<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR ( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended March 31, 1996
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Commission File Number 0-16526
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HUTTON INVESTORS FUTURES FUND L.P. II
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(Exact name of registrant as specified in its charter)
New York 13-3406160
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Smith Barney Futures Management Inc.
390 Greenwich St. - 1st. Fl.
New York, New York 10013
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(Address and Zip Code of principal executive offices)
(212) 723-5424
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(Registrant's telephone number, including area code)
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
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HUTTON INVESTORS FUTURES FUND L.P. II
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page
Number
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<S> <C>
PART I - Financial Information:
Item 1. Financial Statements:
Statements of Financial Condition at
March 31, 1996 and December 31,
1995 3
Statements of Income and Expenses and
Partners' Capital for the Three
Months ended March 31, 1996 and 1995 4
Notes to Financial Statements 5 - 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 7 - 8
PART II - Other Information 9
</TABLE>
2
<PAGE> 3
PART I
Item 1. Financial Statements
HUTTON INVESTORS FUTURES FUND L.P. II
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
----------- -----------
ASSETS
(Unaudited)
<S> <C> <C>
Equity in commodity futures trading account:
Cash and cash equivalents $15,288,531 $15,190,088
Net unrealized appreciation
on open futures contracts 830,991 835,706
----------- -----------
$16,119,522 $16,025,794
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued expenses:
Commissions on open futures contracts $ 64,447 $ 54,276
Incentive fees 37,766 72,172
Other 35,477 25,337
Redemptions payable 210,387 249,753
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348,077 401,538
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Partners' capital
General Partner, 44 Unit equivalents
outstanding in 1996 and 1995 165,304 161,605
Limited Partners, 4,154 and 4,210 Units
of Limited Partnership Interest
outstanding in 1996 and 1995,respectively 15,606,141 15,462,651
----------- -----------
15,771,445 15,624,256
----------- -----------
$16,119,522 $16,025,794
=========== ===========
</TABLE>
See Notes to Financial Statements.
3
<PAGE> 4
HUTTON INVESTORS FUTURES FUND L.P. II
STATEMENTS OF INCOME AND EXPENSES AND PARTNERS' CAPITAL
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, MARCH 31,
1996 1995
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<S> <C> <C>
Income:
Net gains (losses) on trading of commodity
futures:
Realized gains on closed positions $ 406,056 $ 1,962,158
Change in unrealized gains / losses on open
positions (4,715) 1,727,111
----------- -----------
401,341 3,689,269
Less, brokerage commissions and clearing fees
($4,326 and $4,427, respectively) (145,194) (137,774)
----------- -----------
Net realized and unrealized gains 256,147 3,551,495
Interest income 151,707 134,955
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407,854 3,686,450
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Expenses:
Incentive fees 37,766 347,390
Other 12,512 11,340
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50,278 358,730
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Net income 357,576 3,327,720
Redemptions (210,387) (123,280)
----------- -----------
Net increase in Partners' capital 147,189 3,204,440
Partners' capital, beginning of period 15,624,256 11,629,195
----------- -----------
Partners' capital, end of period $15,771,445 $14,833,635
=========== ===========
Net asset value per Unit
(4,198 and 4,452 Units outstanding at
March 31, 1996 and 1995, respectively) $ 3,756.90 $ 3,331.90
=========== ===========
Net income (loss) per Unit of Limited
Partnership Interest and General Partnership
Unit equivalent $ (84.06) $ 741.30
=========== ===========
</TABLE>
See Notes to Financial Statements.
4
<PAGE> 5
HUTTON INVESTORS FUTURES FUND L.P. II
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
General
Hutton Investors Futures Fund L.P. II (the "Partnership") is a limited
partnership, organized on March 31, 1987 under the partnership laws of the State
of Delaware, to engage in the speculative trading of commodity futures contracts
and other commodity interests, including futures and option contracts on U.S.
Treasuries and other financial instruments, foreign currencies and stock
indices. The commodity interests that are traded by the Partnership are volatile
and involve a high degree of market risk. The Partnership commenced operations
on July 24, 1987.
Smith Barney Futures Management Inc. acts as the general partner (the
"General Partner") of the Partnership. Smith Barney Inc. ("SB"), an affiliate of
the General Partner, acts as commodity broker for the Partnership. All trading
decisions for the Partnership are made by John W. Henry & Co., Inc. and
TrendLogic Associates, Inc. (collectively, the "Advisors").
The accompanying financial statements are unaudited but, in the opinion
of management, include all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the Partnership's financial
condition at March 31, 1996 and the results of its operations for the three
months ended March 31, 1996 and 1995. These financial statements present the
results of interim periods and do not include all disclosures normally provided
in annual financial statements. It is suggested that these financial statements
be read in conjunction with the financial statements and notes included in the
Partnership's annual report on Form 10-K filed with the Securities and Exchange
Commission for the year ended December 31, 1995.
Due to the nature of commodity trading, the results of operations for
the interim periods presented should not be considered indicative of the results
that may be expected for the entire year.
