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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 29, 2001
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______________________ to ______________________
Commission file number: 0-25785
WORLD MONITOR TRUST--SERIES A
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(Exact name of Registrant as specified in its charter)
Delaware 13-3985040
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(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
One New York Plaza, 13th Floor, New York, New York
10292
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 778-7866
N/A
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Former name, former address and former fiscal year, if changed since last report
Indicate by check CK 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 _CK_ No __
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PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
WORLD MONITOR TRUST--SERIES A
(a Delaware Business Trust)
STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<Table>
<Caption>
June 29, December 31,
2001 2000
- ---------------------------------------------------------------------------------------------------
ASSETS
Cash $5,895,373 $8,755,205
Net unrealized gain on open futures contracts 175,493 531,296
Accrued interest receivable 832 --
---------- ------------
Total assets $6,071,698 $9,286,501
---------- ------------
---------- ------------
LIABILITIES AND TRUST CAPITAL
Liabilities
Commissions payable $ 42,951 $ 64,688
Redemptions payable 27,743 3,042
Management fees payable 5,826 9,311
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Total liabilities 76,520 77,041
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Commitments
Trust capital
Limited interests (82,172.171 and 120,332.109 interests outstanding) 5,930,586 9,115,823
General interests (895 and 1,236 interests outstanding) 64,592 93,637
---------- ------------
Total trust capital 5,995,178 9,209,460
---------- ------------
Total liabilities and trust capital $6,071,698 $9,286,501
---------- ------------
---------- ------------
Net asset value per limited and general interest ('Interests') $ 72.17 $ 75.76
---------- ------------
---------- ------------
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The accompanying notes are an integral part of these statements.
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WORLD MONITOR TRUST--SERIES A
(a Delaware Business Trust)
STATEMENTS OF OPERATIONS
(Unaudited)
<Table>
<Caption>
For the period from For the period from For the period from For the period from
January 1, 2001 to January 1, 2000 to March 31, 2001 to April 1, 2000 to
June 29, 2001 June 30, 2000 June 29, 2001 June 30, 2000
- ------------------------------------------------------------------------------------------------------------------------
REVENUES
Net realized gain (loss) on
commodity transactions $ 345,031 $(4,203,301) $ (57,451) $(294,684)
Change in net unrealized
gain/loss on open commodity
positions (355,803) 1,629,580 (1,060,602) 672,663
Interest income 211,742 652,832 76,735 310,913
--------------------- --------------------- --------------------- -----------
200,970 (1,920,889) (1,041,318) 688,892
--------------------- --------------------- --------------------- -----------
EXPENSES
Commissions 300,787 820,763 123,612 381,938
Management fees 38,752 156,208 15,925 49,303
--------------------- --------------------- --------------------- -----------
339,539 976,971 139,537 431,241
--------------------- --------------------- --------------------- -----------
Net income (loss) $ (138,569) $(2,897,860) $(1,180,855) $ 257,651
--------------------- --------------------- --------------------- -----------
--------------------- --------------------- --------------------- -----------
ALLOCATION OF NET INCOME (LOSS)
Limited interests $ (135,935) $(2,869,060) $(1,167,051) $ 254,632
--------------------- --------------------- --------------------- -----------
--------------------- --------------------- --------------------- -----------
General interests $ (2,634) $ (28,800) $ (13,804) $ 3,019
--------------------- --------------------- --------------------- -----------
--------------------- --------------------- --------------------- -----------
NET INCOME (LOSS) PER WEIGHTED
AVERAGE LIMITED AND GENERAL
INTEREST
Net income (loss) per weighted
average limited and general
interest $ (1.35) $ (9.58) (13.35) $ .88
--------------------- --------------------- --------------------- -----------
--------------------- --------------------- --------------------- -----------
Weighted average number of
limited and general interests
outstanding 102,721 302,347 88,457 293,261
--------------------- --------------------- --------------------- -----------
--------------------- --------------------- --------------------- -----------
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STATEMENT OF CHANGES IN TRUST CAPITAL
(Unaudited)
<Table>
<Caption>
LIMITED GENERAL
INTERESTS INTERESTS INTERESTS TOTAL
- -----------------------------------------------------------------------------------------------------
Trust capital--December 31, 2000 121,568.109 $9,115,823 $ 93,637 $9,209,460
Net loss (135,935) (2,634 ) (138,569)
Redemptions (38,500.938) (3,049,302) (26,411 ) (3,075,713)
----------- ---------- --------- ----------
Trust capital--June 29, 2001 83,067.171 $5,930,586 $ 64,592 $5,995,178
----------- ---------- --------- ----------
----------- ---------- --------- ----------
- -----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
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WORLD MONITOR TRUST--SERIES A
(a Delaware Business Trust)
NOTES TO FINANCIAL STATEMENTS
JUNE 29, 2001
(Unaudited)
A. General
These financial statements have been prepared without audit. In the opinion
of Prudential Securities Futures Management Inc. (the 'Managing Owner'), the
financial statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to state fairly the financial position of World
Monitor Trust--Series A ('Series A') as of June 29, 2001 and the results of its
operations for the periods from January 1, 2001 to June 29, 2001 ('Year-To-Date
2001'), January 1, 2000 to June 30, 2000 ('Year-To-Date 2000'), March 31, 2001
to June 29, 2001 ('Second Quarter 2001') and April 1, 2000 to June 30, 2000
('Second Quarter 2000'). However, the operating results for these interim
periods may not be indicative of the results expected for a full year.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been omitted. It is suggested that
these financial statements be read in conjunction with the financial statements
and notes thereto included in Series A's Annual Report on Form 10-K filed with
the Securities and Exchange Commission for the year ended December 31, 2000.
