SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
for the quarterly period ended June 30, 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) (ZipCode)
Registrant's telephone number, including area code: (312) 460-4000
Not Applicable
Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No __
<TABLE>
Part I. Financial Information
Item 1. Financial Statements
Following are Financial Statements for the fiscal quarter ended June 30, 1998,
and the additional time frames as noted:
Fiscal Quarter Year to Date Fiscal Year Fiscal Quarter Year to Date
Ended 6/30/98 To 6/30/98 Ended 12/31/97 Ended 6/30/97 To 6/30/97
-------------- -------------- -------------- --------------------------
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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
Jun 30, 1998 Dec 31, 1997
--------------- -------------
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ASSETS
Cash at Escrow Agent $0 $0
Equity in commodity futures
trading accounts:
Account balance 47,436,844 47,936,067
Unrealized gain on open
futures contracts (259,709) 2,454,648
--------------- -------------
47,177,135 50,390,715
Interest receivable 177,753 201,717
Prepaid G.P. fee 340,058 0
--------------- -------------
Total assets $47,694,946 $50,592,432
=============== =============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued commissions on open
futures contracts due to AXP Advisors and $170,536 $103,054
Accrued management fee 140,680 150,667
Accrued incentive fee 0 184,102
Accrued operating expenses 48,214 114,033
Redemptions payable 555,717 490,756
Selling and Offering Expenses Payable 51,192 86,819
--------------- -------------
Total liabilities 966,339 1,129,431
Partners' Capital:
Limited partners ( 143,927.94 units 45,849,621 48,541,669
outstanding at 6/30/98, 137,994.05
units outstanding at 12/31/97) (see Note 1)
General partners (2,759.25 units outstanding 878,986 921,332
6/30/98 and 2,619.16 at 12/31/97) (see Note 1)
--------------- -------------
Total partners' capital 46,728,607 49,463,001
--------------- -------------
Total liabilities and
partners' capital $47,694,946 $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
Apr 1, 1998 Jan 1, 1998 Apr 1, 1997 Jan 1, 1997
through through through through
Jun 30, 1998 Jun 30, 1998 Jun 30, 1997 Jun 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 ($1,383,122) ($651,555) ($3,160,364) ($1,142,159)
Change in unrealized gain (loss)
on open positions (1,644,979) (2,714,357) 1,320,714 1,324,376
Interest income 536,103 1,082,735 481,996 953,233
Foreign currency transaction gain (loss) (129,045) (215,077) 78,094 (203,518)
--------------- ------------- -------------- -------------
Total revenues (2,621,043) (2,498,255) (1,279,560) 931,932
EXPENSES
Commissions paid to AXP Advisors and CIS 421,112 801,731 338,645 549,435
Exchange fees 12,462 25,004 9,256 17,332
Management fees 426,772 869,118 387,659 759,408
Incentive fees 0 235,624 0 62,390
General Partner fee to IDS Futures Corp. and 170,029 340,058 138,502 277,004
Operating expenses (17,118) 5,902 (6,591) (28,714)
--------------- ------------- -------------- -------------
Total expenses 1,013,257 2,277,437 867,471 1,636,855
--------------- ------------- -------------- -------------
Net profit (loss) ($3,634,300) ($4,775,692) ($2,147,031) ($704,923)
=============== ============= ============== =============
PROFIT (LOSS) PER UNIT OF
PARTNERSHIP INTEREST ($25.03) ($33.21) ($16.31) ($4.72)
=============== ============= ============== =============
(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 June 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) (4,733,346) (42,346) (4,775,692)
Additional Units Sold 13,312.47 4,871,400 0 4,871,400
(see Note 1)
Less Selling and Organizational Costs (428,830) 0 (428,830)
Redemptions (see Note 1) (7,238.49) (2,401,272) (2,401,272)
--------------- ------------- -------------- -------------
Partners' capital at June 30, 1998 143,927.94 $45,849,621 $878,986 $46,728,607
=============== ============= ============== =============
Net asset value per unit
January 1, 1998 (see Note 1) 351.77 351.77
Net profit (loss) per unit (see Note 1) (33.21) (33.21)
------------- --------------
Net asset value per unit
June 30, 1998 $318.56 $318.56
* 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
Jun 30, 1998 Jun 30, 1997
--------------- -------------
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Cash flows from operating activities:
Net profit (loss) ($4,775,692) ($704,923)
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 2,714,357 (1,324,376)
Interest receivable 23,964 2,032
Prepaid general partner fee (340,058) (277,052)
Accrued liabilities (192,426) (877,327)
Redemptions payable 64,961 86,809
Selling and Offering Expenses Payable (35,627) (57,309)
--------------- -------------
Net cash provided by (used in)
operating activities (2,540,521) (3,152,147)
Cash flows from financing activities:
Additional Units Sold 4,871,400 5,696,800
Selling and Offering Expenses (428,830) (495,222)
Partner redemptions (2,401,272) (1,619,246)
--------------- -------------
Net cash provided by (used in)
financing activities 2,041,298 3,582,332
--------------- -------------
Net increase (decrease) in cash (499,223) 430,185
Cash at beginning of period 47,936,067 40,648,882
--------------- -------------
Cash at end of period $47,436,844 $41,079,067
=============== =============
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
JUNE 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.
