<PAGE> 1
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, 1997
Commission File Number: 333-8869
Kenmar Global Trust
(Exact name of registrant as specified in its charter)
Delaware 06-6429854
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two American Lane, P.O. Box 5150, Greenwich, Connecticut 06831-8150
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (203) 861-1000
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 X__
<PAGE> 2
KENMAR, GLOBAL TRUST
QUARTER ENDED SEPTEMBER 30, 1997
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Financial Condition as of September 30, 1997
(unaudited) and December 31, 1996 (audited)..........................3
Statements of Operations for the Three Months Ended September
30, 1997, for the Nine Months Ended September 30, 1997 and for
the Period July 17, 1996 (inception) to
September 30, 1996 (unaudited) ......................................4
Statement of Cash Flows for the Nine Months Ended September
30, 1997 and for the Period July 17, 1996 (inception) to
Septemper 30, 1996 (unaudited).......................................5
Statement of Changes in Unitholders' Capital (Net Asset Value)
for the Nine Months Ended September 30, 1997 and for the
Period July 17, 1996 (inception) to
September 30, 1996 (unaudited)......................................6
Notes to Financial Statements (unaudited).........................7-13
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................14
Item 3. Quantitative and Qualitative Disclosures About Market Risk..........15
PART II - OTHER INFORMATION
Item 2. Changes in Securities...............................................16
Item 6. Exhibits and Reports on Form 8-K....................................16
SIGNATURES....................................................................16
-2-
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
KENMAR GLOBAL TRUST
STATEMENTS OF FINANCIAL CONDITION
September 30, 1997 (Unaudited) and December 31, 1996 (Audited)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
Equity in broker trading accounts
Cash $ 10,004,683 $ 0
Net option premiums (received) (20,725) 0
Unrealized gain on open contracts 322,915 0
------------ ------------
Deposits with brokers 10,306,873 0
Cash 1,317,102 2,000
------------ ------------
Total assets $ 11,623,975 $ 2,000
============ ============
LIABILITIES
Commissions and other trading fees on open contracts $ 5,233 $ 0
Managing Owner brokerage commissions 168,952 0
Advisor profit shares 51,232 0
Reimbursable offering costs 73,247 0
------------ ------------
Total liabilities 298,664 0
------------ ------------
UNITHOLDERS' CAPITAL (Net Asset Value)
Managing Owner - 1,157.3108 and 4.0000 units outstanding at
September 30, 1997 and December 31, 1996, respectively 115,549 400
Other Unitholders - 112,273.8874 and 16.0000 units outstanding
at September 30, 1997 and December 31, 1996, respectively 11,209,762 1,600
------------ ------------
Total unitholders' capital
(Net Asset Value) 11,325,311 2,000
------------ ------------
$ 11,623,975 $ 2,000
============ ============
</TABLE>
See accompanying notes.
-3-
<PAGE> 4
KENMAR GLOBAL TRUST
STATEMENT OF OPERATIONS
For the Three Months Ended September 30, 1997,
For the Nine Months Ended September 30, 1997 and
For the Period July 17, 1996 (inception) to September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months July 17, 1996
Ended Ended (inception) to
September 30, 1997 September 30, 1997 September 30, 1996
------------------ ------------------ ------------------
<S> <C> <C> <C>
INCOME
Trading gains (losses)
Realized $ 146,520 $ (25,851) $ 0
Change in unrealized 293,956 322,915 0
--------- --------- ---------
Gain from trading 440,476 297,064 0
Interest income 106,345 151,305 0
--------- --------- ---------
Total income 546,821 448,369 0
--------- --------- ---------
EXPENSES
Brokerage commissions 19,384 23,461 0
Managing Owner brokerage commissions 253,818 338,023 0
Advisor profit shares 51,232 55,523 0
Operating expenses 12,420 16,433 0
--------- --------- ---------
Total expenses 336,854 433,440 0
--------- --------- ---------
NET INCOME $ 209,967 $ 14,929 $ 0
========= ========= =========
NET INCOME PER UNIT
(based on weighted average number of
units outstanding during the period) $ 2.12 $ .16 $ 0
========= ========= =========
INCREASE (DECREASE) IN NET ASSET
VALUE PER UNIT $ 2.44 $ (.16) $ 0
========= ========= =========
</TABLE>
See accompanying notes.
