World Monitor Trust III - Series J - FORM 10-Q

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EX-32.2 - CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 - World Monitor Trust III - Series J	ex32-2.htm
EXCEL - IDEA: XBRL DOCUMENT - World Monitor Trust III - Series J	Financial_Report.xls
EX-31.2 - CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13A-14 AND 15D-14 - World Monitor Trust III - Series J	ex31-2.htm
EX-31.1 - CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13A-14 AND 15D-14 - World Monitor Trust III - Series J	ex31-1.htm
EX-32.1 - CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 O - World Monitor Trust III - Series J	ex32-1.htm

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 quarter ended: March 31, 2014

☐ 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: 000-51651

WORLD MONITOR TRUST III – SERIES J

(Exact name of the Registrant as specified in its charter)

Delaware		20-2446281
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1211 Avenue of the Americas, Suite 2701, New York		10036
(Address of principal executive offices)		(Zip Code)

(914) 307-7000

(The Registrant’s telephone number, including area code)

900 King Street, Suite 100, Rye Brook, New York, 10573

(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 ☒ 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 ☐

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 “accelerated filer”, “large accelerated filer” and “smaller reporting company” 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 ☒

WORLD MONITOR TRUST III – SERIES J

INDEX TO QUARTERLY REPORT ON FORM 10-Q

MARCH 31, 2014

		Page

PART I – FINANCIAL INFORMATION		3

Item 1.	Condensed Financial Statements	4

	*World Monitor Trust III – Series J*

	Condensed Statements of Financial Condition as of March 31, 2014 (Unaudited) and December 31, 2013	5

	Condensed Schedules of Investments as of March 31, 2014 (Unaudited) and December 31, 2013	6

	Condensed Statements of Operations (Unaudited) for the Three Months Ended March 31, 2014 and 2013	7

	Condensed Statements of Changes in Unitholders’ Capital (Unaudited) for the Three Months Ended March 31, 2014 and 2013	8

	Notes to Condensed Financial Statements (Unaudited)	9-23

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38

Item 4.	Controls and Procedures	41

PART II – OTHER INFORMATION		42

Item 1.	Legal Proceedings	42

Item 1.A.	Risk Factors	42

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42

Item 3.	Defaults Upon Senior Securities	42

Item 5.	Other Information	42

Item 6.	Exhibits	43

PART I – FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;

CONDENSED FINANCIAL STATEMENTS TO FOLLOW]

WORLD MONITOR TRUST III – SERIES J

CONDENSED FINANCIAL STATEMENTS

March 31, 2014 (Unaudited)

WORLD MONITOR TRUST III – SERIES J

CONDENSED STATEMENTS OF FINANCIAL CONDITION

March 31, 2014 (Unaudited) and December 31, 2013

	March 31, 2014		December 31, 2013
ASSETS
Cash and cash equivalents (see Note 2)	$	3,452,489	$	8,122,265
Investment in securities, at fair value (cost $18,723,337 and $36,419,914 at March 31, 2014 and December 31, 2013, respectively)		18,599,326		36,141,750
Investment in Affiliated Investment Funds, at fair value (cost $6,688,929 and $11,482,083 at March 31, 2014 and December 31, 2013, respectively) (see Note 7)		5,490,179		12,249,728
Total assets	$	27,541,994	$	56,513,743

LIABILITIES
Accrued expenses payable	$	182,844	$	177,954
Offering costs payable		34,800		12,419
Service fees payable (see Note 5)		45,203		86,619
Redemptions payable		3,806,029		5,716,893
Total liabilities		4,068,876		5,993,885

UNITHOLDERS’ CAPITAL (Net Asset Value)
Class I Units:
Unitholders’ Units – 258,206.321 and 489,671.166 Units outstanding at March 31, 2014 and December 31, 2013, respectively		21,628,534		45,929,534
Class II Units:
Unitholders’ Units – 19,384.607 and 43,291.800 Units outstanding at March 31, 2014 and December 31, 2013, respectively		1,844,584		4,590,324
Total Unitholders’ capital (Net Asset Value)		23,473,118		50,519,858
Total liabilities and Unitholders’ capital	$	27,541,994	$	56,513,743

NET ASSET VALUE PER UNIT
Class I	$	83.76	$	93.80
Class II	$	95.16	$	106.03

See accompanying notes.

WORLD MONITOR TRUST III – SERIES J

CONDENSED SCHEDULES OF INVESTMENTS

March 31, 2014 (Unaudited) and December 31, 2013

	March 31, 2014					December 31, 2013
	Fair Value as a % of Unitholders’ Capital			Fair Value		Fair Value as a % of Unitholders’ Capital			Fair Value

Investment in securities:
Publicly-traded mutual funds:
JP Morgan Short Duration Bond (shares 0.000 and 1,107,398.277 at March 31, 2014 and December 31, 2013, respectively)*		0.00	%	$	0		23.87	%	$	12,059,567
JP Morgan Short Duration Bond – Select (shares 569,387.476 and 0.000 at March 31, 2014 and December 31, 2013, respectively)*		26.42	%	$	6,200,630		0.00	%	$	0
Fidelity Instl Shrt-Interm Govt (shares 618,646.043 and 1,202,857.728 at March 31, 2014 and December 31, 2013, respectively)		26.41	%		6,198,833		23.79	%		12,016,549
T. Rowe Price Short-Term Fund (shares 1,294,334.712 and 2,518,921.488 at March 31, 2014 and December 31, 2013, respectively)		26.41	%		6,199,863		23.88	%		12,065,634
Total investment in securities (cost $18,723,337 and $36,419,914 at March 31, 2014 and December 31, 2013, respectively)		79.24	%	$	18,599,326		71.54	%	$	36,141,750

Investment in Affiliated Investment Funds:
CTA Choice EGLG		4.39	%	$	1,030,705		6.35	%	$	3,206,826
CTA Choice ELL		6.54	%		1,535,029		6.95	%		3,510,668
CTA Choice GLAGS		5.21	%		1,222,759		4.42	%		2,233,373
CTA Choice RDOK		5.00	%		1,174,190		4.37	%		2,208,911
CTA Choice SAXN		2.25	%		527,496		2.16	%		1,089,950
Total investment in Affiliated Investment Funds (cost $6,688,929 and $11,482,083 at March 31, 2014 and December 31, 2013, respectively)		23.39	%	$	5,490,179		24.25	%	$	12,249,728

* On February 14, 2014, shares from JP Morgan Short Duration Bond were transferred to JP Morgan Short Duration Bond – Select.

See accompanying notes.

WORLD MONITOR TRUST III – SERIES J

CONDENSED STATEMENTS OF OPERATIONS

For the Three Months Ended March 31, 2014 and 2013 (Unaudited)

	Three months ended March 31,
	2014			2013
INVESTMENT INCOME
Interest income	$	593		$	959
Dividend income		64,889			167,359
Total investment income		65,482			168,318
EXPENSES
Management fees to Managing Owner		51,585			116,679
Managing Owner interest earned on Certain Investment Funds (see Note 4)		40,235			63,032
Service fees - Class I Units (see Note 5)		180,820			413,389
Sales commission		104,363			236,609
Offering costs		47,045			58,514
Operating expenses		106,512			167,258
Total expenses		530,560			1,055,481
Net investment loss		(465,078	)		(887,163	)

REALIZED AND UNREALIZED GAIN OR (LOSS) ON INVESTMENTS
Net realized (loss) gain on investment in securities		(99,142	)		14,512
Net change in unrealized appreciation/depreciation on investment in securities		154,153			(57,370	)
Net gain (loss) from investment in securities		55,011			(42,858	)
Net realized (loss) on investment in Affiliated Investment Funds		(2,069,242	)		(1,600,357	)
Net change in unrealized depreciation/appreciation on investment in Affiliated Investment Funds		(1,966,395	)		499,362
Net (loss) from investment in Affiliated Investment Funds		(4,035,637	)		(1,100,995	)

NET (LOSS)	$	(4,445,704	)	$	(2,031,016	)
NET (LOSS) PER WEIGHTED AVERAGE UNITHOLDER
Net (loss) per weighted average Unitholder
Class I	$	(10.74	)	$	(2.31	)
Class II	$	(11.76	)	$	(2.05	)
Weighted average number of Units outstanding - Class I		380,299.137			798,176.058
Weighted average number of Units outstanding - Class II		30,558.887			89,362.666

See accompanying notes.

WORLD MONITOR TRUST III – SERIES J

CONDENSED STATEMENTS OF CHANGES IN UNITHOLDERS’ CAPITAL

For the Three Months Ended March 31, 2014 and 2013 (Unaudited)

	Class I						Class II
	Unitholders						Unitholders						Total
	Units			Amount			Units			Amount			Units			Amount

Three months ended March 31, 2014
Unitholders’ capital at December 31, 2013		489,671.166		$	45,929,534			43,291.800		$	4,590,324			532,962.966		$	50,519,858
Redemptions		(231,464.845	)		(20,214,734	)		(23,907.193	)		(2,386,302	)		(255,372.038	)		(22,601,036	)
Net loss					(4,086,266	)					(359,438	)					(4,445,704	)
Unitholders’ capital at March 31, 2014		258,206.321		$	21,628,534			19,384.607		$	1,844,584			277,590.928		$	23,473,118

Three months ended March 31, 2013
Unitholders’ capital at December 31, 2012		823,996.897		$	86,058,399			96,573.216		$	11,177,006			920,570.113		$	97,235,405
Additions		2,550.767			264,178			653.267			75,000			3,204.034			339,178
Redemptions		(56,141.839	)		(5,781,126	)		(18,546.101	)		(2,118,328	)		(74,687.940	)		(7,899,454	)
Net loss					(1,847,718	)					(183,298	)					(2,031,016	)
Unitholders’ capital at March 31, 2013		770,405.825		$	78,693,733			78,680.382		$	8,950,380			849,086.207		$	87,644,113

See accompanying notes.

WORLD MONITOR TRUST III – SERIES J

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 1.

ORGANIZATION

General Description of the Trust

World Monitor Trust III (the “Trust”) is a business trust organized under the laws of Delaware on September 28, 2004. The Trust consisted of four separate and distinct series (“Series”): Series G, H, I and J. Series G, H, I and J commenced trading operations on December 1, 2005. As of December 31, 2007, Series G, H and I were no longer offered and had been dissolved. Series J will continue to exist unless terminated pursuant to the provisions of Article XIII of the Trust’s Fifth Amended and Restated Declaration of Trust and Trust Agreement (the “Trust Agreement”). The assets of each Series have been segregated from those of the other Series, separately valued and independently managed, and separate financial statements have been prepared for each Series. Each Series was formed to engage in the speculative trading of a diversified portfolio of futures, forward and options contracts and may, from time to time, engage in cash and spot transactions. The fiscal year end of Series J is December 31.

Effective March 19, 2014, the Kenmar Group and the Olympia Group of Companies merged with the GEMS Group. In connection with the merger, certain changes in the corporate structure of the organization have occurred. Kenmar Preferred Investments, L.P. (“Kenmar Preferred” or the “Managing Owner”) who is the Managing Owner of the Trust , converted from a Delaware limited partnership to a Delaware limited liability company. Accordingly, the name changed to Kenmar Preferred Investments, LLC. Kenmar Preferred or Managing Owner refers to either Kenmar Preferred Investments, L.P. or Kenmar Preferred Investments, LLC, depending on the applicable period discussed. As the Managing Owner of the Trust and of each Series, Kenmar Preferred conducts and manages the business of the Trust and each Series.

Effective March 17, 2014, ClariTy Managed Account & Analytics Platform L.P. changed its name and form of entity to ClariTy Managed Account & Analytics Platform, LLC (“ClariTy”). ClariTy refers to either ClariTy Managed Account & Analytics Platform, L.P. or ClariTy Managed Account & Analytics Platform, LLC, depending on the applicable period discussed. ClariTy, an affiliate of Kenmar Preferred, serves as the managing member for CTA Choice Fund LLC (“CTA Choice”). CTA Choice is a Delaware limited liability company which consists of multiple segregated series, each established pursuant to a separate Certificate of Designation prepared by ClariTy. Each series maintains separate and distinct records. The assets associated with each series, and the liabilities and obligations incurred with respect to a particular series are enforceable only against the assets of that series.

Effective March 17, 2014, Kenmar Global Investment Management L.P changed its name and form of entity to Kenmar Global Investment Management, LLC (“Asset Allocator”). Asset Allocator refers to either Kenmar Global Investment Management L.P. or Kenmar Global Investment Management, LLC, depending on the applicable period discussed. The Asset Allocator, an affiliate of the Managing Owner, is the Asset Allocator of CTA Choice. Pursuant to the Asset Allocation Agreements between the Managing Owner, the Asset Allocator, and each interestholder, the Asset Allocator determines the trading level of each interestholder’s assets and reallocates among the separate series of CTA Choice as agreed upon with the Trading Advisors.

WORLD MONITOR TRUST III – SERIES J

NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

Note 1.

ORGANIZATION (CONTINUED)

General Description of the Trust (Continued)

While the Asset Allocator receives no fees for such services from Series J, the Asset Allocator is paid management and incentive fees directly from the interestholders pursuant to each interestholder’s Asset Allocation Agreement. Series J pays no management or incentive fees to the Asset Allocator.

Series J allocates a portion of its net assets (“Allocated Assets”) to commodity trading advisors (each, a “Trading Advisor” and collectively, the “Trading Advisors”) through various series of CTA Choice, for which such allocations are rebalanced quarterly. As of March 31, 2014, Series J allocates approximately one-fifth of its Allocated Assets to each Trading Advisor which manages and makes trading decisions with respect to those Allocated Assets (see below table). The Managing Owner may terminate any current Trading Advisor or select new trading advisors from time to time at its sole discretion in order to achieve the goals of Series J. In the future, the Managing Owner may determine to access certain Trading Advisors through separate investee pools.

Each Trading Advisor listed below is referred to herein as an “Affiliated Investment Fund” and collectively referred to herein as the “Affiliated Investment Funds”:

Affiliated Investment Fund	Trading Advisor	Trading Program	Start Date	Termination Date
CTA Choice ORT (“ORT”)	Ortus	Major Currency Program	01/1/12	04/30/13
CTA Choice BEAM (“BEAM”)	BEAM Bayesian Efficient Asset Management, LLC	BEAM Multi-Strategy Program	01/1/12	04/30/13
CTA Choice HKSB (“HKSB”)	Hawksbill Capital Management	Hawksbill Global Diversified Program	12/1/12	08/31/13
CTA Choice EGLG (“EGLG”)*	Eagle	Eagle Global Program	01/1/12
CTA Choice SAXN (“SAXN”)*	Saxon Investment Corporation	Saxon Aggressive Diversified Program	01/1/12
CTA Choice GLAGS (“GLAGS”)*	Global Ag, LLC	Diversified Program	12/1/12
CTA Choice RDOK (“RDOK”)*	Red Oak Commodity Advisors, Inc.	Fundamental Trading Program	12/1/12
CTA Choice ELL (“ELL”)*	Ellington Management Group, LLC	Global Macro Trading Program	12/1/13

* Effective December 1, 2013, Series J allocated approximately one-fifth of its Allocated Assets to each of ELL, EGLG, GLAGS, RDOK and SAXN.

