10-K 2 jwh10kfinalmk.txt 10-K FOR JWH AT 12/31/00 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended Commission File No. 333-16825 December 31, 2000. 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 #) 233 South Wacker Drive, Suite 2300, Chicago, IL 60606 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (312)460-4000 Securities registered pursuant to Section 12 (b) of the Act: None Securities registered pursuant to Section 12 (g) of the Act: Units of Beneficial Ownership Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days: Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K: [X] The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant as of February 28, 2001: $47,844,020 Documents Incorporated by Reference Incorporated by Reference in Part IV, Item 14 is Amendment No. 2 to Registration Statement No. 333-16825 of the Trust on Form S-1 under the Securities Act of 1933, declared effective on April 3, 1997. Incorporated by Reference in Part IV, Item 14 is Registration Statement No. 333-33937 of the Trust on Form S-1 under the Securities Act of 1933, declared effective on September 24, 1997. Incorporated by Reference in Part IV, Item 14 is Post-Effective Amendment No. 1 to Registration Statement No. 333-33937 of the Trust on Form S-1 under the Securities Act of 1933, declared effective on June 26, 1998. Incorporated by Reference in Part IV, Item 14 is Post-Effective Amendment No. 2 to Registration Statement No. 333-33937 of the Trust on Form S-1 under the Securities Act of 1933, filed on March 1, 1999. Incorporated by Reference in Part IV, Item 14 is Post-Effective Amendment No. 3 to Registration Statement No. 333-33937 of the Trust on Form S-1 under the Securities Act of 1933, filed on November 29, 1999. Incorporated by Reference in Part IV, Item 14 is Post-Effective Amendment No. 4 to Registration Statement No. 333-33937 of the Trust on Form S-1 under the Securities Act of 1933, filed on September 18, 2000. Part I Item 1. Business 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, spot and forward contracts on currencies and precious metals and exchanges for physicals ("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 ("CISI" or 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 ("CIS" or the "Clearing Broker") and CIS Financial Services, Inc., which acts as the Trust's currency dealer ("CISFS"). Trading decisions for the Trust are made by an independent commodity trading advisor, John W. Henry & Company, Inc. CIS is a "Futures Commission Merchant", the Managing Owner is a "Commodity Pool Operator" and the trading advisor to the Trust is a "Commodity Trading Advisor", as those terms are used in the CE Act. As such, they are registered with and subject to regulation by the Commodity Futures Trading Commission ("CFTC") and the National Futures Association ("NFA"). CIS is also registered as a broker-dealer with the National Association of Securities Dealers, Inc. ("NASD") and the Securities and Exchange Commission (the "SEC"). 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 on May 30, 1997, 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. 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. On June 26, 1998, Post-Effective Amendment No. 1 to the registration statement was declared effective with the SEC. On March 1, 1999, Post-Effective Amendment No. 2 was filed with the SEC. On November 29, 1999 Post-Effective Amendment No. 3 was filed with the SEC and on September 18, 2000 Post-Effective Amendment No. 4 was filed. The Units are currently offered pursuant to a Prospectus dated October 3, 2000. The current prospectus will expire on July 3, 2001. As a result of the Units being offered at each month-end's 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. Under the terms of the Fourth Amended and Restated Declaration and Agreement of Trust, the Managing Owner may not select Trust transactions involving the purchase or sale of any commodity interests, but must select one or more advisors to direct the Trust's trading with respect thereto. The Managing Owner has chosen and caused the Trust to enter into a Trading Advisory Agreement (the "Advisory Agreement") with John W. Henry and Company, Inc. ("JWH" or the "Advisor"), the Trust's sole commodity trading advisor. Commencing on June 2, 1997, after the conclusion of the offering period with respect to the Trust's Units, JWH began to provide commodity trading instructions to CISI on behalf of the Trust. The Managing Owner is responsible for the preparation of monthly and annual reports to the Beneficial Owners; filing reports required by the CFTC, the NFA, the SEC and any other Federal or state agencies having jurisdiction over the Trust's operations; calculation of the Net Asset Value (meaning the total assets less total liabilities of the Trust) and directing payment of the management and incentive fees payable to the Advisor under the Advisory Agreement. The Managing Owner provides suitable facilities and procedures for handling redemptions, transfers, distributions of profits (if any) and, if necessary, the orderly liquidation of the Trust. Although CIS, an affiliate of the Managing Owner, acts as the Trust's clearing broker, the Managing Owner is responsible for selecting another clearing broker in the event CIS is unable or unwilling to continue in that capacity. The Managing Owner is further authorized, on behalf of the Trust (i) to enter into a brokerage clearing agreement and related customer agreements with CIS, pursuant to which CIS will render clearing services to the Trust; and (ii) to cause the Trust to pay brokerage commissions at the rates provided for in the Prospectus; and to pay delivery, insurance, storage, service and other fees and charges incidental to the Trust's trading. The Managing Owner of the Trust advanced organization and offering costs of $650,000. The Trust reimbursed the Managing Owner for these costs at the initial closing. The Trust is amortizing these costs over the Trust's first 60 months of operations. The Managing Owner also advances payment of ongoing offering expenses for which it receives reimbursement of 0.5% of the Trust's net assets per year. The Prospectus includes a complete discussion of the Trust's fees and expenses. The Advisory Agreement between the Trust and JWH provides that JWH shall have sole discretion in and responsibility for the selection of the Trust's commodity transactions with respect to that portion of the Trust's assets allocated to it. As of December 31, 2000, JWH was managing 100% of the Trust's assets. The Advisory Agreement with JWH commenced on April 3, 1997 and continued in effect until the close of business on the last day of the 12th full calendar month following the commencement of trading activities by the Trust, with automatic renewal for three additional twelve-month terms, unless earlier terminated in accordance with the termination provisions contained therein. The Advisory Agreement shall terminate automatically in the event that the Trust is terminated in accordance with the Fourth Amended and Restated Declaration and Agreement of Trust. The Advisory Agreement may be terminated by the Trust at any time, upon 60 days' prior written notice to the Advisor. In addition, the Advisory Agreement may be terminated by the Trust at any time, upon written notice to the Advisor, in the event that (A) the Net Asset Value of Trust funds allocated to the Advisor's management decreases as of the close of trading on any business day by more than 30% from the sum of the Net Asset Value of the Trust's funds allocated to the Advisor on the date that Trust commenced trading plus the Net Asset Value of any funds which may be allocated to the Advisor thereafter (after adding back all redemptions, distributions and reallocations made to any additional trading advisors in respect of such assets); (B) the Advisor is unable, to any material extent, to use the Trading Programs (as defined in the Advisory Agreement attached hereto as Exhibit 10.1), as the Trading Programs may be refined or modified in the future in accordance with the terms of the Advisory Agreement for the benefit of the Trust; (C) the Advisor's registration as a commodity trading advisor under the Commodity Exchange Act, as amended ("CE Act"), or membership as a commodity trading advisor with NFA is revoked, suspended, terminated or not renewed; (D) the Managing Owner determines in good faith that the Advisor has failed to conform to (i) the Trust's trading policies or limitations, as they may be revised or modified, or (ii) a Trading Program; (E) there is an unauthorized assignment of the Advisory Agreement by the Advisor; (F) the Advisor dissolves, merges or consolidates with another entity or sells a substantial portion of its assets, any portion of the Trading Programs utilized by the Trust or its business goodwill to any person or entity other than one controlled, directly or indirectly, by John W. Henry, in each instance without the consent of the Managing Owner; (G) the Advisor becomes bankrupt or insolvent; (H) John W. Henry ceases to be a principal of the Advisor; or (I) the Managing Owner determines in good faith that such termination is necessary for the protection of the Trust. The Advisor has the right to terminate the Advisory Agreement at any time, upon written notice to the Trust in the event (i) of the receipt by the Advisor of an opinion of independent counsel that solely by reason of the Advisor's activities with respect to the Trust, the Advisor is required to register as an investment adviser under the Investment Advisers Act of 1940; (ii) that the registration of the Managing Owner as a commodity pool operator under the CE Act, or its NFA membership as a commodity pool operator is revoked, suspended, terminated or not renewed; (iii) that the Managing Owner elects (pursuant to Section 1 of the Advisory Agreement) to have the Advisor use a different trading program in the Advisor's management of the Trust's assets from that which the Advisor is then using to manage such assets and the Advisor objects to using