-4-
<PAGE> 5
KENMAR GLOBAL TRUST
STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30, 1997 and
For the Period July 17, 1996 (inception) to September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Nine Months July 17, 1996
Ended (inception) to
September 30, 1997 September 30, 1996
------------------ ------------------
<S> <C> <C>
Cash flows from (for) operating activities
Net income $ 14,929 $ 0
Adjustments to reconcile net income to net
cash (for) operating activities:
Net change in unrealized (322,915) 0
Increase in accrued expenses 225,417 0
Net option premiums received 20,725 0
------------ ------------
Net cash (for) operating activities (61,844) 0
------------ ------------
Cash flows from (for) financing activities
Addition of units 11,387,259 2,000
Offering costs paid (5,630) 0
------------ ------------
Net cash from financing activities 11,381,629 2,000
------------ ------------
Net increase in cash 11,319,785 2,000
============ ============
Cash
Beginning of period 2,000 0
------------ ------------
End of period $ 11,321,785 $ 2,000
============ ============
End of period cash consists of:
Cash in broker trading accounts $ 10,004,683 $ 0
Cash 1,317,102 2,000
------------ ------------
Total end of period cash $ 11,321,785 $ 2,000
============ ============
</TABLE>
See accompanying notes.
-5-
<PAGE> 6
KENMAR GLOBAL TRUST
STATEMENTS OF CHANGES IN UNITHOLDERS' CAPITAL (NET ASSET VALUE)
For the Nine Months Ended September 30, 1997 and
For the Period July 17, 1996 (inception) to September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Unitholders' Capital
----------------------------------------------
Total
Number of Managing Other
Units Owner Unitholders Total
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Nine Months Ended
September 30, 1997
Balances at
December 31, 1996 20.0000 $ 400 $ 1,600 $ 2,000
Additions 113,411.1982 115,800 11,271,459 11,387,259
Net income for the nine
months ended
September 30, 1997 157 14,772 14,929
Offering costs (808) (78,069) (78,877)
------------ ------------ ------------ ------------
Balances at
September 30, 1997 113,431.1982 $ 115,549 $ 11,209,762 $ 11,325,311
============ ============ ============ ============
July 17, 1996 (inception) to
September 30, 1996
Balances at July 17, 1996
(inception) 0.0000 $ 0 $ 0 $ 0
Additions 20.0000 400 1,600 2,000
------------ ------------ ------------ ------------
Balances at
September 30, 1996 20.0000 $ 400 $ 1,600 $ 2,000
============ ============ ============ ============
Net Asset Value Per Unit
------------------------------------------------
September 30, December 31, September 30,
1997 1996 1996
------------- ------------ -------------
$99.84 s $100.00 $100.00
====== ======= =======
</TABLE>
See accompanying notes.
-6-
<PAGE> 7
KENMAR GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. General Description of the Trust
Kenmar Global Trust (the Trust) is a Delaware business trust which
operates as a commodity investment pool. The Trust was formed on July
17, 1996 and commenced trading on May 22, 1997.
B. Regulation
As a registrant with the Securities and Exchange Commission, the
Trust is subject to the regulatory requirements under the Securities
Acts of 1933 and 1934. As a commodity investment pool, the Trust is
subject to the regulations of the Commodity Futures Trading
Commission, an agency of the United States (U.S.) government which
regulates most aspects of the commodity futures industry, rules of
the National Futures Association, an industry self-regulatory
organization, and the requirements of the various commodity exchanges
where the Trust executes transactions. Additionally, the Trust is
subject to the requirements of the Futures Commission Merchants and
interbank market makers (brokers) through which the Trust trades.
C. Method of Reporting
The Trust's financial statements are presented in accordance with
generally accepted accounting principles, which require the use of
certain estimates made by the Trust's management. Gains or losses are
realized when contracts are liquidated. Net unrealized gain or loss
on open contracts (the difference between contract purchase prices
and market prices) is reported in the statement of financial
condition in accordance with Financial Accounting Standards Board
Interpretation No. 39 - "Offsetting of Amounts Related to Certain
Contracts." Any change in net unrealized gain or loss from the
preceding period is reported in the statement of operations.
