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 September 30, 1998
Commission File Number 0-16515
IDS MANAGED FUTURES, L.P.
(Exact name of registrant as specified in its charter)
Delaware 06-1189438
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification #)
233 South Wacker Dr., Suite 2300, Chicago, IL 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 September 30, 1998,
and the additional time frames as noted:
Fiscal Quarter Year to Date Fiscal Year Fiscal Quarter Year to Date
Ended 9/30/98 To 9/30/98 Ended 12/31/97 Ended 9/30/97 To 9/30/97
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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
IDS MANAGED FUTURES, L.P.
STATEMENTS OF FINANCIAL CONDITION
UNAUDITED
Sep 30, 1998 Dec 31, 1997
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ASSETS
Cash at Escrow Agent $0 $0
Equity in commodity futures
trading accounts:
Account balance 48,076,327 47,936,067
Unrealized gain on open
futures contracts 11,163,451 2,454,648
--------------- -------------
59,239,778 50,390,715
Interest receivable 181,687 201,717
Prepaid G.P. fee 170,029 0
--------------- -------------
Total assets $59,591,494 $50,592,432
=============== =============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued commissions on open
futures contracts due to AXP Advisors and $183,789 $103,054
Accrued management fee 178,265 150,667
Accrued incentive fee 640,635 184,102
Accrued operating expenses 131,640 114,033
Redemptions payable 386,169 490,756
Selling and Offering Expenses Payable 58,317 86,819
--------------- -------------
Total liabilities 1,578,815 1,129,431
Partners' Capital:
Limited partners ( 145,841.59 units 56,887,658 48,541,669
outstanding at 9/30/98, 137,994.05
units outstanding at 12/31/97) (see Note 1)
General partners (2,884.19 units outstanding 1,125,021 921,332
9/30/98 and 2,619.16 at 12/31/97) (see Note 1)
--------------- -------------
Total partners' capital 58,012,680 49,463,001
--------------- -------------
Total liabilities and
partners' capital $59,591,494 $50,592,432
=============== =============
This Statement of Financial Condition, in the opinion of management, reflects all adjustments necessary
to fairly state the financial condition of IDS Managed Futures, L.P. (See Note 6)
IDS MANAGED FUTURES, L.P.
STATEMENTS OF OPERATIONS
UNAUDITED
Jul 1, 1998 Jan 1, 1998 Jul 1, 1997 Jan 1, 1997
through through through through
Sep 30, 1998 Sep 30, 1998 Sep 30, 1997 Sep 30, 1997
--------------- ------------- -------------- -------------
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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 $386,090 ($265,465) $3,759,900 $2,617,741
Change in unrealized gain (loss)
on open positions 11,423,161 8,708,803 401,130 1,725,506
Interest income 541,615 1,624,350 528,568 1,481,801
Foreign currency transaction gain (loss) 31,907 (183,170) (108,780) (312,298)
--------------- ------------- -------------- -------------
Total revenues 12,382,773 9,884,518 4,580,818 5,512,750
EXPENSES
Commissions paid to AXP Advisors and CIS 417,231 1,218,962 298,608 848,043
Exchange fees 13,894 38,898 12,506 29,838
Management fees 476,093 1,345,212 417,364 1,176,773
Incentive fees 640,635 876,259 149,617 212,007
General Partner fee to IDS Futures Corp. and 170,029 510,087 138,526 415,530
Operating expenses 101,461 107,363 90,328 61,613
--------------- ------------- -------------- -------------
Total expenses 1,819,343 4,096,780 1,106,949 2,743,804
--------------- ------------- -------------- -------------
Net profit (loss) $10,563,430 $5,787,738 $3,473,870 $2,768,946
=============== ============= ============== =============
PROFIT (LOSS) PER UNIT OF
PARTNERSHIP INTEREST $71.50 $38.29 $25.61 $20.89
=============== ============= ============== =============
(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 IDS Managed Futures, L. P. (See Note 6)
IDS MANAGED FUTURES, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the period January 1, 1998 through September 30, 1998
UNAUDITED
Limited General
Units* Partners Partners Total
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Partners' capital at January 1, 1998 137,853.96 $48,541,669 $921,332 $49,463,001
Net profit (loss) 5,632,548 155,189 5,787,737
Additional Units Sold 19,732.19 7,330,900 50,000 7,380,900
(see Note 1)
Less Selling and Organizational Costs (644,463) (1,500) (645,963)
Redemptions (see Note 1) (11,744.57) (3,972,996) (3,972,996)
--------------- ------------- -------------- -------------
Partners' capital at September 30, 1998 145,841.59 $56,887,658 $1,125,021 $58,012,680
=============== ============= ============== =============
Net asset value per unit
January 1, 1998 (see Note 1) 351.77 351.77
Net profit (loss) per unit (see Note 1) 38.29 38.29
------------- --------------
Net asset value per unit
September 30, 1998 $390.06 $390.06
* Units of Limited Partnership interest.
