10-Q 1 t1600294_10q.htm FORM 10-Q

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 10-Q

  

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the quarterly period ended March 31, 2016
 
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: 001-36840

   

WISDOMTREE COAL FUND

(Registrant)

(Exact name of Registrant as specified in its charter)

     

Delaware

(State or Other Jurisdiction
of Incorporation or Organization)

 

90-6214629

(IRS Employer
Identification No.)

 

c/o WisdomTree Coal Services, LLC

245 Park Avenue
35th Floor

New York, NY

  10167
(Address of Principal Executive Offices)   (Zip Code)
 
1-866-909-9473
(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 website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T 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, or non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one:)

 

Large accelerated filer  ☐               Accelerated filer  ☐               Non-accelerated filer  ☐               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   ☐   No   ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of March 31, 2016: 25,050 Shares outstanding

 

 

 
 

 

WisdomTree Coal Fund

 

Table of Contents 

       
PART I – FINANCIAL INFORMATION   3
     
  Item 1. Financial Statements   3
       
  Statements of Financial Condition March 31, 2016 (unaudited) and December 31, 2015   3
       
  Unaudited Schedule of Investments March 31, 2016   4
       
  Schedule of Investments December 31, 2015   5
       
  Unaudited Statements of Income and Expenses For the Three Months Ended or Period March 31, 2016 and 2015   6
       
  Unaudited Statement of Changes in Shareholders’ Equity For the Three Months Ended March 31, 2016   7
       
  Unaudited Statements of Cash Flows For the Three Months or Period Ended March 31, 2016 and 2015   8
       
  Notes to Financial Statements March 31, 2016   9
       
  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation   16
       
  Item 3. Quantitative and Qualitative Disclosures About Market Risk   20
       
  Item 4. Controls and Procedures   20
       
PART II - OTHER INFORMATION   21
       
  Item 1. Legal Proceedings   21
       
  Item 1A. Risk Factors   21
       
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   21
       
  Item 3. Defaults Upon Senior Securities   21
       
  Item 4. Mine Safety Disclosures   21
       
  Item 5. Other Information   21
       
  Item 6. Exhibits   22
       
SIGNATURES   23

 

2
 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

WisdomTree Coal Fund

Statements of Financial Condition

March 31, 2016 (unaudited) and December 31, 2015 

 

   March 31, 2016 (unaudited)   December 31, 2015 
Assets:          
Cash  $645,172   $ 
Cash held by broker for futures contracts   149,111    786,836 
Unrealized appreciation on futures contracts   23,400     
Prepaid brokerage fees and expenses   724    979 
Total Assets   818,407    787,815 
           
Liabilities and shareholders’ equity:          
Unrealized depreciation on futures contracts       1,550 
Management fee payable to related party   644    635 
Total Liabilities   644    2,185 
           
Shareholders’ equity:          
Paid in capital - 25,050 and 25,050 redeemable shares issued and outstanding as of  March 31, 2016 and December 31, 2015, respectively   1,304,975    1,304,975 
Accumulated deficit   (487,212)   (519,345)
Total shareholders’ equity   817,763    785,630 
Total liabilities and shareholders’ equity  $818,407   $787,815 
           
Net asset value per share  $32.65   $31.36 

 

See accompanying notes to unaudited financial statements

 

3
 

 

WisdomTree Coal Fund

Unaudited Schedule of Investments

March 31, 2016

                                 
Description   Contracts     Unrealized
Appreciation/
(Depreciation)
Percentage of
Net Assets 
    Unrealized
Appreciation/
(Depreciation)
    Notional
Value 
 
Futures Contracts Long
CME Rotterdam Coal Futures               
expiration date 7/29/16   6    0.95%  $7,800   $266,700 
expiration date 8/26/16   6    0.95    7,800    266,700 
expiration date 9/30/16   6    0.95    7,800    266,700 
Total     2.85%  $23,400  $ 800,100

 

See accompanying notes to unaudited financial statements

 

4
 

 

WisdomTree Coal Fund

Schedule of Investments

December 31, 2015

                                 
Description   Contracts     Unrealized
Appreciation/
(Depreciation)
Percentage of
Net Assets 
    Unrealized
Appreciation/
(Depreciation)
    Notional
Value 
 
Futures Contracts Long
CME Rotterdam Coal Futures               
expiration date 4/29/16   6    (0.09)%  $(700)  $262,800 
expiration date 5/27/16   6    (0.05)   (400)   262,800 
expiration date 6/24/16   5    (0.06)   (450)   219,000 
Total     (0.20)%  $(1,550) $ 744,600

 

See accompanying notes to unaudited financial statements

 

5
 

  

WisdomTree Coal Fund 

Unaudited Statements of Income and Expenses 

For the Three Months Ended or Period March 31, 2016 and 2015

                 
    2016     2015*  
Income:
Interest income  $    $  
 
Expenses:          
Management fee to related party   1,837    6,113 
Brokerage fees and expenses   580    1,930 
Total expenses   2,417    8,043 
Net investment loss   (2,417)   (8,043)
           
Realized and Net Change in Unrealized Gain (Loss) on Futures Contracts:          
Net Realized Gain (Loss) from:          
Futures Contracts   9,600    (167,500)
Net Realized Gain (Loss)   9,600    (167,500)
           
Net Change in Unrealized Gain (Loss) from:          
Futures Contracts   24,950    (99,600)
Net Change in Unrealized Gain (Loss)   24,950    (99,600)
Net Realized and Unrealized Gain (Loss) on Futures Contracts   34,550    (267,100)
           
Net Gain (Loss)  $32,133   $(275,143)

 

* Commenced trading operations on the NYSE Arca on February 20, 2015.