Brokerage commissions paid directly to brokers include other trading
fees and are charged to expense when contracts are opened.
D. Income Taxes
The Trust prepares calendar year U.S. and state information tax
returns and reports to the Unitholders their allocable shares of the
Trust's income, expenses and trading gains or losses.
-7-
<PAGE> 8
KENMAR GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
E. Organizational and Initial Offering Costs
Organizational and initial offering costs (exclusive of selling
commissions) of approximately $578,000 were advanced by the Managing
Owner. Such costs are charged to the Trust and reimbursed to the
Managing Owner at a monthly rate of 0.2% of the Trust's beginning of
month Net Asset Value until such amounts are fully reimbursed. Any
unreimbursed organizational and initial offering costs as of the date
of the Trust's dissolution will not be reimbursed to the Managing
Owner.
The Declaration of Trust and Trust Agreement limits organizational
and offering costs, including selling commissions and redemption
fees, to 15% of the capital contributions to the Trust.
F. Foreign Currency Transactions
The Trust's functional currency is the U.S. dollar; however, it
transacts business in currencies other than the U.S. dollar. Assets
and liabilities denominated in currencies other than the U.S. dollar
are translated into U.S. dollars at the rates in effect at the date
of the statement of financial condition. Income and expense items
denominated in currencies other than the U.S. dollar are translated
into U.S. dollars at the rates in effect during the period. Gains and
losses resulting from the translation to U.S. dollars are reported in
income currently.
Note 2. MANAGING OWNER
The Managing Owner of the Trust is Kenmar Advisory Corp., which conducts
and manages the business of the Trust. The Declaration of Trust and
Trust Agreement requires the Managing Owner to maintain a capital
account equal to 1% of the total capital accounts of the Trust.
-7-
<PAGE> 9
KENMAR GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
Note 2. MANAGING OWNER (CONTINUED)
The Managing Owner is paid monthly brokerage commissions equal to 1/12
of 11% (11% annually) of the Trust's beginning of month Net Asset Value.
The Managing Owner, in turn, pays substantially all actual costs of
executing the Trust's trades, selling commissions and trailing
commissions to selling agents, and consulting fees to the Advisors. To
the extent that certain costs of executing the Trust's trades are paid
directly by the Trust, the amount paid to the Managing Owner will be
reduced.
The Managing Owner is paid an incentive fee equal to 5% of New Overall
Appreciation (as defined in the Declaration of Trust and Trust
Agreement) as of each fiscal year-end and upon redemption of Units.
Note 3. COMMODITY TRADING ADVISORS
The Trust has advisory agreements with various commodity trading
advisors, pursuant to which the Trust pays quarterly profit shares of
15% to 20% of Trading Profits (as defined in each Advisory Agreement).
Note 4. DEPOSITS WITH BROKERS
The Trust deposits funds with brokers subject to Commodity Futures
Trading Commission regulations and various exchange and broker
requirements. Margin requirements are satisfied by the deposit of cash
with such brokers. The Trust earns interest income on its assets
deposited with the brokers.
Note 5. SUBSCRIPTIONS, DISTRIBUTIONS AND REDEMPTIONS
Investments in Units of Beneficial Interest are made by subscription
agreement, subject to acceptance by the Managing Owner. The Trust is not
required to make distributions, but may do so at the sole discretion of
the Managing Owner.
-9-
<PAGE> 10
KENMAR GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
Note 5. SUBSCRIPTIONS, DISTRIBUTIONS AND REDEMPTIONS (CONTINUED)
A Unitholder may request and receive redemption of Units owned,
beginning with the end of the sixth month after such Units are sold,
subject to restrictions in the Declaration of Trust and Trust Agreement.
Units redeemed on or before the end of the twelfth full calendar month
and after the end of the twelfth full month but on or before the end of
the eighteenth full calendar month after the date such Units begin to
participate in the profits and losses of the Trust are subject to early
redemption charges of 3% and 2%, respectively, of the Net Asset Value
redeemed. All redemption charges are paid to the Managing Owner.
