SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1995 or
Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Number 0-17443
IDS MANAGED FUTURES II, L.P.
(Exact name of registrant as specified in its charter)
Delaware 06-1207252
(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>
<TABLE>
Part I. Financial Information
Item 1. Financial Statements
Following are Financial Statements for the fiscal quarter ended March 31, 1995,
and the additional time frames as noted:
<CAPTION>
Fiscal Quarter Year to Date Fiscal Year Fiscal Quarter Year to Date
Ended 3/31/95 To 3/31/95 Ended 12/31/94 Ended 3/31/94 To 3/31/94
-------------- -------------- -------------- -------------- -------------
<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 II, L.P.
STATEMENTS OF FINANCIAL CONDITION
UNAUDITED
<CAPTION>
Mar 31, 1995 Dec 31, 1994
--------------- --------------
<S> <C> <C>
ASSETS
Equity in commodity futures
trading accounts:
Account balance $9,543,304 $8,850,144
Unrealized gain on open
futures contracts 1,608,188 546,622
--------------- --------------
11,151,492 9,396,766
Interest receivable 44,028 37,615
--------------- --------------
Total assets $11,195,520 $9,434,381
=============== ==============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued commissions on open
futures contracts due to IDS and CIS $51,824 $52,322
Accrued management fee 36,992 30,011
Accrued incentive fee 115,656 0
Accrued operating expenses 46,195 27,869
Redemptions payable 195,605 47,038
--------------- --------------
Total liabilities 446,272 157,240
Partners' Capital:
Limited partners (23,182.43 units 10,458,511 9,034,378
outstanding at 3/31/95, 23,983.41
units outstanding at 12/31/94)
General partners (644.45 units out- 290,737 242,763
standing at 3/31/95 and 12/31/94)
--------------- --------------
Total partners' capital 10,749,248 9,277,141
--------------- --------------
Total liabilities and
partners' capital $11,195,520 $9,434,381
=============== ==============
<FN>
See accompanying notes to financial statements.
UNAUDITED
</TABLE>
<TABLE>
IDS MANAGED FUTURES II, L.P.
STATEMENTS OF OPERATIONS
<CAPTION>
Jan 1, 1995 Jan 1, 1995 Jan 1, 1994 Jan 1, 1994
through through through through
Mar 31, 1995 Mar 31, 1995 Mar 31, 1994 Mar 31, 1994
--------------- -------------- --------------- ---------------
<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 $915,211 $915,211 ($694,591) ($694,591)
Change in unrealized gain (loss)
on open positions 1,061,566 1,061,566 256,824 256,824
Interest income 110,285 110,285 68,167 68,167
Foreign currency transaction gain (loss) 92,455 92,455 59,655 59,655
--------------- -------------- --------------- ---------------
Total revenues $2,179,516 $2,179,516 ($309,945) ($309,945)
EXPENSES
Commissions paid to IDS and CIS 115,042 115,042 131,002 131,002
Exchange fees 2,096 2,096 3,370 3,370
Management fees 100,163 100,163 109,176 109,176
Incentive fees 115,656 115,656 48,347 48,347
Operating expenses 37,935 37,935 (26,661) (26,661)
--------------- -------------- --------------- ---------------
Total expenses 370,892 370,892 265,234 265,234
--------------- -------------- --------------- ---------------
Net profit (loss) $1,808,624 $1,808,624 ($575,178) ($575,178)
=============== ============== =============== ===============
PROFIT (LOSS) PER UNIT OF
PARTNERSHIP INTEREST $74.45 $74.45 ($21.60) ($21.60)
=============== ============== =============== ===============
<FN>
See accompanying notes to financial statements.
UNAUDITED
</TABLE>
<TABLE>
IDS MANAGED FUTURES II, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the period January 1, 1995 through March 31, 1995
<CAPTION>
Limited General
Units* Partners Partners Total
--------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Partners' capital at January 1, 1995 23,983.41 $9,034,378 $242,763 $9,277,141
Net profit (loss) 1,760,649 47,974 1,808,623
Redemptions (800.98) (336,516) 0 (336,516)
--------------- -------------- --------------- ---------------
Partners' capital at March 31, 1995 23,182.43 $10,458,511 $290,737 $10,749,248
=============== ============== =============== ===============
Net asset value per unit
January 1, 1995 $376.69 $376.69
Net profit (loss) per unit 74.45 74.45
-------------- ---------------
Net asset value per unit
March 31, 1995 $451.14 $451.14
* Units of Limited Partnership interest.
