		12,526
Total assets		117,832,207		44,506,529

Liabilities

Commodity futures contracts		13,418,601		-
Collateral, due to broker		-		1,496,045
Management fee payable to Sponsor		97,674		34,328
Other liabilities		34,317		12,217
Total liabilities		13,550,592		1,542,590

Net assets	$	104,281,615	$	42,963,939

Shares outstanding		2,600,004		1,100,004

Net asset value per share	$	40.11	$	39.06

Market value per share (closing price)	$	39.88	$	39.01

The accompanying notes are an integral part of these financial statements.

TEUCRIUM CORN FUND

SCHEDULE OF INVESTMENTS

September 30, 2011

(Unaudited)

	Fair		Percentage of			Principal
Description: Assets	Value		Net Assets			Amount

Cash equivalents
United States Treasury obligations
U.S. Treasury bills, 0.015%, due October 20, 2011	$	9,999,940		9.59	%	$	10,000,000
U.S. Treasury bills, 0.001%, due November 17, 2011		9,999,870		9.59			10,000,000
Total U.S. Treasury obligations		19,999,810		19.18

Money market funds
Dreyfus Cash Management Plus		81,334,167		77.99

Total cash equivalents	$	101,333,977		97.17	%

	Fair		Percentage of			Notional
Description: Liabilities	Value		Net Assets			Amount

Commodity futures contracts
United States corn futures contracts
CBOT corn futures (1,186 contracts, settlement date March 14, 2012)	$	5,542,419		5.32	%	$	35,920,975
CBOT corn futures (1,005 contracts, settlement date May 14, 2012)		6,580,458		6.31			30,828,375
CBOT corn futures (1,328 contracts, settlement date December 14, 2012)		1,295,724		1.24			37,565,800
	$	13,418,601		12.87	%	$	104,315,150

The accompanying notes are an integral part of these financial statements.

TEUCRIUM CORN FUND

STATEMENTS OF OPERATIONS

(Unaudited)

									From the commencement
	Three months ended			Three months ended		Nine months ended			of operations (June 9, 2010)
	September 30, 2011			September 30, 2010		September 30, 2011			through September 30, 2010
Income
Realized and unrealized gain (loss) on trading of commodity futures contracts:
Realized gain on commodity futures contracts	$	10,147,450		$	1,289,305	$	15,823,273		$	1,290,285
Net change in unrealized appreciation or depreciation on commodity futures contracts		(8,334,377	)		810,334		(18,596,820	)		1,014,829
Interest income		8,677			5,796		47,397			6,405
Total income (loss)		(1,821,750	)		2,105,435		(2,276,150	)		2,311,519

Expenses
Management fees		315,409			22,239		753,877			25,323
Professional fees		94,916			44,121		278,711			52,131
Distribution and marketing fees		146,541			23,019		352,968			29,249
Custodian fees and expenses		32,564			32,564		96,631			40,351
Brokerage commissions		27,901			-		58,319			-
Other expenses		27,637			14,158		81,213			17,600
Total expenses		644,968			136,101		1,621,719			164,654
Net income (loss)	$	1,176,782			1,969,334		(4,347,869	)		2,146,865

Net (loss) income per share		(0.28	)		6.60		1.05			7.49
Net income (loss) per weighted average share		0.43			6.59		(1.92	)		7.67
Weighted average shares outstanding	$	2,718,482		$	298,917	$	2,259,345		$	279,829

The accompanying notes are an integral part of these financial statements.

TEUCRIUM CORN FUND

STATEMENTS OF CHANGES IN NET ASSETS

(Unaudited)

				From the commencement
	Nine months ended			of operations (June 9, 2010)
	September 30, 2011			through September 30, 2010
Operations
Net (loss) income	$	(4,347,869	)	$	2,146,865
Capital transactions
Issuance of Shares		92,546,004			19,462,153
Redemption of Shares		(26,880,459	)		(5,364,242	)
Total capital		65,665,545			14,097,911
Net change in net assets		61,317,676			16,244,776

Net assets, beginning of period		42,963,939			100

Net assets, end of period	$	104,281,615		$	16,244,876
Net asset value per share
At beginning of period	$	39.06		$	25.00

At end of period	$	40.11		$	32.49

The accompanying notes are an integral part of these financial statements.