such different trading program; (iv) that the Managing Owner overrides a trading instruction of the Advisor pursuant to Section 1 of the Advisory Agreement for reasons unrelated to a determination by the Managing Owner that the Advisor has violated the Trust's trading policies or limitations; (v) that the Managing Owner imposes additional trading limitation(s) pursuant to Section 1 of the Advisory Agreement which the Advisor does not agree to follow in the Advisor's management of its allocable share of Trust's assets; (vi) there is an unauthorized assignment of the Advisory Agreement by the Managing Owner of the Trust; or (vii) other good cause is shown to which the written consent of the Managing Owner is obtained. The Advisor may also terminate the Advisory Agreement on 60 days written notice to the Managing Owner during any renewal term. The Advisor will continue to advise other futures trading accounts. The Advisor and its officers, directors and employees also will be free to trade commodity interests for their own accounts provided such trading is consistent with the Advisor's obligations and responsibilities to the Trust. To the extent that the Advisor recommends similar or identical trades to the Trust and other accounts which they manage, the Trust may compete with those accounts for the execution of the same or similar trades. Pursuant to the Advisory Agreement between the Trust and JWH, the Trust received 0.33% of the month-end assets under its management after deduction of a portion of the brokerage commissions at a 1.25% annual rate (rather than the full brokerage commission at a 6.5% annual rate) prior to October 1, 2000. Effective October 1, 2000, the management fee was reduced to 0.167%. The Trust paid JWH a quarterly incentive fee of 15% of trading profits (after deduction of a portion of the brokerage commissions at a 1.25% annual rate, rather than the 6.5% annual rate) achieved on the assets of the Trust allocated by the Managing Owner to JWH's management prior to October 1, 2000. Effective October 1, 2000, the incentive fee was increased to 20%. Trading profits are calculated on the basis of the overall performance of the Trust, not the performance of each Trading Program utilized by JWH, considered individually. See Exhibit 10.1 incorporated by reference herein for a description of NAV and trading profits. The Trust trades in the global futures and forward markets pursuant to the Advisor's proprietary trading strategies. From the commencement of trading on June 2, 1997 until October 4, 1998, the Trust allocated its assets 50% to the Original Investment Program and 50% to the Financial and Metals Portfolio. For the period beginning October 5, 1998 and ending December 31, 1999, the Trust has allocated its assets 40% to the Original Investment Program, 35% to the Financial and Metals Portfolio and 25% to the G-7 Currency Portfolio. On January 1, 2000, the Trust substituted the JWH GlobalAnalytics Family of Programs for the Original Investment Program. Trust assets were reallocated 40% to the Financial and Metals Portfolio, 30% to the G-7 Currency Portfolio and 30% to the JWH GlobalAnalytics Family of Programs. JWH continues to rebalance the Trust's assets at the end of each quarter among these three trading programs in accordance with the proceding percentages. The Trust's net assets are deposited in the Trust's accounts with CIS and CISFS, the Trust's clearing broker and currency dealer, respectively. The Trust earns interest on 100 percent of the Trust's average daily balances on deposit with CIS or CISFS, as the case may be, during each month at the average 91-day Treasury bill rate for that month in respect of deposits denominated in dollars or at the applicable rates in respect of deposits denominated in currencies other than dollars (which may be zero in some cases). The Trust currently has no salaried employees and all administrative services performed for the Trust are performed by the Managing Owner. The Managing Owner has no employees other than their officers and directors, all of whom are employees of the affiliated companies of the Managing Owner. The Trust's business constitutes only one segment for financial reporting purposes; it is a Delaware business trust whose purpose is to trade, buy, sell, spread or otherwise acquire, hold or dispose of commodity interests including futures contracts on currencies, interest rates, energy and agricultural products, metals and stock indices, spot and forward contracts on currencies and precious metals and exchanges for physicals. The Trust does not engage in the production or sale of any goods or services. The objective of the Trust business is appreciation of its assets through speculative trading in such commodity interests. Financial information about the Trust's business, as of December 31, 2000, is set forth under Items 6 and 7 herein. Competition The Advisor and its principals, affiliates and employees are free to trade for their own accounts and to manage other commodity accounts during the term of the Advisory Agreement and to use the same information and trading strategy which the Advisor obtains, produces or utilizes in the performance of services for the Trust. To the extent that the Advisor recommends similar or identical trades to the Trust and other accounts which it manages, the Trust may compete with those accounts for the execution of the same or similar trades. Other trading advisors who are not affiliated with the Trust may utilize trading methods which are similar in some respects to those methods used by the Trust's Advisor. These other trading advisors could also be competing with the Trust for the same or similar trades as requested by the Trust's Advisor. Item 2. Properties The Trust does not utilize any physical properties in the conduct of its business. The Managing Owner use the offices of CIS, at no additional charge to the Trust, to perform their administration functions, and the Trust uses the offices of CIS, again at no additional charge to the Trust, as its principal administrative offices. Item 3. Legal Proceedings None. Item 4. Submission of Matters to a Vote of Security Holders None. Part II Item 5. Market for the Registrant's Units and Related Security Holder Matters (a) There is no established public market for the Units and none is expected to develop. (b) As of December 31, 2000, there were 430,765.38 Units held by the Beneficial Owners for an investment of $49,361,538. The Managing Owner held an investment of $768,196 (which is the equivalent of 6,703.91 Units). A total of 393,996.39 Units had been redeemed by Beneficial Owners and 1,898.82 Units by the Managing Owners during the period from January 1, 2000 to December 31, 2000. The Trust's Fourth Amended and Restated Declaration and Agreement of Trust (Exhibit 3.1 hereto) contains a full description of redemption and distribution procedures. (c) To date no distributions have been made to owners of beneficial interest in the Trust. The Fourth Amended and Restated Declaration and Agreement of Trust does not provide for regular or periodic cash distributions, but gives the Managing Owner sole discretion in determining what distributions, if any, the Trust will make to its owners of beneficial interest. The Managing Owner has not declared any such distributions to date, and do not currently intend to declare such distributions. Item 6. Selected Financial Data (1997 was the Trust's first year of trading, so no data is available prior to 1997) Year ended December 31, 1997 1998 1999 2000 1. Operating Revenues(000) $6,988 $16,869 $2,339 $7,447 2. Profit (Loss) From Continuing Operations(000) 3,651 6,401 (9,222) 1,126 3. Profit (Loss) Per Unit 9.70 5.70 (10.89) 10.08 4. Total Assets(000) 65,693 100,133 89,612 52,922 5. Long Term Obligations 0 0 0 0 6. Cash Dividend Per Unit 0 0 0 0 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Most United States commodity exchanges limit the amount of fluctuation in commodity futures contract prices during a single trading day by regulations. These regulations specify what are referred to as "daily price fluctuation limits" or "daily limits". The daily limits establish the maximum amount the price of a futures contract may vary either up or down from the previous day's settlement price at the end of a trading session. Once the daily limit has been reached in a particular commodity, no trades may be made at a price beyond the limit. Positions in the commodity could then be taken or liquidated only if traders are willing to effect trades at or within the limit during the period for trading on such day. Because the "daily limit" rule only governs price movement for a particular trading day, it does not limit losses. In the past, futures prices have moved the daily limit for numerous consecutive trading days and thereby prevented prompt liquidation of futures positions on one side of the market, subjecting commodity futures traders holding such positions to substantial losses for those days. It is also possible for an exchange or the CFTC to suspend trading in a particular contract, order immediate settlement of a particular contract, or direct that trading in a particular contract be for liquidation only. The Trust's net assets are held in brokerage accounts with CIS and CISFS. The Trust earns interest on 100 percent of the Trust's average daily balances on deposit with CIS or CISFS, as the case may be, during each month at the average 91-day Treasury bill rate for that month in respect of deposits denominated in dollars or at the applicable rates in respect of deposits denominated in currencies other than dollars (which may be zero in some cases). For the calendar year ended December 31, 2000 CIS and CISFS had paid or accrued to pay interest of $3,265,169 to the Trust. For the calendar year ended December 31, 1999 CIS and CISFS paid or accrued to pay interest of $4,299,669 to the Trust. For the fiscal year ended December 31, 2000, investors redeemed a total of 393,996.40 Units for $37,731,946. The Managing Owners redeemed Units for $200,544. For