<PAGE>
As filed with the Securities and Exchange Commission on November 29, 1999
Registration No. 333-33937
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 3 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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JWH GLOBAL TRUST
(Exact name of registrant as specified in its charter)
DELAWARE 6793 36-4113382
(State of Organization) (Primary Standard Industrial (IRS Employer
Classification Code Number) Identification Number)
C/O CIS INVESTMENTS, INC.
233 SOUTH WACKER DRIVE
SUITE 2300
CHICAGO, ILLINOIS 60606
(312) 460-4000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
BARBARA A. PFENDLER
C/O CIS INVESTMENTS, INC.
233 SOUTH WACKER DRIVE
SUITE 2300
CHICAGO, ILLINOIS 60606
(312) 460-4000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:
Joseph H. Harrison, Jr.
James B. Biery
Sidley & Austin
Bank One Plaza
Chicago, Illinois 60603
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
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If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 (the "Securities Act") check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
PURSUANT TO THE PROVISIONS OF RULE 429 PROMULGATED UNDER THE SECURITIES
ACT, THE FORM OF PROSPECTUS SET FORTH HEREIN ALSO RELATES TO REGISTRANT'S
REGISTRATION STATEMENT ON FORM S-1 (REG. NO. 333-16825) DECLARED EFFECTIVE ON
APRIL 3, 1997.
<PAGE>
PART ONE
DISCLOSURE DOCUMENT
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JWH GLOBAL TRUST
$86,700,000
UNITS OF BENEFICIAL INTEREST
THE TRUST
The Trust trades in the U.S. and international futures and forward markets in
currencies, interest rates, energy and agricultural products, metals and stock
indices.
The primary objective of the Trust is substantial capital appreciation over time
by applying trend-following strategies.
It seeks to reduce volatility and risk of loss by participating in broadly
diversified global markets and implementing risk control policies.
An investment in the Trust offers a potentially valuable means of diversifying a
traditional portfolio.
Investors have the opportunity to participate in markets which are typically not
represented in most investors' portfolios and which offer the potential to be
profitable in both rising and falling markets. It is as easy for the Trust to
take long as short positions, and in a wide range of U.S. and non-U.S. markets.
THE TRADING ADVISOR
John W. Henry & Company, Inc. (JWH-Registered Trademark-) is one of the
largest professional managed futures advisors in terms of assets under
management in the managed futures industry. As of October 31, 1999, JWH was
managing approximately $2.0 billion of client assets.
The Trust trades in the global futures and forward markets pursuant to the
Trading Advisor's proprietary trading strategies. Beginning January 2000, the
Trust will utilize the Trading Advisor's Financial and Metals Portfolio, G-7
Currency Portfolio and JWH GlobalAnalytics-Registered Trademark- Family of
Programs.
MANAGING OWNER
CIS Investments, Inc. (CISI) is the Managing Owner and sponsor of the Trust.
The Managing Owner is a subsidiary of Cargill Investor Services, Inc. (CIS).
CIS is a subsidiary of Cargill, Incorporated, one of the largest private
companies in the United States.
The Managing Owner has the discretion, subject to JWH's agreement, to select the
JWH trading programs to be used for the Trust.
As of October 31, 1999, there was approximately $189 million invested in managed
futures funds sponsored (alone or jointly) by CISI.
The Trust is CISI's largest fund.
THE UNITS
The Units are available for subscription on the last day of each month at Net
Asset Value per Unit.
As of October 31, 1999, the Net Asset Value per Unit had increased from $100 as
of June 2, 1997 when the Trust began trading to $103.44, a 1.4% average
compounded annual rate of return. PAST PERFORMANCE IS NOT NECESSARILY
INDICATIVE OF FUTURE RESULTS.
Subscriptions as received will be deposited in escrow at Bank One until being
invested in the Units as of the last day of the month. All interest actually
earned on an investor's subscription while held in escrow will be used to
purchase additional Units for such investor.
The Units are offered on a best efforts basis. There is no minimum number of
Units which must be sold as of the beginning of any particular month.
THE RISKS
Before you decide whether to invest, read this entire prospectus carefully and
consider The Risks You Face beginning on page 9.
- - You could lose all or substantially all of your investment in the Trust.
- - The Trust is speculative and it takes positions with total values that are
bigger than the total amount of the Trust's assets. The face value of the
Trust's positions typically range from three to eight times its aggregate
Net Assets.
- - Performance has been volatile. The Net Asset Value per Unit has fluctuated
almost 11% in a single month.
- - The use of a single advisor applying a limited number of generally similar
trading programs decreases diversification relative to a fund using
multiple advisors and increases risk.
- - Substantial expenses, totalling almost 12.3% per annum, must be offset by
trading profits and interest income.
- - There is no market for the Units. Units may only be redeemed as of the end
of a calendar month subject to a 3% redemption charge through the end of
the eleventh month after issuance.
- - The Trust trades to a substantial degree on non-U.S. markets which are not
subject to the same degree of regulation as U.S. markets.
- - Investors are required to make representations and warranties in connection
with their investment.
- - Each prospective investor is encouraged to discuss the investment with
his/her individual financial, legal and tax adviser.
MINIMUM INVESTMENTS
<TABLE>
<CAPTION>
FIRST-TIME INVESTORS: IRAS, OTHER TAX-EXEMPT ACCOUNTS: EXISTING INVESTORS:
<S> <C> <C>
$5,000 $2,000 $1,000
</TABLE>
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THIS PROSPECTUS IS IN TWO PARTS: A DISCLOSURE DOCUMENT AND A STATEMENT OF
ADDITIONAL INFORMATION. THESE PARTS ARE BOUND TOGETHER, AND BOTH CONTAIN
IMPORTANT INFORMATION.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE
MERITS OF PARTICIPATING IN THIS POOL NOR HAS THE COMMISSION PASSED
ON THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE DOCUMENT.
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CIS INVESTMENTS, INC.
MANAGING OWNER
<PAGE>
JANUARY __, 2000
<PAGE>
COMMODITY FUTURES TRADING COMMISSION
RISK DISCLOSURE STATEMENT
YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU
TO PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT
FUTURES AND OPTIONS TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS GAINS.
SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET VALUE OF THE POOL AND
CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN ADDITION, RESTRICTIONS
ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO WITHDRAW YOUR PARTICIPATION IN THE
POOL.
FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR
MANAGEMENT, ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE POOLS
THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID
DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE DOCUMENT CONTAINS A
COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED THIS POOL AT PAGES 50 TO 54
AND A STATEMENT OF THE PERCENTAGE RETURN NECESSARY TO BREAKEVEN, THAT IS, TO
RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGE 8.
THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS
NECESSARY TO EVALUATE YOUR PARTICIPATION IN THIS COMMODITY POOL. THEREFORE,
BEFORE YOU DECIDE TO PARTICIPATE IN THIS COMMODITY POOL, YOU SHOULD CAREFULLY
STUDY THIS DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION OF THE PRINCIPAL RISK
FACTORS OF THIS INVESTMENT, AT PAGES 9 TO 14.
YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN FUTURES
OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED
STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES MARKET, MAY BE
SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION TO THE
POOL AND ITS PARTICIPANTS. FURTHER, UNITED STATES REGULATORY AUTHORITIES MAY BE
UNABLE TO COMPEL THE ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR
MARKETS IN NON-UNITED STATES JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL MAY
BE EFFECTED.
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THIS PROSPECTUS DOES NOT INCLUDE ALL OF THE INFORMATION OR EXHIBITS IN THE
TRUST'S REGISTRATION STATEMENT. YOU CAN READ AND COPY THE ENTIRE REGISTRATION
STATEMENT AT THE PUBLIC REFERENCE FACILITIES MAINTAINED BY THE SEC IN
WASHINGTON, D.C.
THE TRUST FILES QUARTERLY AND ANNUAL REPORTS WITH THE SEC. YOU CAN READ
AND COPY THESE REPORTS AT THE SEC PUBLIC REFERENCE FACILITIES IN CHICAGO, NEW
YORK OR WASHINGTON, D.C. PLEASE CALL THE SEC AT 1-800-SEC-0300 FOR FURTHER
INFORMATION.
THE TRUST'S FILINGS ARE POSTED AT THE SEC WEBSITE AT HTTP://WWW.SEC.GOV.
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CIS INVESTMENTS, INC.
MANAGING OWNER
233 SOUTH WACKER DRIVE
SUITE 2300
CHICAGO, ILLINOIS 60606
(312) 460-4000
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JWH GLOBAL TRUST
ORGANIZATIONAL CHART
[GRAPHIC]
Other than JWH and the Trustee, all of the entities indicated in the
Organizational Chart are Cargill, Incorporated affiliates. See "Conflicts of
Interest" beginning at page 56 and "Transactions Between the Trust and the CIS
Group" at page 58.
FOR CONVENIENCE, CISI AND ENTITIES AFFILIATED WITH IT ARE SOMETIMES
COLLECTIVELY REFERRED TO AS THE "CIS GROUP."
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<PAGE>
JWH GLOBAL TRUST
CONTENTS
PART ONE
DISCLOSURE DOCUMENT
Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
The Risks You Face . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Investment Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
How the Trust Works. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Performance of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . 19
Selected Financial Information . . . . . . . . . . . . . . . . . . . . . . 20
Management's Analysis of Operations. . . . . . . . . . . . . . . . . . . . 21
Quantitative and Qualitative Disclosures About the
Trust's Market Risk. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
The Managing Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
John W. Henry & Company, Inc.. . . . . . . . . . . . . . . . . . . . . . . 30
JWH Principals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Performance of the JWH Programs. . . . . . . . . . . . . . . . . . . . . . 36
Interest Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Brokerage Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Redemptions; Net Asset Value . . . . . . . . . . . . . . . . . . . . . . . 55
Conflicts of Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Transactions Between the CIS Group
and the Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
The Trust and the Trustee . . . . . . . . . . . . . . . . . . . . . . . . 59
Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Lawyers; Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Performance of Other CISI-Sponsored Funds. . . . . . . . . . . . . . . . . 93
PART TWO
STATEMENT OF ADDITIONAL
INFORMATION
Futures Markets and Trading Methods. . . . . . . . . . . . . . . . . . . . .1
Blue Sky Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
_______________
Exhibit A -- Fourth Amended and Restated
Declaration of Agreement of Trust. . . . . . . . . . . . . .A-1
Exhibit B -- Subscription Requirements . . . . . . . . . . . . . . . . . .B-1
Exhibit C -- Subscription Agreement and
Power of Attorney. . . . . . . . . . . . . . . . . . . . .C-1
SUMMARY
GENERAL
JWH Global Trust is a Delaware business trust which trades in a wide range
of U.S. and international futures and forward markets. CIS Investments, Inc.
("CISI") is the Trust's Managing Owner. John W. Henry & Company, Inc.
("JWH-Registered Trademark-") is its Trading Advisor.
The Trust began trading on June 2, 1997 with an initial capitalization of
$13,027,103 and a Net Asset Value per Unit of $100. As of October 31, 1999, the
Trust's capitalization was $88,007,086, the Net Asset Value per Unit was
$103.44, and the Trust had a total of 3,682 Unitholders.
THE TRUST AND ITS OBJECTIVES
The primary objective of the Trust is substantial capital appreciation
through trading directed by JWH. At the same time, JWH will attempt to reduce
the expected volatility and risk of loss by participating in diversified markets
and applying risk control policies.
Through an investment in the Trust, investors have the opportunity to
participate in markets not typically represented in an individual's portfolio,
and the potential to profit from rising as well as falling prices. The success
of JWH's trading is not dependent upon favorable economic conditions, national
or international. Indeed, periods of economic uncertainty can augment the
profit potential of the Trust by increasing the likelihood of significant
movements in commodity prices, the exchange rates between various countries,
world stock prices and interest rates.
From October 5, 1998, through December 1999, the Trust allocated its assets
40% to JWH's Original Investment Program, 35% to its Financial and Metals
Portfolio and 25% to its G-7 Currency Portfolio. Beginning in January 2000, the
Trust will allocate 40% of its assets to the Financial and Metals Portfolio, 30%
to the G-7 Currency Portfolio and 30% to the JWH GlobalAnalytics-Registered
Trademark- Family of Programs and
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<PAGE>
none of its assets to the Original Investment Program. JWH will continue to
rebalance the Trust's assets at the end of each quarter among these three
trading programs in accordance with the preceding percentages.
The Managing Owner has the discretion, subject to JWH's agreement, from
time to time, to alter the allocation of the Trust's assets among the JWH
trading programs, to delete a trading program or to add other JWH programs. In
deciding whether to delete or add a JWH program, the Managing Owner will
consider, among other things, recent and/or expected economic and market
conditions, the performance of each trading program and the trading programs
combined, the performance of other JWH programs, and the market sector
concentration of the trading programs currently being used by the Trust as well
as the other JWH programs. If the Trust's trading programs become concentrated
in the same market sectors, or if the recent performance of a trading program
appears incompatible with the Trust's objectives, the Managing Owner and JWH
might agree to terminate that program possibly replacing it with another.
JWH AND ITS PROGRAMS
JWH
JWH has been the sole Trading Advisor for the Trust since inception. JWH
manages capital in commodities, financial futures and foreign exchange markets
for international banks, brokerage firms, pension funds, institutions and high
net worth individuals. JWH trades on a 24-hour basis in a wide range of futures
and forward contracts -- over sixty markets as of the date of this prospectus --
in the United States, Europe and Asia. JWH is one of the largest managed
futures advisors in terms of assets under management, trading approximately $2.0
billion in client capital as of October 31, 1999.
JWH currently offers three types of investment programs: Broadly
Diversified; Financial; and Foreign Exchange. Broadly Diversified programs
invest in a broad spectrum of worldwide financial and nonfinancial futures and
forward markets including currencies, interest rates, non-U.S. stock indices,
metals, energies and agricultural commodities. Financial programs invest in
worldwide financial futures and forward markets including currencies, interest
rates and stock indices in addition to the metals and energies markets. Foreign
Exchange programs invest in a wide range of world currencies primarily traded in
the interbank market.
JWH'S PROGRAMS USED FOR THE TRUST
The Trust allocates its assets among JWH's Financial and Metals Portfolio,
G-7 Currency Portfolio and JWH GlobalAnalytics-Registered Trademark- Family of
Programs. The Financial and Metals Portfolio, which began trading client funds
in October 1984, is one of the longest established JWH programs. The G-7
Currency Portfolio has been trading client funds since February 1991. JWH
GlobalAnalytics-Registered Trademark- Family of Programs is JWH's newest program
and has been trading client capital since June 1997.
THE JWH PROGRAMS USED BY THE TRUST MAY CHANGE MATERIALLY OVER TIME. PRIOR
TO OCTOBER 5, 1998 THE TRUST USED ONLY THE ORIGINAL INVESTMENT PROGRAM AND THE
FINANCIAL AND METALS PORTFOLIO. SINCE OCTOBER 5, 1998, THE TRUST ALSO HAS USED
JWH'S G-7 CURRENCY PORTFOLIO. BEGINNING JANUARY 1, 2000, THE TRUST WILL
SUBSTITUTE THE JWH GLOBALANALYTICS-Registered Trademark- FAMILY OF PROGRAMS FOR
THE ORIGINAL INVESTMENT PROGRAM.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
FINANCIAL AND METALS PORTFOLIO
MARKET SECTORS TRADED:
INTEREST RATES
NON-U.S. STOCK INDICES
CURRENCIES
PRECIOUS AND BASE METALS
The Financial and Metals Portfolio began trading client capital in
October 1984 and has an estimated annualized net return of 33.1% from inception
through October 31, 1999. The Financial and Metals Portfolio seeks to identify
and capitalize on intermediate and long-term price movements in four worldwide
market sectors: interest rates, currencies, non-U.S. stock indices and metals.
This program takes a market position when trends are identified but may take a
neutral stance or liquidate open positions in non-
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<PAGE>
trending markets. As of October 31, 1999, JWH had approximately $825 million
under management pursuant to the Financial and Metals Portfolio, which is the
most of any JWH program.
G-7 CURRENCY PORTFOLIO
MARKET SECTORS TRADED:
CURRENCIES
The G-7 Currency Portfolio began trading client capital in February 1991
and has an estimated annualized net return of 13.0% from inception through
October 31, 1999. The G-7 Currency Portfolio seeks to identify and capitalize
on intermediate and long-term price movements in the highly liquid currencies of
major industrialized nations. These currencies allow for trading outrights
against the U.S. dollar or non-dollar cross rates. With the advent of a single
currency for 11 countries in the European Union, the currency exposures formerly
traded for Germany, France and Italy are now executed in the Euro. This program
takes a market position when trends are identified but may take a neutral stance
or liquidate open positions in non-trending markets. It also incorporates
specialized intra-day volatility filters. As of October 31, 1999, JWH had
approximately $35 million under management in the G-7 Currency Portfolio.
JWH GLOBALANALYTICS-Registered Trademark- FAMILY OF PROGRAMS
MARKET SECTORS TRADED:
INTEREST RATES
NON-U.S. STOCK INDICES
CURRENCIES
ENERGIES
SOFTS
GRAINS
FIBER
PRECIOUS AND BASE METALS
JWH GlobalAnalytics-Registered Trademark- Family of Programs, which is
JWH's most broadly diversified program, is the result of extensive research and
testing by JWH. The program invests in a broad spectrum of worldwide financial
and non-financial markets including interest rates, non-U.S. stock indices,
currencies, metals, energies and agricultural commodity markets. Unlike other
JWH programs, which invest in intermediate or long-term price movements, JWH
GlobalAnalytics-Registered Trademark- Family of Programs invests in both long-
and short-term price movements. JWH GlobalAnalytics-Registered Trademark-
Family of Programs uses a combination of two investment styles, one of which
always maintains a market position -- long or short -- and the other of which
takes a market position when trends are identified but may take a neutral stance
or liquidate open positions in non-trending markets. As of October 31, 1999,
JWH had approximately $91 million under management pursuant to the JWH
GlobalAnalytics-Registered Trademark- Family of Programs.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
PLEASE SEE THE CAPSULE PERFORMANCE SUMMARIES BEGINNING ON PAGE 37 AND THE
NOTES ACCOMPANYING THOSE PERFORMANCE SUMMARIES BEGINNING ON PAGE 45.
THE JWH PROGRAMS ARE TECHNICAL AND TREND-FOLLOWING, COMPUTERIZED SYSTEMS
The mathematical models used by the JWH programs are technical systems,
generating trading signals on the basis of statistical research into past market
prices. JWH does not attempt to analyze underlying economic factors, identify
mispricings in the market or predict future prices. Its analysis focuses
exclusively on past price movements.
As a trend-following advisor, JWH's objective is to participate in major
price trends -- sustained price movements either up or down. Such price trends
may be relatively infrequent. Trend-following advisors anticipate that over
half of their positions will be unprofitable. Their strategy is based on making
sufficiently large profits from the trends which they identify and follow to
generate overall profits despite the more numerous but, hopefully, smaller
losses incurred on the majority of their positions.
See "The Risks You Face" beginning at page 9.
MARKETS TRADED
The Financial and Metals Portfolio, the G-7 Currency Portfolio and the JWH
GlobalAnalytics-Registered Trademark- Family of Programs emphasize trading in
currencies
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<PAGE>
and financial instruments, but participate in most major sectors of the
global economy, which may include:
CURRENCIES
Australian Dollar Japanese Yen
British Pound *Malaysian Ringitt
Canadian Dollar Mexican Peso
Czech Koruna Singapore Dollar
*Danish Krone South African Rand
Euro *Swedish Krona
Greek Drachma Swiss Franc
Hong Kong Dollar Thai Baht
FINANCIAL INSTRUMENTS
Australian Euroyen
(90-day) Bank Bills French Notionnel Bonds
Australian French PIBOR
(3-year and 10-year) Euro BOBL (5 year)
Treasury Bonds Italian Bond
Canadian Bank Bills Japanese Government Bond
*Canadian *Spanish Government Bond
Government Bonds Spanish MIBOR
Eurobibor U.K. Long "Gilt"
Eurobund U.K. Short Sterling
Eurodollar U.S. 10-year
*Eurolira Treasury Note
*Euroswiss U.S. Treasury Bond
STOCK INDICES
Australian All FTSE 100 (UK)
Ordinary Index *New York Composite
*CAC 40 Stock Index Nikkei 225 Index
(France) (Japan)
*DAX (German) S&P 500 Stock Index
METALS
*Aluminum *Palladium
Copper *Platinum
Gold Silver
*Lead *Tin
*Nickel *Zinc
AGRICULTURAL PRODUCTS
Live Cattle *Orange Juice
Cocoa Soybeans
Coffee Soybean Meal
Corn Soybean Oil
Cotton Sugar
Wheat
ENERGY
Crude Oil No. 2 Heating Oil
Natural Gas *Unleaded Gasoline
*London Gasoil
- -------------
* These markets are traded if and when contract liquidity, legal constraints,
market conditions and data reliability standards meet JWH's specifications.
$88 million, the Trust's approximate market capitalization as of October
31, 1999, allocated 40% to the Financial and Metals Portfolio, 30% to the G-7
Currency Portfolio and 30% to the JWH GlobalAnalytics-Registered Trademark-
Family of Programs on October 31, 1999 would have had the following approximate
market sector commitments.
[PIE CHART]
Interest Rates - Americas 11%
Interest Rates - Europe 21%
Interest Rates - Asia 19%
Currencies 34%
Stock Indices 3%
Metals 2%
Commodities 4%
Energies 6%
THE TRUST'S MARKET SECTOR WEIGHTINGS MAY VARY SIGNIFICANTLY OVER TIME.
THERE IS NO WAY TO PREDICT WHICH MARKETS THE TRUST WILL TRADE OR WHAT ITS
RELATIVE COMMITMENTS TO THE DIFFERENT MARKETS WILL BE.
VARYING THE SIZE OF THE TRUST'S MARKET POSITIONS
JWH attempts to adjust the Trust's position sizes and market exposure to
meet its profit and risk-control objectives. Generally, only between 2% and 15%
of the face value of a futures or forward position is required as margin to put
on the position. Consequently, JWH has considerable flexibility to make
significant changes in the size of the Trust's open positions. For example, the
margin requirement for the Treasury bond futures contract is only approximately
2% of the face value of each contract. This means that JWH could acquire, for
each $100,000 of Trust capital, positions ranging from a single Treasury bond
contract with a face value of $100,000 up to fifty such contracts
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<PAGE>
with a face value of $5,000,000. The greater the market exposure of the
Trust, the more profit or loss it will recognize as a result of the same
price movements, and the greater its risk, profit potential and expected
performance volatility.
THE MANAGING OWNER
The Managing Owner and Commodity Pool Operator of the Trust is CISI. CISI
was incorporated in Delaware in 1983 and is an affiliate of CIS, the Trust's
futures broker. In addition to the Trust, CISI currently operates two public
commodity pools jointly with IDS Futures Corporation and one private commodity
pool. As of October 31, 1999, the aggregate capitalization of these funds was
approximately $189 million. CISI maintains its principal office at 233 South
Wacker Drive, Suite 2300, Chicago, Illinois 60606; telephone (312) 460-4000.
SEE THE ORGANIZATIONAL CHART OF THE TRUST AT PAGE 2 AND "TRANSACTIONS
BETWEEN THE TRUST AND THE CIS GROUP" AT PAGE 58.
MAJOR RISKS OF THE TRUST
The Trust is a speculative investment. It is not possible to predict how
the Trust will perform over either the long or short term.
Investors must be prepared to lose all or
substantially all of their investment in the Units.
There can be no assurance that the past performance of either the Trust or
JWH is indicative of how they will perform in the future.
The Trust is a single-advisor fund, which is likely to involve higher risk
than multi-advisor funds.
To date, the performance of the Trust has been volatile (one commonly
accepted measure of risk). The Net Asset Value per Unit has varied almost 11%
in a single month.
The Trust could incur large losses over short periods.
The Trust typically takes positions with a face value of three to eight
times its total Net Assets.
Positive correlation among the trading programs (because they trade in some
of the same markets and are all technical, trend-following programs) reduces
diversification and increases the risk of loss.
The performance of the JWH trading programs is dependent upon market trends
of the type that JWH's models are designed to identify. Trendless periods are
frequent, and during such periods the Trust is unlikely to be profitable.
Trading on foreign contract markets involves additional risks, including
the risks of inadequate or lack of regulation, exchange-rate fluctuations,
expropriation, credit and investment controls and counterparty insolvency.
There can be no assurance of the continued availability of JWH or its key
principals.
Because its performance is entirely unpredictable, there is no way of
telling when is a good time to invest in the Trust. Investors have no means of
knowing whether they are buying Units at a time when profitable periods are
ending, beginning, or not in progress.
The Units are not transferable and may only be redeemed once a month.
Because investors must submit irrevocable subscriptions as well as redemption
notices by the fifth business day prior to month-end, they cannot know the Net
Asset Value at which they will acquire or redeem Units. Investors cannot
control the maximum losses on their Units because they cannot be sure of the
redemption value of their Units.
As Unitholders, investors have no voice in the operation of the Trust; they
are entirely dependent on the management of CISI and JWH for the success of
their investment.
FEES AND EXPENSES
The Incentive Fee payable to JWH is calculated on a quarterly basis and
could be substantial even in a breakeven or losing year. The Trust's other
significant expenses are its Brokerage and Management Fees. If the Trust's Net
Asset Value increases, the absolute dollar amount of these percentage-of-assets
fees will
-7-
<PAGE>
also, but they will have the same effect on the Trust's rate of return.
A redeeming Unitholder pays redemption charges to CISI through the end of
the eleventh month after the redeemed Unit was purchased (reducing the
redemption proceeds otherwise payable to investors).
BREAKEVEN TABLE
<TABLE>
<CAPTION> TWELVE-MONTH
DOLLAR
TWELVE-MONTH BREAKEVEN
PERCENTAGE ($5,000 INITIAL
EXPENSES BREAKEVEN INVESTMENT)++
- -------- ----------- --------------
<S> <C> <C>
Brokerage Fees 6.50% $325.00
Management Fee 4.00% $200.00
Incentive Fee* 1.00% $50.00
Administrative Expenses* 0.10% $5.00
Organizational and Initial
Offering Cost Amortization 0.20% $10.00
----- -------
Ongoing Offering Costs 0.50% $25.00
LESS Interest Income* (5.00)% ($250.00)
RETURN ON $5,000 7.30% $365.00
INITIAL INVESTMENT
REQUIRED FOR
"BREAK-EVEN" IF
UNITS HELD AT
LEAST TWELVE
MONTHS
TWELVE-MONTH
BREAKEVEN WITHOUT
REDEMPTION CHARGE 7.30% $365.00
----- -------
Redemption Charge
(on redemptions prior to
twelve months after purchase) 3.00% $150.00
TWELVE-MONTH
BREAKEVEN WITH
REDEMPTION CHARGE 10.30% $515.00
------ -------
</TABLE>
- ---------------
* Estimated. The Incentive Fee is 15% of New Trading Profits and is paid
quarterly; consequently, an Incentive Fee could be due in a breakeven or losing
year.
++ Assumes a constant $5,000 Net Asset Value.
SEE "CHARGES" AT PAGE 50.
PRINCIPAL TAX ASPECTS OF OWNING UNITS
Investors are taxed each year on any gains recognized by the Trust whether
or not they redeem any Units or receive any distributions from the Trust.
40% of any trading profits on U.S. exchange-traded contracts are taxed as
short-term capital gains at the individual investor's ordinary income tax rate
(39.6% maximum), while 60% of such gains are taxed as long-term capital gain at
a 20% maximum rate for individuals. The Trust's trading gains from other
contracts will be primarily short-term capital gain. This tax treatment applies
regardless of how long an investor holds Units. If, on the other hand, an
investor held a stock or bond for twelve months or longer, all the gain realized
on its sale would generally be taxed at a 20% maximum rate.
Losses on the Units may be deducted against capital gains. Any losses in
excess of capital gains may only be deducted against ordinary income to the
extent of $3,000 per year. Consequently, investors could pay tax on the Trust's
interest income even though they have lost money on their Units. See "Tax
Consequences" beginning at page 61.
AN INVESTMENT IN THE UNITS SHOULD BE CONSIDERED AS A LONG-TERM COMMITMENT
The market conditions in which the Trust is likely to recognize significant
profits occur infrequently. An investor should plan to hold Units for long
enough to have a realistic opportunity for a number of such trends to develop.
CISI believes that investors should consider the Units at least a three to
five year commitment.
IS THE TRUST A SUITABLE INVESTMENT FOR YOU?
You should consider investing in the Trust if you are interested in its
potential to produce enhanced returns over the long-term that are generally
unrelated to the returns of the traditional debt and equity markets and you are
prepared to risk significant losses. CISI offers the Trust only as a
diversification opportunity for an investor's entire investment portfolio, not
as a complete investment program. No one should invest
-8-
<PAGE>
more than 10% of his or her readily marketable assets in the Trust.
THE RISKS YOU FACE
POSSIBLE TOTAL LOSS OF AN INVESTMENT IN THE TRUST
You could lose all or substantially all of your investment in the Trust.
SPECIFIC RISKS ASSOCIATED WITH A SINGLE-ADVISOR FUND
Even in the speculative area of managed futures, single-advisor funds are
considered by some to be unusually high risk investments. Multi-advisor
strategies are used by many "commodity pools" specifically for risk control
purposes.
INVESTING IN THE UNITS MIGHT NOT DIVERSIFY AN OVERALL PORTFOLIO
One of the objectives of the Trust is to add an element of diversification
to a traditional securities portfolio. While the Trust may perform in a manner
largely independent from the general stock and bond markets, there is no
assurance it will do so. An investment in the Trust could increase rather than
reduce overall portfolio losses during periods when the Trust as well as stocks
and bonds decline in value. There is no way of predicting whether the Trust
will lose more or less than stocks and bonds in declining markets. Investors
must not rely on the Trust as any form of hedge against losses in their core
securities portfolios.
Prospective investors should consider whether diversification in itself is
worthwhile even if the Trust is unprofitable.
INVESTORS MUST NOT RELY ON THE PAST PERFORMANCE OF EITHER JWH OR THE TRUST IN
DECIDING WHETHER TO BUY UNITS
The performance of the Trust is entirely unpredictable, and the past
performance of the Trust as well as of JWH is not necessarily indicative of
their future results.
The price data which JWH has researched in developing its programs may not
reflect the changing dynamics of future markets. If not, the JWH programs would
have little chance of being profitable. An influx of new market participants,
changes in market regulation, international political developments, demographic
changes and numerous other factors can contribute to once-successful strategies
becoming outdated. Not all of these factors can be identified, much less
quantified. There can be no assurance that JWH will trade profitably.
VOLATILE JWH TRADING HISTORY
JWH's performance, even when successful, has been characterized by
significant volatility. Since the inception of trading of the JWH programs, the
largest "peak-to-valley" drawdown experienced by any single program was nearly
60% on a composite basis, and certain individual accounts managed pursuant to
such program experienced even greater volatility. Moreover, certain programs
have incurred losses of 10% or more in a single trading day. Even if the Trust
is successful, it is likely to experience significant losses from time to time.
The performance of the Trust to date has been volatile.
THE SIMILARITIES AMONG THE JWH PROGRAMS REDUCE DIVERSIFICATION, INCREASING THE
RISK OF LOSS
The similarities among the programs reduce the Trust's diversification.
The less diversification, the higher the risk that the market will move against
a large number of positions held by different programs at the same time,
increasing losses.
OVERLAP OF THE MARKETS TRADED BY JWH ALSO REDUCES DIVERSIFICATION, INCREASING
THE RISK OF LOSS
The trading programs used by the Trust emphasize trading in the financial
instrument and currency markets. The degree of market overlap changes with the
program mix. However, in general, CISI expects the Trust will maintain a
substantial concentration in these two sectors while the current programs
continue to be used for the Trust. Market concentration increases the risk of
major losses and unstable Unit values, as the same price movements
-9-
<PAGE>
adversely affect many of the Trust's concentrated positions at or about the
same time.
As it is impossible to predict where price trends will occur, certain
trend-following managers attempt to maximize the chance of exploiting such
trends by taking positions in as many different markets and market sectors as
feasible. The Trust does not follow this approach and, as a result, may not
capture trends which would have been highly profitable.
ITS SUBSTANTIAL EXPENSES WILL CAUSE LOSSES FOR THE TRUST UNLESS OFFSET BY
PROFITS AND INTEREST INCOME
The Trust pays fixed annual expenses of approximately 11.30% of its average
month-end assets. In addition to this 11.30% annual expense level, the Trust is
subject to 15% quarterly Incentive Fees on any New Trading Profits. Because
these Incentive Fees are calculated quarterly, they could represent a
substantial expense to the Trust even in a breakeven or losing year. Based on
CISI's experience with its other funds, CISI expects that approximately 1% of
the Trust's average month-end assets might be paid out in Incentive Fees even
during a losing year. Overall, investors must expect that the Trust will pay
about 12.30% per year in expenses, 15.30% including the 3% redemption charge in
effect for the first twelve months after a Unit is issued.
The Trust's expenses could, over time, result in significant losses.
Except for the Incentive Fee, these expenses are not contingent and are payable
whether or not the Trust is profitable.
JWH ANALYZES ONLY TECHNICAL MARKET DATA, NOT ANY ECONOMIC FACTORS EXTERNAL TO
MARKET PRICES
The JWH programs focus exclusively on statistical analysis of market
prices. Consequently, any factor external to the market itself which dominates
prices is likely to cause major losses. For example, a pending political or
economic event may be very likely to cause a major price movement, but JWH would
continue to maintain positions that would incur major losses as a result of such
movement, if its programs indicated that it should do so.
The likelihood of the Units being profitable could be materially diminished
during periods when events external to the markets themselves have an important
impact on prices. During such periods, JWH's historical price analysis could
establish positions on the wrong side of the price movements caused by such
events.
LACK OF PRICE TRENDS OR OF THE TYPES OF PRICE TRENDS WHICH JWH PROGRAMS CAN
IDENTIFY WILL CAUSE MAJOR LOSSES
The Trust cannot trade profitably unless major price trends occur in at
least certain markets that it trades. Many markets are trendless most of the
time, and in static markets the JWH programs are likely to incur losses. In
fact, JWH expects more than half of its trades to be unprofitable; it depends on
significant gains from a few major trends to offset these losses. It is not
just any price trend, but price trends of the type which JWH's systems have been
designed to identify, which are necessary for the Trust to be profitable.
THE DANGER TO THE TRUST OF "WHIPSAW" MARKETS
Often, the most unprofitable market conditions for the Trust are those in
which prices "whipsaw," moving quickly upward, then reversing, then moving
upward again, then reversing again. In such conditions, the JWH programs may
establish losing positions based on incorrectly identifying both the brief
upward or downward price movements as trends.
THE LARGE SIZE OF THE TRUST'S TRADING POSITIONS INCREASES THE RISK OF SUDDEN,
MAJOR LOSSES
The Trust takes positions with face values up to as much as approximately
eight times its total equity. Consequently, even small price movements can
cause major losses.
UNIT VALUES ARE UNPREDICTABLE AND VARY SIGNIFICANTLY MONTH-TO-MONTH
The Net Asset Value per Unit can vary significantly month-to-month. In
August 1998, there was almost an 11% change in the value of a Unit. Investors
cannot know at the time they submit a subscription or a redemption request what
the subscription price or redemption value of their Units will be.
-10-
<PAGE>
The only way to take money out of the Trust is to redeem Units. You can
only redeem Units at month-end on five business days' advance notice and subject
to possible redemption charges. The restrictions imposed on redemptions limit
your ability to protect yourself against major losses by redeeming Units.
Transfers of Units are subject to limitations as well, such as advance
written notice of any intent to transfer and the consent of CISI to such
transfer.
In addition, investors are unable to know whether they are subscribing for
Units after a significant upswing in the Net Asset Value per Unit -- often a
time when the Trust has an increased probability of entering into a losing
period.
THE OPPORTUNITY COSTS OF REBALANCING THE JWH PROGRAMS
The quarterly rebalancing of the Trust's assets among its JWH trading
programs may result in the liquidation of profitable positions, thereby
foregoing greater profits which the Trust would otherwise have realized, and the
establishment of unprofitable positions, thereby incurring losses which the
Trust would otherwise have avoided had rebalancing not occurred.
ALTERATION OF TRADING SYSTEMS AND CONTRACTS AND MARKETS TRADED
JWH may, in its discretion, change and adjust the trading programs, as well
as the contracts and markets which they trade. These adjustments may result in
foregoing profits which the trading programs would otherwise have captured, as
well as incurring losses which they would otherwise have avoided. Neither the
Managing Owner nor the Unitholders are likely to be informed of any non-material
changes in the trading programs.
INCREASED COMPETITION FROM OTHER TREND-FOLLOWING TRADERS COULD REDUCE JWH'S
PROFITABILITY
There has been a dramatic increase over the past twenty years in the amount
of assets managed by trend-following trading systems like the JWH programs. In
1980, the amount of assets in the managed futures industry were estimated at
approximately $300 million; by October 1999, this estimate had risen to
approximately $44 billion. It is also estimated that over half of all managed
futures trading advisors rely primarily on trend-following systems. Although
the amount of trading in the futures industry as a whole has increased
significantly during the same period of time, the increase in managed money
increases trading competition. The more competition there is for the same
positions, the more costly and harder they are to acquire.
JWH'S HIGH LEVEL OF EQUITY UNDER MANAGEMENT COULD LEAD TO DIMINISHED RETURNS
JWH has a significant amount of assets under management. As of January 1,
1990, JWH had approximately $197 million under management; as of October 31,
1999, this figure had risen to approximately $2.0 billion. The more money JWH
manages, the more difficult it may be for JWH to trade profitably because of the
difficulty of trading larger positions without adversely affecting prices and
performance. Large trades result in more price slippage than do smaller orders.
ILLIQUID MARKETS COULD MAKE IT IMPOSSIBLE FOR JWH TO REALIZE PROFITS OR LIMIT
LOSSES
In illiquid markets, JWH could be unable to capitalize on the opportunities
identified by it or to close out positions against which the market is moving.
There are numerous factors which can contribute to market illiquidity, far too
many for JWH to predict when or where illiquid markets may occur. JWH attempts
to limit its trading to highly liquid markets, but there can be no assurance
that a market which has been highly liquid in the past will not experience
periods of unexpected illiquidity.
Unexpected market illiquidity has caused major losses in recent years in
such sectors as emerging markets, fixed income relative value strategies and
mortgage-backed securities. There can be no assurance that the same will not
happen to the Trust at any time or from time to time. The large size of the
positions which JWH acquires for the Trust increases the risk of illiquidity by
both making its positions more difficult to liquidate and increasing the losses
incurred while trying to do so.
-11-
<PAGE>
JWH TRADES EXTENSIVELY IN FOREIGN MARKETS; THESE MARKETS ARE LESS REGULATED THAN
U.S. MARKETS AND ARE SUBJECT TO EXCHANGE RATE, MARKET PRACTICES AND POLITICAL
RISKS
The trading programs used for the Trust trade a great deal outside the
U.S. From time to time, as much as 30%-50% of the Trust's overall market
exposure could involve positions taken on foreign markets. Foreign trading
involves risks -- including exchange-rate exposure, possible governmental
intervention and lack of regulation -- which U.S. trading does not. In
addition, the Trust may not have the same access to certain positions on
foreign exchanges as do local traders, and the historical market data on
which JWH bases its strategies may not be as reliable or accessible as it is
in the United States. Certain foreign exchanges may also be in a more or
less developmental stage so that prior price histories may not be indicative
of current price dynamics. The rights of clients in the event of the
insolvency or bankruptcy of a non-U.S. market or broker are also likely to be
more limited than in the case of U.S. markets or brokers.
UNREGULATED MARKETS LACK REGULATORY PROTECTIONS OF EXCHANGES
A substantial portion of the Trust's trading -- primarily its trading of
spot and forward contracts in currencies -- takes place in unregulated
markets. It is impossible to determine fair pricing, prevent abuses such as
"front-running" or impose other effective forms of control over such markets.
The absence of regulation could expose the Trust in certain circumstances to
significant losses which it might otherwise have avoided.
MANDATORY CLOSING OUT OF OFFSETTING POSITIONS
Applicable CFTC rules require that offsetting positions taken by JWH on
behalf of the Trust, even though taken by different programs, be closed out.
JWH does not believe that the requirement of liquidating offsetting positions
held for the Trust by the trading programs will, at this point, impede the
operation of the Trust. However, it is possible that under certain
circumstances the requirement to close out offsetting positions on an
inter-program basis could adversely affect the performance of the Trust. The
fact that JWH operates three strategies for the same account without having
its overall performance disrupted by the CFTC's "close out" rule demonstrates
the extent of the similarities between the trading programs and the
likelihood of significant positive correlation among their respective trading
results.
REGULATORY CHANGES COULD RESTRICT THE TRUST'S OPERATIONS
The Trust implements a speculative, highly leveraged strategy. From time
to time there is governmental scrutiny of these types of strategies and
political pressure to regulate their activities. For example, the Malaysian
government recently blamed the collapse of its currency on speculative funds and
called for international restrictions on their operations.
Regulatory changes could adversely affect the Trust by restricting its
markets, limiting its trading and/or increasing the taxes to which Unitholders
are subject. As an example, in the mid-1980s the CFTC raised doubts concerning
the legality of futures funds trading currency forwards, and the legality of EFP
transactions come under periodic CFTC review. EFPs are a mechanism for
converting a foreign currency forward into a futures contract. If JWH could not
trade currency forwards or EFPs for the Trust, the effect on the Trust could be
material and adverse. CISI is not aware of any pending or threatened regulatory
developments which might adversely affect the Trust. However, adverse
regulatory initiatives could develop suddenly and without notice.
POSSIBLE EFFECTS OF THE EUROPEAN MONETARY UNION
JWH historically has traded European currencies. The market's reaction to
the Euro, or to any nation's possible withdrawal from the European Monetary
Union, may adversely affect the trading opportunities, or trading results
generally, of currency traders. The absence of historical Euro pricing data
could be detrimental to trend-following traders such as JWH.
The conversion to a single euro-currency is a very significant and novel
political and economic event and there can be no certainty about its direct or
indirect future effects on currency markets. Unforeseen effects of the European
Monetary Union could result in trading losses for the Trust.
-12-
<PAGE>
Euro risk, in the form of positions in Euro forward contracts and futures
contracts on Euro-denominated bond interest rates, has been gradually introduced
with increasing exposure throughout 1999 to maintain the Trust's European risk
allocations at a level similar to pre-Euro weightings.
THE TRUST COULD LOSE ASSETS AND HAVE ITS TRADING DISRUPTED DUE TO THE BANKRUPTCY
OF CISI OR OTHERS
The Trust is subject to the risk of CISI, exchange or clearinghouse
insolvency. Trust assets could be lost or impounded in such an insolvency
during lengthy bankruptcy proceedings. Were a substantial portion of the
Trust's capital tied up in a bankruptcy, CISI might suspend or limit trading,
perhaps causing the Trust to miss significant profit opportunities. No CISI
fund has ever lost any assets due to the bankruptcy or default of a broker,
exchange or clearinghouse, but there can be no assurance that this will not
happen in the future.
POSSIBILITY OF TERMINATION OF THE TRUST BEFORE EXPIRATION OF ITS STATED TERM
As Managing Owner, CISI may withdraw from the Trust upon 120 days' notice,
which would cause the Trust to terminate unless a substitute managing owner were
obtained. Other events, such as a long-term substantial loss suffered by the
Trust, could also cause the Trust to terminate before the expiration of its
stated term. This could cause you to liquidate your investments and upset the
overall maturity and timing of your investment portfolio. If the registrations
with the CFTC or memberships in NFA of JWH, CISI or CIS were revoked or
suspended, such entity would no longer be able to provide services to the Trust.
YEAR 2000 ISSUES
The first time an Investor who subscribes on the basis of this prospectus
can participate in the Trust is February 1, 2000. Many, if not all, of the
effects of the Year 2000 Problem on the Trust and its service providers will be
known by then. Nevertheless, the Trust and its service providers may continue
to be affected negatively by the Year 2000 Problem.
The Trust does not have any systems or technology applications of its own
relevant to its operations. Instead, it relies on the smooth functioning of
third parties' computer systems. Both CIS and JWH have taken steps to identify,
update and test their internal computer systems that are Year 2000 vulnerable.
Additionally, each has prepared contingency plans to address the malfunction of
any part of its internal systems or the third-party systems on which they rely.
Despite their efforts, there can be no assurance that CIS, CISFS, CISI, JWH
and the Trust's other service providers have anticipated every step necessary to
avoid any adverse effect on the Trust attributable to the Year 2000 Problem.
CISI believes that a possible worst case scenario would be one in which it
becomes impossible for the Trust to continue trading as a result of the Year
2000 Problem. If CISI and/or JWH foresee such a situation, the Trust will
either attempt to liquidate all positions and/or establish relationships with
additional counterparties in order to permit trading to continue.
------------
THE FOLLOWING ARE NOT RISKS BUT RATHER IMPORTANT TAX FEATURES OF INVESTING
IN THE TRUST WHICH ALL PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER BEFORE
DECIDING WHETHER TO PURCHASE UNITS.
INVESTORS ARE TAXED EVERY YEAR ON THEIR SHARE OF THE TRUST'S PROFITS -- NOT ONLY
WHEN THEY REDEEM AS WOULD BE THE CASE IF THEY HELD STOCKS OR BONDS
Investors are taxed each year on their investment in the Trust,
irrespective of whether they redeem any Units.
All performance information included in this prospectus is presented on a
pre-tax basis; the investors who experienced such performance had to pay the
related taxes from other sources.
Over time, the compounding effects of the annual taxation of the Trust's
income are material to the economic consequences of investing in the Trust. For
example, a 10% compound annual rate of return over five years would result in an
initial $10,000 investment compounding to $16,105. However, if one factors in a
30% tax rate each year, the result would be $14,025.
-13-
<PAGE>
THE TRUST'S TRADING GAINS ARE TAXED AT HIGHER SHORT-TERM CAPITAL GAINS RATE
Investors are taxed on their share of any trading profits of the Trust at
both short- and long-term capital gain rates depending on the mix of U.S.
exchange-traded contracts and non-U.S. contracts traded. These tax rates are
determined irrespective of how long an investor holds Units. Consequently, the
tax rate on the Trust's trading gains may be higher than those applicable to
other investments held by an investor for a comparable period.
TAX COULD BE DUE FROM INVESTORS ON THEIR SHARE OF THE TRUST'S INTEREST INCOME
DESPITE OVERALL LOSSES
Investors may be required to pay tax on their allocable share of the
Trust's interest income, even though the Trust incurs overall losses. Trading
losses can only be used by individuals to offset trading gains and $3,000 of
interest income each year. Consequently, if an investor were allocated $5,000
of interest income and $10,000 of net trading losses, the investor would owe tax
on $2,000 of interest income even though the investor would have a $5,000
economic loss for the year. The $7,000 capital loss would carry forward, but
subject to the same limitation on its deductibility against interest income.
INVESTMENT FACTORS
THE MANAGING OWNER'S OBJECTIVE IN SPONSORING THE TRUST WITH JWH AS ITS SOLE
TRADING ADVISOR IS TO OFFER AN INVESTMENT WHICH HAS THE POTENTIAL OF ACHIEVING
SUBSTANTIAL CAPITAL APPRECIATION OVER TIME TO THOSE INVESTORS WHOSE RISK
TOLERANCE LEVELS CAN ACCEPT SIGNIFICANT RISK AND EXPECTED VOLATILITY IN
PERFORMANCE. IF SUBSTANTIAL LOSSES CAN BE AVOIDED, THE MANAGING OWNER AND JWH
BELIEVE THAT THE TRUST HAS A REASONABLE OPPORTUNITY TO GENERATE SIGNIFICANT
PROFITS OVER TIME, DESPITE EXHIBITING CONSIDERABLE INTRA-PERIOD VOLATILITY, BY
CAPITALIZING ON MAJOR PRICE MOVEMENTS WHEN THEY DO OCCUR. IF SUCCESSFUL, THE
TRUST OFFERS INVESTORS THE FOLLOWING POTENTIAL ADVANTAGES.