 

See accompanying notes to unaudited financial statements

 

6
 

 

WisdomTree Coal Fund 

Unaudited Statement of Changes in Shareholders’ Equity

For the Three Months Ended March 31, 2016 

                     
               Total 
   Paid In     Accumulated   Shareholders’ 
   Units   Capital    Deficit    Equity 
Balance at December 31, 2015   25,050   $1,304,975   $(519,345)  $785,630 
Creation of Limited Units                
Redemption of Limited Units                
Net Gain (Loss):                    
Net Investment Loss           (2,417)   (2,417)
Net Realized Gain from Futures Contracts           9,600    9,600 
Net Change in Unrealized Gain (Loss) from Futures Contracts           24,950    24,950 
Net Gain           32,133    32,133 
Balance at March 31, 2016   25,050   $1,304,975   $(487,212)  $817,763 

 

See accompanying notes to unaudited financial statements

 

7
 

 

WisdomTree Coal Fund 

Unaudited Statements of Cash Flows

For the Three Months or Period Ended March 31, 2016 and 2015

           
   2016   2015* 
Cash flows from operating activities          
Net Gain (Loss)  $32,133   $(275,143)
Adjustments to reconcile net gain (loss) to net cash provided by (used for) operating activities:          
Changes in assets and liabilities          
(Increase)/Decrease in assets:          
Unrealized appreciation on futures contracts   (23,400)    
Prepaid brokerage fees and expenses   255    (2,038)
Increase/(Decrease) in liabilities:          
Unrealized depreciation on futures contracts   (1,550)   99,600 
Management fee payable to related party   9    4,705 
Net cash provided by (used for) operating activities   7,447    (172,876)
           
Cash flows from financing activities          
Proceeds from creation of Limited Units       6,000,000 
Additional capital contribution       500 
Net cash provided by financing activities       6,000,500 
           
Net increase in cash   7,447    5,827,624 
Cash** at beginning of period   786,836    1,500 
Cash** at end of period  $794,283   $5,829,124 

 

* Commenced trading operations on the NYSE Arca on February 20, 2015.

** Includes cash held by the broker for futures contracts.

 

See accompanying notes to unaudited financial statements

 

8
 

 

WisdomTree Coal Fund
Notes to Financial Statements
March 31, 2016

 

(1) Organization

 

WisdomTree Coal Fund (the “Fund”), formerly GreenHaven Coal Fund, was formed as a Delaware statutory trust on September 18, 2012 and commenced operations on February 19, 2015. WisdomTree Coal Services, LLC (the “Sponsor”) serves as the Fund’s commodity pool operator and sponsor under the Fund’s trust agreement, and is responsible for the day-to-day operations of the Fund. Shares representing units of fractional undivided beneficial interest in and ownership of the Fund are listed on the NYSE Arca under the symbol “TONS”.

 

Effective January 1, 2016, in accordance with the terms of a Unit Purchase Agreement dated October 29, 2015, GreenHaven Group LLC sold 100% of the issued and outstanding membership interest in the Sponsor to WisdomTree Investments Inc. Following the sale, the name of the Fund was changed from “GreenHaven Coal Fund” to “WisdomTree Coal Fund” and the name of the Sponsor was changed from “GreenHaven Coal Services, LLC” to “WisdomTree Coal Services, LLC.”

 

As of January 1, 2016, the Fund’s Sub-Advisor and commodity trading advisor is GreenHaven Advisors LLC.

 

The Fund’s investment objective is to provide its investors with exposure to daily changes in the price of coal futures contracts, before Fund liabilities and expenses. The Fund pursues this objective by investing substantially all of its assets in Rotterdam coal futures contracts (“Coal Futures”) traded on the Chicago Mercantile Exchange (“CME”). The Fund will invest in Coal Futures on a non-discretionary basis (i.e., without regard to whether the value of the Fund is rising or falling over any particular period). The Fund will also invest a portion of its net assets in U.S. Treasuries and other high quality short-term fixed income securities for deposit with the Fund’s commodity brokers as margin. Additional specifications for CME Coal Futures can be found at the CME’s website.

 

The Fund continuously offers and redeems baskets of 25,000 Shares (“Baskets”) to authorized participants (“Authorized Participants”) at a price based on the Fund’s net asset value (“NAV”) per Share. Authorized Participants, in turn, may offer such Shares to the public at a per Share offering price that varies, depending on, among other factors, the trading price of the Shares, the NAV, and the supply of and demand for the Shares at the time of the offer.

 

The Sponsor and the Fund retain the services of third party service providers to the extent necessary to operate the ongoing operations of the Fund. (See Note (2)).

 

In accordance with Accounting Standard Update (“ASU“) 2013-08, Financial Services-Investment Companies, the Fund qualifies as an investment company and is applying the accounting and reporting guidance for investment companies.

 

Unaudited Interim Financial Information

 

The financial statements as of March 31, 2016 and for the three months or period ended March 31, 2016 and 2015 included herein are unaudited. In the opinion of the Sponsor, the unaudited financial statements have been prepared on the same basis as the annual financial statements and include all adjustments, which are of the normal recurring nature, necessary for a fair statement of the Fund’s financial position, investments, results of operations and cash flows. Interim results are not necessarily indicative of the results that will be achieved for the year or for any other interim period or for any future year. Past performance of the Fund is not necessarily indicative of future performance.

 

(2) Service Providers and Related Party Agreements

 

(a) “Trustee” – Christiana Trust is the sole Trustee for the Fund. The Trustee is a division of Wilmington Saving Fund Society, FSB, and is headquartered in Wilmington, Delaware.

 

(b) “Sponsor” – WisdomTree Coal Services, LLC (f/k/a GreenHaven Coal Services, LLC) is the commodity pool operator and Sponsor of the Fund, responsible for the day to day operations of the Fund. The Sponsor charges the Fund a management fee for its services. The Sponsor is a Georgia limited liability company with operations in New York, New York.

 

(c) “The Administrator” — State Street Bank and Trust Company is the Fund’s Administrator. The Administrator performs or supervises the services necessary for the operation and administration of the Fund (other than making investment decisions) in accordance with various services agreements entered into with the Fund. These services include calculating the daily NAV of the Fund, accounting and other Fund administrative services. As the Fund’s transfer agent, the Administrator processes creations and redemptions of Shares. These transactions are processed on Depository Trust Company’s (“DTC”) book entry system. The Administrator retains certain financial books and records, including: Basket creation and redemption books and records, fund accounting records, ledgers with respect to assets, liabilities, capital, income and expenses, the registrar, transfer journals and related details and trading and related documents received from futures commission merchants. State Street Bank and Trust Company has an office in Boston, Massachusetts.

 

9
 

 

(d) “Commodity Broker” — Morgan Stanley & Co. LLC (“MS&Co.”) is the Fund’s Commodity Broker. In its capacity as the Commodity Broker, it executes and clears each of the Fund’s futures transactions and performs certain administrative services for the Fund. MS&Co. is based in New York, New York.

 

(e) “Execution Broker” — TFS Energy Futures LLC (“TEF”) is the Fund’s Execution Broker. The Execution Broker executes certain of the Fund’s over-the-counter transactions and performs certain administrative services for the Fund. TEF is based in New York, New York.