This Statement of Changes in Partners' Capital, in the opinion of management, reflects all adjustments
necessary to fairly state the financial condition of IDS Managed Futures, L. P. (See Note 6)
IDS MANAGED FUTURES, L.P.
STATEMENTS OF CASH FLOWS
UNAUDITED
Jan 1, 1998 Jan 1, 1997
through through
Sep 30, 1998 Sep 30, 1997
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Cash flows from operating activities:
Net profit (loss) $5,787,738 $2,768,946
Adjustments to reconcile net profit
(loss) to net cash provided by
(used in) operating activities:
Change in assets and liabilities:
Unrealized gain (loss) on open
futures contracts (8,708,803) (1,725,506)
Interest receivable 20,030 (15,789)
Prepaid general partner fee (170,029) (138,526)
Accrued liabilities 582,473 (697,226)
Redemptions payable (104,587) 212,919
Selling and Offering Expenses Payable (28,502) (57,309)
--------------- -------------
Net cash provided by (used in)
operating activities (2,621,681) 347,509
Cash flows from financing activities:
Additional Units Sold 7,380,900 5,696,800
Selling and Offering Expenses (645,963) (495,222)
Partner redemptions (3,972,996) (2,655,009)
--------------- -------------
Net cash provided by (used in)
financing activities 2,761,941 2,546,569
--------------- -------------
Net increase (decrease) in cash 140,261 2,894,078
Cash at beginning of period 47,936,067 40,648,882
--------------- -------------
Cash at end of period $48,076,328 $43,542,960
=============== =============
This Statement of Cash Flows, in the opinion of management, reflects all adjustments
necessary to fairly state the financial condition of IDS Managed Futures, L. P. (See Note 6)
</TABLE>
IDS MANAGED FUTURES, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(1) GENERAL INFORMATION AND SUMMARY
IDS Managed Futures, L.P. (the "Partnership") is a limited partnership
organized on December 16, 1986 under the Delaware Revised Uniform Limited
Partnership Act. The Partnership was formed to speculatively trade
commodity interests, including futures contracts, forward contracts,
physical commodities, and related options thereon pursuant to the trading
instructions of independent trading advisors. The General Partners of the
Partnership are CIS Investments, Inc. ("CISI") and IDS Futures Corporation
("IDS Futures") (collectively, the "General Partners"). The General Partners
are registered commodity pool operators under the Commodity Exchange Act,
as amended (the "CE Act") and are responsible for administering the business
and affairs of the Partnership exclusive of trading decisions. CISI is an
affiliate of Cargill Investor Services, Inc. ("CIS"), the clearing broker
for the Partnership. IDS Futures is an affiliate of American Express
Financial Advisors Inc. ("AEFA"), formerly IDS Financial Services Inc.,
which acts as the Partnership's introducing broker and selling agent.
Trading decisions for the Partnership were made by two independent commodity
trading advisors, John W. Henry & Company, Inc. ("JWH") and Sabre Fund
Management Limited ("Sabre"), until July 7, 1997. Effective July 8, 1997
the General Partners added Welton Investment Corporation ("Welton") as an
additional independent commodity trading advisor for the Partnership and
the assets of the Partnership were reallocated among the three independent
commodity trading advisors. The General Partners elected not to renew the
Advisory Contract of Sabre Fund Management Limited and it expired on
December 31, 1997. Effective January 1,1998, all of the assets of the
Partnership are managed by JWH and Welton.
Units of limited partnership interest ("Units") were offered initially by
AEFA commencing March 27, 1987 and concluding June 16, 1987. Subsequent
offerings commenced March 29, 1993, January 31, 1994, June 26, 1995,
August 26, 1997 and May 1, 1998. The total amount of the initial offering
was $7,500,000 and the total amount of the combined reopenings was
$80,000,000. Investors purchase Units at the then current net asset value
per Unit on the last business day of the month; investors affiliated with
the selling agent of the Partnership are not required to pay selling
commissions, and the current offering has varied selling commission rates
depending on the total dollar amount of the investment. Therefore, the total
number of Units authorized for the Partnership is not determinable and
therefore is not disclosed in the financial statements.
