SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2012
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
Commission file number 333-119655
TriView Global Fund, LLC
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation
505 Brookfield Drive, Dover, DE 19901
(Address of principal executive offices, including zip code)
(Registrants telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [ ] No [ ] Not Applicable
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [X] Smaller Reporting Company[ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes [ ] No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) f the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ] Not applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date. Not Applicable
Part 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
The reviewed financial statements for the Registrant for the nine months ended September 30, 2012 are attached hereto and made a part hereof.
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
The Registrant (the Fund) was granted an initial effective date by the Securities and Exchange Commission ("SEC") on November 3, 2005. The Fund's Registration Statement filed May 7, 2010 for $20,000,000 in face amount of units of membership interests (the "Units") went effective with the SEC on August 10, 2010. The Fund's purpose, pursuant to the terms of the LLC Operating Agreement, is to engage in the business of speculative and high risk trading of commodity futures and options markets through the services of the commodity trading advisors its management has selected.
Description of Fund Business
The Fund grants one or more commodity trading advisors (CTAs) a power of attorney that is terminable at the will of either party to trade the equity assigned to each CTA by Fund management. The Managing Member has reserved the right to add and delete CTAs and reallocate equity assigned as it shall determine, in its sole discretion, without prior notice to the members (investors). A CTA has discretion to select and enter trades, and does not disclose the methods it uses to make those determinations in its disclosure documents, or to the Fund or to Fund management. There is no promise or expectation of a fixed or any other return to the investors. The investors must look solely to trading profits for a return their investment as the interest income is expected to be less than the fixed expenses to operate the Fund.
The CTA selected to trade on behalf of the Fund is GT Capital CTA, which is paid a 1% management fee on Fund assets allocated to it to trade, along with a 20% incentive fee on New Net Profit, as that term is defined in the Funds prospectus. There will be a twelve month lock-in commencing from the date an investment is admitted to the Fund.
On July 7, 2011, the Fund had sold approximately $1,374,000 in Units and commenced business. At such time, the Fund began to reimburse the managing member and its affiliates for offering and organizational of $291,153, though payment will not exceed 15% of gross subscription proceeds at any time. Such expenses will be amortized by the Fund over 60 months on a straight line basis, or paid off sooner at the managing members discretion.
Through August 31, 2011, the Fund paid the corporate managing member a 2.5% annual management fee calculated on the prior month-end net assets, and pay brokerage commissions to the affiliated introducing broker of $15 per round turn. Beginning September 1, 2011, the aforementioned fees were no longer be paid. Instead, the Fund pays fixed annual brokerage commissions of 10%, calculated on the prior month-end net assets, with 2.5% to the corporate managing member and 7.5% to the introducing broker, paid monthly. In its July 6, 2011 prospectus, the managing member had estimated the round turn brokerage of $15 would approximate 7.5% annually of Fund net assets. Accordingly, the managing member does not believe the total fees charged to the Fund will change.
As of the beginning of October, 2011, the Managing Member allocated approximately 50% of trading assets to another program traded by the Fund's sole CTA and reserves the right to change the allocation between the programs at its own discretion. For purposes of calculating the incentive fee, the performance of both programs will be netted during each quarterly incentive fee period such that the trading advisor is only paid an incentive fee when the performance considering both programs is net positive.
Upon acceptance of subscriptions and admission to the Fund, the Managing Member deposits the subscription proceeds to the Funds accounts, including the account at the futures commission merchant to hold as security for the trades selected by the commodity trading advisor. The Managing Member will use its best efforts to put Fund equity not used for margin in accounts not maintained by or accessible by the futures commission merchant (FCM). This includes U.S. Treasuries held at the U.S. Treasury, investments in cash management funds that invest in only U.S. Treasuries, and foreign treasuries held with the respective issuing department of treasury, all held in the name of the Fund. The Fund assets at the FCM will consist of cash used as margin to secure futures (formerly called commodities) trades entered on its behalf by the commodity trading advisors it selects. The futures held in the Fund accounts at the FCM are valued at the market price on the close of business each day by the FCM. The Capital accounts of the Members are immediately responsible for all profit and losses incurred by trading and payment and accrual of the expenses of offering membership interests for sale and the operation of the Fund. The fixed costs of operation must be paid before the members may earn a profit on their investment.
The Fund does not intend to borrow from third parties. Its trades are entered pursuant to a margin agreement with the FCM, which obligates the fund to the actual loss, if any, without reference or limit by the amount of cash posted to secure the trade. The members are not personally liable for the debts of the Fund, including any trading losses. As of the date of this Report, there have been no offers or sales to non-affiliates of Units. Once a Unit has been sold and redeemed, it will not be resold. Capital available will be dependent upon the marketing and sales effort put in place by Fund management to sell the registered membership interests.