ACCESS TO JWH AND THE TRADING PROGRAMS
By investing in the Trust, subscribers have the opportunity to place assets
with an experienced active managed futures advisor. JWH is one of the largest
advisors in the managed futures industry in terms of assets under management.
JWH has been continuously managing client funds in the futures and forward
markets for over sixteen years and, as of October 31, 1999, managed
approximately $2.0 billion in client capital. JWH has achieved substantial
profits under a variety of different market conditions and trading a variety of
different programs, including the Financial and Metals Portfolio, the G-7
Currency Portfolio and JWH GlobalAnalytics-Registered Trademark- Family of
Programs.
INVESTMENT DIVERSIFICATION
The globalization of the world's economy offers potentially valuable
trading opportunities, as major political and economic events continue to
influence world markets, at times dramatically. Volatility in interest rates,
the possibility of significant fluctuations in the value of commodities and
currencies, the consolidation of European currencies, fragility in world banking
and credit mechanisms and the growing interdependence among national economies
create high risks but also substantial opportunities for profit. These
developments may make a diversification into an investment vehicle such as the
Trust timely.
Unlike a traditional diversified portfolio of stocks, bonds and real
estate, the profit potential of the Trust does not depend upon favorable general
economic conditions and the Trust is as likely to be profitable (or
unprofitable) during periods of declining stock, bond and real estate markets as
at any other time. In addition to the expected non-correlation in its
performance with the performance of the general equity and debt markets, the
Trust's flexibility to take either long or short positions, as opposed to
traditional portfolios which are typically heavily weighted towards the former,
can be an important advantage in times of economic uncertainty.
An investor who is not prepared to spend substantial time trading in the
futures and forward markets may nevertheless participate in the commodities and
financial markets through investing in the Trust, thereby obtaining
diversification from
-14-
<PAGE>
traditional investments such as a diversified portfolio of stocks, bonds and
real estate. By allocating a portion of the risk segment of a traditional
diversified portfolio to the Trust, an investor has the potential, if the
Trust is successful, to enhance the prospects for superior performance of the
overall portfolio as well as to reduce the volatility of the portfolio over
time and the dependence of such portfolio on any single country's economy.
The following graph demonstrates the potential effects of adding managed
futures to a traditional stocks and bonds portfolio. The graph assumes a
constant 60/40 ratio of stocks to bonds as futures are gradually introduced in
the portfolio. Adding futures has the potential to increase returns while
decreasing standard deviation (one measure of risk). Once the futures exceed
approximately 20% of the investment portfolio, returns continue to increase but
so does standard deviation.
[GRAPH]
EFFICIENT FRONTIER
<TABLE>
<CAPTION>
(%) OF ANNUALIZED COMPOUND
PORTFOLIO STANDARD ANNUAL RATE
IN MANAGED DEVIATION OF RETURN
FUTURES (%) (%)
<S> <C> <C>
0 11.51 14.81
1 11.32 14.82
3 10.99 14.83
4 10.84 14.83
5 10.7 14.83
6 10.57 14.84
7 10.46 14.84
8 10.35 14.85
9 10.26 14.85
10 10.18 14.85
11 10.1 14.86
12 10.04 14.86
13 9.99 14.87
14 9.95 14.87
15 9.91 14.87
16 9.89 14.88
17 9.87 14.88
18 9.86 14.89
19 9.86 14.89
20 9.87 14.89
21 9.89 14.9
22 9.91 14.9
23 9.94 14.91
24 9.97 14.91
25 10.02 14.91
26 10.06 14.92
27 10.12 14.92
28 10.17 14.93
29 10.24 14.93
30 10.31 14.93
31 10.38 14.94
32 10.45 14.94
33 10.53 14.95
34 10.62 14.95
35 10.71 14.95
36 10.8 14.96
37 10.89 14.96
38 10.98 14.97
39 11.08 14.97
40 11.18 14.97
41 11.29 14.98
42 11.39 14.98
43 11.5 14.99
44 11.61 14.99
45 11.72 14.99
46 11.83 15
47 11.94 15
</TABLE>
-15-
<PAGE>
<TABLE>
<S> <C> <C>
48 12.05 15.01
49 12.17 15.01
50 12.29 15.01
51 12.4 15.02
52 12.52 15.02
53 12.64 15.02
54 12.76 15.03
55 12.88 15.03
56 13 15.04
57 13.12 15.04
58 13.24 15.04
59 13.36 15.05
60 13.48 15.05
61 13.6 15.06
62 13.72 15.06
63 13.85 15.06
64 13.97 15.07
65 14.09 15.07
66 14.21 15.08
67 14.33 15.08
68 14.46 15.08
69 14.58 15.09
70 14.7 15.09
71 14.82 15.09
72 14.94 15.1
73 15.06 15.1
74 15.18 15.11
75 15.3 15.11
76 15.43 15.11
77 15.55 15.12
78 15.67 15.12
79 15.78 15.13
80 15.9 15.13
81 16.02 15.13
82 16.14 15.14
83 16.26 15.14
84 16.38 15.14
85 16.5 15.15
86 16.61 15.15
87 16.73 15.16
88 16.85 15.16
89 16.96 15.16
90 17.08 15.17
91 17.2 15.17
92 17.31 15.17
93 17.43 15.18
94 17.54 15.18
95 17.65 15.19
96 17.77 15.19
97 17.88 15.19
98 17.99 15.2
99 18.11 15.2
100 18.22 15.21
</TABLE>
SOURCE:
Stocks -- Standard & Poor's Composite 500 Stock Price Index.
Bonds -- Lehman Brothers' Long Term Government Bond Index.
Managed Futures -- Barclays CTA Index.
THE MANAGED FUTURES COMPONENT OF THE PORTFOLIO DEPICTED ON THE"EFFICIENT
FRONTIER" GRAPH ABOVE IS THE PERFORMANCE OF AN INDEX, NOT THE PERFORMANCE OF THE
TRUST. FOR RETURNS TO CONTINUALLY INCREASE, MANAGED FUTURES MUST OUT-PERFORM
STOCKS OR BONDS. AN INVESTOR MAY LOSE ALL OF HIS OR HER INVESTMENT IN FUTURES.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
OPPORTUNITY TO PROFIT IN DECLINING AS WELL AS IN RISING MARKETS
The futures markets offer the ability to trade either side of the market.
Unlike short selling in the securities markets, taking short positions in the
futures market (or buying a put option or selling a call option) in anticipation
of a drop in price can be accomplished without additional restrictions or
special margin requirements. Selling short is no more difficult than
establishing a long position.
The profit and loss potential of futures trading is not dependent upon
economic prosperity or interest rate or currency stability. Positive and
negative returns may be realized in both rising and declining markets. It is
potentially advantageous for investors to own assets which can appreciate during
a period of generally declining prices, financial disruption or economic
instability.
INTEREST ON TRUST ASSETS
The Trust receives interest income on its assets. On the fifth business
day of each month, CIS and CISFS credit the Trust's account with interest as
if 100% of the Trust's average daily balances on deposit with CIS or CISFS,
as the case may be, in the previous month were continuously invested at the
average 91-day Treasury bill rate for that previous month for deposits
denominated in dollars and at the applicable rate for deposits denominated in
currencies other than dollars. The interest earned on the Trust's assets can
offset a substantial portion of its routine costs. The
-16-
<PAGE>
Trust's interest income represents a source of revenue entirely independent
of the success or failure of its speculative futures and forward trading.
Although CISI has not yet done so, CISI may place some of the Trust's
assets with a Custodian and hire a third-party cash manager to manage that
money. If Trust assets are deposited with such Custodian, the Trust will
receive the interest actually earned by the third-party cash manager on such
assets. CIS has agreed to credit the account of the Trust at each month-end
the amount, if any, by which returns (net of fees of the cash manager) for
such month on Trust assets held by a Custodian are less than the return that
would have been realized by the Trust had such assets been deposited with
CIS.
SMALL MINIMUM INVESTMENT
JWH is typically available to manage individual accounts only of
substantial size -- $5,000,000 or more. Investors in the Trust are currently
able to gain access to three JWH programs for a minimum investment of only
$5,000; $2,000 in the case of trustees or custodians of eligible employee
benefit plans and individual retirement accounts. A small minimum investment
requirement makes the Trust accessible to a wide range of investors and also
means that no investor must commit a significant amount of assets in order to
participate in the Trust.
LIMITED LIABILITY
An investor who opens an individual futures account is generally liable for
all losses incurred in such account, and may lose substantially more than such
investor committed to the account, particularly in light of the large positions
in relation to capital used in futures and forward trading. However, a
Unitholder cannot lose more than his or her investment in the Trust plus
undistributed profits. In fact, in the event the Net Asset Value of a Unit
decreases to less than 50% of the previous highest month-end Net Asset Value per
Unit as of the close of business on any day, the Managing Owner is required to
cause the Trust to liquidate all open positions, suspend trading and declare a
Special Redemption Date in accordance with the provisions in the Declaration and
Agreement of Trust. Without limited liability, it could be imprudent for an
investor to participate in strategies like those applied by JWH where positions
may be large in relation to account equity.
ADMINISTRATIVE CONVENIENCE
The Trust is structured so as to substantially eliminate the
administrative burden which would otherwise be involved in Unitholders
engaging directly in futures and forward trading. Unitholders receive
monthly unaudited and annual certified financial reports as well as all tax
information relating to the Trust necessary for Unitholders to complete their
federal income tax returns. The approximate daily Net Asset Value per Unit
is available by calling your registered representative or CISI at (312)
460-4000 or toll free at (888) 292-9399.
HOW THE TRUST WORKS
BUYING UNITS
You buy Units as of the last business day of any month at net asset value.
your subscription must be submitted by the fifth business day prior to the
month-end of investment. late subscriptions will be applied to unit sales as of
the end of the second month after receipt, unless revoked.
CISI has no present intention to terminate the offering, but may do so at
any time.
Units are offered at Net Asset Value.
Investors need to submit Subscription Agreements with each purchase of
Units.
The minimum purchase for first-time investors is $5,000; $2,000 for IRAs
and other tax-exempt accounts. Existing investors may make additional
investments in $1,000 minimums.
USE OF PROCEEDS
100% of all subscription proceeds are invested directly into the Trust.
Neither the Trust nor any subscriber pays any selling commissions. CISI pays
all such commissions as part of the ongoing syndication costs of the Trust. In
return, CISI receives substantial revenues from the Trust over time.
-17-
<PAGE>
The Trust uses subscription proceeds to margin its speculative futures
trading, as well as to pay trading losses and expenses. At the same time that
the Trust's assets are being used as margin, they are also available for cash
management. Substantially all the cash management return earned on the Trust's
assets is paid to the Trust, although the CIS Group does retain certain economic
benefits from possession of the Trust's assets, as described in more detail
under "Interest Income" beginning at page 49.
REDEEMING UNITS
You can redeem Units monthly. To redeem at month-end, contact your
registered representative or CISI. Redemption requests must be received by
CISI no later than the fifth business day prior to the month-end of
redemption.
The proceeds of Units redeemed through the eleventh month from the date
of issuance are reduced by a charge of 3% of their redemption date Net Asset
Value. This charge is paid to CIS. If a Unitholder acquires Units at more
than one closing, the Units purchased first by such investor and, accordingly,
least likely to be subject to redemption charges, are assumed to be those
first redeemed.
UNCERTAIN SUBSCRIPTION AND REDEMPTION VALUE OF UNITS
The Trust sells and redeems Units at subscription or redemption date Net
Asset Value, not at the Net Asset Value as of the date that subscriptions or
redemption requests are submitted. Investors must submit irrevocable
subscriptions and redemption requests no later than the fifth business day prior
to the effective date of subscription or redemption. Because of the volatility
of Unit values, this delay means that investors cannot know the value at which
they will purchase or redeem their Units.
Materially adverse changes in the Trust's financial position could occur
between the time an investor irrevocably commits to acquire or redeem Units and
the time the purchase or redemption is made.
NO DISTRIBUTIONS INTENDED
The Trust does not anticipate making any distributions to investors. No
distributions have been made to date.
-18-
<PAGE>
PERFORMANCE OF THE TRUST
The following are the monthly rates of return and the month-end Net Asset
Value per Unit from the inception of the Trust through October 31, 1999.
JWH GLOBAL TRUST
JUNE 2, 1997 - OCTOBER 31, 1999
AGGREGATE SUBSCRIPTIONS: $115.1 MILLION
CURRENT CAPITALIZATION: $88.0 MILLION
WORST MONTHLY DECLINE (MONTH/YEAR): (9.97)% 11/98
WORST PEAK-TO-VALLEY DECLINE (MONTH/YEAR): (14.41)% 7/99 - 10/99
NET ASSET VALUE PER UNIT, OCTOBER 31, 1999: $103.44
NUMBER OF UNITHOLDERS, OCTOBER 31, 1999: 3,682
<TABLE>
<CAPTION>
1999 1998 1997
------------------------------------------------------------------------------
MONTHLY MONTHLY MONTHLY
RATES OF MONTH-END RATES OF MONTH-END RATES OF MONTH-END
MONTH RETURN NAV PER UNIT RETURN NAV PER UNIT RETURN NAV PER UNIT
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
January (4.08)% $110.70 (2.83)% $106.59
- -----------------------------------------------------------------------------------------------
February 2.78 113.78 (1.14) 105.38
- -----------------------------------------------------------------------------------------------
March (0.78) 112.89 (3.03) 102.20
- -----------------------------------------------------------------------------------------------
April 3.89 117.28 (4.59) 97.51
- -----------------------------------------------------------------------------------------------
May (0.20) 117.04 3.44 100.85
- -----------------------------------------------------------------------------------------------
June 2.58 120.06 (1.63) 99.21 0.16% $100.16
- -----------------------------------------------------------------------------------------------
July (3.42) 115.96 (3.05) 96.18 6.64 106.81
- -----------------------------------------------------------------------------------------------
August (0.25) 115.66 10.84 106.61 (2.26) 104.39
- -----------------------------------------------------------------------------------------------
September (3.67) 111.42 8.02 115.16 (1.46) 102.88
- -----------------------------------------------------------------------------------------------
October (7.16) 103.44 2.73 118.30 2.46 105.40
- -----------------------------------------------------------------------------------------------
November (9.97) 106.51 0.83 106.28
- -----------------------------------------------------------------------------------------------
December 8.35 115.40 3.22 109.70
- -----------------------------------------------------------------------------------------------
COMPOUND (10.36)% 9.70%
ANNUAL RATE (10 months) -- 5.20% -- (7 months) --
OF RETURN
- -----------------------------------------------------------------------------------------------
</TABLE>
UNTIL OCTOBER 5, 1998, WHEN THE G-7 CURRENCY PROGRAM WAS ADDED TO THE TRUST'S
PORTFOLIO, THE TRUST USED ONLY TWO JWH PROGRAMS, THE ORIGINAL INVESTMENT
PROGRAM AND THE FINANCIAL AND METALS PORTFOLIO. BEGINNING IN JANUARY 2000,
THE TRUST WILL SUBSTITUTE THE JWH GLOBALANALYTICS-Registered Trademark-
FAMILY OF PROGRAMS FOR THE ORIGINAL INVESTMENT PROGRAM AND CHANGE THE
ALLOCATION OF TRUST ASSETS AMONG THE THREE PROGRAMS.
MONTHLY RATE OF RETURN IS THE NET PERFORMANCE OF THE TRUST DURING A MONTH
(INCLUDING INTEREST INCOME) DIVIDED BY THE TOTAL EQUITY OF THE TRUST AS OF
THE BEGINNING OF THE MONTH. PERFORMANCE INFORMATION IS CALCULATED ON AN
ACCRUAL BASIS IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
WORST PEAK-TO-VALLEY DECLINE IS THE LARGEST DECLINE IN THE NET ASSET VALUE
PER UNIT WITHOUT SUCH NET ASSET VALUE PER UNIT BEING SUBSEQUENTLY EQUALED OR
EXCEEDED.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
-19-
<PAGE>
SELECTED FINANCIAL INFORMATION
The following Selected Financial Information for the period ended
September 30, 1999 is derived from the unaudited financial statements of the
Trust for the period from January 1, 1999 to September 30, 1999. The
Selected Financial Information for the year ended December 31, 1998 and the
period ended December 31, 1997 is derived from the financial statements for
the year ended December 31, 1998 and the period from June 2, 1997
(commencement of trading operations) to December 31, 1997, which have been
audited by KPMG LLP. See "Financial Statements" at page 67.
_________________________
<TABLE>
<CAPTION>
JAN. 1, 1999 JUNE 2, 1997
TO JAN. 1, 1998 (COMMENCEMENT OF
SEPT. 30, 1999 TO TRADING OPERATIONS) TO
INCOME STATEMENT DATA (UNAUDITED) DEC. 31, 1998 DEC. 31, 1997
- --------------------- -------------- ------------- ----------------------
<S> <C> <C> <C>
Revenues:
Realized gain (loss) on closed positions $ 9,910,068 $ 10,418,484 $ 1,761,637
Change in unrealized gain (loss) on
open positions (7,131,800) 3,078,002 4,481,153
Interest income 3,192,207 3,669,771 1,042,648
Foreign currency transaction gain (loss) (260,400) (296,969) (297,458)
------------ ------------ ------------
Total Revenues $ 5,710,077 $ 16,869,288 $ 6,987,980
============ ============ ============
Expenses:
Commissions paid to CIS 4,700,178 5,195,089 1,441,635
Exchange, clearing, and NFA fees 63,378 59,724 12,426
Management fees 2,935,732 3,239,007 896,312
Incentive fees 853,599 1,383,562 715,477
Amortization of prepaid initial
organization and offering expenses 99,129 132,173 66,238
Ongoing organization and offering
expenses 363,004 400,616 110,352
Operating expenses 45,639 58,596 94,292
------------ ------------ ------------
Total Expenses 9,060,659 10,468,767 3,336,732
------------ ------------ ------------
Net profit (loss) $ (3,350,583) $ 6,400,521 $ 3,651,248
============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
SEPT. 30, 1999
NET DEC. 31, 1998 DEC. 31, 1997
ASSET VALUE NET NET
BALANCE SHEET DATA (UNAUDITED) ASSET VALUE ASSET VALUE
- ------------------ -------------- ------------- -------------
<S> <C> <C> <C>
AGGREGATE NET ASSET VALUE $ 94,830,715 $ 95,472,546 $ 64,351,524
NET ASSET VALUE PER UNIT $111.42 $115.40 $109.70
</TABLE>
THE $650,000 OF ORGANIZATIONAL AND INITIAL OFFERING COSTS REIMBURSED TO
THE MANAGING OWNER BY THE TRUST AS OF THE COMMENCEMENT OF TRADING ARE BEING
AMORTIZED OVER A SIXTY-MONTH PERIOD BEGINNING WITH JUNE 1997.
-20-
<PAGE>
MANAGEMENT'S ANALYSIS OF OPERATIONS
RESULTS OF OPERATIONS
GENERAL
JWH programs do not predict price movements. No fundamental economic
supply or demand analysis is used in attempting to identify mispricings in
the market, and no macroeconomic assessments of the relative strengths of
different national economies or economic sectors is made. Instead, the
programs apply proprietary computer models to analyze past market data, and
from this data alone attempt to determine whether market prices are trending.
Technical traders such as JWH base their strategies on the theory that
market prices reflect the collective judgment of numerous different traders
and are, accordingly, the best and most efficient indication of market
movements. However, there are frequent periods during which fundamental
factors external to the market dominate prices.
If JWH's models identify a trend, they signal positions which follow it.
When these models identify the trend as having ended or reversed, these
positions are either closed out or reversed. Due to their trend-following
character, the JWH programs do not predict either the commencement or the end
of a price movement. Rather, their objective is to identify a trend early
enough to profit from it and to detect its end or reversal in time to close
out the Trust's positions while retaining most of the profits made from
following the trend.
In analyzing the performance of JWH's trend-following programs, economic
conditions, political events, weather factors, etc., are not directly
relevant because only market data has any input into JWH's trading results.
There is no direct connection between particular market conditions and price
trends. There are so many influences on the markets that the same general
type of economic event may lead to a price trend in some cases but not in
others. The analysis is further complicated by the fact that the programs
are designed to recognize only certain types of trends and to apply only
certain criteria of when a trend has begun. Consequently, even though
significant price trends may occur, if these trends are not comprised of the
type of intra-period price movements which the programs are designed to
identify, the Trust may miss the trend altogether.
The Trust's success depends on JWH's ability to recognize and capitalize
on major price movements and other profit opportunities in different sectors
of the world economy. Because of the speculative nature of its trading,
operational or economic trends have little relevance to the Trust's results,
and its past performance is not necessarily indicative of its future results.
The Managing Owner believes, however, that there are certain market
conditions -- for example, markets with major price movements -- in which the
Trust has a better opportunity of being profitable than in others.
The following performance summary outlines certain major price trends
which the JWH programs have identified for the Trust since inception. The
fact that certain trends were captured does not imply that others, perhaps
larger and potentially more profitable trends, were not missed or that JWH
will be able to capture similar trends in the future. Moreover, the fact
that the programs were profitable in certain market sectors in the past does
not mean that they will be so in the future.
The performance summary is an outline description of how the Trust
performed in the past, not necessarily any indication of how it will perform
in the future. Furthermore, the general causes to which certain trends are
attributed may or may not in fact have caused such trends, as opposed to
simply having occurred at about the same time.
While there can be no assurance that JWH will be profitable even in
trending markets, markets in which substantial and sustained price movements
occur offer the best profit potential for the Trust.
PERFORMANCE SUMMARY
1999
Through September 30, 1999, total contributions to the Trust equalled
$15,539,374, none of which were made by the Managing Owner, and investors
redeemed Units in the amount of $12,830,623. The Trust achieved realized and
unrealized trading gains of $2,517,868 and interest
-21-
<PAGE>
income of $3,192,209. Total expenses of the Trust were $9,060,659, resulting
in a net loss of $3,350,583 and a decrease in the Net Asset Value per Unit of
$3.98.
In January, the Trust posted a loss resulting primarily from volatility
in the currency sector as well as Japanese interest rates. The Trust posted
a gain for February resulting primarily from trading in precious metals and
currencies. During March, concerns about the military conflict in Kosovo
mounted. As a result, the global markets experienced increased volatility,
namely in precious metals and interest rates, and the Trust posted a small
loss. Overall, the first quarter of fiscal 1999 ended negatively for the
Trust, which recorded a loss of $2,085,640.
The Trust recorded a gain of $6,060,792 for the second quarter of 1999.
In April, the Trust posted a gain resulting primarily from an appreciating
Japanese stock market, rising crude oil prices, falling commodity prices and
continued appreciation of the U.S. Dollar versus the Euro and Swiss Franc.
The Trust posted a loss during May resulting primarily from the currencies
and indices and despite the declining price of gold and the continued decline
of the Euro currency. The Trust posted a gain in June as it continued to
benefit from the freefall in gold prices and the declining Euro currency.
The third quarter ended negatively for the Trust, which recorded a loss
of $7,325,734. In July, the Trust posted a loss resulting primarily from
excessive volatility in the currency markets. The Trust posted small gains
during August resulting primarily from the weakening U.S. dollar and long
positions in the Yen which became more profitable due to the apparent flight
to quality to the Yen. During September, the Trust surrendered profits due to
rapidly escalating gold prices and the Trust's short gold positions.
1998
During 1998, total contributions to the Trust equaled $37,938,405,
including the Managing Owner's contribution of $361,483, and investors
redeemed Units in the amount of $13,217,904. The Trust achieved realized and
unrealized trading gains of $13,199,517 and interest income of $3,669,771.
Total expenses of the Trust were $10,468,767, resulting in a net profit of
$6,400,521 and an increase in the Net Asset Value per Unit of $5.70.
The Trust had a profitable year in 1998, producing a net gain of 5.20%
for the calendar year. The year 1998 was marked by declining global interest
rates and commodity prices and extremely volatile currency fluctuations. 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 benefitted 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.
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 for 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 liquidated
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
-22-
<PAGE>
addition, the Trust was short the Nikkei and FTSE equity indices. Gold and
silver prices fell to 1998 lows, and 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. A long Japanese
yen position provided the only profit for the Trust in October but was the
largest losing position in November. Yet, by December, long Japanese yen
positions were again 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 500 and German DAX proved rewarding.
1997 (SEVEN MONTHS)
During 1997, total contributions to the Trust equalled $61,630,136,
including the Managing Owner's contribution of $610,000, and investors
redeemed Units in the amount of $929,860. The Trust achieved realized and
unrealized trading gains of $5,945,332 and interest income of $1,042,648.
Total expenses of the Trust were $3,336,732, resulting in net income of
$3,651,248 and an increase in the Net Asset Value per Unit of $9.70.
The Trust posted positive returns for 1997, which was the Trust's first
year of trading. In 1997 the global futures markets showed a great deal of
volatility and JWH programs were well positioned to profit from these moves.
The Trust produced a net gain of 9.70% for the seven months it traded during
the calendar year. The year 1997 was marked by declining gold prices and
interest rates around the globe and a rising U.S. dollar relative to the
German mark and Japanese yen. The strength of these market moves proved
beneficial to the Trust. The price of gold declined to the lowest level in
over a decade reflecting its declining value as an alternative monetary asset
as central banks increased their willingness to sell or lease the precious
metal. Solid gains were generated in the global interest rate markets,
particularly in the Japanese government bond where yields plummeted to
historic lows as the nation sank relentlessly into a recession. Strong gains
were also recorded in Australian 10-year bonds and 3-year notes and in German
and Italian bonds. Gains were realized in positions in the German mark,
which weakened in world markets as hopes for European monetary union rose.
The U.S. dollar dominated the world currencies reflecting sound economic
fundamentals in the U.S. The Trust benefited from the upward price movement
in natural gas during the summer and fall. However, energy markets were
disappointing as ample world inventories and mild weather kept supply and
demand in balance. In addition, losses were incurred in agricultural
markets, despite strong performance by coffee futures earlier in the year.
The Trust ended the year with a profit of $3,651,248.
LIQUIDITY AND CAPITAL RESOURCES
The amount of assets invested in the Trust generally does not affect its
performance, as typically this amount is not a limiting factor on the
positions acquired by JWH, and the Trust's expenses are primarily charged as
a fixed percentage of its asset base, however large.
The Trust sells no securities other than the Units. The Trust borrows
only to a limited extent and only on a strictly short-term basis in order to
finance losses on non-U.S. dollar denominated trading positions pending the
conversion of the Trust's dollar deposits. These borrowings are at a
prevailing short-term rate in the relevant currency. They have been
immaterial to the Trust's operation to date and are expected to continue to
be so.
The Net Asset Value of the Trust's cash and financial instruments is not
materially affected by inflation. Changes in interest rates, which are often
associated with inflation, could cause the value of certain of the Trust's
debt securities to decline, but only to a limited extent. More importantly,
changes in interest rates could cause periods of strong up or down price
trends, during which the Trust's profit potential generally increases.
Inflation or deflation in commodity prices could also generate price
movements which the programs might successfully follow.
The Trust's assets are held primarily in cash. Except in very unusual
circumstances, the Trust should be able to close out any or all of its open
trading positions and liquidate any or all of its securities holdings quickly
and at market prices. This should permit JWH to limit losses as well as
reduce market
-23-
<PAGE>
exposure on short notice should its programs indicate reducing market
exposure. In addition, because there is a readily available market value for
the Trust's positions and assets, the Trust's monthly Net Asset Value
calculations are precise, and investors need only wait ten business days to
receive the full redemption proceeds of their Units.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT THE TRUST'S 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.
INTERIM PERIODS
In accordance with SEC regulations, the quantitative and qualitative
disclosures about the Trust's market risk are provided as of December 31,
1998, which is the end of the Trust's most recent fiscal year. CISI believes
that there have not been any material changes to either the sources of the
Trust's trading and non-trading market risk or their impacts on the Trust
since the end of 1998. Quantitative information regarding the Trust's
Trading Value at Risk as of September 30, 1999 is provided for comparative
purposes.
QUANTIFYING THE TRUST'S TRADING VALUE AT RISK
QUANTITATIVE 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
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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 funda-mentals 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
The following tables indicates the trading Value at Risk associated with
the Trust's open positions by market category as of September 30, 1999 and
December 31, 1998. All open position trading risk exposures of the Trust
have been included in calculating the figures set forth below. As of
September 30, 1999, the Trust's total capitalization was approximately $88.0
million and, as of December 31, 1999, the JWH's total capitalization was
approximately $94.8 million.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999
------------------------------------
% OF TOTAL
MARKET SECTOR VALUE AT RISK CAPITALIZATION
- ------------- ------------- --------------
<S> <C> <C>
Interest Rates $ 5.8 million 6.13%
Currencies $ 3.8 million 3.96%
Stock Indices $ 0.8 million 0.86%
Precious Metals $ 1.1 million 1.18%
Commodities $ 0.9 million 0.95%
Energy $ 0.7 million 0.71%
-------------
Total $13.1 million 13.79%
============= ======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1998
------------------------------------
% OF TOTAL
MARKET SECTOR VALUE AT RISK CAPITALIZATION
- ------------- ------------- --------------
<S> <C> <C>
Interest Rates $ 4.6 million 4.82%
Currencies $ 1.9 million 1.99%
Stock Indices $ 0.8 million 0.84%
Precious Metals $ 0.5 million 0.52%
Commodities $ 0.7 million 0.73%
Energy $ 0.5 million 0.52%
-------------
Total $ 9.0 million 9.42%
============= =====
</TABLE>
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."
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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 September 30, 1999 and December 31, 1998, the
Trust had approximately $95,252,291 and $90,183,000, respectively, 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
September 30, 1999 and December 31, 1998, by market sector.
INTEREST RATES
Interest rate risk is the principal 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/mark 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, although it is difficult at this point to
predict the effect of the introduction of the Euro on JWH's currency trading
strategies. 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.
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<PAGE>
STOCK INDICES
The Trust's primary equity exposure is to equity price risk in the G-7
countries. The stock index futures traded by the Trust are by law limited to
futures on broadly based indices. As of September 30, 1999 and December 31,
1998, the Trust's primary exposures were in the Nikkei (Japan) and All
Ordinaries (Australia) 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. However, silver prices have remained volatile
over this period, and JWH has from time to time taken substantial positions as
it has perceived market opportunities to develop. The Managing Owner
anticipates that gold and silver will remain the primary metals 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, coffee, sugar and cocoa accounted for the substantial bulk of the
Trust's commodities exposure as of September 30, 1999 and December 31, 1998. In
the past, the Trust has had material market exposure to live cattle, cotton 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
September 30, 1999 and December 31, 1998.
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 Managing 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 entire 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
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<PAGE>
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, current market volatility, risk exposure,
subjective judgment and evaluation of these and other general market conditions.
THE MANAGING OWNER
The Managing Owner and Commodity Pool Operator of the Trust is CISI, a
wholly-owned subsidiary of CIS, the Trust's Futures Broker. The Managing
Owner was incorporated in Delaware in 1983. It has been registered with the
CFTC under the CEA as a Commodity Pool Operator since December 13, 1985 and
is a member of NFA in such capacity. CISI maintains its principal office at
233 South Wacker Drive, Suite 2300, Chicago, Illinois 60606; telephone (312)
460-4000. The records of the Trust are kept at CISI's principal office. The
officers and directors of CISI do not receive any compensation directly from
CISI.
In addition to the Trust, CISI currently operates two public commodity
pools jointly with IDS Futures Corporation and one private commodity pool. CISI
operated one other private commodity pool which has been liquidated. The past
performance record of the Managing Owner's other pools is set forth on pages 93
to 96.
The directors and officers of CISI are as follows:
BERNARD W. DAN (born in December 1960) is President and a director. Mr.
Dan has been President of CIS since June 1, 1998. He joined CIS 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 actively serves within
the futures industry on exchange committees and industry user groups. He
received a B.S. degree in accounting from St. John's University, Collegeville,
Minnesota.
BARBARA A. PFENDLER (born in May 1953) is Vice President and a director.
Ms. Pfendler is a graduate of the University of Colorado, Boulder. She
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<PAGE>
began her career with Cargill, Incorporated in 1975. She held various
merchandising and management positions within the organization's Oilseed
Processing Division before transferring to CIS in 1986 where she is
responsible for the Fund Services Group. She was appointed Vice President of
CISI in May 1990 and Vice President of CIS in June 1996.
SHAUN D. O'BRIEN (born in November 1964) is Vice
President-Controller/Treasurer 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 received a Master's degree from the
University of Minnesota's Carlson School of Management in 1999. Mr. O'Brien
began working for Cargill in 1988 and joined CIS in 1999.
JAN R. WAYE (born in June 1948) is Vice President. Mr. Waye assumed the
position of Senior Vice President of CIS in mid-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. He was
appointed Vice President with CISI on June 24, 1997. Mr. Waye joined Cargill in
1970 and served in various commodity trading and management position in
Chesapeake, Virginia; Winnipeg, Manitoba; and Vancouver, British Columbia. 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. Mr. Waye
graduated from Concordia College, Moorhead, Minnesota, with a B.A. degree in
Communications and Economics in 1970.
CHRISTOPHER MALO (born in August 1956) is Vice President. Mr. Malo
graduated from Indiana University in 1978 with a B.S. in Accounting and further
completed the University of Minnesota Executive Program in 1993. He started
work at Cargill, Incorporated in June 1978. He joined CIS in 1979, and served
as Secretary/Treasurer and Controller from 1983 until 1991. He was elected Vice
President, Administration and Operations in July 1991. He 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) is Vice President. Mr. Davis
graduated from Illinois Institute of Technology, Chicago, Illinois in 1975 with
a B.S. and an M.B.A. in 1977. He began his career in the futures industry with
A. G. Becker, Incorporated in 1980 and joined CIS 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) is Secretary. Ms. Steindel
graduated from the University of Illinois in 1987. She began working at CIS in
August 1987. She has held various financial and risk management positions at
CIS and was elected Risk and Compliance Officer and Secretary 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) is an Assistant Secretary. Ms.
Halbach graduated Phi Beta Kappa from the University of Minnesota with a B.A.
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.
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<PAGE>
The following are additional officers of CISI: JAMES CLEMENS, Assistant
Secretary; and LILLINA LUNDEER, Assistant Secretary.
JOHN W. HENRY & COMPANY, INC.
BACKGROUND
John W. Henry & Company began managing assets in 1981 as a sole
proprietorship and was later incorporated in the State of California as John
W. Henry & Co., Inc. to conduct business as a commodity trading advisor
("CTA"; a person who directs the trading of futures accounts for clients,
including commodity pools). In 1997, JWH reincorporated in the State of
Florida. JWH's offices are located at 301 Yamato Road, Suite 2200, Boca
Raton, Florida 33431 and One Glendinning Place, Westport, Connecticut 06880.
JWH's registration as a CTA became effective in November 1980. JWH is a
member of NFA in this capacity. "JWH" is the registered trademark of John W.
Henry & Company, Inc.
For a description of the principals of JWH, see "JWH Principals" beginning
at page 33.
TRADING STRATEGY
THE FOLLOWING DESCRIPTION OF JWH'S TRADING STRATEGY RELATES TO JWH
GENERALLY AND NOT TO THE TRUST ITSELF.
GENERAL
JWH specializes in managing institutional and individual capital in the
global futures, financial futures and foreign exchange markets. Since 1981, JWH
has developed and implemented proprietary trend-following trading techniques
that focus on intermediate and long-term rather than short-term, day-to-day
trends. As of the date of this prospectus, JWH operates eleven trading
programs.
INVESTMENT PHILOSOPHY AND METHODOLOGY
JWH's investment philosophy is based on the premise that market prices,
rather than market fundamentals, are the key aggregator of information necessary
to make investment decisions. JWH believes that changes in market prices
initially reflect human reactions to new or emerging information or events that
will cause trends, but that prices eventually reflect all relevant information.
The price adjustment process takes time, however, since reactions of market
participants to changing market dynamics initially may be inefficient.
Investors may not react immediately to information because of differing
abilities to process and evaluate data, differing levels of risk tolerance or
uncertainty. Gradual price adjustments manifest themselves in long-terms
trends, which themselves can influence the course of events and from which
profit opportunities can arise. JWH believes that such market inefficiencies
can be exploited through a combination of trend detection and risk management.
Systematic risk taking may be rewarded as markets adjust to a new price.
There is strong economic and statistical evidence to suggest that trends do
exist in most markets although they may be difficult to identify. Since it was
founded, JWH has employed analytical methods to identify short- to long-term
trends. Comprehensive research undertaken by the firm's founder, John W. Henry,
led to the development of disciplined systematic quantitative models. JWH's
computer models examine market data for systematic price behavior or
relationships which will characterize a trend. When price trends are
identified, the JWH trading system generates buy and sell signals for
implementing trades. The strict application of these signals is one of the most
important aspects of JWH's investment process.
JWH attempts to control risk throughout the investment process. This
includes the confirmation of a trend, determining the optimal exposure in a
given market and money management issues such as the startup or upgrade of an
account. JWH's research on these and other issues has resulted in investment
program modifications from time to time that have decreased from previous levels
the overall volatility of its investment programs while maintaining the
potential for generating attractive performance returns.
DURATION OF POSITIONS HELD
JWH's historical performance demonstrates that, because trends often last
longer than most market participants expect, significant returns can be
generated from positions held over a long period of time. Therefore, market
exposure to profitable positions is not changed based on the time horizon of a
trade.
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<PAGE>
Losing positions are generally pared relatively quickly, with most closing
within a few days or weeks. However, if the JHW system detects a profitable
underlying trend, a position trading at a loss may be retained in order to
capture the potential benefits of participating in that trend. Throughout the
investment process, risk controls designed to reduce the possibility of an
extraordinary loss in any one market are maintained.
EQUITY DRAWDOWNS
Historically, only 30% to 40% of all trades made pursuant to JWH's programs
have been profitable. Large profits on a few trades in positions that typically
exist for several months have produced favorable results overall. The greatest
cumulative percentage decline in daily net asset value which JWH has experienced
since inception in any single program on a composite basis was nearly 60%.
Prospective investors in the Trust should understand that similar or greater
drawdowns are possible in the future.
To reduce exposure to volatility in any particular market, most JWH
programs participate in several markets at one time. In total, JWH participates
in over sixty markets, encompassing interest rates, foreign exchange and
commodities such as agricultural products, energy and precious metals. Most
investment programs maintain a consistent portfolio composition to allow
opportunities in as many major market trends as possible.
OVERSIGHT OF TRADING POLICIES
The JWH Investment Policy Committee ("IPC") is a senior-level advisory
group, broadly responsible for evaluating and overseeing trading policies. The
IPC provides a forum for shared responsibility, meeting periodically to discuss
issues relating to implementation of JWH's investment process and its
application to markets, including research on new markets and strategies.
Typical issues analyzed by the IPC include liquidity, position size,
capacity, performance cycles and new product and market strategies. The IPC
also makes the discretionary decisions concerning investment program selection,
asset allocation and leverage levels for the Strategic Allocation Program, a
multi-program asset allocation methodology. Composition of the IPC, and
participation in its discussions and decisions by non-members, may vary over
time. All recommendations of the IPC require approval by the chairman. The IPC
does not make day-to-day trading decisions.
DISCRETIONARY ASPECTS
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. This could occur, for example,
when JWH determines that markets are illiquid or erratic, such as may occur
cyclically during holiday seasons or on the basis of irregularly occurring
market events. Subjective aspects of JWH's quantitative models also include the
determination of position size in relation to account equity, when an account
should commence trading, the investment of assets associated with additions,
redemptions and allocations, contracts and contract month selection and
effective trade execution.
PROGRAM MODIFICATIONS
Proprietary research is conducted on an ongoing basis to refine the JWH
investment strategies. While the basic philosophy underlying the firm's
investment methodology has remained intact throughout its history, the potential
benefits of employing more than one investment methodology, or in varying
combinations, is a subject of continual testing, review and evaluation.
Extensive research may suggest substitution of alternative investment
methodologies with respect to particular contracts. This may occur, for
example, when the testing of a different 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 for an investment program or a change in position size in
relation to account equity. However, most investment programs maintain a
consistent portfolio composition to allow opportunities in as many major market
trends as possible.
All cash in a JWH investment program is available to be used to trade in a
JWH program. The amounts committed to margin will vary from time to time. As
capital in each JWH trading program increases, additional emphasis and weighting
may be
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<PAGE>
placed on certain markets which have historically demonstrated the greatest
liquidity and profitability. Furthermore, the weighting of capital committed
to various markets in the trading programs is dynamic, and JWH may vary the
weighting at its discretion as market conditions, liquidity, position limit
considerations and other factors warrant. CISI will generally not be
informed of any such changes.
ADJUSTING THE SIZE OF POSITIONS TAKEN
Adjustments to 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 account equity
in certain markets or entire investment programs. Such adjustments may be made
at certain times for some investment 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, current market volatility,
risk exposure and subjective judgment and evaluation of these and other general
market conditions. Such decisions to change the size of a position in relation
to account equity may positively or negatively affect performance and will alter
risk exposure for an account. Such adjustments may lead to greater profits or
losses, more frequent and larger margin calls and greater brokerage expense. No
assurance is or can be given that such adjustments will result in profits for
investors in the Trust. JWH reserves the right to alter, at its sole discretion
and without notification to the Trust, its policy regarding the size of
positions taken in relation to account equity.
ADDITION, REDEMPTION AND REALLOCATION OF CAPITAL FOR COMMODITY POOL ACCOUNTS
Investors purchase or redeem Units at Net Asset Value on the close of
business on the last business day of the month. In order to provide market
exposure commensurate with the Trust's equity on the date of these transactions,
JWH's general practice is to adjust positions as near as possible to the close
of business on the last trading date of the month. The intention is to provide
for additions and redemptions at a Net Asset Value that will be the same for
each of these transactions, and to eliminate possible variations in Net Asset
Values that could occur as a result of inter-day price changes if, for example,
additions were calculated on the first day of the subsequent month. Therefore,
JWH may, at its sole discretion, adjust its investment of the assets associated
with the addition or redemption as near as possible to the close of business on
the last business day of the month to reflect the amount then available for
trading. Based on JWH's determination of liquidity or other market conditions,
JWH may decide to commence trading earlier in the day on, or before, the last
business day of the month, or at its sole discretion, delay adjustments to
trading for an account to a date or time after the close of business on the last
day of the month. No assurance is given that JWH will be able to achieve the
objectives described above in connection with Trust equity level changes. The
use of discretion by JWH in the application of this procedure may affect
performance positively or negatively.
PHYSICAL AND CASH COMMODITIES
JWH may trade in physical or cash commodities for immediate or deferred
delivery, including specifically gold bullion, as well as futures, options and
forward contracts when JWH believes that cash markets offer comparable or
superior market liquidity or the ability to execute transactions at a single
price. The CFTC does not regulate cash transactions, which are subject to the
risk of counterparty failure, inability or refusal to perform with respect to
such contracts.
THE TRADING ADVISORY AGREEMENT
The Trust has entered into a Trading Advisory Agreement with JWH. The
agreement provides that JWH will be the sole trading advisor for the Trust and
will have sole responsibility for determining transactions in commodity
interests with respect to Trust assets. The Trading Advisory Agreement also
provides that the Managing Owner, with the agreement of JWH, may reallocate
assets between the trading programs, delete a trading program or add one or more
other JWH programs. The Trading Advisory Agreement has an initial term ending
on the last day of the twelfth full calendar month after commencement of trading
by the Trust, with automatic renewal for three one-year periods on the same
terms unless the Managing Owner gives notice of termination to JWH at least
forty-five days prior to the expiry of the then current term. The Trading
Advisory Agreement will terminate automatically if the Trust is terminated.
-32-
<PAGE>
JWH, its principals and employees will not be liable to the Managing Owner
or its principals and employees, the Trust, the Unitholders, or any of their
successors or assigns except by reason of acts or omissions due to bad faith,
misconduct, negligence or not having acted in good faith in the reasonable
belief that such actions or omissions were in, or not opposed to, the best
interests of the Trust. The Trust and the Managing Owner will, jointly and
severally, indemnify JWH, its principals and employees to the fullest extent
permitted by law against any liability incurred or sustained by JWH in
connection with any acts or omissions of JWH relating to its management of Trust
assets or arising out of or in connection with the Trading Advisory Agreement or
arising out of JWH's management of Trust assets, provided that there has been no
judicial determination that such liability was the result of negligence,
misconduct, bad faith or a breach of the Trading Advisory Agreement nor any
judicial determination that the conduct which was the basis for such liability
was not done in good faith in the reasonable belief that it was in, or not
opposed to, the best interests of the Trust. Any such indemnification involving
a material amount, unless ordered or expressly permitted by a court, will be
made by the Trust only upon the opinion of mutually acceptable independent legal
counsel that JWH has met the applicable standard of conduct described above.
The Trading Advisory Agreement prohibits JWH from receiving any commission,
compensation, remuneration or payment whatsoever from any broker with whom the
Trust carries any account by reason of the Trust's transactions.
LEGAL CONCERNS
There neither now exists nor has there previously ever been any material
administrative, civil or criminal action against JWH or its principals.
Principals of JWH serve on the board of directors and committees of various
organizations, both in and outside of the managed futures industry. In such
capacities, these individuals have a fiduciary duty to the other organizations
they serve, and they are required to act in the best interests of those
organizations even if those actions were to be adverse to the interest of JWH
and its clients.
JWH PRINCIPALS
The following are the principals of JWH:
The sole shareholder of JWH is the John W. Henry Trust dated July 27,
1990. MR. JOHN W. HENRY is chairman of the JWH Board of Directors and is
trustee and sole beneficiary of the John W. Henry Trust. Mr. Henry is also a
member of the Investment Policy Committee. He currently concentrates his
activities at JWH on portfolio management, research and new system
development, day-to-day decisions involving the strategic direction and
business of the firm and frequent dialogue with trading supervisors. Mr.
Henry is the exclusive owner of certain trading systems licensed to Elysian
Licensing Corporation, a corporation wholly-owned by Mr. Henry and
sublicensed by Elysian Licensing Corporation to JWH and utilized by JWH in
managing investor accounts.
Mr. Henry has served on the Board of Directors of the Futures Industry
Association ("FIA"), the National Association of Futures Trading Advisors
("NAFTA") and the Managed Futures Trade Association, and has served on the
Nominating Committee of NFA. He has served on a panel created by the Chicago
Mercantile Exchange and the Chicago Board of Trade to study cooperative efforts
related to electronic trading, common clearing and issues regarding a potential
merger. In 1989, Mr. Henry established residency in Florida, and since that
time has performed services from that location as well as from the offices of
JWH in Westport, Connecticut. Mr. Henry is a principal of Westport Capital
Management Corporation, Global Capital Management Limited, JWH Asset Management,
Inc. and JWH Financial Products, Inc., all of which are affiliates of JWH.
Since the beginning of 1987, Mr. Henry has devoted, and will continue to devote,
considerable time to activities in businesses other than JWH and its affiliates,
including acting as Chairman of the Florida Marlins Baseball Club LLC, which
continues to be operated by a professional baseball staff.