The Units are currently offered pursuant to a Prospectus dated May 1, 1998.
The minimum subscription size for the offering is $1,000 for investors not
affiliated with AEFA. During the quarter ending September 30, 1998 the
Partnership sold 6,544.64 Units for $2,509,500. By September 30, 1998, a
total of 82,370.14 Units representing a total investment of $27,834,709
of limited partnership interest had been sold in the offering period
commencing June 26, 1995. During the quarter ended September 30, 1998,
selling commissions of $141,848 were paid to AEFA by the new limited
partners and all new investors paid organization and offering expenses
totaling $75,285. The Offering Expense charged pursuant to the registration
statement effective June 26, 1995 was reduced to 3% from the 6% which had
been charged in the previous two offerings.
No redemptions are permitted by a subscriber during the first six months
after he or she has been admitted to the Partnership. Thereafter, a Limited
Partner may cause any or all of his or her Units to be redeemed by the
Partnership effective as of the last trading day of any month of the
Partnership based on the Net Asset Value per Unit on ten days written notice
to the General Partners. There are no additional charges to the investors
at redemption. The General Partners may declare additional redemption dates
upon notice to the Limited Partners. Payment will be made within ten
business days of the effective date of the redemption. The Partnership's
Reinstated and Amended Limited Partnership Agreement contains a full
description of redemption and distribution procedures.
The Partnership shall be terminated on Dec. 31, 2006 if none of the following
occur prior to that date: (1) investors holding more than 50 percent of the
outstanding Units notify the General Partners to dissolve the Partnership as
of a specific date; (2) withdrawal, removal, insolvency, bankruptcy, legal
disability or dissolution of the General Partners of the Partnership; (3)
bankruptcy or insolvency of the Partnership; (4) decrease in the net asset
value to less than $500,000; (5) the Partnership is declared unlawful; or
(6) the net asset value per Unit declines to less than $125 per Unit and the
General Partners elect to withdraw from the Partnership.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of the Partnership 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 which the Partnership follows in preparing its financial statements.
Revenue Recognition
Commodity futures contracts, forward contracts, physical commodities and
related options are recorded on the trade date. All such transactions are
reported on an identified cost basis. Realized gains and losses are determined
by comparing the purchase price to the sales price when the trades are offset.
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 related
options and cash dealer prices at a predetermined time for forward contracts,
physical commodities and their related options) as of the last business day
of the quarter-end.
The Partnership earns interest on 100 percent of the Partnership's average
monthly cash balance on deposit with the Clearing Broker at a rate equal to
90 percent of the average 90-day Treasury bill rate for U.S. Treasury bills
issued during that month.
Redemptions
No redemptions are permitted by a subscriber during the first six months after
he or she has been admitted to the Partnership. Thereafter, a limited partner
may cause any or all of his or her units to be redeemed by the Partnership
effective as of the last trading day of any month of the Partnership based on
the Net Asset Value per unit on 10 days' written notice to the General
Partners. Payment will be made within 10 business days of the effective date
of the redemption. The Partnership's Limited Partnership Agreement contains
a full description of redemption and distribution procedures.
Commissions
Brokerage commissions, National Futures Association fees, and clearing and
exchange fees are accrued on a round-turn basis on open commodity futures
contracts. The Partnership pays commissions on trades executed on its behalf
at a rate of $35 per round turn contract to CIS which in turn reallocates $20
per round turn contract to AEFA, an affiliate of IDS Futures.
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. Foreign currencies are translated into U.S. dollars for closed
positions 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 represents 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, incentive fees are accrued
monthly and paid quarterly and General Partners' administrative fees are paid
annually and amortized monthly. Trading decisions for the periods covered in
these financial statements were made by JWH, Sabre and Welton, the
Partnership's Commodity Trading Advisors ("CTAs"). See Note 1 for the
specific periods of trading for each CTA.
Effective February 1, 1997 Sabre received management fees of 1/4 of 1% of the
month-end net assets. The agreement with Sabre, which expired on December
31, 1997, was not renewed.
Under signed agreement, JWH will receive a monthly management fee of 1/3 of
1% of the month-end net asset value of the Partnership under its management
and 15% of the Partnership's net trading profits, if any, attributable to
its management.
Under signed agreement, Welton will receive a monthly management fee of 1/4
of 1% of the month-end net asset value of the Partnership under its management
and 18% of the Partnership's net trading profits, if any, attributable to its
management.
