<PAGE>
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, 1999
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 __
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Following are Financial Statements for the fiscal quarter ended September 30,
1999 and the additional time frames as noted:
<TABLE>
<CAPTION>
Fiscal Quarter Year to Date Fiscal Year Fiscal Quarter Year to Date
Ended 9/30/99 To 9/30/99 Ended 12/31/98 Ended 9/30/98 To 9/30/98
-------------- ------------ -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
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
</TABLE>
<PAGE>
IDS MANAGED FUTURES, L.P.
STATEMENTS OF FINANCIAL CONDITION
UNAUDITED
<TABLE>
<CAPTION>
Sep 30, 1999 Dec 31, 1998
------------ ------------
<S> <C> <C>
ASSETS
Cash at Escrow Agent $0 $0
Equity in commodity futures
trading accounts:
Account balance 52,029,252 52,649,782
Unrealized gain on open
futures contracts (1,133,303) 5,740,766
-------------------- ----------------------
50,895,949 58,390,548
Interest receivable 184,387 179,775
Prepaid G.P. fee $198,492 $0
-------------------- ----------------------
TOTAL ASSETS $51,278,827 $58,570,323
==================== ======================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued commissions on open
futures contracts due to AXP Advisors and CIS $76,495 $131,631
Accrued management fee 154,658 173,726
Accrued incentive fee 0 0
Accrued operating expenses 98,466 125,906
Redemptions payable 360,083 308,694
Selling and Offering Expenses Payable 56,755 87,188
-------------------- ----------------------
Total liabilities 746,458 827,145
Partners' Capital:
Limited partners ( 147,136.72 units 49,560,872 56,642,072
outstanding at 9/30/99, 148,334.99
units outstanding at 12/31/98) (see Note 1)
General partners (2,884.19 units outstanding at 971,498 1,101,106
9/30/99 and 12/31/98) (see Note 1)
-------------------- ----------------------
Total partners' capital 50,532,370 57,743,178
-------------------- ----------------------
TOTAL LIABILITIES AND
PARTNERS' CAPITAL $51,278,828 $58,570,323
==================== ======================
</TABLE>
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)
<PAGE>
IDS MANAGED FUTURES, L.P.
STATEMENTS OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
Jul 1, 1999 Jan 1, 1999 Jul 1, 1998 Jan 1, 1998
through through through through
Sep 30, 1999 Sep 30, 1999 Sep 30, 1998 Sep 30, 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES
Gains on trading of commodity futures
and forwards contracts, physical
commodities and related options:
Realized gain (loss) on closed positions ($624,794) $2,031,638 $386,090 ($265,465)
Change in unrealized gain (loss)
on open positions (5,230,180) (6,880,481) 11,423,161 8,708,803
Interest income 572,971 1,636,638 541,615 1,624,350
Foreign currency transaction gain (loss) 90,885 (76,777) 31,907 (183,170)
---------------- ------------ ------------- -------------
Total revenues (5,191,119) (3,288,981) 12,382,773 9,884,518
EXPENSES
Commissions paid to AXP Advisors and CIS 381,998 1,136,804 417,231 1,218,962
Exchange fees 19,452 59,074 13,894 38,898
Management fees 487,506 1,488,115 476,093 1,345,212
Incentive fees 0 107,651 640,635 876,259
General Partner fee to IDS Futures Corp.