MR. MARK H. MITCHELL is vice chairman, counsel to the firm and a member of
the JWH Board of Directors. His duties include the coordination and allocation
of responsibilities among JWH and its affiliates. He is also vice chairman and
a director of JWH Asset Management, Inc. and JWH Financial Products, Inc. Prior
to joining JWH in January 1994,
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<PAGE>
Mr. Mitchell was a partner at Chapman and Cutler, in Chicago, where he headed
the law firm's futures law practice from August 1983 to December 1993. He
also served as General Counsel of the Managed Funds Association ("MFA") and
General Counsel of NAFTA. Mr. Mitchell is currently a member of the NFA
CPO/CTA Advisory Committee. In addition, he has served as a member of the
NFA Special Committee for the Review of Multi-tiered Regulatory Approach to
NFA Rules, the MFA Government Relations Committee and the Executive Committee
of the Law and Compliance Division of the FIA. In 1985, he received the
Richard P. Donchian Award for Outstanding Contributions to the Field of
Commodity Money Management. He received an A.B. with honors from Dartmouth
College and a J.D. from the University of California at Los Angeles, where he
was named to the Order of the Coif, the national legal honorary society.
MR. VERNE O. SEDLACEK is the president and chief operating officer and a
member of the JWH Investment Policy Committee. He is responsible for the
day-to-day management of the firm. Mr. Sedlacek is also president and
director of Westport Capital Management Corporation and Global Capital
Management Limited, and vice president of JWH Financial Products, Inc. Prior
to joining JWH in July 1998, Mr. Sedlacek was the executive vice president
and chief financial officer of Harvard Management Company, Inc., a
wholly-owned subsidiary of Harvard University, which at the time of his
departure managed approximately $14 billion of University-related funds. He
joined Harvard Management Company in March 1983 and was responsible for
managing the areas of personnel, budgets, systems, performance analysis,
contracts, credit, compliance, custody, operations, cash management,
securities lending and market risk evaluation. Mr. Sedlacek currently serves
on the Board of Directors of the FIA and the Chicago Mercantile Exchange, and
is a member of the Global Markets Advisory Committee of the CFTC. He received
his A.B. in Economics from Princeton University, M.B.A. in Accounting from
New York University and was certified as a C.P.A. in the State of New York in
1978.
DR. MARK S. RZEPCZYNSKI is a senior vice president, research and trading,
and a member of the JWH Investment Policy Committee. He is also a vice
president of JWH Financial Products, Inc. Dr. Rzepczynski joined JWH in May
1998. From May 1995 to April 1998, he was vice president and director of
taxable credit and quantitative research in the fixed-income division of
Fidelity Management and Research, where he oversaw credit and quantitative
research recommendations for all Fidelity taxable fixed-income funds. From
April 1993 to April 1995, he was a portfolio manager and director of research
for CSI Asset Management, Inc., a fixed-income money management subsidiary of
Prudential Insurance. Dr. Rzepczynski has a B.A. CUM LAUDE in Economics from
Loyola University of Chicago and an A.M. and Ph.D. in Economics from Brown
University.
E. LYNDON TEFFT is a senior vice president and the chief financial
officer. He is also the treasurer of Westport Capital Management Corporation
and JWH Asset Management, Inc., vice president of JWH Financial Products,
Inc. and a director, secretary and treasurer of JWH Securities, Inc. Prior
to joining JWH in October 1998, Mr. Tefft was the Director of MIS and a vice
president at Harvard Management Company, Inc. where he was responsible for
directing the design, development and operation of global equity, bond and
derivative trading, accounting and settlement systems beginning in May 1994.
Mr. Tefft received a B.S. in Industrial Management from Purdue University and
an M.B.A. from Wharton School of Business at the University of Pennsylvania.
MS. ELIZABETH A. M. KENTON is a senior vice president, compliance. She is
responsible for the day-to-day management of compliance, as well as overall
issues pertaining to administration and human resources. She is also a vice
president of JWH Asset Management, Inc. and JWH Financial Products, Inc., and a
director of Westport Capital Management Corporation and Global Capital
Management Limited. Since joining JWH in March 1989, Ms. Kenton has held
positions of increasing responsibility in research and development,
administration and regulatory compliance. She received a B.S. in Finance from
Ithaca College.
MR. DAVID M. KOZAK is a senior vice president, general counsel and
secretary to the corporation. He is also secretary of JWH Asset Management,
Inc. and JWH Financial Products, Inc., and a director and secretary of Westport
Capital Management Corporation. Prior to joining JWH in September 1995, he had
been a partner at the law firm of Chapman and Cutler from 1989. In his practice
there, he
-34-
<PAGE>
concentrated in commodity futures law, with an emphasis on commodity money
management. Mr. Kozak is currently the secretary and a director of the MFA,
and is a member of that organization's Executive Committee and chairman of
its Government Relations Committee. He is also a member of the Special
Committee on CPO/CTA Disclosure Issues and the Special Committee for the
Review of Multi-Tiered Regulatory Approach to NFA Rules, both of the NFA. He
is also chairman of the subcommittee on CTA and CPO issues of the Futures
Regulation Committee of the Association of the Bar of the City of New York.
He received a B.A. from Lake Forest College, an M.A. from the University of
Chicago and a J.D. from Loyola University of Chicago.
MR. DAVID I. GINSBERG is a member of the JWH Board of Directors and special
advisor to the chairman. Mr. Ginsberg joined JWH in October 1999. He served as
the managing director of the Multi-Manager Group at Global Asset Management
("GAM") from its inception in September 1989 until July 1995. This GAM group
was, and continues to be, one of the largest multi-advisor groups specializing
in hedge funds. Since leaving GAM, Mr. Ginsberg has been a private investor.
Mr. Ginsberg received a M.B.A. with a concentration in Finance from Boston
University and a B.A. from Kenyon College. Mr. Ginsberg is a member of the
board of directors of GAM Diversity, Inc., a global multi-advisor hedge fund
with assets in excess of $1 billion that specializes in hedge funds, and a
director of the Adelphi Europe Fund, a hedge fund specializing in European
equities.
MR. KEVIN S. KOSHI is a senior vice president, proprietary trading and a
member of the JWH Investment Policy Committee. He is responsible for the
implementation and oversight of the firm's proprietary strategies and
investments. Mr. Koshi joined JWH in August 1988 as a professional in the
Finance Department, and since 1990, has held positions of increasing
responsibility in the Trading Department. He received a B.S. in Finance from
California State University at Long Beach.
MR. MATTHEW J. DRISCOLL is a vice president, trading, and chief trader and
a member of the JWH Investment Policy Committee. He is responsible for the
supervision and administration of all aspects of order execution strategies and
implementation of trading policies and procedures. Mr. Driscoll joined JWH in
March 1991 as a member of its trading department. Since joining the firm, he
has held positions of increasing responsibility as they relate to the
development and implementation of JWH's trading strategies and procedures. He
has played a major role in the development of JWH's 24-hour trading operation.
Mr. Driscoll attended Pace University.
MR. EDWIN B. TWIST is a director of JWH. He is also a director of JWH
Investment Management, Inc. and JWH Financial Products, Inc. Mr. Twist joined
JWH as internal projects manager in September 1991 and has been a director since
August 1993. His responsibilities include assisting with the day-to-day
administration and internal projects of JWH's Florida office.
MR. JULIUS A. STANIEWICZ is a vice president, senior strategist and a
member of the JWH Investment Policy Committee. He is also president of JWH
Asset Management, Inc. and JWH Financial Products, Inc. He joined JWH in March
of 1992. Mr. Staniewicz received a B.A. in Economics from Cornell University.
The additional principals of JWH have the following titles: Mr. Christopher
E. Deakins, vice president, investor services; Ms. Nancy O. Fox, C.P.A., vice
president, investment support; Mr. Andrew D. Willard, vice president,
information technology; Mr. Paul D. Braica, C.P.A., vice president, analytics;
Ms. Florence Y. Sofer, vice president, marketing; Mr. Robert B. Lendrim, vice
president, investor services; and Ms. Wendy B. Goodyear, vice president,
investor services.
-35-
<PAGE>
PERFORMANCE OF THE JWH PROGRAMS
GENERAL
The composite capsule performance of all accounts managed by JWH and JWH
Investments, Inc., an affiliate of JWH which ceased operations, is presented
below. All performance is current as of October 31, 1999.
Monthly rates of return from inception of client trading through October
31, 1999 is also presented below for the programs used for the Trust.
Descriptions of these programs are set forth on pages 4 and 5. The line
appearing in these performance tables between 1994 and 1993 separates the CFTC
required performance period for the past five years and year to date from the
performance record of the investment programs prior to that period.
Brief summaries of the programs not used for the Trust are set forth on
page 43. The Trust may use any of the active programs in the future subject to
JWH's agreement.
FROM THE INCEPTION OF TRADING OF THE JWH PROGRAMS, THE GREATEST CUMULATIVE
PERCENTAGE DECLINE IN DAILY NET ASSET VALUE EXPERIENCED IN ANY SINGLE PROGRAM
WAS NEARLY 60% ON A COMPOSITE BASIS, AND CERTAIN INDIVIDUAL ACCOUNTS INCLUDED IN
SUCH PROGRAM EXPERIENCED EVEN GREATER DECLINES. CERTAIN JWH ACCOUNTS HAVE LOST
10% OR MORE IN A SINGLE TRADING DAY. PROSPECTIVE INVESTORS SHOULD UNDERSTAND
THAT SIMILAR OR GREATER DRAWDOWNS ARE POSSIBLE IN THE FUTURE. THERE CAN BE NO
ASSURANCE THAT JWH WILL TRADE PROFITABLY FOR THE TRUST OR AVOID SUDDEN AND
SEVERE LOSSES.
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<PAGE>
THE JWH PROGRAMS USED BY THE TRUST
ANNUAL AND MONTHLY RATES OF RETURN
FINANCIAL AND METALS PORTFOLIO
ASSETS UNDER MANAGEMENT IN THE PROGRAM ON OCTOBER 31, 1999: $825,008,102**
NUMBER OF OPEN ACCOUNTS: 26
WORST MONTHLY DECLINE ON AN INDIVIDUAL ACCOUNT BASIS: (10.1)% (2/96)
WORST PEAK-TO-VALLEY DECLINE ON AN INDIVIDUAL ACCOUNT BASIS: (30.5)% (6/94-1/95)
1999 COMPOUND RATE OF RETURN: (13.7)% (10 MOS.)**
1998 COMPOUND RATE OF RETURN: 7.2%
1997 COMPOUND RATE OF RETURN: 15.2%
1996 COMPOUND RATE OF RETURN: 29.7%
1995 COMPOUND RATE OF RETURN: 38.5%
1994 COMPOUND RATE OF RETURN: (5.3)%
AVERAGE COMPOUNDED ANNUALIZED RATE OF RETURN SINCE JANUARY 1994: 10.7%*
AVERAGE COMPOUNDED ANNUALIZED RATE OF RETURN SINCE INCEPTION IN OCTOBER 1984 TO
OCTOBER 1999: 33.1%**
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
ANNUAL AND MONTHLY RATES OF RETURN (%)
- -----------------------------------------------------------------------------------------------------------------------
COMPOUND
YEAR JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER ANNUAL ROR
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 (4.8) 0.9 (2.6) 1.6 5.9 6.1 (2.3) (3.1) (7.0) (8.2)** N/A N/A (13.7)**
(10 months)
- -----------------------------------------------------------------------------------------------------------------------
1998 (3.5) (4.0) (1.6) (7.9) 3.2 (4.8) (0.9) 17.5 15.3 (3.8) (7.5) 8.9 7.2
- -----------------------------------------------------------------------------------------------------------------------
1997 4.4 (2.2) (0.7) (2.9) (8.3) 4.1 15.8 (3.7) 2.2 2.0 2.5 2.9 15.2
- -----------------------------------------------------------------------------------------------------------------------
1996 6.0 (5.5) 0.7 2.3 (1.7) 2.2 (1.1) (0.8) 3.2 14.3 10.9 (2.6) 29.7
- -----------------------------------------------------------------------------------------------------------------------
1995 (3.8) 15.7 15.3 6.1 1.2 (1.7) (2.3) 2.1 (2.1) 0.3 2.6 1.7 38.5
- -----------------------------------------------------------------------------------------------------------------------
1994 (2.9) (0.6) 7.2 0.9 1.3 4.5 (6.1) (4.1) 1.5 1.7 (4.4) (3.5) (5.3)
- -----------------------------------------------------------------------------------------------------------------------
1993 3.3 13.9 (0.3) 9.3 3.3 0.1 9.7 (0.8) 0.2 (1.1) (0.3) 2.9 46.8
- -----------------------------------------------------------------------------------------------------------------------
1992 (18.0) (13.5) 3.0 (12.2) (5.7) 21.9 25.5 10.2 (5.2) (4.5) (0.8) (2.6) (10.9)
- -----------------------------------------------------------------------------------------------------------------------
1991 (2.3) 3.8 4.5 (0.8) (0.3) (1.3) (13.4) 4.8 25.8 (7.7) 6.6 39.4 61.9
- -----------------------------------------------------------------------------------------------------------------------
1990 28.0 19.5 11.4 2.4 (22.7) 6.9 12.2 11.2 8.3 (5.0) 3.1 (3.7) 83.6
- -----------------------------------------------------------------------------------------------------------------------
1989 31.7 (8.7) 8.5 3.2 37.0 (6.6) 4.4 (8.2) (14.9) (17.5) 21.6 (4.5) 34.6
- -----------------------------------------------------------------------------------------------------------------------
1988 (12.6) 9.8 (2.3) (15.0) 0.3 44.2 5.5 6.9 (8.1) 2.5 5.2 (19.2) 4.0
- -----------------------------------------------------------------------------------------------------------------------
1987 33.0 12.1 34.2 18.2 (7.2) (10.7) 12.2 (14.6) (8.9) 28.0 32.5 21.2 252.4*
- -----------------------------------------------------------------------------------------------------------------------
1986 4.8 21.9 (6.3) 3.7 (17.5) 17.6 25.0 9.4 (0.2) 2.6 (3.6) (0.5) 61.5
- -----------------------------------------------------------------------------------------------------------------------
1985 6.6 17.7 (9.3) (7.8) (7.7) (1.8) 41.3 (10.1) (27.3) 6.4 26.6 1.9 20.7
- -----------------------------------------------------------------------------------------------------------------------
9.9
1984 N/A N/A N/A N/A N/A N/A N/A N/A N/A 1.6 (3.2) 11.7 (3 months)
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
* The timing of additions and withdrawals materially inflated the 1987 rate
of return. The three accounts that were open for the entire year of 1987
achieved rates of return of 138%, 163% and 259%.
** Estimated
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
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<PAGE>
THE JWH PROGRAMS USED BY THE TRUST
ANNUAL AND MONTHLY RATES OF RETURN
G-7 CURRENCY PORTFOLIO
ASSETS UNDER MANAGEMENT IN THE PROGRAM ON OCTOBER 31, 1999: $35,563,435*
NUMBER OF OPEN ACCOUNTS: 4
WORST MONTHLY DECLINE ON AN INDIVIDUAL ACCOUNT BASIS: (12.3)% (11/94)
WORST PEAK-TO-VALLEY DECLINE
ON AN INDIVIDUAL ACCOUNT BASIS: (31.4)% (10/92-1/95)
1999 COMPOUND RATE OF RETURN: 10.0% (10 MOS.)*
1998 COMPOUND RATE OF RETURN: (4.8)%
1997 COMPOUND RATE OF RETURN: 21.0%
1996 COMPOUND RATE OF RETURN: 14.5%
1995 COMPOUND RATE OF RETURN: 32.2%
1994 COMPOUND RATE OF RETURN: (4.9)%
AVERAGE COMPOUNDED ANNUALIZED RATE OF RETURN SINCE
INCEPTION JANUARY 1994: 10.9%*
AVERAGE COMPOUNDED ANNUALIZED RATE OF RETURN SINCE INCEPTION IN FEBRUARY 1991 TO
OCTOBER 1999: 13.0%*
<TABLE>
<CAPTION>
ANNUAL AND MONTHLY RATES OF RETURN (%)
- ---------------------------------------------------------------------------------------------------------------------
COMPOUND
YEAR JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER ANNUAL ROR
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 (2.2) 3.3 5.9 5.0 (1.4) (0.3) (5.6) 4.2 1.4 (0.2)* N/A N/A 10.0*
(10 months)
- ---------------------------------------------------------------------------------------------------------------------
1998 (4.1) (2.6) 4.7 (1.9) 6.6 (2.8) 0.4 (2.5) 2.0 7.4 (9.1) (1.7) (4.8)
- ---------------------------------------------------------------------------------------------------------------------
1997 2.5 3.9 0.4 3.1 (3.3) 5.7 4.1 (3.5) (1.2) 1.2 6.0 0.9 21.0
- ---------------------------------------------------------------------------------------------------------------------
1996 2.9 (4.2) (0.4) 2.2 0.7 1.8 (2.7) (4.3) 1.6 10.9 4.1 1.8 14.5
- ---------------------------------------------------------------------------------------------------------------------
1995 (3.0) 9.6 21.2 2.2 (4.3) (0.2) (1.8) 5.3 1.8 2.0 (1.3) (0.8) 32.2
- ---------------------------------------------------------------------------------------------------------------------
1994 (1.3) (1.7) 0.9 (1.3) (1.0) 7.9 (3.5) (0.3) 2.9 4.1 (7.2) (3.6) (4.9)
- ---------------------------------------------------------------------------------------------------------------------
1993 (4.4) 7.9% (0.3) (1.8) (1.0) 4.6 2.6 (5.0) (1.8) (5.4) (0.6) (0.5) (6.3)
- ---------------------------------------------------------------------------------------------------------------------
1992 (10.7) (1.4) (0.1) (2.6) 1.8 10.0 5.8 10.9 1.6 2.3 (0.3) (1.8) 14.6
- ---------------------------------------------------------------------------------------------------------------------
1991 N/A (1.8) 19.6 0.8 3.5 7.8 (2.9) (4.1) 2.1 0.5 1.7 15.7 48.5
(11 months)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Estimated
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<PAGE>
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
-39-
<PAGE>
THE JWH PROGRAMS USED BY THE TRUST
ANNUAL AND MONTHLY RATES OF RETURN
JWH GLOBALANALYTICS-Registered Trademark- FAMILY OF PROGRAMS
PERFORMANCE FOR EXCLUSIVE FUND ACCOUNTS
ASSETS UNDER MANAGEMENT IN THE PROGRAM ON OCTOBER 31, 1999: $91,670,870**
NUMBER OF OPEN ACCOUNTS: 2
WORST MONTHLY DECLINE ON AN INDIVIDUAL ACCOUNT BASIS: (5.8)% (11/98)
WORST PEAK-TO-VALLEY DECLINE ON AN INDIVIDUAL ACCOUNT BASIS: (6.1)%
(10/98-11/98)
1999 COMPOUND RATE OF RETURN: (6.7)%**
1998 COMPOUND RATE OF RETURN: 25.5% (8 MOS.)**
1997 COMPOUND RATE OF RETURN: N/A
AVERAGE COMPOUNDED ANNUALIZED RATE OF RETURN FROM MAY 8, 1998 TO OCTOBER 1999:
11.1%**
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
ANNUAL AND MONTHLY RATES OF RETURN (%)
- ---------------------------------------------------------------------------------------------------------------------
COMPOUND
YEAR JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER ANNUAL ROR
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 (1.9) 4.0 (3.9) 3.7 2.6 3.0 (2.6) (0.7) (1.0) (9.3)** N/A N/A (6.7)**
(10 months)
- ---------------------------------------------------------------------------------------------------------------------
1998 N/A N/A N/A N/A 6.2* (1.9) 0.6 12.4 8.2 (0.3) (5.6) 4.8 25.5
(8 months)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
INCEPTION OF TRADING TO MAY 8, 1998
ASSETS UNDER MANAGEMENT IN THE PROGRAM ON OCTOBER 31, 1999: $0
NUMBER OF OPEN ACCOUNTS: 0
WORST MONTHLY DECLINE ON AN INDIVIDUAL ACCOUNT BASIS: (5.0)% (4/98)
WORST PEAK-TO-VALLEY DECLINE ON AN INDIVIDUAL ACCOUNT BASIS: (5.3)% (4/98-5/98)
1999 COMPOUND RATE OF RETURN: N/A
1998 COMPOUND RATE OF RETURN: (3.6)% (5 MOS.)
1997 COMPOUND RATE OF RETURN: 17.6% (7 MOS.)
AVERAGE COMPOUNDED ANNUALIZED RATE OF RETURN FROM INCEPTION TO MAY 8, 1998:
13.5% (6/97-5/98)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
ANNUAL AND MONTHLY RATES OF RETURN (%)
- ----------------------------------------------------------------------------------------------------------------------
COMPOUND
YEAR JANUARY FEBRUARY MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER ANNUAL ROR
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998 1.8 (1.1) 4.7 (4.9) (0.3)* N/A N/A N/A N/A N/A N/A N/A (3.6)
(5 months)
- ----------------------------------------------------------------------------------------------------------------------
17.6
1997 N/A N/A N/A N/A N/A 3.2 8.4 (4.4) 3.4 0.7 0.5 5.0 (7 months)
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* JWH GlobalAnalytics-Registered Trademark- Family of Programs is part of
special multi-program trading strategy that is subject to an exclusivity
arrangement with one client operating two funds. Under the exclusivity
arrangement, JWH may make various discretionary trading adjustments for the
accounts of those two funds, including ongoing allocations and reallocations
of fund assets among investment programs and periodic adjustments to the
position size in relation to account equity. As a result of a change in
position size to account equity made to these accounts on May 8, 1998, these
accounts have traded differently from the other account in the JWH
GlobalAnalytics-Registered Trademark- Family of Programs. JWH is required to
present the performance record for these accounts separately.
** Estimated
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
-40-
<PAGE>
JWH CAPSULE PERFORMANCE RECORD
FOR PROGRAMS NOT USED BY THE TRUST
January 1994 through October 1999
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Original Global JWH The World
Investment Diversified GlobalAnalytics(R) Financial
Program++ Program++ 99 Perspective
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception of trading in program October 1982 June 1988 March 1999 April 1987
- ---------------------------------------------------------------------------------------------------------------------
Assets under management in $248,099,888* $117,816,014* $7,005,313* $26,091,589*
program on October 31, 1999
- ---------------------------------------------------------------------------------------------------------------------
Number of open accounts 18 8 1 2
- ---------------------------------------------------------------------------------------------------------------------
Worst monthly decline on an (16.3)% (15.1)%* (9.3)%* (11.7)%
individual account basis (10/94) (10/99) (10/99) (2/94)
- ---------------------------------------------------------------------------------------------------------------------
Worst peak-to-valley on an (31.0)% (24.1)% (15.0)%* (25.9)%
individual account basis (7/94-10/94) (6/95-10/95) (7/99-10/99) (7/94-1/95)
- ---------------------------------------------------------------------------------------------------------------------
1999 compound rate of return (12.9)%* (13.0)%* (12.3)%* (4.6)*
(10 months) (10 months) (8 months) (10 months)
- ---------------------------------------------------------------------------------------------------------------------
1998 compound rate of return 10.8% 23.5% -- 7.2%
- ---------------------------------------------------------------------------------------------------------------------
1997 compound rate of return 5.7% 3.3% -- 10.4%
- ---------------------------------------------------------------------------------------------------------------------
1996 compound rate of return 22.6% 26.9% -- 40.9%
- ---------------------------------------------------------------------------------------------------------------------
1995 compound rate of return 53.2% 19.6% -- 32.2%
- ---------------------------------------------------------------------------------------------------------------------
1994 compound rate of return (5.7)% 10.1% -- (15.2)%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* These figures are estimates.
++ Please see the JWH Programs Performance Summaries -- Exclusive Fund
Accounts on page 44.
THESE PROGRAMS ARE NOT CURRENTLY USED FOR THE TRUST.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
-41-
<PAGE>
JWH CAPSULE PERFORMANCE RECORD
FOR PROGRAMS NOT USED BY THE TRUST
JANUARY 1994 THROUGH OCTOBER 1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Global International Worldwide International Dollar
Financial Currency and Bond Program++ Foreign Program++
Portfolio++ Bond Portfolio Exchange
Program++
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception of trading in program June 1994 January 1993 July 1996 August 1986 July 1996
- -----------------------------------------------------------------------------------------------------------------------------
Assets under management in $73,261,486* $25,267,280* $0 $75,743,395* $0
program on October 31, 1999
- -----------------------------------------------------------------------------------------------------------------------------
Number of open accounts 4 1 0 4 0
- -----------------------------------------------------------------------------------------------------------------------------
Worst monthly decline on an (19.5)% (7.8)%* (3.8)% (8.3)% (8.4)%
individual account basis (11/94) (7/94) (4/97) (5/97) (5/97)
- -----------------------------------------------------------------------------------------------------------------------------
Worst peak-to-valley on an (48.9)% (23.6)% (6.2)% (35.9)% (11.6)%
individual account basis (7/94-1/95) (7/94-1/95) (12/96-5/97) (9/92-1/95) (5/97-7/97)
- -----------------------------------------------------------------------------------------------------------------------------
1999 compound rate of return (1.2)%* (0.3)%* -- (9.7)* --
(10 months) (10 months) (10 months)
- -----------------------------------------------------------------------------------------------------------------------------
1998 compound rate of return 9.9% 16.1% (0.4)% 13.9% (4.9)%
(5 months) (5 months)
- -----------------------------------------------------------------------------------------------------------------------------
1997 compound rate of return 4.9% 17.0% 9.5% 71.1% 6.8%
- -----------------------------------------------------------------------------------------------------------------------------
1996 compound rate of return 32.4% 19.9% 17.8% 3.7% 10.6%
(6 months)
- -----------------------------------------------------------------------------------------------------------------------------
1995 compound rate of return 86.2% 36.5% -- 16.9% --
- -----------------------------------------------------------------------------------------------------------------------------
1994 compound rate of return (37.7)% (2.3)% -- (6.3)% --
(7 months)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* These figures are estimates.
++ Please see the JWH Programs Performance Summaries -- Exclusive Fund
Accounts on page 44.
THESE PROGRAMS ARE NOT CURRENTLY USED FOR THE TRUST.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
-42-
<PAGE>
JWH CAPSULE PERFORMANCE RECORD
FOR CLOSED PROGRAMS
JANUARY 1994 THROUGH OCTOBER 1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Delevered Yen InterRate(TM) KT Diversified JWH
Denominated Program Investments, Inc.
Financial and Financial and
Metals Profile Metals Portfolio
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inception of trading in program October 1995 December 1988 January 1984 September 1991
(ceased trading (ceased trading (ceased trading (ceased trading
December 1996) July 1996) February 1994) July 1995)
- -----------------------------------------------------------------------------------------------------------------------
Assets under management in $0 $0 $0 $0
program on October 31, 1999
- -----------------------------------------------------------------------------------------------------------------------
Number of open accounts 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------
Worst monthly decline on an (3.2)% (3.1)% (19.6)% (4.8)%
individual account basis (2/96) (11/94) (8/93) (7/94)
- -----------------------------------------------------------------------------------------------------------------------
Worst peak-to-valley on an (5.1)% (19.7)% (33.9)% (12.2)%
individual account basis (2/96-8/96) (9/92-11/93) (8/93-2/94) (7/94-12/94)
- -----------------------------------------------------------------------------------------------------------------------
1999 compound rate of return -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
1998 compound rate of return -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
1997 compound rate of return -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
1996 compound rate of return 9.4% 5.79% -- --
(7 months)
- -----------------------------------------------------------------------------------------------------------------------
1995 compound rate of return 0.2% 5.19% -- 30.3%
(3 months) (7 months)
- -----------------------------------------------------------------------------------------------------------------------
1994 compound rate of return -- 3.42% (14.0)% (0.8)%
(2 months)
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
* These figures are estimates.
THESE PROGRAMS ARE CLOSED OUT AND ARE NOT USED FOR THE TRUST.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
-43-
<PAGE>
DESCRIPTION OF JWH'S PROGRAMS NOT USED FOR THE TRUST
The Original Investment Program began trading client capital in October
1982 and was the first program offered by JWH. The Original Investment
Program seeks to capitalize on long-term trends in a broad spectrum of
worldwide financial and nonfinancial futures markets including interest
rates, non-U.S. stock indices, currencies, metals, energies and agricultural
commodity markets.
The Global Diversified Portfolio, which began trading client capital in
June 1988, seeks to capitalize on intermediate-term movements in a broad
spectrum of financial and non-financial markets including interest rates,
stock indices, currencies, metals, energies and agricultural commodity
markets.
The World Financial Perspective, which began trading client capital in
April 1987, seeks to capitalize on long-term price movements in five
worldwide market sectors: interest rates, stock indices, currencies, metals
and energies. Rather than concentrating on the profit potential available
solely from the point of view of one country, the program holds positions
from several currency perspectives, including the British pound, Canadian
dollar, euro, Japanese yen, Swiss franc and U.S. dollar.
The Global Financial Portfolio, which began trading client capital in
June 1994, seeks to identify and capitalize on long-term price movements in
five worldwide market sectors: interest rates, non-U.S. stock indices,
currencies, metals and energies.
The International Currency and Bond Portfolio, which began trading
client capital in January 1993, seeks to identify and capitalize on
intermediate-term price movements in the currency and interest rate markets.
The International Currency and Bond Portfolio targets currencies and the
long-term portion of interest rate markets of major industrialized nations.
The Worldwide Bond Program, which began trading client capital in July
1996, seeks to capitalize on intermediate-term trends by investing in the
long-term portion of the worldwide interest rate markets. Although the
Worldwide Bond Program concentrates in one sector, diversification is
achieved by trading the interest rate markets of major industrialized
countries.
The International Foreign Exchange Program, which began trading client
capital in August 1986, seeks to identify and capitalize on intermediate-term
movements in a broad range of both major and minor currencies primarily
trading on the interbank market.
The Dollar Program, which began trading client capital in July 1996,
seeks to identify and capitalize on intermediate-term price movements in the
foreign exchange sector, trading major currencies against the U.S. dollar.
InterRate-TM- began trading client capital in 1988 and closed in 1996.
This program was designed to enhance returns available in U.S. treasury bills
to provide both secure income and collateral for a portfolio of interbank
forward and exchange-traded futures contracts.
The Yen Financial Portfolio, which began trading client capital in 1992
and closed in 1997, offered investors access to a select group of Japanese
financial futures markets. The program was designed to capitalize on
intermediate and long-term price movements and attempted to exit the markets
during periods when sustained trends were not identified.
The Delevered Yen Financial and Metals Profile, which began trading
client capital in 1995 and closed in 1996, was opened at the request of a
client. This program was traded at approximately one half of the position
size in relation to account equity of the traditional Financial and Metals
Portfolio and was traded from the perspective of the Japanese yen.
THESE PROGRAMS ARE NOT CURRENTLY USED FOR THE TRUST.
-44-
<PAGE>
JWH PROGRAMS
PERFORMANCE SUMMARIES
EXCLUSIVE FUND ACCOUNTS
Pursuant to a special JWH multi-program trading strategy that is
currently the subject of an exclusivity arrangement with one client operating
two funds (the "Exclusive Fund Accounts"), JWH makes various discretionary
trading adjustments for the accounts of those funds, including selection of
programs, ongoing allocations and reallocations of fund assets among the
investment programs and periodic adjustments to position size in relation to
account equity. As a result of a change made to these accounts on May 8, 1998,
these accounts have traded differently than the other accounts in the respective
JWH investment program. Set forth below are capsule performance records for the
Exclusive Fund Accounts.
<TABLE>
<CAPTION>
ORIGINAL GLOBAL JWH FINANCIAL AND GLOBAL
INVESTMENT DIVERSIFIED GLOBALANALYTICS(R) METALS FINANCIAL
PROGRAM PORTFOLIO FAMILY OF PROGRAMS PORTFOLIO PORTFOLIO
EXCLUSIVE EXCLUSIVE EXCLUSIVE EXCLUSIVE EXCLUSIVE
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
JWH Began Trading Client Capital
in Program May 1998 May 1998 May 1998 May 1998 May 1998
Number of Open Accounts 2 2 2 2 2
Assets Under Management $2.0 $2.0 $2.0 $2.0 $2.0
Assets Under Management in the
Program $99,676,588* $49,527,384* $91,670,870* $64,257,307* $81,521,462*
Worst Monthly Decline for an (12.0)% (14.1)%* (9.4)%* (8.8)%* (8.9)%*
Individual Account (11/98) (10/99) (10/99) (10/99) (10/99)
Worst Peak-to-Valley Decline for an (14.1)%* (18.4)%* (13.5)%* (19.3)%* (11.8)%*
Individual Account (7/99-10/99) (8/99-10/99) (7/99-10/99) (7/99-10/99) (7/99-10/99)
Average Compounded Annualized
Rate of Return 6.9%* 17.9* 11.1%* 10.5%* 12.6%*
1999 Rate of Return (10 mos.) (8.1)* (8.4)%* (6.7)%* (13.0)* 0.9%*
1998 Rate of Return (8 mos.) 20.2% 39.7% 25.5% 33.5% 18.4%
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL
WORLDWIDE G-7 FOREIGN
BOND CURRENCY DOLLAR EXCHANGE
PROGRAM PORTFOLIO PROGRAM PROGRAM
EXCLUSIVE EXCLUSIVE EXCLUSIVE EXCLUSIVE
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
JWH Began Trading Client Capital
in Program May 1998 May 1998 May 1998 April 1999
Number of Open Accounts 2 2 2 2
Assets Under Management $2.0 $2.0 $2.0 $2.0
Assets Under Management in the
Program $29,035,170* $57,013,762* $29,601,795* $25,722,642*
Worst Monthly Decline for an (7.0)% (8.6)% (7.2)% (6.5)%*
Individual Account (10/98) (11/98) (11/98) (10/99)
Worst Peak-to-Valley Decline for an (7.3)% (11.9)% (7.7)% (11.0)%*
Individual Account (10/98-11/98) (11/98-1/99) (11/98-1/99) (4/99-10/99)
Average Compounded Annualized
Rate of Return 14.0%* 6.8%* 6.6%* N/A
(10.8)%*
1999 Rate of Return (10 mos.) (3.3)%* 9.7%* 7.1%* (7 mos.)
1998 Rate of Return (8 mos.) 25.9% 0.7% 2.7% --
</TABLE>
* ESTIMATED
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
FUTURES TRADING IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK.
THE EXCLUSIVE FUND ACCOUNTS HAVE TRADED DIFFERENTLY THAN THE TRUST.
SEE NOTES TO THE CAPSULE PERFORMANCE SUMMARIES AT PAGE 45.
-----------
-45-
<PAGE>
NOTES ON PERFORMANCE RECORDS
An investor should note that the composite capsule performance
presentations include individual accounts which, even though traded according
to the same investment program, have materially different rates of return.
The reasons for this are numerous material differences among accounts: (a)
procedures governing timing for the commencement of trading and means of
moving toward full portfolio commitment of new accounts; (b) the period
during which accounts are active; (c) client trading restrictions, including
futures versus forward contracts and contract months; (d) trading size to
equity ratio resulting from JWH procedures for the commencement of trading
and full portfolio commitment of new accounts and new capital; (e) the size
of the account, which can influence the size of positions taken and restrict
the account from participating in all markets available to an investment
program; (f) the amount of interest income earned by an account, which will
depend on the rates paid by futures commission merchants on equity deposits
and/or on the portion of an account invested in interest-bearing obligations
such as U.S. Treasury bills; (g) the amount of management and incentive fees
paid to JWH and the amount of brokerage commissions paid, which will vary and
will depend on the commissions negotiated by the client with the broker; (h)
the timing of orders to open or close positions; (i) the market conditions,
which in part determine the quality of trade executions; (j) variations in
fill prices; and (k) timing of additions and withdrawals. Notwithstanding
these material differences among accounts, the composite remains a valid
representation of the accounts included therein.
Composite performance presentation is only allowed for accounts which
are not materially different. For the purpose of determining whether
material differences exist among accounts traded pursuant to the same trading
program, the gross trading performance of each JWH investment program and
each individual JWH account within the relevant program is reviewed against
the following parameters established by interpretations of the Division of
Trading and Markets of the CFTC to determine whether the differences are
material: (i) if the arithmetic average of two percentages is greater than
ten percentage points, the difference between the two is less than 10% of
their average; (ii) if the arithmetic average of the two percentages is
greater than five percentage points but less than ten percentage points, the
difference between the two is 1.5 percentage points or less; and (iii) if the
arithmetic average of the two percentages is less than five percentage
points, the difference between the two is one percentage point or less. If
one of the parameters (i) - (iii) is satisfied in the review, then the
results within the designated range are deemed "materially the same" or "not
materially different." The parameters (i) - (iii) determine if differences
between accounts are material. The gross trading performance of each JWH
investment program and each individual JWH account within the relevant
program not satisfying the above parameters (i) - (iii) is then reviewed to
determine whether any material differences detected could produce misleading
composite performance results. With the exception of accounts that were
established at levels below JWH's current minimum account size, JWH's policy
is to provide separate performance capsules when an account is consistently
performing differently on a gross trading basis than the other JWH accounts
traded pursuant to the same trading program and the continued inclusion of
that account in the composite would create a distortion in the composite rate
of return.
The composite rates of return indicated should not be taken as
representative of any rate of return actually achieved by any single account
represented in the records. Investors are further cautioned that the data
set forth in the performance capsule records is not indicative of any results
which may be attained by JWH in the future since past performance is not
necessarily indicative of future results.
During the periods covered by the preceding capsule performance records,
and particularly since 1989, JWH has increased and decreased position size in
relation to account equity in certain markets and entire programs, and also
altered the composition of the markets and contracts for certain programs.
In general since 1992, JWH began implementing certain position size
adjustments that were of a more permanent nature. While historical returns
represent actual performance achieved, you should be aware that the position
size relative to account equity utilized currently or in the future may be
significantly different from that used during previous time periods. You
-46-
<PAGE>
should be aware of the following position size adjustments relative to
account equity:
Original Investment Program --
reduced 25% commencing in October 1995
Financial and Metals Portfolio --
reduced 50% commencing in August 1992
Global Financial Portfolio --
reduced 50% commencing in April 1995
International Currency and Bond Portfolio --
increased 20% commencing in May 1998
G-7 Currency Portfolio --
increased 50% commencing in May 1998.
Prior to December 1991 for JWH, and July 1992 for JWH Investments, Inc.,
capsule performance records are presented on a cash basis except as otherwise
stated in the notes to the records. The recording of items on a cash basis
should not, for most months, be materially different from presenting such rates
of return on an accrual basis. Any differences in the monthly rates of return
between the two methods are immaterial to the overall performance presented.
With the change to the accrual basis of accounting for incentive fees in
December 1991 for JWH, and July 1992 for JWH Investments, Inc., the net effect
on monthly net performance and the rate of return in the capsule performance
records of continuing to record interest income, management fees, commissions
and other expenses on a cash basis is materially equivalent to the full accrual
basis. JWH began reflecting all items of net performance on an accrual basis
for the G-7 Currency Portfolio in July 1992, and at the inception of client
trading for the International Currency and Bond Portfolio, Worldwide Bond
Program, Dollar Program and JWH GlobalAnalytics-Registered Trademark- Family of
Programs. In August 1998, JWH made an adjustment to the accounting method
employed for every investment program not already utilizing the full accrual
basis of accounting. This adjustment moved all JWH investment programs to the
full accrual basis beginning on September 1, 1998.
The calculation of management and incentive fees is subject to variation
due to the agreed upon definitions contained in each account's advisory
agreement. Management fees range historically from 0% to 6% of assets under
management and incentive fees range from 0% to 25% of trading profits. From
time to time, such variations in advisory fees may have a material impact on the
performance of an account.
NOTES TO JWH PROGRAMS' CAPSULE
PERFORMANCE SUMMARIES
Number of open accounts is the number of accounts directed by JWH or JWH
Investments, Inc. pursuant to the investment program shown as of October 31,
1999.
Assets under management in a program is the aggregate amount of total
equity, excluding "notional" equity under management, of JWH or JWH Investments,
Inc. in the investment program shown as of October 31, 1999.
Worst monthly decline on an individual account basis within the past five
years is the largest monthly loss experienced by any single account in the
relevant investment program in any calendar month covered by the capsule.
"Loss" for these purposes is calculated on the basis of the loss experienced by
the individual account, expressed as a percentage of total equity (including
"notional" equity) in the account. Worst monthly decline information includes
the month and year of such decline.
Worst peak-to-valley decline on an individual account basis is the
largest percentage decline by any single account in the relevant investment
program (after eliminating the effect of additions and withdrawals) during
the period covered by the capsule from any month-end net asset value, without
such month-end net asset value being equalled or exceeded as of a subsequent
month-end by the individual account, expressed as a percentage of the total
equity (including "notional" equity) in the account. The worst
peak-to-valley decline since inception is the worst peak-to-valley decline by
the program as a composite.
Compound Annual Rate of Return is calculated by compounding the monthly
rates of return over the number of periods in a given year. For example, each
monthly rate of return in hundredths is added to one (1) and the result is
multiplied by the previous month's compounded monthly rate of return similarly
expressed. One (1) is then subtracted from the product. For periods less than
one year, the results are year to date.
-47-
<PAGE>
Average Compounded Annualized Rate of Return is calculated in a similar
manner to Compound Annual Rate of Return, except that before subtracting one (1)
from the product, the product is exponentially changed by the factor of one (1)
divided by the number of years in the program's performance record, then one (1)
is subtracted.
Monthly Rates of Return are daily compounded monthly rates of return in the
investment program. The daily compounded monthly rate of return is calculated by
compounding the daily rates of return over the number of days in the month. For
example, each of the daily rates of return in hundredths is added to one (1) and
the result is multiplied by the previous day's daily rate of return similarly
expressed. One (1) is then subtracted from the product. The daily rates of
return are calculated by dividing the day's net performance by the sum of the
beginning equity, plus additions minus withdrawals for the day. Prior to
September 1998, Monthly Rates of Return were calculated by dividing net
performance by the sum of the beginning equity, plus additions minus withdrawals
in the investment program for the month. For such purposes all additions and
withdrawals were treated as if they had been made on the first day of the month,
even if, in fact, they occurred later. From December 1991 through August 1998,
if additions and withdrawals were material to a program's performance, they were
time weighted. If time weighting was materially misleading, then the only
accounts traded method was utilized. As of September 1998, time weighting is no
longer relevant as the monthly rates of return are daily compounded monthly
rates of return.
Proprietary capital is included in the rates of return for the Original
Investment Program, the Financial and Metals Portfolio and the International
Foreign Exchange Program for certain periods. The absence of management and
incentive fees as well as reduced commissions during these periods may have had
a material effect on the rates of return for each program. This potential
material effect occurred from inception of the program through July 1988 for the
Original Investment Program, through July 1987 for the Financial and Metals
Portfolio and through November 1987 for the International Foreign Exchange
Program. In addition, during the period May 1991 through August 1995, the
Financial and Metals Portfolio included two other proprietary accounts, which
had no material impact on the rates of return presented.
For periods other than those described above, proprietary capital is
included in the rates of return for the Original Investment Program, the Global
Diversified Portfolio, the Global Financial Portfolio and the G-7 Currency
Portfolio pursuant to an investment in a fund. These proprietary accounts have
been traded in exactly the same manner as client funds, and have been subject to
all of the same fees and expenses charged to a client investment in the fund.
Therefore, there is no material impact on the rates of return presented. The
International Currency and Bond Portfolio also had proprietary capital as an
investment in a fund. This proprietary account was traded in the exact same
manner that client funds would be traded and was subject to all of the same fees
and expenses that would be charged to a client investment in a fund had there
been other client accounts traded. Therefore, there is no material impact to
the rates of return presented.
ADDITIONAL NOTE TO THE
FINANCIAL AND METALS PORTFOLIO
In May 1992, position sizes were reduced by 50% for 35% of the assets in
the Financial and Metals Portfolio at the request of a client. This reduction
in position size materially affected the rates of return in some JWH accounts;
the 1992 annual rate of return for the relevant accounts was negative 24.3%.
The 1992 annual rate of return for the Financial and Metals Portfolio was
negative 10.9%. If these accounts had been excluded from the performance
record, the 1992 annual rate of return would have been negative 3.9%. The
effect of this reduction in position size was eliminated in September 1992 when
all accounts in this program underwent a reduction in position size.
ADDITIONAL NOTE TO THE GLOBAL FINANCIAL
PORTFOLIO COMPOSITE PERFORMANCE SUMMARY
The timing of individual account openings in the Global Financial Portfolio
has had a material impact on compounded rates of return. Based on the account
startup methodology used by JWH, the performance of individual accounts
composing the Global Financial Portfolio performance record has
-48-
<PAGE>
varied. In 1994, the two accounts that were open generated separate rates of
return of -44% and -17%. For the period January 1995 through June 1995, the
three open accounts achieved separate rates of return of 101%, 75% and 67%.
By June 1995, these accounts maintained mature positions and were performing
consistently with each other. Due to the six-month period in 1995 of varied
performance, the three accounts achieved an annual rate of return of 122%,
92% and 78%.
ADDITIONAL NOTE TO THE YEN FINANCIAL
PORTFOLIO PERFORMANCE SUMMARY
The Yen Financial Portfolio traded client capital from January 1992
through March 1997. The program offered access to a select group of Japanese
financial futures markets. The program was designed to capitalize on
intermediate and long-term price movements and attempted to exit the markets
during periods when sustained trends were not identified. The Yen Financial
Portfolio was traded from the Japanese yen perspective.
The performance summary of the Yen Financial Portfolio is presented on
an individual account by account basis due to material differences among
accounts' historical performance. Account performance has varied historically
due to a number of factors unique to this Program, including whether an account
was denominated in U.S. dollars or Japanese yen, the extent of hedging currency
conversions, the amounts and frequency of currency conversions, and account
size. Several of these factors that have materially influenced performance
depended upon clients' specific instructions that effectively resulted in
customized client portfolios.
ADDITIONAL NOTE TO THE PERFORMANCE
SUMMARIES OF THE DISCONTINUED PROGRAMS
Performance summaries are included for InterRate-TM-, the Delevered Yen
Denominated Financial and Metals Profile, the KT Diversified Program and the Yen
Financial Portfolio. All of these programs have been discontinued.
-49-
<PAGE>
INTEREST INCOME
The Trust's assets are generally deposited with CIS and CISFS.
On the fifth business day of each month, CIS and CISFS credit the Trust
with interest on 100% of the Trust's average daily balances on deposit with CIS
or CISFS, as the case may be, in the previous month at the average 91-day
Treasury bill rate for such previous month in respect of deposits denominated in
dollars. CIS has agreed to credit the account of the Trust at each month-end
the amount, if any, by which returns (net of fees of the investment adviser) for
such month on Trust assets held by a Custodian are less than the return that
would have been realized by the Trust had such assets been deposited with CIS.
On Trust assets held in a foreign currency (for purposes of making margin
deposits with respect to positions on an exchange outside the United States on
which JWH currently trades), CIS and CISFS credit the Trust with interest on the
fifth business day of each month on the average daily balance of Trust assets
held in such currency during the previous month at a rate equal to 0.75% below
the average rate paid with respect to deposits in such currency by the relevant
clearing association for such previous month (which is zero in certain cases)
except that the rate of interest at which CIS or CISFS credit the Trust for
deposits in Spanish pesetas will be 2.75% below the average Madrid interbank
offered rate for the month in question. With respect to currencies required for
margin on markets not currently traded by JWH, CIS and CISFS will credit the
Trust with interest at the rates paid by, respectively, CIS and CISFS to other
accounts similar in size and character to that of the Trust.
The economic benefit from possession of the Trust's assets in excess of the
interest credited by CIS and CISFS to the Trust is retained by CIS and CISFS,
respectively.
To the extent that the Trust participates in the spot and forward currency
markets, the Trust is required to deposit margin with CISFS. CIS satisfies such
margin requirements by transferring Trust assets from the Trust's account at CIS
to CISFS. Amounts transferred to CISFS as margin on spot and forward currency
and precious metals positions are not held by CISFS as customer segregated funds
under the CEA and the rules of the CFTC but are included in determining the
interest to be credited to the Trust as described above.