the fiscal year ended December 31, 1999, investors redeemed a total of 177,214.77 Units for $19,704,627. No managing Owners redeemed units during the fiscal year 1999. During 2000, Beneficial Owners purchased 18,386.99 Units for $1,766,481. The Managing Owner made a contribution of $58 in 2000, therefore, total contribution during 2000 equals $1,766,539. On December 31, 2000, the Trust had unrealized profits of $8,003,965 and cash on deposit of $44,316,136. These positions required margin deposits of $6,699,816. The total balance of the Trust's accounts at CIS and CISFS was $52,320,101. These figures compare to unrealized profits of $3,339,311, cash on deposit of $85,053,945, margin requirements of $13,606,854 and total balance of the Trust's accounts at CIS and CISFS of $88,393,256 as of December 31, 1999. During the fiscal year ended December 31, 2000, the Trust had no credit exposure to a counterparty which is a foreign commodities exchange which was material. The Trust trades futures contracts on recognized global futures exchanges through CIS. It also trades over the counter foreign exchange forwards contracts through CISFS. At December 31, 2000, the Trust had assets of $5,322,749 on deposit at CISFS. CISFS does not deal in foreign exchange forwards, but acts as a broker, placing the trades immediately with large banks having assets in excess of $100 million. At the settlement date all transactions with each of the banks are netted and any excess or deficit is received from or sent to the bank. All of the Trust's foreign exchange transactions are transacted in US dollars. See note 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 note 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 trading of the Clearing Broker. Results of Operations The Trust posted a gain for 2000, a loss for 1999 and a positive return for 1998. 2000 During 2000, total contributions to the Trust equaled $1,766,539. Investors redeemed Units in the amount of $37,731,946 and the Managing Owner redeemed units in the amount of $200,544. The Trust achieved realized and unrealized gains of $4,182,309 and interest income of $3,265,169. Total expenses of the Trust were $6,321,659, resulting in a net profit of $1,125,819 and an increase in the Net Asset Value per Unit of $10.08. The trust had a profitable year in 2000, producing a gain of 9.65% for the calendar year. After experiencing difficult trading environments during the first three quarters of the year, JWH, the trading advisor to the Trust, exploited trading opportunities in the financial markets during the fourth quarter and closed the year strongly. In the first quarter of 2000, strategic events reversed trends, which led to unprofitable trading. In February, the U.S. Federal Reserve announced that they were buying back part of the debt. This led to a powerful rally in the world's interest rate markets and the Trust's short positions were closed out at a loss. In March, the decline of Nasdaq commenced and with it came a dramatic shift of capital from U.S. dollar into yen. This movement of capital hurt the Trust's long dollar and euro positions. Prices of agriculture, energy and metals markets were flat during the first quarter. The second quarter was marked by conflicting economic signals, which often reversed long term price trends. The dollar, after having lost value in March, was strong in April and then declined in value in May and June. Interest rates, followed a similar directionless path with the "hard landing or soft landing" question being the primary driver. Through the end of June, the only market sector with defined direction was the energy sector, which has been the Trust's most consistent source of profits over the past few years. As the third quarter began, the futures markets continued seeking direction. Metal and agricultural prices were listless. Stock index trading was volatile in the short term and sideways over a longer period. Up trends emerged in the world's bond markets where open trade profits were accrued. In the currency sector, the dollar gained very steadily versus euro during July and August. By September, the dollar was gaining value on all major currencies. However, on September 22, the European Central Bank intervened to support the euro. Consequently, price trends reversed dramatically and the Trust's accrued profits in the currency and interest rate sectors turned into open trade losses. Despite the intervention, the Trust remained long dollar and interest rates and reaped the benefits of those positions as the fourth quarter began. In October, the dollar hit its all-time high versus the euro and gained substantially versus the Swiss, British and Japanese currencies. By November, interest rate trading became the Trust's strongest sector as long positions in global bond markets amassed large open trade gains. Strong performance in interest rate markets continued in December. A revival of European currencies provided the bulk of the month's gain in the currency sector. These trends remained in place through year-end. Effective October 1, Management Fees paid by the Trust to JWH were reduced from 4% to 2% annually (paid monthly). Incentive fees were increased from 15% to 20% of quarter end new high profits. This change in fees reduced the "breakeven" on the Trust from 7.3% to 4.8%. 1999 The JWH Global Trust experienced a disappointing year in 1999. The year-end Net Asset Value for 1999 ended the year at $104.51 per unit, representing a loss of 9.44% for the year. In 1999, JWH experienced its most difficult year in the firm's 18 year history. A lack of sustained price movements coupled with abrupt trend reversals in many market sectors resulted in a very difficult trading environment. The forces that supported strong returns in the equity markets such as strong consumer confidence and the perception of economic equilibrium caused volatile, sideways price patterns in the futures markets. This type of price movement is extremely difficult for long-term trend followers such as JWH. The currency sector provided profit opportunities for the Trust. As the conflict in Kosovo escalated in early March, there was a flight to quality into the U.S. dollar and out of the euro and Swiss franc. This crisis-related selling of these two currencies continued through mid-July. Short U.S. dollar positions against the Japanese yen were also profitable. In addition, crude oil began its sharp ascent from less than $12/barrel in March to $25.60/barrel at year-end. This sustained trend proved profitable for the Trust throughout the year as was the strengthening yen relative to the U.S. dollar during the second half of the year. The "choppy" markets described above surfaced in many areas but most particularly the world's interest rate markets. The Fed's attempt to slow down the escalating economy resulted in one-quarter point increases in the fed funds rate in June, August and October. Despite these increases, short positions in the 10-year and 30-year U.S. bonds resulted in flat performance largely due to occasional price aberrations, which triggered stop loss orders. The most difficult trading period for the Trust occurred in the last quarter. Whipsaw price activity in the Japanese and Australian interest rates led to major losses. Short gold positions, which had been profitable during the first part of the year, sustained losses when the price of gold rose $50/ounce in 10 days. Once again, stop loss orders were triggered and the Trust suffered a significant setback. While unpleasant, the loss sustained in 1999 was within the expected range of returns over time. Historically, performance tends to be cyclical, producing strong overall results. 1998 The year 1998 was marked by declining global interest rates and commodity prices and extremely volatile currency fluctuations. The Trust produced a net gain of 5.20% for the calendar year. One of the key markets that consistently reported profits during the year was the energy sector, primarily crude oil. Short crude oil prices throughout the year were beneficial to the Trust. Additionally, coffee prices fell 28% during the year and the Trust benefited from its short positions in coffee prices. The first quarter was marked by a flight to quality in the bond market, namely German bunds and U.S. bonds amidst turbulence in the Asian markets. The U.S. dollar remained volatile for the first two months of the year and strengthened during March, primarily versus the German mark and Swiss franc. The volatility in both these sectors produced overall losses for the Trust. Warren Buffett was rumored and then confirmed to be holding significant silver positions anticipating a rise in silver prices. Long silver prices were beneficial to the Trust. In the second quarter, the U.S. dollar strengthened against the Japanese yen until the U.S. Government intervened to support the Japanese yen, essentially selling the U.S. dollar and depressing the value of the U.S. dollar relative to most major world currencies. By July, the U.S. dollar was back at all-time highs against the Japanese yen. Overall, the Trust gained as a result of the fluctuation of the U.S. dollar. However, the ripple effect created volatility for the U.S. dollar versus the European currencies and the Trust lost on its positions in these currencies. Precious metals, namely silver, reversed as prices slumped. Gold prices seesawed up and down never settling on direction. The volatility in these markets was unprofitable to the Trust. The third quarter was highlighted by a devaluation of the Russian ruble which sent shock waves through the world equity markets as traders liquated equities in favor of sovereign debt. Even prior to the Russian crisis, the Trust was well positioned to take advantage of rising bonds. The Trust was long the U.S., German and Japan bond markets. Interest rates on the U.S. 30-year long bond fell below 5%, the lowest level in over 30 years. In addition, the Trust was short the Nikkei and FTSE equity indices. Gold and silver prices fell to 1998 lows, as short positions in these precious metals