B. Related Parties
The Managing Owner of Series A is a wholly-owned subsidiary of Prudential
Securities Incorporated ('PSI'), which, in turn, is a wholly-owned subsidiary of
Prudential Securities Group Inc. The Managing Owner or its affiliates perform
services for Series A, which include, but are not limited to: brokerage
services; accounting and financial management; registrar, transfer and
assignment functions; investor communications, printing and other administrative
services. Except for costs related to brokerage services, PSI or its affiliates
pay the costs of these services in addition to Series A's routine operational,
administrative, legal and auditing costs.
The costs charged to Series A for brokerage services for Year-To-Date 2001,
Year-To-Date 2000, Second Quarter 2001 and Second Quarter 2000 were $300,787,
$820,763, $123,612 and $381,938, respectively.
Series A's assets are maintained either in trading or cash accounts with PSI,
Series A's commodity broker, or, for margin purposes, with the various exchanges
on which Series A is permitted to trade. PSI credits Series A monthly with 100%
of the interest it earns on the average net assets in Series A's accounts.
Series A, acting through its trading advisor, may execute over-the-counter,
spot, forward and/or option foreign exchange transactions with PSI. PSI then
engages in back-to-back trading with an affiliate, Prudential-Bache Global
Markets Inc. ('PBGM'). PBGM attempts to earn a profit on such transactions. PBGM
keeps its prices on foreign currency competitive with other interbank currency
trading desks. All over-the-counter currency transactions are conducted between
PSI and Series A pursuant to a line of credit. PSI may require that collateral
be posted against the marked-to-market position of Series A.
As of June 29, 2001, a non-U.S. affiliate of the Managing Owner owns 101.112
limited interests of Series A.
C. Derivative Instruments and Associated Risks
Series A is exposed to various types of risks associated with the derivative
instruments and related markets in which it invests. These risks include, but
are not limited to, risk of loss from fluctuations in the value of derivative
instruments held (market risk) and the inability of counterparties to perform
under the terms of Series A's investment activities (credit risk).
Market Risk
Trading in futures and forward (including foreign exchange) contracts
involves entering into contractual commitments to purchase or sell a particular
commodity at a specified date and price. The gross or face amount of the
contracts, which is typically many times that of Series A's net assets being
traded, significantly exceeds Series A's future cash requirements since Series A
intends to close out its open positions
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prior to settlement. As a result, Series A is generally subject only to the risk
of loss arising from the change in the value of the contracts. As such, Series A
considers the 'fair value' of its derivative instruments to be the net
unrealized gain or loss on the contracts. The market risk associated with Series
A's commitments to purchase commodities is limited to the gross or face amount
of the contract held. However, when Series A enters into a contractual
commitment to sell commodities, it must make delivery of the underlying
commodity at the contract price and then repurchase the contract at prevailing
market prices. Since the repurchase price to which a commodity can rise is
unlimited, entering into commitments to sell commodities exposes Series A to
unlimited risk.
Market risk is influenced by a wide variety of factors, including government
programs and policies, political and economic events, the level and volatility
of interest rates, foreign currency exchange rates, the diversification effects
among the derivative instruments Series A holds and the liquidity and inherent
volatility of the markets in which Series A trades.