Note 6. TRADING ACTIVITIES AND RELATED RISKS
The Trust engages in the speculative trading of U.S. and foreign futures
contracts, options on U.S. and foreign futures contracts and forward
contracts (collectively, "derivatives"). These derivatives include both
financial and non-financial contracts held as part of a diversified
trading strategy. The Trust is exposed to both market risk, the risk
arising from changes in the market value of the contracts, and credit
risk, the risk of failure by another party to perform according to the
terms of a contract.
Purchases and sales of futures and options on futures contracts require
margin deposits with the brokers. Additional deposits may be necessary
for any loss of contract value. The Commodity Exchange Act requires a
commodity broker to segregate all customer transactions and assets from
such broker's proprietary activities. A customer's cash and other
property (for example, U.S. Treasury bills) deposited with a commodity
broker are considered commingled with all other customer funds subject
to the broker's segregation requirements. In the event of a commodity
broker's insolvency, recovery may be limited to a pro rata share of
segregated funds available. It is possible that the recovered amount
could be less than total cash and other property deposited.
The Trust has a substantial portion of its assets on deposit with
financial institutions in connection with its trading of forward
contracts and its cash management activities. In the event of a
financial institution's insolvency, recovery of Trust assets on deposit
may be limited to account insurance or other protection afforded such
deposits. In the normal course of business, the Trust does not require
collateral from such financial institutions. Since forward contracts are
traded in unregulated markets between principals, the Trust also assumes
the risk of loss from counterparty nonperformance.
-10-
<PAGE> 11
KENMAR GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
Note 6. TRADING ACTIVITIES AND RELATED RISKS (CONTINUED)
For derivatives, risks arise from changes in the market value of the
contracts. Theoretically, the Trust is exposed to a market risk equal to
the value of futures and forward contracts purchased and unlimited
liability on such contracts sold short. As both a buyer and seller of
options, the Trust pays or receives a premium at the outset and then
bears the risk of unfavorable changes in the price of the contract
underlying the option. Written options expose the Trust to potentially
unlimited liability, and purchased options expose the Trust to a risk of
loss limited to the premiums paid.
The fair value of derivatives represents unrealized gains and losses on
open futures and forward contracts and long and short options at market
value. The average fair value of derivatives for the period May 22, 1997
(commencement of trading) to September 30, 1997 and the related fair
values as of September 30, 1997 are as follows:
<TABLE>
<CAPTION>
For the Period
May 22, 1997
to As of
September 30, 1997 September 30, 1997
------------------ ------------------
<S> <C> <C>
Exchange traded futures and options
on futures contracts $240,000 $310,000
Forward contracts 50,000 (8,000)
</TABLE>
Net trading results from derivatives for the three and nine months ended
September 30, 1997 are reflected in the statement of operations and
consist of the gain from trading less brokerage commissions and the
portion of the Managing Owner brokerage commissions that is payable to
the brokers. For the three and nine months ended September 30, 1997, the
portion of the Managing Owner brokerage commissions that is payable to
the brokers was approximately $15,000 and $20,000, respectively. Such
trading results reflect the net gain arising from the Trust's
speculative trading of futures contracts, options on futures contracts
and forward contracts.
-11-
<PAGE> 12
KENMAR GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
Note 6. TRADING ACTIVITIES AND RELATED RISKS (CONTINUED)
Open contracts generally mature within one year; the latest maturity
date for open contracts as of September 30, 1997 is June 1998. However,
the Trust intends to close all contracts prior to maturity. At September
30, 1997, the notional amount of open contracts is as follows:
<TABLE>
<CAPTION>
Contracts to Contracts to
Purchase Sell
-------- ----
<S> <C> <C>
Exchange traded futures contracts and written options thereon:
- Financial instruments $43,700,000 $22,400,000
- Metals 4,500,000 3,000,000
- Energy 1,300,000 0
- Agricultural 700,000 1,800,000
- Currencies 9,300,000 10,600,000
Forward Contracts:
- Currencies 0 600,000
----------- -----------
$59,500,000 $38,400,000
=========== ===========
Exchange traded purchased options on futures contracts:
- Financial instruments $ 0 $ 300,000
- Metals 100,000 200,000
----------- -----------
$ 100,000 $ 500,000
=========== ===========
</TABLE>
The above amounts do not represent the Trust's risk of loss due to
market and credit risk, but rather represent the Trust's extent of
involvement in derivatives at the date of the statement of financial
condition.
