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, 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 __
<TABLE>
Part I. Financial Information
Item 1. Financial Statements
Following are Financial Statements for the fiscal quarter ended March 31, 1999
and the additional time frames as noted:
Fiscal Quarter Year to Date Fiscal Year Fiscal Quarter Year to Date
Ended 6/30/99 To 6/30/99 Ended 12/31/98 Ended 6/30/98 To 6/30/98
-------------- -------------- -------------- --------------------------
<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
IDS MANAGED FUTURES, L.P.
STATEMENTS OF FINANCIAL CONDITION
UNAUDITED
Jun 30, 1999 Dec 31, 1998
--------------- -------------
<S> <C> <C>
ASSETS
Cash at Escrow Agent $0 $0
Equity in commodity futures
trading accounts:
Account balance 53,420,519 52,649,782
Unrealized gain on open
futures contracts 4,090,465 5,740,766
--------------- -------------
57,510,984 58,390,548
Interest receivable 186,823 179,775
Prepaid G.P. fee 396,984 0
--------------- -------------
Total assets $58,094,791 $58,570,323
=============== =============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued commissions on open
futures contracts due to AXP Advisors and $95,370 $131,631
Accrued management fee 176,566 173,726
Accrued incentive fee 107,651 0
Accrued operating expenses 88,350 125,906
Redemptions payable 1,140,717 308,694
Selling and Offering Expenses Payable 39,219 87,188
--------------- -------------
Total liabilities 1,647,873 827,145
Partners' Capital:
Limited partners ( 146,045.35 units 55,353,759 56,642,072
outstanding at 6/30/99, 148,334.99
units outstanding at 12/31/98) (see Note 1)
General partners (2,884.19 units outstanding 1,093,159 1,101,106
6/30/99 and 12/31/98) (see Note 1)
--------------- -------------
Total partners' capital 56,446,918 57,743,178
--------------- -------------
Total liabilities and
partners' capital $58,094,791 $58,570,323
=============== =============
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, 1999 Jan 1, 1999 Apr 1, 1998 Jan 1, 1998
through through through through
Jun 30, 1999 Jun 30, 1999 Jun 30, 1998 Jun 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 $2,507,422 $2,656,432 ($1,383,122) ($651,555)
Change in unrealized gain (loss)
on open positions 3,160,658 (1,650,301) (1,644,979) (2,714,357)
Interest income 524,972 1,063,667 536,103 1,082,735
Foreign currency transaction gain (loss) (19,826) (167,661) (129,045) (215,077)
--------------- ------------- -------------- -------------
Total revenues 6,173,226 1,902,137 (2,621,043) (2,498,254)
EXPENSES
Commissions paid to AXP Advisors and CIS 448,343 754,806 421,112 801,731
Exchange fees 24,015 39,622 12,462 25,004
Management fees 506,045 1,000,609 426,772 869,118
Incentive fees 107,651 107,651 0 235,624
General Partner fee to IDS Futures Corp. and 198,492 396,984 170,029 340,058
Operating expenses 14,274 27,774 (17,118) 5,902
--------------- ------------- -------------- -------------
Total expenses 1,298,820 2,327,446 1,013,257 2,277,437
--------------- ------------- -------------- -------------
Net profit (loss) $4,874,406 ($425,309) ($3,634,300) ($4,775,691)
=============== ============= ============== =============
PROFIT (LOSS) PER UNIT OF
PARTNERSHIP INTEREST $32.32 ($2.83) ($25.03) ($33.21)
=============== ============= ============== =============
(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, 1999 through June 30, 1999
UNAUDITED
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) (417,362) (7,947) (425,309)
Additional Units Sold 9,638.46 3,798,000 0 3,798,000
(see Note 1)
Less Selling and Organizational Costs (336,176) 0 (336,176)
Redemptions (see Note 1) (11,928.10) (4,332,774) (4,332,774)
--------------- ------------- -------------- -------------
Partners' capital at June 30, 1999 146,045.35 $55,353,759 $1,093,159 $56,446,918
=============== ============= ============== =============
Net asset value per unit
January 1, 1999 (see Note 1) 381.85 381.85
Net profit (loss) per unit (see Note 1) (2.83) (2.83)
------------- --------------
Net asset value per unit
June 30, 1999 $379.02 $379.02
* 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, 1999 Jan 1, 1998
through through
Jun 30, 1999 Jun 30, 1998
--------------- -------------
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Cash flows from operating activities:
Net profit (loss) ($425,309) ($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 1,650,301 2,714,357
Interest receivable (7,048) 23,964
Prepaid general partner fee (396,984) (340,058)
Accrued liabilities 36,674 (192,426)
Redemptions payable 832,023 64,961
Selling and Offering Expenses Payable (47,969) (35,627)
--------------- -------------
Net cash provided by (used in)
operating activities 1,641,688 (2,540,521)
Cash flows from financing activities:
Additional Units Sold 3,798,000 4,871,400
Selling and Offering Expenses (336,176) (428,830)
Partner redemptions (4,332,774) (2,401,272)
--------------- -------------
Net cash provided by (used in)
financing activities (870,950) 2,041,298
--------------- -------------
Net increase (decrease) in cash 770,737 (499,223)
Cash at beginning of period $52,649,782 47,936,067
--------------- -------------
Cash at end of period $53,420,519 $47,436,844
=============== =============
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, 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 June 30, 1999, a total of 96,846.72 Units representing
a total investment of $33,411,306 of limited partnership interest had been sold
in the offering period commencing June 26, 1995. During the quarter ended June
30, 1999, selling commissions of $110,562 were paid to AEFA by the new limited
partners and all new investors paid organization and offering expenses totaling
$56,811. 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 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. 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, 1999 and June 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 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, 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
June 30, 1999:
COMMODITY GROUP UNREALIZED GAIN/(LOSS)
AGRICULTURAL COMMODITIES $ 45,835
FOREIGN CURRENCIES 345,716
STOCK INDICES 524,127
ENERGIES 120,880
METALS 347,913
INTEREST RATE INSTRUMENTS 2,705,994
____________
TOTAL $4,090,465
The range of maturity dates of these exchange traded open contracts is July of
1999 to June 2000. The average open trade equity for the period of January 1,
1999 to June 30, 1999 was $3,431,002.
