-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AvdAMuJoTtnFvkOrK63/fpgp8ND0M3p/0uzvsiNbIVsMRqNG9FRW4oz35DitbfJ0 jNF+dzhYrUu3ki3TSk0Zzw== 0000837919-99-000015.txt : 19990813 0000837919-99-000015.hdr.sgml : 19990813 ACCESSION NUMBER: 0000837919-99-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JWH GLOBAL TRUST CENTRAL INDEX KEY: 0001027099 STANDARD INDUSTRIAL CLASSIFICATION: [6221] IRS NUMBER: 364113382 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22887 FILM NUMBER: 99685125 BUSINESS ADDRESS: STREET 1: C/O CIS INVESTMENTS INC STREET 2: 233 S WACKER DR STE 2300 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3124604000 MAIL ADDRESS: STREET 1: C/O CIS INVESTMENTS INC STREET 2: 233 S WACKER DR SUITE 2300 CITY: CHICAGO STATE: IL ZIP: 60606 FORMER COMPANY: FORMER CONFORMED NAME: JWH GLOBAL PORTFOLIO TRUST DATE OF NAME CHANGE: 19961114 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1999 Commission File Number 333-16825 JWH GLOBAL TRUST (Exact name of registrant as specified in its charter) Delaware 36-4113382 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 233 South Wacker Drive, Suite 2300, Chicago, Illinois 60606 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (312) 460-4000 Not Applicable (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Part I. Financial Information Item 1. Financial Statements Following are Financial Statements for the fiscal quarter ended June 30, 1999 and the additional time frames as noted: Fiscal Quarter Year to Date Fiscal Year Fiscal Quarter Year to Date Ended 6/30/99 To 6/30/99 Ended 12/31/98 Ended 6/30/98 To 6/30/98 -------------- -------------- -------------- -------------------------- Statement of Financial Condition X X Statement of Operations X X x x Statement of Changes in Partners' Capital X Statement of Cash Flows X x Notes to Financial Statements X JWH GLOBAL TRUST STATEMENTS OF FINANCIAL CONDITION UNAUDITED Jun 30, 1999 Dec 31, 1998 --------------- ------------- Cash $1,294,551 $1,601,405 Equity in commodity futures trading accounts: Account balance 96,289,242 90,182,744 Unrealized gain on open futures and forwards contracts 5,786,966 7,559,155 --------------- ------------- 103,370,759 99,343,304 Interest receivable 363,557 338,264 Prepaid Initial O&O 385,503 451,589 --------------- ------------- Total assets $104,119,819 $100,133,157 =============== ============= LIABILITIES AND UNITHOLDERS' CAPITAL Liabilities: Accrued commissions due to CIS $548,836 $528,885 Accrued management fee 342,552 328,109 Accrued incentive fee 853,599 120,253 Accrued operating expenses 95,952 109,738 Redemptions payable 1,061,235 3,533,024 Selling and Offering Expenses Payable 42,081 40,602 --------------- ------------- Total liabilities 2,944,256 4,660,611 Unitholders' Capital: Beneficial owners ( 834,110.57 units outstandi 100,143,234 94,386,640 at 6/30/99, 817,899.61 units outstanding at 12/31/98) (see Note 1) Managing owner (8,598.45 units outstanding at 1,032,329 1,085,906 6/30/99 and 9,409.49 at 12/31/98) (see Note 1) --------------- ------------- Total unitholders' capital 101,175,563 95,472,546 --------------- ------------- Total liabilities and unitholders' capital $104,119,819 $100,133,157 =============== ============= This Statement of Financial Condition, in the opinion of management, reflects all adjustments necessary to fairly state the financial condition of JWH Global Trust. (See Note 6) JWH GLOBAL TRUST STATEMENTS OF OPERATIONS UNAUDITED Apr 1, 1999 Jan 1, 1999 Apr 1, 1998 Jan 1, 1998 through through through through Jun 30, 1999 Jun 30, 1999 Jun 30, 1998 Jun 30, 1998 --------------- ------------- -------------- ------------- REVENUES Gains on trading of commodity futures and forwards contracts, physical commodities and related options: Realized gain (loss) on closed positions $6,329,326 $9,965,965 $3,588,449 $2,473,244 Change in unrealized gain (loss) on open positions 2,684,301 (1,319,327) (4,313,036) (6,721,955) Interest income 1,052,904 2,039,911 883,702 1,687,093 Foreign currency transaction gain (loss) (328,207) (389,260) (159,517) (299,042) --------------- ------------- -------------- ------------- Total revenues 9,738,323 10,297,289 (402) (2,860,660) EXPENSES Commissions paid to CIS 1,622,160 3,135,722 978,530 1,837,937 Exchange fees 17,698 38,444 11,463 24,400 Management fees 1,010,841 1,956,001 755,678 1,421,438 Incentive fees 853,599 853,599 0 0 Organization & Offering Expenses 157,595 307,732 126,725 242,233 Operating expenses 15,639 30,639 204,246 426,947 --------------- ------------- -------------- ------------- Total expenses 3,677,532 6,322,138 2,076,641 3,952,955 --------------- ------------- -------------- ------------- Net profit (loss) $6,060,792 $3,975,151 ($2,077,043) ($6,813,614) =============== ============= ============== ============= PROFIT (LOSS) PER UNIT OF OWNERSHIP INTEREST $7.17 $4.66 ($2.98) ($17.48) =============== ============= ============== ============= (see Note 1) (see Note 1) (see Note 1) (see Note 1) This Statement of Operations, in the opinion of management, reflects all adjustments necessary to fairly state the financial condition of JWH Global Trust. (See Note 6) JWH GLOBAL TRUST STATEMENTS OF CHANGES IN UNITHOLDERS' CAPITAL From January 1, 1999 through June 30, 1999 UNAUDITED Additional Units Sold Beneficial Managing (see Note 1) Units* Owners Owner Total --------------- ------------- -------------- ------------- Unitholders' capital at January 1, 1999 817,899.61 $94,386,640 $1,085,906 $95,472,546 Additional Units Sold 97,234.12 11,147,786 (93,497) 11,054,289 (see Note 1) Net profit (loss) 3,935,232 39,920 3,975,152 Redemptions (see Note 1) (81,023.16) (9,326,424) (9,326,424) --------------- ------------- -------------- ------------- Unitholders' capital at March 31, 1999 834,110.57 $100,143,234 $1,032,329 $101,175,563 =============== ============= ============== ============= Net asset value per unit January 1, 1999 (see Note 1) 112.89 112.89 Net profit (loss) per unit (see Note 1) 7.17 7.17 ------------- -------------- Net asset value per unit June 30, 1999 $120.06 $120.06 * Units of Beneficial Ownership. This Statement of Changes in Unitholders' Capital, in the opinion of management, reflects all adjustments necessary to fairly state the financial condition of JWH Global Trust. (See Note 6) JWH GLOBAL TRUST STATEMENTS OF CASH FLOWS UNAUDITED Jan 1, 1999 Jan 1, 1998 through through Jun 30, 1999 Jun 30, 1998 --------------- ------------- Cash flows from operating activities: Net profit (loss) $3,975,151 ($6,813,614) Adjustments to reconcile net profit (loss) to net cash provided by (used in) operating activities: Change in assets and liabilities: (Increase) decrease in receivable for units 306,854 510,880 Unrealized gain (loss) on open futures contracts 1,772,189 6,721,954 Interest receivable (25,293) (67,734) Prepaid Organization and Offering Expenses 66,086 66,087 Accrued liabilities 753,954 (561,591) Redemptions payable (2,471,789) 675,797 Selling and Offering Expenses Payable 1,479 7,193 --------------- ------------- Net cash provided by (used in) operating activities 4,378,632 538,971 Cash flows from financing activities: Additional Units Sold 11,054,289 25,178,102 Unitholder redemptions (9,326,424) (2,294,736) --------------- ------------- Net cash provided by (used in) financing activities 1,727,866 22,883,368 --------------- ------------- Net increase (decrease) in cash 6,106,498 23,422,338 Cash at beginning of period $90,182,744 56,278,134 --------------- ------------- Cash at end of period $96,289,242 $79,700,472 =============== ============= This Statement of Cash Flows, in the opinion of management, reflects all adjustments necessary to fairly state the financial condition of JWH Global Trust. (See Note 6)
JWH GLOBAL TRUST NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999 (1) GENERAL INFORMATION AND SUMMARY JWH Global Trust (the "Trust") is a Delaware business trust organized on November 12, 1996 under the Delaware Business Trust Act. The business of the Trust is the speculative trading of commodity interests, including futures contracts on currencies, interest rates, energy and agricultural products, metals and stock indices, options on such futures contracts, and spot and forward contracts on currencies and precious metals ("Commodity Interests") pursuant to the trading instructions of an independent trading advisor. The managing owner of the Trust is CIS Investments, Inc., a Delaware corporation organized in June 1983 (the "Managing Owner"). The Managing Owner is registered as a commodity pool operator under the Commodity Exchange Act, as amended, and is responsible for administering the business and affairs of the Trust exclusive of trading decisions. The Managing Owner is an affiliate of Cargill Investor Services, Inc., the clearing broker for the Trust (the "Clearing Broker") and CIS Financial Services, Inc., which acts as the Trust's currency dealer ("CISFS"). Trading decisions for the Trust were made by an independent commodity trading advisor, John W. Henry & Company, Inc. The initial public offering of the Trust's units of beneficial interest ("Units") commenced on April 3, 1997 and concluded on September 23, 1997. The initial offering price was $100 per Unit until the initial closing of the Trust, and thereafter at the current Net Asset Value of the Trust on the last business day of the calendar month. The total amount of the initial offering was $50,000,000. On September 24, 1997, a registration statement was declared effective with the SEC to register $155,000,000 of additional Units. The Units were offered pursuant to a Prospectus dated September 26, 1997 until June 25, 1998. On June 26, 1998, an amendment to the registration statement was declared effective with the SEC and the Units were offered pursuant to a Prospectus dated June 26, 1998 until March 25, 1999. On March 26, 1999, an amendment to the registration statement was declared effective with the SEC and the Units are currently offered pursuant to a prospectus dated March 31, 1999. A Post- Effective Amendment was declared effective with the SEC on October 20, 1997 to deregister $3,120,048.99 of Units which remained unsold upon the termination of the initial offering of the Units. As a result of the Units being offered at each month-end Net Asset Value, the total number of Units authorized for the Trust is not determinable and therefore is not disclosed in the financial statements. The initial closing of the Trust was on May 30, 1997 and the Trust commenced trading on June 2, 1997. The initial Beneficial Owners of the Trust, representing ownership of $1,000, were redeemed on May 30, 1997, prior to the commencement of trading. The minimum subscription size for the offering is $5,000 for individuals and $2,000 for trustees or custodians of eligible employee benefit plans and individual retirement accounts (subject to higher minimums in certain States); and $1,000 for existing investors in the Trust (the "Unitholders"). By June 30, 1999, a total of 1,035,690.02 Units were sold to Beneficial Owners of the Trust for an investment of $108,814,985.00 and 9,409.49 Units were sold to the Managing Owner of the Trust for an investment of $971,483, resulting in a total of 1,045,099.51 Units representing a total investment of $109,786,468.00 being sold in the offering period commencing April 3, 1997. The Managing Owner of the Trust advanced organization and offering costs of $650,000. The Trust reimbursed the Managing Owner for these costs. The Trust is amortizing these costs over 60 months. The Trust shall terminate on December 31, 2026 if