The Managing Owner has established procedures to actively monitor and
minimize market and credit risk. The Unitholders bear the risk of loss
only to the extent of the market value of their respective investments
and, in certain specific circumstances, distributions and redemptions
received.
-12-
<PAGE> 13
KENMAR GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
Note 7. INTERIM FINANCIAL STATEMENTS
The statement of financial condition as of September 30, 1997, the
statements of operations for the three and nine months ended September
30, 1997 and for the period July 17, 1996 (inception) to September 30,
1996 and the statements of cash flows and changes in unitholders'
capital (net asset value) for the nine months ended September 30, 1997
and for the period July 17, 1996 (inception) to September 30, 1996 are
unaudited. In the opinion of management, such financial statements
reflect all adjustments, which were of a normal and recurring nature,
necessary for a fair presentation of financial position as of September
30, 1997, the results of operations for the three and nine months ended
September 30, 1997 and for the period July 17, 1996 (inception) to
September 30, 1996 and cash flows for the nine months ended September
30, 1997 and for the period July 17, 1996 (inception) to September 30,
1996.
-13-
<PAGE> 14
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The proceeds of the offering of the Units are used by the Trust to engage in the
speculative trading on futures, forward, options and related markets through
allocating such proceeds to multiple commodity trading advisors (the
"Advisors").
The assets of the Trust are deposited with commodity brokers and interbank
dealers (collectively, the "Clearing Brokers") in trading accounts established
by the Trust for the Advisors and are used by the Trust as margin to engage in
trading. Such assets are held in either a non-interest bearing bank account or
in securities approved by the CFTC for investment of customer funds.
Capital Resources. The Trust does not have, nor does it expect to have, any
capital assets. Redemptions and sales of the units of beneficial interest (the
"Units") in the future will affect the amount of funds available for trading
futures, forwards and options in subsequent periods.
There are three primary factors that affect the Trust's capital resources: (i)
the trading profit or loss generated by the Advisors (including interest
income); (ii) the capital invested or redeemed by the unitholders of the Trust
(the "Unitholders"); and (iii) the capital invested or redeemed by the Trust's
managing owner, Kenmar Advisory Corp. ("Kenmar"). Kenmar has maintained, and has
agreed to maintain, at all times one percent (1%) interest in the Trust. All
capital contributions by Kenmar necessary to maintain such capital account
balance are evidenced by units of beneficial interest, each of which has an
initial value equal to the Net Asset Value per Unit (as defined below) at the
time of such contribution. Kenmar, in its sole discretion, may withdraw any
excess above its required capital contribution without notice to the
Unitholders. Kenmar, in its sole discretion, may also contribute any greater
amount to the Trust, for which it shall receive, at its option, additional Units
at their then-current Net Asset Value (as defined below).
"Net Asset Value" is defined as total assets of the Trust less total liabilities
as determined in accordance with generally accepted accounting principles as
described in the Trust's Amended and Restated Declaration of Trust and Trust
Agreement dated as of December 17, 1996 (the "Declaration of Trust Agreement").
The term "Net Asset Value Per Unit" is defined in the Declaration of Trust
Agreement to mean the Net Assets of the Trust divided by the number of Units
outstanding as of the date of determination.