An Investment in the Fund Depends upon Redemption of Fund Units
The Fund Units are not traded and they have no market value. Liquidity of an investment in the Fund depends upon the credit worthiness of the exchanges, brokers, and third parties of off exchange traded futures that hold Fund equity or have a lien against Fund assets for payment of debts incurred. Those parties must honor their obligations to the Fund for the Fund to be able to obtain the return of its cash from the futures commission merchant that holds the Fund account.
The commodity trading advisors select the markets and the off exchange instruments to be traded. The Managing Member selects the futures commission merchants to hold the Fund assets. The commodity trading advisors and the Managing Member believe all parties who hold Fund assets or are otherwise obligated to pay value to the Fund are credit worthy. Margin is an amount to secure the entry of a trade and is not a limit of the profit or loss to be gained from the trade. The Managing Member allocates a substantial portion of the Fund equity to be used as margin to enter trades. Although it is customary for the commodity trading advisors to use 40% or less of the equity available as margin, there is no limit imposed by the Fund upon the amount of equity the advisors may commit to margin. It is possible for the Fund to suffer losses in excess of the margin it posts to secure the trades made. As of the date of this Report, the Fund maintained approximately 89% of its total assets on deposit with the FCM, and 10% in cash and cash equivalents, including Fund bank accounts and the Wells Fargo 100% Treasury money market fund.
To have the purchase price or appreciation, if any, of the Units paid to them, members must use the redemption feature of the Fund. Distributions, although possible in the sole discretion of the Managing Member, are not expected to be made. There is no current market for the Units sold, none is expected to develop and the LLC Operating Agreement limits the ability of a member to transfer the Units.
Results of Operations
The initial start-up costs attendant to the sale of Units by use of a Prospectus which has been filed with the Securities and Exchange Commission are substantial. The Operating Agreement grants solely to the Managing Member the right to select the CTAs and to otherwise manage the operation of the Fund. See the Registration Statement, incorporated by reference herein, for an explanation of the operation of the Fund.
On July 7, 2011, the Fund commenced business after admission of 26 limited partners, with total subscriptions of $1,374,333. As of September 30, 2012, aggregate subscriptions were $2,523,271. Because the Fund was not
operational prior to July 7, 2011, the Fund believes it would be misleading to compare the financial results for the three and nine months ended September 30, 2012 with the similar prior year period.
For non-financial reporting purposes (subscription and redemption purposes), the Fund's initial net asset value (NAV) per Unit of $1,000 decreased to $922.14, a loss of (7.79)%, from the commencement of operations into year end December 31, 2011, and it decreased a further (18.68)% in the nine months ended September 30, 2012. The losses were as a result of a combination of trading losses (see below) and operational expenses, the latter of which were $(121,966) for the commencement of operations into year end December 31, 2011 and $(194,828) for the nine months ended September 30, 2012, of which $(50,198) were incurred in the three months ended September 30, 2012. From the commencement of operations into year end December 31, 2011, the Fund's net assets increased to $1,796,875, primarily as a result of capital contributions by Members of $2,155,371. Despite $367,899 in capital contributions in the nine months ended September 30, 2012, the Fund's net assets decreased to $715,040 by the end of the period, primarily due to redemptions of $(1,126,550) and aforementioned operational expenses.
Going forward, any positive revenue is expected to be primarily derived from the trading of GT Capital CTA until short term interest rates rise and interest income contributes to revenues. The trading advisors objective is to achieve appreciation of the Fund's assets through speculative trading in futures contracts and options on futures contracts. There is no representation being made that the trading programs offered by the trading advisor will be successful in achieving this goal.
Money managers generally rely on either fundamental or technical analysis, or a combination thereof, in making trading decisions and attempting to identify price trends in a commodity interest. "Fundamental analysis" is the consideration of factors external to the market of a particular instrument. For example, weather and political events which affect the supply and demand of that particular instrument, in order to predict future prices of that instrument. As an example, some of the fundamental factors that affect the supply of commodities (e.g., agricultural products such as corn and soybeans) include the acreage planted, weather during the growing season, harvesting and distribution of the commodity and the previous year's crop carryover. The demand for such commodities is determined in part by domestic consumption and exports and is a product of many factors, including general world economic conditions, exports and the cost of competing products which might be substituted as alternate sources of food or fiber.
Technical analysis is not based on the anticipated supply and demand of the "cash" or "physical" (i.e., actual) commodity; instead, technical analysis is based on the theory that a study of the markets themselves (in particular, of trends of prices established by the markets for various instruments during selected historical periods) provides a means of anticipating prices. Technical analysis of the markets often includes a study of the actual daily, weekly and monthly price fluctuations, as well as volume variations and changes in open interest, utilizing charts and/or computers for analysis of these items and other technical market data. Both general methodologies have been employed with success by traders and investors in the past, however, neither trading method can be assured of success in a particular interval of time.
If a large price movement occurs in a sector that a trading advisor trades, such as stock indices, agriculture, financials, metals or softs, it does not necessarily mean that the trading advisor will engage in trades that capture such moves. Accordingly, market movements and conditions are not necessarily correlated with Fund performance. As always, past performance is not necessarily indicative of future results.