 

(f) “Distributor” — Foreside Fund Services LLC (“FFS”) is the Fund’s Distributor. The Fund’s Distributor assists the Sponsor and the Administrator with certain functions and duties relating to the creation and redemption of Baskets, including receiving and processing orders from the Fund’s Authorized Participants to create and redeem Baskets, coordinating the processing of such orders and related functions and duties. FFS has an office in Portland, Maine.

 

(g) “Authorized Participant” — Authorized Participants are the only persons that may place orders to create or redeem Baskets. Each Authorized Participant must (1) be a registered broker-dealer or other securities market participant such as a bank or other financial institution which is not required to register as a broker-dealer to engage in securities transactions, (2) be a participant in the DTC, and (3) have entered into a Participant Agreement with the Fund. The Participant Agreement sets forth the procedures for the creation and redemption of Baskets and for the delivery of cash required for such creations or redemptions. A list of the current Authorized Participants can be obtained from the Sponsor.

 

(3) Summary of Significant Accounting Policies

 

(a) Use of Estimates

 

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the amounts of reported income and expenses. Actual results could differ from those estimates.

 

(b) Recently Issued Accounting Standards

 

No recently promulgated accounting standards are expected to have an effect on the Fund’s financial statements.

 

(c) Cash Held by Broker

 

Cash held in segregated accounts at MS&Co. is for the purpose of meeting the initial and subsequent variation margin requirements on open futures contracts held by the Fund. The cash held by MS&Co. is restricted cash and is not insured by the Federal Deposit Insurance Corporation.

  

(d) U.S. Obligations

 

The Fund records purchases and sales of U.S. Treasury Obligations on a trade date basis. These holdings are marked to market based on quotations from broker-dealers or independent service providers. The Fund may hold U.S. Treasury Obligations for deposit with the Commodity Broker as margin for trading and holding against initial margin of the open futures contracts. Interest income is recognized on an accrual basis when earned. Premiums and discounts are amortized or accreted over the life of the U.S. Treasury Obligations. As of March 31, 2016 and December 31, 2015, there were no U.S. Treasury Obligations held by the Fund.

  

(e) Income Taxes

 

The Fund is classified as a partnership, for U.S. federal income tax purposes. Accordingly, the Fund is not subject to U.S. federal, state, or local income taxes. No provision for federal, state, or local income taxes has been made in the accompanying financial statements, as investors are individually liable for income taxes, if any, on their allocable share of the Fund’s income, gain, loss, deductions and other items.

 

The Fund accounts for uncertainty in income taxes pursuant to the applicable accounting standard, which provides measurement, presentation and disclosure guidance related to uncertain tax positions. The guidance addresses how tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this topic, the Fund may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution.

 

10
 

 

(f) Futures Contracts

 

The Fund purchases and holds Coal Futures for investment purposes. These contracts are recorded on a trade date basis and open contracts are valued daily at settlement prices provided by the relevant exchanges. In the Statement of Financial Condition, Coal Futures are presented at their published settlement prices on the last business day of the period, in accordance with the fair value accounting standard. Since these contracts are actively traded in markets that are directly observable and which provide readily available price quotes, their market value is deemed to be their fair value under the fair value accounting standard. (See Note 4 — Fair Value Measurements).

 

However, when market closing prices are not available, the Sponsor may value an asset of the Fund pursuant to such other principles as the Sponsor deems fair and equitable provided such principles are consistent with the fair value accounting standard. Realized gains (losses) and changes in unrealized appreciation (depreciation) on open positions are determined on a specific identification basis and recognized in the Statements of Income and Expenses in the period in which the contract is closed or the changes occur, respectively.

 

(g) Subsequent Events

 

For purposes of disclosure in the financial statements, the Fund has evaluated events occurring between the period ended March 31, 2016 and when the financial statements were issued. During that period, no Shares were created or redeemed. The evaluation did not result in any subsequent events that necessitated disclosures and/or adjustments.

 

(4) Fair Value Measurements

 

The existing guidance for fair value measurements establishes the authoritative definition for fair value, sets out a framework for measuring fair value and outlines the required disclosures regarding fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Fund uses a three-tier fair value hierarchy based upon observable and unobservable inputs as follows:

 

Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.

 

Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

 

Level 3 — Unobservable inputs for the asset or liability.

 

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The assets of the Fund are either exchange-traded securities that are valued at the official closing price on the exchange where they are principally traded or U.S. government securities that are valued using dealer and broker quotations or other inputs that are observable or can be corroborated by observable market data. A summary of the Fund’s assets and liabilities at fair value as of March 31, 2016, classified according to the levels used to value them, is as follows:

 

Assets  Quoted
Prices in
Active
Market
(Level 1)
   Other
Significant
Observable
Inputs
(Level 2)
   Significant
Unobservable
Inputs
(Level 3)
   Totals 
Unrealized appreciation on futures contracts  $23,400   $   $   $23,400 

 

There were no transfers between Level 1 and Level 2 for the Fund during the three months ended March 31, 2016. The Fund did not hold any Level 3 securities during the three months ended March 31, 2016.

 

A summary of the Fund’s assets and liabilities at fair value as of December 31, 2015, classified according to the levels used to value them, is as follows:

 

Liabilities  Quoted
Prices in
Active
Market
(Level 1)
   Other
Significant
Observable
Inputs
(Level 2)
   Significant
Unobservable
Inputs
(Level 3)
   Totals 
Unrealized depreciation on futures contracts  $(1,550)  $   $   $(1,550)

 

11
 

 

There were no transfers between Level 1 and Level 2 for the Fund during the year ended December 31, 2015. The Fund did not hold any Level 3 securities during the year ended December 31, 2015.

 

(5) Derivative Instruments and Hedging Activities

 

The Fund uses derivative instruments as part of its principal investment strategy to achieve its investment objective. As of March 31, 2016, the Fund was invested in commodity futures contracts. For the three months ended March 31, 2016 and year ended December 31, 2015, the volume of derivative activity (based on average month-end notional amounts) were $752,238 and $1,693,021, respectively.

 

At March 31, 2016, the fair value of derivative instruments was as follows:

 

Derivative
Instruments
  Asset
Derivatives (i)
   Liability
Derivatives
 
Commodity Futures Contracts  $23,400   $  

 

(i)Values are disclosed on the March 31, 2016 Statements of Financial Condition under unrealized appreciation on futures contracts.

