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UNITED STATES
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 28, 2002
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
- --------------------------------------------------------------------------------
(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 No.)
incorporation or organization)
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 28, December 31,
2002 2001
- ---------------------------------------------------------------------------------------------------
ASSETS
Cash $5,106,205 $5,425,959
Net unrealized gain on open futures contracts 724,101 210,147
Accrued interest receivable 319 --
---------- ------------
Total assets $5,830,625 $5,636,106
---------- ------------
---------- ------------
LIABILITIES AND TRUST CAPITAL
Liabilities
Commissions payable $ 29,519 $ 34,930
Management fees payable 8,335 919
Redemptions payable 1,866 8,618
---------- ------------
Total liabilities 39,720 44,467
---------- ------------
Commitments
Trust capital
Limited interests (61,774.190 and 70,712.634 interests outstanding) 5,732,261 5,531,871
General interests (632 and 764 interests outstanding) 58,644 59,768
---------- ------------
Total trust capital 5,790,905 5,591,639
---------- ------------
Total liabilities and trust capital $5,830,625 $5,636,106
---------- ------------
---------- ------------
Net asset value per limited and general interest ('Interests') $ 92.79 $ 78.23
---------- ------------
---------- ------------
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<Caption>
The accompanying notes are an integral part of these statements.
</Table>
2
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WORLD MONITOR TRUST--SERIES A
(a Delaware Business Trust)
Condensed Schedules of Investments
(Unaudited)
<Table>
<Caption>
June 28, 2002 December 31, 2001
-------------------------------- --------------------------------
Net Unrealized Net Unrealized
Gain (Loss) Gain (Loss)
as a % of Net Unrealized as a % of Net Unrealized
Futures Contracts Trust Capital Gain (Loss) Trust Capital Gain (Loss)
<Caption>
- -------------------------------------------------------------------------------------------------------------
Futures contracts purchased:
Stock indices $ -- $ 10,350
Interest rates 422,484 (59,552)
Currencies 250,407 100,156
Commodities (2,903) (34,889)
-------------- --------------
Net unrealized gain on futures
contracts purchased 11.57% 669,988 0.29% 16,065
-------------- --------------
Futures contracts sold:
Stock indices 28,968 --
Currencies -- 165,632
Commodities 25,145 28,450
-------------- --------------
Net unrealized gain on futures
contracts sold 0.93 54,113 3.47 194,082
------- -------------- ------ --------------
Net unrealized gain on futures
contracts 12.50% $ 724,101 3.76% $210,147
------- -------------- ------ --------------
------- -------------- ------ --------------
Settlement Currency--Futures Contracts
British pound 1.85% $ 107,424 (1.24)% $(69,132)
Australian dollars 0.30 17,469 -- --
Euro 2.73 158,153 (0.46) (25,874)
Japanese yen 0.55 31,880 2.17 121,044
U.S. dollar 7.07 409,175 3.29 184,109
------- -------------- ------ --------------
Total 12.50% $ 724,101 3.76% $210,147
------- -------------- ------ --------------
------- -------------- ------ --------------
<Caption>
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The accompanying notes are an integral part of these statements.