none of the following occur prior to that date: (1) investors holding more than 50 percent of the outstanding Units notify the Managing Owner to dissolve the Trust as of a specific date; (2) withdrawal, insolvency, bankruptcy, retirement, resignation, expulsion or dissolution of the Managing Owner of the Trust; (3) bankruptcy or insolvency of the Trust; (4) decline in the aggregate Net Assets of the Trust to less than $2,500,000; (5) decline in the Net Asset Value per Unit to $50 or less; (6) dissolution of the Trust pursuant to the Fourth Amended and Restated Declaration and Agreement of Trust; or (7) any other event which shall make it unlawful for the existence of the Trust to be continued or require dissolution of the Trust. The Trust's Fourth Amended and Restated Declaration and Agreement of Trust contains a full description of the Trust's term and dissolution procedures. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting and reporting policies of the Trust conform to generally accepted accounting principles and to general practices within the commodities industry. The following is a description of the more significant of those policies that the Trust follows in preparing its financial statements. Revenue Recognition Commodity futures contracts, forward contracts, and physical commodities are recorded on the trade date. All such transactions are reported on an identified cost basis. Unrealized gains and losses reflected in the statements of financial condition represent the difference between original contract amount and market value (as determined by exchange settlement prices for futures contracts and cash dealer prices at a predetermined time for forward contracts and physical commodities) as of the last business day of the quarter-end. The Trust earns interest on its assets on deposit with CIS and CISFS at 100% of the 91-day Treasury bill rate for deposits denominated in dollars, and at the rates agreed between the Trust and CIS and CISFS for deposits denominated in other currencies. Redemptions A beneficial owner may cause any or all of his or her units to be redeemed by the Trust effective as of the last trading day of any month of the Trust based on the Net Asset Value per unit on five days' written notice to the Managing Owner. Payment will be made within 10 business days of the effective date of the redemption. Any redemption made during the first 11 months of investment is subject to a 3% redemption penalty. Any redemption made in the 12th month of investment or later will not be subject to any penalty. The Trust's Fourth Amended and Restated Declaration and Agreement of Trust contains a full description of redemption and distribution policies. Commissions Commodity brokerage commissions are typically paid for each trade transacted and are referred to as "round-turn commissions". These commissions cover both the initial purchase (or sale) and the subsequent offsetting sale (or purchase) of a commodity futures contract. The Trust does not pay commodity brokerage commissions on a per-trade basis, but rather pays monthly flat-rate Brokerage Fees at the annual rate of 6.5% (or a monthly rate of approximately 0.542%) of the Trust's month-end assets after reduction of the Management Fee. CIS receives these Brokerage Fees irrespective of the number of trades executed on the Trust's behalf. Certain large investors are eligible for a "Special Brokerage Rate" of 5% per year. Foreign Currency Transactions Trading accounts in foreign currency denominations are susceptible to both movements on underlying contract markets as well as fluctuation in currency rates. Translation of foreign currencies into U.S. dollars for closed positions are translated at an average exchange rate for the quarter, while quarter-end balances are translated at the quarter-end currency rates. The impact of the translation is reflected in the statement of operations. Statements of Cash Flows For purposes of the statements of cash flows, cash includes cash on deposit with the Clearing Broker in commodity futures trading accounts. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management 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 financial statements and the reported amounts of increase and decrease in net assets from operations during the period. Actual results could differ from those estimates. (3) FEES Management fees are accrued and paid monthly and incentive fees are accrued monthly and paid quarterly. Trading decisions for the period of these financial statements were made by John W. Henry & Company, Inc. ("JWH") utilizing two of its trading programs, the Original Investment Program and the Financial and Metals Portfolio, until October 4, 1998. Effective October 5, 1998, the Managing Owner added a third JWH program to the Trust, the G-7 Currency Portfolio. Under signed agreement, JWH receives a monthly management fee of 1/12 of 4% of the Trust's month-end assets after deduction of a portion of the Brokerage Fee at the annual rate of 1.25% (rather than 6.5%) of month-end Trust assets but before deduction of any management fees, redemptions, distributions, or incentive fee accrued or payable as of the relevant month-end. In addition, the Trust pays to JWH a quarterly incentive fee equal to 15% of the new trading profits of the Trust. The incentive fee is based on the overall performance of the Trust, not individually in respect of the performance of the individual programs utilized by the Trust. This fee is also calculated by deducting Brokerage Fee at a rate of 1.25% (rather than the 6.5% rate). (4) INCOME TAXES No provision for Federal income taxes has been made in the accompanying financial statements as each beneficial owner is responsible for reporting income (loss) based on the pro rata share of the profits or