The Partnership pays an annual administrative fee of 1.125% and 0.25% of the
beginning of the year net asset value of the Partnership to IDS Futures and
CISI, respectively.
(4) INCOME TAXES
No provision for Federal Income Taxes has been made in the accompanying
financial statements as each partner is responsible for reporting income
(loss) based on the pro rata share of the profits or losses of the
Partnership. The Partnership is responsible for the Illinois State
Partnership Information and Replacement Tax based on the operating results
of the Partnership. Such tax amounted to $87,813 and $41,691 for the periods
ended September 30, 1998 and September 30, 1997, respectively.
(5) FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Partnership was formed to speculatively trade Commodity Interests. It
has commodity transactions and all of its cash on deposit at its Clearing
Broker at all times. In the event that volatility of trading of other
customers of the Clearing Broker impaired the ability of the Clearing Broker
to satisfy its obligations to the Partnership, the Partnership 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
has controls in place to make certain that all customers maintain adequate
margin deposits for the positions which they maintain at the Clearing Broker.
Such procedures should protect the Partnership from the off-balance sheet
risk as mentioned earlier. The Clearing Broker does not engage in
proprietary trading and thus has no direct market exposure.
The counterparty of the Partnership for futures contracts traded in the
United States and most non-U.S. exchanges on which the Partnership trades is
the Clearing House associated with the exchange. In general, Clearing Houses
are backed by the membership and will act in the event of nonperformance by
one of its members or one of the members' customers and as such should
significantly reduce this credit risk. In the cases where the Partnership
trades on exchanges on which the Clearing House is not backed by the
membership, the sole recourse of the Partnership for nonperformance will be
the Clearing House.
The Partnership holds futures and futures options positions on the various
exchanges throughout the world. The Partnership does not trade
over-the-counter contracts. As defined by SFAS 105, futures positions are
classified as financial instruments. SFAS 105 requires that the Partnership
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 positions held by the
Partnership at the same time, and if the markets moved such that the Trading
Advisors were unable to offset the futures positions of the Partnership, the
Partnership could loseall of its assets and the partners would realize a
100% loss.As of September 30, 1998 the Partnership had contracts with two
CTAs who make the trading decisions. One of the CTAs trades a program
diversified among all commodity groups, while the other is diversified among
the various futures contracts in the financials and metals group. Both CTAs
trade on U.S. and non-U.S. exchanges. Such diversification should greatly
reduce this market risk. Cash was on deposit with the Clearing Broker
in each time period of the financial statements which exceeded the cash
requirements of the Commodity Interests of the Partnership.
The following chart discloses the dollar amount of the unrealized gain or
loss on open contracts related to exchange traded contracts for the
Partnership as of September 30, 1998:
COMMODITY GROUP UNREALIZED GAIN/(LOSS)
AGRICULTURAL COMMODITIES (41,703)
FOREIGN CURRENCIES 2,493,252
STOCK INDICES 436,390
ENERGIES (34,040)
METALS 41,030
INTEREST RATE INSTRUMENTS 8,268,522
TOTAL 11,163,451
The range of maturity dates of these exchange traded open contracts is
October of 1998 to September of 1999. The average open trade equity for the
period of January 1, 1998 to September 30, 1998 was $3,276,743.
The margin requirement at September 30, 1998 was $7,279,435. To meet this
requirement, the Partnership had on deposit with the Clearing Broker
$52,108,804 in segregated funds and $7,308,258 in secured funds.
(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
Partnership for the year ended December 31, 1997, as filed with the Securities
and Exchange Commission on March 27, 1998, 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 September 30, 1998
The Partnership recorded a gain of $10,563,430 or $71.50 per Unit for the
third quarter of 1998. This compares to a gain of $3,473,870 or $25.61 per
Unit for the third quarter of 1997.
The Partnership suffered losses during the first month of the quarter largely
as a result of losses in interest rates and stock indices. During the second
and third months of the quarter, the Partnership experienced solid gains in
interest rates and smaller gains in currencies and stock indices. Overall,
the third quarter of fiscal 1998 ended positively for the Partnership's
accounts managed by John W. Henry & Company, Inc. and Welton Investment
Corporation. At September 30, 1998, John W. Henry & Company, Inc. was
managing 64.9% of the Partnership's assets and Welton Investment Corporation
was managing 35.1% of the Partnership's assets.