TEUCRIUM CORN FUND

STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine months ended			From the commencement of operations (June 9, 2010)
	September 30, 2011			through September 30, 2010
Cash flows from operating activities:
Net (loss) income	$	(4,347,869	)	$	2,146,865
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Net change in unrealized appreciation or depreciation on commodity futures contracts		18,596,820			(1,014,829	)
Changes in operating assets and liabilities:
Collateral, due from broker		(16,184,201	)		-
Interest receivable		4,489			(2,480	)
Other assets		(300,746	)		(13,521	)
Collateral, due to broker		(1,496,045	)		380,886
Management fee payable to Sponsor		63,346			10,674
Other liabilities		22,100			64,969
Net cash (used in) provided by operating activities		(3,642,106	)		1,572,564

Cash flows from financing activities:
Proceeds from sale of Shares		92,546,004			19,462,153
Redemption of Shares		(26,880,459	)		(5,364,242	)
Net cash provided by financing activities		65,665,545			14,097,911

Net change in cash and cash equivalents		62,023,439			15,670,475
Cash and cash equivalents, beginning of period		39,310,538			100
Cash and cash equivalents, end of period	$	101,333,977		$	15,670,575

The accompanying notes are an integral part of these financial statements.

NOTES TO FINANCIAL STATEMENTS

September 30, 2011

(Unaudited)

Note 1 – Organization and Operation

Teucrium Corn Fund (referred to herein as “CORN,” the “Corn Fund” or the “Fund”) is a commodity pool that is a series of Teucrium Commodity Trust (“Trust”), a Delaware statutory trust formed on September 11, 2009. The Corn Fund issues common units, called the “Shares,” representing fractional undivided beneficial interests in the Corn Fund. The Corn Fund continuously offers Creation Baskets consisting of 100,000 Shares at their Net Asset Value (“NAV”) to “Authorized Purchasers” through Foreside Fund Services, LLC, which is the distributor for the Corn Fund (the “Marketing Agent”). Authorized Purchasers sell such Shares, which are listed on the New York Stock Exchange (“NYSE”) Arca under the symbol “CORN,” to the public at per-Share offering prices that reflect, among other factors, the trading price of the Shares on the NYSE Arca, the NAV of the Corn Fund at the time the Authorized Purchaser purchased the Creation Baskets and the NAV at the time of the offer of the Shares to the public, the supply of and demand for Shares at the time of sale, and the liquidity of the markets for corn interests. The Corn Fund’s Shares trade in the secondary market on the NYSE Arca at prices that are lower or higher than their NAV per Share.

The investment objective of the Corn Fund is to have the daily changes in percentage terms of the Shares’ NAV reflect the daily changes in percentage terms of a weighted average of the closing settlement prices for three futures contracts for corn (“Corn Futures Contracts”) that are traded on the Chicago Board of Trade (“CBOT”), specifically (1) the second-to-expire CBOT Corn Futures Contract, weighted 35%, (2) the third-to-expire CBOT Corn Futures Contract, weighted 30%, and (3) the CBOT Corn Futures Contract expiring in the December following the expiration month of the third-to-expire contract, weighted 35%. (This weighted average of the three referenced Corn Futures Contracts is referred to herein as the “Benchmark,” and the three Corn Futures Contracts that at any given time make up the Benchmark are referred to herein as the “Benchmark Component Futures Contracts”.)

The Corn Fund commenced investment operations on June 9, 2010 and has a fiscal year ending on December 31. The Corn Fund’s sponsor is Teucrium Trading, LLC (the “Sponsor”). The Sponsor is responsible for the management of the Corn Fund. The Sponsor is a member of the National Futures Association (the “NFA”) and became a commodity pool operator registered with the Commodity Futures Trading Commission (the “CFTC”) effective November 10, 2009.

On June 5, 2010, the Corn Fund’s initial registration of 30,000,000 shares on Form S-1 was declared effective by the U.S. Securities and Exchange Commission (“SEC”). On June 9, 2010, the Corn Fund listed its shares on the NYSE Arca under the ticker symbol “CORN.” On the day prior to that, the Corn Fund issued 200,000 shares in exchange for $5,000,000 at the Corn Fund’s initial NAV of $25 per share. The Corn Fund also commenced investment operations on June 9, 2010 by purchasing commodity futures contracts traded on the Chicago Board of Trade (“CBOT”).