Credit risk
When entering into futures or forward contracts, Series A is exposed to
credit risk that the counterparty to the contract will not meet its obligations.
The counterparty for futures contracts traded on United States and most foreign
futures exchanges is the clearinghouse associated with such exchanges. In
general, clearinghouses are backed by their corporate members who are required
to share any financial burden resulting from the non-performance by one of their
members and, as such, should significantly reduce this credit risk. In cases
where the clearinghouse is not backed by the clearing members (i.e., some
foreign exchanges), it is normally backed by a consortium of banks or other
financial institutions. On the other hand, if Series A enters into forward
transactions, the sole counterparty is PSI, Series A's commodity broker. Series
A has entered into a master netting agreement with PSI and, as a result, when
applicable, presents unrealized gains and losses on open forward positions as a
net amount in the statements of financial condition. The amount at risk
associated with counterparty non-performance of all of Series A's contracts is
the net unrealized gain included in the statements of financial condition. There
can be no assurance that any counterparty, clearing member or clearinghouse will
meet its obligations to Series A.
The Managing Owner attempts to minimize both credit and market risks by
requiring Series A and its trading advisor to abide by various trading
limitations and policies. The Managing Owner monitors compliance with these
trading limitations and policies, which include, but are not limited to,
executing and clearing all trades with creditworthy counterparties; limiting the
amount of margin or premium required for any one commodity or all commodities
combined; and generally limiting transactions to contracts which are traded in
sufficient volume to permit the taking and liquidating of positions.
Additionally, pursuant to the advisory agreement among Series A, the Managing
Owner and the trading advisor, Series A shall automatically terminate the
trading advisor if the net asset value allocated to the trading advisor declines
by 33 1/3% from the value at the beginning of any year or since the effective
date (i.e., March 2000) of the advisory agreement. Furthermore, the Second
Amended and Restated Declaration of Trust and Trust Agreement provides that
Series A will liquidate its positions, and eventually dissolve, if Series A
experiences a decline in net asset value of 50% from the value at the beginning
of any year or since the commencement of trading activities. In each case, the
decline in net asset value is after giving effect for distributions,
contributions and redemptions. The Managing Owner may impose additional
restrictions (through modifications of trading limitations and policies) upon
the trading activities of the trading advisor as it, in good faith, deems to be
in the best interests of Series A.
PSI, when acting as Series A's futures commission merchant in accepting
orders for the purchase or sale of domestic futures contracts, is required by
Commodity Futures Trading Commission ('CFTC') regulations to separately account
for and segregate as belonging to Series A all assets of Series A relating to
domestic futures trading (subject to the recent opt out provisions discussed
below) and is not allowed to commingle such assets with other assets of PSI. At
June 29, 2001, such segregated assets totalled $1,867,709. Part 30.7 of the CFTC
regulations also requires PSI to secure assets of Series A related to foreign
futures trading, which totalled $4,203,157 at June 29, 2001. There are no
segregation requirements for assets related to forward trading.
The CFTC recently promulgated rules that allow futures commission merchants
to permit certain customers, including Series A, to opt out of segregation with
regard to trading on certain exchanges, but PSI has not done so to date. If
Series A were to opt out, its funds could be held in a broader and riskier range
of investments.
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As of June 29, 2001, Series A's open futures contracts mature within four
months.
At June 29, 2001 and December 31, 2000, the fair value of open futures
contracts were:
<Table>
<Caption>
2001 2000
-------------------------- --------------------------
Assets Liabilities Assets Liabilities
---------- ----------- ---------- -----------
Domestic exchanges
Interest rates $ -- $ 104,297 $ 344,677 $ --
Stock indices -- 7,150 -- --
Currencies 118,950 77,999 202,200 --
Commodities 175,487 -- 36,563 37,300
Foreign exchanges
Interest rates 90,292 117,690 492,521 23,022
Stock indices 26,118 29,461 66,353 --
Commodities 107,690 6,447 -- 550,696
---------- ----------- ---------- -----------
$ 518,537 $ 343,044 $1,142,314 $ 611,018
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
</Table>
D. Financial Highlights
<Table>
<Caption>
Year-To-Date 2001 Second Quarter 2001
----------------- -------------------
Performance per Interest
Net asset value, beginning of period $ 75.76 $ 84.65
----------------- ----------
Net realized gain (loss) and change in net
unrealized gain/loss on commodity transactions (2.32) (11.77)
Interest income 2.01 .86
Expenses (3.28) (1.57)
----------------- ----------
Decrease for the period (3.59) (12.48)
----------------- ----------
Net asset value, end of period $ 72.17 $ 72.17
----------------- ----------
----------------- ----------
Total return (4.74)% (14.74)%
Ratio to average net assets
Interest income 5.34% 4.65%
Expenses 8.56% 8.46%
</Table>
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WORLD MONITOR TRUST--SERIES A
(a Delaware Business Trust)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Series A commenced operations on June 10, 1998 with gross proceeds of
$6,039,177 allocated to commodities trading. Interests in Series A continued to
be offered weekly until Series A achieved its subscription maximum of
$34,000,000 during November 1999.