In July, the Partnership incurred small losses as unprofitable positions in
interest rates, stock indices and agricultural commodities offset moderate
gains in gold and crude oil. The price of gold declined at month end along
with the Japanese yen's fall in world markets; gold and the Japanese yen have
moved in lockstep since early June, reflecting the diminishing demand for gold
as the region's economies retract. Crude oil prices fell at month end
following an earlier rise, as reports indicated a build-up in U.S. inventory.
Gains in long-term European bond markets failed to offset losses in other
long-term interest rates traded. Corn prices plunged on favorable weather
conditions for crops; profitable positions in corn and smaller gains in wheat,
soybean oil and live cattle did not offset losses in other markets traded.
The Partnership recorded a loss of $454,749 or $3.10 per Unit in July.
In August the Partnership posted solid gains, led by profitable positions in
global interest rates. Leading gains in the bond market were positions in
German and U.S. bonds, which benefited from investors' flight to quality
during the month, and the Japanese Government bond, where the yield on the
benchmark 10-year bond dropped to 1.105%, a historic low. The U.S. dollar
made little progress against the Japanese yen as Japanese officials renewed
their threats of intervention in the currency markets. The world's supply of
crude oil skyrocketed in August, up 11% from a year earlier, holding prices
down. The price of crude oil has been halved from its 1997 high of $26.62
per barrel; positions in this key energy market resulted in gains.The
Partnership recorded a gain of $5,911,711 or $40.13 per Unit in August.
In September, the Partnership recorded gains as profitable positions in
interest rates and smaller gains in currencies and stock indices offset
losses in metals, energy and agricultural commodities. Except for
Australian bonds, which reflected the uncertainty of an upcoming election in
that country, positions in all interest rates traded were profitable. Gains
were strongest in German, U.S. and Japanese government bonds; in all three
markets, yields declined to historic levels. Profitable positions in the
German mark and Swiss franc and smaller gains in the British pound offset
losses in other currencies traded. Positions in gold and silver resulted in
losses as prices of both metals rose. Sugar plummeted to an 11-year low
during the month on reduced demand and expectations of record crops in Brazil;
gains in sugar and cocoa failed to offset losses in other agricultural
commodities traded, but the Partnership recorded a gain of $5,106,468 or
$34.47 per Unit in September.
During the quarter there were 6,544.64 additional Units sold, including
124.94 Units sold to the General Partners. Additional Units sold during the
quarter represented a total of $2,509,500 before the reduction of selling
commissions and organizational costs of $217,133. Investors redeemed a total
of 4,506.06 Units during the quarter. At the end of the quarter there were
148,725.78 Units outstanding (including 2,884.19 Units owned by the General
Partners).
During the fiscal quarter ended September 30, 1998, the Partnership had no
material credit exposure to a counterparty which is a foreign commodities
exchange.
The Partnership currently only trades on recognized global futures exchanges.
In the event the Partnership begins trading over the counter contracts, any
credit exposure to a counterparty which exceeds 10% of the Partnership's total
assets will be disclosed.
See Footnote 5 of the Financial Statements for procedures established by the
General Partners to monitor and minimize market and credit risks for the
Partnership. In addition to the procedures set out in Footnote 5, the
General Partners review on a daily basis reports of the Partnership's
performance, including monitoring of the daily net asset value of the
Partnership. The General Partners also review the financial situation of the
Partnership's Clearing Broker on a monthly basis. The General Partners rely
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 General Partners assurance that the
Partnership will not suffer trading losses through the Clearing Broker.
Year 2000 Issue
The Partnership does not have any anticipated costs, problems or uncertainties
associated with the Year 2000 issue. The Partnership relies on the General
Partners to provide the Partnership with certain calculations and reports, so
if the Year 2000 issue is material to the General Partners, then it may impact
the Partnership. However, the Year 2000 issue is not material for the General
Partners since the administration software has recently been replaced and will
be in compliance with Y2000 prior to the end of 1998. In addition, the
Clearing Broker is undergoing an intensive review to determine what areas (if
any) are not in compliance with Y2000, and expects to be in compliance by the
end of 1998. Neither the software replacement nor the compliance review are
expected to be material or to yield noncompliance issues that are material.
Fiscal Quarter ended September 30, 1997
The Partnership recorded a gain of $3,473,870 or $25.61 per Unit for the
third quarter of 1997.