and CIS 198,492 595,477 170,029 510,087
Operating expenses 13,500 41,274 101,461 107,363
---------------- ------------ ------------- -------------
Total expenses 1,100,948 3,428,394 1,819,343 4,096,781
---------------- ------------ ------------- -------------
NET PROFIT (LOSS) ($6,292,067) ($6,717,376) $10,563,430 $5,787,737
================ ============ ============= =============
PROFIT (LOSS) PER UNIT OF
PARTNERSHIP INTEREST ($42.18) ($45.01) $71.50 $38.29
================ ============ ============= =============
(see Note 1) (see Note 1) (see Note 1) (see Note 1)
</TABLE>
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)
<PAGE>
IDS MANAGED FUTURES, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIOD JANUARY 1, 1999 THROUGH SEPTEMBER 30, 1999
UNAUDITED
<TABLE>
<CAPTION>
Limited General
Units* Partners Partners Total
----- -------- -------- -----
<S> <C> <C> <C> <C>
Partners' capital at January 1, 1999 148,334.99 $56,642,072 $1,101,106 $57,743,178
Net profit (loss) (6,587,769) (129,608) (6,717,377)
Additional Units Sold 13,970.23 5,471,700 0 5,471,700
(see Note 1)
Less Selling and Organizational Costs (483,579) 0 (483,579)
Redemptions (see Note 1) (15,168.50) (5,481,552) (5,481,552)
------------------ ---------------- ------------- --------------
Partners' capital at September 30, 1999 147,136.72 $49,560,872 $971,498 $50,532,370
================== ================ ============= ==============
Net asset value per unit
January 1, 1999 (see Note 1) 381.85 381.85
Net profit (loss) per unit (see Note 1) (45.01) (45.01)
---------------- -------------
Net asset value per unit
September 30, 1999 $336.84 $336.84
</TABLE>
* 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)
<PAGE>
IDS MANAGED FUTURES, L.P.
STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
Jan 1, 1999 Jan 1, 1998
through through
Sep 30, 1999 Sep 30, 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net profit (loss) ($6,717,377) ($4,775,692)
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 6,874,069 2,714,357
Interest receivable (4,612) 23,964
Prepaid general partner fee (198,492) (340,058)
Accrued liabilities (101,643) (192,426)
Redemptions payable 51,389 64,961
Selling and Offering Expenses Payable (30,433) (35,627)
---------------- ----------------
Net cash provided by (used in)
operating activities (127,098) (2,540,521)
Cash flows from financing activities:
Additional Units Sold 5,471,700 4,871,400
Selling and Offering Expenses (483,579) (428,830)
Partner redemptions (5,481,552) (2,401,272)
---------------- ----------------
Net cash provided by (used in)
financing activities (493,431) 2,041,298
---------------- ----------------
Net increase (decrease) in cash (620,530) (499,223)
Cash at beginning of period $52,649,782 47,936,067
---------------- ----------------
Cash at end of period $52,029,252 $47,436,844
================ ================
</TABLE>
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)
<PAGE>
IDS MANAGED FUTURES, L.P.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(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 during the period of these financials were made by two
independent commodity trading advisors, John W. Henry & Company, Inc. ("JWH")
and Welton Investment Corporation ("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 and June 26, 1995. 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 April 30,
1999. The minimum subscription size for the offering is $1,000 for investors
not affiliated with AEFA. By September 30, 1999, a total of 147,136.72 Units
representing a total investment of $49,560,872 of limited partnership
interest had been sold in the offering period commencing June 26, 1995.
During the quarter ended September 30, 1999, selling commissions of $87,192
were paid to AEFA by the new limited partners and all new investors paid
organization and offering expenses totaling $50,211.
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
2
<PAGE>
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.
3
<PAGE>
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 escrow agent and 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 and Welton, the Partnership's
Commodity Trading Advisors ("CTAs"). See Note 1 for the specific periods of
trading for each CTA.
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.
4
<PAGE>
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 $87,813 for the periods ended
September 30, 1999 and September 30, 1998, 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 that 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
5
<PAGE>
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 September
30, 1999 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, 1999:
<TABLE>
<CAPTION>
COMMODITY GROUP UNREALIZED GAIN/(LOSS)
<S> <C>
AGRICULTURAL COMMODITIES $ (3,656)
FOREIGN CURRENCIES 445,975
STOCK INDICES (90,195)
ENERGIES 76,828
METALS (1,905,664)
INTEREST RATE INSTRUMENTS 343,409
------------
TOTAL $(1,133,303)
</TABLE>
The range of maturity dates of these exchange traded open contracts is
October of 1999 to September, 2000. The average open trade equity for the
period of January 1, 1999 to September 30, 1999 was $3,050,983.
