<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: March 31, 1998
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 MARCH 30, 1998
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL STATEMENTS......................................................3
Item 1. Financial Statements...................................................3
Statements of Financial Condition as of March 31, 1998 (unaudited)
and December 31, 1997 (audited)........................................3
Statements of Operations for the Three Months Ended March 31, 1998
and 1997 (unaudited)...................................................4
Statements of Cash Flows for the Three Months Ended March 31, 1998
and 1997 (unaudited)...................................................5
Statements of Changes in Unitholders' Capital (Net Asset
Value) for the Three Months Ended March 31, 1998
and 1997 (unaudited)...................................................6
Notes to Financial Statements (unaudited)...........................7-12
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations .........................................13-14
Item 3. Quantitative and Qualitative Disclosures About Market Risk.........14-15
PART II - OTHER INFORMATION.......................................................16
Item 2. Changes in Securities.................................................16
Item 6. Exhibits and Reports on Form 8-K......................................16
Financial Data Schedule.........................................17
SIGNATURES........................................................................16
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
KENMAR GLOBAL TRUST
STATEMENTS OF FINANCIAL CONDITION
March 31, 1998 (Unaudited) and December 31, 1997 (Audited)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---- ----
<S> <C> <C>
ASSETS
Equity in broker trading accounts
Cash $12,888,925 $11,166,621
Net option premiums paid 28,220 12,165
Unrealized gain on open contracts 628,598 838,321
----------- -----------
Deposits with brokers 13,545,743 12,017,107
Cash 1,592,237 588,287
Subscriptions receivable 76,280 0
Other assets 0 177,369
----------- -----------
Total assets $15,214,260 $12,782,763
=========== ===========
LIABILITIES
Accounts payable $8,618 $24,489
Commissions and other trading fees on open contracts 8,313 6,831
Managing Owner brokerage commissions 99,227 89,492
Advisor profit shares 139,034 54,575
Managing Owner incentive fee 22,840 0
Reimbursable offering costs 52,036 23,058
Redemptions payable 161,135 176,774
Redemption charges payable to Managing Owner 8,625 4,503
Subscription deposits 0 25,720
----------- -----------
Total liabilities 499,828 405,442
=========== ===========
UNITHOLDERS' CAPITAL (NET ASSET VALUE)
Managing Owner - 1,435.7319 and 1,258.4577 units outstanding
at March 31, 1998 and December 31, 1997 149,452 125,970
Other Unitholders - 139,920.2653 and 122,392.3731 units
outstanding at March 31, 1998 and December 31, 1997 14,564,980 12,251,351
---------- ----------
Total unitholders' capital
(Net Asset Value) 14,714,432 12,377,321
---------- ----------
$15,214,260 $12,782,763
=========== ===========
</TABLE>
See accompanying notes.
3
<PAGE> 4
KENMAR GLOBAL TRUST
STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended
March 31,
1998 1997
<S> <C> <C>
INCOME
Trading gains (losses)
Realized $1,179,902 $0
Change in unrealized (209,723) 0
-------- -
Gain from trading 970,179 0
Interest income 187,294 0
------- -
Total income 1,157,473 0
--------- -
EXPENSES
Brokerage commissions 25,718 0
Managing Owner brokerage commissions 337,817 0
Advisor profit shares 135,822 0
Managing Owner incentive fee 22,840 0
Operating expenses 16,524 0
------ -
Total expenses 538,721 0
------- -
NET INCOME $618,752 $0
-------- --
NET INCOME PER UNIT
(based on weighted average number of
units outstanding during the period) $4.80 $0.00
===== =====
INCREASE IN NET ASSET
VALUE PER UNIT $3.99 $0.00
===== =====
</TABLE>
See accompanying notes.