The Partnership experienced gains during the first and third months of the
quarter as a result of strong profits in global interest rate positions,
metals and some currencies. During the second month of the quarter, the
Partnership suffered losses in U.S and European interest rates, currencies,
crude oil and metals. Overall, the third quarter of fiscal 1997 ended
positively for the Partnership's accounts managed by John W. Henry & Company,
Inc. and Welton Investment Corporation and ended negatively for the
Partnership's accounts managed by Sabre Fund Management Limited. At
September 30, 1997, John W. Henry & Company, Inc. was managing 64.5% of the
Partnership's assets, Sabre Fund Management Limited was managing 4.3% of the
Partnership's assets and Welton Investment Corporation was managing 31.2% of
the Partnership's assets.
In July, positions in U.S. Treasuries resulted in strong gains as did
positions in Japanese Government bonds. In the currency markets, investors
traded German marks and Swiss francs for U.S. dollars, pushing the dollar to
new highs against both currencies. Except for sugar, positions in all other
agricultural commodities traded resulted in losses. Silver and gold prices
fell, reflecting the sale by the Australian central bank of 60% of its gold
reserves; the positions held by the Partnership in both metals were
profitable. The Partnership recorded a gain of $4,770,193 or $35.24 per Unit
in July.
In August, crude oil prices were pressured downward and traded erratically in
part due to the recent return of Iraqi oil to world markets. Trading
volatility also accounted for losses in the global interest rate sector and
metals. Price reversals in the U.S. 30-year bond and U.S. and Australian
10-year notes resulted in losses for the Partnership. While losses occurred
in the Deutsche mark and Swiss franc, gains were made in the Japanese yen and
the Nikkei stock index. Positions in coffee, cotton and corn also resulted
in gains for the Partnership. However, these gains did not offset the losses
incurred and the Partnership recorded a loss of $2,079,893 or $15.51 per Unit
in August.
In September, moderate gains were recorded for the Partnership, reflecting
profitable positions in global interest rate markets and the Japanese Nikkei.
The largest gains were derived from positions in the British long gilt and
Japanese Government bond. Except for the Australian dollar, positions in all
other currencies traded resulted in losses. Small gains in cotton failed to
offset losses in coffee, sugar and other agricultural markets. Positions in
silver and copper resulted in gains, offsetting losses in gold. The
Partnership recorded a gain of $783,570 or $5.88 per Unit in September.
There were no additional Units sold during the fiscal quarter of 1997.
Investors redeemed a total of 2,981.97 Units during the quarter. At the end
of the quarter there were 132,369.80 Units outstanding (including 2,619.16
Units owned by the General Partners).
During the fiscal quarter ended September 30, 1997, the Partnership had no
material credit exposure to a counterparty which is a foreign commodities
exchange.
Fiscal Quarter ended June 30, 1998
The Partnership recorded a loss of $3,634,300 or $25.03 per Unit for the
second quarter of 1998. This compares to a loss of $2,147,031 or $16.31 per
Unit for the second quarter of 1997.
During the first and third months of the quarter, the Partnership 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.
Overall, the second quarter of fiscal 1998 ended negatively for the
Partnership accounts managed by JWH and Welton. At June 30, 1998, JWH was
managing 59.9% of the Partnership's assets and Welton was managing 40.1% of
the Partnership's assets.
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 Partnership recorded a loss of $3,090,654 or $21.36 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 Partnership recorded a gain of $1,172,425
or $8.02 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 Partnership recorded a loss of
$1,716,071 or $11.69 per Unit in June.
During the quarter there were 5,975.01 additional Units sold; there were no
Units sold to the General Partners. Additional Units sold during the quarter
represented a total of $2,121,900 before the reduction of selling commissions
and organizational costs of $187,861. Investors redeemed a total of
3,943.70 Units during the quarter. At the end of the quarter there were
146,687.19 Units outstanding (including 2,759.25 Units owned by the General
Partners).
During the fiscal quarter ended June 30, 1998, the Partnership had no
material credit exposure to a counterparty which is a foreign commodities
exchange.
Fiscal Quarter ended June 30, 1997
The Partnership recorded a loss of $2,147,031 or $16.31 per Unit for the
second quarter of 1997.
During the first two months of the quarter the Partnership experienced losses
primarily as a result of losses in precious metals and foreign exchange. The
third month experienced gains due to profitable positions in metals, interest
rates and stock indices. Overall, the second quarter of fiscal 1997 ended
negatively for the Partnership's accounts managed by JWH and only slightly
positive for Sabre. At June 30, 1997, JWH was managing 61.8% of the
Partnership's assets and Sabre was managing 38.2% of the Partnership's assets.