losses of the Trust. Generally, for both Federal and State tax purposes, trusts such as JWH Global Trust are treated as partnerships. The Trust is responsible for the Illinois State Partnership Information and Replacement Tax based on the operating results of the Trust. Such tax amounted to $0 and $0 for the periods ended June 30, 1999 and June 30, 1998 and is included in operating expenses in the Statement of Operations. (5) FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK The Trust was formed to speculatively trade Commodity Interests. The Trust's commodity interest transactions and its related cash balance are on deposit with the Clearing Broker or the Forwards Currency Broker (the "Brokers") at all times. In the event that volatility of trading of other customers of the Brokers impaired the ability of the Brokers to satisfy the obligations to the Trust, the Trust would be exposed to off-balance sheet risk. Such risk is defined in Statement of Financial Accounting Standards No. 105 ("SFAS 105") as a credit risk. To mitigate this risk, the Clearing Broker, pursuant to the mandates of the Commodity Exchange Act, is required to maintain funds deposited by customers relating to futures contracts in regulated commodities in separate bank accounts which are designated as segregated customers' accounts. In addition, the Clearing Broker has set aside funds deposited by customers relating to foreign futures and options in separate bank accounts which are designated as customer secured accounts. Lastly, the Clearing Broker is subject to the Securities and Exchange Commission's Uniform Net Capital Rule which requires the maintenance of minimum net capital of at least 4% of the funds required to be segregated pursuant to the Commodity Exchange Act. The Clearing Broker and Forwards Currency Broker both have controls in place to make certain that all customers maintain adequate margin deposits for the positions which they maintain at each Broker. Such procedures should protect the Trust from the off-balance sheet risk as mentioned earlier. Neither the Clearing Broker nor the Forwards Currency Broker engage in proprietary trading and thus has no direct market exposure. The counterparty of the Trust for futures contracts traded in the United States and most non-U.S. exchanges on which the Trust trades is the Clearing House associated with the exchange. In general, Clearing Houses are backed by their membership and will act in the event of non-performance by one of their members or one of the members' customers and as such should significantly reduce this credit risk. In cases where the Trust trades on exchanges on which the Clearing House is not backed by the exchange membership, the sole recourse of the Trust for non-performance will be the Clearing House. The Forwards Currency Broker is the counterparty for the Trust's forward transactions. CISFS policies require that they execute transactions only with top rated financial institutions with assets in excess of $100,000,000. The Trust holds futures positions on the various exchanges throughout the world and forwards positions with CISFS which transacts with various top rated banks throughout the world. As defined by SFAS 105, futures and forward currency contracts are classified as financial instruments. SFAS 105 requires that the Trust disclose the market risk of loss from all of its financial instruments. Market risk is defined as the possibility that future changes in market prices may make a financial instrument less valuable or more onerous. If the markets should move against all of the futures and forwards positions of the Trust at the same time (both long positions and short positions), and if the markets moved such that the CTA was unable to offset the futures positions of the Trust, the Trust could lose all of its assets and the Beneficial Owners would realize a 100% loss. During the period of these financials, the Trust utilized two of the trading programs of the CTA until October 4, 1998 (a third program was added on October 5, 1998 as discussed below). One trading program is diversified among all commodity groups, while the other is diversified among the various futures contracts and forwards contracts in the financials and metals group. Both programs trade in the U.S. and outside of the U.S. To further increase the diversification of the Trust, on October 5, 1998 the Managing Owner added a third program of the CTA to the two programs already being traded by the Trust. This program, the G-7 Currency Portfolio, is diversified among a number of world currencies against each other, unlike the other programs which trade versus the U.S. dollar only. In addition, the G-7 Currency Portfolio trades currencies not traded in the other two programs. Such diversification should greatly reduce this market risk. The margin requirement at June 30, 1999 was $12,826,828. To meet this requirement, the Trust had on deposit with the Clearing Broker $84,663,874 in segregated funds, $7,128,573 in secured funds and $10,283,761 in non-regulated funds. At June 30, 1999, cash was on deposit with the Clearing Broker and the Forwards Currency Broker that exceeded the cash requirement amount. The following chart discloses the dollar amount of the unrealized gain or loss on open contracts related to Commodity Interests for the Trust as of June 30, 1999: COMMODITY GROUP UNREALIZED GAIN/(LOSS) AGRICULTURAL COMMODITIES (203,328) FOREIGN CURRENCIES 681,858 STOCK INDICES 436,169 ENERGIES 678,725 METALS 240,359 INTEREST RATE INSTRUMENTS 3,953,183 _________ TOTAL 5,786,966 The range of maturity dates of these exchange traded open contracts is August of 1999 to June of 2000. The average open trade equity for the period of January 1, 1999 to June 30, 1999 is $6,624,373. (6) FINANCIAL STATEMENT PREPARATION The interim financial statements are unaudited but reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. These adjustments consist primarily of normal recurring accruals. These interim financial statements should be read in conjunction with the audited financial statements of the Trust for the year ended December 31, 1998, as filed with the Securities and Exchange Commission on March 29, 1999, as part of its Annual Report on Form 10-K. The results of operations for interim periods are not necessarily indicative of the operating results to be expected for the fiscal year. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation Fiscal Quarter ended June 30, 1999 The Trust recorded a gain of $6,060,792 or $7.17 per Unit for the second quarter of 1999. This compares to a loss of $2,077,043 or $2.98 per Unit for the second quarter of 1998. In the first month of the quarter the Trust posted a gain resulting primarily from an appreciating Japanese stock market, rising crude oil prices, falling commodity prices and continued appreciation of the U.S. Dollar versus the Euro and Swiss Franc. The Trust posted a loss during the second month of the quarter resulting primarily from the currencies and indices and despite the declining price of gold and the continued decline of the Euro currency. During the third month of the quarter, the Trust posted a gain as it continued to benefit from the freefall in gold prices and the declining Euro currency. Overall, the second quarter of fiscal 1999 ended positively for the Trust accounts managed by JWH. At June 30, 1999, JWH was managing 100% of the Trust's assets in three trading programs, the Original Investment Program, the Financial and Metals Portfolio and the G-7 Currency Portfolio. In April, currencies were the most favorable sector for the Trust. The continued flight to quality to the U.S. dollar provided opportunities for the Trust to profit from long U.S. dollar positions versus the Euro and Swiss franc. As the conflict in Kosovo persisted, the flow of money into the U.S. dollar continued. Trading in the Japanese yen and Australian dollar was also profitable. Confidence in the Japanese stock market restored performance in the Nikkei 225 as the index was up approximately 20% year to date. A long position in the Nikkei helped the Trust generate profits as did long positions in the S&P 500 Index and Hang Seng Index. During April, the unprofitable trading sectors were mainly interest rates and precious metals. As Europe cut interest rates mid-month, the Trust's position went from short to long. Short U.S. bond positions generated a small profit by month end. Short gold positions were also unprofitable. In the interim, this position turned profitable as the United Kingdom decided to sell off over 50% of its gold reserves putting severe pressure on the price of gold. All in all, the Trust posted a gain of $3,721,267 or $4.39 per Unit in April. In May, gold fell below $270 per ounce, a 20 year low. The Trust benefited from this price decline since it held short gold positions during the month. The interest rate rumors in the US, coupled with the inflation fears caused the continuation of the decline in the US 10-year and 30-year bonds. The Trust held short positions in this sector during May, resulting in profits for the period. In addition, the Trust held long positions in the Japanese government bond that were profitable. Notwithstanding these gains, the trust posted a loss for May primarily due to the markets moving against the Trust's long positions in energies and indicies, as well as from long positions in British pounds and short coffee positions. During May, we saw the Euro fall to its lowest level versus the US dollar since its inception at the beginning of the year. Pressure on the Euro surrounded the conflict in Kosovo, as investors saw the dollar as a safe haven. Overall, the Trust posted a loss of $201,809 or $.24 per Unit in May. In June, the rumor of the Fed raising interest rates in the US became a reality. The Trust's short positions in the 10-year and 30-year bonds provided profits and strong gains were posted as European bond prices continued to erode. A big reason was the weakening Euro, which declined 13%, depreciating in a straight line against the U.S. dollar since its inception January 1, 1999. Short positions in the German Bund, the German Bobl and U.K. Gilt provided the lion's share of performance. Currencies also provided gains for the Trust for the fourth consecutive month. Once again, the profit opportunities came from long US dollar positions versus the Euro and Swiss franc. Pressure on the Euro which initially resulted from the conflict in Kosovo, also seemed attributable to investors losing confidence in the Euro. During June, the Trust continued to profit from its short positions in the gold market. Long positions in the Nikkei stock index have been profitable for the Trust for the entire year, as the percentage gain in this index for 1999 is 26.64%. Short positions in the agricultural complex, especially in coffee, caused losses as the prices of these commodities rebounded. Additionally, continued long positions in crude oil were favorable as oil prices gained nearly 80% in 1999. Overall, the Trust posted a gain of $2,541,334 or $3.02 per Unit in June. During the quarter there were 34,289.32 additional Units sold to the Beneficial Owners for an investment of $4,048,034; there were no Units sold to the Managing Owner. Investors redeemed a total of 38,895.88 Units during the quarter. At the end of the quarter there were 834,110.57 Units outstanding owned by the Beneficial Owners and 8,598.45 Units outstanding owned by the Managing Owner. During the quarter, the Managing Owner, CIS Investments, Inc. experienced the following officer changes: Shaun D. O'Brien