Interests in Series A may be redeemed on a weekly basis, but were subject to
a redemption fee if transacted within one year of the effective date of
purchase. Redemptions of limited interests for Year-To-Date 2001, Second Quarter
2001 and for the period from June 10, 1998 (commencement of operations) to June
29, 2001 were $3,049,302, $2,129,731 and $20,704,091, respectively. Redemptions
of general interests for Year-To-Date 2001, Second Quarter 2001 and for the
period from June 10, 1998 (commencement of operations) to June 29, 2001 were
$26,411, $15,476 and $185,813, respectively. Additionally, Interests owned in
one series of World Monitor Trust (Series A, B and C) may be exchanged, without
any charge, for Interests of one or more other series of World Monitor Trust on
a weekly basis for as long as Interests in those Series are being offered to the
public. Since Interests in Series A are no longer being offered, participants
can no longer exchange their Interests from Series B and/or Series C into Series
A; however, participants can currently continue to exchange their Interests from
Series A to Series B and/or Series C. Future redemptions and exchanges will
impact the amount of funds available for investment in commodity contracts in
subsequent periods.
At June 29, 2001, 100% of Series A's net assets were allocated to commodities
trading. A significant portion of the net assets was held in cash, which is used
as margin for Series A's trading in commodities. Inasmuch as the sole business
of Series A is to trade in commodities, Series A continues to own such liquid
assets to be used as margin. PSI credits Series A monthly with 100% of the
interest it earns on the average net assets in Series A's accounts.
The commodities contracts are subject to periods of illiquidity because of
market conditions, regulatory considerations and other reasons. For example,
commodity exchanges limit fluctuations in certain commodity futures contract
prices during a single day by regulations referred to as 'daily limits.' During
a single day, no trades may be executed at prices beyond the daily limit. Once
the price of a futures contract for a particular commodity has increased or
decreased by an amount equal to the daily limit, positions in the commodity can
neither be taken nor liquidated unless traders are willing to effect trades at
or within the limit. Commodity futures prices have occasionally moved the daily
limit for several consecutive days with little or no trading. Such market
conditions could prevent Series A from promptly liquidating its commodity
futures positions.
Since Series A's business is to trade futures and forward contracts, its
capital is at risk due to changes in the value of these contracts (market risk)
or the inability of counterparties to perform under the terms of the contract
(credit risk). Series A's exposure to market risk is influenced by a number of
factors, including the volatility of interest rates and foreign currency
exchange rates, the liquidity of the markets in which the contracts are traded
and the relationship among the contracts held. The inherent uncertainty of
Series A's speculative trading, as well as the development of drastic market
occurrences, could result in monthly losses considerably beyond Series A's
experience to date and could ultimately lead to a loss of all or substantially
all of investors' capital. The Managing Owner attempts to minimize these risks
by requiring Series A and its trading advisor to abide by various trading
limitations and policies, which include limiting margin amounts, trading only in
liquid markets and permitting the use of stop loss provisions. See Note C to the
financial statements for a further discussion on the credit and market risks
associated with Series A's futures and forward contracts.
Series A does not have, nor does it expect to have, any capital assets.
Results of Operations
The net asset value per Interest as of June 29, 2001 was $72.17, a decrease
of 4.74% from the December 31, 2000 net asset value per Interest of $75.76 and a
decrease of 14.74% from the March 30, 2001 net asset value per Interest of
84.65. Past performance is not necessarily indicative of future results.
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Series A's gross trading gains (losses) were ($11,000) and ($1,118,000)
during Year-To-Date 2001 and Second Quarter 2001, respectively, compared to
($2,574,000) and $378,000 during Year-To-Date 2000 and Second Quarter 2000,
respectively. Due to the nature of Series A's trading activities, a period to
period comparison of its trading results is not meaningful. However, a detailed
discussion of Series A's Second Quarter 2001 trading results is presented below.