In April, yields on the U.S. Treasury 30-year bond soared to a nine-month
high, only to fall by month end resulting in losses in interest rates. The
U.S. dollar continued its rise in the weeks leading up to the meeting of the
G-7 finance ministers, reaching new highs against the Japanese yen and the
German mark. Gains were realized in coffee as prices soared amid increasing
concerns about adequate supply. In precious metals, both gold and silver
prices declined as investors' concerns over U.S.inflation subsided. However,
the Partnership recorded a loss of $876,680.83 or $6.70 per Unit in April.
Worldwide political events upset currency markets in May. The British pound
rallied sharply, but briefly, hitting its highest intraday level since August
1992 after a surprise decision by Britain's newly elected Labour Government
to give the Bank of England more autonomy in setting interest rates. In Japan,
official warnings of intervention to cap the U.S. dollar's rise against the
Japanese yen and a report that the Bank of Japan might raise a key interest
rate pushed the dollar to a 4 1/2 month low against the Japanese currency.
Surprising strength in the polls by French socialists and sharp disagreement
in Germany over the use of gold reserves to meet criteria for European union
membership threw the future of that monetary union in doubt. Trading in
stock indices and agricultural commodities generated gains, while trading in
metals was mixed. The Partnership recorded a loss of $2,425,881.10 or $18.10
per Unit in May.
In June, gold prices fell to a four-year low as the U.S. dollar strengthened
and inflation indicators remained favorable. Positions in both gold and silver
were profitable. Continued uncertainty surrounding the European currency
union benefited bond markets outside the EMU circle of nations. In the
currency markets, the Swiss monetary authority's determination to keep the
franc from appreciating against major currencies succeeded in pushing the
price of that currency down. After reaching a 20-year high in May, coffee
prices fell steadily in June on news of higher world exports and concerns
about the impact of high prices on demand. The Partnership recorded a gain
of $1,155,530.98 or $8.49 per Unit in June.
During the quarter there were 6,636.42 additional Units sold, including
303.82 Units sold to the General Partners. Additional Units sold during the
quarter represented a total of $2,325,600 before the reduction of selling
commissions and organizational costs of $199,064. Investors redeemed a total
of 2,037.70 Units during the quarter. At the end of the quarter there were
135,351.77 Units outstanding (including 2,619.16 Units owned by the General
Partners).
During the fiscal quarter ended June 30, 1997, the Partnership had no material
credit exposure to a counterparty which is a foreign commodities exchange.
Fiscal Quarter ended March 31, 1998
The Partnership recorded a loss of $1,141,392 or $8.18 per Unit for the first
quarter of 1998. This compares to gain of $1,442,108 or $11.59 per Unit for
the first quarter of 1997.
During the first two months of the quarter, the Partnership experienced
losses primarily as a result of unprofitable positions in currencies and
interest rates, while during the third month gains were recorded primarily
due to gains in the currency and energy markets. Overall, the first quarter
of fiscal 1998 ended negatively for the Partnership account managed by JWH
and positively for the Partnership account managed by Welton. At March 31,
1998, JWH was managing 60.7% of the Partnership's assets and Welton was
managing 39.3% of the Partnership's assets.
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 Partnership. Benign inflation news in Europe and the U.S. boosted
bond markets in both regions, resulting in gains for the Partnership. These
gains were offset by losses in stock indices and in gold prices. Positions
in crude oil and coffee produced small gains for the Partnership. Overall,
the Partnership recorded a loss of $1,426,301 or $10.15 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
Partnership. 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
Partnership recorded a loss of $172,379 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 postwar lows.
Positions in the Swiss franc and the German mark resulted in gains for the
Partnership. The market for crude oil generated a lot of excitement during
the month, following the surprise announcement by OPEC and non-OPEC oil-
producing nations of an agreement to cut production. Positions in energy
markets were profitable overall. 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
themonth. Except for small gains in soybeans and soybean-derivative markets,
positions in agricultural commodities resulted in losses overall. The
Partnership recorded a gain of $457,288 or $3.18 per Unit in March.
During the quarter, additional units sold consisted of 7,337.44 limited
partnership units and 140.09 general partnership units. Additional units
sold during the quarter represented a total of $2,799,500 before the
reduction of selling commissions and organizational costs of $240,969.
Investors redeemed a total of 3,294.77 Units during the quarter. At the end
of the quarter there were 144,655.88 Units outstanding (including 2,759.25
Units owned by the General Partners).