were profitable. The fourth quarter saw extremes in the currency sector as the U.S. dollar again gyrated for the last three months of the year. The long Japanese yen position that provided the only profit for the Trust in October was the largest losing position in November, yet by December, long Japanese yen positions were providing profits. The Fed eased interest rates one quarter point three times in seven weeks. However, long U.S. bond positions reaped few rewards as these rate cuts had already been factored in the market. Global stock indices rebounded beginning in October and long positions in the S&P and German DAX proved rewarding. The Trust ended the year with a profit of $6,400,521. Inflation Inflation does have an effect on commodity prices and the volatility of commodity markets; however, continued inflation is not expected to have a material adverse effect on the Trust's operations or assets. Item 7(A). Quantitative and Qualitative Disclosures About Market Risk Introduction Past Results Are Not Necessarily Indicative of Future Performance The Trust is a speculative commodity pool. The market sensitive instruments held by it are acquired for speculative trading purposes, and all or substantially all of the Trust's assets are subject to the risk of trading loss. Unlike an operating company, the risk of market sensitive instruments is integral, not incidental, to the Trust's main line of business. Market movements result in frequent changes in the fair market value of the Trust's open positions and, consequently, in its earnings and cash flow. The Trust's market risk is influenced by a wide variety of factors, including the level and volatility of interest rates, exchange rates, equity price levels, the market value of financial instruments and contracts, the diversification effects among the Trust's open positions and the liquidity of the markets in which it trades. The Trust can acquire and/or liquidate both long and short positions in a wide range of different markets. Consequently, it is not possible to predict how a particular future market scenario will affect performance, and the Trust's past performance is not necessarily indicative of its future results. Value at Risk is a measure of the maximum amount which the Trust could reasonably be expected to lose in a given market sector. However, the inherent uncertainty of the Trust's speculative trading and the recurrence in the markets traded by the Trust of market movements far exceeding expectations could result in actual trading or non-trading losses far beyond the indicated Value at Risk or the Trust's experience to date (i.e., "risk of ruin"). In light of the foregoing as well as the risks and uncertainties intrinsic to all future projections, the inclusion of the quantification included in this section should not be considered to constitute any assurance or representation that the Trust's losses in any market sector will be limited to Value at Risk or by the Trust's attempts to manage its market risk. Standard of Materiality Materiality as used in this section, "Qualitative and Quantitative Disclosures About Market Risk," is based on an assessment of reasonably possible market movements and the potential losses caused by such movements, taking into account the leverage, optionality and multiplier features of the Trust's market sensitive instruments. Quantifying the Trust's Trading Value at Risk Qualitative Forward-Looking Statements The following quantitative disclosures regarding the Trust's market risk exposures contain "forward-looking statements" within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934). All quantitative disclosures in this section are deemed to be forward-looking statements for purposes of the safe harbor, except for statements of historical fact. The Trust's risk exposure in the various market sectors traded by JWH is quantified below in terms of Value at Risk. Due to the Trust's mark-to-market accounting, any loss in the fair value of the Trust's open positions is directly reflected in the Trust's earnings (realized or unrealized) and cash flow (at least in the case of exchange-traded contracts in which profits and losses on open positions are settled daily through variation margin). Exchange maintenance margin requirements have been used by the Trust as the measure of its Value at Risk. Maintenance margin requirements are set by exchanges to equal or exceed the maximum losses reasonably expected to be incurred in the fair value of any given contract in 95%-99% of any one-day intervals. The maintenance margin levels are established by dealers and exchanges using historical price studies as well as an assessment of current market volatility (including the implied volatility of the options on a given futures contract) and economic fundamentals to provide a probabilistic estimate of the maximum expected near-term one-day price fluctuation. Maintenance margin has been used rather than the more generally available initial margin, because initial margin includes a credit risk component which is not relevant to Value at Risk. In the case of market sensitive instruments which are not exchange traded (almost exclusively currencies in the case of the Trust), the margin requirements for the equivalent futures positions have been used as Value at Risk. In those rare cases in which a futures-equivalent margin is not available, dealers' margins have been used. The fair value of the Trust's futures and forward positions does not have any optionality component. In quantifying the Trust's Value at Risk, 100% positive correlation in the different positions held in each market risk category has been assumed. Consequently, the margin requirements applicable to the open contracts have simply been aggregated to determine each trading category's aggregate Value at Risk. The diversification effects resulting from the fact that the Trust's positions are rarely, if ever, 100% positively correlated have not been reflected. The Trust's Trading Value at Risk in Different Market Sectors [Explanatory note: We are not required to provide quarterly information for fiscal year 1999. However, since this information already existed and it is not incorrect to provide it, I thought it would be more efficient to use what we had rather than going back to determine year-end information for 1999.] The Trust's Trading Value at Risk in Different Market Sectors The following table indicates the average, highest and lowest amounts of trading Value at Risk associated with the Trust's open positions by market category for fiscal year 2000 and 1999. All open position trading risk exposures of the Trust have been included in calculating the figures set forth below. During fiscal year 2000, the Trust's average total capitalization was approximately $57.0 million, and during fiscal year 1999, the Trust's average total capitalization was approximately $94.2 million. Fiscal Year 2000 --------------------------------------------------------------------------- ------------------- ------------ ------------ ----------- ----------------- Highest Lowest Average % of Market Value Value Value Average Sector at Risk* at Risk* at Risk* Capitalization** Interest Rates $2.8 $0.9 $2.1 3.7% Currencies $4.3 $1.1 $2.4 4.2% Stock Indices $1.2 $0.1 $0.7 1.2% Metals $1.0 $0.1 $0.5 0.9% Commodities $0.3 $0.0 $0.1 0.2% Energy $0.5 $0.1 $0.3 0.5% Total $10.1 $2.3 $6.1 10.7% Fiscal Year 1999 -------------------------------------------------------------------------- -------------------- ----------- ----------- ----------- ----------------- Highest Lowest Average % of Market Value Value Value Average Sector at Risk* at Risk* at Risk* Capitalization** Interest Rates $4.7 $3.3 $4.1 4.3% Currencies $5.8 $3.5 $4.7 5.0% Stock Indices $1.2 $0.8 $1.0 1.1% Metals $2.2 $1.6 $1.9 2.0% Commodities $0.9 $0.8 $0.9 0.9% Energy $1.1 $1.0 $1.1 1.1% Total $15.9 $11.0 $13.7 14.4% * Average, highest and lowest Value at Risk amounts relate to the quarter-end amounts for each calendar quarter-end during the fiscal year. All amounts represent millions of dollars. ** Average Capitalization is the average of the Trust's capitalization at the end of each fiscal quarter for fiscal year 1999. December 31, 1998 ---------------------------------------------------------------- % of Total Market Sector Value at Risk Capitalization Interest Rates $4.6 million 4.9% Currencies $1.8 million 1.9% Stock Indices $0.8 million 0.8% Precious Metals $0.5 million 0.5% Commodities $0.7 million 0.7% Energy $0.5 million 0.5% Total $ 8.9 million 9.3% Material Limitations on Value at Risk as an Assessment of Market Risk The face value of the market sector instruments held by the Trust is typically many times the applicable maintenance margin requirement (maintenance margin requirements generally ranging between approximately 1% and 10% of contract face value) as well as many times the capitalization of the Trust. The magnitude of the Trust's open positions creates a "risk of ruin" not typically found in most other investment vehicles. Because of the size of its positions, certain market conditions, unusual, but historically recurring from time to time - could cause the Trust to incur severe losses over a short period of time. The foregoing Value at Risk table, as well as the past performance of the Trust - give no indication of this "risk of ruin." Non-Trading Risk The Trust has non-trading market risk on its foreign cash balances not needed for margin. However, these balances (as well as any market risk they represent) are immaterial. The Trust holds substantially all of its assets in cash on deposit with CIS and CISFS. The Trust has cash flow risk on these cash deposits because if interest rates decline, so will the interest paid out by CIS and CISFS at the 91-day Treasury bill rate. As of December 31, 2000, the Trust had approximately $44.3 million in cash on deposit with CIS and CISFS. Qualitative Disclosures Regarding Primary Trading Risk Exposures The following qualitative disclosures regarding the Trust's market risk exposures - except for (i) those disclosures