Series J meets the definition of an investment company in accordance with guidance under Accounting Standards Codification Topic 946 “Financial Services – Investment Companies”.

Regulation

As a registrant with the Securities and Exchange Commission (“SEC”), the Trust and each Series are subject to the regulatory requirements under the Securities Act of 1933 and the Securities Exchange Act of 1934.

WORLD MONITOR TRUST III – SERIES J

NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

Note 1.

ORGANIZATION (CONTINUED)

Regulation (Continued)

As a commodity pool, the Trust and each Series are subject to the regulations of the Commodity Futures Trading Commission (“CFTC”), an independent agency of the U.S. government which regulates most aspects of the commodity futures industry; rules of the National Futures Association (“NFA”), an industry self-regulatory organization; and the requirements of the various commodity exchanges where the Trust, indirectly through the Affiliated Investment Funds, executes transactions.

The Offering

Series J offers units (the “Units”) in two classes (each, a “Class”) – Class I and Class II.

Up to $281,250,000 Series J, Class I and $93,750,000 Series J, Class II Units are being offered (totaling $375,000,000) (“Subscription Maximum”). Units are being offered to investors who meet certain established suitability standards. Prior to November 30, 2008, investments required a minimum aggregate initial subscription of $5,000 and $2,000 for certain Benefit Plan Investors (including IRAs), although the minimum purchase for any single series was $500.

Effective November 30, 2008, the Board of Directors of the Managing Owner of Series J determined that the Units would no longer be publicly offered and would only be available on a private placement basis to “accredited investors” pursuant to Regulation D under the Securities Act of 1933.

For new subscribers, the minimum initial investment is $25,000 ($10,000 for benefit plan investors (including IRAs)). The minimum additional subscription amount for current investors is $5,000.

Series J completed its initial offering on December 1, 2005 with gross proceeds of $31,024,443. Until the Subscription Maximum for Series J is reached, Series J’s Units will continue to be offered on a monthly basis at the then current Net Asset Value per Unit.

Exchanges, Redemptions and Termination

Redemptions from Series J are permitted on a monthly basis with no redemption charges applicable to either Class I or Class II Units.

In the event that the Net Asset Value of a Series, after adjustments for distributions, contributions and redemptions, declines by 50% or more since the commencement of trading activities or the first day of a fiscal year, the Series will automatically terminate.

Should the Managing Owner make a determination that Series J’s aggregate net assets in relation to its operating expenses make it unreasonable or imprudent to continue the business of Series J, or, in the exercise of its reasonable discretion, if the aggregate Net Asset Value of Series J as of the close of business on any business day declines below $10 million, the Managing Owner may dissolve Series J.

WORLD MONITOR TRUST III – SERIES J

NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

Note 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The condensed statements of financial condition, including the condensed schedules of investments, as of March 31, 2014, the condensed statements of operations for the three months ended March 31, 2014 (“First Quarter 2014”) and for the three months ended March 31, 2013 (“First Quarter 2013”), and the condensed statements of changes in Unitholders’ capital for the First Quarter 2014 and the First Quarter 2013, are unaudited.

In the opinion of the Managing Owner, the condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to state fairly the financial position of Series J as of March 31, 2014 and the results of its operations for the First Quarter 2014 and the First Quarter 2013. The operating results for these interim periods may not be indicative of the results expected for a full year.

The condensed financial statements of Series J are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Such principles require the Managing Owner to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with U.S. GAAP have been omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in Series J’s annual report on Form 10-K filed with the SEC for the year ended December 31, 2013.

The weighted average number of Units outstanding was computed for purposes of disclosing net (loss) per weighted average Unitholder. The weighted average number of Units is equal to the number of Units outstanding at period end, adjusted proportionately for Units subscribed and redeemed based on their respective time outstanding during the period.

Investment in securities consists of publicly-traded mutual funds, which are valued using the net asset value on the last day of the period. Realized gains and losses from investment in securities and Affiliated Investment Funds are determined using the identified cost method. Any change in net unrealized gain or loss from the preceding period is reported in the condensed statements of operations. Dividends are recorded on the ex-dividend date.

Series J has elected not to provide a statement of cash flows since substantially all of Series J’s investments are carried at fair value and classified as Level 1 or Level 2 measurements in the fair value hierarchy table, Series J has little or no debt and a condensed statement of changes in Unitholders’ capital (Net Asset Value) is provided.

WORLD MONITOR TRUST III – SERIES J

NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

Note 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Basis of Accounting (Continued)

Consistent with standard business practices in the normal course of business, Series J has provided general indemnifications to the Managing Owner, the Trading Advisors and others when they act, in good faith, in the best interests of Series J. Series J is unable to develop an estimate of the maximum potential amount of future payments that could potentially result from any hypothetical future claim, but expects the risk of having to make any payments under these general business indemnifications to be remote.

Series J accounts for financial assets and liabilities using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels: quoted market prices in active markets for identical assets and liabilities (Level 1), inputs other than quoted market prices that are observable for the asset or liability, either directly or indirectly (Level 2), and unobservable inputs for the asset or liability (Level 3).

Series J considers its investments in publicly-traded mutual funds to be based on quoted prices in active markets for identical assets (Level 1). In determining the level, Series J considers the length of time until the investment is redeemable, including notice and lock-up periods or any other restriction on the disposition of the investment. Series J also considers the nature of the portfolios of the underlying Affiliated Investment Funds and their ability to liquidate their underlying investments. Series J has the ability to redeem its investments at the reported net asset valuation as of the measurement date (see Note 7) and classified its investment in Affiliated Investment Funds as Level 2 using the fair value hierarchy. The Affiliated Investment Funds are valued at the net asset value as reported by the underlying investment funds’ capital balance using the practical expedient method. The carrying value of the underlying investment in the Affiliated Investment Funds is at fair value.

There are no Level 3 investments on March 31, 2014 or December 31, 2013, nor any portion of the interim periods.

The following table summarizes the assets measured at fair value using the fair value hierarchy:

March 31, 2014	Level 1		Level 2		Level 3		Total

Assets:
Investment in securities, at fair value	$	18,599,326	$	0	$	0	$	18,599,329
Investment in Affiliated Investment Funds, at fair value	$	0	$	5,490,179	$	0	$	5,490,179

December 31, 2013	Level 1		Level 2		Level 3		Total

Assets:
Investment in securities, at fair value	$	36,141,750	$	0	$	0	$	36,141,750
Investment in Affiliated Investment Funds, at fair value	$	0	$	12,249,728	$	0	$	12,249,728

WORLD MONITOR TRUST III – SERIES J

NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

Note 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Cash and Cash Equivalents

Cash and cash equivalents include cash and investments in overnight deposits. Interest income, if any, includes interest on cash and overnight deposits. In the event of a financial institution’s insolvency, recovery of cash on deposit may be limited to account insurance or other protections afforded such deposits. Series J has established procedures to actively monitor market risk and minimize credit risk, although there can be no assurance that it will, in fact, succeed in doing so. 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 or redemptions received.

Income Taxes

Series J is treated as a partnership for U.S. federal income tax purposes. As such, Series J is not required to provide for, or pay, any U.S. federal or state income taxes. Income tax attributes that arise from its operations are passed directly to the Unitholders including the Managing Owner. Series J may be subject to other state and local taxes in jurisdictions in which it operates.

Series J recognizes tax benefits or expenses of uncertain tax positions in the year such determination is made when the positions are “more likely than not” to be sustained assuming examination by tax authorities. The Managing Owner has reviewed Series J’s tax positions for all open years and concluded that no provision for unrecognized tax benefits or expense is required in these condensed financial statements. Series J has elected an accounting policy to classify interest and penalties related to unrecognized tax benefits as interest or other expense. The 2010 through 2013 tax years generally remain subject to examination by U.S. federal and most state tax authorities.

There have been no differences between the tax basis and book basis of assets, liabilities or Unitholders’ capital since inception of Series J.

Profit and Loss Allocations and Distributions

Income and expenses (excluding the service fee and upfront sales commissions further discussed in Note 5) are allocated pro rata to the Class I Units and Class II Units monthly based on the Units outstanding during the month. Class I Units are charged with the service fee and upfront sales commission applicable to such Units. Distributions (other than redemptions of Units) may be made at the sole discretion of the Managing Owner on a pro rata basis in accordance with the respective capital balances of the Unitholders. The Managing Owner has not and does not presently intend to make any distributions.

WORLD MONITOR TRUST III – SERIES J

NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

Note 2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Offering Costs

In accordance with the Trust’s Agreement and Prospectus, the Managing Owner is responsible for the payment of all offering expenses of Series J incurred after the Initial Offering Period (“ongoing offering costs”), provided that the amount of such ongoing offering costs paid by the Managing Owner are subject to reimbursement by the Trust, without interest, in up to 36 monthly payments during each of the first 36 months following the month in which such expenses were paid by the Managing Owner. Through March 31, 2014, the Managing Owner has paid $2,924,613 in ongoing offering costs, of which $2,867,451 has been allocated to Series J.

Ongoing offering costs incurred through November 30, 2006 in the amount of $599,062 will not be reimbursed to the Managing Owner. For the period December 1, 2006 through March 31, 2014, the Managing Owner incurred and Series J was allocated ongoing offering costs in the amount of $2,287,994 and $2,268,388, respectively. Of the $2,268,388 allocated to Series J, $635,144 will not be reimbursable to the Managing Owner.

Series J will only be liable for payment of ongoing offering costs on a monthly basis. If Series J terminates prior to completion of payment of such amounts to the Managing Owner, the Managing Owner will not be entitled to any additional payments, and Series J will have no further obligation to the Managing Owner.

For the First Quarter 2014 and the First Quarter 2013, Series J’s allocable portion of ongoing offering costs did not exceed 0.50% per annum of the Net Asset Value of Series J.

Interest and Dividends

Interest is recorded on an accrual basis. Dividends are recorded on the ex-dividend date.

Investment in Affiliated Investment Funds

The investment in Affiliated Investment Funds is reported in Series J’s condensed statements of financial condition at fair value. Fair value ordinarily is the value determined for the Affiliated Investment Funds in accordance with the fund’s valuation policies and reported at the time of Series J’s valuation by the management of the funds. Generally, the fair value of Series J’s investment in Affiliated Investment Funds represents the net asset value which is the amount that Series J could reasonably expect to receive from the Affiliated Investment Funds if Series J’s investments were redeemed at the time of the valuation, based on information reasonably available at the time the valuation is made and that Series J believes to be reliable.

Note 3.

RELATED PARTIES

Series J reimburses Kenmar Preferred and its affiliates for services it performs for Series J, which include, but are not limited to: management, legal, accounting, registrar, transfer and assignment functions, investor communications, printing, and other administrative services.

WORLD MONITOR TRUST III – SERIES J

NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

Note 3.

RELATED PARTIES (CONTINUED)

The expenses incurred by Series J for services performed by Kenmar Preferred and its affiliates for Series J were as follows:

	Three months ended March 31,
	2014		2013
Management fees to Managing Owner	$	51,585	$	116,679
Managing Owner interest earned on Certain Investment Funds		40,235		63,032
Operating expenses		36,910		53,435
	$	128,730	$	233,146

Expenses payable to the Managing Owner and its affiliates, which are included in accrued expenses payable on the condensed statements of financial condition as of March 31, 2014 and December 31, 2013, were $44,630 and $52,350, respectively.

Note 4.

MANAGING OWNER AND AFFILIATES

The Managing Owner is paid a monthly management fee of 1/12 of 0.5% (0.5% annually) of Series J’s Net Asset Value at the beginning of each month (See Note 5).

Series J invests a portion of the excess cash balances not required for margin through certain investment funds which invest in (i) U.S. government securities (which include any security issued or guaranteed as to principal or interest by the United States), (ii) any certificate of deposit for any of the foregoing, including U.S. treasury bonds, U.S. treasury bills and issues of agencies of the United States government, (iii) corporate bonds or notes, or (iv) other instruments permitted by applicable rule and regulations (collectively, “Certain Investment Funds”). The objective is to obtain a rate of return for Series J that balances risk and return relative to the historically low yields on short term cash deposits with banks and or brokerage firms. There is no guarantee that the Managing Owner will be successful in investing the excess cash successfully to obtain a greater yield than available on short term cash deposits with banks and or brokerage firms. The Managing Owner is paid monthly 1/12 of 50% of the first 1% of the positive returns earned on Series J’s investments in Certain Investment Funds. The calculation is based on Series J’s average annualized Net Asset Value, and any losses related to returns on Certain Investment Funds must first be recovered through subsequent positive returns prior to the Managing Owner receiving a payment. After the calculation of the amount payable to the Managing Owner, Series J will be credited with all additional positive returns (or 100% of any losses) on Series J’s investments in Certain Investment Funds. If at the end of any calendar year, a loss has been incurred on the returns for Certain Investment Funds, then the loss carry forward will reset to zero for the next calendar year with regards to the calculation of the Managing Owner’s portion of Certain Investment Fund’s income. For the First Quarter 2014 and the First Quarter 2013, the Managing Owner’s portion of interest earned on Certain Investment Funds amounted to $40,235 and $63,032, respectively.

WORLD MONITOR TRUST III – SERIES J

NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

Note 4.

MANAGING OWNER AND AFFILIATES (CONTINUED)

Series J pays a monthly administrative services fee to ClariTy for risk management and related services with respect to monitoring the Trading Advisors, indirectly through its investment in Affiliated Investment Funds based on their respective beginning of month Allocated Assets. For the First Quarter 2014 and the First Quarter 2013, the administrative services fee earned indirectly totaled $26,102 and $59,209, respectively.

Note 5.