During the fiscal quarter ended March 31, 1998, the Partnership had no
material credit exposure to a counterparty which is a foreign commodities
exchange.
Fiscal Quarter ended March 31, 1997
The Partnership recorded a gain of $1,442,108 or $11.59 per Unit for the
first quarter of 1997.
During the first two months of the quarter, the Partnership experienced
gains primarily as a result of profits in foreign exchange rates, while
during the third month losses were recorded due in part to the direction of
U.S interest rates. Overall, the first quarter of fiscal 1997 ended
positively for the Partnership's accounts managed by JWH and Sabre. At March
31, 1997, JWH was managing 65% of the Partnership's assets and Sabre was
managing 35% of the Partnership's assets.
In January, the U.S. dollar continued to dominate world currencies,
reflecting both sound economic fundamentals and a policy, shared by both the
U.S. central bank and Treasury administration officials, in support of a
strong dollar. The Japanese yen suffered from problems in the Japanese
banking sector. Rising unemployment and weak economic numbers in Germany
once again drove the German mark down against the U.S. dollar. Trading in
the British pound grew increasingly volatile as prospects for an interest
rate increase in Britain weakened. Gold prices reached a three year low at
mid-month. Therefore, the Partnership recorded a profit of $1,484,691 or
$11.92 per Unit in January.
In February, the U.S. dollar reached new highs against the German mark,
Japanese yen and Swiss franc. The Federal Reserve chairman hinted of a
possible hike in U.S. interest rates which sent the dollar soaring.
Volatility in global interest rate markets continued to be fueled by
speculation on the direction of global interest rates. Early in the month,
central banks in Germany, England and the U.S announced their decisions to
keep rates stable. In commodity markets, gold prices rose as demand was
rekindled by the lowest spot prices since 1993. In agricultural markets, a
two-month bull trend in coffee prices continued as unfavorable weather and
labor strife in South America threatened supply. The Partnership recorded a
gain of $33,813 or $.27 per Unit in February.
In March, speculation over the direction of U.S. interest rates unsettled
financial markets around the world. Rising U.S. interest rates, unease over
first quarter corporate earnings and lofty stock evaluations resulted in
turmoil in U.S equity markets. In Europe, renewed speculation about a delay
in the European Union's plans for economic and monetary union pushed the
German mark higher against the U.S. dollar. Agricultural markets recorded
profits resulting from persistent supply concerns. Due to overall market
turbulence, the Partnership recorded a loss of $76,396 or $.60 per Unit in
March.
During the quarter, additional units sold consisted of 9,164.28 limited
partnership units; no general partner units were sold. Additional Units sold
during the quarter represented a total of $3,371,200 before the reduction of
selling commissions and organizational costs of $296,158. Investors redeemed
a total of 2,902.34 Units during the quarter. At the end of the quarter
there were 130,753.07 Units outstanding (including 2,315.34 Units owned by
the General Partners).
During the fiscal quarter ended March 31, 1997, the Partnership had no
material credit exposure to a counterparty which is a foreign commodities
exchange.
Item 3. Quantitative and Qualitative Disclosures
About Market Risk
Not Applicable.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
The Partnership and its affiliates are from time to time parties to various
legal actions arising in the normal course of business. The General
Partners believe that there is no proceeding threatened or pending against
the Partnership 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 Partnership.
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.
IDS MANAGED FUTURES, L.P.
Date: November 12, 1998 By: CIS Investments, Inc.,
One of its General Partners
By: /s/ Richard A Driver
Richard A. Driver
Treasurer
(Duly authorized officer of
the General Partner and the
Principal Financial Officer of
the General Partner)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from IDS Managed
Futures, L.P. for the third quarter of 1998 and is qualified in its entirety by
reference to such 10-Q.
</LEGEND>
<CIK> 0000809061
<NAME> IDS MANAGED FUTURES, L.P.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1998
<CASH> 59,239,778
<SECURITIES> 0
<RECEIVABLES> 351,716
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 59,591,494
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 59,591,494
<CURRENT-LIABILITIES> 1,578,815
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 58,012,680
<TOTAL-LIABILITY-AND-EQUITY> 59,591,494
<SALES> 0
<TOTAL-REVENUES> 12,382,773
<CGS> 0
<TOTAL-COSTS> 1,819,343
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,563,430
<INCOME-TAX> 0
<INCOME-CONTINUING> 10,563,430
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 10,563,430
<EPS-PRIMARY> 71.50
<EPS-DILUTED> 71.50
</TABLE>