that are statements of historical fact and (ii) the descriptions of how the Trust and JWH manage the Trust's primary market risk exposures - constitute forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. The Trust's primary market risk exposures as well as the strategies used and to be used by JWH for managing such exposures are subject to numerous uncertainties, contingencies and risks, any one of which could cause the actual results of the Trust's risk controls to differ materially from the objectives of such strategies. Government interventions, defaults and expropriations, illiquid markets, the emergence of dominant fundamental factors, political upheavals, changes in historical price relationships, an influx of new market participants, increased regulation and many other factors could result in material losses as well as in material changes to the risk exposures and the risk management strategies of the Trust. There can be no assurance that the Trust's current market exposure and/or risk management strategies will not change materially or that any such strategies will be effective in either the short- or long-term. Investors must be prepared to lose all or substantially all of their investment in the Trust. The following were the primary trading risk exposures of the Trust as of December 31, 2000, by market sector. Interest Rates. Interest rate risk is a major market exposure of the Trust. Interest rate movements directly affect the price of the sovereign bond positions held by the Trust and indirectly the value of its stock index and currency positions. Interest rate movements in one country as well as relative interest rate movements between countries materially impact the Trust's profitability. The Trust's primary interest rate exposure is to interest rate fluctuations in the United States and the other G-7 countries. However, the Trust also takes positions in the government debt of smaller nations - e.g., Australia. The Managing Owner anticipates that G-7 interest rates will remain the primary market exposure of the Trust for the foreseeable future. The changes in interest rates which have the most effect on the Trust are changes in long-term, as opposed to short-term, rates. Most of the speculative positions held by the Trust are in medium- to long-term instruments. Consequently, even a material change in short-term rates would have little effect on the Trust were the medium- to long-term rates to remain steady. Currencies. The Trust's currency exposure is to exchange rate fluctuations, primarily fluctuations which disrupt the historical pricing relationships between different currencies and currency pairs. These fluctuations are influenced by interest rate changes as well as political and general economic conditions. The Trust trades in a large number of currencies, including cross-rates - i.e., positions between two currencies other than the U.S. dollar. However, the Trust's major exposures have typically been in the dollar/yen, dollar/euro, dollar/Swiss franc and dollar/pound positions. The Managing Owner does not anticipate that the risk profile of the Trust's currency sector will change significantly in the future. The currency trading Value at Risk figure includes foreign margin amounts converted into U.S. dollars with an incremental adjustment to reflect the exchange rate risk inherent to the dollar-based Trust in expressing Value at Risk in a functional currency other than dollars. Stock Indices. The Trust's primary equity exposure is to equity price risk in the G-7 countries excluding the U.S. The stock index futures traded by the Trust are by law limited to futures on broadly based indices. As of December 31, 2000, the Trust's primary exposures were in the DAX (Germany), FTSE (Britain) and Nikkei (Japan) stock indices. The Managing Owner anticipates little, if any, trading in non-G-7 stock indices. The Trust is primarily exposed to the risk of adverse price trends or static markets in the major U.S., European and Japanese indices. (Static markets would not cause major market changes but would make it difficult for the Trust to avoid being "whipsawed" into numerous small losses.) Metals. The JWH programs currently used for the Trust trade mainly precious, not base, metals, and the Trust's primary metals market exposure is to fluctuations in the price of gold and silver. JWH has from time to time taken substantial positions as it has perceived market opportunities in these metals to develop. The Managing Owner anticipates that silver will remain the primary metal market exposure for the Trust. Commodities. The Trust's primary commodities exposure is to agricultural price movements which are often directly affected by severe or unexpected weather conditions. Grains and cotton accounted for the substantial bulk of the Trust's commodities exposure as of December 31, 2000. In the past, the Trust has had material market exposure to live cattle, coffee, sugar, cocoa and the soybean complex and may do so again in the future. However, JWH and the Trust will maintain an emphasis on grains, coffee, sugar and cocoa, in which the Trust has historically taken its largest commodity positions. Energy. The Trust's primary energy market exposure is to gas and oil price movements, often resulting from political developments in the Middle East. Although JWH trades natural gas to a limited extent, oil is by far the dominant energy market exposure of the Trust. Oil prices can be volatile and substantial profits and losses have been and are expected to continue to be experienced in this market. Qualitative Disclosures Regarding Non-Trading Risk Exposure The following were the only non-trading risk exposures of the Trust as of December 31, 2000. Foreign Currency Balances. The Trust's primary foreign currency balances are in Japanese yen, German marks, British pounds and Australian dollars. The Trust controls the non-trading risk of these balances by regularly converting these balances back into dollars (no less frequently than twice a month). Cash Position. The Trust holds substantially all its assets in cash at CIS and CISFS, earning interest at the 91-day Treasury bill rate (calculated daily). Qualitative Disclosures Regarding Means of Managing Risk Exposure The Manager Owner monitors the Trust's performance and the concentration of its open positions, and consults with JWH concerning the Trust's overall risk profile. If the Managing Owner felt it necessary to do so, the Managing Owner could require JWH to close out individual positions as well as enter programs traded on behalf of the Trust. However, any such intervention would be a highly unusual event. The Managing Owner primarily relies on JWH's own risk control policies while maintaining a general supervisory overview of the Trust's market risk exposures. Risk Management JWH attempts to control risk in all aspects of the investment process - from confirmation of a trend to determining the optimal exposure in a given market, and to money management issues such as the startup or upgrade of investor accounts. JWH double checks the accuracy of market data, and will not trade a market without multiple price sources for analytical input. In constructing a portfolio, JWH seeks to control overall risk as well as the risk of any one position, and JWH trades only markets that have been identified as having positive performance characteristics. Trading discipline requires plans for the exit of a market as well as for entry. JWH factors the point of exit into the decision to enter (stop loss). The size of JWH's positions in a particular market is not a matter of how large a return can be generated but of how much risk it is willing to take relative to that expected return. To attempt to reduce the risk of volatility while maintaining the potential for excellent performance, proprietary research is conducted on an ongoing basis to refine the JWH investment strategies. Research may suggest substitution of alternative investment methodologies with respect to particular contracts; this may occur, for example, when the testing of a new methodology has indicated that its use might have resulted in different historical performance. In addition, risk management research and analysis may suggest modifications regarding the relative weighting among various contracts, the addition or deletion of particular contracts from a program, or a change in position size in relation to account equity. The weighting of capital committed to various markets in the investment programs is dynamic, and JWH may vary the weighting at its discretion as market conditions, liquidity, position limit considerations and other factors warrant. JWH may determine that risks arise when markets are illiquid or erratic, such as may occur cyclically during holiday seasons, or on the basis of irregularly occurring market events. In such cases, JWH at its sole discretion may override computer-generated signals and may at times use discretion in the application of its quantitative models, which may affect performance positively or negatively. Adjustments in position size in relation to account equity have been and continue to be an integral part of JWH's investment strategy. At its discretion, JWH may adjust the size of a position in relation to equity in certain markets or entire programs. Such adjustments may be made at certain times for some programs but not for others. Factors which may affect the decision to adjust the size of a position in relation to account equity include ongoing research, program volatility, assessments of current market volatility and risk exposure, subjective judgment, and evaluation of these and other general market conditions. Item 8. Financial Statements and Supplementary Data Reference is made to the financial statements and the notes thereto attached to this report. The following summarized quarterly financial information presents the results of operations and other data for three-month periods ended March 31, June 30, September 30 and December 31, 2000 and 1999. This information has not been audited.