SERVICE FEES AND SALES COMMISSIONS

Series J pays a service fee with respect to Class I Units, monthly in arrears, equal to 1/12 of 2% (2% per annum) of the Net Asset Value per Unit of the outstanding Class I Units as of the beginning of the month. Series J also pays an initial commission equal to 2% of the initial Net Asset Value per Unit of each Class I Unit sold by the Correspondent Selling Agents (“CSA”), payable on the date such Class I Units are purchased. Commencing with the 13^th month after the purchase of a Class I Unit, the CSAs received an ongoing monthly commission equal to 1/12^th of 2% (2% per annum) of the Net Asset Value per Class I Unit as of the beginning of each month of the Class I Units sold by them.

The Service Fee – Class I Units (as described below) disclosed on the condensed statements of operations represents (i) the monthly 1/12 of 2% of the Net Asset Value per Class I Unit as of the beginning of each month of the Class I Units, (ii) the initial upfront sales commission of 2%, and (iii) a deduction for Series J’s recapture of the 1/12 of 2% service fee on all Units owned for less than 12 months that have received the 2% upfront sales commission and a recapture of the service fee on Units held with no CSA.

For the First Quarter 2014 and the First Quarter 2013, the Service Fee – Class I Units is composed of the following:

	First Quarter 2014			First Quarter 2013
Monthly 1/12 of 2% service fee calculated on all Class I Units	$	191,080		$	419,552
Initial up-front 2% sales commissions		0			5,284
Series J’s recapture on 1/12 of 2% service fee on select Units and recapture of the service fee on Units held with no CSA		(10,260	)		(11,447	)
Total	$	180,820		$	413,389

Effective October 1, 2010, Series J agreed to pay a monthly fee to Wells Fargo for providing continuing due diligence, training, operations, system support, and marketing. For Class I and II Units purchased by clients of Wells Fargo on or prior to October 1, 2010, the fee is 1/12^thof 0.10% (0.10% per annum) of the beginning of the month Net Asset Value. For Class I and II Units purchased subsequent to October 1, 2010 the fee is 1/12^th of 0.30% (0.30% per annum) of the beginning of the month Net Asset Value. These fees are deducted from the management fee paid to the Managing Owner.

WORLD MONITOR TRUST III – SERIES J

NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

Note 6.

ADMINISTRATOR

GlobeOp Financial Services LLC (“GlobeOp” or the “Administrator”), a Delaware limited liability company, serves as the Administrator of Series J. The Administrator performs or supervises the performance of services necessary for the operation and administration of Series J (other than making investment decisions), including administrative and accounting services. The Administrator also calculates Series J’s Net Asset Value. In addition, the Administrator maintains certain books and records of Series J, including certain books and records required by CFTC Rule 4.23(a). GlobeOp also serves as the administrator of the Affiliated Investment Funds.

Series J indirectly pays its pro-rata share of administrator fees through its investment in Affiliated Investment Funds. For the First Quarter 2014 and the First Quarter 2013, Series J indirectly paid administrator fees totaling $24,013 and $41,140, respectively.

Effective January 1, 2013, Series J also pays an administrator fee directly to GlobeOp. For the First Quarter 2014 and the First Quarter 2013, Series J directly paid GlobeOp administrator fees of $6,250 and $6,250, respectively.

Note 7.

INVESTMENT IN AFFILIATED INVESTMENT FUNDS

Series J invests a portion of its assets in Affiliated Investment Funds. Series J’s investment in Affiliated Investment Funds represents approximately 23.39% and 24.25% of the Net Asset Value of Series J at March 31, 2014 and December 31, 2013, respectively. The investment in Affiliated Investment Funds is reported in Series J’s condensed statements of financial condition at fair value. Series J records its proportionate share of income or loss in the condensed statements of operations. The investments are subject to the terms of the organizational and offering documents of the Affiliated Investment Funds.

The following table summarizes the change in net asset value (fair value) of Series J’s Level 2 investment in Affiliated Investment Funds for the First Quarter 2014 and the First Quarter 2013:

		Net Asset Value December 31, 2013				Purchases				Loss				Redemptions				Net Asset Value March 31, 2014
Investment in Affiliated Investment Funds		$	12,249,728			$	3,389,774			$	(4,035,637	)		$	(6,113,686	)		$	5,490,179

		Net Asset Value December 31, 2012				Purchases				Loss				Redemptions				Net Asset Value March 31, 2013
Investment in Affiliated Investment Funds		$	23,396,923			$	14,454,606			$	(1,100,995	)		$	(19,836,913	)		$	16,913,621

WORLD MONITOR TRUST III – SERIES J

NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

Note 7.

INVESTMENT IN AFFILIATED INVESTMENT FUNDS (CONTINUED)

The Affiliated Investment Funds are redeemable monthly and require a redemption notice of 1-5 days. Series J may make additional contributions to or redemptions from the Affiliated Investment Funds on a standard allocation date. The Affiliated Investment Funds engage in trading of commodity futures including agriculture, currency, energy, interest rates and stock indices among other types, foreign currency forward contracts and options on futures contracts.

Series J records its proportionate share of income or loss in the condensed statements of operations.

Series J’s investment in Affiliated Investment Funds are notionally funded, and the following table sets out the total capital commitment split between net asset value (amount funded) and the remaining capital commitment. The remaining capital commitment is the amount that can be requested from Series J if requested by the Affiliated Investment Funds to meet margin calls in accordance with the governing documents. However, Series J’s capital commitment to the Affiliated Investment Funds is disclosed below:

	Total Capital Commitment March 31, 2014		Net asset value March 31, 2014		Remaining Capital Commitment March 31, 2014
CTA Choice EGLG	$	4,881,862	$	1,030,705	$	3,851,157
CTA Choice ELL		5,612,997		1,535,029		4,077,968
CTA Choice GLAGS		5,174,069		1,222,759		3,951,310
CTA Choice RDOK		5,752,337		1,174,190		4,578,147
CTA Choice SAXN		6,109,402		527,496		5,581,906
Total	$	27,530,667	$	5,490,179	$	22,040,488

Series J’s investment in Affiliated Investment Funds is subject to the market and credit risks of securities held or sold short by their respective Affiliated Investment Fund. ClariTy has established procedures to monitor market risk and minimize credit risk, although there can be no assurance that it will, in fact, succeed in doing so. The interestholders within CTA Choice 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.

Note 8.

TRUSTEE

The trustee of the Trust is Wilmington Trust Company, a Delaware banking corporation. The trustee has delegated to the Managing Owner the power and authority to manage the business and affairs of the Trust and has only nominal duties and liabilities with respect to the Trust.

Note 9.

COSTS, FEES AND EXPENSES

Operating Expenses

Operating expenses of Series J are paid for by Series J.

WORLD MONITOR TRUST III – SERIES J

NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

Note 9.

COSTS, FEES AND EXPENSES (CONTINUED)

Trading Advisor Management and Incentive Fees

Series J pays indirectly through its investment in Affiliated Investment Funds, the following Trading Advisors’ management fees (based on Series J’s Allocated Assets as of each standard allocation date) and incentive fees for achieving “New High Net Trading Profits,” in Series J’s capital accounts within the Affiliated Investment Funds as defined in their respective advisory agreements:

Affiliated Investment Fund	Management Fee			Incentive Fee
BEAM*		1.00	%		20.00	%
EGLG		2.00	%		25.00	%
ELL		0.00	%		30.00	%
GLAGS		2.00	%		20.00	%
HKSB**		0.00	%		25.00	%
ORT*		1.00	%		25.00	%
RDOK		2.00	%		20.00	%
SAXN		0.00	%		25.00	%

* Series J fully redeemed from BEAM and ORT as of April 30, 2013.

** Series J fully redeemed from HKSB as of August 31, 2013.

For the First Quarter 2014 and the First Quarter 2013, Series J paid Trading Advisor management fees, which are earned indirectly and are calculated within each Affiliated Investment Fund based on Series J’s Allocated Assets as of each standard allocation date, of $119,862 and $271,124, respectively.

For the First Quarter 2014 and the First Quarter 2013, Series J paid Trading Advisor incentive fees indirectly within its investment in Affiliated Investment Funds of $0 and $189,078, respectively.

Commissions

Series J, indirectly through the commodity trading activity of the Affiliated Investment Funds, is obligated to pay all floor brokerage expenses, give-up charges and NFA clearing and exchange fees. These activities are reflected within the respective net asset value of each of the Affiliated Investment Funds.

Note 10.

DERIVATIVE INSTRUMENTS AND ASSOCIATED RISKS

No derivative instruments were directly held by Series J as of March 31, 2014 and December 31, 2013. Derivative trading activity is conducted within the Affiliated Investment Funds.

Series J’s investment in Affiliated Investment Funds is subject to the market and credit risks of the futures contracts, options on futures contracts, forward currency contracts and other financial instruments held or sold short by them. Series J bears the risk of loss only to the extent of the capital commitment of its investment and, in certain specific circumstances, distributions and redemptions received.

WORLD MONITOR TRUST III – SERIES J

NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

Note 10.

DERIVATIVE INSTRUMENTS AND ASSOCIATED RISKS (CONTINUED)

Series J is exposed to various types of risks associated with the derivative instruments and related markets in which it indirectly invests through its investments in Affiliated Investment Funds. These risks include, but are not limited to, risk of loss from fluctuations in the value of derivative instruments held (market risk) and the inability of counterparties to perform under the terms of Series J’s investment activities (credit risk), including investment in Affiliated Investment Funds.

The Managing Owner has established procedures to actively monitor market risk and minimize credit risk, although there can be no assurance that it will, in fact, succeed in doing so. The Unitholders bear the risk of loss only to the extent of the market value of their respective investment in Series J and, in certain specific circumstances, distributions and redemptions received.

Market Risk

Market risk is influenced by a wide variety of factors, including government programs and policies, political and economic events, the level and volatility of interest rates, foreign currency exchange rates, the diversification effect among the derivative instruments, the liquidity and inherent volatility of the markets in which Series J indirectly invests through its ownership in Affiliated Investment Funds.

Credit Risk

The Managing Owner attempts to minimize both credit and market risks by requiring Series J and its Trading Advisors to abide by various trading limitations and policies. The Managing Owner monitors compliance with these trading limitations and policies, which include, but are not limited to, executing and clearing all trades with creditworthy counterparties; limiting the amount of margin or premium required for any one commodity or all commodities combined; and generally limiting transactions to contracts which are traded in sufficient volume to permit the taking and liquidating of positions.

WORLD MONITOR TRUST III – SERIES J

NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

Note 11. FINANCIAL HIGHLIGHTS

The following information presents per Unit operating performance data and other supplemental financial data for the First Quarter 2014 and the First Quarter 2013. This information has been derived from information presented in the condensed financial statements:

	Class I						Class II
	First Quarter						First Quarter
	2014			2013			2014			2013
Per Unit Performance
(for a Unit outstanding throughout the entire period)
Net Asset Value per Unit at beginning of period	$	93.80		$	104.44		$	106.03		$	115.74

Loss from operations:
Net realized and change in unrealized loss ⁽¹⁾		(8.88	)		(1.25	)		(10.10	)		(1.38	)
Interest income ⁽¹⁾		0.00			0.00			0.00			0.00
Dividend income ⁽¹⁾		0.16			0.19			0.18			0.21
Expenses ⁽³⁾		(1.32	)		(1.23	)		(0.95	)		(0.81	)
Total loss from operations		(10.04	)		(2.29	)		(10.87	)		(1.98	)
Net Asset Value per Unit at end of period	$	83.76		$	102.15		$	95.16		$	113.76

Total Return ⁽⁴⁾		(10.70	)%		(2.19	)%		(10.26	)%		(1.71	)%

Supplemental data
Ratios to average Net Asset Value:
Net investment loss ^{(2), (3)}		(5.19	)%		(4.04	)%		(3.02	)%		(2.09	)%
Interest income ⁽³⁾		0.01	%		0.00	%		0.01	%		0.00	%
Dividend income ⁽³⁾		0.70	%		0.72	%		0.71	%		0.74	%
Other expenses ⁽³⁾		5.90	%		4.76	%		3.74	%		2.83	%

Total expenses		5.90	%		4.76	%		3.74	%		2.83	%

Total returns are calculated based on the change in value of a Unit during the period. An individual Unitholder’s total return and ratios may vary from the above total returns and ratios based on the timing of subscriptions and redemptions.

⁽¹⁾

Dividend and Interest income per Unit, expenses per Unit are calculated by dividing dividend income, interest income and other expenses applicable to each Class by the weighted average number of Units of each Class outstanding during the period. Total trading and investing loss is a balancing amount necessary to reconcile the change in Net Asset Value per Unit of each Class with the other per Unit information.

⁽²⁾

Represents dividend and interest income less total expenses.

⁽³⁾

Annualized.

⁽⁴⁾

Not annualized.

WORLD MONITOR TRUST III – SERIES J

NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

Note 12.

SUBSEQUENT EVENTS

The following table sets out the total capital commitment split between net asset value (amount funded) and the remaining capital commitments as of April 30, 2014:

		Total Capital Commitment April 30, 2014				Net asset value April 30, 2014				Remaining Capital Commitment April 30, 2014
Affiliated Investment Funds		$	23,640,876			$	5,177,293			$	18,463,583

From April 1, 2014 through May 12, 2014, there were subscriptions and redemptions of $0 and $3,406,060, respectively.

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

This report on Form 10-Q (the “Report”) for the quarter ending March 31, 2014 (“First Quarter 2014”) includes forward-looking statements that reflect the current expectations of Kenmar Preferred Investments, L.P., the Managing Owner of World Monitor Trust III – Series J (the “Registrant”), about the future results, performance, prospects and opportunities of the Registrant. The Managing Owner has tried to identify these forward-looking statements by using words such as “may”, “will”, “expect”, “anticipate”, “believe”, “intend”, “should” and “estimate”, or the negative of those terms or similar expressions. These forward-looking statements are based on information currently available to the Managing Owner and are subject to a number of risks, uncertainties and other factors, both known, such as those described in this Report, and unknown, that could cause the Registrant’s actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements.

You should not place undue reliance on any forward-looking statements. Except as expressly required by the Federal securities laws, the Managing Owner undertakes no obligation to publicly update or revise any forward-looking statements or the risks, uncertainties or other factors described in this Report, as a result of new information, future events or changed circumstances or for any other reason after the date of this Report.

Introduction

General

World Monitor Trust III (the “Trust”) was formed as a Delaware Statutory Trust on September 28, 2004, with separate series (each, a “Series”) of units of beneficial interest (“Units”). Its term will expire on December 31, 2054 (unless terminated earlier in certain circumstances). The trustee of the Trust is Wilmington Trust Company. The Trust’s fiscal year for book and tax purposes ends on December 31.