 

The following is a summary of the realized and unrealized gains and losses of the derivative instruments utilized by the Fund for the three months ended March 31, 2016:

 

Derivative
Instruments
  Statements of
Income and Expenses Location
  Realized Gain
on Derivative
Instruments
  Net Change in
Unrealized Gain (Loss)
on Derivative
Instruments
 
Commodity Futures Contracts  Net realized gain (loss) from futures contracts  $9,600     
   Net change in unrealized gain (loss) from futures contracts      $24,950 

 

At December 31, 2015, the fair value of derivative instruments was as follows:

 

Derivative
Instruments
  Asset
Derivatives
   Liability
Derivatives (ii)
 
Commodity Futures Contracts  $  $1,550  

 

(ii)Values are disclosed on the December 31, 2015 Statements of Financial Condition under unrealized depreciation on futures contracts.

                       

The following is a summary of the realized and unrealized gains and losses of the derivative instruments utilized by the Fund for the period ended March 31, 2015.

 

Derivative
Instruments
  Statements of
Income and Expenses Location
  Realized Loss
on Derivative
Instruments
  Net Change in
Unrealized Gain (Loss)
on Derivative
Instruments
 
Commodity Futures Contracts  Net realized gain (loss) from futures contracts  $(167,500)      
   Net change in unrealized gain (loss) from futures contracts      $(99,600)

 

(6) Financial Instrument Risk

 

Market Risk

 

Trading in Coal Futures will involve the Fund entering into contractual commitments to purchase or sell specific amounts of instruments at a specified date in the future. The gross or face amount of the contracts is expected to significantly exceed the future cash requirements of the Fund, however, the Fund intends to close out any open positions prior to the contractual expiration date. As a result, the Fund’s market risk is the risk of loss arising from the decline in value of the contracts, not from the need to make delivery under the contracts. The Fund considers the “fair value” of derivative instruments to be the unrealized gain or loss on the contracts. The market risk associated with the commitment by the Fund to purchase a specific contract will be limited to the aggregate face amount of the contacts held.

 

12
 

 

The exposure of the Fund to market risk will depend on a number of factors including the markets for the specific instrument, the volatility of interest rates and foreign exchange rates, the liquidity of the instrument-specific interest market and the relationships among the contracts held by the Fund.

 

Market risk is the potential for changes in the value of the financial instruments traded by the Fund due to market changes, including fluctuations in commodity prices. In entering into these contracts, there exists a market risk that such contracts may be significantly influenced by conditions, resulting in such contracts being less valuable. If the markets should move against all of the futures interest positions at the same time, and the Sponsor was unable to offset such positions, the Fund could experience substantial losses.

 

Credit Risk

 

When the Fund enters into Coal Futures, it will be exposed to the credit risk that the counterparty will not be able to meet its obligations. As the Fund initially plans to trade its investments primarily on CME ClearPort, the Fund executes trades of Block Traded Coal Futures via CME ClearPort by placing purchase orders with an Execution Broker. The Execution Broker identifies a selling counterparty, and simultaneously with completion of the transaction, the Block Traded Coal Futures are entered into CME ClearPort by the Execution Broker, thereby completing the transaction and creating a cleared futures transaction. If the CME does not accept the transaction for any reason, the transaction is considered null and void and of no legal effect. As a result, all of the Fund’s positions in Coal Futures, whether traded on the CME ClearPort Block Trade entry systems (the current practice) or on CME Globex (which may occur in the future), will be cleared by CME clearing member firms, thereby reducing counterparty risk. There can be no assurance that any counterparty, clearinghouse, or their financial backers will satisfy their obligations to the Fund.

 

Credit risk is the possibility that a loss may occur due to the failure of an exchange clearinghouse to perform according to the terms of a contract. Credit risk with respect to exchange-traded instruments is reduced to the extent that an exchange or clearing organization acts as counterparty to the transactions. The Fund’s risk of loss in the event of counterparty default is typically limited to the amounts recognized in the Statement of Financial Condition and not represented by the contract or notional amounts of the instruments.

 

The Commodity Exchange Act (“CEA”) requires all Futures Commission Merchants (“FCMs”), such as the Fund’s current Commodity Broker, to meet and maintain specified fitness and financial requirements, to segregate customer funds from proprietary funds and account separately for all customers’ funds and positions, and to maintain specified books and records open to inspection by the staff of the CFTC. The CFTC has similar authority over introducing brokers, or persons who solicit or accept orders for commodity interest trades but who do not accept margin deposits for the execution of trades. The CEA authorizes the CFTC to regulate trading by FCMs and by their officers and directors, permits the CFTC to require action by exchanges in the event of market emergencies, and establishes an administrative procedure under which customers may institute complaints for damages arising from alleged violations of the CEA. The CEA also gives the states powers to enforce its provisions and the regulations of the CFTC.

 

The CFTC has adopted regulations that require enhanced customer protections, risk management programs, internal monitoring and controls, capital and liquidity standards, customer disclosures and auditing and examination programs for FCMs. The rules are intended to afford greater assurances to market participants that customer segregated funds and secured amounts are protected, customers are provided with appropriate notice of the risks of futures trading and of the FCMs with which they may choose to do business, FCMs are monitoring and managing risks in a robust manner, the capital and liquidity of FCMs are strengthened to safeguard the continued operations and the auditing and examination programs of the CFTC and the self-regulatory organizations are monitoring the activities of FCMs in a thorough manner.

  

Off-Balance Sheet Risk

 

The Fund does not use and is not expected to use special purpose entities to facilitate off-balance sheet financing arrangements. The Fund does not have and is not expected to have loan guarantee arrangements or other off-balance sheet arrangements of any kind other than agreements entered into in the normal course of business, which may include indemnification provisions related to certain risks service providers undertake in performing services that are in the interest of the Fund. While the Fund’s exposure under such indemnification provisions cannot be estimated, these general business indemnifications are not expected to have a material impact on the Fund’s financial position. In the normal course of its business, the Fund may be party to financial instruments with off-balance sheet risk. The term “off-balance sheet risk” refers to an unrecorded potential liability that, even though it does not appear on the statements of financial condition, may result in a future obligation or loss. The financial instruments used by the Fund are coal futures, whose values are based upon an underlying asset and generally represent future commitments which have a reasonable possibility to be settled in cash or through physical delivery. These instruments are traded on an exchange and are standardized contracts.