Since the commencement of operations, the CTA has allocated trades (by volume) among the following sectors in the approximate proportions: Currencies 15%, Energy 15%, Metals 10%, and Stock Indices 60%.
Pursuant to the Trading Advisory Agreement, the Fund pays a quarterly incentive fee to GT on new net profits, or those profits achieved on a per unit basis above the advisor's previous high water mark. See Note 5 to the financial statements herein for the current incentive fees. Trading profits (losses) from the commencement of operations to December 31, 2011 were $35,300, and they were $(80,020) in the nine months ended September 30, 2012. GT was paid an incentive fee of $2,438 as of December 31, 2012, but was not paid any incentive fee in 2012.
Interest income was negligible during the reporting period because of low short term interest rates.
These results are not to be construed as an expectation of similar profits or losses in the future.
Quantitative and Qualitative Disclosures about Market Risk
The business of the Fund is speculative and involves a high degree of risk of loss. See the Funds Registration Statement and prospectus contained therein, incorporated herein, for a full description of the risks attendant to Fund business.
Controls and Procedures
Disclosure Controls and Procedures
The Registrant has adopted procedures in connection with the operation of its business including, but not limited to, the review of account statements sent to the Managing Member before the open of business each day that disclose the positions held overnight in the Fund accounts, the margin to hold those positions, and the amount of profit or loss on each position, and the net balance of equity available in each account. The Fund brokerage account statements and financial books and records accounts are prepared by an independent CPA Firm and then are reviewed each quarter and audited each year by a different independent CPA firm.
The Managing Member of the Fund, under the actions of its sole principal, Michael Pacult, has evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) with respect to the Fund as of the end of the period covered by this Report. Based on their evaluation, Mr. Pacult has concluded that these disclosure controls and procedures are effective.
Changes in Internal Control over Financial Reporting
There were no changes in the Managing Members internal control over financial reporting during the quarter ended September 30, 2012 that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting applicable to the Fund.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
For the five years preceding the date of this Report, there have been no legal proceedings against the Fund, its Managing Member, the FCM, the IB, the CTA or any of their Affiliates, directors or officers other than as described below. The CTA, GT Capital CTA, has had the following described reportable events, none of which, in the opinion of the CTA, is material to the performance of the CTA on behalf of the Funds account
On August 24, 2009, a lawsuit was filed against Mr. Teitelbaoum, principal of GT Capital CTA, and two other parties. The complaint alleges that Mr. Teitelbaoum and the other defendants failed to properly compensate the plaintiff for marketing services. Mr. Teitelbaoum vehemently denies all allegations of wrongdoing and plans to vigorously defend the lawsuit.
Since the commencement of business, Vision Financial Services LLC was the only FCM with which the Fund deposited assets, and it has had the following described reportable events, none of which, in the opinion of the FCM, is material to the performance of the FCM on behalf of the Funds account:
On May 18, 2011, simultaneously with the issuance of a complaint by the NFA, Vision Financial Markets LLC ("Vision") consented to a finding based on a one-count complaint for failure to supervise guaranteed IBs in violation of NFA Compliance Rule 2-9(a). The alleged activities occurred prior to 2009. Without admitting or denying the findings in the Committees Decision, Vision consented to pay a fine of $500,000 and to retain an independent consultant to review its supervisory procedures relating to guaranteed IBs. Vision undertook to implement revised procedures for supervising GIBs within 6 months. Finally, Vision consented to a restriction on guaranteeing new
introducing brokers until 2013, unless it petitions the NFA to lift the restriction earlier.
The FCM only acts as clearing brokers for the Funds futures accounts and as such it may have been paid commissions for executing and clearing trades. The FCM has not passed upon the adequacy or accuracy of the Funds prospectus or this report and will not act in any supervisory capacity with respect to the CPO or the CTA, as the case may be, nor participate in the management of the CPO or of the Fund or of the CTA. Therefore, investors should not rely on the FCM in deciding whether or not to participate in the Fund.
The Fund is not aware of any threatened or potential claims or legal proceedings to which the Fund is a party or to which any of its assets are subject. The FCMs has represented to the Managing Member that that none of the events reported above would interfere with its performance as a clearing broker for the Funds account.
Item 1A. Risk Factors
There have been no material changes from risk factors as previously disclosed in the Funds 2011 Form 10-K. The risks of the Fund are (1) described fully in its prospectus filed with its registration statement on Form S-1, which is incorporated herein by reference (2) described in summary in Part I of this Form 10-Q, which is incorporated herein by reference.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities
Item 4. (Removed and Reserved)
Item 5. Other Information
Item 6. Exhibits
Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Form 10-Q for the period ended September 30, 2012, to be signed on its behalf by the undersigned, thereunto duly authorized.
TriView Global Fund, LLC
By TriView Capital Management, Inc.
Its Managing Member
/s/ Michael Pacult
Mr. Michael Pacult
Sole Director, Sole Shareholder,
President, and Treasurer of the Managing Member
Date: November 19, 2012