The Trust’s Units were initially offered in four (4) separate and distinct Series: Series G, Series H, Series I and Series J (the “Registrant”). The Trust may issue additional Series of Units in the future. Each Series will continue to exist until terminated pursuant to the provisions of Article XIII of the Fifth Amended and Restated Declaration of Trust and Trust Agreement (the “Trust Agreement”). Each Series offers Units in two classes (each, a “Class”) – Class I and Class II. Class I Units pay a service fee. Class II Units may only be offered to investors who are represented by approved correspondent selling agents who are directly compensated by the investor for services rendered in connection with an investment in the Trust (such arrangements commonly referred to as “wrap-accounts”) (see Note 5 of the condensed financial statements).

Series G, H, I and J commenced trading operations on December 1, 2005.

Units are offered as of the beginning of each month, and Units will continue to be offered in each Series until the maximum amount of each Series’ Units which are registered are sold. The Managing Owner may suspend or terminate the offering of Units of any Series at any time or extend the offering by registering additional Units. The Managing Owner terminated the offering of Units of Series H and Series I effective March 31, 2007 and dissolved Series H and Series I effective close of business on April 30, 2007. The Managing Owner terminated the offering of Units of Series G on December 31, 2007 and dissolved Series G effective close of business on December 31, 2007.

Managing Owner and its Affiliates

Effective March 17, 2014, Kenmar Preferred Investments, L.P. changed its name and form of entity to Kenmar Preferred Investments, LLC (“Kenmar Preferred” or the “Managing Owner”). Kenmar Preferred or Managing Owner refers to either Kenmar Preferred Investments, L.P. or Kenmar Preferred Investments, LLC depending on the applicable period discussed. Kenmar Preferred is the managing owner of the Registrant.

Kenmar Preferred has been the managing owner of the Registrant since October 1, 2004. The Managing Owner may, but is not required under the terms of the Trust Agreement to maintain an interest in the Registrant.

The Registrant reimburses the Managing Owner for services it performs for the Registrant, which include, but are not limited to: management, legal, accounting, registrar, transfer and assignment functions, investor communications, printing, and related services with respect to monitoring the Trust and other administrative services. The Registrant pays a monthly fee to ClariTy Managed Account & Analytics Platform, L.P., who effective March 17, 2014 changed its name and form of entity to Clarity Managed Account & Analytics Platform, LLC (“ClariTy”), an affiliate of the Managing Owner, for risk management and related services with respect to monitoring the Trading Advisors. ClariTy refers to either ClariTy Managed Account & Analytics Platform, L.P. or ClariTy Managed Account & Analytics Platform, LLC, depending on the applicable period discussed.

The Offering

Units are being offered to investors who meet certain established suitability standards. Prior to November 30, 2008, investments required a minimum aggregate initial subscription of $5,000 and $2,000 for certain Benefit Plan Investors (including IRAs), although the minimum purchase for any single series was $500. Effective December 1, 2008, the minimum initial investment for new subscribers is $25,000 ($10,000 for benefit plan investors (including IRAs)) and the minimum additional subscription amount for current investors, who are “accredited investors,” is $5,000.

Effective November 30, 2008, the Board of Directors of the Managing Owner of the Registrant determined that the Registrant’s Units are no longer to be publicly offered and are only to be available on a private placement basis to accredited investors pursuant to Regulation D under the Securities Act of 1933 (the “Securities Act”). This change in the manner in which the Registrant’s Units are offered has no material impact to current investors as there is no change in the fees and expenses and redemption terms of the Units or any change in the management and investment strategy and reporting provided to investors of the Registrant. The only change is in the method by which the Registrant’s Units will be available, and the increased suitability standard of persons subscribing for Units. New subscriptions must be made by persons that are accredited investors. Current investors that are not accredited investors are not required to redeem their current Units, but are not able to purchase additional Units.

Initially, the Units for each Series were offered for a period ending November 30, 2005 (“Initial Offering Period”) at $100 per Unit. The subscription minimum of $30,000,000 for the Registrant was reached during the Initial Offering Period permitting all of Series G, H, I and J to commence trading operations. The Registrant completed its initial offering on December 1, 2005 with gross proceeds of $31,024,443, which was fully allocated to the trading vehicles. Series H and Series I Units were fully redeemed as of April 30, 2007 and Series G’s Units as of December 31, 2007. Up to $281,250,000 Series J, Class I and $93,750,000 Series J, Class II Units are being offered (totaling $375,000,000) (“Subscription Maximum”). Until the Subscription Maximum for the Registrant is reached, the Registrant’s Units will continue to be offered on a monthly basis at the then current Net Asset Value per Unit.

The Trading Advisors and the Trading Vehicles

The Registrant allocates a portion of its net assets (“Allocated Assets”) to commodity trading advisors (each, a “Trading Advisor” and collectively, the “Trading Advisors”). Each Trading Advisor manages a portion of the Allocated Assets of the Registrant and makes the trading decisions with respect to those Allocated Assets. The Managing Owner may terminate any current Trading Advisor or select new trading advisors from time to time in its sole discretion. In the future, the Managing Owner may determine to access certain Trading Advisors through separate investee pools.

In general, the Registrant expects to access the Trading Advisors through various series of CTA Choice Fund LLC (“CTA Choice”). CTA Choice is an “umbrella fund” having multiple segregated series, each of which is referred to herein as a “CTA Fund” or an “Affiliated Investment Fund”. Each CTA Fund has its own clearly-defined investment objective and strategies that are implemented by a Trading Advisor. ClariTy, an affiliate of the Managing Owner, is the managing member of CTA Choice. From December 1, 2012 to April 30, 2013, the Registrant allocated approximately one-seventh of its Allocated Assets to each of the following CTA Funds:

•

CTA Choice BEAM, managed by BEAM Bayesian Efficient Asset Management, LLC (“BEAM”), pursuant to its BEAM Multi-Strategy Program, which is a systematic, technical, and fundamentally based financials and commodities program;

•

CTA Choice EGLG, managed by Eagle Trading Systems Inc. (“Eagle”), pursuant to its Global Program, which is a systematic, technical long term diversified program;

•

CTA Choice GLAGS, managed by Global Ag, LLC (“Global”), pursuant to its Discretionary Trading Program, which is a discretionary, fundamental trading program that focuses on agricultural markets;

•

CTA Choice HKSB, managed by Hawksbill Capital Management (“Hawksbill”), pursuant to its Global Diversified Program, which is a primarily systematic, technically-based, trend-following diversified program;

•

CTA Choice ORT, managed by Ortus Capital Management Limited (“Ortus”), pursuant to its Currency Program, which is a systematic, fundamentally based currency program;

•

CTA Choice RDOK, managed by Red Oak Commodity Advisors, Inc. (“Red Oak”), pursuant to its Fundamental Trading Program, which is a Diversified, Discretionary trading program; and

•

CTA Choice SAXN, managed by Saxon Investment Corporation (“Saxon”), pursuant to its Saxon Aggressive Diversified Program, which is a systematic, technically based, broadly diversified program.

From May 1, 2013 to August 31, 2013, the Registrant allocated approximately one-fifth of its Allocated Assets to each of EGLG, GLAGS, HKSB, RDOK and SAXN after fully redeeming from BEAM and ORT as of April 30, 2013.

From September 1, 2013 to December 1, 2013, the Registrant allocated approximately one-quarter of its Allocated Assets to each of EGLG, GLAGS, RDOK and SAXN after fully redeeming from HKSB as of August 31, 2013.

As of December 1, 2013, the Registrant allocates approximately one-fifth of its Allocated Assets to each of EGLG, GLAGS, RDOK, SAXN and CTA Choice ELL, which is managed by Ellington Management Group, LLC (“Ellington”), pursuant to its Global Macro Trading Program and is a discretionary, fundamental, event driven program.

BEAM’s Multi-Strategy Program is a global multi-asset class systematic investment strategy which combines the existing strategies of BEAM; i.e. Bond and FX, FX, SBF and Commodities. The program typically has low correlations to other active and passive investment programs because of its use of proprietary Bayesian formulation to forecasting, portfolio optimization and risk management. The program incorporates forecasting errors into its learning process and makes adjustments in the portfolio to adapt to structural changes in the markets. It is designed to provide portable scalable alpha with superior risk-adjusted long-term returns. The portfolio takes positions in futures for stock indices, bonds, currencies, and commodities (energy complex).

Eagle’s Global Program is a technical, trend-following system developed, based on Eagle’s extensive experience in observing and trading the global markets, to capture a well-structured trading philosophy. The trading philosophy incorporates trend following elements, money management principles, predetermined risk parameters and volatility adjustment features. The system is designed to trade in a wide range of global futures markets—currencies, fixed income, energies, commodities and stock indices—that exhibit orderly intermediate and long-term trends, and adjust to changes in market environment with no predetermined allocation to any one sector. Eagle Global analyzes typical behavior and volatility patterns of various markets. The system seeks markets with potentially good risk/reward profiles while attempting to avoid markets characterized by excessive volatility and sharp price corrections. An attempt is made to participate in markets which exhibit favorable “signal to noise” characteristics. Money management and risk control disciplines serve to attempt to limit downside risk.

Ellington’s Global Macro Trading Program primarily invests by taking both long and short positions in global currency, fixed income, commodity and equity markets through a wide range of derivative instruments and direct investments. Ellington will, from time to time, make extensive use of derivative instruments, including, without limitation, futures and forwards contracts and options on global currencies, commodities, fixed income and equity securities and security indices; interest rate derivatives (such as swaps, caps and floors); credit default swaps; options on any of the foregoing; and other over-the-counter and exchange-traded derivatives.

Global’s Discretionary Trading Program primarily, but not exclusively, trades futures on agricultural markets, primarily grains and oilseeds and the associated options on these markets. Global is aware of the “randomness” of markets. However, it is Global’s belief that fundamentals determine the eventual movement of a particular market towards a price, either higher or lower than currently observed. It is for this reason that Global relies heavily on analyzing each market “fundamentally” and developing a trading strategy to complement the analysis. As price discovery takes place, Global monitors a host of market inputs that it deems very important. Some of these include energy and currency values, domestic and international freight values, underlying cash values associated with futures markets, as well as political events in both importing and exporting countries that can have a substantive effect on global trade flows.

Hawksbill’s Global Diversified Program comprises a number of technical, trend-following trading systems, money management rules and Hawksbill’s overall trading experience and judgment regarding various market factors and conditions. Hawksbill’s objective is to achieve appreciation of its clients’ assets through speculative trading of commodity interests. Hawksbill primarily engages in trading futures contracts on U.S. and non-U.S. exchanges, including EFP transactions in foreign currencies. Hawksbill may also trade options on futures, forward contracts on commodities and currencies, cash currencies and may engage in transactions in physical commodities, including EFPs, in addition to EFPs in foreign currencies. An EFP is a transaction in which a cash or spot market position (which may be a forward contract) is exchanged for a comparable futures position.

Ortus’s Currency Program is a computerized, global macro strategy that seeks to capitalize on fundamentally driven price moves in the G7 currencies that are a result of a shift in the exchange rate cycle. It is the Trading Advisor’s belief that these shifts are driven by the dynamic interactions between asset prices (e.g. stocks and bonds) and underlying economic fundamentals (e.g. monetary policy, interest rates). As such, position duration is long-term and changes to the portfolio are gradual.

Red Oak’s Fundamental Trading Program is driven by fundamentals: specifically, its strategy is grounded in Red Oak’s principals’ experience in and knowledge of the different commodity and commodity-related markets and the various fundamental factors which affect each of such markets. Thus, unlike many trading strategies now being employed by managed futures professionals, Red Oak’s approach is neither technically-based nor trend-following. Fundamental analysis, in general, is based on a study of factors external to the markets in predicting future prices. Such factors might include, among other things, supply and demand factors for a particular commodity, the economy of a particular country, government policies, domestic and foreign political and economic events and changing trade prospects. Fundamental analysis is premised on the concept that market prices frequently may not reflect (on a real time basis) the actual value of a commodity, although such value will eventually determine price levels.

Saxon’s Aggressive Diversified Program is primarily “trend following;” to this end, Saxon combines multiple rigorously researched systems to trade a diversified portfolio of futures worldwide. Saxon currently trades over 50 commodity interests on 13 exchanges in 6 countries; commodities traded included currencies, financials, softs, metals, grains, the meat complex and energy products. Through the use of proprietary money management techniques, Saxon seeks to further optimize returns. In addition, Saxon believes that the development of a trading system is an ongoing process; consequently, Saxon commits substantial resources to researching, developing and implementing improved trading techniques, money management principles and statistical analysis.

The Administrator

GlobeOp Financial Services LLC (“GlobeOp” or the “Administrator”), a Delaware limited liability company located at One South Road, Harrison, NY 10528, has been retained by the Registrant to serve as the Registrant’s administrator and provide certain administration and accounting services.

The Administrator performs or supervises the performance of services necessary for the operation and administration of the Registrant (other than making investment decisions), including administrative and accounting services. The Administrator also calculates the Registrant’s Net Asset Value. In addition, the Administrator maintains certain books and records of the Registrant, including certain books and records required by CFTC Rule 4.23(a).

Fees and Expenses

Management Fee

The Managing Owner is paid a monthly management fee of 1/12 of 0.5% (0.5% annually) of the Registrant’s Net Asset Value at the beginning of each month. See Note 4 of the Registrant’s financial statements included in its annual report for the year ended December 31, 2013 (the “Registrant’s 2013 Annual Report”), which is filed as an exhibit to the Registrant’s Form 10-K for the fiscal year ended December 31, 2013.

“Net Asset Value” is the total assets of the Registrant less total liabilities of the Registrant, each determined on the basis of accounting principles generally accepted in the United States of America.

The Registrant, through its investment in Affiliated Investment Funds, indirectly pays an administrative services fee in the amount of 1/12 of 0.25% (0.25% annually) of the respective CTA Fund’s beginning of month Allocated Assets to ClariTy for risk management and related services with respect to monitoring the Trading Advisors.

Trading Advisors’ Fees

The Registrant indirectly, through its investment in the Affiliated Investment Funds, pays each Trading Advisor a monthly management fee and an incentive fee accrued monthly and paid quarterly.

	Effective December 1, 2012
	Management	Incentive
Trading Advisor	Fee	Fee

BEAM*	1.00%	20.00%
Eagle	2.00%	25.00%
Ellington***	0.00%	30.00%
Global	2.00%	20.00%
Hawksbill**	0.00%	25.00%
Ortus*	1.00%	25.00%
Red Oak	2.00%	20.00%
Saxon	0.00%	25.00%

The Registrant fully redeemed from BEAM and ORT as of April 30, 2013.

The Registrant fully redeemed from HKSB as of August 31, 2013.