replaced former Vice President & Treasurer Richard A. Driver; James Clemens replaced Henry W. Gjersdal as Assistant Secretary; Lillian Lundeen replaced Bruce H. Barnett as Assistant Secretary. During the fiscal quarter ended June 30, 1999, the Trust had no credit exposure to a counterparty which is a foreign commodities exchange or to any counterparty dealing in over the counter contracts which was material. See Footnote 5 of the Financial Statements for procedures established by the Managing Owner to monitor and minimize market and credit risks for the Trust. In addition to the procedures set out in Footnote 5, the Managing Owner reviews on a daily basis reports of the Trust's performance, including monitoring of the daily net asset value of the Trust. The Managing Owner also reviews the financial situation of the Trust's Clearing Broker on a monthly basis. The Managing Owner relies on the policies of the Clearing Broker to monitor specific credit risks. The Clearing Broker does not engage in proprietary trading and thus has no direct market exposure which provides the Managing Owner assurance that the Trust will not suffer trading losses through the Clearing Broker. Year 2000 Issue CIS surveyed its major applications in 1996 to see if they were Year 2000 compliant. Systems identified with Year 2000 issues were targeted for replacement or modification. Replacement and modification projects are currently underway. In addition, CIS has dedicated resources to assess our work processes and verify that it will be able to handle the changes in the next millennium. This process addresses software applications as well as key vendor, bank and customer relationships. During 1997, CIS participated in developing the industry-wide test plan with the Futures Industry Association, with whom it continues to work closely. CIS has participated in BETA testing, which began in September 1998, and participated again with the FIA in "street wide" testing during the second quarter of 1999. In addition, CIS has begun developing various "contingency plans" in the event that mission critical systems should fail. This development is proceeding on schedule. CIS is taking this issue seriously and has a goal of maintaining reasonable procedures in order to eliminate as much risk as possible to its customers (including the Partnership), its counterparties and itself. Despite the best efforts of CIS, CISFS and CISI, there can be no assurance that the above steps will be sufficient or that all potential problems have been identified in order to avoid any adverse impact to the Partnership. CIS and its affiliates make no representations or warrants related to Year 2000 readiness or compliance, including but not limited to business interruption, whether from failures in their own computer systems, those of the Advisors, or any other third party. Fiscal Quarter ended June 30, 1998 The Trust recorded a loss of $2,077,043 or $2.98 per Unit for the second quarter of 1998. This compares to a gain of $20,296.37 or $0.16 per Unit for the second quarter of 1997. During the first and third months of the quarter, the Trust experienced losses primarily as a result of unprofitable positions in currencies, interest rates and metals, while during the second month gains were recorded primarily due to gains in the currency, interest rate, metals and energy markets. At June 30, 1998, John W. Henry & Company, Inc. was managing 100% of the Trust's assets in two trading programs, the Original Investment Program and the Financial and Metals Portfolio. In April, positions in nearly all markets traded were unprofitable. Positions in the U.S. 30-year bond and Euro dollar markets resulted in losses for interest rate futures. Unprofitable positions in the German mark and Swiss franc offset gains in other currencies traded. Silver prices fell following reports that a major investment company had sold a third of its holdings. Losses in silver and copper offset profits in gold. Sugar prices fell to a five-year low on prospects of a large Brazilian crop. Positions in sugar resulted in profits as did positions in coffee, wheat, corn and soybean oil. The Trust recorded a loss of $3,358,004 or $4.68 per Unit in April. In May gains were recorded reflecting profitable positions in interest rates, metals, energies and currencies. The strongest gains overall came from positions in the Japanese yen, Japanese Government bond, silver and crude oil. Silver prices slumped as investors who bought on hopes of rising value lost patience and took profits. Crude oil prices were pressured by worries of oversupply in world markets. Gains were also recorded in positions in the Australian dollar as a nervous market dealt with rumors of further currency devaluations in Asia; the Australian currency fell to a 12-year low against the U.S. dollar. Positions in stock indices and agricultural commodities resulted in losses overall; but the Trust recorded a gain of $2,563,534 or $3.34 per Unit in May. In June losses were recorded due largely to unprofitable positions in global interest rates and metals. Unprofitable positions in the Japanese Government bond led losses in global interest rates as the yield rose from record lows following intervention to support the yen. A marginal gain in the Japanese yen failed to offset losses in the British pound and Swiss franc. Positions in gold and silver also resulted in losses as the prices of both metals remained coupled to movements in the Japanese yen. Gains were recorded in crude oil positions as inventories worldwide continued to exceed demand and prices fell. Profitable positions in cotton, sugar, coffee and corn offset losses in other agricultural markets. The Trust recorded a loss of $1,282,573 or $1.64 per Unit in June. During the quarter there were 107,284.71 