The margin requirement at September 30, 1999 was $6,719,783. To meet this
requirement, the Partnership had on deposit with the Clearing Broker
$45,522,366 in segregated funds and $5,373,583 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, 1998, as filed with the
Securities and Exchange Commission on March 29, 1999, as part of its Annual
Report on Form 10-K.
The results of operations for interim periods are not necessarily indicative
of the operating results to be expected for the fiscal year.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
FISCAL QUARTER ENDED SEPTEMBER 30, 1999
The Partnership recorded a loss of $6,292,067 or $42.18 per Unit for the
third quarter of 1999. This compares to a gain of $10,563,430 or $71.50 per
Unit for the third quarter of 1998.
In the first month of the quarter the Partnership posted a loss resulting
primarily from excessive volatility in the currency markets. The Partnership
posted a small loss during the second month of the quarter resulting
primarily from losses in global interest rates and the Japanese Nikkei stock
index. During the third month of the quarter, the Partnership surrendered
profits due to rapidly escalating gold prices and the Partnership's short
gold positions. Overall, the third quarter of fiscal 1999 ended negatively
for the Partnership accounts managed by JWH. At September 30, 1999, JWH was
managing 68% of the Partnership's assets and Welton was managing 32% of the
Partnership's assets.
The Partnership posted a loss for July, largely due to excessive volatility
in the currency markets. After gaining value versus the world's currencies
for several weeks, the U.S. dollar ran out of steam by the mid-month. As a
result, the Partnership posted losses from long Dollar positions against the
Euro, Swiss franc and Japanese yen. The decline of the Dollar continued
through month end, which prompted short Dollar positions to be established.
Losses in the currency markets wiped out smaller gains that came from global
interest rates, metals, energy and the agricultural sectors. Short positions
in the 10-year and 30-year U.S. bonds provided profits as the long bond yield
rose above 6.1%. The Partnership's strongest gains in this sector came from
Europe where interest rates continued to rise. Profits were earned from short
positions in the Euro Bund, Euro Bobl and U.K. Gilt. Likewise, the
Partnership continued to profit from its short positions in the gold market
as the price of gold fell to its lowest level in 20 years; $253.70 per troy
ounce. All in all, the Partnership posted a loss of $1,663,100 or $11.16 per
Unit in July.
In August, the Partnership posted another small loss. Gains for the
Partnership were the result of a weaker U.S. dollar, versus the Yen and Euro
specifically. Stronger crude oil prices and lower gold prices also provided
gains. Unfortunately, these gains were offset by losses in global interest
rates and the Japanese Nikkei stock index. Long positions in the Japanese
stock index (the Nikkei) that were profitable for the entire year were closed
out and small losses were recorded during August.
Currencies provided some resurrection in the form of a stronger Yen and Euro
versus the U.S. dollar. Since mid-July, the Partnership held profitable long
positions in the Yen and Euro looking for these currencies to strengthen
against the Dollar. Long positions in crude oil performed well as prices rose
$2 per barrel during August exceeding $22 per barrel. Gold prices again
plummeted through a 20-year low to $253.00 per troy ounce. Notwithstanding
these gains, the Partnersip posted a loss of $1,689,683 or $11.34 per Unit in
August.
The Partnership had a difficult time in the markets during September. Losses
were primarily attributable to its short gold position, as the price rose
over
7
<PAGE>
$50 per ounce. The price of gold escalated rapidly after 15 European central
banks announced that they wouldn't sell or lease additional gold for the next
five years.
Unfortunately, gains in Crude oil and the Japanese Yen were offset by losses
in gold, as well as short positions in the U.S. and Japanese bond markets.
The Partnership's long positions in Crude oil performed well as prices rose
nearly another $2 per barrel. Currencies provided small gains as the Japanese
yen strengthened against the U.S. dollar for the second consecutive month. In
addition, long yen positions proved profitable relative to the European
currencies. Notwithstanding these gains, the Partnership posted a loss of
$2,939,284 or $19.68 per Unit in September.
During the quarter there were 4,331.77 additional Units sold to the Limited
Partners (there were no Units sold to the General Partners). Additional Units
sold during the quarter represented a total of $1,526,297.00 before the
reduction of selling commissions and organizational costs of $137,403.