and Sabre Fund Management Limited, until July 7, 1997. Effective
July 8, 1997 the General Partners added Welton Investment Corporation 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 John W. Henry & Company, Inc. and Welton
Investment Corporation.
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 June 30, 1998 the
Partnership sold 5,975.01 Units for $2,121,900. By June 30, 1998, a total
of 75,825.50 Units representing a total investment of $25,325,209 of limited
partnership interest had been sold in the offering period commencing
June 26, 1995. During the quarter ended June 30, 1998, selling commissions
of $124,204 were paid to AEFA by the new limited partners and all new
investors paid organization and offering expenses totaling $63,657.
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
Restated 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 John W. Henry & Company,
Inc. ("JWH"), Sabre Fund Management Limited ("Sabre") and Welton Investment
Corporation ("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 $0 and $0 for the periods ended
June 30, 1998 and June 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 lose all of its assets and the partners would realize a
100% loss. As of June 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 June 30, 1998:
COMMODITY GROUP UNREALIZED GAIN/(LOSS)
AGRICULTURAL COMMODITIES 42,132
FOREIGN CURRENCIES (510,453)
STOCK INDICES (446,806)
ENERGIES (18,838)
METALS (191,585)
INTEREST RATE INSTRUMENTS 865,841
TOTAL (259,709)
The range of maturity dates of these exchange traded open contracts is July
of 1998 to June of 1999. The average open trade equity for the period of
January 1, 1998 to June 30, 1998 was $1,713,284.
The margin requirement at June 30, 1998 was $7,601,530. To meet this
requirement, the Partnership had on deposit with the Clearing Broker
$43,134,464 in segregated funds and $4,042,671 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 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).
On June 1, 1998 the following changes became effective for CIS Investments,
Inc., one of the General Partners of the Partnership: Hal T. Hansen resigned
as President and Director due to upcoming retirement; L. Carlton Anderson
resigned as Vice President and Director due to upcoming retirement;
Bernard W. Dan was elected President and Director; Barbara A. Pfendler was
elected Director (she also holds the position of Vice President) and
Ronald L. Davis was elected Vice President.
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.
During the fiscal quarter ended June 30, 1998, the Partnership had no
material credit exposure to a counterparty which is a foreign commodities
exchange.
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 is
currently being 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 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 John
W. Henry & Company, Inc. and only slightly positive for Sabre Fund Management
Limited. At June 30, 1997, John W. Henry & Company, Inc. was managing 61.8%
of the Partnership's assets and Sabre Fund Management Limited 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 2037.70 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 John
W. Henry & Company, Inc. and positively for the Partnership account managed
by Welton Investment Corporation. At March 31, 1998, John W. Henry & Company,
Inc. was managing 60.7% of the Partnership's assets and Welton Investment
Corporation 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
the month. 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 John W. Henry & Company, Inc. and Sabre
Fund Management Limited. At March 31, 1997, John W. Henry & Company, Inc.
was managing 65% of the Partnership's assets and Sabre Fund Management
Limited 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: August 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 second 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> JUN-30-1998
<CASH> 47,177,135
<SECURITIES> 0
<RECEIVABLES> 517,811
<ALLOWANCES> 0
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0
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<TOTAL-LIABILITY-AND-EQUITY> 47,694,946
<SALES> 0
<TOTAL-REVENUES> (2,621,043)
<CGS> 0
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<INCOME-PRETAX> (3,634,300)
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