First Quarter Second Quarter Third Quarter Fourth Quarter 2000 2000 2000 2000 -------------------------- --- --------------- --- --------------- --- -------------- ---- -------------- Total Revenues $ (5,283,831) $ (419,161) $ (1,446,773) 14,597,242 Total Expenses $ 2,159,870 $ 1,700,682 $ 1,354,603 $ 1,106,503 Gross Profit (Loss) $ (7,443,701) $ (2,119,843) $ (2,801,376) $ 13,490,739 Net Profit (Loss) $ (7,443,701) $ (2,119,843) $ (2,801,376) $ 13,490,739 Net Profit per Unit $ (9.64) $ (3.82) $ (5.38) $ 28.92
First Quarter Second Quarter Third Quarter Fourth Quarter 1999 1999 1999 1999 -------------------------- -- ---------------- -- ---------------- -- ---------------- -- ---------------- Total Revenues $ 558,966 $ 9,738,323 $ (4,587,213) $ (3,371,098) Total Expenses $ 2,644,606 $ 3,677,532 $ 2,738,521 $ 2,500,410 Gross Profit (Loss) $ (2,085,640) $ 6,060,792 $ (7,325,734) $ (5,871,508) Net Profit (Loss) $ (2,085,640) $ 6,060,792 $ (6,292,066) $ (5,871,508) Net Profit per Unit $ (2.51) $ 7.17 $ (8.64) $ (6.91)
There were no extraordinary, unusual or infrequently occurring items recognized in each full calendar quarter within the two most recent fiscal years, and the Trust has not disposed of any segments of its business. There have been no year-end adjustments that are material to the results of any fiscal quarter reporter above. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Part III Item 10. Directors and Executive Officers of the Registrant The Trust is managed by its Managing Owner, CIS Investments, Inc. The officers and directors of the Managing Owner as of December 31, 2000 were as follows: CIS Investments, Inc. Bernard W. Dan (born in December 1960), President and Director. Mr. Dan has served as President and Director of CISI since June 1, 1998. He received a B.S. degree in accounting from St. John's University, Collegeville, Minnesota. He joined Cargill Investor Services, Inc. in 1985 and held various operational positions. In 1986 Mr. Dan was assigned to Cargill Investor Services, Ltd. in London as Administrative Manager for all operational activities. In 1989 Mr. Dan was assigned to the CIS New York Regional Office as the Administrative Manager. Mr. Dan was named Director of Cargill Investor Services (Singapore) Pte Ltd. at the formation of the company in November 1994 and continued in that position until April 1997. Mr. Dan was named President of Cargill Investor Services, Inc. on June 1, 1998. Mr. Dan actively serves within the futures industry on exchange committees and industry user groups. Shaun D. O'Brien (born November 1964) is Vice President and a director. Mr. O'Brien became a Vice President and a director of CISI on July 1, 1999. Mr. O'Brien graduated from Northeastern University in 1987 and he received a master's degree from the University of Minnesota's Carlson School of Management in 1999. Mr. O'Brien began working for Cargill, Incorporated in 1988 and joined CIS in 1999. Barbara A. Pfendler (born in May 1953), Vice President and Director. Ms. Pfendler was appointed Vice President of CISI in May 1990 and Director of CISI in June 1998. Ms. Pfendler graduated from the University of Colorado in 1975. She began her career with Cargill, Incorporated in 1975, holding various merchandising and management positions within Cargill Incorporated's Oilseed Processing Division before transferring to Cargill Investor Services, Inc. in 1986. She is currently the manager responsible for all activities of the Fund Services Group at Cargill Investor Services, Inc. She was appointed Vice President of Cargill Investor Services, Inc. in June 1996 and Director Cargill Investor Services, Inc. in June 1998. Jan R. Waye (born in June 1948), Vice President. Mr. Waye was appointed Vice President of CISI in June 1997. Mr. Waye graduated from Concordia College, Moorhead, MN, with a B.A. degree in Communications and Economics in 1970. Mr. Waye assumed the position of Senior Vice President of Cargill Investor Services, Inc. in September 1996, after returning from London where he held various management positions for Cargill Investor Services, Ltd. including most recently Managing Director for CIS Europe. Mr. Waye joined Cargill, Incorporated in 1970 and served in various commodity trading and management positions in Chesapeake, VA; Winnipeg, Manitoba; and Vancouver, BC. In 1978 he moved to New York and shortly thereafter Minneapolis as head of Foreign Exchange for Cargill's metals trading business. Mr. Waye served in various management positions in the Financial Markets Group until 1988 when he assisted in the management and sale of Cargill's life insurance business in Akron, Ohio. He moved to London in late 1988. Mr. Waye has served as a member of the Board of LIFFE, the London International Financial Futures and Options Exchange, and as Vice Chairman of its Membership and Rules Committee. He also served on the Board of the London Commodity Exchange up to its merger with LIFFE. Christopher Malo (born in August 1956), Vice President. Mr. Malo graduated from Indiana University in 1976 with a B.S. in Accounting and further completed the University of Minnesota Executive Program in 1993. He started working at Cargill, Incorporated in June 1978 as an internal auditor. He transferred to Cargill Investor Services, Inc. in August 1979 and served as Secretary/Treasurer and Controller from November 1983 until July 1991. He was elected Vice President, Administration and Operations in July 1991. Mr. Malo was Managing Director in Europe from 1996 until January 1999, responsible for CIS activities and operations in Europe, the Middle East and Russia. He was an active member of the FIA-UK Chapter and LIFFE Membership and Rules Committee. He currently serves on the Board of the FIA in Chicago. Ronald L. Davis (born in September 1953), Vice President. Mr. Davis was elected Vice President of CISI in June 1998. Mr. Davis graduated from Illinois Institute of Technology, Chicago, Illinois with a B.S. in 1975 and with an M.B.A in 1977. He began his career in the futures industry with A.G. Becker, Incorporated in 1980 and joined Cargill Investor Services, Inc. in 1987 as the Administrative Manager of the Fund Services Group. He is responsible for all administrative, accounting and reporting functions of all CISI funds. In June 1998 Mr. Davis became Business Development Manager of the Fund Services Group. Rebecca S. Steindel (born in April 1965), Secretary and Treasurer. Ms. Steindel was elected Secretary of CISI in September 1997. Ms. Steindel graduated from the University of Illinois in 1987. She began working at Cargill Investor Services, Inc. in August 1987. She has held various financial and risk management positions at Cargill Investor Services, Inc. and was elected Risk and Compliance Officer and Secretary of Cargill Investor Services, Inc. in August 1997. She currently serves on the Board of Directors and Executive Committee of the FIA Financial Management Division. Patrice H. Halbach (born in August 1953), Assistant Secretary. Ms. Halbach became Assistant Secretary of CISI in June 1996. Ms. Halbach graduated Phi Beta Kappa from the University of Minnesota with a bachelor of arts degree in history. In 1980 she received a J.D. degree cum laude from the University of Minnesota. She is a member of the Tax Executives Institute, the American Bar Association and the Minnesota Bar Association. Ms. Halbach joined the Law Department of Cargill, Incorporated in February 1983. She had previously been an attorney with Fredrikson & Byron, Minneapolis, Minnesota. In December 1990 she was named Senior Tax Manager for Cargill, Incorporated's Tax Department and became Assistant Tax Director in March 1993. She was named Assistant Vice President of Cargill, Incorporated's Administrative Division in April 1994. In January 1999 she was named Vice President, Tax, of Cargill, Incorporated. In her current position as Vice President, Tax, Ms. Halbach oversees Cargill, Incorporated's global tax function. Barbara A. Walenga (born in February 1960) is an Assistant Secretary. Ms. Walenga graduated from Fayetteville Technical Institute in 1981. She began working at CIS in August 1981. She has held various compliance management positions at CIS and is currently the Legal Compliance Manager. She is currently a member of the FIA Law and Compliance Division and the SIA Compliance and Legal Division. Additional CISI officers include James Clemens as Assistant secretary and Lillian Lundeen also as Assistant Secretary. Each officer and director holds such office until the election and qualification of his or her successor or until his or her earlier death, resignation or removal. Item 11. Executive Compensation The Trust has no officers or directors. The Managing Owner administers the business and affairs of the Trust (exclusive of Trust trading decisions which are made by an independent commodity trading advisor). The officers and directors of the Managing Owner receive no compensation from the Trust for acting in their respective capacities with the Managing Owner. All operating and administrative expenses attributable to the Trust are paid by the Managing Owner except for brokerage commissions, advisory fees, legal, accounting, auditing, printing, recording and filing fees, postage charges and Trustee fees which are paid directly by the Trust. CIS and CISFS, affiliates of the Managing Owner, are the Trust's clearing broker and currency dealer, respectively. During the year ended December 31, 2000, the Trust accrued and paid $3,737,532 in brokerage commissions to CIS, as compared to $6,136,926 in 1999 and $5,195,089 in 1998. Item 12. Security Ownership of Certain Beneficial Owners and Management (a) As of December 31, 2000, no person was known to the Trust to own beneficially more than 5% of the outstanding Units. (b) As of December 31, 2000, the Managing Owner beneficially held an ownership of $768,196 (which is the equivalent of 6,703.91 Units) or approximately 1.53% of the ownership of the Trust as of that date. (c) As of December 31, 2000, no arrangements were known to the registrant, including any pledges by any person of Units of the Trust or shares of its Managing Owner or the parent of the Managing Owner, such that a change in control of the Trust may occur at a subsequent date. Item 13. Certain Relationships and Related Transactions. (a) None other than the compensation arrangements described herein. (b) None. (c) None. (d) Not Applicable. Part IV Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K (a) The following documents are included herein: (1) Financial Statements: a. Report of Independent Public Accountants. b. Statements of Financial Condition as of December 31, 2000 and 1999. c. Statements of Operations, Statements of Unitholders' Capital and Statements of Cash Flows for the years ended December 31, 2000 1999, and 1998. d. Notes to Financial Statements. (2) All financial statement schedules have been omitted either because the information required by the schedules is not applicable, or because the information required is contained in the financial statements included herein or the notes hereto. (3) Exhibits: See the Index to Exhibits annexed hereto. (b) Reports on Form 8-K: None SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: March _____, 2001 JWH GLOBAL TRUST By: CIS Investments, Inc. (Managing Owner) By: /s/ Bernard W. Dan Bernard W. Dan President By: /s/ Shaun D. O'Brien Shaun D. O'Brien Vice President and Treasurer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. Date: March _______, 2001 /s/ Bernard W. Dan Bernard W. Dan Director and President /s/ Barbara A. Pfendler Barbara A. Pfendler DirectorandVice President /s/ Shaun D. O'Brien Shaun D. O'Brien Vice President and Treasurer Index to Exhibits Number Exhibit 3.1 Fourth Amended and Restated Declaration and Agreement of Trust (Incorporated by Reference to Post-Effective Amendment No. 1 to Registration Statement No. 333-33937 of the Trust on Form S-1 under the Securities Act of 1933, declared effective on June 26, 1998). 10.1 Trading Advisory Agreement dated as of April 3, 1997 between JWH Global Trust and John W. Henry & Company, Inc. Incorporated by Reference to Amendment No. 2 to Registration Statement No. 333-16825 of the Trust on Form S-1 under the Securities Act of 1933, declared effective on April 3, 1997). 10.2 First Amendment to Trading Advisory Agreement dated September 29, 2000 between JWH Global Trust and John W. Henry & Company, Inc. Index to Financial Statements Table of Contents Independent Auditors' Report Financial Statements: Statements of Financial Condition, December 31, 2000 and 1999 Statements of Operations, Years ended December 31, 2000, 1999 and 1998 Statements of Changes in Unitholders' Capital, Years ended December 31, 2000, 1999 and 1998 Statements of Cash Flows, Years ended December 31, 2000, 1999 and 1998 Notes to Financial Statements Acknowledgment Independent Auditors' Report The Unitholders JWH Global Trust: We have audited the accompanying statements of financial condition of JWH Global Trust (the Trust) as of December 31, 2000 and 1999, and the related statements of operations, changes in unitholders' capital and cash flows for each of the years in the three-year period ended December 31, 2000. These financial statements are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of JWH Global Trust as of December 31, 2000 and 1999, and the results of operations, changes in unitholders' capital and cash flows for each of the years in the three-year period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. KPMG LLP Chicago, Illinois January 26, 2001 JWH GLOBAL TRUST Statements of Financial Condition December 31, 2000 and 1999
Assets 2000 1999 --------------- --------------- Assets: Equity in commodity trading accounts: Cash on deposit with Brokers $ 44,316,136 85,053,945 Unrealized gain on open contracts 8,003,965 3,339,311 --------------------------------- 52,320,101 88,393,256 Receivable for units sold 191,437 522,643 Interest receivable 223,611 377,036 Prepaid initial organization and offering costs 187,244 319,417 --------------------------------- Total assets $ 52,922,393 89,612,352 ================================= Liabilities and Unitholders' Capital Liabilities: Accrued commissions on open contracts $ 282,628 474,960 due to CIS Accrued management fees 87,816 296,715 Accrued operating expenses 60,000 60,000 Accrued offering expenses 21,796 36,779 Redemptions payable 2,340,419 3,574,032 --------------------------------- Total liabilities 2,792,659 4,442,486 --------------------------------- Unitholders' capital: Beneficial owners (430,765.38 and 806,374.79 units outstanding at December 31, 2000 and 1999, respectively) 49,361,538 84,270,892 --------------------------------- Managing owner (6,703.91 and 8,602.14 units outstanding at December 31, 2000 and 1999, respectively) 768,196 898,974 --------------------------------- Total unitholders' capital 50,129,734 85,169,866 ==================================== Total liabilities and unitholders' capital $ 52,922,393 89,612,352 ==================================== See accompanying notes to financial statements.
JWH GLOBAL TRUST Statements of Operations Years ended December 31, 2000, 1999 and 1998
2000 1999 1998 --------------- --------------- --------------- Revenues: Gain (loss) on trading of commodity contracts: Realized gain on closed positions $ 740 2,105,322 10,418,484 Change in unrealized gain on open positions 4,664,653 (4,219,845) 3,078,002 Interest income 3,265,169 4,299,669 3,669,771 Foreign currency transaction gain (loss) (483,085) 153,831 (296,969) --------------- --------------- --------------- Total revenues 7,447,477 2,338,977 16,869,288 --------------- --------------- --------------- Expenses: Commission paid to CIS 3,737,532 6,136,926 5,195,089 Exchange, clearing and NFA fees 38,489 83,215 59,724 Management fees 2,088,954 3,833,530 3,239,007 Incentive fees 0 853,599 1,383,562 Amortization of prepaid initial organization and offering 132,173 132,172 132,173 costs Ongoing organization and offering expenses 288,770 474,221 400,616 Operating expenses 35,740 47,406 58,596 --------------- --------------- --------------- Total expenses 6,321,658 11,561,069 10,468,767 --------------- --------------- --------------- Net profit (loss) $ 1,125,819 (9,222,092) 6,400,521 =============== =============== =============== Profit (loss) per unit of beneficial ownership interest $ 5.70 10.08 (10.89) Profit (loss) per unit of managing ownership interest 5.70 10.08 (10.89) =============== =============== =============== See accompanying notes to financial statements.
JWH GLOBAL TRUST Statements of Changes in Unitholders' Capital Years ended December 31, 2000, 1999 and 1998
Beneficial Managing Units* Owners Owner Total ------------------- ----------------- -------------- ---------------- Balance at December 31, 1997 580,678.76 63,702,878 648,646 64,351,524 Net income 0 6,324,744 75,777 6,400,521 Unitholders' contributions 358,583.68 37,661,334 277,071 37,938,405 Unitholders' redemptions (120,556.32) (13,217,904) 0 (13,217,904) ----------------- ----------------- ------------- ----------------- Balance at December 31, 1998 818,706.12 94,471,052 1,001,494 95,472,546 Net loss 0 (9,119,572) (102,520) (9,222,092) Unitholders' contributions 164,883.44 18,624,039 0 18,624,039 Unitholders' redemptions (177,214.77) (19,704,627) 0 (19,704,627) ----------------- ----------------- ------------- ----------------- Balance at December 31, 1999 806,374.79 84,270,892 898,974 85,169,866 Net income 0 1,056,111 69,708 1,125,819 Unitholders' contributions 18,386.99 1,766,481 58 1,766,539 Unitholders' redemptions (393,996.40) (37,731,946) (200,544) (37,932,490) ----------------- ----------------- ------------- ----------------- Balance at December 31, 2000 430,765.38 $ 49,361,538 768,196 50,129,734 ================= ================= ============= ================= Net asset value per unit at December 31, 2000 $ 114.59 114.59 Net asset value per unit at December 31, 1999 104.51 104.51 Net asset value per unit at December 31, 1998 115.40 115.40 ================= ============= *Units of beneficial ownership. See accompanying notes to financial statements.
JWH GLOBAL TRUST Statements of Cash Flows Years ended December 31, 2000, 1999 and 1998
2000 1999 1998 ----------------- ---------------- ---------------- Cash flows from operating activities: Net profit (loss) $ 1,125,819 (9,222,092) 6,400,521 Adjustments to reconcile net profit (loss) to net cash provided by (used in) operating activities : Decrease (increase) in unrealized gain (loss) on open contracts (4,664,653) 4,219,845 (3,078,002) Change in assets and liabilities: Decrease (increase) in interest receivable 153,425 (38,772) (97,519) Decrease in prepaid initial organization and offering costs 132,173 132,172 132,173 Increase (decrease) in accrued liabilities (416,215) (259,133) (183,111) ----------------- ---------------- ---------------- Net cash provided by (used in) operating activities (3,669,451) (5,167,980) 3,174,062 ----------------------------------- ---------------- Cash flows from financing activities: Net proceeds from sale of units 2,097,745 19,702,800 40,446,623 Unit redemptions (39,166,103) (19,663,619) (9,716,075) ------------------ ----------------- ---------------- Net cash provided by (used in) financing activities (37,068,358) 39,181 30,730,548 ----------------------------------- ---------------- Net increase (decrease) in cash (40,737,809) (5,128,799) 33,904,610 Cash at beginning of year 85,053,945 90,182,744 56,278,134 ----------------- ---------------- ---------------- Cash at end of year $ 44,316,136 85,053,945 90,182,744 =================================== ================ See accompanying notes to financial statements.