***

The Registrant subscribed to ELL as of December 1, 2013.

“New High Net Trading Profits” (for purposes of calculating an Trading Advisor’s incentive fees) will be computed as of the close of business of the last day of each calendar quarter ( the “Incentive Measurement Date”) and will include such profits (as outlined below) since the immediately preceding Incentive Measurement Date (or, with respect to the first Incentive Measurement Date, since commencement of operations of the Registrant or the date the Trading Advisor commenced trading activities for the Registrant), or each an Incentive Measurement Period. New High Net Trading Profits for any Incentive Measurement Period will be the net profits, if any, from the Trading Advisor’s trading during such period (including (i) realized trading profit (loss) plus or minus (ii) the change in unrealized trading profit (loss) on open positions), and will be calculated after the determination of certain transaction costs attributable to the Trading Advisor’s trading activities, operating expenses, and the Trading Advisor’s management fee, but before deduction of any incentive fees payable during the Incentive Measurement Period. New High Net Trading Profits will not include interest earned or credited on the assets allocated to the Trading Advisor.

New High Net Trading Profits will be generated only to the extent that the cumulative New High Net Trading Profits achieved by the Trading Advisor exceed the highest level of cumulative New High Net Trading Profits achieved by such Trading Advisor as of a previous Incentive Measurement Date. Except as set forth below, net losses from prior months must be recouped before New High Net Trading Profits can again be generated.

If a withdrawal or distribution occurs or if a Trading Advisor’s advisory agreement with the relevant CTA Fund is terminated at any date that is not an Incentive Measurement Date, the date of the withdrawal or distribution or termination will be treated as if it were an Incentive Measurement Date. New High Net Trading Profits for an Incentive Measurement Period shall exclude capital contributions allocated to the Trading Advisor in an Incentive Measurement Period, distributions or redemptions paid or payable from the Trading Advisor’s account during an Incentive Measurement Period and any loss carry-forward attributable to the Trading Advisor will be reduced in the same proportion that the value of the assets allocated away from the Trading Advisor comprises of the value of the assets allocated to the Trading Advisor prior to such allocation away from the Trading Advisor). In calculating New High Net Trading Profits, incentive fees paid for a previous Incentive Measurement Period will not reduce cumulative New High Net Trading Profits in subsequent periods.

Brokerage Commissions and Fees

The Registrant indirectly pays to the clearing brokers all brokerage commissions, including applicable exchange fees, National Futures Association (“NFA”) fees, give-up fees, pit brokerage fees and other transaction related fees and expenses charged in connection with the Registrant’s trading activities. These activities are charged indirectly through the Registrant’s Affiliated Investment Funds and are reflected within the respective net asset values of each of the Affiliated Investment Funds. On average, total charges paid to the clearing brokers are expected to be less than $10.00 per round-turn trade, although the clearing broker’s brokerage commissions and trading fees will be determined on a contract-by-contract basis. The exact amount of such brokerage commissions and trading fees to be incurred is impossible to estimate and will vary based upon a number of factors including the trading frequency of each Trading Advisor, the types of instruments traded, transaction sizes, degree of leverage employed and transaction rates in effect from time to time.

Routine Operational, Administrative and Other Ordinary Expenses

The Registrant pays directly or indirectly all of its routine operational, administrative and other ordinary expenses, including, but not limited to, (i) legal, bookkeeping, accounting, custodial, administration (including, without limitation, the costs and expenses of the Administrator), auditing, tax preparation charges and related charges of the Registrant (including reimbursement of the Managing Owner on a reasonable time-spent basis, for certain legal, accounting, administrative and registrar and transfer agent work performed by certain of the Managing Owner’s personnel for and on behalf of the Registrant), as well as printing and other related expenses, (ii) investment related expenses, including, but not limited to brokerage commissions, “bid-ask” spreads, mark-ups, margin interest and other transactional charges and clearing fees, as well as banking, sales and purchase commissions and charges and exchange fees, fees and charges of other custodians and clearing agencies, interest and commitment fees on loans and debit balances, income taxes, withholding taxes, transfer taxes and other governmental charges and duties, and other transactional charges and clearing fees incurred by the Trading Advisor on behalf of the Registrant, the Registrant’s pro rata share of the expenses of any Affiliated Investment Fund into which it invests, and any due diligence expenses incurred in selecting and monitoring the Trading Advisor and any Affiliated Investment Fund,, (iii) operational and overhead expenses of the Registrant, including but not limited to, photocopying, postage, and telephone expenses, (iv) preparation of monthly, quarterly, annual and other reports required by applicable Federal and state regulatory authorities, (v) the Registrant meetings and preparing, printing and mailing of proxy statements and reports to Unitholders, (vi) client relations and services, and (vii) computer equipment, system maintenance and other technology-related expenses.

Extraordinary Fees and Expenses

The Registrant pays all its extraordinary fees and expenses, if any, and its allocable portion of all extraordinary fees and expenses of the Registrant generally, if any, as determined by the Managing Owner. Extraordinary fees and expenses are fees and expenses that are non-recurring and unusual in nature, such as legal claims and liabilities and litigation costs and any permitted indemnification payments related thereto. Extraordinary fees and expenses shall also include material expenses that are not currently anticipated obligations of the Registrant or of managed futures funds in general, such as the payment of partnership taxes or governmental fees associated with payment of such taxes. Routine operational, administrative and other ordinary expenses will not be deemed extraordinary expenses. Any fees and expenses imposed on the Registrant due to the status of an individual shall be paid by such individual or the Registrant, not the Managing Owner.

Competition

The Managing Owner and its affiliates have formed, and may continue to form, various entities to engage in the speculative trading of futures, forward and options contracts which have certain of the same investment policies as the Registrant.

The Registrant is an open-end fund, which solicits the sale of additional Units on a monthly basis until the maximum amount of Units being offered by the Registrant have been sold. As such, the Registrant may compete with other entities, whether or not formed by the Managing Owner, to attract new Unitholders. In addition, to the extent that a Trading Advisor recommends similar or identical trades to the Registrant and other accounts that it manages, the Registrant may compete with those accounts for the execution of the same or similar trades, as well as with other market participants.

Employees

The Registrant has no employees. Management and administrative services for the Registrant are performed by the Managing Owner or third parties pursuant to the Trust Agreement, as further discussed in Notes 3, 4, 5, 6 and 8 of the Registrant’s 2013 Annual Report, which is filed as an exhibit to the Registrant’s Form 10-K for the fiscal year ended December 31, 2013.

Financial Information about Segments

The Registrant’s business constitutes only one segment for financial reporting purposes. The Registrant does not engage in the production or sale of any goods or services. The objective of the Registrant’s business is appreciation of its assets through speculative trading in such commodity interests. Financial information about the Registrant’s business, as of March 31, 2014, is set forth under Items 2 and 3 herein.

Financial Information about Geographic Areas

Although the Registrant has indirect exposure to the global futures, forward and option markets, it does not have operations outside of the United States.

Available Information

The Registrant files an annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to these reports with the Securities and Exchange Commission (the “SEC”). You may read and copy any document filed by the Registrant at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for information on the Public Reference Room. The Registrant does not maintain an internet website; however, the Registrant’s SEC filings are available to the public from the EDGAR database on the SEC’s website at http://www.sec.gov. The Registrant’s CIK number is 0001345991.

Critical Accounting Policies

General

Preparation of the condensed financial statements and related disclosures in compliance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires the application of appropriate accounting rules and guidance. Applying these policies requires the Managing Owner to make judgments, estimates and assumptions in connection with the preparation of the Registrant’s condensed financial statements. Actual results may differ from the estimates used.

The Managing Owner has evaluated the Registrant’s condensed financial statements and related disclosures and has determined that the policies discussed below are critical accounting policies because they involve estimates, judgments and assumptions that are particularly complex, subjective or uncertain. For further discussion of the Registrant’s significant accounting policies, see Note 2 of the Registrant’s 2013 Annual Report, which is filed as an exhibit to the Registrant’s Form 10-K for the fiscal year ended December 31, 2013.

The Registrant records all investments at fair value in its condensed financial statements, with changes in fair value reported as a component of trading profits (losses) in the condensed statements of operations. Generally, fair values are based on quoted market prices; however, in certain circumstances, significant judgments and estimates are involved in determining fair value in the absence of an active market closing price. The Registrant considers its investments in publicly-traded mutual funds to be based on quoted prices in active markets for identical assets (Level 1). Level 3 inputs reflect the Registrant’s assumptions that it believes market participants would use in pricing the asset or liability. The Registrant develops Level 3 inputs based on the best information available in the circumstances, which may include indirect correlation to a market value, combinations of market values or the Registrant’s proprietary data. Level 3 inputs generally include information derived through extrapolation or interpolation of observable market data. The Registrant does not currently have any investments valued using Level 3 inputs.

The investment in Affiliated Investment Funds is reported in the Registrant’s condensed statements of financial condition and is considered a Level 2 investment. In determining the level, the Registrant considers the length of time until the investment is redeemable, including notice and lock-up periods or any other restriction on the disposition of the investment. The Registrant also considers the nature of the portfolios of the underlying Affiliated Investment Funds and their ability to liquidate their underlying investments. The Registrant has the ability to redeem its investments at the reported net asset valuation as of the measurement date (see Note 7 of the Registrant’s 2013 Annual Report, which is filed as an exhibit to the Registrant’s Form 10-K for the fiscal year ended December 31, 2013) and classified its investment in Affiliated Investment Funds as Level 2 using the fair value hierarchy. Fair value ordinarily is the value determined for the Affiliated Investment Funds in accordance with the fund’s valuation policies and reported at the time of the Registrant’s valuation by the management of the fund. Generally, the fair value of the Registrant’s investment in the Affiliated Investment Funds represents the amount that the Registrant could reasonably expect to receive from the Affiliated Investment Funds if the Registrant’s investment was redeemed at the time of the valuation, based on information reasonably available at the time the valuation is made and that the Registrant believes to be reliable.

Of the Registrant’s investments at March 31, 2014, $18,599,326 or 77.21% were classified as Level 1 and $5,490,179 or 22.79% as Level 2. Of the Registrant’s investments at December 31, 2013, $36,141,750 or 74.69% were classified as Level 1 and $12,249,728 or 25.31% as Level 2. There were no Level 3 investments at March 31, 2014 or December 31, 2013, nor any portion of the interim periods.

The Registrant invests a portion of the excess cash balances not required for margin through certain investment funds which invest in (i) U.S. government securities (which include any security issued or guaranteed as to principal or interest by the United States), (ii) any certificate of deposit for any of the foregoing, including U.S. treasury bonds, U.S. treasury bills and issues of agencies of the United States government, (iii) corporate bonds or notes, or (iv) other instruments permitted by applicable rule and regulations (collectively, “Certain Investment Funds”). The objective is to obtain a rate of return for the Registrant that balances risk and return relative to the historically low yields on short-term cash deposits with banks or brokerage firms. There is no guarantee that the Managing Owner will be successful in investing the excess cash successfully to obtain a greater yield than available on short-term cash deposits with banks or brokerage firms. The Managing Owner is paid monthly 1/12 of 50% of the first 1% of the positive returns earned on the Registrant’s investments in Certain Investment Funds. The calculation is based on the Registrant’s average annualized Net Asset Value, and any losses related to returns on the Certain Investment Funds must first be recovered through subsequent positive returns prior to the Managing Owner receiving a payment. After the calculation of the amount payable to the Managing Owner, the Registrant will be credited with all additional positive returns (or 100% of any losses) on the Registrant’s investment in Certain Investment Funds. If, at the end of any calendar year, a loss has been incurred on the returns for the Certain Investment Funds, then the loss carry forward will reset to zero for the next calendar year with regards to the calculation of the Managing Owner’s portion of the Certain Investment Fund’s income.

Liquidity and Capital Resources

The Registrant commenced operations on December 1, 2005 with gross proceeds of $31,024,443 allocated to commodities trading. Additional contributions raised through the continuous offering of limited interests (“Limited Interests”) and general interests (“General Interests” or “Managing Owner Interests” and, together with the Limited Interests, “Interests”) of beneficial ownership in the Registrant for the period from December 1, 2005 (commencement of operations) to March 31, 2014 resulted in additional gross proceeds to the Registrant of $195,857,057.

Limited Interests in the Registrant may be subscribed or redeemed on a monthly basis.

Subscriptions and Redemptions

First Quarter 2014

Subscriptions of Limited Units for the First Quarter 2014 were $0. Redemptions of Limited Units for the First Quarter 2014 were $22,601,036.

First Quarter 2013

Subscriptions of Limited Units for the First Quarter 2013 were $339,178. Redemptions of Limited Units for the First Quarter 2013 were $7,899,454.

Liquidity

A portion of the Registrant’s net assets is held in cash, which is used as margin for its indirect trading in commodities through its investment in Affiliated Investment Funds.

Commodity contracts may be subject to periods of illiquidity because of market conditions, regulatory considerations and other reasons. For example, commodity exchanges limit fluctuations in certain commodity futures contract prices during a single day by regulations referred to as “daily limits.” During a single day, no trades may be executed at prices beyond the daily limit. Once the price of a futures contract for a particular commodity has increased or decreased by an amount equal to the daily limit, positions in the commodity can neither be taken nor liquidated unless traders are willing to effect trades at or within the limit. Commodity futures prices have occasionally moved the daily limit for several consecutive days with little or no trading. Such market conditions could prevent the Registrant from promptly liquidating its indirect exposure, through its investments in CTA Choice to commodity futures positions.

Since the Registrant’s business is to trade futures, forward and option contracts through its investment in Affiliated Investment Funds, its capital is at risk due to changes in the value of these contracts (market risk) or the inability of counterparties to perform under the terms of the contracts (credit risk). The Registrant’s exposure to market risk is influenced by a number of factors including the volatility of interest rates and foreign currency exchange rates, the liquidity of the markets in which the contracts are traded and the relationships among the contracts held. The inherent uncertainty of the Registrant’s speculative trading as well as the development of drastic market occurrences could result in losses considerably beyond the Registrant’s experience to date and could ultimately lead to a loss of all or substantially all of Unitholders’ capital. The Managing Owner attempts to minimize these risks by requiring the Registrant and the Trading Advisors to abide by various trading limitations and policies, which include limiting margin amounts, trading only in liquid markets and permitting the use of stop loss provisions.

The Registrant does not have, nor does it expect to have, any capital assets.

Market Overview

Following is a market overview for the First Quarter 2014 and the First Quarter 2013:

First Quarter 2014

Market was volatile in the first quarter and it was a more difficult environment for trading, as compared to 2013. Political unrest and the prospect of higher interest rates gave indications that the market regime may be changing.