Results of Operations. The Trust incurs substantial charges from the payment of
profit shares to the Advisors, incentive fees to Kenmar, reimbursement to Kenmar
for its advancing the organizational and initial offering costs of the Trust,
brokerage commissions and miscellaneous executions costs and administrative
expenses. Such reimbursement and brokerage commissions are payable based upon
the Net Asset Value of the Trust and are payable without regard to the
profitability of the Trust. As a result, it is possible that the Trust may incur
a net loss when trading profits are not substantial enough to avoid depletion of
the Trust's assets from such fees and expenses. Thus, due to the nature of the
Trust's business, the success of the Trust is dependent upon the ability of the
Advisors to generate trading profits through the speculative trading of futures,
forwards and options sufficient to produce capital appreciation after payment of
all fees and expenses.|_|
It is important to note, however, that (i) the Advisors trade in various markets
at different times and that prior activity in a particular market does not mean
that such markets will be actively traded by an Advisor or will be profitable in
the future and (ii) the Advisors trade independently of each other using
different trading systems and may trade different markets with various
concentrations at various times. Consequently, the results of operations of the
Trust can only be discussed in the context of the overall trading activities of
the Trust, the Advisors' trading activities on behalf of the Trust as a whole
and how the Trust has performed in the past.
The Trust commenced trading operations on May 22, 1997. Set forth below are the
results of operations of the Trust for the period from May 22, 1997 through
September 30, 1997.
As of September 30, 1997, the Net Asset Value of the Trust was $11,325,311, an
increase of approximately 36.86% from its Net Asset Value of $8,275,357 at June
30, 1997. The Trust's subscriptions and redemptions for the quarter ended
September 30, 1997 totaled $2,917,259 and $0, respectively. For the quarter
ended September 30, 1997, the Trust had revenues comprised of $146,520 in
realized trading gains, $293,956 in change in unrealized trading gains, and
$106,345 in interest income. Total expenses for the quarter ended September 30,
1997 were $336,854. The Net Income for the quarter ended September 30, 1997 was
$209,957. The Net Asset Value per Unit at September 30, 1997 increased 2.51%
from $97.40 at June 30, 1997 to $99.84 at September 30, 1997.
As of September 30, 1997 the Net Asset Value of the Trust was $11,325,311, an
increase of approximately 98.55% from its Net Asset Value of $5,704,100 at the
commencement of trading. The Trust's subscriptions and redemptions for the nine
months ended September 30, 1997 totaled $11,387,259 and $0, respectively. For
the nine months ended September 30, 1997 the Trust had revenues comprised of
($25,851) in realized trading losses, $322,915 in change in unrealized trading
gains and $151,305 in interest income. Total expenses for the nine months ended
September 30, 1997 were $433,440. The Net Income for nine months ended
-14-
<PAGE> 15
September 30, 1997 was $14,929. The Net Asset Value per Unit at September 30,
1997 decreased (.16%) from $100.00 at December 31, 1996 to $99.84 at September
30, 1997.
Past performance is not indicative of future results. As a result, any recent
increases in realized or unrealized trading gains may have no bearing on any
results that may be obtained in the future.
Liquidity. Units may be redeemed, at a Unitholder's option, as of the close of
business on the last day of any month beginning with the end of the sixth month
after their sale. Units are redeemed at Net Asset Value, subject to redemption
charges of 3% and 2%, respectively, for Units redeemed on and after the end of
the sixth month through the end of the twelfth month after sale and from the end
of the twelfth month through the end of the eighteenth month after sale.
With respect to the Trust's trading, in general, the Trust's Advisors will
endeavor to trade only futures, forwards and options that have sufficient
liquidity to enable them to enter and close out positions without causing major
price movements. Notwithstanding the foregoing, most United States commodity
exchanges limit the amount by which certain commodities may move during a single
day by regulations referred to as "daily price fluctuation limits" or "daily
limits". Pursuant to such regulations, no trades may be executed on any given
day at prices beyond the daily limits. The price of a futures contract has
occasionally moved the daily limit for several consecutive days, with little or
no trading, thereby effectively preventing a party from liquidating its
position. While the occurrence of such an event may reduce or effectively
eliminate the liquidity of a particular market, it will not limit ultimate
losses and may in fact substantially increase losses because of this inability
to liquidate unfavorable positions. In addition, if there is little or no
trading in a particular futures or forward contract that the Trust is trading,
whether such illiquidity is caused by any of the above reasons or otherwise, the
Trust may be unable to execute trades at favorable prices and/or may be unable
or unwilling to liquidate its position prior to its expiration date, thereby
requiring the Trust to make or take delivery of the underlying interest of the
commodity.