Quarterly Market Overview
The global economy remained sluggish during the second quarter of 2001 and as
a result, U.S. and global stock markets continued their downward trend. In the
U.S., heightened concerns regarding cutbacks in industrial production and future
sales caused downward revisions of corporate earnings. Business investment and
capital spending were weak and appeared to be decreasing further, reflecting in
part the downtrend in manufacturing output. Labor demand weakened considerably
and unemployment rose. Consumer spending held up relatively well despite
deceleration in income, reduced household net worth, and deterioration in
consumer sentiment. Economic activity in foreign industrial countries
decelerated as well, due in part to softening of the U.S. economy, weakness in
world high-tech markets and the downward adjustment in global equity prices.
Expansion in Europe, including the United Kingdom, and Canada slowed
significantly, while the Japanese economy slowed after a brief rebound late last
year. In addition, economic growth in many developing countries softened,
reflecting, in part, weaker external demand. In the U.S., overall inflation, as
measured by the Consumer Price Index (CPI), increased slightly, but was held
down by a deceleration in energy prices.
As a result of weak global economies, equity markets continued to perform
poorly during most of the quarter. In April, U.S. equity markets, particularly
the NASDAQ, rallied briefly after the U.S. Federal Reserve (Fed) called an
unscheduled meeting to lower interest rates before falling once again amid
continuing softening economies and fears of weak corporate earnings. Markets
rose briefly once again in June following the U.S. Federal Reserve's 25 basis
point interest rate cut. This smaller than anticipated rate reduction seemed to
signal a cessation of the Fed's recent series of aggressive rate cuts and caused
many investors to exit the bond market and invest in equities.
Interest rate instruments trended upward throughout most of the quarter as
major central banks cut short-term interest rates in an attempt to bolster
slowing economies. The U.S. Federal Reserve cut rates three times during the
quarter lowering rates from 4.50% to 3.75%. The European Central Bank and the
Bank of England cut interest rates by 25 basis points in May. This was the third
interest rate reduction in five months for the Bank of England. Global bonds
reversed downward towards quarter-end as the Fed cut rates by only 25 basis
points, driving many investors out of interest rate instruments and into
equities.
In foreign exchange markets, the Japanese yen started the quarter strong
before weakening against the U.S. dollar and other foreign currencies. This
followed a government report that Japan's GDP shrank in the first quarter,
generating fears that the Japanese economy may be slipping into recession. The
Canadian dollar posted gains against the U.S. dollar as economic reports showed
a 1.7% increase in exports to the U.S. in June. The British pound reached a 15
year low against the U.S. dollar in June amid concern that England would join
the European Monetary Union. The euro declined against the U.S. dollar as well,
amid signs of continuing weakness in the European economy.
Energy prices fell in response to growing inventory levels of crude oil and
related products. The American Petroleum Institute reported that the U.S.
gasoline supply had reached its highest level in two years. Swelling energy
inventories fed fears of an overall weakening demand for fuels in the slowing
global economy. Additionally, the market fell when tropical storm Allison caused
less damage along the Gulf Coast than was originally feared.
Quarterly Performance of Series A
The following is a summary of performance for the major sectors in which
Series A traded:
Interest rates (-): Prices of most interest rate instruments trended upward
throughout most of the quarter due to short-term interest rate cuts by major
central banks in an attempt to bolster slowing economies. Short positions in
U.S. government and euro bonds resulted in losses for Series A.
Currencies (-): The Canadian dollar rose against the U.S. dollar amid signs
of a weak U.S. economy and an increase of Canadian exports to the U.S.,
resulting in losses for short positions. Long British pound positions incurred
losses as the pound reached a 15 year low against the U. S. dollar in June.
After a strong
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start, the Japanese yen declined against the U.S. dollar and many European
currencies as the Japanese economy exhibited signs of weakness. Long Japanese
yen and short euro/yen cross-rate positions resulted in losses.
Stock indices (-): Weak global economies and concerns regarding corporate
earnings resulted in continued poor performance in the equity markets. S&P 500
and DAX positions resulted in losses for Series A.
Energies (-): Long crude and heating oil positions resulted in losses as
increased inventories and weakening demand drove prices downward.
Metals (+): Gold prices rallied to a ten month high in May before reversing
course amid rumors that Russia would sell a portion of its gold reserve. Short
gold positions resulted in gains for Series A. Rate cuts by U.S. and European
central banks stirred fears of inflation driving metal prices higher. Long
copper positions resulted in gains.