additional Units sold to the Beneficial Owners for an investment of $10,589,942 and 1,114.19 Units sold to the Managing Owner for an investment of $110,000, representing a total of 108,398.90 additional Units sold for a total investment of $10,699,942. Investors redeemed a total of 14,260.80 Units during the quarter. At the end of the quarter there were 802,157.51 Units outstanding owned by the Beneficial Owners and 8,410.68 Units outstanding owned by the Managing Owner. During the fiscal quarter ended June 30, 1998, the Trust had no credit exposure to a counterparty which is a foreign commodities exchange or to any counterparty dealing in over the counter contracts which was material. Fiscal Quarter ended March 31, 1999 The Trust recorded a loss of $2,085,640 or $2.51 per Unit for the first quarter of 1999. This compares to a loss of $4,736,571 or $7.50 per Unit for the first quarter of 1998. In the first month of the quarter the Trust posted a loss resulting primarily from volatility in the currency sector as well as Japanese interest rates. The Trust posted a gain for the second month of the quarter resulting primarily from trading in precious metals and currencies. During the third month of the quarter concerns about the military conflict in Kosovo mounted. As a result the global markets experienced increased volatility, namely in precious metals and interest rates, and the Trust posted a small loss. Overall, the first quarter of fiscal 1999 ended negatively for the Trust accounts managed by JWH. At March 31, 1999, JWH was managing 100% of the Trust's assets in three trading programs, the Original Investment Program, the Financial and Metals Portfolio and the G-7 Currency Portfolio. Currencies were the most volatile sector for the month of January; namely short positions in the British pound and long positions in the Japanese yen. The anxiously awaited Euro began trading and started out the year on a positive note as short positions rendered small profits for the Trust. The only profitable interest rate market was in Germany where the Trust maintained a long German bund position, thereby taking advantage of falling German rates. Short positions in the Japanese government bond and Australian bond positions created losses for the Trust. Coffee prices vacillated; rising in December and falling in January. The Trust posted losses from long coffee positions. Long sugar positions were also unprofitable. The Nikkei stock index provided the majority of the loss in the stock indices, as short positions were unprofitable. Crude oil prices showed no direction during the month. Short positions were retained during January and resulted in a small loss for the Trust. All in all, the Trust posted a loss of $3,893,098 or $4.70 per Unit in January. In February, agricultural prices declined steadily throughout the month as the Trust was positioned to profit from short positions in coffee, corn, wheat, and soybeans. Energy prices eroded allowing short positions in crude and heating oil to provide profits. Long silver positions in the precious metals sector were profitable and the Nikkei stock index provided gains amidst a falling and then rising market. Currency trading rendered gains from short positions in the Euro, British pound and Swiss franc as each currency declined against the U.S. dollar. These gains were able to cover losses in the Australian dollar and Japanese yen. Interest rates were the only unprofitable sector for the Trust. The Trust was able to take advantage of rising interest rates in the U.S. 10-year notes and 30-year bonds. However, long Japanese government bond and German bund positions recorded more significant losses. Overall, the Trust posted a gain of $2,554,238 or $3.07 per Unit in February. In March, silver and gold positions were extremely volatile as the Trust recorded losses from long silver positions and short gold positions. Short bond positions in Australia and in the United Kingdom were unprofitable as interest rates in both began to rise. However, long Japanese government bond positions were the largest loser in this sector as bond prices plummeted. The price decline in the agricultural complex, which provided profit opportunities during February from short positions, saw a reversal in March as sustained short corn and coffee positions gave back profits. Currencies were the most favorable sector for the Trust. A flight to quality in the U.S. dollar has provided opportunities for the Trust to profit from long U.S. dollar positions versus the Euro and Swiss franc. The conflict in Kosovo has exacerbated the crisis - -related selling of the Euro and the flow of money into the U.S. dollar. The Nikkei stock index moved sharply higher during March and the Trust profited from long positions. Long positions in the Australian All-Ordinaries index were also profitable. A sharp rise in energy prices gave way to profits from long positions in crude oil. Rumors of gasoline shortages as well as the decision of world oil producers to cut oil production pushed crude prices higher throughout the month. Overall, the Trust posted a loss of $746,780 or $.88 per Unit in March. During the quarter there were 62,944.80 additional Units sold to the Beneficial Owners for an investment of $7,099,752; there were no Units sold to the Managing Owner. Investors redeemed a total of 42,127.28 Units during the quarter. At the end of the quarter there were 838,717.13 Units outstanding owned by the Beneficial Owners and 8,598.45 Units outstanding owned by the Managing Owner. During the fiscal quarter ended March 31, 1999, the Trust had no credit exposure to a counterparty which is a foreign commodities exchange or to any counterparty dealing in over the counter contracts which was material. See Footnote 5 of the Financial Statements