 

(7) Share Creations and Redemptions

 

As described in the Item 1 of this quarterly report, the creation and redemption procedures allow only Authorized Participants to create and redeem Shares directly from the Fund. Proceeds from sales of shares of the Fund are invested directly in the Fund. Retail investors seeking to purchase or sell Shares on any day are expected to execute such transactions in the secondary market, on the NYSE Arca, at the market price per Share, rather than in connection with the creation or redemption of Baskets.

 

(a) Creation of Shares

 

General. On any business day, an Authorized Participant may place an order with the Distributor to create one or more Baskets. Creation orders are accepted only on a “business day” during which the NYSE Arca is open for regular trading. Purchase orders must be placed no later than 10:00 a.m., New York time, on each business day the NYSE Arca is open for regular trading. The day on which the Distributor receives a valid purchase order is the purchase order date. Purchase orders are irrevocable. By placing a purchase order, and prior to delivery of the applicable Baskets, an Authorized Participant’s DTC account will be charged the non-refundable transaction fee due for the purchase order.

 

13
 

 

Determination of Required Payment. The total payment required to create each Basket is the NAV of 25,000 Shares on the purchase order date, but only if the required payment is timely received. To calculate the NAV, the Administrator will use the CME settlement price (typically determined after 5:00 p.m. New York time) for the Coal Futures traded on the CME.

 

Delivery of Required Payment. An Authorized Participant who places a purchase order must transfer to the Administrator the required amount of U.S. Treasuries and/or cash by the end of the next business day following the purchase order date. Upon receipt of the deposit amount, the Administrator will direct DTC to credit the number of Baskets ordered to the Authorized Participant’s DTC account on the next business day following the purchase order date.

 

Suspension of Purchase Orders. The Sponsor acting by itself or through the Administrator or the Fund’s Distributor may suspend the right of purchase, or postpone the purchase settlement date, for any period during which the NYSE Arca or other exchange on which the shares are listed is closed, other than for customary holidays or weekends, or when trading is restricted or suspended. None of the Sponsor, the Distributor or the Administrator will be liable to any person or in any way for any loss or damages that may result from any such suspension or postponement.

 

Rejection of Purchase Orders. The Sponsor acting by itself or through the Administrator or the Distributor may reject a purchase order if (i) it determines that the purchase order is not in proper form, (ii) circumstances outside the control of the Sponsor make it, for all practical purposes, not feasible to process creations of Baskets, such as during force majeure events, or (iii) the Sponsor believes that it or the Fund would be in violation of any securities or commodities rules or regulations regarding position limits or otherwise by accepting a creation. None of the Administrator, the Distributor or the Sponsor will be liable for the rejection of any purchase order.

 

(b) Redemption of Shares

 

General. The approved procedures by which an Authorized Participant can redeem one or more Baskets mirror in reverse the procedures for the creation of Baskets. On any business day, an Authorized Participant may place an order with the Distributor to redeem one or more Baskets. Redemption orders must be placed no later than 10:00 a.m., New York time, on each business day. The day on which the Distributor receives a valid redemption order is the redemption order date.

 

By placing a redemption order, an Authorized Participant agrees to deliver the Baskets to be redeemed through DTC’s book-entry system to the Fund not later than 12:00 p.m., New York time, on the business day immediately following the redemption order date. By placing a redemption order, and prior to receipt of the redemption distribution, an Authorized Participant’s DTC account will be charged the non-refundable transaction fee due for the redemption order.

 

Determination of Redemption Proceeds. The redemption proceeds from the Fund consists of the cash redemption amount equal to the NAV of the number of Baskets requested in the Authorized Participant’s redemption order on the redemption order date. To calculate the NAV, the Administrator will use the CME settlement price (typically determined after 5:00 p.m. New York time) for the Coal Futures traded on the CME.

 

Delivery of Redemption Proceeds. The redemption proceeds due from the Fund is delivered to the Authorized Participant at 12:00 p.m., New York time, on the business day immediately following the redemption order date if, by such time, the Fund’s DTC account has been credited with the Baskets to be redeemed. If the Fund’s DTC account has not been credited with all of the Baskets to be redeemed by such time, the redemption distribution is delivered to the extent of whole Baskets received. Any remainder of the redemption distribution is delivered on the next business day to the extent of remaining whole Baskets received if the Administrator receives the fee applicable to the extension of the redemption distribution date which the Sponsor may, from time to time, determine and the remaining Baskets to be redeemed are credited to the Fund’s DTC account by 12:00 p.m., New York time, on such next business day. Any further outstanding amount of the redemption order shall be cancelled. The Sponsor may cause the redemption distribution to be delivered notwithstanding that the Baskets to be redeemed are not credited to the Fund’s DTC account by 12:00 p.m., New York time, on the next business day immediately following the redemption order date if the Authorized Participant has collateralized its obligation to deliver the Baskets through DTC’s book entry system on such terms as the Administrator and the Sponsor may from time to time determine.

 

Suspension of Redemption Orders. The Sponsor acting by itself or through the Administrator or the Distributor may suspend the right of redemption, or postpone the redemption settlement date, (i) for any period during which the NYSE Arca is closed, other than customary weekend or holiday closings, or for any period when trading on the NYSE Arca is suspended, (ii) for any period during which an emergency exists as a result of which the redemption distribution is not reasonably practicable, or (iii) in the event any price limits imposed by the CME or the CFTC are reached and the Sponsor believes that permitting redemptions under such circumstances may adversely impact investors. None of the Sponsor, the Distributor or the Administrator will be liable to any person or in any way for any loss or damages that may result from any such suspension or postponement.

 

14
 

 

Rejection of Redemption Orders. The Sponsor acting by itself or through the Distributor or the Administrator may reject a redemption order if the order is not in proper form as described in the Participant Agreement or if the fulfillment of the order, in the opinion of the Sponsor’s counsel, might be unlawful. None of the Administrator, the Distributor or the Sponsor will be liable for the rejection of any redemption order.

 

(8) Operating Expenses

 

(a) Sponsor Fee

 

The Fund pays the Sponsor a fee equal to 0.95% per annum of the Fund’s average daily NAV. For the three months or period ended March 31, 2016 and 2015, the Sponsor’s fee was $1,837 and $6,113, respectively. In addition, the Fund will pay its brokerage fees and expenses, and certain other operational fees, as described below.

 

(b) Organization and Offering Expenses

 

The fees and expenses incurred in connection with the organization of the Fund and the offering of the Shares were paid by the Sponsor. The Sponsor, under certain circumstances, may be reimbursed by the Fund in the future in connection with the payment of the organizational and offering fees and expenses.