The Trust's assets are used either as margin to secure the Trust's
obligations under the open positions which it holds in the markets or as a
reserve to support further trading in the event of market losses. The assets
deposited as margin with and held by the Futures Broker are held in "customer
segregated funds accounts" or "foreign futures and foreign options secured
amount accounts" (in the case of futures and options traded on non-U.S.
exchanges), as prescribed by the CEA and applicable CFTC regulations. Assets
deposited as margin with and held by the Foreign Currency Broker are held in
unregulated accounts. In general, approximately 80% to 94% of the Trust's
assets are held in customer segregated funds accounts or with a Custodian,
approximately 5% to 15% in foreign futures and options secured amount accounts
and approximately 1% to 8% in unregulated accounts. Assets held in "customer
segregated funds accounts" may be held in cash or invested in United States
Treasury bills or notes. Assets held at a Custodian may be held in cash or
invested on an unleveraged basis in Treasury bills, notes and bonds as well as
other securities issued or guaranteed as to principal and/or interest by certain
U.S. government agencies or instrumentalities.
Although currently not contemplated, CISI may deposit a portion of Trust
assets with a Custodian and engage a third-party cash manager to manage such
assets. Such assets will be invested on an unleveraged basis in Treasury bills,
notes and bonds as well as other securities issued or guaranteed as to principal
and/or interest by certain U.S. government agencies or instrumentalities. The
fees of such third-party cash manager will be paid by the Trust. CIS has agreed
to credit to the account of the Trust at each month-end the amount, if any, by
which returns (net of fees of the cash manager) for such month on Trust assets
held by a Custodian are less than the return that would have been realized by
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the Trust had such assets been deposited with CIS. THERE CAN BE NO ASSURANCE
THAT, IF THE SERVICES OF ONE OR MORE CASH MANAGERS ARE USED, THE TRUST WILL
AVOID LOSS OF PRINCIPAL WITH RESPECT TO TRUST ASSETS PLACED WITH SUCH MANAGERS.
CHARGES
CHARGES PAID BY THE TRUST
The Trust is subject to the following charges and fees.
<TABLE>
<CAPTION>
RECIPIENT NATURE OF PAYMENT AMOUNT OF PAYMENT
- --------- ----------------- -----------------
<S> <C> <C>
CISI Organizational and CISI advanced these costs, approximately
initial offering $650,000, and was reimbursed by the
costs Trust at the initial closing. These
costs are being amortized over the first
sixty months of the Trust's operations,
subject to a maximum monthly payment of
1/60 of 2% of the month-end Net Assets.
Year-to-date through October 1999,
amortized organizational and initial
offering costs equalled $110,144.
During 1998, amortized organizational
and initial offering costs equalled
$132,173.
Third Ongoing offering As incurred, subject to a ceiling of
Parties costs 0.5% of the Trust's average month-end
Net Assets in each fiscal year. Year-
to-date through October 1999, ongoing
offering costs equalled $399,706.
During 1998, ongoing offering costs
equalled $400,616.
CIS Brokerage Fee 6.5% annually (or approximately 0.542%
per month) of the Trust's month-end
assets (after deduction of the
Management Fee payable to JWH and before
recognizing the purchases and
redemptions for the month) is paid to
CIS. Such Brokerage Fee covers all
brokerage, exchange, clearing and NFA
fees incurred in the Trust's trading
including brokerage fees payable to
CISFS on spot and forward currency
trading. Year-to-date through October
1999, Brokerage Fees equalled
$5,066,031. During 1998, Brokerage Fees
equalled $5,254,813.
Certain large investors are eligible to
be charged the Special Brokerage Fee
Rate as described under "Charges --
Brokerage Fee -- Special Brokerage Fee
Rate."
CIS and CISFS Interest income CIS and CISFS credit the Trust with
earned above amount interest on 100% of the Trust's average
credited to the daily U.S. dollar balances on deposit
Trust, if any with CIS or CISFS during each month at
the average 91-day Treasury bill rate
and at the applicable rates (which may
be zero in some cases) in respect of
non-U.S. dollar deposits. The economic
benefit from the possession of the
Trust's assets in excess of the interest
credited by CIS and CISFS to the Trust
will be retained by CIS and CISFS,
respectively.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
RECIPIENT NATURE OF PAYMENT AMOUNT OF PAYMENT
- --------- ----------------- -----------------
<S> <C> <C>
Third Parties Administrative As incurred, currently estimated to be
expenses approximately $70,000 annually. Year-
to-date through October 1999,
administrative expenses equalled
$50,639. During 1998, administrative
expenses equalled $58,596.
JWH Management Fee 4% annually (or approximately 0.333% per
month) of the Trust's month-end assets
after deduction of a portion of the
Brokerage Fee at a 1.25% annual rate
(rather than 6.5% annual rate) and
before recognizing the purchases and
redemptions for the month; payable
monthly. Year-to-date through October
1999, Management Fees equalled
$3,232,093. During 1998, Management
Fees equalled $3,239,007.
JWH Incentive Fee As of each calendar quarter-end, 15% of
any New Trading Profits for such quarter
will be paid to JWH. Trading Profits
for any period equal the sum of (i) the
net of any profits and losses realized
on all trades closed out during a
quarter, (ii) the net of any unrealized
profits and losses on open positions as
of the end of such quarter less the net
of any unrealized profits and losses on
open positions as of the end of the
immediately preceding quarter, minus
(iii) the Brokerage Fee at the annual
rate of 1.25% (rather than 6.5% annual
rate) of the Trust's month-end assets
and the Management Fee.
Trading Profits do not include interest
income.
Trading Profits are calculated on the
basis of the overall performance of the
Trust, not the performance of each
trading program considered individually.
New Trading Profits for any quarter are
the amount of cumulative calendar
quarter-end Trading Profits in excess of
the highest level of such cumulative
Trading Profits as of any previous
calendar quarter-end.
Year-to-date through October 1999,
Incentive Fees equalled $853,899.
During 1998, Incentive Fees equalled
$1,383,562.
Third Parties Reimbursement of Actual payments to third parties; not
delivery, insurance, subject to estimate.
storage and any
other extraordinary
charges; taxes (if
any)
</TABLE>
------------------------
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The above fees are the complete compensation that will be received by CIS or its
affiliates from the Trust. This excludes redemption fees which will be charged
to some Unitholders if they redeem on or before the twelfth month of ownership.
------------------------
BROKERAGE COMMISSIONS; ADMINISTRATIVE FEES
BROKERAGE FEE
BROKERAGE FEE RATE. Commodity brokerage commissions are typically paid
upon the completion or liquidation of a trade and are referred to as "round-turn
commissions," which 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 average month-end assets after deduction
of the Management Fee but before inclusion of purchases and redemptions for the
month. CIS receives such Brokerage Fee, irrespective of the number of trades
executed on the Trust's behalf.
SPECIAL BROKERAGE FEE RATE. A Unitholder who purchases at least $5,000,000
of Units as of any month-end (an "Eligible Unitholder") will be charged
Brokerage Fees at the flat rate of 5% per annum (or 0.417% per month; the
"Special Brokerage Fee Rate"). As of each month-end that a Unitholder holds
Units with an aggregate issue price of at least $5,000,000, such Unitholder will
remain an Eligible Unitholder regardless of the aggregate Net Asset Value of
such Units.
An investor who makes an additional purchase of Units on a closing date
that causes the aggregate issue price of all of such investor's Units to equal
at least $5,000,000 will be charged the Special Brokerage Fee Rate with respect
to such additional Units as of the next month-end but with respect to earlier
purchased Units only after such Units have been outstanding for at least twelve
full months. For example, if an investor makes an initial investment of
$3,000,000 as of March 31, 1999 ("Initial Purchase Date") and an incremental
investment of $3,000,000 as of September 30, 1999 ("Subsequent Purchase Date"),
such Eligible Unitholder will be eligible to be charged the Special Brokerage
Fee Rate (i) immediately with respect to Units acquired as of the Subsequent
Purchase Date and (ii) as of April 30, 2000 with respect to Units acquired as of
the Initial Purchase Date. In determining the Brokerage Fees due on such an
investor's Units, Units when redeemed will be treated on a "first-in, first-out"
basis.
The Special Brokerage Fee reduction is effected while maintaining a uniform
Net Asset Value per Unit by issuing additional Units to Eligible Unitholders.
THE TRUST'S BROKERAGE FEES CONSTITUTE A "WRAP FEE," WHICH COVER THE CIS
GROUP'S COSTS AND EXPENSES, NOT JUST THE COST OF BROKERAGE EXECUTIONS.
THE BROKERAGE FEES MAY NOT BE INCREASED ABOVE THE CURRENT LEVEL WITHOUT THE
UNANIMOUS CONSENT OF ALL UNITHOLDERS.
JWH'S MANAGEMENT FEES
The Trust pays monthly Management Fees to JWH at a rate of 0.333% (a 4%
annual rate) of the month-end assets of the Trust, after reduction for a 1.25%
(rather 6.5% per annum) portion of the Brokerage Fee charged, but before
reduction for any Incentive Fee or other costs and before inclusion of purchases
and redemptions for the month.
INCENTIVE FEES
METHOD OF CALCULATING
The Trust pays to JWH an Incentive Fee equal to 15% of any New Trading
Profits as of the end of each calendar quarter. New Trading Profits are any
cumulative Trading Profit in excess of the highest level -- the "High Water
Mark" -- of cumulative Trading Profits as of any previous calendar quarter-end.
Trading Profits (i) include realized and unrealized profits and losses,
(ii) exclude interest income and (iii) are reduced by Brokerage Fees of
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1.25% (not 6.5%) of month-end assets, the Management Fee and by no other
costs.
Accrued Incentive Fees on Units when redeemed are paid to JWH. Any
shortfall between cumulative Trading Profits and the "High Water Mark" in
cumulative Trading Profits is proportionately reduced when Units are redeemed.
Trading Profits are not reduced by redemption charges.
For example, assume that as of January 1, 2000, the Trust is at a "High
Water Mark" in cumulative Trading Profits. If Trading Profits for such month
equalled $500,000, all of such Trading Profits would be New Trading Profits,
resulting in an accrued $75,000 Incentive Fee. Assume also that by the end of
the next month, losses, the 1.25% Brokerage Fee and the Management Fee have
reduced the $500,000 New Trading Profits to a loss of $(180,000). If the Trust
then withdrew 50% of its assets, this $(180,000) loss carryforward would be
reduced by 50% to ($90,000) for Incentive Fee calculation purposes. If during
the following month Trading Profits equalled $200,000, New Trading Profits of
$110,000 would be accrued as of the end of such quarter, and JWH would be
entitled to an additional Incentive Fee of $16,500.
PAID EQUALLY BY ALL UNITS
New Trading Profits may be generated even though the Net Asset Value per
Unit has declined below the purchase price of certain Units. Conversely, if new
Units are purchased at a Net Asset Value reduced by an accrued Incentive Fee
which is subsequently reversed, the reversal is allocated equally among all
Units, although the accrual itself was attributable only to the previously
outstanding Units.
EXTRAORDINARY EXPENSES
The Trust will be required to pay any extraordinary expenses, such as
taxes, incurred in its operation. The Trust has had no such expenses to date,
and in CISI's experience with other managed futures funds, such expenses have
been negligible. Extraordinary expenses, if any, would not reduce Trading
Profits for purposes of calculating the Incentive Fees.
--------------
FEES AND EXPENSES PAID BY CIS
BROKERAGE FEE FOR CURRENCY AND PRECIOUS METALS TRADING
CIS pays CISFS, from CIS's own funds, brokerage fees on a per trade basis
for the Trust's trading of spot and forward contracts on currencies.
SELLING COMMISSIONS AND ONGOING COMPENSATION
CIS pays the Selling Agents selling commissions of up to 4% (up to 2.5% in
respect of Units sold to Eligible Unitholders). CIS also pays eligible Selling
Agents ongoing compensation of up to 4% per annum of the average month-end Net
Asset Value per Unit for all Units which remain outstanding for longer than
twelve months (up to 2.5% per annum in respect of Units owned by Eligible
Unitholders), beginning in the thirteenth month after sale. Selling Agents
ineligible to receive ongoing compensation may receive installment selling
commissions which, when added to the initial selling commission, may not exceed
9% of the initial subscription price of each Unit sold by any such Selling
Agent. Such ongoing compensation may be deemed to constitute underwriting
compensation. See "Federal Income Tax Aspects -- Syndication Expenses."
Wholesalers who introduce Additional Selling Agents to CIS will share the
selling commissions and ongoing compensation (or installment selling
commissions) with their respective Additional Selling Agents. Additional
Selling Agents who distribute Units through correspondents will also share the
selling commissions and ongoing compensation (or installment selling
commissions) with their respective correspondents. See "Plan of Distribution --
Selling Agents."
REDEMPTION CHARGES
A redemption charge of 3% of the redemption date Net Asset Value per Unit
is imposed on Units redeemed on or before the end of the first eleven months
after issuance. This redemption charge is deducted from investors' redemption
proceeds and paid to CISI.
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<PAGE>
BROKERAGE
ARRANGEMENTS
THE FUTURES BROKER
CIS, the Lead Selling Agent, is also the Trust's Futures Broker. CIS
executes and clears the Trust's futures transactions and provides other
brokerage-related services. CIS is a Delaware corporation. Its principal
office is located at 233 South Wacker Drive, Suite 2300, Chicago, Illinois
60606. It has offices and affiliated offices in Chicago, New York, Kansas City
and Minneapolis as well as in England, France, Switzerland and Singapore. The
clients of CIS include commercial and financial institutions that use the
futures markets for risk management purposes as well as private investors. CIS
has more than 500 employees. CIS is a wholly-owned, but separately managed,
subsidiary of Cargill, Incorporated, a privately-owned international merchant,
warehouser, processor and transporter of agricultural and other bulk commodities
that was founded in 1865.
CIS is a clearing member of all of the principal futures exchanges in
the United States and is a clearing broker or has clearing relationships on
all major world futures exchanges. It is registered with the CFTC as a
futures commission merchant and is a member of NFA in such capacity. Certain
employees of CIS are members of U.S. futures exchanges and may serve on the
governing bodies and standing committees of those exchanges, their
clearinghouses and NFA. In that capacity, these employees have a fiduciary
duty to the exchanges and would be required to act in the best interests of
such exchanges, even if that action might be adverse to the interests of the
Trust.
Cargill, Incorporated owns and operates grain elevators and soybean
processing plants that are designated as regular warehouses for delivery of
certain physical commodities in satisfaction of futures contracts under the
rules of the Chicago Board of Trade and similar rules of other U.S. futures
exchanges.
Cargill, Incorporated and its affiliates are substantial users of virtually
all futures contracts for hedging purposes. Such hedging transactions are
generally implemented by employees of Cargill, Incorporated, and CIS generally
executes or clears those transactions. The volume of trading by Cargill,
Incorporated and its affiliates is likely to result in their competing with the
Trust for futures market positions. Thus, in certain instances, CIS may have
orders for trades from the Trust and from Cargill, Incorporated or its
affiliates, and CIS might be deemed to have a conflict of interest with respect
to the sequence in which such orders will be transmitted to the trading floors
of futures exchanges. In order to assure impartial treatment for such orders,
CIS has an operating policy of transmitting orders to the trading floors in the
sequence received regardless of which entity has placed the order. The Trust
might enter into trades in which the other party is Cargill, Incorporated or one
of its affiliates. It is possible that the hedging and cash operations of
Cargill, Incorporated or trading by its affiliates may adversely affect the
Trust. Records of such trading will not be made available to Unitholders. It
is possible that these entities may compete for similar positions in the futures
markets.
NO OFFICERS, DIRECTORS OR EMPLOYEES OF CIS OR ITS AFFILIATES ARE PERMITTED
TO TRADE FUTURES SPECULATIVELY FOR THEIR OWN ACCOUNTS.
In the ordinary course of its business, CIS is engaged in civil litigation
and subject to administrative proceedings which, in the aggregate, are not
expected to have a material effect upon its condition, financial or otherwise,
or the services it will render to the Trust.
The Trust and CIS have entered into a Customer Agreement that provides
that, for as long as the Trust maintains an account with CIS, CIS will execute
and clear trades for the Trust upon instruction of JWH, and will receive the
monthly flat-rate Brokerage Fees. The Customer Agreement is terminable on sixty
days' notice by either party. If for any reason the Trust elects to terminate
the Customer Agreement with CIS, no assurance may be given that the Trust will
be able to retain the brokerage services of another futures broker at the same
commission rate. In addition, under the Declaration and Agreement of Trust,
Unitholders owning more than 50% of the outstanding Units may cause the Trust to
terminate the Customer Agreement. CIS is
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<PAGE>
responsible for execution and clearance of futures contracts (and options, if
traded) as well as for certain administrative duties such as record keeping,
transmittal of confirmation statements and calculating equity balance and
margin requirements for the Trust's account. The agreement provides that CIS
will not be liable to the Trust except for bad faith or negligence.
Trust assets are deposited with CIS in its capacity as the Trust's Futures
Broker. CIS credits interest monthly to the Trust's account on substantially
all of the Trust's average daily balances on deposit at CIS, as described under
"Interest Income." CIS retains any economic benefit derived from possession of
the Trust's assets in excess of the amount credited to the Trust's account.
THE FOREIGN CURRENCY BROKER
CISFS acts as the Trust's counterparty in the Trust's spot and forward
contracts trades. CISFS is a Delaware corporation that is a wholly-owned
subsidiary of CIS Holdings, Inc. Under most normal circumstances, CISFS will
contact at least two counterparties for a quote on each of the Trust's currency
and precious metals trades. CISFS will enter a spot or forward contract with
the selected counterparty and will enter into a back-to-back spot or forward
contract with the Trust at the same price CISFS buys from (or sells to) the
selected counterparty.
REDEMPTIONS;
NET ASSET VALUE
REDEMPTIONS
THE TRUST IS INTENDED AS A MEDIUM- TO LONG-TERM, "BUY AND HOLD"
INVESTMENT. THE TRUST'S OBJECTIVES ARE TO ACHIEVE SUBSTANTIAL CAPITAL
APPRECIATION OVER TIME. THE TRUST IS NOT INTENDED TO ACHIEVE, NOR TO ATTEMPT
TO ACHIEVE, SIGNIFICANT APPRECIATION OVER THE SHORT TERM.
A Unitholder may cause the Trust to redeem any or all of such Unitholder's
Units at Net Asset Value as of the close of business on the last business day of
any calendar month. Written redemption requests may be submitted to CISI or to
a redeeming Unitholder's Registered Representative but in either case must be
received by CISI no later than five business days prior to month-end (including
the last business day of the month) to effect redemption as of such month-end.
A form of Request for Redemption is attached to the Subscription Agreement and
Power of Attorney as an Annex.
Redemption proceeds will generally be paid within ten business days after
the month-end of redemption, either directly to the redeeming Unitholder or to
the Unitholder's customer securities account as directed by the Unitholder.
However, in special circumstances, including, but not limited to, default or
delay in payments due to the Trust from banks or other persons, the Trust may,
in turn, delay payment to persons requesting redemption of Units of the
proportionate part of the redemption value of their Units equal to the
proportionate part of the Net Assets of the Trust represented by the sums that
are the subject of such default or delay.
A Unit which is redeemed at or prior to the end of the eleventh full month
after its issuance will be assessed a redemption charge of 3% of the Net Asset
Value per Unit as of the date of redemption. In the event that an investor
acquires Units at more than one time, such investor's Units will be treated on a
"first-in, first-out" basis for purposes of determining whether redemption
charges apply.
Applicable state "Blue Sky" policies require that redemption charges not be
assessed on any Unitholder who redeems because the Trust's expenses have
increased.
The Managing Owner may declare additional redemption dates, including
Special Redemption Dates under certain circumstances. If as of the close of
business on any day the Net Asset Value of a Unit has decreased to less than 50%
of the previous highest month-end Net Asset Value per Unit, after adding back
all distributions, the Managing Owner shall liquidate all of the Trust's open
positions, suspend trading and within ten business days after the suspension of
trading declare a Special Redemption Date by notice to Unitholders and otherwise
in accordance with the Declaration of Trust.
Unitholders may not transfer or assign Units without providing prior
written notice to the
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Managing Owner. No assignee may become a substitute Unitholder except with
the consent of the Managing Owner.
NOTICES OF REDEMPTION ARE IRREVOCABLE ONCE SUBMITTED. THE NET ASSET VALUE
PER UNIT AS OF THE DATE OF REDEMPTION MAY DIFFER SUBSTANTIALLY FROM THE NET
ASSET VALUE PER UNIT AS OF THE DATE THAT IRREVOCABLE NOTICE OF REDEMPTION MUST
BE SUBMITTED.
UNITHOLDERS NEED NOT REDEEM ALL THEIR UNITS IN ORDER TO REDEEM ANY SUCH
UNITS, PROVIDED THAT AT LEAST $1,000 OF UNITS ARE REDEEMED AND THAT THE MINIMUM
INVESTMENT OF $1,000 IS MAINTAINED AFTER ANY PARTIAL REDEMPTION.
NET ASSET VALUE
The Net Assets of the Trust are its assets less its liabilities determined
in accordance with generally accepted accounting principles. The Net Asset
Value per Unit is the Net Assets of the Trust divided by the number of Units
outstanding.
Futures or option contracts traded on a United States commodity exchange
are valued at the settlement price on the date of valuation. If an open
position cannot be liquidated on the day with respect to which Net Assets are
being determined, the settlement price on the first subsequent day on which the
position can be liquidated shall be the basis for determining the liquidating
value of such position for such day, or such other value as the Managing Owner
may deem fair and reasonable. The liquidating value of a commodity futures or
option contract not traded on a United States commodity exchange shall mean its
liquidating value as determined by the Managing Owner on a basis consistently
applied for each different variety of contract. Accrued Incentive Fee
liabilities reduce Net Asset Value (subject, however, to possible whole or
partial reversal if the Trust incurs subsequent losses) even if such accrued
Incentive Fees may never, in fact, be finally paid to JWH.
Organizational and initial offering cost reimbursements reduce Net Asset
Value only as amortized over the first 60 months of the Trust's trading.
CONFLICTS OF INTEREST
GENERAL
Neither CISI nor JWH has established any formal procedures to resolve the
following conflicts of interest. Consequently, there is no independent control
on how CISI or JWH resolves these conflicts which can be relied upon by
investors as ensuring that the Trust is treated equitably with other CISI or JWH
clients.
Because no formal procedures are in place for resolving conflicts, they may
be resolved by CISI and/or JWH in a manner which causes the Trust losses. The
value of Unitholders' investment may be diminished by actions or omissions which
independent third parties could have prevented or corrected.
Although the following conflicts of interest are present in the operation
of the Trust, CISI does not believe that they are likely to have a material
adverse effect on its performance. This belief is based on a number of factors,
including the following.
(i) JWH trades all similarly situated CIS accounts in parallel, placing bulk
orders which are allocated among the JWH accounts pursuant to
pre-established procedures. Consequently, JWH has little opportunity to
prefer another JWH client over the Trust.
(ii) CIS simply receives and executes JWH's bulk orders based on
pre-established procedures. CIS has no ability in allocating positions
to favor one account over another.
(iii) JWH charges similar accounts the same fees.
(iv) CISI, as a fiduciary, is prohibited from benefiting itself at the expense
of the Trust.
In CISI's view, the most important conflict of interest relating to the
Trust is that the business terms applicable to the CIS Group's dealings with the
Trust were not negotiated when they were initially established. These business
terms are described in detail in this prospectus in order to give prospective
investors ample opportunity to accept or reject such terms. However, it may be
difficult for investors to
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assess, for example, the extent of the adverse impact which the high level of
the Trust's Brokerage Fees has on its long-term prospects for profitability.
CISI
CISI organized and controls the Trust. CISI and its affiliates are the
primary service providers to the Trust and will remain so even if using other
firms might be better for the Trust. Futures trading is highly competitive. To
the extent that CIS Group entities continue to be retained by the Trust despite
providing non-competitive services, the Trust is likely to be less profitable or
incur greater losses.
CISI allocates its resources among a number of different funds. CISI may
have financial incentives to favor certain funds over the Trust. To the extent
that CISI actually does so, the Net Asset Value per Unit is likely to be
negatively impacted.
The business terms of the Trust -- other than the Management and Incentive
Fees due to JWH which were negotiated between CISI and JWH -- were not
negotiated. CISI unilaterally established these terms, balancing marketing and
performance considerations and its interest in maximizing the revenues generated
to CISI.
CISI'S INTEREST IN MAXIMIZING ITS REVENUES COULD CAUSE IT TO TAKE ACTIONS
WHICH ARE DETRIMENTAL TO THE TRUST IN ORDER TO INCREASE CISI'S INCOME FROM THE
TRUST OR DECREASE ITS COSTS IN SPONSORING THE TRUST. ALSO, BECAUSE CISI DOES
NOT HAVE TO COMPETE WITH THIRD PARTIES TO PROVIDE SERVICES TO THE TRUST, THERE
IS NO INDEPENDENT CHECK ON THE QUALITY OF SUCH SERVICES. CISI MAY LOWER THE
QUALITY OF SUCH SERVICES IN ORDER TO MAXIMIZE THE NET REVENUES WHICH IT RECEIVES
FROM THE TRUST, WHILE AT THE SAME TIME CAUSING THE NET ASSET VALUE PER UNIT TO
DECLINE.
CIS; CISFS
GENERAL
CIS executes trades for different clients in the same markets at the same
time. Consequently, other clients may receive better prices on the same trades
than the Trust, causing the Trust to pay higher prices for its positions.
Many CIS clients pay lower brokerage rates than the Trust. Brokerage Fees
are a major drag on the Trust's performance, and the cumulative effect of the
higher rates paid by the Trust is material.
CIS and CISFS must allocate their resources among many different clients.
They all have financial incentives to favor certain accounts over the Trust.
Because of the competitive nature of the markets in which they trade, to the
extent that either CIS or CISFS prefers other clients over the Trust, the Trust
is likely to be negatively impacted.
CIS AND CISFS DO NOT HAVE TO COMPETE TO PROVIDE SERVICES TO THE TRUST;
CONSEQUENTLY, THERE IS NO INDEPENDENT CHECK ON THE QUALITY OF THEIR SERVICES.
JWH
GENERAL
JWH manages many accounts other than the Trust. Consequently, JWH may
devote less resources to the Trust's trading than JWH otherwise might, to the
detriment of the Trust.
Some of JWH's principals devote a substantial portion of their business
time to ventures other than managing the Trust, including ventures unrelated to
futures trading. The Trust may be at a competitive disadvantage to other
accounts which are managed by advisors whose principals devote their entire
attention to futures trading.
FINANCIAL INCENTIVES TO DISFAVOR THE TRUST
If the Trust has losses, JWH may have an incentive to prefer other clients
because JWH could begin to receive incentive compensation from such clients
without having to earn back any losses.
ANY ACTION WHICH JWH TAKES TO MAXIMIZE ITS REVENUES BY DISFAVORING THE
TRUST, EITHER IN RESPECT OF THE RESOURCES DEVOTED TO ITS TRADING OR THE PROGRAMS
SELECTED FOR IT, COULD ADVERSELY AFFECT THE TRUST'S PERFORMANCE, PERHAPS TO A
MATERIAL EXTENT.
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THE SELLING AGENTS
The Selling Agents receive substantial selling commissions on the sale of
Units. Consequently, the Selling Agents have a conflict of interest in advising
their clients whether to invest in the Units.
The Selling Agents receive, beginning in the thirteenth month after each
month-end sale of Units, ongoing compensation based on the Net Asset Value of
Units sold by them which remain outstanding. Consequently, in advising clients
whether to redeem their Units the Selling Agents will have a conflict of
interest between their interest in maximizing the compensation which they will
receive from the Trust and giving their clients the financial advice which the
Selling Agents believe to be in such clients' best interests. The same conflict
of interest extends to the Wholesalers and correspondents who distribute Units.
PROPRIETARY TRADING
The CIS Group and their employees are prohibited from trading for their
own accounts.
JWH and Mr. Henry may engage in discretionary trading for their own
accounts, and may trade for the purpose of testing new investment programs
and concepts, as long as such trading does not amount to a breach of
fiduciary duty. In the course of such trading, JWH and Mr. Henry may take
positions in their own accounts which are the same as or opposite to client
positions, due to testing a new quantitative model or program, a neutral
allocation system, and/or trading pursuant to individual discretionary
methods; on occasion, their orders may receive better fills than investor
accounts. Records for these accounts will not be made available to the
Trust.
Employees and principals of JWH (other than Mr. Henry) are not permitted
to trade in futures, options on futures or forward contracts. However, such
principals and employees may invest in investment vehicles that trade futures,
options on futures or forward contracts when an independent trader manages
trading in that vehicle, and in The JWH Employee Fund, L.P., for which JWH is
the trading advisor. Records of these accounts will not be made available to
the Trust.
Records of proprietary trading will not be available for inspection by
Unitholders.
Proprietary trading by JWH or Mr. Henry could, if substantial in size and
conducted in the same markets traded by the Trust, cause losses for the Trust by
increasing the cost at which it must acquire and liquidate positions. Over
time, the losses resulting from such increased prices could make it difficult
for the Trust to earn profits even if its trading were otherwise successful.
TRANSACTIONS BETWEEN THE CIS GROUP AND THE TRUST
All of the service providers to the Trust, other than JWH and the Trustee, are
affiliates of CIS. CISI negotiated with JWH over the level of its Management
and Incentive Fees. However, none of the fees paid by the Trust to the CIS
Group were negotiated, and they may be higher than would have been obtained in
arm's-length bargaining.
The Trust pays CIS substantial Brokerage Fees. The Trust also pays CIS
interest on short-term loans extended by CIS to cover losses on foreign currency
positions and permits CIS to retain a portion of the benefit derived from
possession of the Trust's assets.
Within the CIS Group, CISI is the direct beneficiary of the revenues
received by CIS from the Trust. CISI controls the management of the Trust and
CIS serves as its promoter. Although CISI has not sold any assets, directly or
indirectly, to the Trust, CISI makes substantial profits from the Trust due to
the foregoing revenues.
No loans have been, are or will be outstanding between CISI or any of its
principals and the Trust.
CIS pays substantial selling commissions (up to 4% of the subscription
price of Units) and trailing commissions (up to 4% annually of the average Net
Asset Value per Unit, beginning in the thirteenth month after a Unit is sold) to
the Selling Agents for distributing the Units. CIS is ultimately paid back for
these expenditures from the revenues it receives from the Trust.
Descriptions of the dealings between the Trust and the CIS Group are set
forth under "Selected Financial Data," "Interest Income" and "Charges."
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THE TRUST AND THE TRUSTEE
PRINCIPAL OFFICE; LOCATION OF RECORDS
The Trust is organized under the Delaware Business Trust Act. The Trust
is administered by the Managing Owner, whose office is located at 233 South
Wacker Drive, Suite 2300, Chicago, Illinois 60606 (telephone: (312) 460-4000).
The records of the Trust, including a list of the Unitholders and their
addresses but excluding detailed trading records of JWH, is located at the
foregoing address, and available for inspection and copying (upon payment of
reasonable reproduction costs) by Unitholders or their representatives during
regular business hours as provided in the Declaration and Agreement of Trust.
(Section 10). There is a limitation to non-commercial purposes. Transfer agent
services will be provided by CIS at 233 South Wacker Drive, Suite 2300, Chicago,
Illinois 60606 at no additional cost to the Trust. The Managing Owner will
maintain and preserve the books and records of the Trust for a period of not
less than six years.
CERTAIN ASPECTS OF THE TRUST
THE TRUST IS THE FUNCTIONAL EQUIVALENT OF A LIMITED PARTNERSHIP;
PROSPECTIVE INVESTORS SHOULD NOT ANTICIPATE ANY LEGAL OR PRACTICAL PROTECTIONS
UNDER THE DELAWARE BUSINESS TRUST ACT GREATER THAN THOSE AVAILABLE TO LIMITED
PARTNERS.
No special custody arrangements are applicable to the Trust which would
not be applicable to a limited partnership, and the existence of a trustee
should not be taken as an indication of any additional level of management or
supervision over the Trust. To the greatest extent permissible under Delaware
law, the Trustee acts in an entirely passive role, delegating all authority over
the operation of the Trust to the Managing Owner. The Managing Owner is the
functional equivalent of the general partner in a limited partnership.
(Sections 5(a), 9 and 19).
Although units of beneficial interest in a trust need not carry any voting
rights, the Declaration and Agreement of Trust gives Unitholders voting rights
comparable to those typically extended to limited partners in publicly-offered
futures funds. (Section 19).
The Delaware Business Trust Act under which the Trust is formed is filed
as an exhibit to the Registration Statement of which this Prospectus is a part.
THE TRUSTEE
Wilmington Trust Company, a Delaware banking corporation, is the sole
Trustee of the Trust. The Trustee's principal offices are located at Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001. The
Trustee is unaffiliated with either the Managing Owner or the Selling Agents.
The Trustee's duties and liabilities with respect to the offering of the Units
and the administration of the Trust are limited to its express obligations under
the Declaration and Agreement of Trust.
The rights and duties of the Trustee, the Managing Owner and the
Unitholders are governed by the provisions of the Delaware Business Trust Act
and by the Declaration and Agreement of Trust.
The Trustee serves as the Trust's sole trustee in the State of Delaware.
The Trustee will accept service of legal process on the Trust in the State of
Delaware and will make certain filings under the Delaware Business Trust Act.
The Trustee does not owe any other duties to the Trust, the Managing Owner or
the Unitholders. The Trustee is permitted to resign upon at least 60 days'
notice to the Trust, provided that any such resignation will not be effective
until a successor Trustee is appointed by the Managing Owner. The Declaration
and Agreement of Trust provides that the Trustee is compensated by the Trust,
and is indemnified by the Managing Owner against any expenses it incurs relating
to or arising out of the formation, operation or termination of the Trust or the
performance of its duties pursuant to the Declaration and Agreement of Trust,
except to the extent that such expenses result from the gross negligence or
willful misconduct of the Trustee. The Managing Owner has the discretion to
replace the Trustee.
Only the Managing Owner has signed the Registration Statement of which
this prospectus is a part, and only the assets of the Trust and the Managing
Owner are subject to issuer liability under the federal securities laws for the
information contained in this prospectus and under federal and state laws with
respect to the issuance and sale of the Units. Under such laws, neither the
Trustee, either in its capacity as Trustee or in its individual capacity,
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nor any director, officer or controlling person of the Trustee is, or has any
liability as, the issuer or a director, officer or controlling person of the
issuer of the Units. The Trustee's liability in connection with the issuance
and sale of the Units is limited solely to the express obligations of the
Trustee set forth in the Declaration and Agreement of Trust.
Under the Declaration and Agreement of Trust, the Trustee has delegated to
the Managing Owner the exclusive management and control of all aspects of the
business of the Trust. The Trustee has no duty or liability to supervise or
monitor the performance of the Managing Owner, nor shall the Trustee have any
liability for the acts or omissions of the Managing Owner. In addition, the
Managing Owner has been designated as the "tax matters partner" of the Trust for
purposes of the Internal Revenue Code of 1986, as amended (the "Code"). The
Unitholders have no voice in the operations of the Trust, other than certain
limited voting rights as set forth in the Declaration and Agreement of Trust.
In the course of its management, the Managing Owner may, in its sole and
absolute discretion, retain such persons (except where the Managing Owner has
been notified by the Unitholders that the Managing Owner is to be replaced as
the managing owner), including an affiliate or affiliates of the Managing Owner,
as the Managing Owner deems necessary for the efficient operation of the Trust.
(Sections 2 and 9).
Because the Trustee has delegated substantially all of its authority over
the operation of the Trust to the Managing Owner, the Trustee itself is not
registered in any capacity with the CFTC.
The Trust's Declaration of Trust effectively gives CISI, as Managing
Owner, full control over the management of the Trust. Unitholders have no voice
in its operations. In addition, CISI in its operation of the Trust is
specifically authorized to engage in the transactions described herein
(including those involving affiliates of CISI), and is exculpated and
indemnified by the Trust against claims sustained in connection with the Trust,
provided that such claims were not the result of negligence or misconduct and
that CISI determined that such conduct was in the best interests of the Trust.
Although as Unitholders investors have no right to participate in the
control or management of the Trust, they are entitled to: (i) vote on a variety
of different matters; (ii) receive annual audited financial statements,
unaudited monthly reports and timely tax information; (iii) inspect the Trust's
books and records; (iv) redeem Units; and (v) not have the business terms of the
Trust changed in a manner which increases the compensation received by CISI or
its affiliates without their unanimous consent.
Unitholders' voting rights extend to any proposed change in the
Declaration of Trust which would adversely affect them, as well as to their
right to terminate the Trust's contracts with affiliates of CISI. Unitholders
also have the right to call meetings of the Trust in order to permit Unitholders
to vote on any matter on which they are entitled to vote, including the removal
of CISI as Managing Owner of the Trust.
Unitholders or their duly authorized representatives may inspect the
Trust's books and records, for any purpose reasonably related to their status as
Unitholders in the Trust, during normal business hours upon reasonable written
notice to the CISI. They may also obtain copies of such records upon payment of
reasonable reproduction costs; provided, however, that such Unitholders
represent that the inspection and/or copies of such records will not be for
commercial purposes unrelated to such Unitholders' interest in the Trust.
The Declaration of Trust contains restrictions on CISI's ability to raise
Brokerage Fees, Administrative Fees and other revenues received by the CIS Group
from the Trust, as well as certain other limitations on the various conflicts of
interest to which the CIS Group is subject in operating the Trust.
The Declaration of Trust provides for the economic and tax allocations of
the Trust's profit and loss. Economic allocations are based on investors'
capital accounts, and the tax allocations generally attempt to equalize tax and
capital accounts by, for example, making a priority allocation of taxable income
to Unitholders who redeem at a profit.
A Unitholder may transfer or assign his or her units in the Trust upon
prior written notice to his or her registered representative and CISI and
subject to approval of the assignee, CISI will provide consent when it is
satisfied that the transfer complies with applicable laws. An assignee not
admitted to the Trust as a Unitholder will have only limited rights to
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share the profits and capital of the Trust and a limited redemption right.
The Managing Owner may amend the Declaration of Trust in any manner not
adverse to the Unitholders without need of obtaining their consent. These
amendments can be for clarification of inaccuracies or ambiguities,
modifications in response to changes in tax code or regulations or any other
changes CISI deems advisable so long as they do not change the basic investment
policy or structure.
The Trust has agreed to indemnify CISI, as Managing Owner, for actions
taken on behalf of the Trust, provided that CISI's conduct was in the best
interests of the Trust and the conduct was not the result of negligence or
misconduct. Indemnification by the Trust for alleged violation of securities
laws is only available if the following conditions are satisfied:
1) a successful adjudication on the merits of each count alleged has been
obtained, or
2) such claims have been dismissed with prejudice on the merits by a
court of competent jurisdiction; or
3) a court of competent jurisdiction approves a settlement of the claims
and finds indemnification of the settlement and related costs should
be made; and
4) in the case of 3), the court has been advised of the position of the
SEC and the states in which the Units were offered and sold as to
indemnification for the violations.
TAX CONSEQUENCES
THE FOLLOWING CONSTITUTES THE OPINION OF SIDLEY & AUSTIN AND SUMMARIZES
THE MATERIAL FEDERAL INCOME TAX CONSEQUENCES TO UNITED STATES TAXPAYERS WHO ARE
INDIVIDUALS.
THE TRUST'S TAX STATUS
In the opinion of Sidley & Austin, the Trust will be classified as a
partnership for federal income tax purposes. Consequently, the Unitholders
individually, not the Trust itself, are subject to tax.
The Managing Owner believes that all of the income expected to be
generated by the Trust will constitute "qualifying income" and has so advised
Sidley & Austin. As a result, in the opinion of Sidley & Austin, the Trust will
not be subject to tax as a corporation under the provisions applicable to
"publicly-traded partnerships."
TAXATION OF UNITHOLDERS ON PROFITS OR LOSSES OF THE TRUST
Each Unitholder must pay tax on his or her share of the Trust's income and
gains. Such share must be included each year in a Unitholder's taxable income
whether or not such Unitholder has redeemed Units. In addition, a Unitholder
may be subject to paying taxes on the Trust's interest income even though the
Net Asset Value per Unit has decreased due to trading losses. See "-- Tax on
Capital Gains and Losses; Interest Income," below.
The Trust provides each Unitholder with an annual schedule of his or her
share of the Trust's tax items. The Trust generally allocates these items
equally to each Unit. However, when a Unitholder redeems Units, the Trust
allocates capital gains or losses so as to eliminate any difference between the
redemption proceeds and the tax accounts of such Units.
LIMITED DEDUCTIBILITY OF TRUST LOSSES AND DEDUCTIONS
A Unitholder may not deduct Trust losses or deductions in excess of his or
her tax basis in his or her Units as of year-end. Generally, a Unitholder's tax
basis in his or her Units is the amount paid for such Units reduced (but not
below zero) by his or her share of any Trust distributions, losses and
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deductions and increased by his or her share of the Trust's income and gains.
LIMITED DEDUCTIBILITY FOR CERTAIN EXPENSES
Individual taxpayers are subject to material limitations on their ability
to deduct investment advisory expenses and other expenses of producing income.
Sidley & Austin has opined that the amount, if any, of the Trust's expenses
which might be subject to this limitation should be DE MINIMIS. However, the
IRS could take a different position. The IRS could contend that the Management
and Incentive Fees should be characterized as "investment advisory expenses"
because the Trust is not engaged in a "trade or business."
Individuals cannot deduct investment advisory expenses in calculating
their alternative minimum tax.
YEAR-END MARK-TO-MARKET OF OPEN POSITIONS
Section 1256 Contracts are futures, futures options traded on U.S.
exchanges, certain foreign currency contracts and stock index options.
Certain of the Trust's open positions are Section 1256 Contracts. Section
1256 Contracts that remain open at the end of each year are treated for tax
purposes as if such positions had been sold and any gain or loss recognized.
The gain or loss on Section 1256 Contracts is characterized as 40% short-term
capital gain or loss and 60% long-term capital gain or loss regardless of how
long any given position has been held. Non-U.S. exchange-traded futures and
forwards are generally non-Section 1256 Contracts. Gain or loss on
non-Section 1256 Contracts will be recognized when sold by the Trust and will
be primarily short-term gain or loss. Gain or loss on certain currency
contracts will be ordinary income or loss.
TAX ON CAPITAL GAINS AND LOSSES; INTEREST INCOME
As described under "-- Year-End Mark-to-Market of Open Positions," the
Trust's trading generates 60% long-term capital gains or losses and 40%
short-term capital gains or losses from its Section 1256 Contracts and
primarily short-term capital gain or loss from its non-Section 1256
Contracts. Individuals pay tax on long-term capital gains at a maximum rate
of 20%. Short-term capital gains are subject to tax at the same rates as
ordinary income, with a maximum rate of 39.6% for individuals.
Individual taxpayers may deduct capital losses only to the extent of their
capital gains plus $3,000. Accordingly, the Trust could incur significant
losses but a Unitholder could be required to pay taxes on his or her share of
the Trust's interest income.
If an individual taxpayer incurs a net capital loss for a year, he may
elect to carryback (up to three years) the portion of such loss which consists
of a net loss on Section 1256 Contracts. A taxpayer may deduct such losses only
against net capital gain for a carryback year to the extent that such gain
includes gains on Section 1256 Contracts. To the extent that a taxpayer could
not use such losses to offset gains on Section 1256 Contracts in a carryback
year, the taxpayer may carryforward such losses indefinitely as losses on
Section 1256 Contracts.
SYNDICATION EXPENSES
The $650,000 in organizational and initial offering costs reimbursed by
the Trust to CISI were non-deductible syndication expenses, as will be the
estimated $250,000 in costs in 1999 associated with the ongoing offering of the
Units under this prospectus and any subsequent ongoing offering expenses
incurred by the Trust. The IRS could also contend that a portion of the
Brokerage Fees paid to CIS constitute non-deductible syndication expenses.
TAXATION OF FOREIGN INVESTORS
A Unitholder who is a non-resident alien individual, foreign corporation,
foreign partnership, foreign trust or foreign estate (a "Foreign Unitholder")
generally is not subject to taxation by the United States on capital gains from
commodity or derivatives trading, provided that such Foreign Unitholder (in the
case of an individual) does not spend more than 182 days in the United States
during his or her taxable year, and provided further, that such Foreign
Unitholder is not engaged in a trade or business within the United States during
a taxable year to which income, gain, or loss is treated as "effectively
connected." An investment in the Trust should not, by itself, cause a Foreign
Unitholder to be engaged in a trade or business within the United States for the
foregoing purposes, assuming that the trading activities of the Trust will be
conducted as described in this prospectus. Pursuant to a "safe
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harbor" in the Code, an investment fund whose U.S. business activities
consist solely of trading commodities and derivatives for its own account
should not be treated as engaged in a trade or business within the United
States provided that such investment fund is not a dealer in commodities or
derivatives and that the commodities traded are of a kind customarily dealt
in on an organized commodity exchange. The Managing Owner has advised Sidley
& Austin of the contracts that the Trust will trade. Based on a review of
such contracts as of the date of this prospectus, the Trust has been advised
by its counsel, Sidley & Austin, that such contracts should satisfy the safe
harbor. If the contracts traded by the Trust in the future were not covered
by the safe harbor, there is a risk that the Trust would be treated as
engaged in a trade or business within the United States. In the event that
the Trust were found to be engaged in a United States trade or business, a
Foreign Unitholder would be required to file a United States federal income
tax return for such year and pay tax at full United States rates. In the
case of a Foreign Unitholder which is a foreign corporation, an additional
30% "branch profits" tax might be imposed. Furthermore, in such event the
Trust would be required to withhold taxes from the income or gain allocable
to such a Unitholder under Section 1446 of the Code.
A Foreign Unitholder is not subject to United States tax on certain
interest income, including income attributable to (i) original issue discount on
Treasury bills having a maturity of 183 days or less or (ii) commercial bank
deposits, provided, in either case, that such Foreign Unitholder is not engaged
in a trade or business within the United States during a taxable year.
Additionally, a Foreign Unitholder, not engaged in a trade or business within
the United States, is not subject to United States tax on interest income (other
than certain so-called "contingent interest") attributable to obligations issued
after July 18, 1984 that are in registered form if the Foreign Unitholder
provides the Trust with a Form W-8.
UNRELATED BUSINESS TAXABLE INCOME
Tax-exempt Unitholders will not be required to pay tax on their share of
income or gains of the Trust, provided that such Unitholders do not purchase
Units with borrowed funds.
IRS AUDITS OF THE TRUST AND ITS UNITHOLDERS
The IRS is required to audit Trust-related items at the Trust rather than
the Unitholder level. CISI is the Trust's "tax matters partner" with general
authority to determine the Trust's responses to a tax audit. If an audit of the
Trust results in an adjustment, all partners may be required to pay additional
taxes plus interest as well as penalties, and additions to tax.
STATE AND OTHER TAXES
In addition to the federal income tax consequences described above, the
Trust and the Unitholders may be subject to various state and other taxes. For
example, the Trust may be subject to a 1.5% Personal Property Replacement Tax in
Illinois. Such tax is imposed on the net income of the Trust allocable to
Illinois.
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PROSPECTIVE INVESTORS ARE
URGED TO CONSULT THEIR TAX
ADVISERS BEFORE DECIDING
WHETHER TO INVEST.
PLAN OF DISTRIBUTION
SUBSCRIPTION PROCEDURE
Units are offered at Net Asset Value as of the close of business on the
last business day of each calendar month. The minimum initial investment is
$5,000; $2,000 for trustees or custodians of eligible employee benefit plans and
individual retirement accounts. Subscriptions in excess of these minimums are
permitted in $100 increments. Additional subscriptions by existing Unitholders
are permitted in $1,000 minimums with $100 increments. Units are sold in
fractions calculated to five decimal places.
