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