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 and Form 10-K/A, as well as the most recent amendment to Form S-1, dated May 1, 2011, as applicable. The operating results from January 1, 2011 through September 30, 2011 are not necessarily indicative of the results to be expected for the full year ending December 31, 2011.

Note 2 – Summary of Significant Accounting Policies

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 statement 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 statement of operations. Interest on cash equivalents and deposits with the Futures Commission Merchant are recognized on the accrual basis. The Corn Fund earns interest on its assets denominated in U.S. dollars on deposit with the Futures Commission Merchant at a rate equal to 85% of the overnight of Federal Funds Rate. In addition, the Corn Fund earns interest on funds held at the custodian at prevailing market rates for such investments.

Brokerage Commissions

Brokerage commissions on all open commodity futures contracts are accrued on a full-turn basis.

Income Taxes

For tax purposes, the Corn Fund will be treated as a partnership. The Corn Fund does not record a provision for income taxes because the partners report their share of the Corn Fund’s income or loss on their income tax returns. The financial statements reflect the Corn Fund’s transactions without adjustment, if any, required for income tax purposes.

In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic (“ASC”) 740-10, “Accounting for Uncertainty in Income Taxes,” the Corn Fund is required to determine whether a tax position is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Corn Fund files an income tax return in the U.S. federal jurisdiction, and may file income tax returns in various U.S. states and foreign jurisdictions. The Corn Fund is subject to income tax examinations by major taxing authorities for all tax years since inception. The tax benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. De-recognition of a tax benefit previously recognized results in the Corn Fund recording a tax liability that reduces net assets. Based on its analysis, the Corn Fund has determined that it has not incurred any liability for unrecognized tax benefits as of September 30, 2011 or December 31, 2010. However, the Corn Fund’s conclusions regarding this policy may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analysis of and changes to tax laws, regulations, and interpretations thereof.

The Corn Fund recognizes interest accrued related to unrecognized tax benefits and penalties related to unrecognized tax benefits in income tax fees payable, if assessed. No interest expense or penalties have been recognized as of and for the periods ended September 30, 2011 and December 31, 2010.

The Corn Fund 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 Corn Fund’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

Creations and Redemptions

Authorized Purchasers may purchase Creation Baskets consisting of 100,000 shares from CORN. The amount of the proceeds required to purchase a Creation Basket will be equal to the net asset value 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 the Corn Fund only in blocks of 100,000 shares called “Redemption Baskets.” The amount of the redemption proceeds for a Redemption Basket will be equal to the net asset value 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.

The Corn 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 Corn Fund’s statements of assets and liabilities as receivable for shares sold. Amounts payable to Authorized Purchasers upon redemption are reflected in the Fund’s statements of assets and liabilities as payable for shares redeemed. For the period July 1, 2011 through September 30, 2011 the Sponsor had five Redemption Baskets and one Creation Basket totaling a net reduction to the Corn Fund of 400,000 shares. For the period January 1, 2011 through September 30, 2011, the Sponsor had six Redemption Baskets and twenty-one Creation Baskets totaling a net addition to the Corn Fund of 1,500,000 shares.

Allocation of Shareholder Income and Losses

Profit or loss is allocated among the shareholders of the Corn Fund in proportion to the number of shares each shareholder holds as of the close of each month.

Cash Equivalents

Cash equivalents are highly-liquid investments with original maturity dates of three months or less at inception. The Corn Fund reported its cash equivalents in the 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. The Corn Fund has a substantial portion of its assets on deposit with banks. Assets deposited with the bank may, at times, exceed federally insured limits. The Corn Fund had a balance of $81,334,167 and $39,310,538 in money market funds at September 30, 2011 and December 31, 2010, respectively; these balances are included in cash and cash equivalents on the statements of assets and liabilities. The Corn Fund held $19,999,810 and $0 in United States Treasury Bills with a maturity date of three months or less at September 30, 2011 and December 31, 2010 respectively; these balances are included in cash and cash equivalents on the statements of assets and liabilities.

Collateral, Due from/to Broker

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 (ranging upward from less than 2%) 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 Corn Fund’s 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 counterparties, so the counterparties may agree to require the posting of collateral by one or both parties to address credit exposure.

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 Corn Fund’s trading, the Corn Fund (and not its shareholders personally) is 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.

Calculation of Net Asset Value

The Corn Fund’s NAV is calculated by:

Taking the current market value of its total assets, and

Subtracting any liabilities.