</Table>
3
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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, 2002 to January 1, 2001 to March 30, 2002 to March 31, 2001 to
June 28, 2002 June 29, 2001 June 28, 2002 June 29, 2001
- -------------------------------------------------------------------------------------------------------------------------------
REVENUES
Net realized gain (loss) on
commodity transactions $ 539,545 $ 345,031 $ 695,803 $ (57,451)
Change in net unrealized gain on
open commodity positions 513,954 (355,803) 542,020 (1,060,602)
Interest income 54,515 211,742 26,393 76,735
--------------------- ----------- --------------------- ---------------------
1,108,014 200,970 1,264,216 (1,041,318)
--------------------- ----------- --------------------- ---------------------
EXPENSES
Commissions 191,792 300,787 94,620 123,612
Management fees 49,422 38,752 24,382 15,925
--------------------- ----------- --------------------- ---------------------
241,214 339,539 119,002 139,537
--------------------- ----------- --------------------- ---------------------
Net income (loss) $ 866,800 $(138,569) $ 1,145,214 $(1,180,855)
--------------------- ----------- --------------------- ---------------------
--------------------- ----------- --------------------- ---------------------
ALLOCATION OF NET INCOME (LOSS)
Limited interests $ 857,857 $(135,935) $ 1,133,260 $(1,167,051)
--------------------- ----------- --------------------- ---------------------
--------------------- ----------- --------------------- ---------------------
General interests $ 8,943 $ (2,634) $ 11,954 $ (13,804)
--------------------- ----------- --------------------- ---------------------
--------------------- ----------- --------------------- ---------------------
NET INCOME (LOSS) PER WEIGHTED
AVERAGE LIMITED AND GENERAL
INTEREST
Net income (loss) per weighted
average limited and general
interest $ 12.96 $ (1.35) $ 17.81 $ (13.35)
--------------------- ----------- --------------------- ---------------------
--------------------- ----------- --------------------- ---------------------
Weighted average number of
limited and general interests
outstanding 66,863 102,721 64,313 88,457
--------------------- ----------- --------------------- ---------------------
--------------------- ----------- --------------------- ---------------------
- ------------------------------------------------------------------------------------------------------------------------
</Table>
STATEMENT OF CHANGES IN TRUST CAPITAL
(Unaudited)
<Table>
<Caption>
LIMITED GENERAL
INTERESTS INTERESTS INTERESTS TOTAL
- -----------------------------------------------------------------------------------------------------
Trust capital--December 31, 2001 71,476.634 $5,531,871 $ 59,768 $5,591,639
Net income 857,857 8,943 866,800
Redemptions (9,070.444) (657,467) (10,067) (667,534)
---------- ---------- --------- ----------
Trust capital--June 28, 2002 62,406.190 $5,732,261 $ 58,644 $5,790,905
---------- ---------- --------- ----------
---------- ---------- --------- ----------
<Caption>
- -----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</Table>
4
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WORLD MONITOR TRUST--SERIES A
(a Delaware Business Trust)
NOTES TO FINANCIAL STATEMENTS
JUNE 28, 2002
(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 28, 2002 and the results of its
operations for the period from January 1, 2002 to June 28, 2002 ('Year-To-Date
2002'), January 1, 2001 to June 29, 2001 ('Year-To-Date 2001'), March 30, 2002
to June 28, 2002 ('Second Quarter 2002') and March 31, 2001 to June 29, 2001
('Second Quarter 2001'). However, the operating results for the 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, 2001.
B. Related Parties
The Managing Owner of Series A is a wholly-owned subsidiary of Prudential
Securities Incorporated ('PSI'), which, in turn, is an indirect wholly-owned
subsidiary of Prudential Financial, 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. Additionally, PSI or its affiliates
paid the costs associated with offering Series A's Interests.
The costs charged to Series A for brokerage services for Year-To-Date 2002,
Year-To-Date 2001, Second Quarter 2002 and Second Quarter 2001 were $191,792,
$300,787, $94,620 and $123,612, 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 28, 2002, a non-U.S. affiliate of the Managing Owner owned 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 contracts (including foreign exchange)
involves entering into contractual commitments to purchase or sell a particular
commodity at a specified date and price. The gross or face
5
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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 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 the particular exchange.
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;
however, counterparty nonperformance on only certain of Series A's contracts may
result in greater loss than nonperformance on all of Series A's contracts. 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 of the advisory agreement (i.e., March 2000). 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 and is not allowed to commingle such assets with other
assets of PSI. At June 28, 2002, such segregated assets totalled $3,044,071.
Part 30.7 of the CFTC regulations also requires PSI to secure assets of Series A
related to foreign futures trading, which totalled $2,786,235 at June 28, 2002.
There are no segregation requirements for assets related to forward trading.
As of June 28, 2002, Series A's open futures contracts mature within five
months.
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D. Financial Highlights
<Table>
<Caption>
Year-To-Date Year-To-Date Second Quarter Second Quarter
2002 2001 2002 2001
------------- ------------- --------------- ---------------
Performance per Interest
Net asset value, beginning of
period $ 78.23 $ 75.76 $ 74.29 $ 84.65
------------- ------------- --------------- ---------------
Net realized gain (loss) and
change in net unrealized gain
on commodity transactions 17.36 (2.32) 19.94 (11.77)
Interest income .82 2.01 .41 .86
Expenses (3.62) (3.28) (1.85) (1.57)
------------- ------------- --------------- ---------------
Increase (decrease) for the
period 14.56 (3.59) 18.50 (12.48)
------------- ------------- --------------- ---------------
Net asset value, end of period $ 92.79 $ 72.17 $ 92.79 $ 72.17
------------- ------------- --------------- ---------------
------------- ------------- --------------- ---------------
Total return 18.61% (4.74)% 24.90% (14.74)%
Ratio to average net assets
(annualized)
Interest income 2.15% 5.34% 2.16% 4.65%
Expenses 9.53% 8.56% 9.72% 8.46%
</Table>
These financial highlights represent the overall results of Series A
during Year-To-Date 2002, Year-To-Date 2001, Second Quarter 2002 and Second
Quarter 2001. An individual limited owner's actual results may differ depending
on the timing of redemptions.