5
<PAGE> 6
Net Asset Value Per Unit
Changes in net asset value per Unit for the three months ended March
31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------
1996 1995
---- ----
<S> <C> <C>
Net realized and unrealized
gains $ 60.22 $ 791.15
Interest income 35.66 30.06
Expenses (11.82) (79.91)
--------- ---------
Increase (decrease) for period (84.06) 741.30
Net Asset Value per Unit,
beginning of period 3,672.84 2,590.60
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Net Asset Value per Unit,
end of period $3,756.90 $3,331.90
========= =========
</TABLE>
6
<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources
The Partnership does not engage in the sale of goods or services. Its
only assets are its equity in its commodity futures trading account, consisting
of cash and cash equivalents (such as U.S. Treasury Bills, which constitutes
approximately 75% of the Partnership's assets at March 31, 1996) and net
unrealized appreciation (depreciation) on open futures contracts. Because of the
low margin deposits normally required in commodity futures trading, relatively
small price movements may result in substantial losses to the Partnership. While
substantial losses could lead to a substantial decrease in liquidity, no such
losses occurred in the Partnership's first quarter of 1996.
The Partnership is party to financial instruments with off-balance
sheet risk, including derivative financial instruments and derivative commodity
instruments, in the normal course of its business. These financial instruments
include forwards, futures and options, whose value is based upon an underlying
asset, index, or reference rate, and generally represent future commitments to
exchange currencies or cash flows, or to purchase or sell other financial
instruments at specified terms at specified future dates. Each of these
instruments is subject to various risks similar to those relating to the
underlying financial instruments including market and credit risk. The General
Partner monitors and controls the Partnership's risk exposure on a daily basis
through financial, credit and risk management monitoring systems and,
accordingly believes that it has effective procedures for evaluating and
limiting the credit and market risks to which the Partnership is subject.
The Partnership's capital consists of the capital contributions of the
partners as increased or decreased by gains or losses on commodity futures
trading, expenses, interest income, redemptions of Units and distributions of
profits, if any.
For the three months ended March 31, 1996, Partnership capital
increased 9.4% from $15,624,256 to $15,771,445. This increase was attributable
to net income from operations of $357,576 which was partially offset by the
redemption of 56 Units resulting in an outflow of $210,387 for the three months
ended March 31, 1996. Future redemptions can impact the amount of funds
available for investment in commodity contract positions in subsequent months.
7
<PAGE> 8
Results of Operations
During the Partnership's first quarter of 1996, the net asset value per
Unit decreased 2.3% from $3,672.84 to $3,756.90, as compared to the first
quarter of 1995 in which the net asset value per Unit increased 28.6%. The
Partnership experienced a net trading gain before commissions and expenses in
the first quarter of 1996 of $401,341. Gains were recognized in the trading of
commodity futures in interest rates and currencies and were partially offset by
losses recognized in stock indices, agricultural products, energy products, and
precious metals. The Partnership experienced a net trading gain before
commissions and expenses in the first quarter of 1995 of $3,689,269. Gains were
realized in the trading of interest rates, currencies, stock indices,
agricultural products and precious metals commodity futures and were partially
offset by losses realized in energy products.
Commodity futures markets are highly volatile. Broad price fluctuations
and rapid inflation increase the risks involved in commodity trading but also
increase the possibility of profit. The profitability of the Partnership depends
on the existence of major price trends and the ability of the Advisors to
identify correctly those price trends. These price trends are influenced by,
among other things, changing supply and demand relationships, weather,
governmental, agricultural, commercial and trade programs and policies, national
and international political and economic events and changes in interest rates.
To the extent that market trends exist and the Advisors are able to identify
them, the Partnership expects to increase capital through operations.
Interest income earned on U.S. Treasury Bills increased by $16,752 for
the three months ended March 31, 1996, as compared to the corresponding period
in 1995. The increase in interest income is primarily due to an increase in
Partnership capital as a result of a 12.8% increase in net asset value from the
first quarter of 1995 to the first quarter of 1996. This increase in net asset
value was partially offset by the net affect of redemptions coupled with a
decrease in interest rates in the first quarter of 1996 as compared to the
corresponding period in 1995.
Brokerage commissions are based on the number of trades executed by the
Advisors. Brokerage commissions and clearing fees for the three months ended
March 31, 1996 increased by $7,420, as compared to the corresponding period in
1995.
Incentive fees are based on the new appreciation generated by each
Advisor as defined in the advisory agreements between the Partnership, the
General Partner and each Advisor. Trading performance for the three months ended
March 31, 1996 and 1995 resulted in incentive fees of $37,766 and $347,390,
respectively.
8
<PAGE> 9
PART II OTHER INFORMATION
Item 1. Legal Proceedings - None
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. (a) Exhibits
(b) Reports on Form 8-K - None
9
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
HUTTON INVESTORS FUTURES FUND L.P. II
By: Smith Barney Futures Management Inc.
------------------------------------
(General Partner)
By: /s/ David J. Vogel, President
------------------------------------
David J. Vogel, President
Date: 5/10/96
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Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: Smith Barney Futures Management Inc.
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(General Partner)
By: /s/ David J. Vogel, President
------------------------------------
David J. Vogel, President
Date: 5/10/96
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By /s/ Daniel A. Dantuono
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Daniel A. Dantuono
Chief Financial Officer and Director
Date: 5/10/96
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10
<PAGE> 11
EXHIBIT INDEX
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Exhibit
No. Description
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000812818
<NAME> HUTTON INVESTORS FUTURES FUND L.P. II
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 15,288,531
<SECURITIES> 830,991
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,119,522
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,119,522
<CURRENT-LIABILITIES> 348,077
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 15,771,445
<TOTAL-LIABILITY-AND-EQUITY> 16,119,522
<SALES> 0
<TOTAL-REVENUES> 407,854
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 50,278
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 357,576
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 357,576
<EPS-PRIMARY> ( 84.06)
<EPS-DILUTED> 0
</TABLE>