In addition, certain Advisors trade on futures markets outside the United States
on behalf of the Trust. Certain foreign exchanges may be substantially more
prone to periods of illiquidity than United States exchanges. Further, certain
Advisors trade forward contracts which are not traded on exchanges; rather banks
and dealers act as principals in these markets. The Commodity Futures Trading
Commission does not regulate trading on non-U.S. futures markets or in forward
contracts.
SAFE HARBOR STATEMENT. The discussion above contains certain forward-looking
statements (as such term is defined in the rules promulgated under the
Securities Exchange Act of 1934) that are based on the beliefs of the Trust, as
well as assumptions made by, and information currently available to, the Trust.
A number of important factors should cause the Trust's actual results,
performance or achievements for 1997 and beyond to differ materially from the
results, performance or achievements expressed in, or implied by, such
forward-looking statements. These factors include, without limitation, the
factors described above.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Derivative instruments involve varying degrees of off-balance sheet market risk
and changes in the level or volatility of interest rates, foreign currency
exchange rates or the market values of the financial instruments or commodities
underlying such derivative instruments frequently result in the changes in the
Trust's unrealized profit (loss) on such derivative instruments as reflected in
the Statements of Financial Condition. The Trust's exposure to market risk is
influenced by a number of factors, including the relationships among derivative
instruments held by the Trust as well as the volatility and liquidity of the
markets in which the financial instruments are traded.
Kenmar has procedures in place intended to control the Trust's exposure to
market risk, although there can be no assurance that they will, in fact, succeed
in doing so. These procedures focus primarily on monitoring the trading of the
Advisors selected from time to time for the Trust, calculating the Net Asset
Value of the Advisors respective Trust accounts as of the close of business on
each day and reviewing outstanding positions for over-concentrations - both on
an Advisor-by-Advisor and on an overall Trust basis. While Kenmar will not
itself intervene in the markets to hedge or diversify the Trust's market
exposure, Kenmar may urge Advisors to reallocate positions, or itself reallocate
Trust assets among Advisors (although typically only as of the end of a month)
in an attempt to avoid over-concentrations. However, such interventions would be
unusual. Except in cases in which it appears that an Advisor has begun to
deviate from past practice or trading policies or to be trading erratically,
Kenmar's basic risk control procedures consist of the ongoing process of Advisor
monitoring and selection, with the market risk controls being applied by the
Advisors themselves.
-15-
<PAGE> 16
PART II - OTHER INFORMATION
Item 2. Changes in Securities.
On December 17, 1996, the Trust commenced offering Units in a public offering
under the Securities Act of 1933. The Trust commenced trading operations on May
22, 1997. Units are offered at Net Asset Value as of the last day of each month.
The minimum investment is 50 Units (or, if less, $5,000), except for (i)
trustees or custodians of eligible employee benefit plans and individual
retirement accounts and (ii) Unitholders subscribing for additional Units, where
the minimum investment is 20 Units (or, if less, $2,000). Investments in excess
of these minimums are permitted in $100 increments.
During the third quarter of 1997, 28,470.7820 Units were sold for a total of
$2,917,259.04.
Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits.
Financial Data Schedule.
B. Reports on Form 8-K.
None.
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.
KENMAR GLOBAL TRUST
By: Kenmar Advisory Corp., managing owner
Dated: November 13, 1997 By: /s/ Robert L. Cruikshank
------------------------
Robert L. Cruikshank
Executive Vice President
(Duly Authorized Officer
of Kenmar)
Dated: Novemebr 13, 1997 By: /s/ Thomas J. DiVuolo
---------------------
Thomas J. DiVuolo
Senior Vice President
(Principal Financial and Accounting
Officer of the Registrant)
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,317,102
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,623,975
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,623,975
<CURRENT-LIABILITIES> 298,664
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 11,623,975
<SALES> 0
<TOTAL-REVENUES> 448,369
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 433,440
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 14,929
<INCOME-TAX> 0
<INCOME-CONTINUING> 14,929
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,929
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