In order to purchase Units, an investor must complete, execute and deliver
to a Selling Agent an original of the Subscription Agreement and Power of
Attorney Signature Page which accompanies this prospectus, together with a check
for the amount of his or her subscription. Pending investment in the Units,
subscriptions will be held in escrow at Bank One. Checks should be made payable
to "BANK ONE, ESCROW AGENT FOR JWH GLOBAL TRUST," and shall be transmitted to
the Escrow
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Agent by noon of the second business day after receipt by the Managing Owner.
Subscription payments by clients of certain Selling Agents may be made by
authorizing the Selling Agents to debit a subscriber's customer securities
account with the amount of the subscription. When a subscriber authorizes such
a debit, the subscriber will be required to have the amount of his or her
subscription payment on deposit in his or her account when the subscription is
submitted. The account will be debited, and amounts so debited will be
transmitted directly to Bank One by such Selling Agent via Selling Agent check
or wire transfer made payable to "BANK ONE, ESCROW AGENT FOR JWH GLOBAL TRUST"
for deposit in the escrow account of the Trust.
The Managing Owner will determine, in its sole discretion, whether to
accept or reject a subscription in whole or in part. Such determination is made
within five business days after the receipt of a subscription by the Managing
Owner. The Managing Owner will send each subscriber whose subscription for
Units has been accepted a confirmation of such acceptance.
Subscription documents must be received no later than the fifth business
day prior to the month-end of investment (including the last business day of the
month) in order to be accepted as of the last day of the month.
Subscription funds are invested in short-term United States Treasury bills
or comparable authorized instruments while held in escrow pending investment in
the Units and will earn interest at the applicable rates paid on these
instruments. Escrow interest is allocated PRO RATA among all subscribers during
a particular escrow period based on the amount of their respective subscriptions
and the length of time on deposit in escrow. Interest actually earned on
subscriptions while held in escrow will be invested in the Trust, and investors
will be issued additional Units reflecting each investor's allocable share of
such interest.
No fees are charged on any subscriptions while held in escrow.
Subscribers are notified prior to any return of their subscriptions, and the
amounts returned to them shall in no event be reduced by any deductions for fees
or expenses.
Subscriptions, if rejected, will be promptly returned to investors
directly or, if applicable, to the appropriate Selling Agent for credit to an
investor's customer securities account, together with all interest earned
thereon while held in escrow.
No subscriptions are final or binding on a subscriber until the close of
business on the fifth business day following such subscriber's receipt of a
final prospectus (I.E., the date of subscription).
CISI advanced the Trust's organizational and initial offering costs
(approximately $650,000), for which CISI was reimbursed by the Trust at the
initial closing. The Trust is amortizing such costs over the first sixty months
of its operations, up to a limit at each month-end of 1/60 of 2% of the Trust's
Net Assets as of such month-end. CISI will return to the Trust any unamortized
amount at the end of the amortization period or earlier termination of the
Trust. See "Charges -- Organizational and Initial Offering Costs."
SUBSCRIBERS' REPRESENTATIONS AND WARRANTIES
By executing a Subscription Agreement and Power of Attorney Signature
Page, such subscriber is representing and warranting, among other things, that:
(i) the subscriber is of legal age to execute and deliver the Subscription
Agreement and Power of Attorney and has full power and authority to do so; (ii)
the subscriber has read and understands "Exhibit B -- Subscription Requirements"
of this prospectus and meets or exceeds the applicable suitability criteria of
net worth and annual income set forth therein; and (iii) the subscriber has
received a copy of this prospectus. These representations and warranties might
be used by the Managing Owner or others against a subscriber in the event that
the subscriber were to take a position inconsistent therewith.
While the foregoing representations and warranties will be binding on
subscribers, the Managing Owner believes that to a large extent such
representations and warranties would be implied from the fact that an investor
has subscribed for Units. NONETHELESS, NO PROSPECTIVE SUBSCRIBER WHO IS NOT
PREPARED TO MAKE SUCH REPRESENTATIONS AND WARRANTIES, AND TO BE BOUND BY THEM,
SHOULD CONSIDER INVESTING IN THE UNITS.
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THE SELLING AGENTS
No selling commissions are paid from the proceeds of this offering. The
Selling Agents are paid selling commissions by CIS of up to 4% of the
subscription price of all Units sold by each Selling Agent. In addition to
selling commissions, CIS will also pay ongoing compensation to the Selling
Agents which are registered with the CFTC as "futures commission merchants" or
"introducing brokers" in the amount of up to 0.333% (a 4.0% annual rate) of the
month-end Net Asset Value of all Units sold by them which remain outstanding,
beginning with the end of the thirteenth full month after the date such Units
were first issued (not the date the subscription was accepted); provided that
such ongoing compensation may only be paid on Units in respect of which
Registered Representatives who are registered with the CFTC and have passed
either the Series 3 or the Series 31 Examination agree to provide certain
ongoing services to their clients who own outstanding Units. Such ongoing
compensation may be deemed to constitute underwriting compensation. See
"Federal Income Tax Aspects -- Syndication Expenses."
Under applicable rules of the National Association of Securities
Dealers, Inc., if either a Selling Agent or a Selling Agent's Registered
Representative is not duly registered with the CFTC, or such Registered
Representative does not agree to provide ongoing services to his or her
clients who own outstanding Units, no ongoing compensation may be paid either
to such Selling Agent or to such Registered Representative by CIS. Rather,
such Selling Agent and such Registered Representatives are restricted to
receiving installment selling commissions, which will be calculated in the
same manner as ongoing compensation except that the total amount of
installment selling commissions and initial selling commission received by
any such Registered Representative on each Unit sold by him or her that
remains outstanding may not exceed 9% of the initial subscription price of
the Unit.
Selling Commissions and ongoing compensation payable in respect of
Units sold to any Eligible Unitholder (an investor who purchases at least
$5,000,000 of Units, as described under "Charges -- Brokerage Fee -- Special
Brokerage Fee Rate") shall be up to 2.5% of the subscription amount and up to
2.5% of the average month-end Net Asset Value. The total amount of initial
selling commissions and installment selling commissions paid on Units sold to
Eligible Unitholders by a Selling Agent or Registered Representative
ineligible to receive ongoing compensation also may not exceed 9% of the
initial subscription price of such Units.
The Lead Selling Agent may engage Wholesalers who are registered
broker-dealers, or their Registered Representatives who will introduce
Additional Selling Agents to the Lead Selling Agent and assist such
Additional Selling Agents in the offering and sale of Units. Each such
Wholesaler will share with an Additional Selling Agent introduced by the
Wholesaler (i) the up to 4% (in the case of sales to Eligible Unitholders, up
to 2.5%) initial selling commissions and (ii) the up to 4% (in the case of
sales to Eligible Unitholders, up to 2.5%) ongoing compensation payable in
respect of Units sold by such Additional Selling Agent.
Certain Additional Selling Agents may select certain correspondent
"introducing brokers" to distribute Units. On Units sold through each such
correspondent, who must be registered as a broker-dealer, the relevant
Additional Selling Agent will retain (i) up to 1% of the 4% (in the case of
sales to an Eligible Unitholder, up to 0.5% of the 2.5%) initial selling
commissions and (ii) up to 1% of the 4% (in the case of sales to an Eligible
Unitholder, up to 0.5% of the 2.5%) ongoing compensation to be received by such
Additional Selling Agent in respect of Units sold by such correspondent, and
will in each case pass on the remainder of the initial selling commissions and
ongoing compensation to the correspondent.
Wholesalers and correspondents must meet the same eligibility requirements
applicable to Selling Agents in order to receive ongoing compensation.
LAWYERS; ACCOUNTANTS
Sidley & Austin, Chicago, Illinois and Richards, Layton & Finger,
Wilmington, Delaware have advised CISI and CIS on the offering of the Units.
Sidley & Austin drafted "Tax Consequences."
The financial statements of CISI as of May 31, 1999 and 1998 and the
financial statements of the Trust as of December 31, 1998 and 1997 included
herein have been audited by KPMG LLP.
-66-
<PAGE>
FINANCIAL STATEMENTS
SCHEDULES ARE OMITTED FOR THE REASON THAT THEY ARE NOT REQUIRED OR ARE NOT
APPLICABLE OR THAT EQUIVALENT INFORMATION HAS BEEN INCLUDED IN THE FINANCIAL
STATEMENTS OR NOTES THERETO.
---------------
INDEPENDENT AUDITORS' REPORT
INDEX OF FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
JWH GLOBAL TRUST
Statement of Financial Condition (unaudited) as of September 30, 1999 and 1998.......................... 69
Statement of Operations (unaudited) for the period from
January 1, 1999 to September 30, 1999 and the period from
January 1, 1998 to September 30, 1998................................................................. 70
Statement of Unitholders' Capital (unaudited) for the period
from January 1, 1999 to September 30, 1999 and the period
from January 1, 1998 to September 30, 1998............................................................ 71
Statement of Cash Flows (unaudited) for the period from
January 1, 1999 to September 30, 1999 and the period from
January 1, 1998 to September 30, 1998................................................................. 72
Independent Auditors' Report............................................................................ 73
Statements of Financial Condition as of December 31, 1998 and 1997...................................... 74
Statements of Operations for the year ended December 31, 1998 and the
period from June 2, 1997 (commencement of operations) to December 31, 1997.............................. 75
Statements of Unitholders' Capital for the year ended December 31, 1998 and
the period from June 2, 1997 (commencement of operations) to December 31, 1997.......................... 76
Statement of Cash Flows for the year ended December 31, 1998 and
the period from June 2,1997 (commencement of operations) to December 31, 1997........................... 77
Notes to Financial Statements ......................................................................... 78
CIS INVESTMENTS, INC.
Balance Sheet (unaudited) as of October 31, 1999........................................................ 84
Independent Auditors' Report............................................................................ 85
Statements of Financial Condition as of May 31, 1999 and 1998........................................... 86
</TABLE>
-67-
<PAGE>
FINANCIAL STATEMENTS (CONT.)
<TABLE>
<S> <C>
Statements of Income for the years ended May 31, 1999 and 1998.......................................... 87
Statements of Changes in Stockholder's Equity for the years ended
May 31, 1999 and 1998................................................................................... 88
Statements of Cash Flows for the years ended May 31, 1999 and 1998...................................... 89
Notes to Financial Statements ......................................................................... 90
</TABLE>
--------------------
-68-
<PAGE>
JWH GLOBAL TRUST
Statements of Financial Condition (unaudited)
September 30, 1999 and 1998
<TABLE>
<CAPTION>
ASSETS SEPT. 30, 1999 SEPT. 30, 1998
-------------- --------------
<S> <C> <C>
Assets:
Receivable for units sold $ 1,148,150 $ 841,652
Equity in commodity futures trading accounts:
Cash on deposit with Clearing Broker 95,252,291 78,275,749
Unrealized gain on open futures contracts (25,507) 16,701,417
-------------- ----------------
96,374,934 95,818,818
Interest receivable 378,792 330,553
Prepaid initial organization and offering costs 352,460 484,632
-------------- ----------------
Total assets $97,106,186 $ 96,634,003
-------------- ----------------
-------------- ----------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued commissions on open futures contracts
due to CIS $ 509,258 $ 419,517
Accrued management fees 319,696 319,039
Accrued incentive fees -- 1,263,310
Accrued operating expenses 105,952 185,849
Redemptions payable 1,300,967 2,301,580
Accrued selling and offering expenses 39,598 39,007
-------------- ----------------
Total liabilities 2,275,471 4,528,301
-------------- ----------------
Unitholders' capital:
Beneficial owners (842,520.14 and 791,423.72 units outstanding
at September 30, 1999 and 1998, respectively) 93,872,685 91,137,162
Managing owner (8,598.45 and 8,410.68 units outstanding at
September 30, 1999 and 1998, respectively 958,030 968,540
-------------- ----------------
Total unitholders' capital 94,830,715 92,105,702
-------------- ----------------
Total liabilities and unitholders' capital $ 97,106,186 $ 96,634,003
-------------- ----------------
-------------- ----------------
</TABLE>
THIS STATEMENT OF FINANCIAL CONDITION, IN THE OPINION OF MANAGEMENT,
REFLECTS ALL ADJUSTMENTS NECESSARY TO FAIRLY STATE THE FINANCIAL CONDITION OF
JWH GLOBAL TRUST AT SEPTEMBER 30, 1999 AND 1998.
-69-
<PAGE>
JWH GLOBAL TRUST
Statements of Operations (unaudited)
Period ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
JAN. 1, 1999 JAN. 1, 1998
TO TO
SEPT. 30, 1999 SEPT. 30, 1998
-------------- --------------
<S> <C> <C>
Revenues:
Gain on trading of commodity futures and forwards contracts, physical
commodities, and related options:
Realized gain (loss) on closed positions $ 9,910,068 $ (737,863)
Change in unrealized gain (loss) on open positions (7,131,800) 12,220,264
Interest income 3,192,209 2,702,286
Foreign currency transaction loss (260,400) (334,421)
------------ ------------
Total revenues 5,710,077 13,850,266
------------ ------------
Expenses:
Commission paid to CIS 4,700,178 2,963,329
Exchange, clearing, and NFA fees 63,378 42,463
Management fees 2,935,732 2,294,108
Incentive fees 853,599 1,263,310
Ongoing organization and offering expenses 462,133 382,915
Operating expenses 45,639 756,444
------------ ------------
Total expenses 9,060,659 7,702,569
------------ ------------
Net profit (loss) $ (3,350,582) 6,147,697
------------ ------------
------------ ------------
Profit (loss) per unit of beneficial ownership interest $ (3.98) 5.46
Profit (loss) per unit of managing ownership interest (3.98) 5.46
------------ ------------
------------ ------------
</TABLE>
THIS STATEMENT OF OPERATIONS, IN THE OPINION OF MANAGEMENT, REFLECTS ALL
ADJUSTMENTS NECESSARY TO FAIRLY STATE THE FINANCIAL CONDITION OF JWH GLOBAL
TRUST.
-70-
<PAGE>
JWH GLOBAL TRUST
Statements of Unitholders' Capital (unaudited)
From January 1, 1999 through September 30, 1999
<TABLE>
<CAPTION>
Beneficial Managing
Units* owners owner Total
---------- ------------- --------- ------------
<S> <C> <C> <C> <C>
Unitholders' capital at January 1, 1999 817,899.61 $ 94,386,640 $1,085,906 $95, 472,546
---------- ------------- --------- ------------
Additional Units Sold 136,348.97 15,632,871 (93,497) 15,539,374
Net profit (loss) - (3,316,203) (34,379) (3,350,582)
Partner's redemptions (111,728.44) (12,830,623) - (12,830,623)
---------- ------------- --------- ------------
Unitholders' capital at September 30, 1999 842,520.14 $ 93,872,685 $958,030 $94,830,715
---------- ------------- --------- ------------
---------- ------------- --------- ------------
Net asset value per unit at January 1, 1999 $ 115.40 115.40
Net profit (loss) per Unit (3.98) (3.98)
Net asset value per unit at September 30, 1999 111.42 111.42
---------- ------------- --------- ------------
---------- ------------- --------- ------------
</TABLE>
*Units of beneficial ownership.
THIS STATEMENT OF CHANGES IN UNITHOLDERS' CAPITAL, IN THE OPINION OF
MANAGEMENT, REFLECTS ALL ADJUSTMENTS NECESSARY TO FAIRLY STATE THE FINANCIAL
CONDITION OF JWH GLOBAL TRUST.
-71-
<PAGE>
JWH GLOBAL TRUST
Statements of Cash Flows (unaudited)
Period ended September 30, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JAN. 1, 1999 JAN. 1, 1998
TO TO
SEPT. 30, 1999 SEPT. 30, 1998
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net profit (loss) $ (3,350,583) 6,147,696
Adjustments to reconcile net profit (loss) to
net cash provided by operating activities:
Change in assets and liabilities:
(Increase) decrease in receivable for Units sold 453,255 3,267,971
(Increase) decrease in unrealized gain (loss)
on open futures contracts 7,584,662 (12,220,264)
(Increase) decrease in interest receivable (40,528) (89,808)
(Increase) decrease in prepaid organization
and offering expenses 99,129 99,130
Increase (decrease) in accrued liabilities (152,080) 902,146
Increase (decrease) in redemptions payable (2,232,057) 2,270,385
Increase (decrease) in accrued selling and
offering expenses (1,004) 13,878
----------- -----------
Net cash provided by operating activities 2,360,794 391,134
----------- -----------
Cash flows from financing activities:
Additional Units sold 15,539,374 28,465,038
Unit redemptions (12,830,623) (6,858,555)
----------- -----------
Net cash provided by financing activities 2,708,751 21,606,483
----------- -----------
Net increase in cash 5,069,545 21,997,617
Cash at beginning of period 90,182,744 56,278,134
----------- -----------
Cash at end of period $ 95,252,289 78,275,751
----------- -----------
----------- -----------
</TABLE>
THIS STATEMENT OF CASH FLOWS, IN THE OPINION OF MANAGEMENT, REFLECTS ALL
ADJUSTMENTS NECESSARY TO FAIRLY STATE THE FINANCIAL CONDITION OF JWH GLOBAL
TRUST.
-72-
<PAGE>
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, 1998 and 1997, and the related statements
of operations, unitholders' capital, and cash flows for each of the years then
ended. 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 generally accepted auditing
standards. 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, 1998 and 1997, and the results of its operations and its cash flows for each
of the year ended December 31, 1998 and 1997, in conformity with generally
accepted accounting principles.
KPMG LLP
February 5, 1999
-73-
<PAGE>
JWH GLOBAL TRUST
Statements of Financial Condition
December 31, 1998 and 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS 1998 1997
------ ---- ----
<S> <C> <C>
Assets:
Receivable for units sold $ 1,601,405 4,109,623
Equity in commodity futures trading accounts:
Cash on deposit with Clearing Broker 90,182,744 56,278,134
Unrealized gain on open futures contracts 7,559,155 4,481,153
------------ ----------
99,343,304 64,868,910
Interest receivable 338,264 240,745
Prepaid initial organization and offering costs 451,589 583,762
------------ ----------
Total assets $100,133,157 65,693,417
------------ ----------
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Liabilities:
Accrued commissions on open futures contracts $ 528,885 330,854
due to CIS
Accrued management fees 328,109 205,109
Accrued incentive fees 120,253 656,583
Accrued operating expenses 109,738 93,023
Accrued organization and offering expenses 40,602 25,129
Redemptions payable 3,533,024 31,195
------------ ----------
Total liabilities 4,660,611 1,341,893
------------ ----------
Unitholder's capital:
Beneficial owners (817,899.61 and 580,678.76 units outstanding
at December 31, 1998 and 1997, respectively) 94,386,640 63,702,878
Managing owner (9,409.49 and 5,912.68 units outstanding at
December 31, 1998 and 1997, respectively 1,085,906 648,646
------------ ----------
Total unitholders' capital 95,472,546 64,351,524
------------ ----------
Total liabilities and unitholders' capital $100,133,157 65,693,417
------------ ----------
------------ ----------
</TABLE>
See accompanying notes to financial statements.
-74-
<PAGE>
JWH GLOBAL TRUST
Statements of Operations
Year ended December 31, 1998 and 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Revenues:
Gain on trading of commodity futures and forwards contracts, physical
commodities, and related options:
Realized gain on closed positions $10,418,484 1,761,637
Increase in unrealized gain on open positions 3,078,002 4,481,153
Interest income 3,669,771 1,042,648
Foreign currency transaction loss (296,969) (297,458)
----------- ---------
Total revenues 16,869,288 6,987,980
----------- ---------
Expenses:
Commission paid to CIS 5,195,089 1,441,635
Exchange, clearing, and NFA fees 59,724 12,426
Management fees 3,239,007 896,312
Incentive fees 1,383,562 715,477
Amortization of prepaid initial organization and offering costs 132,173 66,238
Ongoing organization and offering expenses 400,616 110,352
Operating expenses 58,596 94,292
----------- ---------
Total expenses 10,468,767 3,336,732
----------- ---------
Net profit $ 6,400,521 3,651,248
----------- ---------
Profit per unit of beneficial ownership interest $ 5.70 9.70
Profit per unit of managing ownership interest 5.70 9.70
----------- ---------
----------- ---------
</TABLE>
See accompanying notes to financial statements.
-75-
<PAGE>
JWH GLOBAL TRUST
Statements of Unitholders' Capital
Year ended December 31, 1998 and 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Beneficial Managing
Units* owners owner Total
------ ------ ----- -----
<S> <C> <C> <C> <C>
Balance at December 31, 1996 8.17 $ 817 183 1,000
----------- ----------- --------- -----------
Redemption of initial ownership interests (8.17) (817) (183) (1,000)
Net income - 3,612,602 38,646 3,651,248
Partner's contributions 589,914.19 61,020,136 610,000 61,630,136
Partner's redemptions ( 9,235.43) (929,860) - (929,860)
----------- ----------- --------- -----------
Balance at December 31, 1997 580,678.76 $63,702,878 648,646 64,351,524
----------- ----------- --------- -----------
----------- ----------- --------- -----------
Net Income -- 6,324,744 75,777 6,400,521
Partner's contributions 357,777.17 37,576,922 361,483 37,938,405
Partner's redemptions (120,556.32) (13,217,904) -- (13,217,904)
----------- ----------- --------- -----------
Balance at December 31, 1998 817,899.61 $94,386,640 1,085,906 95,472,546
----------- ----------- --------- -----------
----------- ----------- --------- -----------
Net asset value per unit at December 31, 1998 $ 115.40 115.40
Net asset value per unit at December 31, 1997 109.70 109.70
----------- ---------
----------- ---------
</TABLE>
*Units of beneficial ownership.
See accompanying notes to financial statements.
-76-
<PAGE>
JWH GLOBAL TRUST
Statements of Cash Flows
Year ended December 31, 1998 and 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net profit $ 6,400,521 3,651,248
Adjustments to reconcile net profit to
net cash used in operating activities:
Change in assets and liabilities:
Increase in unrealized gain on open futures contracts (3,078,002) (4,481,153)
Increase in interest receivable (97,519) (240,745)
Decrease (increase) in prepaid initial organization
and offering costs 132,173 (583,762)
Increase (decrease) in accrued liabilities (183,111) 1,310,698
----------- ----------
Net cash provided by (used in) operating activities 3,174,062 (343,714)
----------- ----------
Cash flows from financing activities:
Net proceeds from sale of units 40,446,623 57,521,513
Unit redemptions (9,716,075) (899,665)
----------- ----------
Net cash provided by financing activities 30,730,548 56,621,848
----------- ----------
Net increase in cash 33,904,610 56,278,134
Cash at beginning of year 56,278,134 --
----------- ----------
Cash at end of year $90,182,744 56,278,134
----------- ----------
----------- ----------
</TABLE>
See accompanying notes to financial statements.
-77-
<PAGE>
JWH GLOBAL TRUST
Notes to Financial Statements
Year ended December 31, 1998 and 1997
- ------------------------------------------------------------------------------
(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 forwards broker is CIS Financial Services, Inc.
(CISFS or Forwards Currency Broker), an affiliate of CISI.
Units of beneficial ownership of the Trust commenced selling on April 3,
1997. The initial amount offered for investment was $50,000,000. Trading
began on June 2, 1997 with initial capitalization of $13,027,103. On
September 26, 1997, the Trust registered an additional $155,000,000 for
further investment and continued the offering. By December 31, 1998, a
total of 947,699.53 units representing an investment for $84,449,294 of
beneficial ownership interest had been sold in the combined offerings. In
addition, during the offerings, the Managing Owner purchased a total of
9,409.49 units, representing a total investment of $971,483. 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 which the Trust follows in preparing its financial statements.
REVENUE RECOGNITION
Commodity futures contracts, forward contracts, and physical
commodities are recorded on the trade date. All such transactions are
reported on an identified cost basis. Unrealized gains and losses
reflected in the statements of financial condition represent the
difference between original contract amount and market value (as
determined by exchange settlement prices for futures contracts and
cash dealer prices at a pre-determined time for forward contracts and
physical commodities) as of the last business day of the year or as of
the last date of the financial statements.
-78-
<PAGE>
JWH GLOBAL TRUST
Notes to Financial Statements
Year ended December 31, 1998 and 1997
- ------------------------------------------------------------------------------
The Trust earns interest on its assets on deposit at CIS and CISFS 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 10
business days of the effective date of the redemption. Any redemption
made during the first 11 months of investment is subject to a 3%
redemption penalty. Any redemption made in the 12th month of
investment or later will not be subject to any penalty. The Trust's
Amended and Restated Declaration and Agreement of Trust contains a
full description of redemption and distribution policies.
COMMISSIONS
Commodity brokerage commissions are typically paid for each trade
transacted and are referred to as "round-turn commissions." These
commissions cover both the initial purchase (or sale) and the
subsequent offsetting sale (or purchase) of a commodity futures
contract. The Trust does not pay commodity brokerage commissions on a
per-trade basis, but rather pays monthly flat-rate Brokerage Fees at
the annual rate of 6.5% (or a monthly rate of approximately 0.542%) of
the Trust's month-end assets after reduction of the Management Fee.
The amount paid to CIS is reduced by exchange fees paid directly by
the Trust. CIS receives these Brokerage Fees irrespective of the
number of trades executed on the Trust's behalf. The round-turn
equivalent rate for commissions paid by the Trust for the year ended
December 31, 1998 was $61.
Certain large investors are eligible for a "Special Brokerage Fee
Rate" of 5% per year. As of December 31, 1998, 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 Clearing Broker in the equity in commodity futures
trading accounts.
-79-
<PAGE>
JWH GLOBAL TRUST
Notes to Financial Statements
Year ended December 31, 1998 and 1997
- ------------------------------------------------------------------------------
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of increase
and decrease in net assets from operations during the period. Actual
results could differ from those estimates.
(3) FEES
Management fees are accrued and paid monthly, 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 Original Investment Program,
the Financial and Metals Portfolio and the G-7 Currency Portfolio.
Under signed agreement, JWH receives a monthly management fee of 1/12 of 4%
of the Trust's month-end assets after deduction of a portion of the
Brokerage Fee at the annual rate of 1.25% (rather than 6.5%) of month-end
Trust assets but before deduction of any management fees, redemptions,
distributions, or incentive fee accrued or payable as of the relevant month
end.
In addition, the Trust pays to JWH, a quarterly incentive fee equal to 15%
of the new trading profits of the Trust. The incentive fee is based on the
overall performance of the Trust, not individually in respect of the
performance of the individual programs utilized by the Trust. This fee is
also calculated by deducting Brokerage Fee at a rate of 1.25% (rather than
the 6.5% rate).
(4) INCOME TAXES
No provision for Federal income taxes has been made in the accompanying
financial statements as each beneficial owner is responsible for reporting
income (loss) based on the pro rata share of the profits or losses of the
Trust. Generally, for both Federal and state tax purposes, trusts, such as
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
$41,242 for the year ended December 31, 1998 and is included in operating
expenses in the statement of operations.
(5) FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Trust was formed to speculatively trade commodity interests. The
Trust's commodity interest transactions and its related cash balance are on
deposit with the Clearing Broker or the Forwards Currency Broker (Brokers)
at all times. In the event that volatility of trading of other customers
of the Brokers impaired the ability of the Brokers to satisfy the
obligations to the Trust, the Trust would be
-80-
<PAGE>
JWH GLOBAL TRUST
Notes to Financial Statements
Year ended December 31, 1998 and 1997
- ------------------------------------------------------------------------------
exposed to off-balance sheet risk. Such risk is defined in Statement of
Financial Accounting Standards No. 105 (SFAS 105) as a credit risk. To
mitigate this risk, the Clearing Broker, pursuant to the mandates of the
Commodity Exchange Act, is required to maintain funds deposited by
customers relating to futures contracts in regulated commodities in
separate bank accounts which are designated as segregated customers'
accounts. In addition, the Clearing Broker has set aside funds
deposited by customers relating to foreign futures and options in
separate bank accounts which are designated as customer-secured
accounts. Lastly, the Clearing Broker is subject to the Securities and
Exchange Commission's Uniform Net Capital Rule, which requires the
maintenance of minimum net capital 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 $570,328,165 and $1,063,876,786, respectively on December 31, 1998, and
$368,276,971 and $240,130,546, respectively on December 31, 1997. The
contractual amounts of these instruments reflect the extent of the Trust's
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 fund 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 $4,860,965 during 1998.
Fair value as of December 31, 1998 was $7,559,155. 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 which transacts with various top rated
banks throughout the world. As defined by SFAS 105, futures and forward
currency contracts are classified as financial instruments. SFAS 105
requires that the Trust disclose the market risk of loss from all of its
financial instruments. Market risk is defined as the possibility that
future changes in market prices may make a financial instrument less
valuable or more onerous. If the markets should move against all of the
futures and forwards positions of the Trust at the same time (both long
positions and short positions), and if the markets moved such that the CTA
was unable to offset the futures positions of the Trust, the Trust could
lose all of its assets
-81-
<PAGE>
JWH GLOBAL TRUST
Notes to Financial Statements
Year ended December 31, 1998 and 1997
- ------------------------------------------------------------------------------
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 two are
diversified among the various futures contracts and forwards contracts
in the financial and metals group. All three programs trade in the U.S.
and outside of the U.S. Such diversification should greatly reduce this
market risk.
At December 31, 1998, the cash requirement of the commodity interests of
the Trust was $9,700,885. This cash requirement is met by $85,532,262 held
in segregated funds, $10,790,940 held in secured funds and $1,418,697 held
in nonregulated funds. At December 31, 1997, the cash requirement of the
commodity interests of the Trust was $9,299,511. This cash requirement was
met by $48,132,040 held in segregated funds, $6,027,922 held in secured
funds and $6,599,325 held in nonregulated funds. At December 31, 1998 and
1997, cash was on deposit with the Clearing Broker and the Forwards
Currency Broker which exceeded the cash requirement amount.
-82-
<PAGE>
JWH GLOBAL TRUST
Notes to Financial Statements
Year ended December 31, 1998 and 1997
- ------------------------------------------------------------------------------
The following chart discloses the dollar amount of the unrealized gain or loss
on open contracts of the Trust at December 31, 1998 and 1997:
<TABLE>
<CAPTION>
COMMODITY GROUP 1998 1997
- --------------- ------------ ----------
<S> <C> <C>
Agricultural $ 283,099 99,960
Currency 337,027 720,970
Stock Indices (275,499) 321,503
Energies 325,869 490,370
Metals 111,650 1,955,345
Interest 6,777,009 893,005
------------ ----------
Total $ 7,559,155 4,481,153
============ ==========
</TABLE>
The range of expiration dates of these open contracts is February 1999 to
December 1999.
-83-
<PAGE>
CIS INVESTMENTS, INC.
Balance Sheet (unaudited)
October 31, 1999
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS OCTOBER 31, 1999
- ------------------------------------------------------------------------------
<S> <C>
Assets:
Receivable from JWH Global Trust $ 599,025
Investments in registered commodity pools 1,997,347
- ------------------------------------------------------------------------------
Total assets $ 2,596,372
==============================================================================
LIABILITIES AND EQUITY
- ------------------------------------------------------------------------------
Liabilities:
Deferred Offering Costs $ 85,176
Deferred Income 24,060
Income Taxes Payable 93,206
- ------------------------------------------------------------------------------
Total liabilities 202,442
- ------------------------------------------------------------------------------
Stockholder's equity:
Common stock, $100 par value. Authorized
30,000 shares; issued 10 shares 1,000
Subscribed Stock 29,990 shares 2,999,000
Less subscriptions receivable (2,999,000)
Paid-in capital 18,250,000
Less demand note receivable (18,000,000)
Retained earnings 2,142,930
- ------------------------------------------------------------------------------
Total stockholder's equity $ 2,393,930
- ------------------------------------------------------------------------------
2,596,372
==============================================================================
</TABLE>
THIS BALANCE SHEET, IN THE OPINION OF MANAGEMENT, REFLECTS ALL
ADJUSTMENTS NECESSARY TO FAIRLY STATE THE FINANCIAL CONDITION OF CIS
INVESTMENTS, INC. AT OCTOBER 31, 1999. ALL ADJUSTMENTS MADE WERE OF A NORMAL
AND RECURRING NATURE.
PURCHASERS OF UNITS WILL NOT RECEIVE AN INTEREST IN THIS ENTITY.
-84-
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
CIS Investments, Inc.:
We have audited the accompanying statements of financial condition of CIS
Investments, Inc. (a wholly owned subsidiary of Cargill Investor Services,
Inc.) (the Company) as of May 31, 1999 and 1998, and the related statements
of income, changes in stockholder's equity and cash flows for the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 CIS Investments, Inc. as of
May 31, 1999 and 1998, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
KPMG LLP
July 23, 1999
PURCHASERS OF UNITS WILL NOT RECEIVE AN INTEREST IN THIS ENTITY.
-85-
<PAGE>
CIS INVESTMENTS, INC.
Statements of Financial Condition
May 31, 1999 and 1998
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS 1999 1998
- ------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Receivable from JWH Global Trust $ 219,991 337,513
Accrued taxes receivable 44,223 45,321
Investments in registered commodity pools 2,259,643 1,914,443
- ------------------------------------------------------------------------------
Total assets $ 2,523,857 2,297,277
- ------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDER'S EQUITY
- ------------------------------------------------------------------------------
Liabilities:
Accounts payable 387 3,899
Deferred management fees 84,209 72,133
Due to Cargill Inc. 417,943 1,192,827
- ------------------------------------------------------------------------------
Total liabilities 502,539 1,268,859
- ------------------------------------------------------------------------------
Stockholder's equity:
Common stock, $100 par value. Authorized
30,000 shares; issued 10 shares 1,000 1,000
Common stock subscribed, 29,990 shares
at the years ended 1999 and 1998,
respectively 2,999,000 2,999,000
Less subscriptions receivable (2,999,000) (2,999,000)
Paid-in capital 18,250,000 18,250,000
Less demand note receivable (18,000,000) (18,000,000)
Retained earnings 1,770,318 777,418
- ------------------------------------------------------------------------------
Total stockholder's equity 2,021,318 1,028,418
- ------------------------------------------------------------------------------
$ 2,523,857 2,297,277
==============================================================================
</TABLE>
See accompanying notes to financial statements.
PURCHASERS OF UNITS WILL NOT RECEIVE AN INTEREST IN THIS ENTITY.
-86-
<PAGE>
CIS INVESTMENTS, INC.
Statements of Income
Years ended May 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Revenues:
Management fees $ 201,405 162,315
Other professional services income 1,256,260 670,912
Realized and unrealized gain on investments 303,696 32,558
----------- -------
Total revenues 1,761,361 865,785
Expenses - operating 172,976 47,249
----------- -------
Income before income taxes 1,588,385 818,536
Income tax expense 595,485 288,484
----------- -------
Net income $ 992,900 530,052
----------- -------
----------- -------
</TABLE>
See accompanying notes to financial statements.
PURCHASERS OF UNITS WILL NOT RECEIVE AN INTEREST IN THIS ENTITY.
-87-
<PAGE>
CIS INVESTMENTS, INC
Statements of Changes in Stockholder's Equity
Years ended May 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Demand
Common stock Subscriptions Paid-in note Retained
stock subscribed receivable capital receivable earnings Total
----- ---------- ---------- ------- ---------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
May 31, 1997 $ 1,000 2,999,000 (2,999,000) 250,000 - 247,366 498,366
Contribution
of capital
from Cargill - 18,000,000 (18,000,000) - -
Net income - - - - - 530,052 530,052
------- --------- ---------- ---------- ----------- --------- ---------
Balance at
May 31, 1998 $ 1,000 2,999,000 (2,999,000) 18,250,000 (18,000,000) 777,418 1,028,418
Net income - - - - - 992,900 992,900
------- --------- ---------- ---------- ----------- --------- ---------
Balance at
May 31, 1999 $ 1,000 2,999,000 (2,999,000) 18,250,000 (18,000,000) 1,770,318 2,021,318
------- --------- ---------- ---------- ----------- --------- ---------
------- --------- ---------- ---------- ----------- --------- ---------
</TABLE>
See accompanying notes to financial statements.
PURCHASERS OF UNITS WILL NOT RECEIVE AN INTEREST IN THIS ENTITY.
-88-
<PAGE>
CIS INVESTMENTS, INC.
Statements of Cash Flows
Years ended May 31, 1999 and 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 992,900 $ 530,052
Adjustments to reconcile net income to net cash
provided by operating activities:
Realized and unrealized gain on investments (303,696) (32,558)
Decrease (increase) in assets:
Accrued taxes receivable 1,098 33,309
Increase (decrease) in liabilities:
Deferred management fees 12,076 13,370
Accounts payable (3,512) (396,134)
------------ -----------
Net cash provided by operating activities 698,866 148,039
------------ -----------
Cash flows from investing activities:
Organizational and offering costs of JWH Global Trust 117,522 177,993
Purchase of investments, net (41,504) (900,847)
------------ -----------
Net cash (used in) provided by investing activities 76,018 (722,854)
------------ -----------
Cash flow from financing activity--
amount advanced from (paid to) Cargill Inc. (774,884) 574,815
------------ -----------
Net cash (used in) provided by financing activity (774,884) 574,815
------------ -----------
Net change in cash - -
Cash at beginning of year - -
------------ -----------
Cash at end of year $ - $ -
------------ -----------
------------ -----------
Supplemental disclosures of cash flow information -
cash paid during the year for income taxes $ 594,387 $ 255,142
------------ -----------
------------ -----------
</TABLE>
See accompanying notes to financial statements.
PURCHASERS OF UNITS WILL NOT RECEIVE AN INTEREST IN THIS ENTITY.
-89-
<PAGE>
CIS INVESTMENTS, INC.
Notes to Financial Statements
Years ended May 31, 1999 and 1998
- --------------------------------------------------------------------------------
(1) GENERAL INFORMATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies which have been followed
in preparing the accompanying financial statements is set forth below.
NATURE OF BUSINESS
CIS Investments, Inc. (the Company), a wholly owned subsidiary of
Cargill Investor Services, Inc. (the Parent), is a registered
commodity pool operator with the Commodity Futures Trading Commission.
The Company is the general partner or managing owner in various
limited partnerships or trusts (Funds) organized for the purpose of
engaging in the speculative trading of commodity interests, including
futures contracts, physical commodities, and related options.
MANAGEMENT FEES
Unearned management fees are amortized over one year, the life of the
contract, using the straight-line method.
INVESTMENTS
Investments in Funds are recorded at a value which approximates the
Company's proportionate share of each Fund's net asset value.
INCOME TAXES
The Company is included in the consolidated Federal income tax return
of the Parent. Income tax expense is calculated as if the Company
would file a separate return. Accrued taxes represents the remaining
balance due from the Parent for the current year taxes including the
impact of deferred taxes.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
EXPENSES
Certain immaterial administrative overhead costs are expensed and paid
by the Parent.
-90-
<PAGE>
CIS INVESTMENTS, INC.
Notes to Financial Statements
May 31, 1999 and 1998
- --------------------------------------------------------------------------------
USE OF ESTIMATES
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles (GAAP). The preparation
of financial statements in conformity with GAAP requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and
liabilities as of the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting period.
Actual amounts could differ from such estimates.
(2) INVESTMENTS IN FUNDS
Investment in IDS Managed Futures, L.P. is approximately 1% of the total
interest. Investment in IDS Managed Futures II, L.P. is approximately 2%
of the total interest. Investment in Everest Futures Fund II, L.P. and JWH
Global Trust is approximately 1.0% of the total interest. Investments in
the Funds at May 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
--------------------- ---------------------
UNITS AMOUNT UNITS AMOUNT
----- ------ ----- ------
<S> <C> <C> <C> <C>
IDS Managed Futures, L.P. 1,423 $ 513,151 1,299 $ 428,833
IDS Managed Futures II, L.P 322 212,795 322 194,618
Everest Futures Fund II, L.P. 370 554,674 370 457,647
JWH Global Trust 8,598 979,023 8,007 833,345
---------- ---------
$2,259,643 $1,914,443
---------- ---------
---------- ---------
</TABLE>
The following represents condensed combined financial information of the
Funds as of May 31, 1999 and 1998 (in thousands).
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Assets $221,779 185,018
-------- -------
Liabilities 5,013 1,473
Capital 216,766 183,545
-------- -------
Total liabilities and capital $221,779 185,018
-------- -------
-------- -------
</TABLE>
-91-
<PAGE>
CIS INVESTMENTS, INC.
Notes to Financial Statements
May 31, 1999 and 1998
- --------------------------------------------------------------------------------
(3) NET WORTH REQUIREMENTS
The Company is required to maintain an amount of net worth as stated in
each Fund's agreement. For the purpose of compliance, net worth is defined
as the total of common stock issued and subscribed, paid in capital and
retained earnings. At May 31, 1999, the Company believes it is in
compliance with its net worth requirements.
(4) COMMON STOCK SUBSCRIPTIONS
The Company and its Parent entered into stock subscription agreements
whereby the Parent subscribed to purchase up to 29,990 shares of the
Company's stock at $100 per share in order to ensure the Company's
continued compliance with its net worth requirements. No subscribed stock
was issued, nor is it known when and if any will be issued in the future.
As such, the subscribed stock receivable amount is shown as a deduction
from stockholder's equity.
(5) FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Funds hold futures contracts and options. A futures contract is
defined as an agreement to buy or sell a specific amount of a commodity or
financial instrument at a particular price on a stipulated future date. If
the markets should move against all of the futures positions held by the
Funds at the same time, and if the Funds are unable to offset the futures
positions of the Funds, the Funds could lose all of their assets and the
investors, including the Company, would realize a 100% loss of their
investment.
(6) RECEIVABLE FROM JWH GLOBAL TRUST
The Company has advanced JWH Global Trust (the Trust) its initial
organizational and offering costs. These costs are being reimbursed
currently by the Trust at a rate of 1/2 of 1% of the net assets of the
Trust per year.
(7) DEMAND NOTE RECEIVABLE
The Company received a capital contribution of $18,000,000 from its Parent
and entered into a related non interest bearing demand note for
$18,000,000. No cash was transferred, nor is it known when and if any will
be transferred in the future. As such, the demand note is shown as a
deduction from stockholder's equity.
-92-
<PAGE>
PERFORMANCE OF OTHER CISI-SPONSORED FUNDS
PERFORMANCE SUMMARIES OF OTHER CISI-SPONSORED FUNDS
The following performance tables are included per CFTC requirements.
However, the performance of these funds may have very little significance in
terms of the performance of the Trust, as each is traded pursuant to materially
different strategies.
The following performance information has been calculated on the accrual
basis of accounting in accordance with generally accepted accounting principles.
THE FOLLOWING FUNDS HAVE TRADED PURSUANT TO STRATEGIES THAT ARE MATERIALLY
DIFFERENT FROM THE TRUST. THEREFORE, THE PERFORMANCE OF SUCH CISI-SPONSORED
POOLS IS NOT REPRESENTATIVE OF HOW THE TRUST WILL PERFORM.
INVESTORS SHOULD NOTE THAT INTEREST INCOME MAY CONSTITUTE A SIGNIFICANT
PORTION OF A COMMODITY POOL'S INCOME AND, IN CERTAIN INSTANCES, MAY GENERATE
PROFITS WHERE THERE HAVE BEEN REALIZED AND UNREALIZED LOSSES FROM COMMODITY
TRADING.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
FUTURES TRADING IS SPECULATIVE. INVESTORS MAY LOSE ALL
OR SUBSTANTIALLY ALL OF THEIR INVESTMENT.
-93-
<PAGE>
PERFORMANCE SUMMARIES
OF OTHER CISI-SPONSORED FUNDS
IDS MANAGED FUTURES, L.P.
TYPE OF POOL: Publicly offered, multi-advisor
INCEPTION OF TRADING: June 1987
AGGREGATE SUBSCRIPTIONS: $58.7 million
CURRENT CAPITALIZATION: $47.3 million
WORST MONTHLY DRAWDOWN: (7.57)% (10/99)
WORST PEAK-TO-VALLEY DRAWDOWN: (17.70)% (7/99-10/99)
1999 COMPOUND RATE OF RETURN: (18.45)%
1998 COMPOUND RATE OF RETURN: 8.55%
1997 COMPOUND RATE OF RETURN: 8.68%
1996 COMPOUND RATE OF RETURN: 20.08%
1995 COMPOUND RATE OF RETURN: 23.04%
1994 COMPOUND RATE OF RETURN: (6.93)%
--------------
OCTOBER 31, 1999 VALUE OF INITIAL $1,000 UNIT: $4,143.09
------------------------------
IDS MANAGED FUTURES II, L.P.
TYPE OF POOL: Publicly offered, multi-advisor
INCEPTION OF TRADING: March 1988
AGGREGATE SUBSCRIPTIONS: $15.6 million
CURRENT CAPITALIZATION: $9.0 million
WORST MONTHLY DRAWDOWN: (7.63)% (10/99)
WORST PEAK-TO-VALLEY DRAWDOWN: (18.07)% (7/99-10/99)
1999 COMPOUND RATE OF RETURN: (18.83)%
1998 COMPOUND RATE OF RETURN: 9.00%
1997 COMPOUND RATE OF RETURN: 5.45%
1996 COMPOUND RATE OF RETURN: 24.64%
1995 COMPOUND RATE OF RETURN: 29.80%
1994 COMPOUND RATE OF RETURN: (13.97)%
--------------
OCTOBER 31, 1999 VALUE OF INITIAL $1,000 UNIT: $2,418.94
PURCHASERS OF UNITS WILL ACQUIRE NO INTEREST IN THESE FUNDS
WHICH TRADE IN MATERIALLY DIFFERENT MARKET SECTORS AND UNDER MATERIALLY
DIFFERENT STRATEGIES THAN DOES THE TRUST.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
-94-
<PAGE>
PERFORMANCE SUMMARIES
OF OTHER CISI-SPONSORED FUNDS
EVEREST FUTURES FUND II, L.P.
TYPE OF POOL: Privately offered, single-advisor
INCEPTION OF TRADING: April 1996
AGGREGATE SUBSCRIPTIONS: $53.3 million
CURRENT CAPITALIZATION: $44.7 million
WORST MONTHLY DRAWDOWN: (9.06)% (5/97)
WORST PEAK-TO-VALLEY DRAWDOWN: (19.60)% (7/99-10/99)
1999 COMPOUND RATE OF RETURN: (13.52)%
1998 COMPOUND RATE OF RETURN: 4.27%
1997 COMPOUND RATE OF RETURN: 13.16%
1996 COMPOUND RATE OF RETURN: 27.61% (9 months)
--------------
OCTOBER 31, 1999 VALUE OF INITIAL $1,000 UNIT: $1,302.03
PURCHASERS OF UNITS WILL ACQUIRE NO INTEREST IN THESE FUNDS
WHICH TRADE IN MATERIALLY DIFFERENT MARKET SECTORS AND UNDER MATERIALLY
DIFFERENT STRATEGIES THAN DOES THE TRUST.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
-95-
<PAGE>
NOTES TO PERFORMANCE SUMMARIES OF
OTHER CISI-SPONSORED FUNDS
1. TYPE OF POOL. The CFTC specifies that pools should be categorized as:
(i) either publicly or privately offered; (ii) "principal protected" (i.e.,
generally assuring the return of some or all of an initial investment at a
date certain in the future), if applicable; and (iii) either multi-advisor
or single-advisor.
2. INCEPTION OF TRADING is the date of inception of trading by the fund.
3. AGGREGATE SUBSCRIPTIONS is the aggregate gross capital subscriptions
(without regard to redemptions).
4. CURRENT CAPITALIZATION is the net asset value of the fund at the end of the
period indicated.