Market movers over the quarter included the progress of Abenomics, the pace of Federal Reserve tapering, outlook for growth in developed and emerging markets and, late in the quarter, the outbreak of Ukraine-Russian tensions. The situation in the Crimea had a particularly strong impact on global commodities.

After a euphoric end to the year, global equity markets began the first quarter on a depressed note as risk aversion swept through the marketplace. China growth concerns combined with emerging market turmoil diminished investor enthusiasm. In February, the United States (“U.S.”) rally resumed strongly while European and Pacific Rim markets generally lagged. Thereafter, the major equity markets generally offered little opportunity. Consistent with the equity rout in January, global bond markets rallied in January as investors sought a safe haven. Thereafter, global bond markets settled in to a period of consolidation as investors weighed growth prospects.

In currency markets, after a long period of coordinated global central bank activity, the first quarter witnessed the beginnings of actual and anticipated policy decoupling. The Royal Bank of New Zealand was the first central bank to tighten in March and stronger growth in the UK increased expectations they could be next to follow. In the U.S., a mixed message from Federal Reserve Chairman Yellen initially kept the U.S. dollar in a narrow trading range but positive economic reports combined with safe haven buying, as Ukraine-Russian tensions intensified, supported the greenback later. Europe at the other end of the spectrum continued to struggle due to weakness in many Eurozone countries outside of Germany. The euro has nonetheless rallied confounding efforts to use devaluation to support the economies in this zone. In Japan, after a successful weakening of the currency for much of the 4th quarter 2013, investors sought out the safe haven currency putting a temporary halt to its decline.

A variety of events impacted the commodity markets including strikes in South Africa, Ukraine-Russian tensions, freezing temperatures in the U.S., and drought in South America. The strongest moves during the quarter were witnessed in the traditional commodity markets: grain, meats and softs. In grains, prices of corn and wheat moved sharply higher on concerns of supply disruptions out of Ukraine, aptly named the European Bread Basket, as it is a major exporter in these markets. Prices of soybeans also rallied sharply as weather concerns in Brazil led to worries over near-term supply amid strong demand. Dry weather Brazil also sent coffee prices sharply higher. Finally, in meats, the outbreak of PED propelled hog prices.

First Quarter 2013

The first quarter was marked by surging optimism in the global financial markets, with emphasis on the United States (“U.S.”). The resolution of the fiscal cliff, growing signs that the deleveraging headwinds on consumers were fading, continued robust housing data, and the improving job market all boosted hopes that the U.S. economy was on the verge of a multi-year reflation. The bold steps of Japanese policymakers to shake their economy from long-term inactivity advanced their stock markets and gave a massive jolt to consumer and business confidence. Sovereign debt markets continued to stabilize in Europe despite the flare up in Cyprus. China and other emerging markets showed signs that they were reaccelerating after the slowdown in 2012. Global PMIs lifted up in the first quarter. Risk assets soared, especially in the U.S., as the markets looked ahead to a year with no major worries of financial dislocation, expectations of firming growth, and still accommodative monetary policy.

Treasuries continued to selloff as tail risk perceptions dwindled and investors began to chase yield and asset appreciation. Still, the selloff failed to gather momentum as the Cyprus bailout fueled a strong bid for Treasuries toward the end of the quarter. Yields on the long-end of the curve climbed and the yield curve steepened. The yield on the 10-year note appreciated 9 basis points to 1.87%, although at one point during the quarter the yield had surged to 2.06%. The yield on the 30-year note rose 15 basis points to reach 3.10%, the highest level since May 2012. The yield on the 5-year note edged up 5 basis points to 0.77%. However, the yield on the 2-year note was unchanged at 25 basis points. The Bank of Japan announced massive quantitative easing and its intention to buy a wide range of assets. The European Central Bank and the Bank of England maintained status quo.

Despite the rally in risk assets and the fading of flight to safety, the greenback rallied quickly as expectations of U.S. economic resurgence gained ground. The Dollar Index jumped 4.02%. The euro failed to hold onto the gains at the beginning of the year and fell back to below 1.30 by the end of the quarter, losing 2.81% against the U.S. dollar. The British pound plunged 6.57% against the U.S. dollar as poor economic performance and widening current account deficit took their toll. The Japanese yen continued its rapid decline, dropping 8.68%, due to the Bank of Japan’s announcement of Quantitative Easing. The commodity currencies were mixed—the Australian dollar edged up 0.15% against the greenback but the Canadian dollar dropped 2.17%.

U.S. equities experienced their best first quarter since 1997. The gains were broad-based, with transportation and financials leading the way. The Dow, the S&P 500, and NASDAQ gained approximately 11.25%, 10.61%, and 8.21%, respectively, for the quarter. European stocks experienced more moderate gains. The STOXX 600, a broad measure of European equities, climbed 2.31%, in U.S. dollar terms. The CAC, the DAX, and the FTSE 100 closed the quarter with gains of approximately 2.48%, 2.40%, and 8.71%, respectively. Asian markets were more mixed. The Nikkei soared 19.27%, after climbing 17.2% in the previous quarter. However, the Hang Seng declined 1.58%. The Korean Kospi edged up 0.39%. The Australian All Ordinaries Index rose 6.76%.

Commodities did not partake in the global rally in risk assets. Much of the commodity complex declined, with the exception of the energy complex and cotton. WTI crude gained 4.41% during the quarter even as Brent crude declined 2.63%, narrowing the spread between the two. Gasoline and natural gas outperformed crude oil, soaring 11.29% and 24.47%, respectively. Natural gas benefited from the colder winter.

Precious metals lost ground as fear receded and investors sought out yield. Gold and silver dropped 5.57% and 8.49%, respectively. Base metal prices fell across the board. Copper, nickel, aluminum, and zinc recorded losses of 8.94%, 5.90%, 11.89%, and 11.36%, respectively.

The grains complex was mixed. Wheat prices dropped 8.94% as U.S. weather threats diminished. On the other hand, corn and soybeans held their ground. The softs complex suffered significant losses, notably sugar, which declined 10.31% on reports that India’s production would be higher than earlier estimates. Coffee fell 8.20%.

Sector Performance

Due to the nature of the Registrant’s indirect trading activities, a period-to-period comparison of its trading results is not meaningful. However, set forth below are the following:

(a) the major sectors to which the Registrant’s assets were allocated indirectly as of the First Quarter 2014 and the First Quarter 2013, measured as a percentage of the “gross speculator margin” (i.e., the minimum amount of cash or marginable securities a speculator must post when buying or selling futures assets); and

(b) a discussion of the Registrant’s trading results for the major sectors in which the Registrant indirectly traded for the First Quarter 2014 and the First Quarter 2013.

First Quarter 2014

As of March 31, 2014, the allocation of the Registrant’s assets to major sectors was as follows:

Sector	Allocation

Currencies		22.09	%
Energies		14.80	%
Grains		26.80	%
Indices		10.89	%
Interest Rates		14.65	%
Meats		0.24	%
Metals		9.18	%
Tropicals		1.35	%

TOTAL		100.00	%

Trading results for the major sectors in which the Registrant indirectly traded for the First Quarter 2014 were as follows:

Currencies: (-) The Registrant experienced a majority of its gains in the Canadian dollar and Brazilian real. The majority of its losses were incurred in the Euro and Japanese yen.

Energies: (-) The Registrant experienced a majority of its gains in natural gas. The majority of losses were incurred in RBOB gasoline.

Grains: (-) The Registrant experienced a majority of its gains in soybeans. The majority of its losses were incurred in corn and wheat.

Indices: (-) The Registrant experienced no gains. The majority of losses were incurred in European and Pacific Rim indices.

Interest Rates: (-) The Registrant experienced a majority of its gains in U.S. rates. The majority of its losses were incurred in European rates.

Meats: (-) The Registrant experienced a majority of its gains in live cattle. The majority of its losses were incurred in live hogs.

Metals: (-) The Registrant experienced a majority of its gains in palladium. The majority of its losses were incurred in gold and silver.

Tropicals: (+) The Registrant experienced a majority of its gains in coffee. The majority of its losses were incurred in cocoa.

First Quarter 2013

As of March 31, 2013, the allocation of the Registrant’s assets to major sectors was as follows:

Sector	Allocation

Currencies		22.26	%
Energies		11.54	%
Grains		33.58	%
Indices		10.45	%
Interest Rates		14.28	%
Meats		0.00	%
Metals		4.79	%
Tropicals		3.10	%

TOTAL		100.00	%

Trading results for the major sectors in which the Registrant indirectly traded for the First Quarter 2013 were as follows:

Currencies: (-) The Registrant experienced a majority of its gains in the British pound and the Mexican peso. The majority of its losses were incurred in the Japanese yen and the Canadian dollar.

Energies: (+) The Registrant experienced a majority of its gains in RBOB gasoline and natural gas. The majority of its losses were incurred in Brent crude and gas oil.

Grains: (+) The Registrant experienced a majority of its gains in cotton and corn. The majority of its losses were incurred in soybeans and soybean meal.

Indices: (+) The Registrant experienced a majority of its gains in the DAX index and the Nikkei index. The majority of its losses were incurred in All Ordinaries index.

Interest Rates: (-) The Registrant experienced a majority of its gains in the German bobl. The majority of its losses were incurred in the U.S. treasury notes and the Euro bund.

Meats: (-) The Registrant experienced a majority of its gains in hogs. The majority of its losses were incurred in cattle.

Metals: (-) The Registrant experienced a majority of its gains in palladium and gold. The majority of its losses were incurred in silver and copper.

Tropicals: (-) The Registrant experienced a majority of its gains in lumber. The majority of its losses were incurred in coffee

Results of Operations

First Quarter 2014

The Net Asset Value per Unit of Class I as of March 31, 2014 was $83.76, a decrease of $10.04 from the December 31, 2013 Net Asset Value of $93.80.

The Net Asset Value per Unit of Class II as of March 31, 2014 was $95.16, a decrease of $10.87 from the December 31, 2013 Net Asset Value of $106.03.

The following table discloses each Trading Advisor’s contribution to the Net Asset Values of Class I and Class II for the First Quarter 2014, as well as the allocation of the Registrant’s assets to each Trading Advisor at March 31, 2014. The table is based on the effect of a Unitholder that held Units for the First Quarter 2014, and is based on the average contribution per Trading Advisor and net expenses for the relevant Class of Units.

WMT III Series J - Class I				WMT III Series J - Class II				Allocation of Assets as of March 31,
Beginning UNAV	$	93.80		Beginning UNAV	$	106.03		2014
EGLG		(3.51	)	EGLG		(3.96	)		20.34	%
ELL		(1.33	)	ELL		(1.51	)		19.80	%
GLAGS		(3.06	)	GLAGS		(3.45	)		19.87	%
RDOK		(1.08	)	RDOK		(1.22	)		20.20	%
SAXN		(0.30	)	SAXN		(0.34	)		19.79	%
Net Expenses		(0.76	)	Net Expenses		(0.39	)
ENDING UNAV	$	83.76		Ending UNAV	$	95.16			100.00	%

The Registrant’s average net asset level during the First Quarter 2014 was approximately $37,170,000, a decrease of approximately $55,639,000 as compared to the First Quarter 2013, primarily due to the effect of investor redemptions and negative trading performance.

The Registrant’s performance for Class I and Class II for the First Quarter 2014 was (10.70)% and (10.26)%, respectively. Performance includes the percentage change in the Registrant’s Net Asset Value excluding the effect of any subscriptions and redemptions and includes the percentage impact of investment gains/(losses) less any commissions and related fees and expenses. Past performance is not necessarily indicative of future results.

The Registrant’s total gain from its investment in securities for the First Quarter 2014 was approximately $55,000.

The Registrant’s total loss from its investment in Affiliated Investment Funds for the First Quarter 2014 was approximately $4,036,000.

Dividend income for the First Quarter 2014 was approximately $65,000, a decrease of approximately $102,000, as compared to the First Quarter 2013.

Brokerage commissions and other transaction fees, which are paid indirectly through the Affiliated Investment Funds and are reflected within the respective net asset values of each of the Affiliated Investment Funds for the First Quarter 2014 were approximately $94,000, a decrease of approximately $81,000, as compared to the First Quarter 2013.

Management fees to the Trading Advisors, which are paid indirectly through the Affiliated Investment Funds and are reflected within the respective net asset values of each of the Affiliated Investment Funds, for the First Quarter 2014 were approximately $120,000, a decrease of approximately $151,000 as compared to the First Quarter 2013, primarily due to the decrease in the average net asset level discussed above.

Management fees to the Managing Owner for the First Quarter 2014 were approximately $52,000, a decrease of approximately $65,000 as compared to the First Quarter 2013, primarily due to the decrease in the average net asset level discussed above.

Trading Advisor incentive fees are based on the New High Net Trading Profits generated by the Trading Advisors, as defined in the Trading Advisory Agreements between the Registrant and the Trading Advisors. Trading Advisor incentive fees, which are paid indirectly through the Affiliated Investment Funds and are reflected within the respective net asset values of each of the Affiliated Investment Funds, for the First Quarter 2014 were approximately $0.

An administrative services fee, which is indirectly paid to ClariTy for risk management and related services with respect to monitoring the Trading Advisors through the Affiliated Investment Funds and reflected within the respective net asset values of each of the Affiliated Investment Funds, for the First Quarter 2014 was approximately $26,000, a decrease of approximately $33,000 as compared to the First Quarter 2013, primarily due to the decrease in the average net asset level discussed above.

Service fees for the First Quarter 2014 were approximately $181,000, a decrease of approximately $232,000 as compared to the First Quarter 2013, primarily due to the decrease in the average net asset level discussed above.

Sales commissions for the First Quarter 2014 were approximately $104,000, a decrease of approximately $133,000 as compared to the First Quarter 2013, primarily due to the decrease in the average net asset level discussed above.

Managing Owner interest earned on Certain Investment Funds for the First Quarter 2014 was approximately $40,000, a decrease of approximately $23,000, as compared to the First Quarter 2013.

Operating expenses were approximately $107,000 for the First Quarter 2014. These expenses include accounting, audit, registrar and transfer agent, tax and legal fees, as well as printing and postage costs related to reports sent to Unitholders.

Offering costs were approximately $47,000 for the First Quarter 2014.

First Quarter 2013

The Net Asset Value per Unit of Class I as of March 31, 2013 was $102.15, a decrease of $2.29 from the December 31, 2012 net asset level of $104.44.

The Net Asset Value per Unit of Class II as of March 31, 2013 was $113.76, a decrease of $1.98 from the December 31, 2012 net asset level of $115.74.