The administrator, the Bank of New York Mellon, calculates the NAV of the Corn Fund once each trading day. It calculates NAV as of the earlier of the close of the NYSE or 4:00 p.m. New York time. The NAV for a particular trading day is released after 4:15 p.m. New York time.

In determining the value of Corn Futures Contracts, the administrator uses the CBOT closing price (typically 2:15 p.m. New York time). The administrator determines the value of all other Fund investments as of the earlier of the close of the NYSE or 4:00 p.m. New York time. The value of over-the-counter corn interests is determined based on the value of the commodity or futures contract underlying such corn interest, except that a fair value may be determined if the Sponsor believes that the Corn Fund is subject to significant credit risk relating to the counterparty to such corn interest. For purposes of financial statements and reports, the Sponsor will recalculate the NAV where necessary to reflect the “fair value” of a Futures Contract when the Futures Contract closes at its price fluctuation limit for the day. Treasury securities held by the Corn Fund are valued by the administrator using values received from recognized third-party vendors and dealer quotes. NAV includes any unrealized profit or loss on open corn interests and any other income or expense accruing to the Corn Fund but unpaid or not received by the Corn Fund.

Sponsor Fee

The Sponsor is responsible for investing the assets of the Corn Fund in accordance with the objectives and policies of the Corn 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 Corn Fund. For these services, the Corn Fund is 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. For the period July 1, 2011 through September 30, 2011, the Corn Fund recorded $315,409 in management fees to the sponsor. For the period January 1, 2011 through September 30, 2011, the Corn Fund recorded $753,877 in management fees to the sponsor. The Corn Fund pays 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, the Financial Industry Regulatory Authority (“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 Corn Fund also pays the fees and expenses associated with the Fund’s tax accounting and reporting requirements. Certain aggregate expenses common to all funds managed by the Sponsor are allocated to each fund based on activity drivers deemed most appropriate by the Sponsor for such expenses.

Use of Estimates

Fair Value - Definition and Hierarchy

In determining fair value, the Corn Fund uses various valuation approaches. In accordance with 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 Corn Fund. Unobservable inputs reflect the Corn Fund’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 Fund has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 securities. 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 security to security and is affected by a wide variety of factors including, the type of security, whether the security 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 securities existed. Accordingly, the degree of judgment exercised by the Corn Fund in determining fair value is greatest for securities 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.

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 Corn Fund’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Corn Fund uses prices and inputs that are current as of the measurement date, including during periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many securities. This condition could cause a security to be reclassified to a lower level within the fair value hierarchy. For instance, when Corn Futures Contracts on the 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 Net Asset Value (“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, 2011, the Corn Futures Contracts traded on the CBOT were in a “limit-down” condition and, in the opinion of the Trust and the Fund, the reported value at the close of the market on that day did not fairly value the Corn Futures Contracts held by the Fund. Therefore, the Trust and the Fund used alternative verifiable sources to value the Corn Futures Contracts on June 30, 2011 and the financial statements of the Fund were adjusted accordingly, resulting in an approximately $5,801,000 decrease to unrealized change in commodity futures contracts as compared to the reported CBOT values. On September 30, 2011, in the opinion of the Trust and the Fund, the reported value of the Corn Futures Contracts traded on the CBOT fairly reflected the value of the Corn Futures Contracts held by the Fund, and no adjustments were necessary.

The Funds and the Trust record their derivative activities at fair value. Gains and losses from derivative contracts are included in the statement of operations. Derivative contracts include futures contracts related to commodity prices. Futures, which are listed on a national securities exchange, such as the Chicago Board of Trade (“CBOT”) or the New York Mercantile Exchange (“NYMEX”), 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.

Net Income (Loss) per Share

Net income (loss) per share is the difference between the NAV per unit at the beginning of each period and at the end of each period. The weighted average number of units outstanding was computed for purposes of disclosing net income (loss) per weighted average unit. The weighted average units are equal to the number of units outstanding at the end of the period, adjusted proportionately for units created or redeemed based on the amount of time the units were outstanding during such period.