Investors redeemed a total of 3,240.39 Units during the quarter. At the end
of the quarter there were 150,020.91 Units outstanding (including 2,884.19
Units owned by the General Partners).
During the fiscal quarter ended September 30, 1999, 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
CIS surveyed its major applications in 1996 to see if they were Year 2000
compliant. Systems identified with Year 2000 issues were targeted for
replacement or modification. Replacement and modification projects are nearly
complete. In addition, CIS has dedicated resources to assess our work
processes and verify that it will be able to handle the changes in the next
millennium. This process addresses software applications as well as key
vendor, bank and customer relationships.
During 1997, CIS participated in developing the industry-wide test plan with
the Futures Industry Association, with whom it continues to work closely. CIS
has participated in BETA testing, which began in September 1998, and
8
<PAGE>
participated again with the FIA in "street wide" testing during the second
quarter of 1999.
In addition, CIS developed various "contingency plans" in the event that
mission critical systems should fail.
CIS is taking this issue seriously and has a goal of maintaining reasonable
procedures in order to eliminate as much risk as possible to its customers
(including the Partnership), its counterparties and itself. Despite the best
efforts of CIS, CISFS and CISI, there can be no assurance that the above
steps will be sufficient or that all potential problems have been identified
in order to avoid any adverse impact to the Partnership. CIS and its
affiliates make no representations or warrants related to Year 2000 readiness
or compliance, including but not limited to business interruption, whether
from failures in their own computer systems, those of the Advisors, or any
other third party.
FISCAL QUARTER ENDED 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.
9
<PAGE>
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.
FISCAL QUARTER ENDED JUNE 30, 1999
The Partnership recorded a gain of $4,874,406 or $32.32 per Unit for the
second quarter of 1999. This compares to a loss of $3,634,300 or $25.03 per
Unit for the second quarter of 1998.
In the first month of the quarter the Partnership posted a gain resulting
primarily from an appreciating Japanese stock market, rising crude oil
prices, falling commodity prices and continued appreciation of the U.S.
Dollar versus the Euro and Swiss Franc. The Partnership posted a gain during
the second month of the quarter resulting primarily from the declining price
of gold and the continued decline of the Euro currency. During the third
month of the quarter, the partnership posted a gain as it continued to
benefit from the freefall in gold prices and the declining Euro currency.
Overall, the second quarter of fiscal 1999 ended positively for the
Partnership accounts managed by both JWH and Welton. At June 30, 1999, JWH
was managing 68.7% of the Partnership's assets and Welton was managing 31.3%
of the Partnership's assets.
In April, currencies were the most favorable sector for the Partnership. The
continued flight to quality to the U.S. dollar provided opportunities for the
Partnership to profit from long U.S. dollar positions versus the Euro and
Swiss franc. As the conflict in Kosovo persisted, the flow of money into the
U.S. dollar continued. Trading in the Japanese yen and Australian dollar was
also profitable. Confidence in the Japanese stock market restored performance
in the Nikkei 225 as the index was up approximately 20% year to date. A long
position in the Nikkei helped the Partnership generate profits as did long
positions in the S&P 500 Index and Hang Seng Index.
10
<PAGE>
During April, the unprofitable trading sectors were mainly interest rates and
precious metals. As Europe cut interest rates mid-month, the Fund's position
went from short to long. Short U.S. bond positions generated a small profit
by month end. Short gold positions were also unprofitable. In the interim,
this position turned profitable as the United Kingdom decided to sell off
over 50% of its gold reserves putting severe pressure on the price of gold.
All in all, the partnership posted a gain of $742,505 or $4.93 per Unit in
April.
In May, gold fell below $270 per ounce, a 20 year low. The Partnership
benefited from this price decline since it held short gold positions during
the month. The interest rate rumors in the US, coupled with the inflation
fears caused the continuation of the decline in the US 10 year and 30 year
bonds. The Partnership held short positions in this sector during May,
resulting in profits for the period. In addition, the Partnership held long
positions in the Japanese government bond which were profitable.