The margin requirement at June 30, 1999 was $8,965,681. To meet this
requirement, the Partnership had on deposit with the Clearing Broker
$53,150,734 in segregated funds and $4,360,250 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.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation
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.
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
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.
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
currently underway. 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
participated again with the FIA in "street wide" testing during the second
quarter of 1999.
In addition, CIS has begun developing various "contingency plans" in the event
that mission critical systems should fail. This development is proceeding on
schedule.
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 June 30, 1998
The Partnership recorded a loss of $3,634,300 or $25.03 per Unit for the
second quarter of 1998. This compares to a loss of $2,147,031 or $16.31 per
Unit for the second quarter of 1997.
During the first and third months of the quarter, the Partnership experienced
losses primarily as a result of unprofitable positions in currencies, interest
rates and metals, while during the second month gains were recorded primarily
due to gains in the currency, interest rate, metals and energy markets.
Overall, the second quarter of fiscal 1998 ended negatively for the
Partnership accounts managed by JWH and Welton. At June 30, 1998, JWH was
managing 59.9% of the Partnership's assets and Welton was managing 40.1% of
the Partnership's assets.
In April, positions in nearly all markets traded were unprofitable.
Positions in the U.S. 30-year bond and Euro dollar markets resulted in losses
for interest rate futures. Unprofitable positions in the German mark and
Swiss franc offset gains in other currencies traded. Silver prices fell
following reports that a major investment company had sold a third of its
holdings. Losses in silver and copper offset profits in gold. Sugar prices
fell to a five-year low on prospects of a large Brazilian crop. Positions in
sugar resulted in profits as did positions in coffee, wheat, corn and soybean
oil. The Partnership recorded a loss of $3,090,654 or $21.36 per Unit in
April.
In May gains were recorded reflecting profitable positions in interest rates,
metals, energies and currencies. The strongest gains overall came from
positions in the Japanese yen, Japanese Government bond, silver and crude oil.
Silver prices slumped as investors who bought on hopes of rising value lost
patience and took profits. Crude oil prices were pressured by worries of
oversupply in world markets. Gains were also recorded in positions in the
Australian dollar as a nervous market dealt with rumors of further currency
devaluations in Asia; the Australian currency fell to a 12-year low against
the U.S. dollar. Positions in stock indices and agricultural commodities
resulted in losses overall; but the Partnership recorded a gain of $1,172,425
or $8.02 per Unit in May.
In June losses were recorded due largely to unprofitable positions in global
interest rates and metals. Unprofitable positions in the Japanese Government
bond led losses in global interest rates as the yield rose from record lows
following intervention to support the yen. A marginal gain in the Japanese
yen failed to offset losses in the British pound and Swiss franc. Positions
in gold and silver also resulted in losses as the prices of both metals
remained coupled to movements in the Japanese yen. Gains were recorded in
crude oil positions as inventories worldwide continued to exceed demand and
prices fell. Profitable positions in cotton, sugar, coffee and corn offset
losses in other agricultural markets. The Partnership recorded a loss of
$1,716,071 or $11.69 per Unit in June.
During the quarter there were 5,975.01 additional Units sold; there were no
Units sold to the General Partners. Additional Units sold during the quarter
represented a total of $2,121,900 before the reduction of selling commissions
and organizational costs of $187,861. Investors redeemed a total of
3,943.70 Units during the quarter. At the end of the quarter there were
146,687.19 Units outstanding (including 2,759.25 Units owned by the General
Partners).
During the fiscal quarter ended June 30, 1998, the Partnership had no
material credit exposure to a counterparty which is a foreign commodities
exchange.
Fiscal Quarter ended 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
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.
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.
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
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.
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.
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 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)
<TABLE> <S> <C>
<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>
<CIK> 0000809061
<NAME> IDS MANAGED FUTURES, L.P.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1999
<CASH> 57,510,984
<SECURITIES> 0
<RECEIVABLES> 583,807
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 58,094,791
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 58,094,791
<CURRENT-LIABILITIES> 1,647,873
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 56,446,918
<TOTAL-LIABILITY-AND-EQUITY> 58,094,791
<SALES> 0
<TOTAL-REVENUES> 6,173,226
<CGS> 0
<TOTAL-COSTS> 1,298,820
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,874,406
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,874,406
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,874,406
<EPS-BASIC> 32.32
<EPS-DILUTED> 32.32
</TABLE>