7
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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. The Managing Owner suspended the offering of
Interests in World Monitor Trust--Series B and World Monitor Trust--Series C and
allowed all selling registrations to expire by April 30, 2002. As such,
Interests owned in one series of World Monitor Trust may no longer be exchanged
for Interests of one or more other series of World Monitor Trust.
Interests in Series A may be redeemed on a weekly basis. Redemptions of
limited interests for Year-To-Date 2002, Second Quarter 2002 and for the period
from June 10, 1998 (commencement of operations) to June 28, 2002 were $657,467,
$348,437 and $22,237,055, respectively. Redemptions of general interests for
Year-To-Date 2002 and for the period from June 10, 1998 (commencement of
operations) to June 28, 2002 were $10,067 and $206,807. No general interests
were redeemed during Second Quarter 2002. Future redemptions will impact the
amount of funds available for investment in commodity contracts in subsequent
periods.
At June 28, 2002, 100% of Series A's net assets were allocated to commodities
trading. A significant portion of the net assets was held in cash, which was
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 28, 2002 was $92.79, an increase
of 18.61% from the December 31, 2001 net asset value per Interest of $78.23, and
an increase of 24.90% from the March 29, 2002 net asset value per Interest of
$74.29. Past performance is not necessarily indicative of future results.
Series A's gross trading gains (losses) were $1,053,000 and $1,238,000 during
Year-To-Date 2002 and Second Quarter 2002, compared to $(11,000) and
$(1,118,000) during Year-To-Date 2001 and Second
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Quarter 2001, 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 2002 trading results is
presented below.
Quarterly Market Overview
Despite reports by the Federal Reserve Board (the 'Fed') indicating that
overall economic activity expanded at a moderate pace during the second quarter
of 2002, investor sentiment remained bleak. Most major U.S. equity indices
reached new lows as investor confidence worldwide was battered by reports of
corporate leadership misconduct and accounting irregularities. Continued
uncertainty in the Middle East and weaker than expected second quarter corporate
earnings added to investor uncertainty. The U.S. dollar fell against most major
foreign currencies during the quarter, while the price of interest rate
instruments rose. In the U.S., residential real estate markets generally
remained robust, but weakness persisted in most commercial markets. Retail sales
were generally flat and labor markets remained weak. Consumer spending and
manufacturing activity, which helped boost U.S. economic growth in previous
quarters, remained stagnant at a relatively high level. Additionally, continued
softness in the labor markets helped weaken consumer confidence. European and
Asian economic activity mirrored that of the U.S., but to a lesser extent.
Global equity markets moved sharply lower throughout the quarter as investor
confidence collapsed in response to concerns about accounting transparency at
some firms, heightened tension in the Middle East, and decreased corporate sales
and profits. This resulted in investors re-evaluating their outlook for a
near-term economic recovery. In the U.S., concerns that unannounced accounting
problems will eliminate expected corporate profits continued to keep equity
markets down. At quarter-end, the year-to-date returns for the S&P 500, the
NASDAQ and the London FTSE were -14%, -25% and -10.75%, respectively.
In bond markets, prices rose as interest rates fell in the U.S. on concerns
regarding a weak economic recovery and declines in the equity markets.
Additionally, declining equity markets led investors to switch allocations from
equity markets to fixed income markets, which are perceived as the current safe
haven for wealth. The Fed left interest rates unchanged at 1.75% in its two
meetings this quarter, declaring that its economic outlook for the near future
remained 'uncertain'. Other central banks, including the European Central Bank
and the Bank of Japan, generally followed the lead of the Fed leaving rates
unchanged and foreign bond markets rose as well.