The following table discloses each trading advisors contribution to the Net Asset Values of Class I and Class II as of March 31, 2013, as well as the allocation of the Registrants assets to each trading advisor at March 31, 2013.

WMT III Series J - Class I				WMT III Series J - Class II				Allocation of Assets as of March 31,
Beginning UNAV	$	104.44		Beginning UNAV	$	115.74		2013
BEAM		(1.13	)	BEAM		(1.25	)		14.31	%
EGLG		0.19		EGLG		0.21			14.26	%
GLAGS		0.27		GLAGS		0.30			14.31	%
HKSB		0.19		HKSB		0.22			14.30	%
ORT		(1.18	)	ORT		(1.31	)		14.20	%
RDOK		0.52		RDOK		0.57			14.37	%
SAXN		(0.10	)	SAXN		(0.11	)		14.25	%
Net Expenses		(1.05	)	Net Expenses		(0.61	)
ENDING UNAV	$	102.15		ENDING UNAV	$	113.76			100.00	%

The Registrant’s average net asset level during the First Quarter 2013 was approximately $92,809,000, a decrease of approximately $47,303,000 as compared to the First Quarter 2012, primarily due to the effect of investor redemptions and negative trading performance.

The Registrant’s performance for Class I and Class II for the First Quarter 2013 was (2.19)% and (1.71)%, respectively. Performance includes the percentage change in the Registrant’s Net Asset Value excluding the effect of any subscriptions and redemptions and includes the percentage impact of investment gains/(losses) less any commissions and related fees and expenses. Past performance is not necessarily indicative of future results.

The Registrant’s total loss from its investment in securities for the First Quarter 2013 was approximately $43,000.

The Registrant’s total loss from its investment in Affiliated Investment Funds for the First Quarter 2013 was approximately $1,101,000.

Dividend income for the First Quarter 2013 was approximately $167,000, a decrease of approximately $146,000, as compared to the First Quarter 2012.

Brokerage commissions and other transaction fees, which are paid indirectly through the Affiliated Investment Funds and are reflected within the respective net asset values of each of the Affiliated Investment Funds for the First Quarter 2013 were approximately $175,000, an increase of approximately $56,000, as compared to the First Quarter 2012.

Management fees to the Trading Advisors, which are paid indirectly through the Affiliated Investment Funds and are reflected within the respective net asset values of each of the Affiliated Investment Funds, for the First Quarter 2013 were approximately $271,000, a decrease of approximately $101,000 as compared to the First Quarter 2012, primarily due to the decrease in the average net asset level discussed above.

Management fees to the Managing Owner for the First Quarter 2013 were approximately $117,000, a decrease of approximately $60,000 as compared to the First Quarter 2012, primarily due to the decrease in the average net asset level discussed above.

Trading Advisor incentive fees are based on the New High Net Trading Profits generated by the Trading Advisors, as defined in the Trading Advisory Agreements between the Registrant and the Trading Advisors. Trading Advisor incentive fees, which are paid indirectly through the Affiliated Investment Funds and are reflected within the respective Net Asset Values of each of the Affiliated Investment Funds, for the First Quarter 2013 were approximately $189,000.

An administrative services fee, which is indirectly paid to ClariTy for risk management and related services with respect to monitoring the Trading Advisors through the Affiliated Investment Funds and reflected within the respective net asset values of each of the Affiliated Investment Funds, for the First Quarter 2013 was approximately $59,000, a decrease of approximately $26,000 as compared to the First Quarter 2012, primarily due to the decrease in the average net asset level discussed above.

Service fees for the First Quarter 2013 were approximately $413,000, a decrease of approximately $133,000 as compared to the First Quarter 2012 primarily due to the decrease in the average net asset level discussed above.

Sales Commissions for the First Quarter 2013 were approximately $237,000, a decrease of approximately $122,000 as compared to the First Quarter 2012, primarily due to the decrease in the average net asset level discussed above.

Managing Owner interest earned on Certain Investment Funds for the First Quarter 2013 was approximately $63,000, a decrease of approximately $2,000, as compared to the First Quarter 2012.

Operating expenses were approximately $167,000 for the First Quarter 2013. These expenses include accounting, audit, registrar and transfer agent, tax and legal fees, as well as printing and postage costs related to reports sent to Unitholders.

Offering costs were approximately $59,000 for the First Quarter 2013.

Inflation

Inflation has had no material impact on the operations or on the financial condition of the Registrant from inception through March 31, 2014.

Off-Balance Sheet Arrangements and Contractual Obligations

The Registrant does not have any off-balance-sheet arrangements (as defined in Regulation S-K 303(a)(4)(ii)) that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to Unitholders.

The Registrant’s contractual obligations are with the Managing Owner, the Trading Advisors through CTA Choice and its commodity broker. Management fees payable by the Registrant to the Trading Advisors through CTA Choice and the Managing Owner are calculated as a fixed percentage of the Registrant’s Net Asset Value or allocated assets as defined. Incentive fees payable by the Registrant to the Trading Advisors through CTA Choice are at a fixed rate, calculated as a percentage of the Registrant’s “New High Net Trading Profits” (as defined in the Trading Advisory Agreements). As such, the Managing Owner cannot anticipate the amounts to be paid for future periods as Net Asset Values and “New High Net Trading Profits” are not known until a future date. Commissions payable to the Registrant’s commodity broker are based on a cost per executed trade and, as such, the Managing Owner cannot anticipate the amount that will be required under the brokerage agreement, as the level of executed trades are not known until a future date. These agreements are effective for one-year terms, renewable automatically for additional one-year terms unless terminated. Additionally, these agreements may be terminated by either party thereto for various reasons. Additionally, the Registrant does not enter into other long-term debt obligations, capital lease obligations, operating lease obligations or other long-term liabilities that would otherwise be reflected on the Registrant’s condensed statements of financial condition, a table of contractual obligations has not been presented. For a further discussion of the Registrant’s contractual obligations, see Notes 1, 3, 4, 5 and 7 of the Registrant’s 2013 Annual Report, which is filed as an exhibit to the Registrant’s Form 10-K for the fiscal year ended December 31, 2013.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Introduction

Past Results Not Necessarily Indicative of Future Performance

The Registrant is a speculative commodity pool. The market sensitive instruments held by it are acquired for speculative trading purposes, and substantially all of the Registrant’s assets are subject to the risk of trading loss. Unlike an operating company, the risk of market sensitive instruments is integral, not incidental, to the Registrant’s main line of business.

Market movements result in frequent changes in the fair market value of the Registrant’s open positions and, consequently, in its earnings and cash flow. The Registrant’s market risk is influenced by a wide variety of factors, including the level and volatility of interest rates, exchange rates, equity price levels, the market value of financial instruments and contracts, the diversification effects among the Registrant’s open positions and the liquidity of the markets in which it trades.

The Registrant rapidly acquires and liquidates both long and short positions in a wide range of different markets. Consequently, it is not possible to predict how a particular futures market scenario will affect performance, and the Registrant’s past performance is not necessarily indicative of its future results.

“Value at Risk” is a measure of the maximum amount which the Registrant could reasonably be expected to lose in a given market sector. However, the inherent uncertainty of the Registrant’s speculative trading and the recurrence in the markets traded by the Registrant of market movements far exceeding expectations could result in actual trading or non-trading losses far beyond the indicated Value at Risk or the Registrant’s experience to date (i.e., “risk of ruin”). In light of the foregoing, as well as the risks and uncertainties intrinsic to all future projections, the quantification included in this section should not be considered to constitute any assurance or representation that the Registrant’s losses in any market sector will be limited to Value at Risk or by the Registrant’s attempts to manage its market risk.

Standard of Materiality

Materiality as used in this section, “Quantitative and Qualitative Disclosures About Market Risk,” is based on an assessment of reasonably possible market movements and the potential losses caused by such movements, taking into account the leverage, optionality and multiplier features of the Registrant’s market sensitive instruments.

Quantifying the Registrant’s Trading Value at Risk

Quantitative Forward-Looking Statements

The following quantitative disclosures regarding the Registrant’s market risk exposures contain “forward-looking statements” within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934. as amended (the “Exchange Act”)).

The Registrant’s risk exposure in the various market sectors traded by the Trading Advisors is quantified below in terms of Value at Risk. Due to the Registrant’s mark-to-market accounting, any loss in the fair value of the Registrant’s open positions is directly reflected in the Registrant’s earnings (realized or unrealized) and cash flow (at least in the case of exchange-traded contracts in which profits and losses on open positions are settled daily through variation margin).

Exchange maintenance margin requirements have been used by the Registrant as the measure of its Value at Risk. Maintenance margin requirements are set by exchanges to equal or exceed the maximum losses reasonably expected to be incurred in the fair value of any given contract in 95%-99% of any one-day interval. The maintenance margin levels are established by dealers and exchanges using historical price studies as well as an assessment of current market volatility (including the implied volatility of the options on a given futures contract) and economic fundamentals to provide a probabilistic estimate of the maximum expected near-term one-day price fluctuation. Maintenance margin has been used rather than the more generally available initial margin, because initial margin includes a credit risk component, which is not relevant to Value at Risk.

In the case of market sensitive instruments that are not exchange-traded (almost exclusively currencies in the case of the Registrant), the margin requirements for the approximate estimated equivalent futures positions have been used as Value at Risk. In those rare cases in which a futures-equivalent margin is not available, estimated dealers’ margins have been used.

In quantifying the Registrant’s Value at Risk, 100% positive correlation in the different positions held in each market risk category has been assumed. Consequently, the margin requirements applicable to the open contracts have simply been aggregated to determine each trading category’s aggregate Value at Risk. The diversification effects resulting from the fact that the Registrant’s positions are rarely, if ever, 100% positively correlated have not been reflected.

The Registrant’s Trading Value at Risk in Different Market Sectors

The following table presents the trading value at risk associated with the Registrant’s open positions by market sector through its investment in Affiliated Investment Funds at March 31, 2014 and December 31, 2013. All open position trading risk exposures of the Registrant have been included in calculating the figure set forth below. At March 31, 2014 and December 31, 2013, the Registrant had total capitalizations of approximately $23 million and $51 million, respectively.

	March 31, 2014					December 31, 2013
			% of Total					% of Total
Market Sector	Value at Risk		Capitalization			Value at Risk		Capitalization

Interest rates	$	430,659		1.83	%	$	1,985,413		3.93	%
Currencies		649,542		2.77	%		1,364,856		2.70	%
Commodities		1,539,729		6.56	%		5,706,209		11.29	%
Stock indices		320,158		1.36	%		1,102,980		2.18	%
Total	$	2,940,088		12.52	%	$	10,159,458		20.10	%

The following table presents the average trading value at risk of the Registrant’s open positions by market sector for the First Quarter 2014 and the First Quarter 2013 based upon the Registrant’s total average capitalization of approximately $37 million and $93 million, respectively.

	First Quarter 2014					First Quarter 2013
			% of Total					% of Total
Market Sector	Value at Risk		Capitalization			Value at Risk		Capitalization

Interest rates	$	1,498,152		4.03	%	$	2,292,201		2.47	%
Currencies		844,736		2.27	%		3,380,131		3.64	%
Commodities		4,027,741		10.84	%		6,779,025		7.30	%
Stock indices		1,063,633		2.86	%		1,788,819		1.93	%
Total	$	7,434,262		20.00	%	$	14,240,176		15.34	%

Material Limitations on Value at Risk as an Assessment of Market Risk

The notional value of the market sector instruments held by the Registrant (directly/indirectly) is typically many times the applicable maintenance margin requirement (maintenance margin requirements generally range between approximately 1% and 10% of the face value) as well as many times the total capitalization of the Registrant. The magnitude of the Registrant’s open positions creates a “risk of ruin” not typically found in most other investment vehicles. Because of the size of its positions, certain market conditions, although unusual, but historically recurring from time to time, could cause the Registrant to incur severe losses over a short period of time. The foregoing Value at Risk table, as well as the past performance of the Registrant give no indication of this “risk of ruin.”

Non-Trading Risk

The Registrant has non-trading market risk on its foreign cash balances not needed for margin. However, these balances (as well as any market risk they represent) are immaterial.

Qualitative Disclosures Regarding Primary Trading Risk Exposures

The following qualitative disclosures regarding the Registrant’s market risk exposures—except for (i) those disclosures that are statements of historical fact and (ii) the descriptions of how the Registrant manages its primary market risk exposures—constitute forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. The Registrant’s primary market risk exposures as well as the strategies used and to be used by the Managing Owner and the Trading Advisors for managing such exposures are subject to numerous uncertainties, contingencies and risks are one of which could cause the actual results of the Registrant’s risk controls to differ materially from the objectives of such strategies. Government interventions, defaults and expropriations, illiquid markets the emergence of dominant fundamental factors, political upheavals, changes in historical price relationships, an influx of new market participants, increased regulation and many other factors could result in material losses as well as in material changes to the risk exposures and the risk management strategies of the Registrant. There can be no assurance that the Registrant’s current market exposure and/or risk management strategies will not change materially or that any such strategies will be effective in either the short- or long-term. Investors must be prepared to lose all or substantially all of their investment in the Registrant.

Based on the trading value at risk at March 31, 2014, the Registrant experienced a net decrease in its value at risk, relative to capitalization levels, as compared with the trading value at risk at December 31, 2013. A net increase in the average trading value at risk, relative to average capitalization levels was experienced during the First Quarter 2014 as compared with the First Quarter 2013.

Qualitative Disclosures Regarding Means of Managing Risk Exposure

The means by which the Managing Owner and the Trading Advisors through CTA Choice attempt to manage the risk of the Registrant’s open positions is essentially the same in all market categories traded.

The Trading Advisors attempt to minimize market risk exposure by applying their own risk management trading policies that include the diversification of trading assets into various market sectors. Additionally, the Managing Owner’s oversight committee is responsible for evaluating and overseeing the Trading Advisors’ trading policies. The oversight committee meets periodically to discuss and analyze issues such as liquidity, position size, capacity, performance cycles, and new product and market strategies.