For the third consecutive month, currencies continued to provide gains for
the Partnership. Profit opportunities came from long US dollar positions
versus the Euro and Swiss franc. During May, we saw the Euro fall to its
lowest level versus the US dollar since its inception at the beginning of the
year. Pressure on the Euro surrounded the conflict in Kosovo, as investors
saw the dollar as a safe haven. Small gains also came from the Japanese yen.
Overall, the Partnership posted a gain of $1,365,404 or $9.05 per Unit in May.
In June, the rumor of the Fed raising interest rates in the US became a
reality. The Partnership's short positions in the 10-year and 30-year bonds
provided profits and strong gains were posted as European bond prices
continued to erode. A big reason was the weakening Euro, which declined 13%,
depreciating in a straight line against the U.S. dollar since its inception
January 1, 1999. Short positions in the German Bund, the German Bobl and U.K.
Gilt provided the lion's share of performance. Currencies also provided gains
for the Partnership for the fourth consecutive month. Once again, the profit
opportunities came from long US dollar positions versus the Euro and Swiss
franc. Pressure on the Euro which initially resulted from the conflict in
Kosovo, now also seemed to be attributable to investors losing confidence in
the Euro.
During June, the Partnership continued to profit from its short positions in
the gold market. Long positions in the Nikkei stock index have been
profitable for the Partnership for the entire year, as the percentage gain in
this index for 1999 is 26.64%. Short positions in the agricultural complex,
especially in coffee, caused losses as the prices of these commodities
rebounded. Additionally, continued long positions in crude oil were favorable
as oil prices gained nearly 80% in 1999. Overall, the Partnership posted a
gain of $2,766,497 or $18.34 per Unit in June.
During the quarter there were 4,782.51 additional Units sold to the Limited
Partners (there were no Units sold to the General Partners). Additional Units
sold during the quarter represented a total of $1,726,327 before the
reduction of selling commissions and organizational costs of $110,562.
Investors redeemed a total of 6,578.46 Units during the quarter. At the end
of the quarter there were 148,929.54 Units outstanding (including 2,884.19
Units owned by the General Partners).
During the fiscal quarter ended June 30, 1999, IDS Futures elected Patricia
L. Moren to replace former vice-president John M. Knight and CISI experienced
the
11
<PAGE>
following officer changes: Shaun D. O'Brien replaced former Vice President &
Treasurer Richard A. Driver; James Clemens replaced Henry W. Gjersdal as
Assistant Secretary; Lillian Lundeen replaced Bruce H. Barnett as Assistant
Secretary.
During the fiscal quarter ended June 30, 1999, the 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.
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
12
<PAGE>
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 MARCH 31, 1999
The Partnership recorded a loss of $5,299,715 or $35.15 per Unit for the
first quarter of 1999. This compares to a loss of $1,141,392 or $8.18 per
Unit for the first quarter of 1998.
In the first month of the quarter the Partnership posted a loss resulting
primarily from volatility in the currency sector as well as Japanese interest
rates. The Partnership posted a small loss for the second month of the
quarter resulting primarily from trading in interest rates. During the third
month of the quarter concerns about the military conflict in Kosovo mounted.
As a result the global markets experienced increased volatility, namely in
precious metals and interest rates, and the Partnership posted a small loss.
Overall, the first quarter of fiscal 1999 ended negatively for the
Partnership accounts managed by JWH and Welton. At March 31, 1999, JWH was
managing 66% of the Partnership's assets and Welton was managing 34% of the
Partnership's assets.
Currencies were the most volatile sector for the month of January; namely
short positions in the British pound and long positions in the Japanese yen.
The anxiously awaited Euro began trading and started out the year on a
positive note as short positions rendered small profits for the Partnership.
The only profitable interest rate market was in Germany where the Partnership
maintained a long German bund position, thereby taking advantage of falling
German rates. Short positions in the Japanese government bond and Australian
bond positions created losses for the Partnership. Coffee prices vacillated;
rising in December and falling in January. The Partnership posted losses from
long coffee positions. Long sugar positions were also unprofitable. The
Nikkei stock index provided the majority of the loss in the stock indices, as
short positions were unprofitable. Crude oil prices showed no direction
during the month. Short positions were retained during January and resulted
in a small loss for the Partnership. All in all, the Partnership posted a
loss of $2,423,515 or $16.03 per Unit in January.