4
<PAGE> 5
KENMAR GLOBAL TRUST
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended
March 31,
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES
Net income $ 618,752 $ 0
Adjustments to reconcile net income to net
cash from operating activities:
Net change in unrealized 209,723 0
Increase in accounts payable and accrued expenses 102,645 0
Increase in net option premiums paid (16,055) 0
Decrease in other assets 177,369 0
------------ ------------
Net cash from operating activities 1,092,434 0
------------ ------------ -
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES
Addition of units 2,060,373 0
Decrease in subscription deposits (25,720) 0
Offering costs paid (90,339) 0
Redemption of units (310,494) 0
------------ ------------
Net cash from financing activities 1,633,820 0
------------ ------------
Net increase in cash 2,726,254 0
CASH
Beginning of period 11,754,908 2,000
------------ ------------
End of period $ 14,481,162 $ 2,000
END OF PERIOD CASH CONSISTS OF:
Cash in broker trading accounts $ 12,888,925 $ 0
Cash 1,592,237 2,000
------------ ------------
Total end of period cash $ 14,481,162 $ 2,000
============ ============
</TABLE>
See accompanying notes.
5
<PAGE> 6
KENMAR GLOBAL TRUST
STATEMENTS OF CHANGES IN UNITHOLDERS' CAPITAL (NET ASSET VALUE)
For the Three Months Ended March 31, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
Total Unitholders' Capital
Number of Managing Other
Units Owner Unitholders Total
----- ----- ----------- -----
<S> <C> <C> <C> <C>
Three Months Ended March 31, 1998
Balances at
December 31, 1997 123,650.8308 $125,970 $12,251,351 $12,377,321
Net income for the three months
ended March 31, 1998 6,295 612,457 618,752
Additions 20,586.6203 18,400 2,118,253 2,136,653
Redemptions (2,881.4539) 0 (298,977) (298,977)
Offering costs (1,213) (118,104) (119,317)
----------- ------ -------- --------
Balances at
March 31, 1998 141,355.9972 $149,452 $14,564,980 $14,714,432
=========== ======== =========== ===========
Three Months Ended March 31, 1997
Balances at
December 31, 1996 20.0000 $ 400 $ 1,600 $ 2,000
------- ------- ----------- -----------
Balances at
March 31, 1997 20.0000 $ 400 $ 1,600 $ 2,000
======= ======= =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Net Asset Value Per Unit
March 31, December 31, March 31, December 31,
1998 1997 1997 1996
<S> <C> <C> <C> <C>
$104.09 $100.10 $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.
The Trust is a multi-advisor, multi-strategy commodity pool which
trades in United States (U.S.) and foreign futures, options,
forwards and related markets. 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 Act of 1933 and the Securities Exchange Act of 1934. As a
commodity pool, the Trust is subject to the regulations of the
Commodity Futures Trading Commission, an agency of the 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 (FCMs) and interbank market makers
(collectively, "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 Offering Costs
Organizational and initial offering costs (exclusive of
selling commissions) of approximately $580,000 were advanced to the
Trust 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. The total amount of organizational and initial
offering costs to be reimbursed to the Managing Owner may be reduced
by up to $50,000 if the Trust's Net Asset Value does not reach
certain future levels. Any unreimbursed organizational and initial
offering costs as of the date of the Trust's dissolution will not be
reimbursed to the Managing Owner.
Ongoing offering costs are borne by the Trust and are charged
directly to unitholders' capital as incurred.
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.
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. The amount paid to the Managing Owner is reduced by
brokerage commissions and other trading fees paid directly by the
Trust.
8
<PAGE> 9
KENMAR GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
Note 2. MANAGING OWNER (CONTINUED)
The Managing Owner is paid an incentive fee equal to 5% of New
Overall Appreciation (which is defined in the Declaration of Trust and
Trust Agreement and excludes interest income) 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 Profit (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 cash 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. 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. Such redemption
charges are included in redemptions of unitholders' capital and amounted
to $4,442 during the three months ended March 31, 1998.
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.
9
<PAGE> 10
KENMAR GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
Note 6. TRADING ACTIVITIES AND RELATED RISKS (CONTINUED)
Purchases and sales of futures and options on futures contracts
require margin deposits with the FCMs. Additional deposits may be
necessary for any loss of contract value. The Commodity Exchange Act
requires an FCM to segregate all customer transactions and assets
from such FCM's proprietary activities. A customer's cash and other
property (for example, U.S. Treasury bills) deposited with an FCM
are considered commingled with all other customer funds subject to
the FCM's segregation requirements. In the event of an FCM's
insolvency, recovery may be limited to 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 cash on deposit with interbank market makers and other
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.