5. WORST MONTHLY DRAWDOWN is the largest net asset loss experienced in any
calendar month expressed as a percentage of net asset value and includes
the month and year of such drawdown.
6. WORST PEAK-TO-VALLEY DRAWDOWN is the largest calendar month-end to calendar
month-end net asset loss (regardless of whether such loss is continuous)
experienced during the period for which performance is shown, expressed as
a percentage of total equity in the program, and includes the months and
years in which it occurred. For example, a Worst Peak-to-Valley Drawdown
of (17.70)% (7/99-10/99) (see "IDS Managed Futures, L.P." at page 94) means
that the peak-to-valley drawdown lasted from July 1999 through October 1999
and resulted in a (17.70)% drawdown.
7. COMPOUND RATE OF RETURN is calculated on the basis of the actual rate of
return recognized by an initial $1,000 investment in the fund, by
compounding the monthly rates of return over the number of months in a
given year. Each month's rate of return, positive or negative, in
hundredths is added to one and the sum is multiplied by the rate of return
similarly expressed for the previous month. For example, if a fund yielded
monthly rates of return of 2%, (4)% and 6% for three consecutive months,
the compound rate of return for the three months would equal 1.02 x 0.96 x
1.06 = 1.038% or 3.8%. For periods of less than one year, the results are
year-to-date.
PURCHASERS OF UNITS WILL ACQUIRE NO INTEREST IN THESE FUNDS WHICH
TRADE IN MATERIALLY DIFFERENT MARKET SECTORS AND UNDER
MATERIALLY DIFFERENT STRATEGIES THAN DOES THE TRUST.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
-96-
<PAGE>
PART TWO
STATEMENT OF ADDITIONAL INFORMATION
JWH GLOBAL TRUST
$86,700,000
UNITS OF BENEFICIAL INTEREST
------------------------
THIS IS A SPECULATIVE, LEVERAGED INVESTMENT WHICH INVOLVES THE RISK OF LOSS.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
SEE "THE RISKS YOU FACE" BEGINNING AT PAGE 9 IN PART ONE.
THIS PROSPECTUS IS IN TWO PARTS: A DISCLOSURE
DOCUMENT AND A STATEMENT OF ADDITIONAL
INFORMATION. THESE PARTS ARE BOUND
TOGETHER, AND BOTH CONTAIN
IMPORTANT INFORMATION.
CARGILL INVESTOR SERVICES, INC. CIS INVESTMENTS, INC.
LEAD SELLING AGENT MANAGING OWNER
------------------------
<PAGE>
PART TWO
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Futures Markets and Trading Methods. . . . . . . . . . . . . . . . . . . . . . . . .1
"Blue Sky" Glossary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
</TABLE>
-------------------
EXHIBITS
<TABLE>
<S> <C>
Exhibit A: Fourth Amended and Restated
Declaration and Agreement of Trust . . . . . . . . . . . . . . . . . . . . . . . .A-1
Exhibit B: Subscription Requirements. . . . . . . . . . . . . . . . . . . . . . .B-1
Exhibit C: Subscription Instructions. . . . . . . . . . . . . . . . . . . . . . .C-1
</TABLE>
<PAGE>
FUTURES MARKETS AND TRADING METHODS
THE FUTURES AND FORWARD MARKETS
FUTURES AND FORWARD CONTRACTS
Futures contracts in the United States can only be traded on approved
exchanges and call for the future delivery of various commodities. These
contractual obligations may be satisfied either by taking or making physical
delivery or by making an offsetting sale or purchase of a futures contract on
the same exchange.
Forward currency contracts are traded off-exchange through banks or
dealers. In such instances, the bank or dealer generally acts as principal in
the transaction and charges "bid-ask" spreads.
Futures and forward trading is a "zero-sum," risk transfer economic
activity. For every gain there is an equal and offsetting loss.
EXCHANGE OF FUTURES FOR PHYSICALS ("EFP") TRANSACTIONS
Although futures contracts are normally entered into through competitive
bidding and offering on an exchange floor (or its electronic equivalent), most
U.S. exchanges allow futures contracts also to be established in a transaction
known as an exchange of futures for physicals ("EFP"). In an EFP transaction
where two parties engage in a cash sale of a commodity underlying a futures
contract, those same two parties are permitted to establish futures positions of
an equivalent quantity opposite to their cash transaction. For example, a
seller of a cash commodity would be permitted to establish a long futures
position of an equivalent quantity and the buyer of the cash commodity would be
permitted to establish a short futures position of the equivalent commodity. In
some futures markets, the cash transaction upon which the EFP is based can be
the reversal of a previously entered into but unsettled cash transaction. In
those markets, because the cash transaction is essentially "transitory," EFPs
can serve as a means for parties to enter into futures contracts at negotiated
prices and at other than during normal trading hours.
HEDGERS AND SPECULATORS
The two broad classifications of persons who trade futures are "hedgers"
and "speculators." Hedging is designed to minimize the losses that may occur
because of price changes, for example, between the time a merchandiser contracts
to sell a commodity and the time of delivery. The futures and forward markets
enable the hedger to shift the risk of price changes to the speculator. The
speculator risks capital with the hope of making profits from such changes.
Speculators, such as the Trust, rarely take delivery of the physical commodity
but rather close out their futures positions through offsetting futures
contracts.
EXCHANGES; POSITION AND DAILY LIMITS; MARGINS
Each of the commodity exchanges in the United States has an associated
"clearinghouse." Once trades made between members of an exchange have been
cleared, each clearing broker looks only to the clearinghouse for all payments
in respect of such broker's open positions. The clearinghouse "guarantee" of
performance on open positions does not run to customers. If a member firm goes
bankrupt, customers could lose money.
JWH trades for the Trust on a number of foreign commodity exchanges.
Foreign commodity exchanges differ in certain respects from their United States
counterparts and are not regulated by any United States agency.
The CFTC and the United States exchanges have established "speculative
position limits" on the maximum positions that JWH may hold or control in
futures contracts on certain commodities.
Most United States exchanges limit the maximum change in futures prices
during any single trading day. Once the "daily limit" has been reached, it
becomes very difficult to execute trades. Because these limits apply on a
day-to-day basis, they do not
-1-
<PAGE>
limit ultimate losses, but may reduce or
eliminate liquidity.
When a position is established, "initial margin" is deposited. On most
exchanges, at the close of each trading day "variation margin," representing the
unrealized gain or loss on the open positions, is either credited to or debited
from a trader's account. If "variation margin" payments cause a trader's
"initial margin" to fall below "maintenance margin" levels, a "margin call" is
made, requiring the trader to deposit additional margin or have his position
closed out.
TRADING METHODS
Managed futures strategies are generally classified as either (i)
systematic or discretionary; and (ii) technical or fundamental.
SYSTEMATIC AND DISCRETIONARY TRADING APPROACHES
A systematic trader relies on trading programs or models to generate
trading signals. Discretionary traders make trading decisions on the basis of
their own judgment.
Each approach involves inherent risks. For example, systematic traders may
incur substantial losses when fundamental or unexpected forces dominate the
markets, while discretionary traders may overlook price trends which would have
been signaled by a system.
TECHNICAL AND FUNDAMENTAL ANALYSIS
Technical analysis operates on the theory that market prices, momentum and
patterns at any given point in time reflect all known factors affecting the
supply and demand for a particular commodity. Consequently, technical analysis
focuses on market data as the most effective means of attempting to predict
future prices.
Fundamental analysis, in contrast, focuses on the study of factors external
to the markets, for example: weather, the economy of a particular country,
government policies, domestic and foreign political and economic events, and
changing trade prospects. Fundamental analysis assumes that markets are
imperfect and that market mispricings can be identified.
TREND-FOLLOWING
Trend-following advisors try to take advantage of major price movements, in
contrast with traders who focus on making many small profits on short-term
trades or through relative value positions. Trend-following traders assume that
most of their trades will be unprofitable. They look for a few large profits
from big trends. During periods with no major price movements, a
trend-following trading advisor is likely to have big losses.
RISK CONTROL TECHNIQUES
Trading advisors often adopt risk management principles. Such principles
typically restrict the size of positions taken as well as establishing stop-loss
points at which losing positions must be liquidated. However, no risk control
technique can assure that big losses will be avoided.
THE JWH PROGRAMS ARE SYSTEMATIC, TECHNICAL AND TREND-FOLLOWING.
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<PAGE>
"BLUE SKY" GLOSSARY
THE FOLLOWING DEFINITIONS ARE INCLUDED IN THIS APPENDIX II IN COMPLIANCE
WITH THE REQUIREMENTS OF VARIOUS STATE SECURITIES ADMINISTRATORS WHO REVIEW
PUBLIC FUTURES FUND OFFERINGS FOR COMPLIANCE WITH THE "GUIDELINES FOR THE
REGISTRATION OF COMMODITY POOL PROGRAMS" STATEMENT OF POLICY PROMULGATED BY THE
NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION, INC. THE FOLLOWING
DEFINITIONS ARE REPRINTED VERBATIM FROM SUCH GUIDELINES AND MAY, ACCORDINGLY,
NOT IN ALL CASES BE RELEVANT TO AN INVESTMENT IN THE TRUST.
DEFINITIONS -- As used in the Guidelines, the following terms have the
following meanings:
ADMINISTRATOR -- The official or agency administering the security laws of
a state.
ADVISOR -- Any Person who for any consideration engages in the business of
advising others, either directly or indirectly, as to the value, purchase, or
sale of commodity contracts or commodity options.
AFFILIATE -- An Affiliate of a Person means: (a) any Person directly or
indirectly owning, controlling or holding with power to vote 10% or more of the
outstanding voting securities of such Person; (b) any Person 10% or more of
whose outstanding voting securities are directly or indirectly owned, controlled
or held with power to vote, by such Person; (c) any Person, directly or
indirectly, controlling, controlled by, or under common control of such Person;
(d) any officer, director or partner of such Person; or (e) if such Person is an
officer, director or partner, any Person for which such Person acts in any such
capacity.
CAPITAL CONTRIBUTIONS -- The total investment in a Program by a Participant
or by all Participants, as the case may be.
COMMODITY BROKER -- Any Person who engages in the business of effecting
transactions in commodity contracts for the account of others or for his or her
own account.
COMMODITY CONTRACT -- A contract or option thereon providing for the
delivery or receipt at a future date of a specified amount and grade of a traded
commodity at a specified price and delivery point.
CROSS REFERENCE SHEET -- A compilation of the Guideline sections,
referenced to the page of the prospectus, Program agreement, or other exhibits,
and justification of any deviation from the Guidelines.
NET ASSETS -- The total assets, less total liabilities, of the Program
determined on the basis of generally accepted accounting principles. Net Assets
shall include any unrealized profits or losses on open positions, and any fee or
expense including Net Asset fees accruing to the Program.
NET ASSET VALUE PER PROGRAM INTEREST -- The Net Assets of the Trust divided
by the number of Units outstanding.
NET WORTH -- The excess of total assets over total liabilities as
determined by generally accepted accounting principles. Net Worth shall be
determined exclusive of home, home furnishings and automobiles.
NEW TRADING PROFITS -- The excess, if any, of Net Assets at the end of the
period over Net Assets at the end of the highest previous period or Net Assets
at the date trading commences, whichever is higher, and as further adjusted to
eliminate the effect on Net Assets resulting from new Capital Contributions,
redemptions, or capital distributions, if any, made during the period decreased
by interest or other income, not directly related to trading activity, earned on
Program assets during the period, whether the assets are held separately or in a
margin account.
ORGANIZATIONAL AND OFFERING EXPENSES -- All expenses incurred by the
Program in connection with and in preparing a Program for registration and
subsequently offering and distributing it to the public, including, but not
limited to, total underwriting and
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<PAGE>
brokerage discounts and commissions (including fees of the underwriter's
attorneys), expenses for printing, engraving, mailing, salaries of employees
while engaged in sales activity, charges of transfer agents, registrars,
trustees, escrow holders, depositories, experts, expenses of qualification of
the sale of its Program Interests under federal and state law, including
taxes and fees, and accountants' and attorneys' fees.
PARTICIPANT -- The holder of a Program Interest.
PERSON -- Any natural Person, partnership, corporation, association or
other legal entity.
PIT BROKERAGE FEE -- Pit Brokerage Fee shall include floor brokerage,
clearing fees, National Futures Association fees, and exchange fees.
PROGRAM -- A limited partnership, joint venture, corporation, trust or
other entity formed and operated for the purpose of investing in Commodity
Contracts.
PROGRAM BROKER -- A Commodity Broker that effects trades in Commodity
Contracts for the account of a Program.
PROGRAM INTEREST -- A limited partnership interest or other security
representing ownership in a program.
PYRAMIDING -- A method of using all or a part of an unrealized profit in a
Commodity Contract position to provide margin for any additional Commodity
Contracts of the same or related commodities.
SPONSOR -- Any Person directly or indirectly instrumental in organizing a
Program or any Person who will manage or participate in the management of a
Program, including a Commodity Broker who pays any portion of the Organizational
Expenses of the Program, and the general partner(s) and any other Person who
regularly performs or selects the Persons who perform services for the Program.
Sponsor does not include wholly independent third parties such as attorneys,
accountants, and underwriters whose only compensation is for professional
services rendered in connection with the offering of the units. The term
"Sponsor" shall be deemed to include its Affiliates.
VALUATION DATE -- The date as of which the Net Assets of the Program are
determined.
VALUATION PERIOD -- A regular period of time between Valuation Dates.
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<PAGE>
EXHIBIT A
JWH GLOBAL TRUST
FOURTH AMENDED AND RESTATED
DECLARATION AND AGREEMENT OF TRUST
DATED AS OF JUNE 5, 1998
<PAGE>
JWH GLOBAL TRUST
FOURTH AMENDED AND RESTATED
DECLARATION AND AGREEMENT OF TRUST
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
1. Declaration of Trust . . . . . . . . . . . . . . . . . . . . A-1
2. The Trustee. . . . . . . . . . . . . . . . . . . . . . . . . A-1
(a) Term; Resignation . . . . . . . . . . . . . . . . . . . A-1
(b) Powers. . . . . . . . . . . . . . . . . . . . . . . . . A-1
(c) Compensation and Expenses of the Trustee. . . . . . . . A-1
(d) Indemnification . . . . . . . . . . . . . . . . . . . . A-2
(e) Successor Trustee . . . . . . . . . . . . . . . . . . . A-2
(f) Liability of the Trustee. . . . . . . . . . . . . . . . A-2
(g) Reliance by the Trustee and the Managing Owner; Advice
of Counsel. . . . . . . . . . . . . . . . . . . . . . . A-3
(h) Not Part of Trust Estate. . . . . . . . . . . . . . . . A-3
3. Principal Office . . . . . . . . . . . . . . . . . . . . . . A-3
4. Business . . . . . . . . . . . . . . . . . . . . . . . . . . A-3
5. Term, Dissolution, Fiscal Year and Net Asset Value . . . . . A-4
(a) Term. . . . . . . . . . . . . . . . . . . . . . . . . . A-4
(b) Dissolution . . . . . . . . . . . . . . . . . . . . . . A-4
(c) Fiscal Year . . . . . . . . . . . . . . . . . . . . . . A-4
(d) Net Asset Value . . . . . . . . . . . . . . . . . . . . A-4
6. Net Worth of Managing Owner. . . . . . . . . . . . . . . . . A-5
7. Capital Contributions; Units; Managing Owner's Liability . . A-5
(a) Capital Contributions; Units. . . . . . . . . . . . . . A-5
(b) Managing Owner's Liability. . . . . . . . . . . . . . . A-5
8. Allocation of Profits and Losses . . . . . . . . . . . . . . A-5
(a) Capital Accounts and Allocations. . . . . . . . . . . . A-5
(b) Allocation of Profit and Loss for Federal Income Tax
Purposes. . . . . . . . . . . . . . . . . . . . . . . . A-6
(c) Expenses. . . . . . . . . . . . . . . . . . . . . . . . A-7
(d) Limited Liability of Unitholders. . . . . . . . . . . . A-8
(e) Return of Capital Contributions . . . . . . . . . . . . A-8
9. Management of the Trust. . . . . . . . . . . . . . . . . . . A-8
(a) Authority of the Managing Owner . . . . . . . . . . . . A-8
(b) Fiduciary Duties. . . . . . . . . . . . . . . . . . . . A-9
(c) Loans; Investments. . . . . . . . . . . . . . . . . . . A-9
(d) Certain Conflicts of Interest Prohibited. . . . . . . . A-9
(e) Certain Agreements. . . . . . . . . . . . . . . . . . . A-10
(f) Prohibition on "Pyramiding" . . . . . . . . . . . . . . A-10
(g) Freedom of Action . . . . . . . . . . . . . . . . . . . A-10
10. Audits and Reports to Unitholders. . . . . . . . . . . . . . A-10
11. Assignability of Units . . . . . . . . . . . . . . . . . . . A-11
12. Redemptions. . . . . . . . . . . . . . . . . . . . . . . . . A-12
13. Offering of Units. . . . . . . . . . . . . . . . . . . . . . A-13
14. Additional Offerings . . . . . . . . . . . . . . . . . . . . A-13
15. Special Power of Attorney. . . . . . . . . . . . . . . . . . A-14
16. Withdrawal of a Unitholder . . . . . . . . . . . . . . . . . A-14
17. Benefit Plan Investors . . . . . . . . . . . . . . . . . . . A-14
18. Standard of Liability; Indemnification . . . . . . . . . . . A-15
(a) Standard of Liability for the Managing Owner. . . . . . A-15
(b) Indemnification of the Managing Owner by the Trust. . . A-15
(c) Indemnification by the Unitholders. . . . . . . . . . . A-16
</TABLE>
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<TABLE>
<CAPTION>
Page
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<S> <C>
19. Amendments; Meetings . . . . . . . . . . . . . . . . . . . . A-16
(a) Amendments with Consent of the Managing Owner . . . . . A-16
(b) Amendments and Actions without Consent of the Managing
Owner . . . . . . . . . . . . . . . . . . . . . . . . . A-17
(c) Meetings; Other . . . . . . . . . . . . . . . . . . . . A-17
(d) Consent by Trustee. . . . . . . . . . . . . . . . . . . A-17
20. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . A-17
21. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . A-17
(a) Notices . . . . . . . . . . . . . . . . . . . . . . . . A-17
(b) Binding Effect. . . . . . . . . . . . . . . . . . . . . A-17
(c) Captions. . . . . . . . . . . . . . . . . . . . . . . . A-17
22. Certain Definitions. . . . . . . . . . . . . . . . . . . . . A-18
23. No Legal Title to Trust Estate . . . . . . . . . . . . . . . A-19
24. Legal Title. . . . . . . . . . . . . . . . . . . . . . . . . A-19
25. Creditors. . . . . . . . . . . . . . . . . . . . . . . . . . A-19
Testimonium
Signatures
</TABLE>
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<PAGE>
JWH GLOBAL TRUST
FOURTH AMENDED AND RESTATED
DECLARATION AND AGREEMENT OF TRUST
This FOURTH AMENDED AND RESTATED DECLARATION AND AGREEMENT OF TRUST
("Declaration and Agreement of Trust") of JWH GLOBAL TRUST (the "Trust") is made
and entered into as of this 5th day of June, 1998 by and among CIS INVESTMENTS,
INC., a Delaware corporation, as a managing owner (the "Managing Owner"),
WILMINGTON TRUST COMPANY, a Delaware banking corporation, as trustee (the
"Trustee"), each other party who shall execute a counterpart of this Declaration
and Agreement of Trust as an owner of a unit of beneficial interest of the Trust
("Units") or who becomes a party to this Declaration and Agreement of Trust as a
Unitholder by execution of a Subscription Agreement and Power of Attorney
Signature Page or otherwise and who is shown in the books and records of the
Trust as a Unitholder (individually, a "Unitholder" and, collectively, the
"Unitholders").
W I T N E S S E T H:
WHEREAS, the parties hereto desire to continue the Trust for the business
and purpose of issuing Units, the capital of which shall be used to engage in
speculative trading, buying, selling or otherwise acquiring, holding or
disposing of futures and forward contracts on currencies, interest rate, energy
and agricultural products, metals and stock indices, hybrid instruments, swaps,
any rights pertaining thereto and any options thereon or on physical
commodities, with the objective of capital appreciation through speculative
trading, and to amend and restate the Third Amended and Restated Declaration and
Agreement of Trust of the Trust in its entirety.
NOW THEREFORE, the parties hereto agree as follows:
1. DECLARATION OF TRUST.
The Trustee hereby declares that it holds the investments in the Trust in
trust upon and subject to the conditions set forth herein for the use and
benefit of the Unitholders. It is the intention of the parties hereto that the
Trust shall be a business trust under the Act, and that this Declaration and
Agreement of Trust shall constitute the governing instrument of the Trust. The
Trustee has filed the Certificate of Trust required by Section 3810 of the Act.
Nothing in this Declaration and Agreement of Trust shall be construed to
make the Unitholders partners or members of a joint stock association except to
the extent that such Unitholders, as constituted from time to time, are deemed
to be partners under the Internal Revenue Code of 1986, as amended (the "Code"),
and applicable state and local tax laws. Notwithstanding the foregoing, it is
the intention of the parties hereto that the Trust be treated as a partnership
for purposes of taxation under the Code and applicable state and local tax laws.
Effective as of the date hereof, the Trustee shall have all of the rights,
powers and duties set forth herein and in the Act with respect to accomplishing
the purposes of the Trust.
2. THE TRUSTEE.
(a) TERM; RESIGNATION. (i) Wilmington Trust Company has been appointed
and has agreed to serve as the Trustee of the Trust. The Trust shall have only
one trustee unless otherwise determined by the Managing Owner. The Trustee
shall serve until such time as the Managing Owner removes the Trustee or the
Trustee resigns and a successor Trustee is appointed by the Managing Owner in
accordance with the terms of Section 2(e) hereof.
(ii) The Trustee may resign at any time upon the giving of at least 60
days' advance written notice to the Trust; provided, that such resignation shall
not become effective unless and until a successor Trustee shall have been
appointed by the Managing Owner in accordance with Section 2(e) hereof. If the
Managing Owner does not act within such 60 day period, the Trustee may apply to
the Court of Chancery of the State of Delaware for the appointment of a
successor Trustee.
(b) POWERS. Except to the extent expressly set forth in this Section 2
and Sections 3 and 24, the duty and authority of the Trustee to manage the
business and affairs of the Trust are hereby delegated to the Managing Owner.
The Trustee shall have only the rights, obligations or liabilities specifically
provided for herein and in the Act and shall have no implied rights, obligations
or liabilities with respect to the business or affairs of the Trust. The
Trustee shall have the power and authority to execute, deliver, acknowledge and
file all necessary documents, including any amendments to or cancellation of the
Certificate of Trust, and to maintain all necessary records of the Trust as
required by the Act. The Trustee shall provide prompt notice to the Managing
Owner of the Trustee's performance of any of the foregoing. The Managing Owner
shall keep the Trustee informed of any actions taken by the Managing Owner with
respect to the Trust that affect the rights, obligations or liabilities of the
Trustee hereunder or under the Act.
(c) COMPENSATION AND EXPENSES OF THE TRUSTEE. The Trustee shall be
entitled to receive from the Trust or, if
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<PAGE>
the assets of the Trust are insufficient, from the Managing Owner reasonable
compensation for its services hereunder in accordance with the Trustee's
standard fee schedule, and shall be entitled to be reimbursed by the Trust
or, if the assets of the Trust are insufficient, by the Managing Owner for
reasonable out-of-pocket expenses incurred by the Trustee in the performance
of its duties hereunder, including without limitation, the reasonable
compensation, out-of-pocket expenses and disbursements of counsel and such
other agents as the Trustee may employ in connection with the exercise and
performance of its rights and duties hereunder, to the extent attributable to
the Trust.
(d) INDEMNIFICATION. The Managing Owner agrees, whether or not any of
the transactions contemplated hereby shall be consummated, to assume liability
for, and does hereby indemnify, protect, save and keep harmless the Trustee and
its successors, assigns, legal representatives, officers, directors, agents and
servants (the "Indemnified Parties") from and against any and all liabilities,
obligations, losses, damages, penalties, taxes (excluding any taxes payable by
the Trustee on or measured by any compensation received by the Trustee for its
services hereunder or as indemnity payments pursuant to this Section 2(d)),
claims, actions, suits, costs, expenses or disbursements (including legal fees
and expenses) of any kind and nature whatsoever (collectively, "Expenses"),
which may be imposed on, incurred by or asserted against the Indemnified Parties
in any way relating to or arising out of the formation, operation or termination
of the Trust, the execution, delivery and performance of any other agreements to
which the Trust is a party or the action or inaction of the Trustee hereunder or
thereunder, except for Expenses resulting from the gross negligence or willful
misconduct of the Indemnified Parties. The indemnities contained in this
Section 2(d) shall survive the termination of this Declaration and Agreement of
Trust or the removal or resignation of the Trustee. In addition, the
Indemnified Parties shall be entitled to indemnification from any cash, net
equity in any commodity futures, forward and option contracts, all funds on
deposit in the accounts of the Trust, any other property held by the Trust, and
all proceeds therefrom, including any rights of the Trust pursuant to any
agreements to which the Trust is a party (the "Trust Estate") to the extent such
expenses are attributable to the formation, operation or termination of the
Trust as set forth above, and to secure the same the Trustee shall have a lien
against the Trust Estate which shall be prior to the rights of the Managing
Owner and the Unitholders to receive distributions from the Trust Estate. The
Trustee nevertheless agrees that it will, at its own cost and expense, promptly
take all action as may be necessary to discharge any liens on any part of the
Trust Estate which result from claims against the Trustee personally that are
not related to the ownership or the administration of the Trust Estate or the
transactions contemplated by any documents to which the Trust is a party.
(e) SUCCESSOR TRUSTEE. Upon the resignation or removal of the Trustee,
the Managing Owner shall appoint a successor Trustee by delivering a written
instrument to the outgoing Trustee. Any successor Trustee must satisfy the
requirements of Section 3807 of the Act. Any resignation or removal of the
Trustee and appointment of a successor Trustee shall not become effective until
a written acceptance of appointment is delivered by the successor Trustee to the
outgoing Trustee and the Managing Owner and any fees and expenses due to the
outgoing Trustee are paid. Following compliance with the preceding sentence,
the successor Trustee shall become fully vested with all of the rights, powers,
duties and obligations of the outgoing Trustee under this Declaration and
Agreement of Trust, with like effect as if originally named as Trustee, and the
outgoing Trustee shall be discharged of its duties and obligations under this
Declaration and Agreement of Trust.
(f) LIABILITY OF THE TRUSTEE. Except as otherwise provided in this
Section 2, in accepting the trust created hereby, Wilmington Trust Company acts
solely as Trustee hereunder and not in its individual capacity, and all persons
having any claim against the Trustee by reason of the transactions contemplated
by this Declaration and Agreement of Trust and any other agreement to which the
Trust is a party shall look only to the Trust Estate for payment or satisfaction
thereof. The Trustee shall not be liable or accountable hereunder or under any
other agreement to which the Trust is a party, except for the Trustee's gross
negligence or willful misconduct. In particular, but not by way of limitation:
(i) the Trustee shall have no liability or responsibility for the
validity or sufficiency of this Declaration and Agreement of Trust or for
the form, character, genuineness, sufficiency, value or validity of the
Trust Estate;
(ii) the Trustee shall not be liable for any actions taken or
omitted to be taken by it in accordance with the instructions of the
Managing Owner;
(iii) the Trustee shall not have any liability for the acts or
omissions of the Managing Owner;
(iv) the Trustee shall not be liable for its failure to supervise
the performance of any obligations of the Managing Owner, any commodity
broker, any selling agent, any additional selling agent, "wholesaler"
selling agent or "correspondent" selling agent;
(v) no provision of this Declaration and Agreement of Trust shall
require the Trustee to expend or risk funds or otherwise incur any
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<PAGE>
financial liability in the performance of any of its rights or powers
hereunder if the Trustee shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured or provided to it;
(vi) under no circumstances shall the Trustee be liable for
indebtedness evidenced by or other obligations of the Trust arising under
this Declaration and Agreement of Trust or any other agreements to which
the Trust is a party;
(vii) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Declaration and Agreement of
Trust, or to institute, conduct or defend any litigation under this
Declaration and Agreement of Trust or any other agreements to which the
Trust is a party, at the request, order or direction of the Managing Owner
or any Unitholders unless the Managing Owner or such Unitholders have
offered to the Trustee security or indemnity satisfactory to it against the
costs, expenses and liabilities that may be incurred by the Trustee
(including, without limitation, the reasonable fees and expenses of its
counsel) therein or thereby; and
(viii) notwithstanding anything contained herein to the contrary,
the Trustee shall not be required to take any action in any jurisdiction
other than in the State of Delaware if the taking of such action will (a)
require the consent or approval or authorization or order of or the giving
of notice to, or the registration with or taking of any action in respect
of, any state or other governmental authority or agency of any jurisdiction
other than the State of Delaware, (b) result in any fee, tax or other
governmental charge under the laws of any jurisdiction or any political
subdivision thereof in existence as of the date hereof other than the State
of Delaware becoming payable by the Trustee or (c) subject the Trustee to
personal jurisdiction other than in the State of Delaware for causes of
action arising from personal acts unrelated to the consummation by the
Trustee of the transactions contemplated hereby.
(g) RELIANCE BY THE TRUSTEE AND THE MANAGING OWNER; ADVICE OF COUNSEL.
(i) In the absence of bad faith, the Trustee and the Managing Owner may
conclusively rely upon certificates or opinions furnished to the Trustee or the
Managing Owner and conforming to the requirements of this Declaration and
Agreement of Trust in determining the truth of the statements and the
correctness of the opinions contained therein, and shall incur no liability to
anyone in acting on any signature, instrument, notice, resolution, request,
consent, order, certificate, report, opinion, bond or other document or paper
which is believed to be genuine and believed to be signed by the proper party or
parties, and need not investigate any fact or matter pertaining to or in any
such document; provided, however, that the Trustee or the Managing Owner shall
have examined any certificates or opinions so as to determine compliance of the
same with the requirements of this Declaration and Agreement of Trust. The
Trustee or the Managing Owner may accept a certified copy of a resolution of the
board of directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that the
same is in full force and effect. As to any fact or matter the method of the
determination of which is not specifically prescribed herein, the Trustee or the
Managing Owner may for all purposes hereof rely on a certificate, signed by the
president or any vice-president or by the treasurer or other authorized officers
of the relevant party, as to such fact or matter, and such certificate shall
constitute full protection to the Trustee or the Managing Owner for any action
taken or omitted to be taken by either of them in good faith in reliance
thereon.
(ii) In the exercise or administration of the trust hereunder and in the
performance of its duties and obligations under this Declaration and Agreement
of Trust, the Trustee, at the expense of the Trust, (i) may act directly or
through its agents, attorneys, custodians or nominees pursuant to agreements
entered into with any of them, and the Trustee shall not be liable for the
conduct or misconduct of such agents, attorneys, custodians or nominees if such
agents, attorneys, custodians or nominees shall have been selected by the
Trustee with reasonable care and (ii) may consult with counsel, accountants and
other skilled professionals to be selected with reasonable care by the Trustee;
provided that the Trustee shall not allocate any of its internal expenses or
overhead to the account of the Trust. The Trustee shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
opinion or advice of any such counsel, accountant or other such persons.
(h) NOT PART OF TRUST ESTATE. Amounts paid to the Trustee from the Trust
Estate, if any, pursuant to this Section 2 shall not be deemed to be part of the
Trust Estate immediately after such payment.
3. PRINCIPAL OFFICE.
The address of the principal office of the Trust is c/o CIS Investments,
Inc., 233 South Wacker Drive, Suite 2300, Chicago, IL 60606. The Trustee is
located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890, Attention: Corporate Trust Administration. The Trustee shall receive
service of process
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<PAGE>
on the Trust in the State of Delaware at the foregoing address. In the event
Wilmington Trust Company resigns or is removed as the Trustee, the Trustee of
the Trust in the State of Delaware shall be the successor Trustee.
4. BUSINESS.
The Trust's business and purpose is to trade, buy, sell or otherwise
acquire, hold or dispose of all futures contracts including, but not limited to,
those on currencies, interest rates, energy and agricultural products, metals
and stock indices; spot and forward contracts in currencies and precious metals;
any rights pertaining thereto and any options thereon or on physical
commodities; as well as securities and any rights pertaining thereto and any
options thereon, and to engage in all activities necessary, convenient or
incidental thereto. The Trust may also engage in "hedge," arbitrage and cash
trading of any of the foregoing instruments. The Trust may engage in such
business and purpose either directly or through joint ventures, entities or
partnerships, provided that the Trust's participation in any of the foregoing
has no adverse economic or liability consequences for the Unitholders, which
consequences would not be present had the Trust engaged in that same business or
purpose directly.
The objective of the Trust's business is appreciation of its assets through
speculative trading. The Trust shall have the power to engage in all activities
which are necessary, suitable, desirable, convenient or incidental to the
accomplishment to the foregoing business and purpose. The Trust shall do so
under the direction of the Managing Owner.
5. TERM, DISSOLUTION, FISCAL YEAR AND NET ASSET VALUE.
(a) TERM. The term of the Trust commenced on the day on which the
Certificate of Trust was filed with the Secretary of State of the State of
Delaware pursuant to the provisions of the Act and shall end upon the first to
occur of the following: (1) December 31, 2026; (2) receipt by the Managing
Owner of the determination by Unitholders owning more than 50% of the Units then
owned by Unitholders to dissolve the Trust, notice of which is sent by certified
mail, return receipt requested, to the Managing Owner not less than 90 days
prior to the effective date of such dissolution; (3) the bankruptcy, retirement,
resignation, expulsion, withdrawal, insolvency or dissolution of the Managing
Owner, or any other event that causes the Managing Owner to cease to be managing
owner of the Trust unless within 90 days after such event all Unitholders agree
in writing to continue the business of the Trust and to the appointment,
effective as of the date of such event, of one or more managing owners of the
Trust (except Unitholders owning more than 50% of the Units then outstanding may
agree in writing to the appointment of one or more managing owners to continue
the business of the Trust); (4) the insolvency or bankruptcy of the Trust; (5) a
decline in the aggregate Net Assets of the Trust to less than $2,500,000 (except
as provided in Section 12); (6) a decline in the Net Asset Value per Unit to $50
or less (except as provided in Section 12); (7) dissolution of the Trust
pursuant hereto; or (8) any other event which shall make it unlawful for the
existence of the Trust to be continued or require dissolution of the Trust.
(b) DISSOLUTION. Upon the occurrence of an event causing the dissolution
of the Trust, the Trust shall be dissolved and its affairs wound up. Upon the
dissolution of the Trust, the Managing Owner or, in the event that dissolution
of the Trust pursuant to Section 5(a)(3) has caused the Managing Owner to cease
to be managing owner of the Trust, a person or persons approved by the
affirmative vote of more than 50% of the Units then owned by Unitholders, shall
wind up the Trust's affairs and, in connection therewith, shall distribute the
Trust's assets in the following manner and order:
(i) FIRST TO payment and discharge of all claims of creditors of the
Trust (including, to the extent otherwise permitted by law, creditors who
are Unitholders), including by the creation of any reserve that the
Managing Owner (or its successor), in its sole discretion, may consider
reasonably necessary for any losses, contingencies, liabilities or other
matters of or relating to the Trust; provided, however, that if and when
the cause for such reserve ceases to exist, the monies, if any, then in
such reserve shall be distributed in the manner hereinafter provided; and
(ii) SECOND TO distribution in cash of the remaining assets to the
Unitholders in proportion to their capital accounts, after giving effect to
the allocations pursuant to Section 8 hereof as if the date of distribution
were the end of a calendar year.
(c) FISCAL YEAR. The fiscal year of the Trust shall begin on January 1
of each year and end on the following December 31; provided, however, that the
first fiscal year of the Trust shall commence on the date its Certificate of
Trust is filed.
(d) NET ASSET VALUE. The Net Assets of the Trust are its assets less its
liabilities determined in accordance with generally accepted accounting
principles. The Net Asset Value per Unit is the Net Assets of the Trust divided
by the number of Units outstanding, subject to the provision of Section 8(a)
hereof.
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A futures or futures option contract traded on a United States commodity
exchange shall be valued at the settlement price on the date of valuation. If
such a contract held by the Trust cannot be liquidated on the day with respect
to which Net Assets are being determined, the settlement price on the first
subsequent day on which the contract can be liquidated shall be the basis for
determining the liquidating value of such contract for such day, or such other
value as the Managing Owner may deem fair and reasonable. The liquidating value
of a futures, forward or option contract not traded on a United States commodity
exchange shall mean its liquidating value as determined by the Managing Owner on
a basis consistently applied for each different variety of such contract.
The Managing Owner may only cause the Trust to invest in joint ventures,
entities or partnerships which conform to the foregoing valuation principles.
Organizational and initial offering cost reimbursement shall not reduce Net
Asset Value for any purpose, including calculating the redemption value of
Units; however, the amount of organizational and initial offering costs
amortized at each month-end during the amortization period will reduce Net Asset
Value as of each such month-end.
Accrued Incentive Fee (as described in the Prospectus as defined in
Section 9(a)) payable to John W. Henry & Company, Inc., the Trust's trading
advisor ("JWH") (including the portion paid to JWH upon intra-calendar quarter
redemption of certain Units) shall reduce the Net Asset Value of the Trust.
6. NET WORTH OF MANAGING OWNER.
The Managing Owner agrees that at all times so long as it remains the
managing owner of the Trust, it will maintain a Net Worth at an amount not less
than 5% of the total contributions by all Unitholders to the Trust and all
entities of which the Managing Owner is general partner or managing owner. In
no event shall the Managing Owner be required to maintain a net worth in excess
of the greater of (i) $1,000,000 or (ii) the amount which the Managing Owner is
advised by counsel as necessary or advisable to ensure that the Trust is taxed
as a partnership for federal income tax purposes.
7. CAPITAL CONTRIBUTIONS; UNITS; MANAGING OWNER'S LIABILITY.
(a) CAPITAL CONTRIBUTIONS; UNITS. The beneficial interests in the Trust
shall consist of two types: a general liability interest and limited liability
Units. The Managing Owner shall acquire the general liability interest, and
investors shall all acquire limited liability Units.
Upon the initial contribution by the Managing Owner to the Trust, the
Managing Owner became the holder of the general liability interest of the Trust.
No certificates or other evidences of beneficial ownership of the Units
will be issued. The Unitholders' respective capital contributions to the Trust
shall be as shown on the books and records of the Trust.
Every Unitholder, by virtue of having purchased or otherwise acquired
Units, shall be deemed to have expressly consented and agreed to be bound by the
terms of this Declaration and Agreement of Trust.
Any Units acquired by the Managing Owner or any of its affiliates will be
non-voting, and will not be considered outstanding for purposes of determining
whether the majority approval of the outstanding Units has been obtained.
The general liability interest in the Trust held by the Managing Owner will
be non-voting.
(b) MANAGING OWNER'S LIABILITY. The Managing Owner shall have unlimited
liability for the repayment, satisfaction and discharge of all debts,
liabilities and obligations of the Trust to the full extent, and only to the
extent, of the Managing Owner's assets.
The Managing Owner shall be liable for the acts, omissions, obligations and
expenses of the Trust, to the extent not paid out of the assets of the Trust, to
the same extent that the Managing Owner would be so liable if the Trust were a
partnership under the Delaware Revised Uniform Limited Partnership Act and the
Managing Owner were the general partner of such partnership. The obligations of
the Managing Owner under this paragraph shall be evidenced by its ownership of
the general liability interest.
The Managing Owner, so long as it is generally liable for the obligations
of the Trust, shall invest in the Trust, as a general liability interest, no
less than 1% of the total capital contributions to the Trust (including the
Managing Owner's contributions). The Managing Owner may (i) withdraw any
interest it may have in excess of such requirement as of any month-end or (ii)
redeem any Units which it may acquire, in each case on the same terms as any
Unitholder (although without early redemption charges).
8. ALLOCATION OF PROFITS AND LOSSES.
(a) CAPITAL ACCOUNTS AND ALLOCATIONS. A capital account shall be
established for each Unit and for the Managing Owner. The initial balance of
each capital account shall be the aggregate amount contributed to the
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Trust with respect to a Unit, which amount shall be equal to the Net Asset
Value per Unit on the date each Unit is purchased after all accrued fees,
expenses and Incentive Fee allocations (other than unamortized organizational
and initial offering costs). The Net Asset Value per Unit prior to the Trust
commencing operations has been arbitrarily established by the Managing Owner
as $100 per Unit.
As of the close of business (as determined by the Managing Owner) on the
last business day of each month, any increase or decrease in the Trust's Net
Assets as compared to the last such determination of Net Assets shall be
credited or charged equally to the Units of all Unitholders.
In making the month-end adjustments to the capital accounts described in
the preceding paragraph, capital accounts of all Units shall be adjusted to
reflect the Brokerage Fee at the Primary Brokerage Fee Rate, as defined in
Section 8(c). Each Unitholder eligible for a Special Brokerage Fee Rate
pursuant to Section 8(c) shall, to the extent Units are available for sale, be
credited with additional Units at the following month-end Net Asset Value per
Unit in an amount equal to the difference between the adjustment to the such
Unitholder's Units at the Primary Brokerage Fee Rate and the adjustment to the
such Unitholder's Units that would have been made under the applicable Special
Brokerage Fee Rate (the "Brokerage Fee Excess"). The foregoing allocation of
additional Units shall be used solely as a means of efficiently accounting for
the Special Brokerage Fee Rate while preserving a uniform Net Asset Value per
Unit. To the extent Units are not available to be purchased with the Brokerage
Fee Excess as of such date, the Brokerage Fee Excess shall be distributed to the
Unitholder no later than 15 days after such month-end.
(b) ALLOCATION OF PROFIT AND LOSS FOR FEDERAL INCOME TAX PURPOSES. As of
the end of each fiscal year, the Trust's income and expense and capital gain or
loss shall be allocated among the Unitholders (including the Managing Owner on a
Unit-equivalent basis) pursuant to the following provisions of this Section 8(b)
for federal income tax purposes. Allocations of profit and loss shall be PRO
RATA from net capital gain or loss and net ordinary income or loss realized by
the Trust unless allocation of items of gain or income or loss or expense are
necessary to satisfy the requirements in Sections 8(b)(1)(B) and 8(b)(1)(D) that
sufficient profit and loss be allocated to tax accounts such that tax accounts
attributable to redeemed Units equal distributions in redemption of such Units.
Notwithstanding the foregoing requirement that annual allocations of profit and
loss be PRO RATA from capital and ordinary income, gain, loss and expense,
adjustments to such allocations shall be made to reflect the extent to which
income or expense is otherwise determined and periodically allocated to the
Unitholders, and such periodic allocations and adjustment shall be determined in
a manner that in the judgment of the Managing Owner is consistent with the
intent of this Section 8(b).
(1) Trust profit and loss shall be allocated as follows:
(A) For the purpose of allocating profit or loss among the
Unitholders, there shall be established a tax account with respect to each
outstanding Unit and with respect to the Managing Owner. The initial balance
of each tax account shall be the amount contributed to the Trust for each Unit
and the amount contributed by the Managing Owner. As of the end of each of
the first sixty months after the Trust begins operations, the balance of such
tax account shall be reduced by each Unit's allocable share of the amount of
organizational and initial offering cost reimbursements amortized as of the
end of such month by the Trust, as provided in Section 8(c). As of the end of
each month after the Trust begins operations, the balance of such tax account
shall be further reduced by each Unit's allocable share of any amount payable
by the Trust in respect of that month for the costs of the ongoing offering of
Units. The adjustment to reflect the amortization of organizational and
initial offering cost reimbursements as well as ongoing offering costs shall
be made prior to the following allocations of Trust profit and loss (and shall
be taken into account in making such allocations). Tax accounts shall be
adjusted as of the end of each fiscal year and as of the date a Unitholder
redeems any Units as follows:
(i) Each tax account shall be increased by the amount of profit
allocated to the Unitholder pursuant to Section 8(b)(1)(B) and 8(b)(1)(C)
below.
(ii) Each tax account shall be decreased by the amount of loss
allocated to the Unitholder pursuant to Section 8(b)(1)(D) and 8(b)(1)(E)
below and by the amount of any distributions the Unitholder has received
with respect to such Unit.
(iii) When a Unit is redeemed, the tax account attributable to such
Unit (determined after making all allocations set forth in Section 8(b))
shall be eliminated.
(B) Profits shall be allocated first to each Unitholder who has
redeemed any Units during the fiscal year up to the excess, if any, of the
amount received upon redemption of the Units over the amount in the Unitholder's
tax account attributable to the redeemed Units.
(C) Profit remaining after the allocation thereof pursuant to
Section 8(b)(1)(B) shall be allocated next among all Unitholders who hold Units
outstanding at
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the end of the applicable fiscal year whose capital accounts with respect to
such Units are in excess of their tax accounts in the ratio that each such
Unitholder's excess bears to all such Unitholders' excesses. Profit
remaining after the allocation described in the preceding sentence shall be
allocated among all Unitholders in proportion to their holdings of
outstanding Units.
(D) Loss shall be allocated first to each Unitholder who has
redeemed any Units during the fiscal year up to the excess, if any, of the
amount in such Unitholder's tax account attributable to the redeemed Units over
the amount received upon redemption of the Units.
(E) Loss remaining after the allocation thereof pursuant to
Section 8(b)(1)(D) shall be allocated next among all Unitholders who hold
Units outstanding at the end of the applicable fiscal year whose tax accounts
with respect to such Units are in excess of their capital accounts in the
ratio that each such Unitholder's excess bears to all such Unitholders'
excesses. Loss remaining after the allocation pursuant to the preceding
sentence shall be allocated among all Unitholders in proportion to their
holding of outstanding Units.
(2) In the event that a Unit has been assigned, the allocations
prescribed by this Section 8(b) shall be made with respect to such Unit
without regard to the assignment, except that in the year of assignment the
allocations prescribed by this Section 8(b) shall, to the extent permitted for
federal income tax purposes, be allocated between the assignor and assignee
using the interim closing of the books method.
(3) The allocation for federal income tax purposes of profit and
loss, as set forth herein, is intended to allocate taxable profit and loss
among Unitholders generally in the ratio and to the extent that net profit and
net loss are allocated to such Unitholders under Section 8(a) hereof so as to
eliminate, to the extent possible, any disparity between a Unitholder's
capital account and his tax account with respect to each Unit then
outstanding, consistent with the principles set forth in Section 704(c) of the
Code.
(4) Notwithstanding anything herein to the contrary, in the event
that at the end of any Trust taxable year any Unitholder's capital account is
adjusted for, or such Unitholder is allocated, or there is distributed to such
Unitholder any item described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) in an amount not reasonably expected at
the end of such year, and such treatment creates a deficit balance in such
Unitholder's capital account, then such Unitholder shall be allocated all
items of income and gain of the Trust for such year and for all subsequent
taxable years of the Trust until such deficit balance has been eliminated. In
the event that any such unexpected adjustments, allocations or distributions
create a deficit balance in the capital accounts of more than one Unitholder
in any Trust taxable, all items of income and gain of the Trust for such
taxable year and all subsequent taxable years shall be allocated among all
such Unitholders in proportion to their respective deficit balances until such
deficit balances have been eliminated.
(5) The allocations of profit and loss to the Unitholders shall not
exceed the allocations permitted under Subchapter K of the Code, as determined
by the Managing Owner, whose determination shall be binding.
The Managing Owner may adjust the allocations set forth in this Section
8(b), in the Managing Owner's discretion, if the Managing Owner believes that
doing so will achieve more equitable allocations or allocations more consistent
with the Code.
