-----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, J1hGohGSdgoTZ95NQUrmqPHPu21fAUyQY1xdspofjWSs6UTMLo6nx3U/8nlzOgr3 73HkOcNsVkxeB5zRUEKUnA== 0000912057-99-005230.txt : 19991115 0000912057-99-005230.hdr.sgml : 19991115 ACCESSION NUMBER: 0000912057-99-005230 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991112 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: 99749060 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 10-Q 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 September 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 September 30, 1999 and the additional time frames as noted:
Fiscal Quarter Year to Date Fiscal Year Fiscal Quarter Year to Date Ended 9/30/99 To 9/30/99 Ended 12/31/98 Ended 9/30/98 To 9/30/98 ------------- ---------- -------------- ------------- ---------- 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
Sep 30, 1999 Dec 31, 1998 ------------ ----------- ASSETS Cash $1,148,150 $1,601,405 Equity in commodity futures trading accounts: Account balance 95,252,291 90,182,744 Unrealized gain on open futures and forwards contracts (25,507) 7,559,155 96,374,934 99,343,304 Interest receivable 378,792 338,264 Prepaid Initial O&O 352,460 451,589 Total assets $97,106,186 $100,133,157 ============= ============== LIABILITIES AND UNITHOLDERS' CAPITAL Liabilities: Accrued commissions due to CIS $509,258 $528,885 Accrued management fee 319,696 328,109 Accrued incentive fee 0 120,253 Accrued operating expenses 105,952 109,738 Redemptions payable 1,300,967 3,533,024 Selling and Offering Expenses Payable 39,598 40,602 Total liabilities 2,275,470 4,660,611 Unitholders' Capital: Beneficial owners (842,520.14 units outstanding 93,872,685 94,386,640 at 9/30/99, 817,899.61 units outstanding at 12/31/98) (see Note 1) Managing owner (8,598.45 units outstanding at 958,030 1,085,906 9/30/99 and 9,409.49 at 12/31/98) (see Note 1) Total unitholders' capital 94,830,715 95,472,546 Total liabilities and unitholders' capital $97,106,186 $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
July 1, 1999 Jan 1, 1999 July 1, 1998 Jan 1, 1998 through through through through Sep 30, 1999 Sep 30, 1999 Sep 30, 1998 Sep 30, 1998 ------------ ------------ ------------ ------------ REVENUES Gains on trading of commodity futures and forwards contracts, physical commodities and related options: Realized gain (loss) on closed positions ($55,897) $9,910,068 ($3,211,107) ($737,863) Change in unrealized gain (loss) on open positions (5,812,473) (7,131,800) 18,942,219 12,220,264 Interest income 1,152,297 3,192,209 1,015,193 2,702,286 Foreign currency transaction gain (loss) 128,860 (260,400) (35,380) (334,421) Total revenues (4,587,213) 5,710,077 16,710,924 13,850,265 EXPENSES Commissions paid to CIS 1,564,456 4,700,178 1,125,392 2,963,329 Exchange fees 24,933 63,378 18,063 42,463 Management fees 979,731 2,935,732 872,670 2,294,108 Incentive fees 0 853,599 1,263,310 1,263,310 Organization & Offering Expenses 154,401 462,133 140,682 382,915 Operating expenses 15,000 45,639 329,497 756,444 Total expenses 2,738,521 9,060,659 3,749,614 7,702,569 Net profit (loss) ($7,325,734) ($3,350,583) $12,961,310 $6,147,696 =========== ========== =========== ========== PROFIT (LOSS) PER UNIT OF OWNERSHIP INTEREST ($8.64) ($3.98) $15.94 $5.46 =========== ========== =========== ========== (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 September 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 136,348.97 15,632,871 (93,497) 15,539,374 (see Note 1) Net profit (loss) (3,316,203) (34,379) (3,350,582) Redemptions (see Note 1) (111,728.44) (12,830,623) 0 (12,830,623) Unitholders' capital at September 30, 1999 842,520.14 $93,872,685 $958,030 $94,830,715 =========== =========== ======== =========== Net asset value per unit January 1, 1999 (see Note 1) 115.40 115.40 Net profit (loss) per unit (see Note 1) (3.98) (3.98) Net asset value per unit September 30, 1999 $111.42 $111.42
* 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 Sep 30, 1999 Sep 30, 1998 ------------ ------------ Cash flows from operating activities: Net profit (loss) ($3,350,583) ($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 sold 453,255 510,880 Unrealized gain (loss) on open futures contracts 7,584,662 6,721,954 Interest receivable (40,528) (67,734) Prepaid Organization and Offering Expenses 99,129 66,087 Accrued liabilities (152,080) (561,591) Redemptions payable (2,232,057) 675,797 Selling and Offering Expenses Payable (1,004) 7,193 --------- -------- Net cash provided by (used in) operating activities 2,360,795 538,971 --------- -------- Cash flows from financing activities: Additional Units Sold 15,539,374 25,178,102 Unitholder redemptions (12,830,623) (2,294,736) ----------- ---------- Net cash provided by (used in) financing activities 2,708,752 22,883,368 Net increase (decrease) in cash 5,069,546 23,422,338 Cash at beginning of period $90,182,744 56,278,134 ----------- ---------- Cash at end of period $95,252,290 $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 SEPTEMBER 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 September 30, 1999, a total of 842,520.14 Units were sold to Beneficial Owners of the Trust for an investment of $93,872,685 and 8598.45 Units were sold to the Managing Owner of the Trust for an investment of $958,030, resulting in a total of 851,118.59 Units representing a total investment of $94,830,715 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 $42,246 for the periods ended September 30, 1999 and September 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 September 30, 1999 was $11,719,763. To meet this requirement, the Trust had on deposit with the Clearing Broker $78,911,811 in segregated funds, $6,647,526 in secured funds and $9,667.447 in non-regulated funds. At September 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 September 30, 1999:
COMMODITY GROUP UNREALIZED GAIN/(LOSS) AGRICULTURAL COMMODITIES 387,842 FOREIGN CURRENCIES 588,095 STOCK INDICES 78,906 ENERGIES 922,022 METALS (2,188,649) INTEREST RATE INSTRUMENTS 186,276 --------------- TOTAL (25,508)
The range of maturity dates of these exchange traded open contracts is November of 1999 to September of 2000. The average open trade equity for the period of January 1, 1999 to September 30, 1999 is $5,708,715. (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 SEPTEMBER 30, 1999 The Trust recorded a loss of $7,325,734 or $8.64 per Unit for the third quarter of 1999. This compares to a gain of $12,961,310 or $15.94 per Unit for the third quarter of 1998. In the first month of the quarter the Trust posted a loss resulting primarily from excessive volatility in the currency markets. The Trust posted a small loss during the second month of the quarter due in part to long positions held in global interest rates and the Japanese Nikkei stock index. During the third month of the quarter, the Trust surrendered profits due to rapidly escalating gold prices and the trust's short gold positions. Overall, the third quarter of fiscal 1999 ended negatively for the Trust accounts managed by JWH. At September 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. The Trust posted a loss for July, largely due to excessive volatility in the currency markets. After gaining value versus the world's currencies for several weeks, the U.S. dollar ran out of steam by the mid-month. As a result, the Trust posted losses from long Dollar positions against the Euro, Swiss franc and Japanese yen. The decline of the Dollar continued through month end, which prompted short Dollar positions to be established. Losses in the currency markets wiped out smaller gains that came from global interest rates, metals, energy and the agricultural sectors. Short positions in the 10-year and 30-year U.S. bonds provided profits as the long bond yield rose above 6.1%. The Trust's strongest gains in this sector came from Europe where interest rates continued to rise. Profits were earned from short positions in the Euro Bund, Euro Bobl and U.K. Gilt. Likewise, the Trust continued to profit from its short positions in the gold market as the price of gold fell to its lowest level in 20 years; $253.70 per troy ounce. All in all, the Trust posted a loss of $3,458,054 or $4.11 per Unit in July. In August, the Trust posted another small loss. Gains for the Trust were the result of a weaker U.S. dollar, versus the Yen and Euro specifically. Stronger crude oil prices and lower gold prices also provided gains. Unfortunately, these gains were offset by losses in global interest rates and the Japanese Nikkei stock index. Long positions in the Japanese stock index (the Nikkei) that were profitable for the entire year were closed out and small losses were recorded during August. Currencies provided some resurrection in the form of a stronger Yen and Euro versus the U.S. dollar. Since mid-July, the Trust held profitable long positions in the Yen and Euro looking for these currencies to strengthen against the Dollar. Long positions in crude oil performed well as prices rose $2 per barrel during August exceeding $22 per barrel. Gold prices again plummeted through a 20-year low to $253.00 per troy ounce. Notwithstanding these gains, the Trust posted a loss of $249,569 or $.29 per Unit in August. The Trust had a difficult time in the markets during September. Losses were primarily attributable to its short gold position, as the price rose over $50 per ounce. The price of gold escalated rapidly after 15 European central banks announced that they wouldn't sell or lease additional gold for the next five years. Unfortunately, gains in Crude oil and the Japanese Yen were offset by losses in gold, as well as short positions in the U.S. and Japanese bond markets. The Trust's long positions in Crude oil performed well as prices rose nearly another $2 per barrel. Currencies provided small gains as the Japanese yen strengthened against the U.S. dollar for the second consecutive month. In addition, long yen positions proved profitable relative to the European currencies. Overall, the Trust posted a loss of $3,618,111 or $4.24 per Unit in September. During the quarter there were 39,114.85 additional Units sold to the Beneficial Owners for an investment of $4,485,084.95; there were no Units sold to the Managing Owner. Investors redeemed a total of 30,705.28 Units during the quarter. At the end of the quarter there were 842,520.14 Units outstanding owned by the Beneficial Owners and 8,598.45 Units outstanding owned by the Managing Owner. During the fiscal quarter ended September 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 nearly complete. 