New Accounting Pronouncements

Note 3 – Fair Value Measurements

The Corn Fund’s assets and liabilities recorded at fair value have been categorized based upon a fair value hierarchy as described in the Corn Fund’s significant accounting policies in Note 2. The following table presents information about the Corn Fund’s assets and liabilities measured at fair value as of September 30, 2011 and assets as of December 31, 2010:

							Balance
							as of
							September 30,
	Level 1		Level 2		Level 3		2011
Assets:
Cash equivalents	$	101,333,977	$	-	$	-	$	101,333,977

						Balance
						as of
						September 30,
	Level 1		Level 2	Level 3		2011
Liabilities:
Commodity futures contracts	$	13,418,601	$	$	-	$	13,418,601

							Balance
							as of
							December 31,
	Level 1		Level 2		Level 3		2010
Assets:
Cash equivalents	$	39,310,538	$	-	$	-	$	39,310,538
Commodity futures contracts		5,178,219		-		-		5,178,219
Total	$	44,488,757	$	-	$	-	$	44,488,757

Transfers

into

out of

into

out of

into

out of

Level 1

Level 2

Level 3

Assets (at fair value)

Derivative contracts

Corn future contracts

9,140,288

Transfers

into

out of

into

out of

into

out of

Level 1

Level 2

Level 3

Liabilities (at fair value)

Derivative contracts

Corn future contracts

5,938,713

Note 4 -Derivative Instruments and Hedging Activities

In the normal course of business, the Corn Fund utilizes 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 Corn Fund’s 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 Corn Fund is also subject to additional counterparty risk due to inability of its counterparties to meet the terms of their contracts. For the three months ended September 30, 2011, the Corn Fund invested in CBOT Corn Futures Contracts and Chicago Mercantile Exchange Calendar Swaps. Cleared Corn Swaps have standardized terms similar to, and are priced by reference to, the corresponding Benchmark Component Futures Contract. Additionally, Other Corn Interests that do not have standardized terms and are not exchange-traded, referred to as “over-the-counter” Corn Interests, can generally be structured as the parties to the Corn Interest contract desire. Therefore, the Fund might enter into multiple Cleared Swaps and/or over-the-counter Interests intended to exactly replicate the performance of the Benchmark Component Futures Contracts for the Fund, or a single over-the-counter Interest designed to replicate the performance of the Benchmark as a whole. Assuming that there is no default by a counterparty to an over-the-counter Interest, the performance of the Interest will necessarily correlate exactly with the performance of the Benchmark or the applicable Benchmark Component Futures Contract. As of September 30, 2011, the Fund had investments only in commodity futures contracts.

Futures Contracts

The Corn Fund is subject to commodity price risk in the normal course of pursuing its 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 Futures Commission Merchant (“FCM”). Subsequent payments (variation margin) are made or received by the Corn Fund each day, depending on the daily fluctuations in the value of the contract, and are recorded as unrealized gains or losses by the Corn Fund. Futures contracts may reduce the Corn Fund’s exposure to counterparty risk since futures contracts are exchange-traded; and the exchange’s clearinghouse, as the counterparty 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 the Corn 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 fair value of derivative instruments was as follows:

At September 30, 2011

Primary underlying risk	Asset derivatives		Liability derivatives
Commodity price
Commodity futures contracts	$	-	$	(13,418,601	)

At December 31, 2010

Primary Underlying Risk	Asset Derivatives
Commodity Price
Commodity futures contracts	$	5,178,219

The following is a summary of realized and unrealized gains and losses of the derivative instruments utilized by the Corn Fund:

Period July 1, 2011 to September 30, 2011

	Realized Gain on		Net Change in Unrealized Loss
Primary Underlying Risk	Derivative Instruments		on Derivative Instruments
Commodity Price
Commodity futures contracts	$	10,147,450	$	(8,334,377	)

Period January 1, 2011 to September 30, 2011

	Realized Gain on		Net Change in Unrealized Loss
Primary Underlying Risk	Derivative Instruments		on Derivative Instruments
Commodity Price
Commodity futures contracts	$	15,823,273	$	(18,596,820	)

Period July 1, 2010 to September 30, 2010

	Realized Gain on		Net Change in Unrealized Gain
Primary Underlying Risk	Derivative Instruments		on Derivative Instruments
Commodity Price
Commodity futures contracts	$	1,289,305	$	810,334

Period commencement of operations (June 9, 2010) through September 30, 2010

	Realized Gain on	Net Change in Unrealized Gain
Primary Underlying Risk	Derivative Instruments	on Derivative Instruments
Commodity Price