(c) EXPENSES. The Managing Owner advanced all organizational and
initial offering costs incurred in connection with the initial public offering
of Units, for which the Managing Owner was reimbursed by the Trust on the
closing date of the initial public offering of Units (the "Initial Closing
Date") and such costs are being amortized over 60 months beginning with June
1997. At no month-end will the amount amortized by the Trust exceed 1/60 of
2% of the month-end Net Assets of the Trust. The amount amortized each
month-end shall be the lesser of (i) the product of (x) one divided by the
number of months remaining in the amortization period times (y) the
unamortized balance of the capitalized organizational and initial offering
costs, or (ii) 1/60 of 2% of such month-end Net Assets at that month-end. The
amount of such expenses amortized each month shall be allocated on a PRO RATA
basis to each Unit outstanding at such month-end (determined prior to any
redemptions). If (i) the Trust is terminated prior to the end of such
60-month period, or (ii) the entire amount of the organizational and initial
offering costs reimbursed to the Managing Owner is not amortized at the end of
the 60-month period due to the 2% limitation, the Managing Owner shall return
to the Trust, without interest, an amount equal to the unamortized balance of
the capitalized organizational and initial offering costs.
The Trust shall pay no later than the fifth day of each month to Cargill
Investor Services, Inc., the Trust's clearing broker ("CIS"), the monthly
Brokerage Fee at an annual rate of 6.5% (or approximately 0.542% per month) of
the Trust's assets (after deduction of the Management Fee payable to the Trust's
trading advisor) as of the immediately preceding month-end (the "Brokerage Fee
Rate"); provided that, with respect to the month-end assets of the Trust
attributable to Units held by any Unitholder holding as of such month-end Units
originally issued at an aggregate Net Asset Value of at least $5,000,000, CIS
shall be paid a
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Brokerage Fee at an annual rate equal to 5% (or a monthly rate of
approximately 0.417%) of the assets (after deduction of the Management Fee)
attributable to such Units ("Special Brokerage Fee Rate"), as described in the
Prospectus. In the event of Unitholders acquiring Units at more than one
time, their Units will be treated on a "first-in, first-out" basis, as
described in the Prospectus, for purposes of determining whether the Special
Brokerage Fee Rate is applicable.
Any goods and services provided to the Trust by the Managing Owner shall be
provided at rates and terms at least as favorable as those which may be obtained
from third parties in arm's-length negotiations. All of the expenses which are
for the Trust's account shall be billed directly to the Trust, as appropriate.
Appropriate reserves may be created, accrued and charged against Net Assets for
contingent liabilities, if any, as of the date any such contingent liability
becomes known to the Managing Owner.
The Trust shall bear the costs of the continuous offering of the Units
(other than selling commissions and ongoing compensation), as incurred; provided
that the Managing Owner shall absorb, without reimbursement from the Trust, all
such costs to the extent that such costs exceed 0.5% of the Trust's average
month-end Net Assets in any fiscal year. The amount of any such costs borne by
the Trust shall be allocated on a PRO RATA basis to each Unit outstanding at any
month-end (determined prior to any redemptions).
Net Assets, for purposes of calculating the 2% and 0.5% limitations on
organizational and initial offering cost amortization and continuous offering
costs set forth in this Section 8(c), shall be calculated in the same manner as
calculation of the redemption value of a Unit, I.E., net of all accrued fees and
expenses including any accrued Incentive Fee (but prior to redemption charges).
In no event shall organizational and offering expenses (including
redemption fees, but excluding selling commission and ongoing compensation)
exceed 15% of the capital contributions to the Trust.
The Managing Owner shall not allocate any of its internal expenses or
overhead to the account of the Trust.
(d) LIMITED LIABILITY OF UNITHOLDERS. Each Unit, when purchased in
accordance with this Declaration and Agreement of Trust, shall, except as
otherwise provided by law, be fully-paid and nonassessable. Any provisions of
this Declaration and Agreement of Trust to the contrary notwithstanding,
Unitholders (including the Managing Owner, except to the extent otherwise
provided herein) shall be entitled to the same limitation on personal liability
extended to stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware.
The Trust will indemnify, to the full extent permitted by law, each
Unitholder (other than the Managing Owner in the event that the Managing Owner
acquires Units) against any claims of liability asserted against such Unitholder
solely because such Unitholder is a beneficial owner of the Trust (other than in
respect of taxes due from such Unitholder as such a beneficial owner).
Every written note, bond, contract, instrument, certificate or undertaking
made or issued by the Managing Owner shall give notice to the effect that the
same was executed or made by or on behalf of the Trust and that the obligations
of any of the foregoing are not binding upon the Unitholders individually but
are binding only upon the assets and property of the Trust, and that no resort
shall be had to the Unitholders' personal property for the satisfaction of any
obligation or claim thereunder, and appropriate references may be made to this
Declaration and Agreement of Trust and may contain any further recital which the
Managing Owner deems appropriate, but the omission thereof shall not operate to
bind the Unitholders individually or otherwise invalidate any such note, bond,
contract, instrument, certificate or undertaking.
(e) RETURN OF CAPITAL CONTRIBUTIONS. No Unitholder or subsequent
assignee shall have any right to demand the return of its capital contribution
or any profits added thereto, except through redeeming Units or upon dissolution
of the Trust, in each case as provided herein. In no event shall a Unitholder
or subsequent assignee be entitled to demand or receive property other than
cash.
9. MANAGEMENT OF THE TRUST.
(a) AUTHORITY OF THE MANAGING OWNER. Pursuant to Section 3806 of the Act,
the Trust shall be managed by the Managing Owner, and the conduct of the Trust's
business shall be controlled and conducted solely by the Managing Owner in
accordance with this Declaration and Agreement of Trust.
The Managing Owner, to the exclusion of all other Unitholders, shall
control, conduct and manage the business of the Trust. The Managing Owner shall
have sole discretion in determining what distributions of profits and income, if
any, shall be made to the Unitholders (subject to the allocation provisions
hereof), shall execute various documents on behalf of the Trust and the
Unitholders pursuant to powers of attorney and shall supervise the liquidation
of the Trust if an event causing dissolution of the Trust occurs.
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The Managing Owner may, in furtherance of the business of the Trust, cause
the Trust to buy, sell, hold or otherwise acquire or dispose of commodities,
futures contracts, options on futures contracts, and spot and forward contracts
traded on exchanges or otherwise, arbitrage positions, repurchase agreements,
interest-bearing securities, deposit accounts and similar instruments and other
assets, and cause the trading of the Trust to be limited to only certain of the
foregoing instruments. The Managing Owner is specifically authorized to enter
into brokerage, custodial and margining arrangements as described in the
prospectus relating to the public offering of the Units, as it may be
supplemented or updated from time to time (the "Prospectus"). The Managing
Owner may engage, and compensate on behalf of the Trust from funds of the Trust,
or agree to share profits and losses with, such persons, firms or corporations,
including (except as described in this Declaration and Agreement of Trust) the
Managing Owner and any affiliated person or entity, as the Managing Owner in its
sole judgment shall deem advisable for the conduct and operation of the business
of the Trust; provided, that no such arrangement shall allow brokerage
commissions paid by the Trust in excess of such amount as permitted under the
North American Securities Administrators Association, Inc. Guidelines for the
Registration of Commodity Pool Programs (the "NASAA Guidelines") in effect as of
the date of the Prospectus (I.E., 14% annually -- including pit brokerage and
service fees -- of the Trust's average Net Assets, excluding the assets, if any,
not directly related to trading activity). The Managing Owner shall reimburse
the Trust, on an annual basis, to the extent that the Trust's brokerage
commissions have exceeded 14% of the Trust's average Net Assets during the
preceding year.
During any fiscal year of the Trust, if the Management Fee exceeds the 6%
annual management fee contemplated by the NASAA Guidelines, the Managing Owner
shall reimburse the Trust for such excess.
The Managing Owner may take such other actions on behalf of the Trust as
the Managing Owner deems necessary or desirable to manage the business of the
Trust.
Any material change in the Trust's basic investment policies or structure
shall require the approval of Unitholders owning more than 50% of the Units then
outstanding. In addition, the Managing Owner shall notify Unitholders of any
material changes relating to the Trust as provided in Section 10 hereof.
The Managing Owner is hereby authorized to perform all duties imposed by
Sections 6221 through 6232 of the Code on the Managing Owner as the "tax matters
partner" of the Trust.
All Unitholders, by subscribing to the Units, will be deemed to have
consented to the Managing Owner's selection of: (i) John W. Henry &
Company, Inc. as the Trust's trading advisor; (ii) Cargill Investor Services,
Inc. as the Trust's clearing broker, with whom the Trust's trading assets
will be maintained (it being understood that CIS may place certain Trust
assets with a sub-custodian depository bank and employ the services of a
third-party cash manager solely for purposes of cash management and further
that the Managing Owner may place certain Trust assets in one or more bank
accounts in the name of the Trust and engage a third-party cash manager to
manage such assets with the goal of enhancing the net return on such assets),
(iii) CIS Financial Services, Inc. as the Trust's foreign currency and
precious metals counterparty ("CISFS") and (iv) Cargill Investor Services,
Inc. as the Trust's transfer agent. The Managing Owner is hereby
specifically authorized to enter into, on behalf of the Trust, the Trading
Advisory Agreement, the Customer Agreement, the Foreign Exchange Account
Agreement, the Cash Bullion Account Agreement, the Escrow Agreement, the
Selling Agreement and the Transfer Agent Agreement referred to in the
Prospectus.
(b) FIDUCIARY DUTIES. The Managing Owner shall be under a fiduciary duty
to conduct the affairs of the Trust in the best interests of the Trust, provided
that the Managing Owner shall not be obligated to engage in any conduct on
behalf of the Trust to the detriment of any other commodity pool to which the
Managing Owner owes similar fiduciary duties. Except as otherwise provided
herein or disclosed in the Prospectus, the Unitholders will under no
circumstances be deemed to have contracted away the fiduciary obligations owed
them by the Managing Owner under the common law. The Managing Owner's fiduciary
duty includes, among other things, the safekeeping of all funds and assets of
the Trust and the use thereof for the benefit of the Trust. The funds of the
Trust will not be commingled with the funds of any other person or entity
(deposit of funds with a commodity or securities broker, clearinghouse or
forward dealer shall not be deemed to constitute "commingling" for these
purposes). The Managing Owner will take no actions with respect to the property
of the Trust which do not benefit the Trust. The Managing Owner shall at all
times act with integrity and good faith and exercise due diligence in all
activities relating to the conduct of the business of the Trust and in resolving
conflicts of interest.
(c) LOANS; INVESTMENTS. Except as otherwise provided in Section 8(c), the
Trust shall not make loans to any party. The Managing Owner shall make no loans
to the Trust unless approved by the Unitholders in accordance with
Section 19(a). If the Managing Owner makes a loan to the Trust, the Managing
Owner shall not receive interest in excess of its interest costs, nor may the
Managing Owner receive interest in excess of the amounts which would be charged
to the Trust (without reference to the Managing
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Owner's financial resources or guarantees) by unrelated banks on comparable
loans for the same purpose. The Managing Owner shall not receive "points" or
other financing charges or fees regardless of the amount. The Trust shall
not invest in any debt instruments other than Government Securities and other
Commodity Futures Trading Commission ("CFTC")-authorized investments, or
invest in any equity security without prior notice to Unitholders.
(d) CERTAIN CONFLICTS OF INTEREST PROHIBITED. No person or entity may
receive, directly or indirectly, any advisory or management fees, profit shares
or any profit-sharing allocation, from joint ventures, partnerships or similar
arrangements in which the Trust participates, for investment advice or
management who shares or participates in any commodity brokerage commissions
paid by the Trust; no broker may pay, directly or indirectly, rebates or
give-ups to any trading advisor, manager or joint venturer, or to the Managing
Owner or any of its affiliates; and such prohibitions may not be circumvented by
any reciprocal business arrangements. No trading advisor shall be affiliated
with the Trust's commodity broker or any of its affiliates.
(e) CERTAIN AGREEMENTS. Any agreements between the Trust and the Managing
Owner or any affiliate of the Managing Owner, or a trading advisor, shall be
terminable by the Trust, without penalty, on no more than 60 days' written
notice.
In addition to any specific contract or agreements described herein, the
Trust and the Managing Owner on behalf of the Trust may enter into any other
contracts or agreements specifically described in or contemplated by the
Prospectus without any further act, approval or vote of the Unitholders,
notwithstanding any other provisions of this Declaration and Agreement of Trust,
the Act or any applicable laws, rules or regulations; provided, however, any
material change in the Trust's basic investment policies or structure shall
require the approval of Unitholders owning more than 50% of the Units then
outstanding and the Managing Owner shall notify Unitholders of any material
changes relating to the Trust as provided in Section 10 hereof.
The Managing Owner shall not enter into any advisory agreement with any
trading advisor that does not satisfy the relevant experience requirements under
the NASAA Guidelines (I.E., a minimum of three years' experience in the managed
futures industry).
The maximum period covered by any contract entered into by the Trust,
except for the various provisions of the Selling Agreement which survive the
final closing of the sale of the Units, shall not exceed one year.
The Managing Owner is hereby specifically authorized (i) to enter into,
deliver and perform on behalf of the Trust the Trading Advisory Agreement,
Selling Agreement on the terms described in the Prospectus, (ii) to enter
into, deliver and perform on behalf of the Trust, as the case may be, the
Escrow Agreement, the Customer Agreement, the Foreign Exchange Account
Agreement, the Cash Bullion Account Agreement and the Transfer Agent
Agreement as referred to in the Prospectus, (iii) to consent, at its sole
discretion, to the selection and appointment by CIS, in its capacity as the
Trust Lead Selling Agent, of one or more Wholesalers, Additional Selling
Agents and Correspondents as described in the Prospectus and in accordance
with the terms of the Selling Agreement and (iv) in the event that the
Managing Owner determines to deposit Trust assets in one or more bank
accounts in the name of the Trust at a bank ("Custodian") and engage the
services of a third-party cash manager to manage such assets, to enter into
and deliver an appropriate cash management agreement and any related
agreement.
The brokerage commissions paid by the Trust shall be competitive. The
Trust shall seek the best price and services available for its commodity
transactions.
Initially all of the Trust's assets will be deposited in the Trust's
account with CIS and CISFS. CIS and CISFS will credit the Trust on the fifth
business day of each month with interest income on 100% of the Trust's
average daily assets on deposit with CIS and CISFS, respectively, during the
previous month at the average 91-day U.S. Treasury bill rate for that month
in respect of deposits denominated in dollars and at applicable rates
described in the Prospectus in respect of deposits denominated in currencies
other than dollars (which may be zero in certain cases). The Trust and the
Managing Owner reserve the right to deposit, at any time, a portion of Trust
assets with a Custodian and engage the services of a third-party cash manager
to manage such assets with the goal of enhancing net return on such assets.
(f) PROHIBITION ON "PYRAMIDING." The Trust is prohibited from
employing the trading technique commonly known as "pyramiding." A trading
manager or advisor of the Trust taking into account the Trust's open-trade
equity on existing positions in determining generally whether to acquire
additional commodity positions on behalf of the Trust will not be considered
to be engaging in "pyramiding."
(g) FREEDOM OF ACTION. The Managing Owner is engaged, and may in the
future engage, in other business activities and shall not be required to refrain
from any other activity nor forgo any profits from any such activity, whether or
not in competition with the Trust. Neither the Trust nor any of the Unitholders
shall have any rights by virtue of this Declaration and Agreement of Trust in
and to such independent ventures or the income or profits derived
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therefrom. Unitholders may similarly engage in any such other business
activities. The Managing Owner shall devote to the Trust such time as the
Managing Owner may deem advisable to conduct the Trust's business and affairs.
10. AUDITS AND REPORTS TO UNITHOLDERS.
The Trust's books shall be audited annually by an independent certified
public accountant. The Trust shall cause each Unitholder to receive (i) within
90 days after the close of each fiscal year certified financial statements for
the fiscal year then ended, (ii) within 90 days of the end of each fiscal year
(but in no event later than March 15 of each year) such tax information as is
necessary for a Unitholder to complete its federal income tax return and
(iii) such other annual and monthly information as the CFTC may by regulation
require. The Managing Owner shall include in the annual reports sent to
Unitholders an approximate estimate (calculated as accurately as may be
reasonably practicable) of the round-turn equivalent brokerage commission rate
paid by the Trust during the preceding year (including forward contracts on a
futures-equivalent basis for purposes of such calculation).
Unitholders or their duly authorized representatives may inspect the books
and records of the Trust, (which do not include records of the Trust's trades)
during normal business hours upon reasonable written notice to the Managing
Owner and obtain copies of such records upon payment of reasonable reproduction
costs; provided, however, that upon request by the Managing Owner, the
requesting Unitholder shall represent that the inspection and/or copies of such
records will not be used for commercial purposes unrelated to such Unitholder's
interest as a beneficial owner of the Trust. The Managing Owner shall have the
right to keep confidential from the Unitholders, for such period of time as the
Managing Owner deems reasonable, any information that the Managing Owner
reasonably believes to be in the nature of trade secrets or other information
the disclosure of which the Managing Owner in good faith believes is not in the
best interest of the Trust or could damage the Trust or its business or which
the Trust is required by law or by agreement with a third party to keep
confidential.
The Managing Owner shall calculate the Net Asset Value per Unit on a
monthly basis and sell and redeem Units at Net Asset Value.
The Managing Owner shall notify the Unitholders of (i) changes to the
trading method of the Trust's trading advisor which the Managing Owner believes
to be material, (ii) changes in Brokerage Fees, Incentive Fee or other fees paid
by the Trust or (iii) material changes in the basic investment policies or
structure of the Trust. The Managing Owner shall so notify Unitholders, by
certified mail or other means of notification providing for evidence of
delivery, prior to any such change. Such notification shall set forth the
Unitholders' voting and redemption rights. The Managing Owner will send written
notice to each Unitholder within seven days of any decline in the Net Asset
Value per Unit to 50% or less of such value as of the previous month-end. Any
such notice shall contain a description of the Unitholders' voting and
redemption rights. The Trust shall pay the cost of any notification delivered
pursuant to this paragraph.
The Managing Owner shall prepare or cause to be prepared and shall file on
or before the due date (or any extension thereof) any federal, state or local
tax returns required to be filed by the Trust. The Managing Owner shall cause
the Trust to pay any taxes payable by the Trust; provided, however, that such
taxes need not be paid if the Managing Owner or the Trust is in good faith and
by appropriate legal proceedings contesting the validity, applicability or
amount thereof, and such contest does not materially endanger any right or
interest of the Trust.
The Managing Owner shall maintain and preserve all required records
relating to the Trust for a period of not less than six years from the receipt
of such records.
In particular, and not by way of limitation, the Managing Owner will retain
all Subscription Agreement and Power of Attorney Signature Pages submitted by
persons admitted as Unitholders, and all other records necessary to substantiate
that Units are sold only to purchasers for whom the Units are a suitable
investment, for at least six years after Units are sold to such persons.
The Managing Owner shall seek the best price and services for the Trust's
trading, and will, with the assistance of the Trust's commodity broker(s), make
an annual review of the commodity brokerage arrangements applicable to the
Trust. In connection with such review, the Managing Owner will ascertain, to
the extent practicable, the commodity brokerage rates charged to other major
commodity pools whose trading and operations are, in the opinion of the Managing
Owner, comparable to those of the Trust, in order to assess whether the rates
charged the Trust are reasonable in light of the services it receives and the
terms upon which the Trust was promoted to subscribers. If, as a result of such
review, the Managing Owner determines that such rates are unreasonable in light
of the services provided to the Trust and the terms upon which the Trust was
promoted, the Managing Owner will notify the Unitholders, setting forth the
rates charged to the Trust and several funds which are, in the Managing Owner's
opinion, comparable to the Trust. The Managing Owner shall also make an annual
review of the spot and forward trading arrangements for the Trust in an attempt
to determine whether such arrangements are
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competitive with those of other comparable pools in light of the
circumstances.
11. ASSIGNABILITY OF UNITS.
Each Unitholder expressly agrees that it will not assign, transfer or
dispose of, by gift or otherwise, any of its Units or any part or all of its
right, title and interest in the capital or profits of the Trust in violation
of any applicable federal or state securities laws or, except by involuntary
operation of law, without giving written notice to the Managing Owner. No
assignment, transfer or disposition by an assignee of Units or of any part of
its right, title and interest in the capital or profits of the Trust shall be
effective against the Trust, the Trustee or the Managing Owner until the
Managing Owner has received the written notice of the assignment; the
Managing Owner shall not be required to give any assignee any rights
hereunder prior to receipt of such notice. The Managing Owner may, in its
sole discretion, waive any such notice. No such assignee, except with the
consent of the Managing Owner, may become a substituted Unitholder, nor will
the estate or any beneficiary of a deceased Unitholder or assignee have any
right to redeem Units from the Trust except by redemption as provided in
Section 12 hereof. The Managing Owner's consent is required for the
admission of a substituted Unitholder, and the Managing Owner intends to so
consent; provided, that the Managing Owner and the Trust receive an opinion
of counsel to the Managing Owner and of counsel to the Trust that such
admission will not adversely affect the classification of the Trust as a
partnership for federal income tax purposes; and provided further, that an
assignee shall not become a substituted Unitholder without first having
executed an instrument reasonably satisfactory to the Managing Owner
accepting and adopting the terms and provisions of this Declaration and
Agreement of Trust, including a Subscription Agreement and Power of Attorney
Signature Page, a counterpart signature page to this Declaration and
Agreement of Trust or other comparable document, and without having paid to
the Trust a fee sufficient to cover all reasonable expenses of the Trust in
connection with its admission as a substituted Unitholder. Each Unitholder
agrees that with the consent of the Managing Owner any assignee may become a
substituted Unitholder without need of the further act or approval of any
Unitholder. If the Managing Owner withholds consent, an assignee shall not
become a substituted Unitholder, and shall not have any of the rights of a
Unitholder, except that the assignee shall be entitled to receive that share
of capital and profits and shall have that right of redemption to which its
assignor would otherwise have been entitled. No assignment, transfer or
disposition of Units shall be effective against the Trust or the Managing
Owner until the last day of the month in which the Managing Owner receives
notice of such assignment, transfer or disposition.
12. REDEMPTIONS.
A Unitholder (including the Managing Owner except to the extent that its
power to redeem is limited by any other provision of this Declaration and
Agreement of Trust) to the extent that it owns Units or any assignee of Units
of whom the Managing Owner has received written notice as described above,
may redeem all or part of its Units, effective as of the close of business
(as determined by the Managing Owner) on the last day of any month, provided,
that (i) all liabilities, contingent or otherwise, of the Trust, except any
liability to Unitholders on account of their capital contributions, have been
paid or there remains property of the Trust sufficient to pay them, (ii) the
Unitholder redeems at least $1,000 of Units, (iii) in the case of partial
redemption, such Unitholder's investment in the Trust after the partial
redemption will be at least $1,000, and (iv) the Managing Owner shall have
timely received a request for redemption (as provided below). If Units are
redeemed by a Unitholder at a time when there is an accrued incentive fee due
to the Trust's trading advisor, the amount of such accrual attributable to
the Units being redeemed will be deducted from the redemption proceeds
payable to the redeeming Unitholder and paid to the Trust's trading advisor.
Units redeemed on or before the end of the eleventh full calendar month after
such Units are issued by the Trust are subject to early redemption charges of
3% of the Net Asset Value at which they are redeemed. Such charges will be
deducted from redemption proceeds due to the Unitholder making the redemption
and will be paid to CIS. Units are issued, for purposes of determining
whether an early redemption charge is due, as of the date as of which the
subscription price of such Units is invested in the Trust, not when
subscriptions are submitted by Unitholders or accepted by the Managing Owner
or subscription funds are accepted into escrow. No redemption charges shall
be applicable to Unitholders who redeem because the Trust's expenses have
been increased.
In the event that a Unitholder acquires Units as of the end of more than
one month, such Units will be treated on a "first-in, first-out" basis for
purposes of identifying which of such Units are being redeemed so as to
determine whether early redemption charges apply.
Requests for redemption as of any month-end must be received by the
Managing Owner on or before the fifth business day prior to the month-end of
redemption (including the last business day of the month), or such later date
as shall be acceptable to the Managing Owner.
If as of the close of business (as determined by the Managing Owner) on
any day, the Net Asset Value of a Unit has decreased to less than 50% of the
Net Asset Value per Unit as of the previous highest month-end Net Asset Value
per Unit or to $50 or less, after adding back all distributions,
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the Managing Owner shall cause the Trust to liquidate all open positions as
expeditiously as possible and suspend trading. Within ten business days
after the suspension of trading, the Managing Owner shall declare a Special
Redemption Date. Such Special Redemption Date shall be a business day within
30 business days from the suspension of trading by the Trust, and the
Managing Owner shall mail notice of such date to each Unitholder and assignee
of Units of whom it has received written notice as described above, by
first-class mail, postage prepaid, not later than ten business days prior to
such Special Redemption Date, together with instructions as to the procedure
such Unitholder or assignee must follow to have its Units redeemed on such
Date (only entire, not partial, interests in the Trust may be redeemed on a
Special Redemption Date, unless otherwise determined by the Managing Owner).
Upon redemption pursuant to a Special Redemption Date, a Unitholder or any
other assignee of whom the Managing Owner has received written notice as
described above, shall receive from the Trust an amount equal to the Net
Asset Value of its Units, determined as of the close of business (as
determined by the Managing Owner) on such Special Redemption Date. No
redemption charges shall be assessed on any such Special Redemption Date. As
in the case of a regular redemption, an assignee shall not be entitled to
redemption until the Managing Owner has received written notice as described
above of the assignment, transfer or disposition under which the assignee
claims an interest in the Units to be redeemed. If, after a Special
Redemption Date, the Net Assets of the Trust are at least $1,000,000 and the
Net Asset Value per Unit is in excess of $25, the Trust may, in the
discretion of the Managing Owner, resume trading.
The Managing Owner may at any time and in its discretion declare a
Special Redemption Date, should the Managing Owner determine that it is in
the best interests of the Trust to do so. If the Managing Owner declares a
Special Redemption Date, the Managing Owner shall not be required to again
call a Special Redemption Date (whether or not a Special Redemption Date
would otherwise be required to be called as described above); and the
Managing Owner in its notice of a Special Redemption Date may, at its
discretion, establish the conditions, if any, under which other Special
Redemption Dates must be called, which conditions may be determined in the
sole discretion of the Managing Owner, irrespective of the provisions of the
preceding paragraph. The Managing Owner may also, in its discretion, declare
additional regular redemption dates for Units, permit certain Unitholders to
redeem at other than at month-end and waive the notice period otherwise
required to effect redemptions.
Redemption payments will be made within ten business days after the
month-end of redemption, except that under special circumstances, including,
but not limited to, inability to liquidate commodity positions as of a
redemption date or default or delay in payments due the Trust from commodity
brokers, banks or other persons or entities, the Trust may in turn delay
payment to Unitholders or assignees requesting redemption of their Units of
the proportionate part of the Net Asset Value of such Units equal to the
proportionate part of the Trust's aggregate Net Asset Value represented by
the sums which are the subject of such default or delay.
The Managing Owner may require a Unitholder to redeem all or a portion
of such Unitholder's Units if the Managing Owner considers doing so to be
desirable for the protection of the Trust, and will use best efforts to do so
to the extent necessary to prevent the Trust from being deemed to hold "plan
assets" under the provisions of the Employee Retirement Income Security Act
of 1974 ("ERISA") or the Code, with respect to any "employee benefit plan"
subject to ERISA or with respect to any "plan" or "account" subject to
Section 4975 of the Code.
13. OFFERING OF UNITS.
The Managing Owner, on behalf of the Trust shall (i) cause to be filed a
Registration Statement or Registration Statements, and such amendments
thereto as the Managing Owner may deem advisable or necessary, with the
Securities and Exchange Commission for the registration and continuous public
offering of the Units, (ii) use its best efforts to qualify the Units for
sale under the securities laws of such States of the United States or other
jurisdictions as the Managing Owner may deem advisable and (iii) take such
action with respect to the matters described in (i) and (ii) as the Managing
Owner may deem advisable or necessary.
Fractional Units, calculated to five decimal places, may be sold.
All sales of Units in the United States will be conducted by registered
brokers.
The Managing Owner shall not accept any subscriptions for Units if doing
so would cause the Trust to hold "plan assets" under ERISA or the Code with
respect to any "employee benefit plan" subject to ERISA or with respect to
any "plan" or "account " subject to Section 4975 of the Code. If a
subscriber has its subscription reduced for such reason, such subscriber
shall be entitled to rescind its subscription in its entirety even though
subscriptions are otherwise irrevocable.
All subscriptions will be held in escrow by The First National Bank of
Chicago (the "Escrow Agent") until released as of the last business day of
the month. The interest actually earned on subscriptions funds while held by
the Escrow Agent will be invested in the Trust, and each subscriber will be
issued additional Units reflecting the
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subscriber's attributable share of such interest. The Managing Owner may
terminate any offering of Units at any time. The aggregate of all capital
contributions shall be available to the Trust to carry on its business, and
no interest shall be paid by the Trust on any such contributions after such
contributions are released by the Escrow Agent.
14. ADDITIONAL OFFERINGS.
The Managing Owner may, in its discretion, continue, suspend or
discontinue the public offering of the Units, as well as make additional
public or private offerings of Units, provided that the net proceeds to the
Trust of any such sales shall in no event be less than the Net Asset Value
per Unit (as defined in Section 5(d)) at the time of sale (unless the new
Unit's participation in the profits and losses of the Trust is appropriately
adjusted). No Unitholder shall have any preemptive, preferential or other
rights with respect to the issuance or sale of any additional Units, other
than as set forth in the preceding sentence.
15. SPECIAL POWER OF ATTORNEY.
Each Unitholder by virtue of having purchased or otherwise acquired
Units does hereby irrevocably constitute and appoint the Managing Owner and
each officer of the Managing Owner, with full power of substitution, as its
true and lawful attorney-in-fact, in its name, place and stead, to execute,
acknowledge, swear to (and deliver as may be appropriate) on its behalf and
file and record in the appropriate public offices and publish (as may in the
reasonable judgment of the Managing Owner be required by law): (i) this
Declaration and Agreement of Trust, including any amendments and/or
restatements hereto duly adopted as provided herein; (ii) certificates in
various jurisdictions, and amendments and/or restatements thereto; (iii) all
conveyances and other instruments which the Managing Owner deems appropriate
to qualify or continue the Trust in the State of Delaware and the
jurisdictions in which the Trust may conduct business, or which may be
required to be filed by the Trust or the Unitholders under the laws of any
jurisdiction or under any amendments or successor statutes to the Act, to
reflect the dissolution or termination of the Trust or the Trust being
governed by any amendments or successor statutes to the Act or to reorganize
or refile the Trust in a different jurisdiction; and (iv) to file, prosecute,
defend, settle or compromise litigation, claims or arbitrations on behalf of
the Trust. The Power of Attorney granted herein shall be irrevocable and
deemed to be a power coupled with an interest (including, without limitation,
the interest of the other Unitholders in the Managing Owner being able to
rely on its authority to act as contemplated by this Section 15) and shall
survive and shall not be affected by the subsequent incapacity, disability or
death of a Unitholder.
16. WITHDRAWAL OF A UNITHOLDER.
The Trust shall be dissolved upon the death, insanity, bankruptcy,
retirement, resignation, expulsion, withdrawal, insolvency or dissolution of
the Managing Owner, or any other event that causes the Managing Owner to
cease to be the managing owner of the Trust, unless the Trust is continued
pursuant to the terms of Section 5(a)(3). In addition, the Managing Owner
may withdraw from the Trust, without any breach of this Declaration and
Agreement of Trust, at any time upon 120 days' written notice by first class
mail, postage prepaid, to the Trustee, each Unitholder and each assignee of
whom the Managing Owner has notice. If the Managing Owner withdraws from the
Trust and all Unitholders agree in writing to continue the business of the
Trust and to the appointment, effective as of the date of withdrawal of the
Managing Owner, of one or more managing owners, the Managing Owner shall pay
all expenses incurred as a result of its withdrawal. Upon removal or
withdrawal, the Managing Owner shall be entitled to redeem its interest in
the Trust at its Net Asset Value on the next valuation date following the
date of removal or withdrawal.
The Managing Owner may not assign its general liability interest or its
obligation to manage the Trust without the consent of each Unitholder;
provided, however, that the consent of Unitholders is not required if the
Managing Owner assigns its general liability interest and its obligation to
manage the Trust to an entity controlling, controlled by or under common
control with the Managing Owner, provided that such entity (i) expressly
assumes all obligations of the Managing Owner under this Declaration and
Agreement of Trust and (ii) is entitled to act in the capacity of managing
owner for the benefit of the Trust. The Managing Owner shall notify all
Unitholders of such assignment. The Managing Owner will notify all
Unitholders of any change in the principals of the Managing Owner.
The death, incompetency, withdrawal, insolvency or dissolution of a
Unitholder or any other event that causes a Unitholder to cease to be a
beneficial owner (within the meaning of the Act) in the Trust shall not
terminate or dissolve the Trust, and a Unitholder, the Unitholder's estate,
custodian or personal representative shall have no right to redeem or value
such Unitholder's interest except as provided in Section 12 hereof. Each
Unitholder that is a natural person expressly agrees that in the event of his
or her death, he or she waives on behalf of himself or herself and his or her
estate, and directs the legal representatives of his or her estate and any
person interested therein to waive, the furnishing of any inventory,
accounting or appraisal of the assets of the Trust and any right to an audit
or examination of the books of the Trust. Nothing in this Section 16 shall,
however, waive any right given elsewhere in this Declaration and Agreement of
Trust for Unitholders to be
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informed of the Net Asset Value of their Units, to receive periodic reports,
audited financial statements and other information from the Managing Owner or
the Trust or to redeem or transfer Units.
17. BENEFIT PLAN INVESTORS.
Each Unitholder or assignee that is an "employee benefit plan" as
defined in and subject to ERISA, or a "plan" as defined in Section 4975 of
the Code (each such employee benefit plan and plan, a "Plan"), and each
fiduciary thereof who has caused the Plan to become a Unitholder or assignee
(a "Plan Fiduciary"), represents and warrants that: (a) the Plan Fiduciary
has considered an investment in the Trust by such Plan in light of the risks
relating thereto; (b) the Plan Fiduciary has determined that, in view of such
considerations, the investment in the Trust by the Plan is consistent with
the Plan Fiduciary's responsibilities under ERISA; (c) the investment in the
Trust by the Plan does not violate, and is not otherwise inconsistent with,
the terms of any legal document constituting the Plan or any trust agreement
thereunder; (d) the Plan's investment in the Trust has been duly authorized
and approved by all necessary parties; (e) none of the Managing Owner, the
Trustee, JWH, CIS, CISFS, any Selling Agent, Wholesaler, Correspondent, the
Escrow Agent, any of their respective affiliates or any of their respective
agents or employees: (i) has investment discretion with respect to the
investment of assets of the Plan used to purchase Units; (ii) has authority
or responsibility to or regularly gives investment advice with respect to the
assets of the Plan used to purchase Units for a fee and pursuant to an
agreement or understanding that such advice will serve as a primary basis for
investment decisions with respect to the Plan and that such advice will be
based on the particular investment needs of the Plan; or (iii) is an employer
maintaining or contributing to the Plan; and (f) the Plan Fiduciary: (i) is
authorized to make, and is responsible for, the decision of the Plan to
invest in the Trust, including the determination that such investment is
consistent with the requirement imposed by Section 404 of ERISA that Plan
investments be diversified so as to minimize the risks of large losses; (ii)
is independent of the Managing Owner, the Trustee, JWH, CIS, CISFS, any
Selling Agent, Wholesaler, Correspondent, the Escrow Agent, and any of their
respective affiliates; and (iii) is qualified to make such investment
decision.
18. STANDARD OF LIABILITY; INDEMNIFICATION.
(a) STANDARD OF LIABILITY FOR THE MANAGING OWNER. The Managing Owner
and its Affiliates, as defined below, shall have no liability to the Trust or
to any Unitholder for any loss suffered by the Trust which arises out of any
action or inaction of the Managing Owner or its Affiliates, if the Managing
Owner, in good faith, determined that such course of conduct was in the best
interests of the Trust, and such course of conduct did not constitute
negligence or misconduct of the Managing Owner or its Affiliates.
(b) INDEMNIFICATION OF THE MANAGING OWNER BY THE TRUST. To the fullest
extent permitted by law, subject to this Section 18, the Managing Owner and
its Affiliates shall be indemnified by the Trust against any losses,
judgments, liabilities, expenses and amounts paid in settlement of any claims
sustained by them in connection with the Trust; provided that such claims
were not the result of negligence or misconduct on the part of the Managing
Owner or its Affiliates, and the Managing Owner, in good faith, determined
that such conduct was in the best interests of the Trust; and provided
further that Affiliates of the Managing Owner shall be entitled to
indemnification only for losses incurred by such Affiliates in performing the
duties of the Managing Owner and acting wholly within the scope of the
authority of the Managing Owner.
Notwithstanding anything to the contrary contained in the preceding two
paragraphs, the Managing Owner and its Affiliates and any persons acting as
selling agent for the Units shall not be indemnified for any losses,
liabilities or expenses arising from or out of an alleged violation of
federal or state securities laws unless (1) there has been a successful
adjudication on the merits of each count involving alleged securities law
violations as to the particular indemnitee and the court approves
indemnification of the litigation costs, or (2) such claims have been
dismissed with prejudice on the merits by a court of competent jurisdiction
as to the particular indemnitee and the court approves indemnification of the
litigation costs, or (3) a court of competent jurisdiction approves a
settlement of the claims against a particular indemnitee and finds that
indemnification of the settlement and related costs should be made.
In any claim for indemnification for federal or state securities law
violations, the party seeking indemnification shall place before the court
the position of the Securities and Exchange Commission, the California
Department of Corporations, the Massachusetts Securities Division, the
Missouri Securities Division, the Pennsylvania Securities Commission, the
Tennessee Securities Division, the Texas Securities Board and any other state
or applicable regulatory authority with respect to the issue of
indemnification for securities law violations.
The Trust shall not bear the cost of that portion of any insurance which
insures any party against any liability the indemnification of which is
herein prohibited.
For the purposes of this Section 18, the term "Affiliates" shall mean
any person acting on behalf of or
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performing services on behalf of the Trust who: (1) directly or indirectly
controls, is controlled by, or is under common control with the Managing
Owner; or (2) owns or controls 10% or more of the outstanding voting
securities of the Managing Owner; or (3) is an officer or director of the
Managing Owner; or (4) if the Managing Owner is an officer, director, partner
or trustee, is any entity for which the Managing Owner acts in any such
capacity.
Advances from the funds of the Trust to the Managing Owner or its
Affiliates for legal expenses and other costs incurred as a result of any
legal action initiated against the Managing Owner by a Unitholder are
prohibited.
Advances from the funds of the Trust to the Managing Owner or its
Affiliates for legal expenses and other costs incurred as a result of a legal
action will be made only if the following three conditions are satisfied: (1)
the legal action relates to the performance of duties or services by the
Managing Owner or its Affiliates on behalf of the Trust; (2) the legal action
is initiated by a third party who is not a Unitholder; and (3) the Managing
Owner or its Affiliates undertake to repay the advanced funds, with interest
from the initial date of such advance, to the Trust in cases in which they
would not be entitled to indemnification under the standard of liability set
forth in Section 18(a).
In no event shall any indemnity or exculpation provided for herein be more
favorable to the Managing Owner or any Affiliate than that contemplated by the
NASAA Guidelines as in effect on the date of this Declaration and Agreement of
Trust.
In no event shall any indemnification permitted by this subsection (b)
of Section 18 be made by the Trust unless all provisions of this Section for
the payment of indemnification have been complied with in all respects.
Furthermore, it shall be a precondition of any such indemnification that the
Trust receive a determination of qualified independent legal counsel in a
written opinion that the party which seeks to be indemnified hereunder has
met the applicable standard of conduct set forth herein. Receipt of any such
opinion shall not, however, in itself, entitle any such party to
indemnification unless indemnification is otherwise proper hereunder. Any
indemnification payable by the Trust hereunder shall be made only as provided
in the specific case.
In no event shall any indemnification obligations of the Trust under this
subsection (b) of Section 18 subject a Unitholder to any liability in excess of
the capital contributed by such Unitholder, his or her share of undistributed
profits and assets and the amount of any distributions wrongfully distributed to
such Unitholder.
(c) INDEMNIFICATION BY THE UNITHOLDERS. In the event that the Trust is
made a party to any claim, dispute or litigation or otherwise incurs any loss or
expense as a result of or in connection with any activities of a Unitholder,
obligations or liabilities unrelated to the business of the Trust or as a result
of or in connection with a transfer, assignment or other disposition or an
attempted transfer, assignment or other disposition by a Unitholder or an
assignee of its Units or of any part of its right, title and interest in the
capital or profits of the Trust in violation of this Declaration and Agreement
of Trust, such Unitholder shall indemnify and reimburse the Trust for all loss
and expense incurred, including reasonable attorneys' fees.
The Managing Owner shall indemnify and hold the Trust harmless from all
loss or expense which the Trust may incur (including, without limitation, any
indemnify payments) as a result of the difference between the standard of
liability and indemnity under the Trading Advisory Agreement, the Customer
Agreement, the Foreign Exchange Account Agreement or the Cash Bullion Account
Agreement, on the one hand, and the Managing Owner's standards of liability as
set forth herein, on the other hand.
19. AMENDMENTS; MEETINGS.
(a) AMENDMENTS WITH CONSENT OF THE MANAGING OWNER. If at any time during
the term of the Trust the Managing Owner shall deem it necessary or desirable to
amend this Declaration and Agreement of Trust, the Managing Owner may proceed to
do so, provided that such amendment shall be effective only if embodied in an
instrument approved by the Managing Owner and, pursuant to a vote called by the
Managing Owner, by the holders of Units representing a majority of the
outstanding Units. Such vote shall be taken at least 30 but not more than 60
days after delivery by the Managing Owner to each Unitholder of record by
certified mail of notice of the proposed amendment and voting procedures.
Notwithstanding the foregoing, the Managing Owner may amend this Declaration and
Agreement of Trust without the consent of the Unitholders in order (i) to
clarify any clerical inaccuracy or ambiguity or reconcile any inconsistency
(including any inconsistency between this Declaration and Agreement of Trust and
the Prospectus), (ii) to effect the intent of the allocations proposed herein to
the maximum extent possible in the event of a change in the Code or the
interpretations thereof affecting such allocations, (iii) to attempt to ensure
that the Trust is not treated as an association taxable as a corporation for
federal income tax purposes, (iv) to qualify or maintain the qualification of
the Trust as a trust in any jurisdiction, (v) to delete or add any provision of
or to this Declaration and Agreement of Trust required to be deleted or added by
the Staff of the Securities and Exchange Commission or any other federal agency
or any state "Blue Sky" or similar official or in order to opt to be governed by
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any amendment or successor statute to the Act, (vi) to make any amendment to
this Declaration and Agreement of Trust which the Managing Owner deems
advisable, provided that such amendment is for the benefit of and not adverse to
the Unitholders or the Trustee, or that is required by law, (vii) to make any
amendment that is appropriate or necessary, in the opinion of the Managing
Owner, to prevent the Trust or the Managing Owner or its directors, officers or
controlling persons from in any manner being subjected to the provisions of the
Investment Company Act of 1940, as amended, or to avoid causing the assets of
the Trust from being considered for any purpose of ERISA or Section 4975 of the
Code to constitute assets of any "employee benefit plan," as defined in and
subject to ERISA, or of a "plan," as defined in and subject to Section 4975 of
the Code.
In the event that JWH shall cease to be the sole trading advisor of the
Trust, the Managing Owner shall cause "JWH" to be deleted from the Trust's name
and take all such other actions as shall be necessary or appropriate.
(b) AMENDMENTS AND ACTIONS WITHOUT CONSENT OF THE MANAGING OWNER. In any
vote called by the Managing Owner or pursuant to subsection (c) of this Section
19, upon the affirmative vote (which may be in person or by proxy) of more than
50% of the Units then owned by Unitholders, the following actions may be taken
with respect to the Trust, irrespective of whether the Managing Owner concurs:
(i) this Declaration and Agreement of Trust may be amended, provided, however,
that approval of all Unitholders shall be required in the case of amendments
changing or altering this Section 19 or extending the term of the Trust; in
addition, reduction of the capital account of any Unitholder or assignee or
modification of the percentage of profits, losses or distributions to which a
Unitholder or an assignee is entitled hereunder shall not be effected by any
amendment or supplement to this Declaration and Agreement of Trust without such
Unitholder's or assignee's written consent; (ii) the Trust may be dissolved;
(iii) the Managing Owner may be removed and replaced; (iv) a new managing owner
or managing owners may be elected if the Managing Owner withdraws from the
Trust; (v) the sale of all or substantially all of the assets of the Trust may
be approved; and (vi) any contract with the Managing Owner or any affiliate
thereof may be disapproved and, as a result, terminated upon 60 days' notice.
(c) MEETINGS; OTHER. Any Unitholder upon request addressed to the
Managing Owner shall be entitled to obtain from the Managing Owner, upon payment
in advance of reasonable reproduction and mailing costs, a list of the names and
addresses of record of all Unitholders and the number of Units held by each
(which shall be mailed by the Managing Owner to the Unitholder within ten days
of the receipt of the request); provided, that the Managing Owner may require
any Unitholder requesting such information to submit written confirmation that
such information will not be used for commercial purposes. Upon receipt of a
written proposal, signed by Unitholders owning Units representing at least 10%
of all Units then owned by Unitholders, that a meeting of the Trust be called to
vote upon any matter upon which the Unitholders may vote pursuant to this
Declaration and Agreement of Trust, the Managing Owner shall, by written notice
to each Unitholder of record sent by certified mail within 15 days after such
receipt, call a meeting of the Trust. Such meeting shall be held at least 30
but not more than 60 days after the mailing of such notice, and such notice
shall specify the date of, a reasonable place and time for, and the purpose of
such meeting. Such notice shall establish a record date for Units entitled to
vote at the meeting, which shall be not more than 15 days prior to the date
established for such meeting.
The Managing Owner may not restrict the voting rights of Unitholders as set
forth herein.
In the event that the Managing Owner or the Unitholders vote to amend this
Declaration and Agreement of Trust in any material respect, the amendment will
not become effective prior to all Unitholders having an opportunity to redeem
their Units.
(d) CONSENT BY TRUSTEE. The Trustee's written consent to any amendment
of this Declaration and Agreement of Trust shall be required, such consent not
to be unreasonably withheld; provided, however, that the Trustee may, in its
sole discretion, withhold its consent to any such amendment that would adversely
affect any right, duty or liability of, or immunity or indemnity in favor of,
the Trustee under this Declaration and Agreement of Trust or any of the
documents contemplated hereby to which the Trustee is a party, or would cause or
result in any conflict with or breach of any terms, conditions or provisions of,
or default under, the charter documents or by-laws of the Trustee or any
document contemplated hereby to which the Trustee is a party; provided further,
that the Trustee may not withhold consent for any action listed in subsections
19(b)(ii)-(vi). Notwithstanding anything to the contrary contained in this
Declaration and Agreement of Trust, the Trustee may immediately resign if, in
its sole discretion, the Trustee determines that the Unitholders' actions
pursuant to subsections 19(b)(i)-(vi) would adversely affect the Trustee in any
manner.
20. GOVERNING LAW.
The validity and construction of this Declaration and Agreement of Trust
shall be determined and governed by the laws of the State of Delaware without
regard to principles of conflicts of law; provided, that causes of action for
violations of federal or state securities laws shall not be governed by this
Section 20.
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21. MISCELLANEOUS.
(a) NOTICES. All notices under this Declaration and Agreement of Trust
shall be in writing and shall be effective upon personal delivery, or if sent by
first class mail, postage prepaid, addressed to the last known address of the
party to whom such notice is to be given, upon the deposit of such notice in the
United States mails.