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 developed various "contingency plans" in the event that mission critical systems should fail. 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 SEPTEMBER 30, 1998 The Trust recorded a gain of $12,961,310 or $15.94 per Unit for the third quarter of 1998. This compares to a gain of $174,979 or $2.72 per Unit for the third quarter of 1997. The Trust suffered losses during the first month of the quarter largely as a result of losses in interest rates and stock indices. During the second and third months of the quarter, the Trust experienced solid gains in interest rates and smaller gains in currencies and stock indices. At September 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. Effective October 5, 1998, the Managing Owner added a third trading program of John W. Henry & Company, Inc. to the Trust, the G-7 Currency Portfolio. In July, the Trust incurred small losses as unprofitable positions in interest rates, stock indices and agricultural commodities offset moderate gains in gold and crude oil. The price of gold declined at month end along with the Japanese yen's fall in world markets; gold and the Japanese yen have moved in lockstep since early June, reflecting the diminishing demand for gold as the region's economies retract. Crude oil prices fell at month end following an earlier rise, as reports indicated a build-up in U.S. inventory. Gains in long-term European bond markets failed to offset losses in other long-term interest rates traded. Corn prices plunged on favorable weather conditions for crops; profitable positions in corn and smaller gains in wheat, soybean oil and live cattle did not offset losses in other markets traded. The Trust recorded a loss of $2,455,012 or $3.03 per Unit in July. In August the Trust posted solid gains, led by profitable positions in global interest rates. Leading gains in the bond market were positions in German and U.S. bonds, which benefited from investors' flight to quality during the month, and the Japanese Government bond, where the yield on the benchmark 10-year bond dropped to 1.105%, a historic low. The U.S. dollar made little progress against the Japanese yen as Japanese officials renewed their threats of intervention in the currency markets. The world's supply of crude oil skyrocketed in August, up 11% from a year earlier, holding prices down. The price of crude oil has been halved from its 1997 high of $26.62 per barrel; positions in this key energy market resulted in gains. The Trust recorded a gain of $8,471,809 or $10.42 per Unit in August. In September, the Trust recorded gains as profitable positions in interest rates and smaller gains in currencies and stock indices offset losses in metals, energy and agricultural commodities. Except for Australian bonds, which reflected the uncertainty of an upcoming election in that country, positions in all interest rates traded were profitable. Gains were strongest in German, U.S. and Japanese government bonds; in all three markets, yields declined to historic levels. Profitable positions in the German mark and Swiss franc and smaller gains in the British pound offset losses in other currencies traded. Positions in gold and silver resulted in losses as prices of both metals rose. Sugar plummeted to an 11-year low during the month on reduced demand and expectations of record crops in Brazil; gains in sugar and cocoa failed to offset losses in other agricultural commodities traded, but the Trust recorded a gain of $6,944,513 or $8.55 per Unit in September. During the quarter there were 31,703.31 additional Units sold to the Beneficial Owners for an investment of $3,286,936; there were no Units sold to the Managing Owner. Investors redeemed a total of 42,437.10 Units during the quarter. At the end of the quarter there were 791,423.72 Units outstanding owned by the Beneficial Owners and 8,410.68 Units outstanding owned by the Managing Owner. 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. 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. 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: November 11, 1999 By: CIS Investments, Inc., its Managing Owner By: /s/ Shaun D. O'Brien Shaun D. O'Brien Treasurer & Vice President Duly authorized officer of the Managing Owner and the Principal Financial Officer of the Managing Owner) EX-27 2 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JWH GLOBAL TRUST FOR THE THIRD QUARTER OF 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q 0001027099 JWH GLOBAL TRUST 3-MOS DEC-31-1999 SEP-30-1999 96,374,934 0 731,251 0 0 97,106,186 0 0 97,106,186 2,275,470 0 0 0 0 94,830,715 97,106,186 0 (4,587,213) 0 2,738,521 0 0 0 (7,325,734) 0 (7,325,734) 0 0 0 (7,325,734) (8.64) (8.64)
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