JWH GLOBAL TRUST Notes to Financial Statements December 31, 2000, 1999 and 1998 (1) General Information and Summary JWH Global Trust (the Trust), a Delaware business trust organized on November 12, 1996, was formed to engage in the speculative trading of futures contracts on currencies, interest rates, energy and agricultural products, metals and stock indices, spot and forward contracts on currencies and precious metals, and exchanges for physicals pursuant to the trading instructions of independent trading advisors. The Managing Owner of the Trust is CIS Investments, Inc. (CISI). The clearing broker is Cargill Investor Services, Inc. (Clearing Broker or CIS), the parent company of CISI. The broker for forward contracts is CIS Financial Services, Inc. (CISFS or Forwards Currency Broker), an affiliate of CISI. The Clearing Broker and the Forwards Currency Broker will collectively be referred to as the Brokers. Units of beneficial ownership of the Trust commenced selling on April 3, 1997 and trading began on June 2, 1997. The initial amount offered for investment was $50,000,000. On September 26, 1997, the Trust registered an additional $155,000,000 for further investment and continued the offering. By December 31, 2000, a total of 1,131,668.01 units representing an investment for $119,064,111 of beneficial ownership interest had been sold in the combined offerings. In addition, during the offerings, the Managing Owner purchased a total of 8,602.73 units, representing a total investment of $885,058. See the JWH Global Trust prospectus for further details of the offering. The Trust will be terminated on December 31, 2026, if none of the following occur prior to that date: (1) beneficial owners holding more than 50% of the outstanding units notify the Managing Owner to dissolve the Trust as of a specific date; (2) disassociation of the Managing Owner with the Trust; (3) bankruptcy of the Trust; (4), a decrease in the net asset value to less than $2,500,000; (5) a decline in the net asset value per unit to $50 or less; (6) dissolution of the Trust; or (7) any event that would make it unlawful for the existence of the Trust to be continued or require dissolution of the Trust. (2) Summary of Significant Accounting Policies The accounting and reporting policies of the Trust conform to generally accepted accounting principles and to general practices in 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, physical commodities, and related options are recorded on the trade date. All such transactions are recorded on the identified cost basis and marked to market daily. Unrealized gains and losses on open contracts 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 related options and cash dealer prices at a predetermined time for forward contracts, physical commodities, and their related options) as of the last business day of the year or as of the last date of the financial statements. The Trust earns interest on its assets on deposit at the Brokers at 100% of the 91-day Treasury bill rate for deposits denominated in U.S. 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 ten 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 Amended and Restated Declaration and Agreement of Trust contains a full description of redemption and distribution policies. Organizational and Offering Costs Initial organizational and offering costs advanced to the Trust are being amortized over the first 60 months of the Trust's operations, subject to a maximum monthly payment of 1/60 of 2% of the month-end net assets. Ongoing offering costs, subject to a ceiling of 0.5% of the Trust's average month-end net assets, are paid by the Trust and expensed as incurred. 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. The amount paid to CIS is reduced by exchange fees paid by the Trust. The round-turn equivalent rate for commissions paid by the Trust for the years ended December 31, 2000, 1999 and 1998 was $57, $59 and $61, respectively. Certain large investors are eligible for a "Special Brokerage Fee Rate" of 5% per year. As of December 31, 2000, there were no such eligible investors in the Trust. Foreign Currency Transactions Trading accounts in foreign currency denominations are susceptible to both movements in the 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 year, while year-end balances are translated at the year-end currency rates. The impact of the translation is reflected in the statements of operations. Statements of Cash Flows For purposes of the statements of cash flows, cash includes cash on deposit with the Brokers in the 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. (3)Fees Management fees are accrued and paid monthly, 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 three of its trading programs, the JWH GlobalAnalytics Family of Programs, the Financial and Metals Portfolio, and the G-7 Currency Portfolio. Under signed agreement, prior to October 1, 2000, JWH received 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 an annual rate of 1.25% 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. Effective October 1, 2000, the agreement with JWH was changed to reduce the monthly management fee to 1/12 of 2% of the month-end net assets after the deductions. Also, under signed agreement, prior to October 1, 2000, the Trust paid to JWH a quarterly incentive fee equal to 15% of the net 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 a portion of the Brokerage Fees at an annual rate of 1.25%. Effective October 1, 2000, the agreement with JWH was changed to increase the incentive fee to 20% of the net trading profits. (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 the 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, $0, and $41,242 for the years ended December 31, 2000, 1999 and 1998, respectively, 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 Brokers at all times. In the event that volatility of trading of other customers of the Brokers impairs 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 that 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 at least equal to 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 in 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 contractual amounts of commitments for the Trust to purchase and sell exchange traded futures contracts and foreign currency forwards contracts was $455,367,477 and $154,636,609, respectively, on December 31, 2000 and $229,942,351 and $245,184,015, respectively, on December 31, 1999. The contractual amounts of these instruments reflect the extent of the Trusts' involvement in the related futures and forwards contracts and do not reflect the risk of loss due to counterparty performance. Such risk is defined by SFAS 105 as credit risk. 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 nonperformance 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 membership, the sole recourse of the Trust for nonperformance will be the Clearing House. The Forwards Currency Broker is the counterparty for the Trust's forwards transactions. CISFS policies require that they execute transactions only with top rated financial institutions with assets in excess of $100,000,000. The average fair value of commodity interests was $2,758,417, $5,169,913 and $4,860,965 during 2000, 1999 and 1998, respectively. Fair value as of December 31, 2000 and 1999 was $8,003,965 and $3,339,311, respectively. The net gains or losses arising from the trading of commodity interests are presented in the statement of operations. The Trust holds futures positions on various exchanges throughout the world and forwards positions with CISFS that 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 positions of the Trust, the Trust could lose all of its assets and the beneficial owners would realize a 100% loss. The Trust utilizes three of the trading programs of the CTA. One trading program is diversified among all commodity groups, while the other is diversified among the various futures contracts and forwards contracts in the financial and metals group. The third trading program is diversified among various foreign currency forward contracts, including cross currency contracts. The programs trade in the U.S. and outside of the U.S. Such diversification should greatly reduce this market risk. At December 31, 2000, the cash requirement of the commodity interests of the Trust was $6,699,816. This cash requirement was met by $39,278,293 held in segregated funds, $7,719,059 held in secured funds and $5,322,749 held in nonregulated funds. At December 31, 1999, the cash requirement of the commodity interests of the Trust was $13,606,854. This cash requirement was met by $74,766,486 held in segregated funds, $8,457,917 held in secured funds and $5,168,853 held in non-regulated funds. At December 31, 2000 and 1999, cash was on deposit with the Brokers that exceeded the cash requirement amount. The following chart discloses the dollar amount of the unrealized gain or loss on open contracts of the Trust at December 31, 2000 and 1999: Commodity Group 2000 1999 ------------------------------- Agricultural $ 10,743 629,757 Currency 4,303,848 1,461,045 Stock Indices 310,384 190,407 Energies 485,284 401,260 Metals (84,408) (484,516) Interest 2,978,114 1,141,358 ------------------------------- $ 8,003,965 3,339,311 =============================== The range of expiration dates of these open contracts is January 2001 to December 2001. Acknowledgment To the best of my knowledge and belief, the information contained herein is accurate and complete. ---------------------------------- Rebecca S. Steindel Treasurer, CIS Investments, Inc., The Managing Owner and Commodity Pool Operator of JWH Global Trust FIRST AMENDMENT TO TRADING ADVISORY AGREEMENT This Amendment ("Amendment") to the Trading Advisory Agreement (the "Agreement") dated as of April 3, 1997, by and among JWH GLOBAL TRUST (the "Trust"), CIS INVESTMENTS, INC. (the "Managing Owner"), and JOHN W. HENRY & COMPANY, INC. (the "Advisor"), and agreed to as to Section 4 by Cargill Investor Services, Inc., is made this 29th day of September, 2000. W I T N E S S E T H: WHEREAS, the parties hereto entered into the Agreement to set forth the terms and conditions upon which the Advisor renders advisory services in connection with the Trust's commodity interest trading activities; and WHEREAS, the parties hereto desire to amend the Agreement to reflect a change in the management and incentive fees paid by the Trust to the Advisor. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of all of which are hereby acknowledged, the parties hereto agree as follows: 1. Amendment. Section 5 of the Agreement shall be amended as follows: (a) in the third line of the first paragraph, "1/3 of 1%" shall be stricken and replaced with "1/6 of 1%"; and (b) in the seventh line of the first paragraph, "15%" shall be stricken and replaced with "20%". 2. Effective Date. The effective date of this Amendment shall be October 1, 2000. 3. Miscellaneous. (a) Except as amended hereby, the Agreement shall remain in full force and effect and is hereby ratified and confirmed. (b) This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above. JWH GLOBAL TRUST By: CIS Investments, Inc., its Managing Owner By: /s/ Ronald L. Davis Name: Ronald L. Davis Title: Vice President CIS INVESTMENTS, INC. By: /s/ Ronald L. Davis Name: Ronald L. Davis Title: Vice President JOHN W. HENRY & COMPANY, INC. By: /s/ David M. Kozak Name: David M. Kozak Title: Senior Vice President Agreed to and Acknowledged by: CARGILL INVESTOR SERVICES, INC. By: /s/ Barbara A. Pfendler Name: Barbara A. Pfendler Title: Vice President