for procedures established by the Managing Owner to monitor and minimize market and credit risks for the Trust. In addition to the procedures set out in Footnote 5, the Managing Owner reviews on a daily basis reports of the Trust's performance, including monitoring of the daily net asset value of the Trust. The Managing Owner also reviews the financial situation of the Trust's Clearing Broker on a monthly basis. The Managing Owner relies on the policies of the Clearing Broker to monitor specific credit risks. The Clearing Broker does not engage in proprietary trading and thus has no direct market exposure which provides the Managing Owner assurance that the Trust will not suffer trading losses through the Clearing Broker. Fiscal Quarter ended March 31, 1998 The Trust recorded a loss of $4,736,571 or $7.50 per Unit for the first quarter of 1998. During the first two months of the quarter, the Trust experienced losses primarily as a result of unprofitable positions in currencies and interest rates, while during the third month losses were recorded primarily due to losses in metals positions and in the global interest rate market. At March 31, 1998, John W. Henry & Company, Inc. was managing 100% of the Trust's assets in two trading programs, the Original Investment Program and the Financial and Metals Portfolio. In January, performance was negatively impacted by sharp reversals in Japanese financial markets and in gold. Investor optimism over efforts to revive ailing Asian economies boosted the Japanese yen against the U.S. dollar and gave support to the Nikkei; positions in both resulted in losses for the Trust. Benign inflation news in Europe and the U.S. boosted bond markets in both regions, resulting in gains for the Trust. These gains were offset by losses in stock indices and in gold prices. Positions in crude oil and coffee produced some gains for the Trust. Overall, the Trust recorded a loss of $1,823,674 or $3.11 per Unit in January. In February, losses were incurred in nearly all currencies traded. Trading was also unprofitable in U.S. Treasury bonds, interest rates and gold. The purchase of large quantities of silver by a major investor caused the prices of the precious metal to soar in world markets, before succumbing to some profit taking at month end; positions in silver resulted in gains for the Trust. Profitable positions in most European bonds failed to offset losses in other long- and short-term interest rates. Gains in sugar, corn and cotton offset losses in other agricultural commodities traded. The Trust recorded a loss of $760,060 or $1.21 per Unit in February. In March, the U.S. dollar rose against most of its major counterparts, gaining strength from the flight of international capital from a deteriorating Japanese economy and the purchase of dollars to buy U.S. Treasury bonds as yields in key European bond markets hit post-war lows. Positions in the Swiss franc and the German mark resulted in gains for the Trust. Positions in the U.S. 30-year bond led losses in the global interest rate market. Inflation concerns, fueled by rising oil prices, propelled gold prices sharply higher. Positions in gold were unprofitable, as were positions in silver, which became more volatile during the month. Except for small gains in soybeans and soybean - -derivative markets, positions in agricultural commodities resulted in losses overall. The Trust recorded a loss of $2,152,837 or $3.18 per Unit in March. During the quarter there were 136,808.65 additional Units sold to the Beneficial Owners for an investment of $14,333,161 and 1,383.81 Units sold to the Managing Owner for an investment of $145,000, representing a total of 138,192.46 additional Units sold for a total investment of $14,478,161. Investors redeemed a total of 8,353.80 Units during the quarter. At the end of the quarter there were 709,133.61 Units outstanding owned by the Beneficial Owners and 7,296.47 Units outstanding owned by the Managing Owner. During the fiscal quarter ended March 31, 1998, the Trust had no credit exposure to a counterparty which is a foreign commodities exchange or to any counterparty dealing in over the counter contracts which was material. Item 3. Quantitative and Qualitative Disclosures About Market Risk There has been no material change with respect to market risk since the "Quantitative and Qualitative Disclosures About Market Risk" was made in the Form 10K of the Trust dated December 31, 1998. Part II. OTHER INFORMATION Item 1. Legal Proceedings The Trust and its affiliates may from time to time be parties to various legal actions arising in the normal course of business. The Managing Owner believes that there are no proceedings threatened or pending against the Trust or any of its affiliates which, if determined adversely, would have a material adverse effect on the financial condition or results of operations of the Trust. Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K a) Exhibits None b) Reports on Form 8-K None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned and thereunto duly authorized. JWH GLOBAL TRUST Date: August 12, 1999 By: CIS Investments, Inc., its Managing Owner By: /s/ Shaun D. O'Brien Shaun D. Obrien Treasurer & Vice President Duly authorized officer of the Managing Owner and the Principal Financial Officer of the Managing Owner) EX-27 2
5 This schedule contains summary financial information extracted from JWH Global Trust for the second quarter of 1999 and is qualified in its entirety by reference to such 10-Q. 0001027099 JWH GLOBAL TRUST 3-MOS DEC-31-1998 JUN-30-1999 103,370,759 0 749,060 0 0 104,119,819 0 0 104,119,819 2,944,256 0 0 0 0 101,175,563 104,119,819 0 9,738,323 0 3,677,532 0 0 0 6,060,792 0 6,060,792 0 0 0 6,060,792 7.17 7.17
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