 

(c) Brokerage Commissions, Fees, and Routine Operational, Administrative, and Other Ordinary Expenses

 

The Sponsor currently does not expect brokerage commissions and fees as well as routine operational, administrative and other ordinary expenses for which the Fund is responsible, including, but not limited to, the fees and expenses of the Trustee, legal and accounting fees and expenses, tax preparation expenses, filing fees, and printing, mailing and duplication costs, to exceed 0.30% of the Net Asset Value of the Fund in any year, although the actual amount of such fees and expenses in any year may be greater. The Fund’s brokerage commissions and fees and routine operational, administrative and other ordinary expenses are accrued at a rate of 0.30% per annum in the aggregate. Of the amounts so accrued, the Fund first pays brokerage commissions and fees, and secondly from the remainder of the amounts so accrued, reimburses the Sponsor for first, the Fund’s ongoing operational, administrative, professional and other ordinary fees and expenses (other than any marketing-related fees and expenses), and second, the Fund’s organizational and offering fees and expenses.

 

Brokerage commissions and fees are charged against the Fund’s assets on a per transaction basis. The brokerage commissions, trading fees and routine operational, administrative, and other ordinary expenses incurred for the three months or period ended March 31, 2016 and 2015 were $580 and $1,930, respectively.

 

(9) Termination

 

The term of the Fund is perpetual, but the Fund may be dissolved at any time and for any reason, or for no reason at all, by the Sponsor with written notice to the Shareholders. Any termination of the Fund will result in the compulsory redemption of all outstanding Shares.

 

(10) Profit and Loss Allocations and Distributions

 

The Sponsor and the Shareholders share in any profits and losses of the Fund attributable to the Fund in proportion to the percentage interest owned by each. Distributions may be made at the sole discretion of the Sponsor on a pro-rata basis in accordance with the respective capital balances of the Shareholders, but the Fund is under no obligation to make periodic distributions to Shareholders. The Fund made no distributions to its Shareholders during the three months ended March 31, 2016.

 

(11) Commitments and Contingencies

 

The Sponsor, either in its own capacity or in its capacity as the Sponsor and on behalf of the Fund, has entered into various service agreements that contain a variety of representations, or provide indemnification provisions related to certain risks service providers undertake in performing services which are in the best interest of the Fund. As of March 31, 2016, no claims had been received by the Fund and it was therefore not possible to estimate the Fund’s potential future exposure under such indemnification provisions.

 

15
 

 

(12) Net Asset Value and Financial Highlights

 

The Fund is presenting the following NAV and financial highlights related to investment performance and operations for a Share outstanding for the three months or period ended March 31, 2016 and 2015. The total return at NAV is based on the change in NAV of the Shares during the period and the total return at market value is based on the change in market value of the Shares on the NYSE Arca during the period. An individual investor’s return and ratios may vary based on the timing of capital transactions.

 

   Three Months
Ended
   Period Ended 
   March 31, 2016   March 31, 2015* 
Net Asset Value          
Net asset value per Share, beginning of period  $31.36   $30.00 
Capital contribution on original units       10.00 
Net asset value per Share, beginning of period   31.36    40.00 
Net realized and change in unrealized gain (loss)   1.39    (1.78)
Net investment loss(1)   (0.10)   (0.05)
Net increase (decrease) in net assets from operations   1.29    (1.83)
Net asset value per Share, end of period  $32.65   $38.17 
           
Market value per Share, beginning of period  $30.85   $40.00 
Market value per Share, end of period  $32.21   $39.30 
           
Ratio to average Net Assets(2)          
Net investment loss   (1.25)%   (1.28)%
Total expenses   1.25%   1.28%
           
Total Return, at net asset value(3)   4.11%   (4.58)%
Total Return, at market value(3,4)   4.44%   (1.75)%

 

*Commenced trading on the NYSE Arca on February 20, 2015.
(1)Based on average shares outstanding.
(2)Annualized.
(3)Total return calculated for a period of less than one year is not annualized.

(4)In computing the market price total returns, the inputs for dates on or after January 1, 2016 reflect the midpoint of the bid/ask spread as of the close of trading on the exchange where Fund shares are listed, and the inputs for dates prior to January 1, 2016 reflect the last price as of the close of trading on the exchange where Fund shares are listed.

 

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

 

Overview/Introduction

 

The WisdomTree Coal Fund is a commodity pool that was organized as a Delaware statutory trust on June 18, 2012. The Fund’s commodity pool operator is WisdomTree Coal Services, LLC (the “Sponsor”). The Fund’s Trustee is Christiana Trust, a division of Wilmington Savings Fund Society, FSB. Shares representing units of fractional undivided beneficial interest in and ownership of the Fund are listed on the NYSE Arca under the symbol “TONS.”

 

Effective January 1, 2016, in accordance with the terms of a Unit Purchase Agreement dated October 29, 2015, GreenHaven Group LLC sold 100% of the issued and outstanding membership interest in the Sponsor to WisdomTree Investments Inc. Following the sale, the name of the Fund was changed from “GreenHaven Coal Fund” to “WisdomTree Coal Fund” and the name of the Sponsor was changed from “GreenHaven Coal Services, LLC” to “WisdomTree Coal Services, LLC.”

 

As of January 1, 2016, the Fund’s commodity trading advisor is GreenHaven Advisors LLC (the “Sub-Advisor”).

 

The Fund’s investment objective is to provide investors with exposure to daily changes in the price of coal futures contracts, before Fund liabilities and expenses. The Fund pursues this objective by investing substantially all of its assets in Rotterdam coal futures contracts (“Coal Futures”) traded on the Chicago Mercantile Exchange. The Fund also may realize interest income from its holdings in U.S. Treasuries.

 

The Fund continuously offers and redeems baskets of 25,000 Share Baskets (“Baskets”) to authorized participants (“Authorized Participants”) at a price based on the Fund’s net asset value (“NAV”) per Share. Authorized Participants, in turn, may offer such Shares to the public at a per Share offering price that varies depending on, among other factors, the trading price of the Shares, the NAV, and the supply of and demand for the Shares at the time of the offer.

 

Performance Summary

 

Performance of the Fund is detailed below in “Results of Operations.”

 

16
 

 

Net Asset Value

 

The Fund’s Net Asset Value (“NAV”) equals the market value of the Fund’s total assets less total liabilities calculated in accordance with generally accepted accounting principles in the United States. The Fund’s Administrator calculates the NAV once each NYSE Arca trading day. The Administrator uses the CME settlement price (typically determined after 5:00 p.m. New York time) for the contracts traded on the CME Facilities. The NAV for a particular trading day is released after 5:00 p.m. New York time and effective January 1, 2016, will be posted at www.wisdomtree.com.