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 three
months ended March 31, 1998 and the related fair values as of March
31, 1998 and December 31, 1997 are as follows:
<TABLE>
<CAPTION>
For the Three
Months Ended As of As of
March 31, March 31, December 31,
1998 1998 1997
---- ---- ----
<S> <C> <C> <C>
Exchange traded futures and options
on futures contracts $850,000 $656,000 $847,000
Forward contracts 10,000 1,000 3,000
</TABLE>
10
<PAGE> 11
KENMAR GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
Note 6. TRADING ACTIVITIES AND RELATED RISKS (CONTINUED)
Net trading results from derivatives for the three months ended
March 31, 1998 are reflected in the statement of operations and consists
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 months ended March 31, 1998, the net trading gain from
derivatives was approximately $927,000. Such trading results reflect the
net gain arising from the Trust's speculative trading of futures
contracts, options on futures contracts and forward contracts.
Open contracts generally mature within one year; the latest maturity
date for open contracts as of March 31, 1998 is March 1999. However, the
Trust intends to close all contracts prior to maturity. At March 31,
1998 and December 31, 1997, the notional amount of open contracts is as
follows:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
Contracts to Contracts to Contracts to Contract to
Purchase Sell Purchase Sell
-------- ---- -------- ----
<S> <C> <C> <C> <C>
Exchange traded futures contracts and
written options thereon:
- Financial instruments $ 87,800,000 $ 28,500,000 $44,900,000 $16,300,000
- Metals 3,200,000 4,100,000 1,800,000 3,700,000
- Energy 400,000 800,000 0 1,100,000
- Agricultural 900,000 4,900,000 1,500,000 2,800,000
- Currencies 14,000,000 19,100,000 15,300,000 18,800,000
Forward Contracts:
- Currencies 0 900,000 0 700,000
------------ ------------ ----------- -----------
$106,300,000 $ 58,300,000 $63,500,000 $43,400,000
============ ============ =========== ===========
Exchange traded purchased options
on futures contracts:
- Financial instruments $ 8,400,000 $ 0 $ 3,400,000 $ 0
- Metals 0 300,000 0 0
- Currencies 0 2,300,000 0 1,400,000
------------ ------------ ----------- -----------
$ 8,400,000 $ 2,600,000 $ 3,400,000 $ 1,400,000
============ ============ =========== ===========
</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.
11
<PAGE> 12
KENMAR GLOBAL TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
Note 7. INTERIM FINANCIAL STATEMENTS
The statement of financial condition as of March 31, 1998, the
statements of operations, cash flows and changes in unitholders'
capital (net asset value) for the three months ended March 31, 1998
and 1997 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 March 31, 1998, the results of operations for the
three months ended March 31, 1998 and 1997 and cash flows for the
three months ended March 31, 1998 and 1997.
12
<PAGE> 13
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.
13
<PAGE> 14
The Trust commenced trading operations on May 22, 1997. Set forth below
are the results of operations of the Trust for the period from December
31, 1997 through March 31, 1998.
As of March 31, 1998, the Net Asset Value of the Trust was $14, 714,
432, an increase of approximately 18.88% from its Net Asset Value of
$12,377,321 at December 31, 1997. The Trust's subscriptions and
redemptions for the quarter ended March 31, 1998 totaled $2,136,653 and
$298,977, respectively. For the quarter ended March 31, 1998, the Trust
had income comprised of 1,179,902 in realized trading gains, ($209,723)
in change in unrealized trading losses, and $187,294 in interest income.
The Net Asset Value per Unit at March 31, 1998 increased 3.99% from
$100.10 at December 31, 1997 to $104.09 at March 31, 1998. The Trust's
positive performance for the quarter ended March 31, 1998 resulted
primarily from gains in global interest rates, stock indices, energies,
metals, tropicals and meats.
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 1998 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
14
<PAGE> 15
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 first quarter of 1998, 20,586.6203 Units were sold for a
total of $2,136,652.27.
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: May 15, 1998 By: /s/ Robert L. Cruikshank
------------------------
Robert L. Cruikshank
Executive Vice President
(Duly Authorized Officer
of Kenmar)
Dated: May 15, 1998 By: /s/ Thomas J. DiVuolo
---------------------
Thomas J. DiVuolo
Senior Vice President
(Principal Financial and Accounting
Officer of the Registrant)
16
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<PERIOD-END> MAR-31-1998
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