The Managing Owner attempts to minimize market risk exposure by requiring the Trading Advisors to abide by various trading limitations and policies. The Managing Owner monitors compliance with these trading limitations and policies which include, but are not limited to, limiting the amount of margin or premium required for any one commodity or all commodities combined and generally limiting transactions to contracts which are traded in sufficient volume to permit the taking and liquidating of positions. Additionally, the Managing Owner shall automatically terminate the Trading Advisors through CTA Choice if the Net Asset Value of the Registrant declines by 40% during any year or since the commencement of trading activities. Furthermore, the Trust Agreement provides that the Registrant will liquidate its positions, and eventually dissolve, if the Registrant experiences a decline in the Net Asset Value of 50% in any year or since the commencement of trading activities. In each case, the decline in Net Asset Value is after giving effect for contributions, distributions and redemptions. The Managing Owner may impose additional restrictions (through modifications of such trading limitations and policies) upon the trading activities of the Trading Advisors as it, in good faith, deems to be in the best interest of the Registrant.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Registrant’s “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed by the Registrant in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to the Registrant’s management, including the Managing Owner’s Chairman and Chief Operating Officer and Chief Compliance Officer (who, in these capacities, function as the Principal Executive Officers and Principal Financial Accounting/Officer, respectively, of the Registrant), as appropriate to allow for timely decisions regarding required disclosure.

In designing and evaluating the Registrant’s disclosure controls and procedures, the Managing Owner recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Because of the inherent limitations in all control systems, no evaluation of the controls can prove absolute assurance that all control issues and instances of fraud, if any, within the Registrant have been detected.

The Managing Owner’s management, under the supervision and with the participation of certain officers of the Managing Owner (including the Managing Owner’s Chairman and Chief Operating Officer and Chief Compliance Officer), has evaluated the effectiveness of the Registrant’s disclosure controls and procedures during the First Quarter 2014. Based upon such evaluation, the Managing Owner’s Chairman and Chief Operating Officer and Chief Compliance Officer have concluded that, as of March 31, 2014, the Registrant’s disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Registrant’s internal control over financial reporting (as defined in Rules 13a – 15(f) and 15d – 15(f) under the Exchange Act) during the First Quarter 2014 that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

There are no material legal proceedings pending, on appeal, or concluded to which the Registrant is a party or to which any of its assets are subject.

Item 1.A. Risk Factors

There have been no changes from risk factors as previously disclosed in the Registrant’s Form 10-K for the fiscal year ended December 31, 2013.

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

The following table presents sales of unregistered interests (i.e., Managing Owner interests) exempt from registration under Section 4(2) of the Securities Act of 1933 during the period from September 28, 2004 (inception) through March 31, 2014.

	Amount of
Date of Sale	Units Sold		Cash Received

March 10, 2005		10	$	1,000
December 1, 2005		3,080	$	308,000
January 1, 2006		765	$	74,535
February 1, 2006		416	$	40,000
March 1, 2006		256	$	24,489
April 1, 2006		223	$	21,560
May 1, 2006		265	$	27,537
June 1, 2006		454	$	47,400
July 1, 2006		575	$	59,000
August 1, 2006		530	$	52,350
September 1, 2006		403	$	39,200
October 1, 2006		374	$	36,000
November 1, 2006		189	$	18,000
December 1, 2006		11	$	1,000
January 1, 2007		62	$	6,000
February 1, 2007		217	$	21,000
March 1, 2007		109	$	10,000
August 1, 2007		30	$	3,000
September 1, 2007		10	$	1,000
October 1, 2007		49	$	5,000
November 1, 2007		28	$	3,000
December 1, 2007		19	$	2,000
January 1, 2008		265	$	29,000
March 1, 2008		113	$	15,000
April 1, 2008		258	$	40,000
May 1, 2008		419	$	50,000
June 1, 2008		329	$	40,000
July 1, 2008		497	$	61,000
August 1, 2008		294	$	35,000
September 1, 2008		347	$	40,000
October 1, 2008		196	$	22,000

Prior to December 1, 2008 the Registrant was a publicly offered commodity pool and the Managing Owner was required to hold an interest in the Registrant; therefore, sales of the Managing Owner’s interest qualified as unregistered sales of securities. From December 1, 2008 through March 31, 2014, all sales of interest qualify as unregistered sales due to the Registrant offered as a private placement. The aggregate sale of Units in this time period was approximately 693,710.047 Units amounting to approximately $85,177,656.

Item 3. Defaults Upon Senior Securities

None

Item 5. Other Information

None

Item 6. Exhibits:

3.1		Fifth Amended and Restated Declaration of Trust Agreement of World Monitor Trust III dated June 30, 2010 (incorporated by reference to Exhibit 13.1 to the Registrant’s annual report on Form 10-K for the year ended December 31, 2009)

4.2		Subscription Requirements (annexed to the Prospectus as Exhibit B and incorporated by reference to Exhibit 4.2 to the Trust’s Post-Effective Amendment No. 3 on S-1 Registration Statement, File No. 333-119612, filed with the Commission on April 25, 2006)

4.3		Subscription instructions, Form of Subscription Agreement and Power of Attorney (annexed to the Prospectus as Exhibit C and incorporated by reference to Exhibit 4.3 to the Trust’s Post-Effective Amendment No. 3 on S-1 Registration Statement, File No. 333-119612, filed with the Commission on April 25, 2006)

4.4		Form of Privacy Notices of the Managing Owner dated December 2010 (incorporated by reference to Exhibit 4.4 to the Registrant’s annual report on Form 10-K for the year ended December 31, 2010)

10.1		Form of Subscription Escrow Agreement (incorporated by reference to Exhibit 10.1 to the Trust’s Pre-Effective Amendment No. 2 on S-1 Registration Statement, File No. 333-119612, filed with the Commission on March 14, 2005)

10.2		Form of Advisory Agreement among WMT III Series G/J Trading Vehicle LLC, the Managing Owner and Graham Capital Management, L.P. (incorporated by reference to Exhibit 10.2 to the Trust’s Pre-Effective Amendment No. 2 on S-1 Registration Statement, File No. 333-119612, filed with the Commission on March 14, 2005)

10.3		Form of Advisory Agreement among World Monitor Trust III – Series J, the Managing Owner and Eagle Trading Systems Inc. (incorporated by reference to Exhibit 10.3 to the Trust’s Post-Effective Amendment No. 6 to Form S-1 Registration Statement, File No. 333-119612, filed with the Commission on April 10, 2007)

10.4		Form of Advisory Agreement among World Monitor Trust III – Series J, the Managing Owner and Ortus Capital Management (Cayman) Limited (incorporated by reference to Exhibit 10.4 to the Trust’s Post-Effective Amendment No. 8 to Form S-1 Registration Statement, File No. 333-119612, filed with the Commission on April 25, 2007)

10.5		Form of Customer Agreement between the WMT III Series G/J Trading Vehicle LLC and UBS Securities LLC (incorporated by reference to Exhibit 10.5 to the Trust’s Pre-Effective Amendment No. 2 on S-1 Registration Statement, File No. 333-119612, filed with the Commission on March 14, 2005)

10.6		Form of Customer Agreement between the World Monitor Trust III – Series J and UBS Securities LLC (incorporated by reference to Exhibit 10.6 to the Trust’s Post-Effective Amendment No. 6 to Form S-1 Registration Statement, File No. 333-119612, filed with the Commission on April 10, 2007)

10.7		Form of FX Prime Brokerage Agreement between UBS AG and WMT III Series G/J Trading Vehicle LLC (incorporated by reference to Exhibit 10.7 to the Trust’s Post-Effective Amendment No. 6 to Form S-1 Registration Statement, File No. 333-119612, filed with the Commission on April 10, 2007)

10.8		Form of ISDA Master Agreement between UBS AG and WMT III Series G/J Trading Vehicle LLC, Schedule to ISDA Master Agreement and Credit Support Annex to Schedule (incorporated by reference to Exhibit 10.8 to the Trust’s Post-Effective Amendment No. 6 to Form S-1 Registration Statement, File No. 333-119612, filed with the Commission on April 10, 2007)

10.9		Form of FX Prime Brokerage Agreement between UBS AG and World Monitor Trust III – Series J (incorporated by reference to Exhibit 10.9 to the Trust’s Post-Effective Amendment No. 8 to Form S-1 Registration Statement, File No. 333-119612, filed with the Commission on April 25, 2007)

10.10		Form of ISDA Master Agreement between UBS AG and World Monitor Trust III – Series J, Schedule to ISDA Master Agreement and Credit Support Annex to Schedule (incorporated by reference to Exhibit 10.10 to the Trust’s Post-Effective Amendment No. 8 to Form S-1 Registration Statement, File No. 333-119612, filed with the Commission on April 25, 2007)

10.11		WMT III Series G/J Trading Vehicle LLC Organization Agreement (incorporated by reference to Exhibit 1.1 to the Trust’s Post-Effective Amendment No. 6 to Form S-1 Registration Statement, File No. 333-119612, filed with the Commission on April 10, 2007)

10.12		Form of Advisory Agreement among World Monitor Trust III – Series J, the Managing Owner and Graham Capital Management, L.P. (incorporated by reference to Exhibit 10.12 to the Registrant’s annual report on Form 10-K for the year ended December 31, 2007)

10.13		Form of Services Agreement among World Monitor Trust III – Series J, the Managing Owner and Spectrum Global Fund Administration, L.L.C. (incorporated by reference to Exhibit 10.13 to the Registrant’s annual report on Form 10-K for the year ended December 31, 2007)

10.14		Advisory Agreement dated March 24, 2010 by and among, World Monitor Trust III – Series J, Kenmar Preferred Investments Corp. and Tudor Investment Corporation (incorporated by reference to Exhibit 10.9 to the Registrant’s Form 8-K, File No. 000-51651, filed with the Commission on March 26, 2010)

10.15		Advisory Agreement dated March 24, 2010 by and among, World Monitor Trust III – Series J, Kenmar Preferred Investments Corp. and Paskewitz Asset Management, LLC (incorporated by reference to Exhibit 10.10 to the Registrant’s Form 8-K, File No. 000-51651, filed with the Commission on March 26, 2010)

10.16		Amendment No. 1 dated September 29, 2010, with an effective date of October 1, 2010, to the Advisory Agreement dated November 28, 2008, by and among, World Monitor Trust III – Series J, Kenmar Preferred Investments Corp. and Eagle Trading Systems Inc. (incorporated by reference to Exhibit 10.16 to the Registrant’s Form 8-K, File No. 000-51651, filed with the Commission on October 1, 2010)

10.17		Amendment No. 1 dated September 29, 2010, with an effective date of October 1, 2010, to the Advisory Agreement dated November 28, 2008, by and among, World Monitor Trust III – Series J, Kenmar Preferred Investments Corp. and Graham Capital Management, L.P. (incorporated by reference to Exhibit 10.17 to the Registrant’s Form 8-K, File No. 000-51651, filed with the Commission on October 1, 2010)

10.18		Amendment No. 1 dated September 29, 2010, with an effective date of October 1, 2010, to the Advisory Agreement dated July 1, 2009, by and among, World Monitor Trust III – Series J, Kenmar Preferred Investments Corp. and Krom River Investment Management (Cayman) Limited and Krom River Trading AG (incorporated by reference to Exhibit 10.18 to the Registrant’s Form 8-K, File No. 000-51651, filed with the Commission on October 1, 2010)

10.19		Amendment No. 1 dated September 29, 2010, with an effective date of October 1, 2010, to the Advisory Agreement dated March 24, 2010 by and among, World Monitor Trust III – Series J, Kenmar Preferred Investments Corp. and Paskewitz Asset Management, LLC (incorporated by reference to Exhibit 10.19 to the Registrant’s Form 8-K, File No. 000-5161, filed with the Commission on October 1, 2010)

10.20		Amendment No. 1 dated September 29, 2010, with an effective date of January 1, 2011, to the Advisory Agreement dated May 28, 2009, by and among, World Monitor Trust III – Series J, Kenmar Preferred Investments Corp. and Ortus Capital Management Limited (incorporated by reference to Exhibit 10.20 to the Registrant’s Form 8-K, File No. 000-5161, filed with the Commission on October 1, 2010)

10.21		Administrative Services Agreement entered into as of January 27, 2011, by and among GlobeOp Financial Services LLC and World Monitor Trust III – Series J (incorporated by reference to Exhibit 10.21 to the Registrant’s Form 10-Q, filed with the Commission on August 15, 2011)

10.22		Middle/Back Office Services Agreement entered into as of January 27, 2011, by and between GlobeOp Financial Services LLC, World Monitor Trust III – Series J and Kenmar Preferred Investments Corp. (incorporated by reference to Exhibit 10.22 to the Registrant’s Form 10-Q, filed with the Commission on August 15, 2011)

14.1		Kenmar Preferred Investments Corp. Code of Ethics (adopted pursuant to Section 406 of Sarbanes Oxley Act of 2002) as of November 29, 2011 (incorporated by reference to Exhibit 14.1 to the Registrant’s annual report to Form 10-K for the year ended December 31, 2011)

31.1		Certification pursuant to Exchange Act Rules 13a-14 and 15d-14 (filed herewith)

31.2		Certification pursuant to Exchange Act Rules 13a-14 and 15d-14 (filed herewith)

32.1		Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

32.2		Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

99.1		Notice to Unitholders regarding certain changes to the ownership and structure of the Registrant’s underlying managers (incorporated by reference to Exhibit 99.1 to the Registrant’s Form 8-K, File No. 000-51651, filed with the Commission on January 4, 2012)

99.2		Notice to Unitholders regarding certain changes to the ownership and structure of the Registrant’s underlying managers (incorporated by reference to Exhibit 99.1 to the Registrant’s Form 8-K, File No. 000-51651, filed with the Commission on August 17, 2012)

99.3		Notice to Unitholders regarding certain changes to the ownership and structure of the Registrant’s underlying managers (incorporated by reference to Exhibit 99.1 to the Registrant’s Form 8-K, File No. 000-51651, filed with the Commission on December 6, 2012)

99.4		Notice to Unitholders regarding certain changes to the ownership and structure of the Registrant’s underlying managers (incorporated by reference to Exhibit 99.1 to the Registrant’s Form 8-K, File No. 000-51651, filed with the Commission on May 6, 2013)

99.5		Notice to Unitholders regarding certain changes to the ownership and structure of the Registrant’s underlying managers (incorporated by reference to Exhibit 99.1 to the Registrant’s Form 8-K, File No. 000-51651, filed with the Commission on September 3, 2013)

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to the Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

[Remainder of page left blank intentionally.]

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

WORLD MONITOR TRUST III – SERIES J

By:	Kenmar Preferred Investments, LLC,
	its Managing Owner

	By:	/s/ Kenneth A. Shewer	Date: May 12, 2014
	Name:	Kenneth A. Shewer
	Title:	Chairman
		(Principal Executive Officer)

	By:	/s/ David K. Spohr	Date: May 12, 2014
	Name:	David K. Spohr
	Title:	Chief Operating Officer and Chief Compliance Officer
		(Principal Financial/Accounting Officer)

Attached files

World Monitor Trust III - Series J Reports

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