 

Critical Accounting Policies

 

Critical accounting policies for the Fund are as follows:

 

Preparation of the financial statements and related disclosures in conformity with U.S. generally accepted accounting principles requires the application of appropriate accounting rules and guidance, as well as the use of estimates, and requires the Sponsor to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expense and related disclosure of contingent assets and liabilities during the reporting period of the financial statements and accompanying notes. The Fund applies these policies that involve judgments and actual results may differ from the estimates used.

 

When market closing prices are not available, the Sponsor may value an asset of the Fund pursuant to policies the Sponsor has adopted, which are consistent with normal industry standards.

 

Interest income on U.S. Treasuries is recognized on an accrual basis when earned. Discounts and premiums are amortized or accreted over the life of the U.S. Treasuries.

 

Realized gains (losses) and changes in unrealized gain (loss) on open positions are determined on a specific identification basis and recognized in the statement of income and expenses in the period in which the contract is closed or the changes occur, respectively.

 

Market Risk

 

Trading in Coal Futures involves the Fund entering into contractual commitments to purchase or sell specific amounts of instruments at a specified date in the future. The gross or face amount of the contracts is expected to significantly exceed the future cash requirements of the Fund, however, the Fund intends to close out any open positions prior to the contractual expiration date. As a result, the Fund’s market risk is the risk of loss arising from the decline in value of the contracts, not from the need to make delivery under the contracts. The Fund considers the “fair value” of derivative instruments to be the unrealized gain or loss on the contracts. The market risk associated with the commitment by the Fund to purchase a specific contract is limited to the aggregate face amount of the contracts held.

 

The exposure of the Fund to market risk depends on a number of factors including the markets for the specific instrument, the volatility of interest rates and foreign exchange rates, the liquidity of the instrument-specific interest market and the relationships among the contracts held by the Fund.

 

Credit Risk

 

When the Fund enters into Coal Futures, it will be exposed to the credit risk that the counterparty will not be able to meet its obligations. As the Fund trades its investments primarily on CME ClearPort, the Fund executes trades of Block Traded Coal Futures via CME ClearPort by placing purchase orders with an Execution Broker. The Execution Broker identifies a selling counterparty, and simultaneously with completion of the transaction, the Block Traded Coal Futures are entered into CME ClearPort by the Execution Broker, thereby completing the transaction and creating a cleared futures transaction. If the CME does not accept the transaction for any reason, the transaction is considered null and void and of no legal effect. As a result, all of the Fund’s positions in Coal Futures, whether traded on the CME ClearPort Block Trade entry systems (the current practice) or on CME Globex (which may occur in the future), will be cleared by CME clearing member firms, thereby reducing counterparty risk. There can be no assurance that any counterparty, clearinghouse, or their financial backers will satisfy their obligations to the Fund.

 

The Commodity Exchange Act (“CEA”) requires all FCMs, such as the Fund’s current Commodity Broker, to meet and maintain specified fitness and financial requirements, to segregate customer funds from proprietary funds and account separately for all customers’ funds and positions, and to maintain specified books and records open to inspection by the staff of the CFTC. The CFTC has similar authority over introducing brokers, or persons who solicit or accept orders for commodity interest trades but who do not accept margin deposits for the execution of trades. The CEA authorizes the CFTC to regulate trading by FCMs and by their officers and directors, permits the CFTC to require action by exchanges in the event of market emergencies, and establishes an administrative procedure under which customers may institute complaints for damages arising from alleged violations of the CEA. The CEA also gives the states powers to enforce its provisions and the regulations of the CFTC.

 

17
 

 

On November 14, 2013, the CFTC published final regulations that require enhanced customer protections, risk management programs, internal monitoring and controls, capital and liquidity standards, customer disclosures and auditing and examination programs for FCMs. The rules are intended to afford greater assurances to market participants that customer segregated funds and secured amounts are protected, customers are provided with appropriate notice of the risks of futures trading and of the FCMs with which they may choose to do business, FCMs are monitoring and managing risks in a robust manner, the capital and liquidity of FCMs are strengthened to safeguard the continued operations and the auditing and examination programs of the CFTC and the self-regulatory organizations are monitoring the activities of FCMs in a thorough manner.

 

Liquidity and Capital Resources

 

The Fund does not anticipate making use of borrowings or other lines of credit to meet its obligations. The Fund meets its liquidity needs in the normal course of business from the proceeds of the sale of its investments or from the cash, cash equivalents and/or the collateralizing U.S. Treasuries that it holds. The Fund’s liquidity needs include: redeeming its Shares, providing margin deposits for existing Coal Futures, the purchase of additional Coal Futures and paying expenses.

 

The Fund generates cash primarily from (i) the sale of creation Baskets and (ii) interest earned on cash, cash equivalents and investments in collateralizing U.S. Treasuries. Substantially all of the net assets of the Fund are allocated to trading in Coal Futures. Most of the assets of the Fund are held in U.S. Treasuries, cash and/or cash equivalents that could or are used as margin or collateral for trading in Coal Futures. The percentage that such assets bear to the total net assets vary from period to period as the market values of the Coal Futures change. Interest earned on interest-bearing assets of the Fund is paid to the Fund.

 

The Fund’s investments in Coal Futures could be subject to periods of illiquidity because of market conditions, regulatory considerations and other reasons. Such conditions could prevent the Fund from promptly liquidating a position in Coal Futures.

 

Off-Balance Sheet Risk

 

The Fund does not use and is not expected to use special purpose entities to facilitate off-balance sheet financing arrangements. The Fund does not have and is not expected to have loan guarantee arrangements or other off-balance sheet arrangements of any kind other than agreements entered into in the normal course of business, which may include indemnification provisions related to certain risks service providers undertake in performing services that are in the interest of the Fund. While the Fund’s exposure under such indemnification provisions cannot be estimated, these general business indemnifications are not expected to have a material impact on the Fund’s financial position.

  

Results of Operations

 

FOR THE PERIOD FROM COMMENCEMENT OF OPERATIONS TO MARCH 31, 2016

 

The Fund commenced operations on February 19, 2015 at $40.00 per share and the Fund’s shares began secondary market trading on the NYSE Arca on February 20, 2015.