(b) BINDING EFFECT. This Declaration and Agreement of Trust shall inure
to and be binding upon all of the parties, their successors and assigns,
custodians, estates, heirs and personal representatives. For purposes of
determining the rights of any Unitholder or assignee hereunder, the Trust and
the Managing Owner may rely upon the Trust records as to who are Unitholders and
assignees, and all Unitholders and assignees agree that their rights shall be
determined and they shall be bound thereby.
(c) CAPTIONS. Captions in no way define, limit, extend or describe the
scope of this Declaration and Agreement of Trust nor the effect of any of its
provisions. Any reference to "persons" in this Declaration and Agreement of
Trust shall also be deemed to include entities, unless the context otherwise
requires.
22. CERTAIN DEFINITIONS.
This Declaration and Agreement of Trust contains certain provisions
required by the NASAA Guidelines. The terms used in such provisions are defined
as follows (the following definitions are included VERBATIM from such Guidelines
and, accordingly, may not in all cases be relevant to this Declaration and
Agreement of Trust):
ADMINISTRATOR. The official or agency administering the securities laws
of a state.
ADVISOR. Any Person who for any consideration engages in the business of
advising others, either directly or indirectly, as to the value, purchase, or
sale of Commodity Contracts or commodity options.
AFFILIATE. An Affiliate of a Person means: (a) any Person directly or
indirectly owning, controlling or holding with power to vote 10% or more of the
outstanding voting securities of such Person; (b) any Person 10% or more of
whose outstanding voting securities are directly or indirectly owned, controlled
or held with power to vote, by such Person; (c) any Person, directly or
indirectly, controlling, controlled by, or under common control of such Person;
(d) any officer, director or partner of such Person; or (e) if such Person is an
officer, director or partner, any Person for which such Person acts in any such
capacity.
CAPITAL CONTRIBUTIONS. The total investment in a Program by a Participant
or by all Participants, as the case may be.
COMMODITY BROKER. Any Person who engages in the business of effecting
transactions in Commodity Contracts for the account of others or for his or her
own account.
COMMODITY CONTRACT. A contract or option thereon providing for the
delivery or receipt at a future date of a specified amount and grade of a traded
commodity at a specified price and delivery point.
CROSS REFERENCE SHEET. A compilation of the NASAA Guidelines sections,
referenced to the page of the prospectus, Program agreement, or other exhibits,
and justification of any deviation from the NASAA Guidelines.
NET ASSETS. The total assets, less total liabilities, of the Program
determined on the basis of generally accepted accounting principles. Net Assets
shall include any unrealized profits or losses on open positions, and any fee or
expense including Net Asset fees accruing to the Program.
NET ASSET VALUE PER PROGRAM INTEREST. The Net Assets divided by the
number of Program Interests outstanding.
NET WORTH. The excess of total assets over total liabilities as
determined by generally accepted accounting principles. Net Worth shall be
determined exclusive of home, home furnishings and automobiles.
NEW TRADING PROFITS. The excess, if any, of Net Assets at the end of the
period over Net Assets at the end of the highest previous period or Net Assets
at the date trading commences, whichever is higher, and as further adjusted to
eliminate the effect on Net Assets resulting from new Capital Contributions,
redemptions, or capital distributions, if any, made during the period decreased
by interest or other income, not directly related to trading activity, earned on
Program assets during the period, whether the assets are held separately or in a
margin account.
ORGANIZATIONAL AND OFFERING EXPENSES. All expenses incurred by the
Program in connection with and in preparing a Program for registration and
subsequently offering and distributing it to the public, including, but not
limited to, total underwriting and brokerage discounts and commissions
(including fees of the underwriters' attorneys), expenses for printing,
engraving, mailing, salaries of employees while engaged in sales activity,
charges of transfer agents, registrars, trustees, escrow holders, depositories,
experts, expenses of qualification of the sale of
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<PAGE>
its Program Interest under federal and state law including taxes and fees,
accountants' and attorneys' fees.
PARTICIPANT. The holder of a Program Interest.
PERSON. Any natural Person, partnership, corporation, association or
other legal entity.
PIT BROKERAGE FEE. Pit Brokerage Fee shall include floor brokerage,
clearing fees, National Futures Association fees, and exchange fees.
PROGRAM. A limited partnership, joint venture, corporation, trust or
other entity formed and operated for the purpose of investing in Commodity
Contracts.
PROGRAM BROKER. A Commodity Broker that effects trades in Commodity
Contracts for the account of a Program.
PROGRAM INTEREST. A limited partnership interest or other security
representing ownership in a Program.
PYRAMIDING. A method of using all or a part of an unrealized profit in a
Commodity Contract position to provide margin for any additional Commodity
Contracts of the same or related commodities.
SPONSOR. Any Person directly or indirectly instrumental in organizing a
Program or any Person who will manage or participate in the management of a
Program, including a Commodity Broker who pays any portion of the Organizational
and Offering Expenses of the Program, and the general partner(s) and any other
Person who regularly performs or selects the Persons who perform services for
the Program. Sponsor does not include wholly independent third parties such as
attorneys, accountants and underwriters whose only compensation is for
professional services rendered in connection with the offering of the units.
The term "Sponsor" shall be deemed to include its Affiliates.
VALUATION DATE. The date as of which the Net Assets of the Program are
determined.
VALUATION PERIOD. A regular period of time between Valuation Dates.
Certain terms not defined herein are used with the respective meanings set forth
in the Prospectus.
23. NO LEGAL TITLE TO TRUST ESTATE.
The Unitholders shall not have legal title to any part of the Trust Estate.
24. LEGAL TITLE.
Legal title to all the Trust Estate shall be vested in the Trust as a
separate legal entity; except where applicable law in any jurisdiction requires
any part of the Trust Estate to be vested otherwise, the Managing Owner (or the
Trustee, if required by law) may cause legal title to the Trust Estate or any
portion thereof to be held by or in the name of the Managing Owner or any other
person as nominee.
25. CREDITORS.
No creditors of any Unitholders shall have any right to obtain possession
of, or otherwise exercise legal or equitable remedies with respect to, the Trust
Estate.
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IN WITNESS WHEREOF, the undersigned have duly executed this Fourth Amended
and Restated Declaration and Agreement of Trust and Trust Agreement as of the
day and year first above written.
WILMINGTON TRUST COMPANY
as Trustee
By: /S/ EMMETT R. HARMAN
--------------------
Name: Emmett R. Harmon
Title: Vice President
CIS INVESTMENTS, INC.
as Managing Owner
By: /s/ Barbara A. Pfendler
-----------------------
Name: Barbara A. Pfendler
Title: Vice President
All Unitholders now and hereafter admitted as Unitholders of the Trust,
pursuant to powers of attorney now and hereafter executed in favor of, and
granted and delivered to, the Managing Owner.
By: CIS INVESTMENTS, INC.
as Attorney-in-Fact
By: /s/ Barbara A. Pfendler
-----------------------
Name: Barbara A. Pfendler
Title: Vice President
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<PAGE>
EXHIBIT B
JWH GLOBAL TRUST
--------------------
SUBSCRIPTION REQUIREMENTS
By executing a Subscription Agreement and Power of Attorney Signature Page
for JWH GLOBAL TRUST (THE "TRUST"), each PURCHASER ("PURCHASER") of UNITS OF
BENEFICIAL INTEREST ("UNITS") in the Trust subscribes for Units at the Net Asset
Value per Unit, as described in the Trust's current PROSPECTUS (THE
"PROSPECTUS"). The minimum initial subscription is $5,000; $2,000 for trustees
or custodians of eligible employee benefit plans and individual retirement
accounts. Incremental subscriptions will be accepted in multiples of $100 in
excess of such minimums. Existing Unitholders may make additional investments
in the Trust in $1,000 minimums, also with $100 increments. Units are sold in
fractions calculated to five decimal places.
Purchaser is herewith delivering to Purchaser's selling agent (hereinafter,
"Selling Agent") an executed Subscription Agreement and Power of Attorney
Signature Page and either (i) delivering a check in the full amount of the
Purchaser's subscription or (ii) hereby authorizing such Selling Agent to debit
Purchaser's customer securities account maintained with such Selling Agent for
the full amount of Purchaser's subscription in accordance with the procedures
described under "Plan of Distribution -- Subscription Procedure" in the
Prospectus. If Purchaser's Subscription Agreement and Power of Attorney is
accepted by CIS INVESTMENTS, INC., the managing owner of the Trust (the
"Managing Owner"), Purchaser agrees to contribute Purchaser's subscription to
the Trust and to be bound by the terms of the Trust's Declaration and Agreement
of Trust (Exhibit A to the Prospectus), including, without limitation, the
provisions of Sections 9(a), 11 and 15 thereof. Purchaser agrees to reimburse
the Trust and the Managing Owner for any expense or loss incurred by either as a
result of the cancellation of Purchaser's Units due to a failure of the
Purchaser to deliver good funds in the amount of the subscription price of any
or all of such Units.
If the undersigned is acting on behalf of an "employee benefit plan," as
defined in and subject to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or any "plan," as defined in Section 4975 of the Internal
Revenue Code of 1986, as amended (the "Code") (each such employee benefit plan
and plan, a "Plan"), the individual signing this Subscription Agreement and
Power of Attorney on behalf of the undersigned, in addition to the
representations and warranties set forth above, hereby further represents and
warrants as, or on behalf of the fiduciary of the Plan responsible for
purchasing a Unit (the "Plan Fiduciary") that: (a) the Plan Fiduciary has
considered an investment in the Trust for such Plan in light of the risks
relating thereto; (b) the Plan Fiduciary has determined that, in view of such
considerations, the investment in the Trust for such Plan is consistent with the
Plan Fiduciary's responsibilities under ERISA; (c) the Plan's investment in the
Trust does not violate and is not otherwise inconsistent with the terms of any
legal document constituting the Plan or any trust agreement thereunder; (d) the
Plan's investment in the Trust has been duly authorized and approved by all
necessary parties; (e) none of the Managing Owner, John W. Henry & Company, Inc.
("JWH"), Cargill Investor Services, Inc. ("CIS"), CIS Financial Services, Inc.
("CISFS"), any Selling Agent, wholesaler or correspondent, Bank One (the "Escrow
Agent"), Wilmington Trust Company (the "Trustee"), any of their respective
affiliates or any of their respective agents or employees (i) has investment
discretion with respect to the investment of assets of the Plan used to purchase
Units; (ii) has authority or responsibility to or regularly gives investment
advice with respect to the assets of the Plan used to purchase Units for a fee
and pursuant to an agreement or understanding that such advice will serve as a
primary basis for investment decisions with respect to the Plan and that such
advice will be based on the particular investment needs of the Plan; or (iii) is
an employer maintaining or contributing to the Plan; and (f) the Plan Fiduciary
(i) is authorized to make, and is responsible for, the decision to invest in the
Trust, including the determination that such investment is consistent with the
requirement imposed by Section 404 of ERISA that Plan investments be diversified
so as to minimize the risk of large losses, (ii) is independent of the Managing
Owner, JWH, CIS, CISFS, any Selling Agent, wholesaler or correspondent, the
Escrow Agent, the Trustee, and any of their respective affiliates, and (iii) is
qualified to make such investment decision. The undersigned will, at the
request of the Managing Owner, furnish the Managing Owner with such information
as the Managing Owner may reasonably require to establish that the purchase of
Units by the Plan does not violate any provision of ERISA or the Code,
including, without limitation, those provisions relating to "prohibited
transactions" by "parties in interest" or "disqualified persons" as defined
therein.
INVESTOR SUITABILITY
PURCHASER UNDERSTANDS THAT THE PURCHASE OF UNITS MAY BE MADE ONLY BY
PERSONS WHO, AT A MINIMUM, HAVE (i) A NET WORTH OF AT LEAST $150,000 (EXCLUSIVE
OF HOME, FURNISHINGS AND AUTOMOBILES) OR (ii) AN ANNUAL GROSS INCOME OF AT LEAST
$45,000 AND A NET WORTH (SIMILARLY CALCULATED) OF AT LEAST $45,000. RESIDENTS
OF THE FOLLOWING STATES MUST MEET THE SPECIFIC REQUIREMENTS SET FORTH BELOW (NET
WORTH IS, IN ALL CASES, TO BE CALCULATED EXCLUSIVE OF HOME, FURNISHINGS AND
AUTOMOBILES). IT IS RECOMMENDED (REQUIRED, IN THE CASE OF AN INDIVIDUAL
PENNSYLVANIA PURCHASER) THAT NO INDIVIDUAL PURCHASER SHOULD (MAY, IN THE CASE OF
AN INDIVIDUAL PENNSYLVANIA PURCHASER) INVEST MORE THAN 10% OF HIS OR HER NET
WORTH (EXCLUSIVE OF HOME, FURNISHINGS AND AUTOMOBILES) IN THE
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<PAGE>
UNITS AND NO ENTITY PURCHASER, INCLUDING ERISA PLANS, SHOULD INVEST MORE THAN
10% OF ITS LIQUID NET WORTH (READILY MARKETABLE SECURITIES) IN THE UNITS.
1. Arizona -- Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
2. California -- Liquid net worth of at least $100,000 and an annual taxable
income of at least $50,000.
3. Iowa -- Net worth of at least $225,000 or a net worth of at least $60,000
and an annual taxable income of at least $60,000. Minimum purchase for
individual retirement accounts and employee benefit plans in Iowa is $2,500.
4. Maine -- Minimum subscription per investment, both initial and subsequent,
of $5,000; net worth of at least $200,000 or a net worth of at least $50,000 and
an annual income of at least $50,000. All Maine residents, including existing
Unitholders in the Trust subscribing for additional Units, must execute a
Subscription Agreement and Power of Attorney Signature Page. Maine residents
must sign a Subscription Agreement and Power of Attorney Signature Page
specifically prepared for Maine residents, a copy of which shall accompany this
Prospectus and delivered to all Maine residents.
5. Massachusetts -- Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
6. Michigan -- Net worth of at least $225,000 or a net worth of at least
$60,000 and taxable income during the preceding year of at least $60,000.
7. Minnesota -- Except as provided in the immediately following sentence, each
Minnesota Purchaser must be an "accredited investor" as defined in Regulation D
under the Securities Act of 1933 and must, either alone or together with a
purchaser representative, have sufficient financial knowledge and experience to
be capable of evaluating the risks and merits of an investment in the Units.
The Trust may effect no more than 35 sales of Units to non-accredited investors
in Minnesota in any consecutive 12-month period. Each non-accredited investor
must have a net worth of at least $225,000 or a net worth of at least $60,000
and an annual income of at least $60,000. Minnesota residents must sign a
Subscription Agreement and Power of Attorney Signature Page specifically
prepared for Minnesota residents, a copy of which shall accompany this
Prospectus and delivered to all Minnesota residents.
8. Mississippi -- Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
9. Missouri -- Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
10. New Hampshire -- Net worth of at least $250,000 or a net worth of at least
$125,000 and an annual taxable income of at least $50,000.
11. North Carolina -- Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
12. Oklahoma -- Net worth of at least $225,000 or a net worth of $60,000 and an
annual income of at least $60,000.
13. Oregon -- Net worth of at least $225,000 or a net worth of at least $60,000
and an annual income of at least $60,000.
14. Pennsylvania -- Net worth of at least $175,000 or a net worth of at least
$100,000 and an annual income of at least $50,000.
15. South Carolina -- Net worth of at least $100,000 or a net income in the
preceding year some portion of which was subject to maximum federal and state
income tax.
16. South Dakota -- Net worth of at least $225,000 or a net worth of at least
$60,000 and annual taxable income of at least $60,000.
17. Tennessee -- Net worth of at least $250,000 or a net worth of at least
$65,000 and annual taxable income of at least $65,000.
18. Texas -- Net worth of at least $225,000 or a net worth of at least $60,000
and annual taxable income of at least $60,000.
-------------------------
In the case of IRA and SEP plans, the foregoing suitability standards are
applicable to the beneficiary of the plan for whose account the Units are being
acquired. In the case of a custodian purchasing Units for a minor, the Units
will be either a gift to the minor and not paid with funds of the minor or the
minor meets the foregoing suitability standards.
THE FOREGOING SUITABILITY STANDARDS ARE REGULATORY MINIMUMS ONLY. MERELY
BECAUSE PURCHASER MEETS SUCH REQUIREMENTS DOES NOT NECESSARILY MEAN THAT A HIGH
RISK, SPECULATIVE AND ILLIQUID INVESTMENT SUCH AS THE TRUST IS, IN FACT,
SUITABLE FOR PURCHASER.
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EXHIBIT C
JWH GLOBAL TRUST
-------------------------
SUBSCRIPTION INSTRUCTIONS
JWH GLOBAL TRUST
UNITS OF BENEFICIAL INTEREST
SUBSCRIPTION INSTRUCTIONS
ANY PERSON CONSIDERING SUBSCRIBING FOR UNITS SHOULD CAREFULLY READ AND REVIEW
THE PROSPECTUS.
THE PROSPECTUS MUST BE ACCOMPANIED BY THE MOST RECENT ACCOUNT STATEMENT OF THE
TRUST (CURRENT WITHIN 60 CALENDAR DAYS).
The Units are speculative and involve a high degree of risk. It is recommended
that no subscriber should invest more than 10% of such subscriber's net worth
(which excludes home, furnishings and automobiles) in the Trust.
Attached to these subscription instructions is a detachable carbonless copy set
of the Subscription Agreement and Power of Attorney Signature Page (the
"Signature Page") with the Subscription Agreement and Power of Attorney on the
reverse side. The Signature Page is the document which you must execute if you
wish to subscribe for Units. One copy of such Signature Page should be retained
by you for your records and the others delivered to your Registered
Representative.
FILL IN ALL THE INFORMATION ON THE ATTACHED SIGNATURE PAGE, USING BLUE OR BLACK
INK ONLY, AS FOLLOWS:
Item 1 - Enter the whole dollar amount of the subscription (no
cents).
Item 2 - Check the appropriate box if check is attached or if payment
is to be made by debit from investor's securities account.
If debited, enter the investor's securities account number.
Item 3 - Enter the Social Security or Taxpayer ID Number of the
investor. Check the appropriate box to indicate the type of
ownership for the entity that is subscribing. In the case
of joint ownership, either Social Security Number may be
used. Check box if the Non-Taxable Investor is a Selling
Agent Plan.
Items 4 through 8 - The following specific instructions are provided for certain
ownership types identified on the Signature Page:
TRUST -- Enter the trust's name in Item 4 and the trustee's
name in Item 5, followed by "Ttee."
CUSTODIAN UNDER UNIFORM GIFTS TO MINORS ACT -- Complete Item
4 with the name of minor followed by "UGMA." Enter the
minor's Social Security Number in Item 3. In Item 8, enter
the custodian's name followed by "Custodian." Be sure to
furnish the Taxpayer ID Number of the Custodian.
PARTNERSHIP OR CORPORATION -- The partnership's or
corporation's name is required in Item 4. Enter a partner's
or officer's name in Item 5. Enter the Taxpayer ID Number
of the partnership or corporation in Item 3.
NON-TAXABLE INVESTOR -- If applicable, complete Item 8 for
the Custodian. Be sure to furnish the Taxpayer ID Number of
the Custodian.
Complete residence address in Item 6 and mailing address (if
different) in Item 7.
The investor(s) must review the representations relating to
backup withholding tax or non-resident alien status
following Item 7. Check box if applicable.
Item 9 - The investor(s) must sign the Subscription Agreement and
Power of Attorney Signature Page. Joint accounts must
include signatures of all parties.
Items 10 and 11 - Registered Representative must complete.
THE SELLING AGENT'S COPY OF THE SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY
SIGNATURE PAGE MAY BE REQUIRED TO BE RETAINED IN THE BRANCH OFFICE.
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<PAGE>
THE EXECUTION COPY OF THE SUBSCRIPTION AGREEMENT AND POWER
OF ATTORNEY ACCOMPANIES THIS PROSPECTUS AS A SEPARATE DOCUMENT
JWH GLOBAL TRUST
UNITS OF BENEFICIAL INTEREST
-------------------------
BY EXECUTING THIS SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY
SUBSCRIBERS ARE NOT WAIVING ANY RIGHTS UNDER THE SECURITIES ACT OF 1933
OR THE SECURITIES EXCHANGE ACT OF 1934
-------------------------
SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY
JWH GLOBAL TRUST
C/O CIS INVESTMENTS, INC., MANAGING OWNER
233 SOUTH WACKER DRIVE, SUITE 2300
CHICAGO, ILLINOIS 60606
Dear Sirs:
1. SUBSCRIPTION FOR UNITS. I hereby subscribe for the dollar amount
of UNITS OF BENEFICIAL INTEREST ("UNITS") in JWH GLOBAL TRUST (the "Trust")
set forth in the Subscription Agreement and Power of Attorney Signature Page
attached hereto (minimum $5,000; $2,000 for trustees or custodians of
eligible employee benefit plans and individual retirement accounts), at a
purchase price per Unit of Net Asset Value. Incremental subscriptions in
excess of the foregoing minimums are permitted in $100 multiples. Existing
investors may subscribe for additional Units in $1,000 minimums, also with
$100 increments. Fractional Units will be issued to five decimal places. The
terms of the offering of the Units are described in the current Prospectus of
the Trust (the "Prospectus"). I have either (i) authorized my selling agent
to debit my customer securities account in the amount of my subscription or
(ii) delivered a check to my selling agent made payable to "BANK ONE, ESCROW
AGENT FOR JWH GLOBAL TRUST." If I have chosen to subscribe by account debit,
I acknowledge that I must have my subscription payment in such account when I
submit my subscription. My Registered Representative shall debit my account
and the amounts so debited will be transmitted directly to the Escrow Agent.
CIS INVESTMENTS, INC. (THE "MANAGING OWNER") may, in its sole and absolute
discretion, accept or reject this subscription in whole or in part.
SUBSCRIPTIONS ARE REVOCABLE FOR FIVE BUSINESS DAYS AFTER SUBMISSION. ALL
UNITS ARE OFFERED SUBJECT TO PRIOR SALE.
Subscriptions generally must be received by the Managing Owner no later
than five business days before month-end (including the last business day of the
month) in order to be invested in the Units as of the end of the month.
2. REPRESENTATIONS AND WARRANTIES OF SUBSCRIBER. I have received the
Prospectus and an account statement (current within 60 days), relating to the
Trust. I understand that certain investor suitability standards must be met as
a condition of my investment in the Units. I acknowledge that I satisfy the
applicable requirements relating to net worth and annual income as set forth in
"Exhibit B -- Subscription Requirements" to the Prospectus. If subscriber is an
employee benefit plan, the investment in the Units by such employee benefit plan
is in compliance with all federal laws relating to such plans. If the
subscriber is a trust under an employee benefit plan, none of the Trustee, the
Managing Owner, the Trading Advisor, the Futures Broker, the Foreign Currency
Broker, any Selling Agent, Wholesaler or correspondent, or the Escrow Agent, any
of their respective affiliates or any of their respective agents or employees:
(i) has investment discretion with respect to the investment of the assets of
such trust being used to purchase Units; (ii) has authority or responsibility to
give or regularly gives investment advice with respect to such trust assets for
a fee and pursuant to an agreement or understanding that such advise will be
based on the particular investment needs of the trust; or (iii) is an employer
maintaining or contributing to the Trust. If subscriber is not an individual,
the person signing the Subscription Agreement and Power of Attorney Signature
Page on behalf of the subscriber is duly authorized to execute such Signature
Page. If subscriber is a custodian for a minor, the Units purchased will be
either a gift to the minor and not paid with funds of the minor or the minor
meets the net worth and annual income requirements set forth in "Exhibit B --
Subscription Requirements" to the Prospectus.
3. POWER OF ATTORNEY. In connection with my purchase of Units, I do
hereby irrevocably constitute and appoint the Managing Owner and its successors
and assigns, as my true and lawful Attorney-in-Fact, with full power of
substitution, in my name, place and stead, to (i) file, prosecute, defend,
settle or compromise litigation, claims or arbitrations on behalf of the Trust
and (ii) make, execute, sign, acknowledge, swear to, deliver, record and file
any documents or instruments which may be considered necessary or desirable by
the Managing Owner to carry out fully the provisions of the Declaration and
Agreement of Trust of the Trust, including, without limitation, the execution of
the said Agreement itself and the execution of all amendments permitted by the
terms thereof. The Power of Attorney granted hereby shall be deemed to be
coupled with an interest, shall be irrevocable, shall survive, and shall not be
affected by, my subsequent death, incapacity, disability, insolvency or
dissolution or any delivery by me of an assignment of the whole or any portion
of my Units.
4. GOVERNING LAW. Subscriber hereby acknowledges and agrees that this
Subscription Agreement and Power of Attorney derives from a business initiated
in and concluded in the United States of America and shall be governed by and be
interpreted in accordance with the laws of the State of Delaware, without regard
to principles of conflicts of laws thereof.
5. RISKS. These securities are speculative and involve a high degree of
risk. It is recommended that you should invest no more than 10% of your net
worth (excluding home, furnishings and automobiles) in the Trust. Risk factors
relating to the Units include the following:
(i) YOU COULD LOSE ALL OR SUBSTANTIALLY ALL OF YOUR INVESTMENT IN THE
TRUST; (ii) THE TRUST IS SPECULATIVE AND IT TAKES POSITIONS WITH TOTAL VALUES
THAT ARE BIGGER THAN THE TOTAL AMOUNT OF THE TRUST'S ASSETS; THE FACE VALUE OF
THE TRUST'S POSITIONS TYPICALLY RANGE FROM THREE TO EIGHT TIMES ITS AGGREGATE
NET ASSET VALUE; (iii) PERFORMANCE HAS BEEN VOLATILE; THE NET ASSET VALUE PER
UNIT HAS FLUCTUATED ALMOST 11% IN A SINGLE MONTH; (iv) THE USE OF A SINGLE
ADVISOR APPLYING A LIMITED NUMBER OF GENERALLY SIMILAR TRADING PROGRAMS
DECREASES DIVERSIFICATION RELATIVE TO A FUND USING MULTIPLE ADVISORS AND
INCREASES RISK; (v) SUBSTANTIAL EXPENSES, TOTALLING ALMOST 12.3% PER ANNUM, MUST
BE OFFSET BY TRADING PROFITS AND INTEREST INCOME; (vi) THERE IS NO MARKET FOR
THE UNITS; UNITS MAY ONLY BE REDEEMED AS OF THE END OF A CALENDAR MONTH SUBJECT
TO A 3% REDEMPTION CHARGE THROUGH THE END OF THE ELEVENTH MONTH AFTER ISSUANCE;
(vii) THE TRUST TRADES TO A SUBSTANTIAL DEGREE ON NON-U.S. MARKETS WHICH ARE NOT
SUBJECT TO THE SAME DEGREE OF REGULATION AS U.S. MARKETS; (viii) INVESTORS ARE
REQUIRED TO MAKE REPRESENTATIONS AND WARRANTIES IN CONNECTION WITH THEIR
INVESTMENT; (ix) EACH PROSPECTIVE INVESTOR IS ENCOURAGED TO DISCUSS THE
INVESTMENT WITH HIS/HER 1INDIVIDUAL FINANCIAL, LEGAL AND TAX ADVISER.
See "The Risks You Face" beginning at page 9 of the Prospectus.
PLEASE COMPLETE THE SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY SIGNATURE
PAGE WHICH ACCOMPANIES THIS PROSPECTUS CAREFULLY AND ENSURE THAT YOUR REGISTERED
REPRESENTATIVE KNOWS WHETHER YOU ARE SUBSCRIBING BY CHECK OR ACCOUNT DEBIT.
C-2
<PAGE>
JWH GLOBAL TRUST
UNITS OF BENEFICIAL INTEREST
SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY SIGNATURE PAGE
(See attached Subscription Instructions)
The investor named below, by executing and delivering this Signature Page and by
payment of the purchase price for units of beneficial interest ("Units") in JWH
GLOBAL TRUST (the "Trust"), by either (i) enclosing a check payable to "BANK
ONE, AS ESCROW AGENT FOR JWH GLOBAL TRUST" or (ii) authorizing the Selling
Agent (or Additional Selling Agent, as the case may be) to debit investor's
securities account in the amount set forth below, hereby subscribes for the
purchase of Units at a purchase price of 100% of the Net Asset Value per Unit.
The named investor further acknowledges receipt of the current Prospectus of the
Trust (the "Prospectus"), together with a recent Account Statement relating to
the Trust (current within 60 calendar days) and the Trust's most recent Annual
Report if not included in the Prospectus. The Prospectus includes the Trust's
Declaration and Agreement of Trust, Subscription Requirements and Subscription
Agreement and Power of Attorney, the terms of which govern the investment in the
Units being subscribed for hereby.
By my signature below, I represent that I satisfy the minimum income and net
worth standards set forth in Exhibit B to the Prospectus.
1) Investment Amount $ |__|__|__|__|__|__|__|__|__|__| (minimum of $5,000,
except $2,000 minimum for IRAs and other qualified accounts;
$1,000 minimum for existing investors making an additional investment;
incremental investments of $100 multiples.)
2) (Check one) / / Check is attached.
/ / Debit investor's securities account:
Account #____________________________
(must be completed)
3) Social Security # |__|__|__| - |__|__| - |__|__|__|__| or
Taxpayer ID # |__|__|- |__|__|__|__|__|__|__|
Taxable Investors (check one):
<TABLE>
<S> <C> <C>
/ / Individual Investor / / Community Property / / Partnership
/ / Joint Tenants with Right of Survivorship / / Estate / / UGMA/UTMA (Minor)
/ / Tenants in Common / / Trust / / Corporation
</TABLE>
Non-Taxable Investors -- Custodian Signature Required (check one)
<TABLE>
<S> <C> <C> <C>
/ / IRA / / Pension / / Profit Sharing / / Other _____________________________________
/ / Roth IRA / / SEP / / Defined Benefit
/ / IRA Rollover
</TABLE>
Is this a Selling Agent Plan? / / Yes / / No
<TABLE>
<S> <C>
4) Investor(s) Name(s): |__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|
</TABLE>
<TABLE>
<S><C>
5) Additional Information (For Estate, Partnerships, Trust and Corporations)
|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|
</TABLE>
<TABLE>
<S><C>
6) Residence Address of Unitholder
|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|
Street (P.0. Box numbers are not acceptable for residence address)
|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|
City State Zip Country Phone
</TABLE>
<TABLE>
<S> <C>
7) Mailing Address
(if different) |__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__| __|__|__|
Street
|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__| __|__|__|__|__|__|__|__|__|__|
City State Zip Country
</TABLE>
UNITED STATES INVESTORS ONLY
I have checked the following box if I am subject to backup withholding under the
provisions of Section 3406(a)(1)(C) of the Internal Revenue Code: / /. Under
the penalties of perjury, by signature below I hereby certify that the Social
Security or Taxpayer ID Number set forth in Item 3 above is my true, correct and
complete Social Security or Taxpayer ID Number and that the information given in
the immediately preceding sentence is true, correct and complete.
NON-UNITED STATES INVESTORS ONLY
Under the penalties of perjury, by signature below I hereby certify that (a) I
am not a citizen or resident of the United States or (b) (in the case of an
investor which is not an individual) the investor is not a United States
corporation, partnership, estate or trust: / /. See Form W-8 attached.
<TABLE>
<S> <C> <C>
8) Custodian Information |__|__| -|__|__|__|__|__|__|__| |__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|
Tax ID# Name
Mailing Address
|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|
Street
|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|
City State Zip Country Phone
</TABLE>
C-3
<PAGE>
9) INVESTOR(S) MUST SIGN
<TABLE>
<S> <C>
________________________________________________ _________________________________________________________________________________
Signature Date Signature of Authorized Fiduciary, Trustee, Partner or Corporate Office Date
_____________________________________________________ ____________________________________________________________________________
Signature of Joint Investor (if any) Date Print Name of Authorized Fiduciary, Trustee, Partner Date
or Corporate Office (specify title)
</TABLE>
EXECUTING AND DELIVERING THIS SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY SHALL
IN NO RESPECT BE DEEMED TO CONSTITUTE A WAIVER OF ANY RIGHTS UNDER THE
SECURITIES ACT OF 1933 OR UNDER THE SECURITIES EXCHANGE ACT OF 1934.
10) REGISTERED REPRESENTATIVE MUST SIGN
I hereby certify that I have provided the investor with a copy of the Prospectus
and informed the investor of all pertinent facts relating to the: risks; tax
consequences; liquidity and marketability; management; and control of the
Managing Owner with respect to an investment in the Units, as set forth in the
Prospectus. I have also informed the investor of the unlikelihood of a public
trading market developing for the Units and the restrictions on the redemption
of Units. I do not have discretionary authority over the account of the
investor.
I have reasonable grounds to believe, based on information obtained from the
investor concerning his/her investment objectives, other investments, financial
situation and needs and any other information known by me, that an investment in
the Trust is suitable for such investor in light of his/her financial position,
net worth and other suitability characteristics.
The Registered Representative MUST sign below in order to substantiate
compliance with Rule 2810 of the NASD (formerly Appendix F of the NASD's Rules
of Fair Practice).
<TABLE>
<S> <C>
X_____________________________________________________ X__________________________________________________________________________
Registered Representative Signature Date Office Manager Signature (if required) Date
</TABLE>
<TABLE>
<S> <C>
11) Broker Dealer
|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|
Registered Representative:
Name (Print)
|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|
First M.I. Last Reg. Rep. Number
Address
|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|__|
Street City State Zip
Phone Number |__|__|__|__|__|__|__|__|__|__|__|__|__|__| Fax Number |__|__|__|__|__|__|__|__|__|__|__|__|__|__|
</TABLE>
C-4
<PAGE>
JWH GLOBAL TRUST
UNITS OF BENEFICIAL INTEREST
REQUEST FOR REDEMPTION
JWH GLOBAL TRUST __________________________
C/O CIS INVESTMENTS, INC. DATE
MANAGING OWNER
233 SOUTH WACKER DRIVE, SUITE 2300
CHICAGO, ILLINOIS 60606
Dear Sirs:
The undersigned hereby requests redemption subject to all the terms and
conditions of the Amended and Restated Declaration and Agreement of Trust (the
"Declaration and Agreement of Trust") of JWH GLOBAL TRUST (the "Trust") of
Units of Beneficial Interest ("Units") in the Trust. (INSERT NUMBER OF UNITS
OR DOLLAR AMOUNT TO BE REDEEMED BELOW. UNITHOLDERS NEED NOT REDEEM ALL OF THEIR
UNITS PROVIDED THEY REDEEM AT LEAST $1,000 OF UNITS AND THEY MUST HOLD MINIMUM
INVESTMENT OF $1,000 AFTER ANY PARTIAL REDEMPTION. IF NO NUMBER OF UNITS OR
DOLLAR AMOUNT IS INDICATED, ALL UNITS HELD BY THE UNDERSIGNED WILL BE REDEEMED.)
Units are redeemed at the Net Asset Value per Unit, as defined in the
Declaration and Agreement of Trust, less any applicable redemption charge (see
below). Redemption shall be effective as of the end of the current calendar
month; provided this Request for Redemption is received no later than five
business days before the end of such month (including the last business day of
the month). Payment of the redemption proceeds will generally be made within
ten business days of the date of redemption.
The undersigned hereby represents and warrants that the undersigned is the
true, lawful and beneficial owner of the Units to which this Request for
Redemption relates, with full power and authority to request redemption of such
Units. Such Units are not subject to any pledge or otherwise encumbered in any
fashion.
Units redeemed at or prior to the end of the twelfth full month after such
Units are sold are subject to redemption charges of 3% of the Net Asset Value of
Units at which they are redeemed. Such charges will be deducted from the
redemption proceeds and paid to Cargill Investor Services, Inc., the Trust's
Futures Broker. If the undersigned has purchased Units at more than one
closing, such Units will be treated on a first-in/first-out basis for purposes
of determining whether redemption charges continue to be applicable to such
Units.
-------------------
UNITED STATES UNITHOLDERS ONLY:
Under the penalties of perjury, the undersigned hereby certifies that the
Social Security or Taxpayer ID Number indicated on this Request for Redemption
is the undersigned's true, correct and complete Social Security or Taxpayer ID
Number and that the undersigned is not subject to backup withholding under the
provisions of Section 3406(a)(1)(C) of the Internal Revenue Code.
NON-UNITED STATES UNITHOLDERS ONLY:
Under the penalties of perjury, the undersigned hereby certifies that (a)
the undersigned is not a citizen or resident of the United States or (b) (in the
case of an investor which is not an individual) the undersigned is not a United
States corporation, partnership, estate or trust.
C-5
<PAGE>
Tax ID - SS# or Fed No (No hyphens) Account Number
_________________________________________ _____________________________
Account Name
______________________________________________________________________________
______________________________________________________________________________
By:
______________________________________________________________________________
(Authorized corporate officer, partner, trustee or custodian)
ACCOUNT MAILING ADDRESS
Street or P.O. Box
______________________________________________________________________________
City
______________________________________________________________________________
State _____________________________________ Zip __________________________
Country ___________________________________
Phone ________________________________________________________________________
JWH GLOBAL TRUST:
Redeem: Number of Units ____________________________ OR Amount $___________
(Write "ALL" for full redemption)
(Check one)
__________ Mail check to the address above
__________ Credit my customer securities account at:
Name of Broker Dealer: ___________________________________________
Account Name: ___________________________________________________
Account Number: __________________________________________________
SIGNATURES MUST BE IDENTICAL TO NAME(S) IN WHICH UNITS ARE REGISTERED.
___________________________________________________
Individual Unitholder(s)/Custodian Signature
___________________________________________________
Individual Unitholder(s)/Custodian Signature
C-6
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
CIS Investments, Inc., the managing owner of the Trust (the "Managing
Owner"), advanced all initial organization and offering costs (approximately
$650,000) as described in the Prospectus, for which it was reimbursed by the
Registrant on the initial closing date. The following is an estimate of the
costs incurred in connection with updating the Prospectus and preparing and
filing this Post-Effective Amendment No. 3 to the Registration Statement. The
Trust will pay all such costs:
<TABLE>
<CAPTION>
Approximate
Amount
-----------
<S> <C>
Printing Expenses......................................... $100,000
Fees of Certified Public Accountants...................... 15,000
Blue Sky Expenses (Excluding Legal Fees).................. 15,000
Fees of Counsel........................................... 50,000
Escrow Fees............................................... 20,000
Advertising and Sales Literature.......................... 20,000
Miscellaneous Offering Costs.............................. 10,000
---------
Total.............................................. $ 230,000
---------
---------
</TABLE>
Item 14. Indemnification of Directors and Officers.
Section 18 of the Amended and Restated Declaration and Agreement of Trust
(attached as Exhibit A to the Prospectus which forms a part of this Registration
Statement) provides for the indemnification of the Managing Owner, certain of
its affiliates and certain of their respective directors, officers and
controlling persons by the Registrant in certain circumstances. Such
indemnification is limited to claims sustained by such persons in connection
with the Registrant; provided that such claims were not the result of negligence
or misconduct on the part of the Managing Owner or its affiliates, directors,
officers and controlling persons. The Registrant is prohibited from incurring
the cost of any insurance covering any broader indemnification than that
provided above. Advances of Registrant funds to cover legal expenses and other
costs incurred as a result of any legal action initiated against the Managing
Owner by a Unitholder are prohibited.
Item 15. Recent Sales of Unregistered Securities.
There have been no sales of unregistered securities of the Registrant
within the last three years.
II-1
<PAGE>
Item 16. Exhibits and Financial Statement Schedules.
The following documents are made a part of this Registration Statement:
(a) Exhibits.
EXHIBIT DESCRIPTION OF DOCUMENT
NUMBER -----------------------
------
3.01 Fourth Amended and Restated Declaration and Agreement of Trust of
the Registrant (included as Exhibit A to the Prospectus).
10.01 Form of Subscription Agreement and Power of Attorney (included as
Exhibit C to the Prospectus).
23.01(a) Consent of Sidley & Austin.
23.01(b) Consent of Richards, Layton & Finger.
23.02 Consent of KPMG Peat Marwick, LLP.
27.01 Financial Data Schedule
The following exhibits are incorporated by reference herein from the exhibits of
the same description and number filed on March 1, 1999 with Post-Effective
Amendment No. 2 to Registration Statement on Form S-1 (Reg. No. 333-33937).
5.01(a) Opinion of Sidley & Austin relating to the legality of the Units.
5.01(b) Opinion of Richards, Layton & Finger relating to the legality of
the Units
8.01 Opinion of Sidley & Austin with respect to federal income tax
consequences.
The following exhibits are incorporated by reference herein from the exhibits of
the same description and number filed on August 19, 1997 with Registrant's
Registration Statement on Form S-1 (Reg. No. 333-33937).
1.01 Form of Selling Agreement, as amended, among the Registrant, the
Managing Owner, John W. Henry & Company, Inc. ("JWH") and Cargill
Investor Services, Inc. ("CIS" or "Lead Selling Agent")
(including forms of Additional Selling Agent Agreement,
Wholesaling Agreement and Correspondent Selling Agent).
10.02 Form of Amended Escrow Agreement among the Registrant, The First
National Bank of Chicago, the Managing Owner and the Lead Selling
Agent.
The following exhibits are incorporated by reference herein from the exhibits of
the same description and number filed on February 10, 1997 with Amendment No. 1
to Registrant's Registration Statement on Form S-1 (Reg. No. 333-16825;
declared effective April 3, 1997).
II-2
<PAGE>
3.02 Amended and Restated Declaration and Agreement of Trust.
3.03 Certificate of Amendment of Certificate of Trust of the
Registrant.
10.01 Form of Trading Advisory Agreement among the Registrant, the
Managing Owner, CIS and JWH.
10.02 Form of Customer Agreement between the Registrant and CIS.
10.03 Form of Foreign Exchange Account Agreement between the Registrant
and CIS Financial Services, Inc. ("CISFS").
10.04 Form of Cash Bullion Account Agreement between the Registrant and
CISFS.
10.06 Form of Transfer Agent Agreement.
The following exhibits are incorporated by reference herein from the exhibits of
the same description and number filed on November 26, 1996 with Registrant's
Registration Statement on Form S-1 (Reg. No. 333-16825; declared effective April
3, 1997).
3.01 Certificate of Trust of the Registrant.
3.02 Declaration and Agreement of Trust.
99.01 Securities and Exchange Commission Release No. 33-6815 --
Interpretation and Request for Public Comment -- Statement of the
Commission Regarding Disclosure by Issuers of Interests in
Publicly Offered Commodity Pools. (54 Fed. Reg. 5600; February
6, 1989).
99.02 Commodity Futures Trading Commission -- Interpretive Statement
and Request for Comments -- Statement of the Commodity Futures
Trading Commission Regarding Disclosure by Commodity Pool
Operators of Past Performance Records and Pool Expenses and
Requests for Comments. (54 Fed. Reg. 5597; February 6, 1989).
99.03 North American Securities Administrators Association, Inc.
Guidelines for the Registration of Commodity Pool Programs.
99.04 Delaware Business Trust Act.
Item 17. Undertakings.
(a)(1) The undersigned registrant hereby undertakes to file, during any
period in which offers or sales are being made, a post-effective amendment to
this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
II-3
<PAGE>
the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) Insofar as indemnification for liabilities under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 14 above, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any such
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or Registration Statement Amendment
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Chicago in the State of Illinois on November 29, 1999.
JWH GLOBAL TRUST
By: CIS Investments, Inc., Managing Owner
By: /s/ Bernard W. Dan
------------------
Bernard W. Dan
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Registration Statement Amendment has been signed below
by the following persons on behalf of CIS Investments, Inc., the Managing Owner
of the Registrant, in the capacities indicated on November 29, 1999.
/s/ Bernard W. Dan President and Director
------------------------ (Principal Executive Officer)
Bernard W. Dan
/s/ Shaun D. O'Brien Treasurer and Director
------------------------ (Principal Financial and Accounting Officer)
Shaun D. O'Brien
/s/ Barbara A. Pfendler Vice President and Director
------------------------
Barbara A. Pfendler
(Being the principal executive officer, the principal financial and
accounting officer and a majority of the directors of CIS Investments, Inc.)
CIS INVESTMENTS, INC., the Managing Owner of Registrant
By: /s/ Bernard W. Dan
--------------------
Bernard W. Dan
President
II-5
<PAGE>
JWH GLOBAL TRUST
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF DOCUMENT
NUMBER
3.01 Fourth Amended and Restated Declaration and Agreement of Trust of
the Registrant (included as Exhibit A to the Prospectus).
10.01 Form of Subscription Agreement and Power of Attorney (included as
Exhibit C to the Prospectus).
23.01(a) Consent of Sidley & Austin.
23.01(b) Consent of Richards, Layton & Finger.
23.02 Consent of KPMG Peat Marwick, LLP.
27.01 Financial Data Schedule
<PAGE>
Exhibit 23.01(a)
CONSENT OF COUNSEL
We consent to the references to our firm under the captions "Tax Consequences"
and "Lawyers; Accountants" in Post-Effective Amendment No. 3 to the Form S-1
Registration Statement (Reg. No. 333-33937) as filed with the United States
Securities Exchange Commission on or about November 29, 1999 and the related
Prospectus of JWH Global Trust.
Sidley & Austin
November 29, 1999
<PAGE>
Exhibit 23.01(b)
[RICHARDS, LAYTON & FINGER LETTERHEAD]
November 29, 1999
Sidley & Austin
Bank One Plaza
10 South Dearborn Street
Chicago, Illinois 60603
Re: JWH Global Trust
--------------------
Ladies and Gentlemen:
Reference is made to Post-Effective Amendment No. 3 to the Form S-1
Registration Statement (Reg. No. 333-33937) (the "Post-Effective Amendment")
as filed with the United States Securities and Exchange Commission (the
"SEC") on or about November 29, 1999, by you on behalf of JWH Global Trust,
and the related Prospectus of JWH Global Trust. In connection with the
foregoing, we hereby consent to the use of our name under the heading
"Lawyers; Accountants" in the Post-Effective Amendment. In giving the
foregoing consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of
1933 or the rules and regulations of the SEC thereunder.
Very truly yours,
/s/ Richards, Layton & Finger, P.A.
MIL/DWO
<PAGE>
Exhibit 23.02
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the captions "Performance of the
Trust -- Selected Financial Information" and "Lawyers; Accountants" and the use
of our report dated February 5, 1999 with respect to the statements of financial
condition of JWH Global Trust as of December 31, 1998 and 1997 and the related
statements of operations, unitholders' capital, and cash flows for each of the
years ended December 31, 1998 and 1997, and to the use of our report dated July
23, 1999 with respect to the statements of condition of CIS Investments, Inc. as
of May 31, 1999 and 1998 and the related statements of income, changes in
stockholder's equity, and cash flows for each of the years ended May 31, 1999
and 198 included in Post-Effective Amendment No. 3 to the Form S-1 Registration
Statement (Reg. No. 333-33937) and related Prospectus of JWH Global Trust.
KPMG LLP
November 22, 1999
Chicago, Illinois
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED STATEMENT OF FINANCIAL CONDITION AS OF SEPTEMBER 30, 1999 AND THE
UNAUDITED STATEMENT OF OPERATIONS FOR THE PERIOD ENDING SEPTEMBER 30, 1999 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 95,252,291
<SECURITIES> 0
<RECEIVABLES> 1,526,942
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 97,106,186
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 97,106,186
<CURRENT-LIABILITIES> 2,275,471
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 94,830,715
<TOTAL-LIABILITY-AND-EQUITY> 97,106,186
<SALES> 0
<TOTAL-REVENUES> 5,710,077
<CGS> 0
<TOTAL-COSTS> 9,060,659
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,350,582)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,350,582)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,350,582)
<EPS-BASIC> (3.98)
<EPS-DILUTED> (3.98)
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