Series A's average net asset levels during Year-To-Date 2001 and Second
Quarter 2001 have decreased from Year-To-Date 2000 and Second Quarter 2000,
respectively, primarily due to redemptions during 2001 and 2000. The declining
asset levels have led to proportionate decreases in the amount of interest
earned by Series A, as well as commissions and management fees incurred, as
further discussed below.
Interest income is earned on the average net assets held at PSI and,
therefore, varies monthly according to interest rates, trading performance and
redemptions. Interest income decreased $441,000 and $234,000 during Year-To-Date
2001 and Second Quarter 2001, respectively, as compared to Year-To-Date 2000 and
Second Quarter 2000, respectively, due to the decrease in net assets, as
discussed above, as well as the decline in interest rates during 2001 versus
2000.
Commissions are calculated on Series A's net asset value at the end of each
week and, therefore, vary according to weekly trading performance and
redemptions. Commissions decreased $520,000 and $258,000 during Year-To-Date
2001 and Second Quarter 2001, respectively, as compared to Year-To-Date 2000 and
Second Quarter 2000, respectively, due to the decrease in net assets, as
discussed above.
Effective December 6, 1999, the Eagle-Global System became the exclusive
trading program used by Eagle Trading Systems, Inc. (the 'Trading Advisor') to
trade Series A's assets. In conjunction with this change, the Managing Owner and
the Trading Advisor voluntarily agreed to terminate the initial advisory
agreement and enter into a new advisory agreement effective March 21, 2000.
Pursuant to the new advisory agreement, the Trading Advisor is paid a weekly
management fee at an annual rate of 1% of Series A's net asset value until the
net asset value per Interest is at least $80 for a period of 10 consecutive
business days, at which time the weekly management fee will be increased to an
annual rate of 2% (i.e., the rate pursuant to the initial advisory agreement).
Additionally, although the term of the new advisory agreement commenced on March
21, 2000, the Trading Advisor must recoup all trading losses incurred under the
initial advisory agreement before an incentive fee is paid. Furthermore, the new
advisory agreement resets the net asset value for purposes of its termination
provisions (see Note C to the financial statements). The new advisory agreement
may be terminated for a variety of reasons, including at the discretion of the
Managing Owner.
All trading decisions for Series A are made by the Trading Advisor.
Management fees are calculated on Series A's net asset value at the end of each
week and, therefore, are affected by weekly trading performance and redemptions.
Management fees decreased $117,000 and $33,000 during Year-To-Date 2001 and
Second Quarter 2001, respectively, as compared to Year-To-Date 2000 and Second
Quarter 2000, respectively, due to the decrease in net assets as discussed
above. The reduction in the management fee from an annual rate of 2% of Series
A's net asset value to 1% during March 2000, as discussed above, also
contributed to the $117,000 decrease.
Incentive fees are based on the 'New High Net Trading Profits' generated by
the Trading Advisor, as defined in the advisory agreement among the Trust, the
Managing Owner and the Trading Advisor. No incentive fees were paid during
Year-To-Date 2001 or Year-To-Date 2000.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information regarding quantitative and qualitative disclosures about market
risk is not required pursuant to Item 305(e) of Regulation S-K.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings--There are no material legal proceedings pending by or
against Series A or the Managing Owner.
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. (a) Exhibits--
3.1
and
4.1--Second Amended and Restated Declaration of Trust and Trust Agreements of
World Monitor Trust dated as of March 17, 1998 (incorporated by reference
to Exhibits 3.1 and 4.1 to Series A's Registration Statement on Form S-1,
File No. 333-43033)
4.2--Form of Request for Redemption (incorporated by reference to Exhibit 4.2
to Series A's Registration Statement on Form S-1, File No. 333-43033)
4.3--Form of Exchange Request (incorporated by reference to Exhibit 4.3 to
Series A's Registration Statement on Form S-1, File No. 333-43033)
4.4--Form of Subscription Agreement (incorporated by reference to Exhibit 4.4
to Series A's Registration Statement on Form S-1, File No. 333-43033)
(b) Reports on Form 8-K--None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Series A
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
WORLD MONITOR TRUST--SERIES A
By: Prudential Securities Futures Management Inc.
A Delaware corporation, Managing Owner
By: /s/ Steven Carlino Date: August 10, 2001
----------------------------------------
Steven Carlino
Vice President and Treasurer
11