In foreign exchange markets, the U.S. dollar moved sharply lower against most
major currencies throughout the quarter, falling to new lows against some
currencies. Weak U.S. economic growth in relation to other economies and
concerns regarding accounting irregularities in major U.S. corporations drove
the dollar downward. Additionally, the decline in U.S. equity markets and
investor confidence decreased the desire to hold U.S. assets driving the U.S.
dollar lower against the euro, British pound, Swiss franc and Japanese yen.
Gold and other precious metals soared throughout most of the quarter in
response to weaknesses in the U.S. dollar and global equity markets and
instability in the Middle East. Gold prices reversed at quarter-end as a result
of profit taking by traders and sentiment that the U.S. dollar would be
supported by U.S. and Japanese central banks.
Quarterly Performance of Series A
The following is a summary of performance for the major sectors in which
Series A traded:
Interest rates (+): Global bond markets rose as interest rates declined
during the quarter in response to poor equity market performance. Long positions
in U.S., European, British and Japanese bonds resulted in gains.
Currencies (+): Long Japanese yen and Swiss franc positions resulted in gains
as a weak U.S. economy and falling equity markets caused the U.S. dollar to
fall.
Indices (+): Short positions in the London FTSE and Euro DAX resulted in
gains as equity indices fell amid concerns regarding U.S. economic recovery,
accounting irregularities and weaker than expected corporate earnings.
Grains (+): Gains resulted from short soybean positions which declined
following a projected supply increase by the U.S. Department of Agriculture.
9
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Metals (+): Long copper positions resulted in gains as copper rallied due to
supply cutbacks initiated by some producers. Precious metals rallied in the wake
of falling equity markets and weak economies resulting in gains for long gold
and silver positions.
Energies (-): Energy prices declined amid increased U.S. supplies suggesting
ample supply for the summer season and anticipation that Russia would
discontinue output restrictions. Long crude oil, gas oil and heating oil
positions incurred losses.
Series A's average net asset levels during Year-To-Date 2002 and Second
Quarter 2002 have decreased from Year-To-Date 2001 and Second Quarter 2001,
primarily due to redemptions during the second half of 2001 and Year-To-Date
2002 offset, in part, by favorable trading performance during Year-To-Date 2002.
The declining asset levels have led to proportionate decreases in the amount of
interest earned by Series A, as well as commissions incurred.
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 $157,000 and $50,000 during Year-To-Date
2002 and Second Quarter 2002, as compared to Year-To-Date 2001 and Second
Quarter 2001, respectively due to lower interest rates during Year-To-Date 2002
as compared to Year-To-Date 2001, as well as the decrease in net assets as
discussed above.
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 $109,000 and $29,000 during Year-To-Date 2002
and Second Quarter 2002, as compared to Year-To-Date 2001 and Second Quarter
2001, respectively due to the decrease in average net asset levels 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 ('Initial Advisory Agreement') and enter into a new advisory agreement
('New Advisory Agreement') effective March 21, 2000.
Pursuant to the New Advisory Agreement, the Trading Advisor was to be 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 was at least $80 for a period of 10
consecutive business days, at which time the weekly management fee was to be
increased to an annual rate of 2% (i.e., the rate pursuant to the Initial
Advisory Agreement). Effective October 31, 2001, Series A sustained a net asset
value per Interest greater than $80 for 10 consecutive business days. As a
result, the Trading Advisor has been paid a weekly management fee at an annual
rate of 2% since November 1, 2001. 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 increased $11,000 and $8,000 during Year-To-Date 2002 and Second
Quarter 2002 as compared to Year-To-Date 2001 and Second Quarter 2001,
respectively. This is primarily due to the increase in management fee rate from
an annual rate of 1% of Series A's net asset value to 2% offset, in part, by the
decrease in average net asset levels as discussed above.
Incentive fees are based on the 'New High Net Trading Profits' generated by
the Trading Advisor, as defined in the advisory agreement among Series A, the
Managing Owner and the Trading Advisor. No incentive fees were paid during
Year-To-Date 2002 or Year-To-Date 2001.
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.
10
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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--Effective May 2002, Steven Weinreb was elected by the
Board of Directors of Prudential Securities Futures Management Inc. as
Chief Financial Officer replacing Barbara Brooks.
Item 6. Exhibits and Reports on Form 8-K:
(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)
99.1-- Certificate pursuant to 18 U.S.C. Section 1350 as adopted pursuant
to Section 906 of the SARBANES-OXLEY Act of 2002 (filed herewith)
(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 Weinreb Date: August 12, 2002
----------------------------------------
Steven Weinreb
Chief Financial Officer
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