 

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

                                     
Date  NAV
Per Share
   Total
Shares
   Net Assets   1 Month
Return
   3 Month
Return
   Year to Date Return   Cumulative
Return
Since
Inception
 
2/19/2015  $40.00    150,050   $6,002,000    N/A    N/A    N/A    N/A  
2/28/2015  $41.36    150,050   $6,206,068    N/A    N/A    N/A    3.40 %
3/31/2015  $38.17    150,050   $5,727,409    (7.71)%   N/A    N/A    (4.58 )%
4/30/2015  $38.58    150,050   $5,788,929    1.07%   N/A    N/A    (3.55 )%
5/31/2015  $38.29    25,050   $959,165    (0.75)%   (7.42)%   N/A    (4.28 )%
6/30/2015  $39.73    25,050   $995,237    3.76%   4.09%   N/A    (0.68 )%
7/31/2015  $36.91    25,050   $924,596    (7.10)%   (4.33)%   N/A    (7.73 )%
8/31/2015  $35.70    25,050   $894,285    (3.28)%   (6.76)%   N/A    (10.75 )%
9/30/2015  $33.19    25,050   $831,410    (7.03)%   (16.46)%   N/A    (17.03 )%
10/31/2015  $33.73    25,050   $844,937    1.63%   (8.62)%   N/A    (15.68 )%
11/30/2015  $32.78    25,050   $821,139    (2.82)%   (8.18)%   N/A    (18.05 )%
12/31/2015  $31.36    25,050   $785,568    (4.33)%   (5.51)%   N/A    (21.60 )%
1/31/2016  $30.79    25,050   $771,290    (1.82)%   (8.72)%   (1.82)%   (23.03 )%
2/29/2016  $30.85    25,050   $772,793    0.19%   (5.89)%   (1.63)%   (22.88 )%
3/31/2016  $32.65    25,050   $817,883    5.83%   4.11%   4.11%   (18.38 )%

 

18
 

 

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

 

 

 

19
 

 

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

 

 

 

The Fund seeks to provide investors with exposure to the daily change in the price of Coal Futures, before expenses and liabilities of the Fund. For the three-months ended March 31, 2016, the Fund’s Net Asset Value returned 4.11%.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Not required for smaller reporting companies.

 

Item 4. Controls and Procedures.

 

Disclosure controls and procedures

 

The duly authorized officers of the Sponsor performing functions equivalent to those a principal executive officer and principal financial officer of the Fund would perform if the Fund had any officers have evaluated the effectiveness of the Fund’s disclosure controls and procedures, and have concluded that the disclosure controls and procedures of the Fund were effective as of the end of the period covered by this report to provide reasonable assurance that information required to be disclosed in the reports that the Fund files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to the duly authorized officers of the Sponsor performing functions equivalent to those a principal executive officer and principal financial officer of the Fund would perform if the Fund had any officers, as appropriate to allow timely decisions regarding required disclosure.

 

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures.

 

20
 

 

Changes in Internal Control over Financial Reporting

 

Effective January 1, 2016, in accordance with the terms of a Unit Purchase Agreement dated October 29, 2015, GreenHaven Group LLC sold to WisdomTree Investments Inc., 100% of the issued and outstanding membership interest in the Sponsor. In connection with such sale, the Sponsor appointed State Street Bank and Trust as the Fund’s Administrator. The Administrator retains certain financial books and records on behalf of the Fund, including fund accounting records and ledgers with respect to assets, liabilities, capital, income and expenses Also in connection with such sale, the Sponsor appointed new executive officers, who participate in the management of the Fund. See the Fund’s Form 8-K filed January 4, 2016. Except as noted above, Management does not believe that there have been any change in the Fund’s internal control over financial reporting during the three months ended March 31, 2016 that has materially affected, or is reasonably likely to materially affect, the Fund’s internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

Not Applicable.

 

Item 1A. Risk Factors.

 

There are no material changes from risk factors as previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission on March 29, 2016.

 

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

 

(a) None.

 

(b) Not applicable.

 

(c) There were no shares redeemed from Authorized Participants during the quarter ended March 31, 2016.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

None.

 

Item 5. Other Information

 

None.

 

21
 

 

Item 6. Exhibits.

 

Exhibit No.   Description of Document
3.1   Certificate of Amendment to Certificate of Trust of GreenHaven Coal Fund (1)
3.2   Amendment to Second Amended and Restated Declaration of Trust and Trust Agreement of GreenHaven Coal Fund (2)
10.1   Commodity Subadvisory Agreement(3)
10.2   Master Custodian Agreement (4)
10.3   Administration Agreement(5)
10.4   Distribution Services Agreement(6)
10.5   Transfer Agency and Services Agreement(7)
10.6   Form of Participant Agreement(8)
31.1   Certification by Principal Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended (9)
31.2   Certification by Principal Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended(9)
32.1   Certification by Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(9)
32.2   Certification by Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(9)
101.INS   XBRL Instance Document.
101.SCH   XBRL Taxonomy Extension Schema Document.
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB   XBRL Taxonomy Extension Label Linkbase Document.
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document.

 

 

(1)Incorporated by reference to Exhibit 3.1 of the Fund’s Current Report on Form 8-K filed January 4, 2016.

(2)Incorporated by reference to Exhibit 3.2 of the Fund’s Current Report on Form 8-K filed January 4, 2016.

(3)Incorporated by reference to Exhibit 10.1 of the Fund’s Current Report on Form 8-K filed January 4, 2016.

(4)Incorporated by reference to Exhibit 10.2 of the Fund’s Current Report on Form 8-K filed January 4, 2016.

(5)Incorporated by reference to Exhibit 10.3 of the Fund’s Current Report on Form 8-K filed January 4, 2016.

(6)Incorporated by reference to Exhibit 10.4 of the Fund’s Current Report on Form 8-K filed January 4, 2016.

(7)Incorporated by reference to Exhibit 10.5 of the Fund’s Current Report on Form 8-K filed January 4, 2016

(8)Incorporated by reference to Exhibit 10.6 of the Fund’s Current Report on Form 8-K filed January 4, 2016.

(9)Filed herewith.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  WisdomTree Coal Services, LLC,
  Sponsor of the WisdomTree Coal Fund (registrant)
     
  By: /s/ Gregory Barton
  Gregory Barton
  Chief Executive Officer
  (Principal Executive Officer)
     
  Date: May 10, 2016
     
  By: /s/ David Castano
  David Castano
  Chief Financial Officer
  (Principal Financial Officer)
     
  Date: May 10, 2016

 

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