In February, agricultural prices declined steadily throughout the month as
the Partnership was positioned to profit from short positions coffee, corn,
wheat, and soybeans. Energy prices eroded allowing short positions in crude
and heating oil to provide profits. Long silver positions in the precious
metals sector were profitable and the Nikkei stock index provided gains
amidst a falling and then rising market. Currency trading rendered gains from
short
13
<PAGE>
positions in the Euro, British pound and Swiss franc as each currency
declined against the U.S. dollar. These gains were able to cover losses in
the Australian dollar and Japanese yen. Interest rates were the only
unprofitable sector for the Partnership. On the plus side, the Partnership
was able to take advantage of rising interest rates in the U.S. 10-year notes
and 30-year bonds. However, long Japanese government bond and German bund
positions recorded more significant losses. Overall, the Partnership posted a
loss of $356,905 or $2.36 per Unit in February.
In March, silver and gold positions were extremely volatile as the
Partnership recorded losses from long silver positions and short gold
positions. Short bond positions in Australia and in the United Kingdom were
unprofitable as interest rates in both began to rise. However, long Japanese
government bond positions were the largest loser in this sector as bond
prices plummeted. The price decline in the agricultural complex, which
provided profit opportunities during February from short positions, saw a
reversal in March as sustained short corn and coffee positions gave back
profits. Currencies were the most favorable sector for the Partnership. A
flight to quality in the U.S. dollar has provided opportunities for the
Partnership to profit from long U.S. dollar positions versus the Euro and
Swiss franc. The conflict in Kosovo has exacerbated the crisis-related
selling of the Euro and the flow of money into the U.S. dollar. The Nikkei
stock index moved sharply higher during March and the Partnership profited
from long positions. Long positions in the Australian All-Ordinaries index
were also profitable. A sharp rise in energy prices gave way to profits from
long positions in crude oil. Rumors of gasoline shortages as well as the
decision of world oil producers to cut oil production pushed crude prices
higher throughout the month. Overall, the Partnership posted a loss of
$2,519,295 or $16.76 per Unit in March.
During the quarter there were 4,855.95 additional Units sold to the Limited
Partners (there were no Units sold to the General Partners). Additional Units
sold during the quarter represented a total of $1,904,300 before the
reduction of selling commissions and organizational costs of $168,803.
Investors redeemed a total of 5,349.65 Units during the quarter. At the end
of the quarter there were 150,725.48 Units outstanding (including 2,884.19
Units owned by the General Partners).
During the fiscal quarter ended March 31, 1999, 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.
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.
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
14
<PAGE>
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
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.
15
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
There has been no material change with respect to market risk since the
"Quantitative and Qualitative Disclosures About Market Risk" was made in the
Form 10K of the Partnership dated December 31, 1998.
16
<PAGE>
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.
17
<PAGE>
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 11, 1999 By: CIS Investments, Inc.,
One of its General Partners
By: /s/ Shaun D. O'Brien
Shaun D. O'Brien, Treasurer &
Vice President
(Duly authorized officer of the
General Partner and the Principal
Financial Officer of the General
Partner)
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM IDS MANAGED
FUTURES, L.P. FOR THE SECOND QUARTER OF 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1999
<CASH> 50,895,949
<SECURITIES> 0
<RECEIVABLES> 382,879
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 51,278,827
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 51,278,827
<CURRENT-LIABILITIES> 746,458
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 50,532,370
<TOTAL-LIABILITY-AND-EQUITY> 51,278,828
<SALES> 0
<TOTAL-REVENUES> (5,191,119)
<CGS> 0
<TOTAL-COSTS> 1,100,948
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (6,292,067)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,292,067)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,292,067)
<EPS-BASIC> (42.18)
<EPS-DILUTED> (42.18)
</TABLE>