<FN>
See accompanying notes to financial statements.
UNAUDITED
</TABLE>
<TABLE>
IDS MANAGED FUTURES II, L.P.
STATEMENTS OF CASH FLOWS
<CAPTION>
Jan 1, 1995 Jan 1, 1994
through through
Mar 31, 1995 Mar 31, 1994
--------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net profit/(loss) $1,808,624 ($575,178)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Change in assets and liabilities:
Unrealized gain (loss) on open
futures contracts (1,061,566) (256,824)
Interest receivable (6,413) 29
Accrued liabilities 140,465 (38,048)
Redemptions payable 148,567 (46,010)
--------------- --------------
Net cash provided by (used in)
operating activities 1,029,676 (916,031)
Cash flows from financing activities:
Partner redemptions (336,516) (117,297)
--------------- --------------
Net cash provided by (used in)
financing activities (336,516) (117,297)
--------------- --------------
Net increase (decrease) in cash 693,160 (1,033,328)
Cash at beginning of period 8,850,144 11,322,539
--------------- --------------
Cash at end of period $9,543,304 $10,289,211
=============== ==============
<FN>
See accompanying notes to financial statements.
UNAUDITED
</TABLE>
IDS MANAGED FUTURES II, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 1995
(1) GENERAL INFORMATION AND SUMMARY
IDS Managed Futures II, L.P. (the "Partnership"), a limited
partnership organized in April 1987 under the Delaware Revised
Uniform Limited Partnership Act, was formed to engage in the
speculative trading of 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 are IDS
Futures Corporation and CIS Investments, Inc. The clearing
broker is Cargill Investor Services, Inc. (the "Clearing
Broker"), the parent company of CIS Investments, Inc. IDS
Futures Corporation is an affiliate of IDS Financial Services
Inc. which acts as the Partnership's introducing broker and
selling agent. Effective January 1, 1995, IDS Financial
Corporation, the parent company of IDS Financial Services Inc.,
changed its name to American Express Financial Corporation and
IDS Financial Services Inc. changed its name to American Express
Financial Advisors Inc. These were solely name changes; the
management and structure of each company did not change.
Units of limited partnership interest ("Units") were offered
by IDS Financial Services Inc. commencing July 14, 1987 through
December 31, 1988. As of December 31, 1988, 60,127.14 Units
representing a total investment of $14,983,249 had been sold and
accepted into the Partnership (excluding 627.95 Units purchased
by the General Partners for $150,110). A final group of
investors purchasing Units worth $423,750 between December 20,
1988 and December 31, 1988 were admitted into the Partnership on
January 31, 1989, at a Net Asset Value of $255.27. The General
Partners also purchased an additional $3,960 of Units on January
31, 1989.
The Partnership shall be terminated on December 31, 2007 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 $1,500,000; (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.
Page 7 of 15<PAGE>
(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.
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 80 percent of the average 90-
day Treasury bill rate for U.S. Treasury bills issued during that
month.
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 $58.75
per round-turn contract to Cargill Investor Services, Inc.
Cargill Investor Services, Inc. then reallocates the appropriate
portion to American Express Financial Advisors Inc.
Foreign Currency Transactions
Trading accounts on 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 are translated
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.
Page 8 of 15<PAGE>
Statements of Cash Flow
For purposes of the statements of cash flows, cash
represents cash on deposit with the Clearing Broker in commodity
futures trading accounts.
(3) FEES
Management fees are accrued and paid monthly, and incentive
fees are accrued monthly and paid quarterly. Trading decisions
for the period of these financial statements were made by John W.
Henry & Co., Inc. ("JWH") and Sabre Fund Management Limited
("Sabre") the Partnership's Commodity Trading Advisors ("CTAs").
The CTAs receive a monthly management fee of 1/3 of 1% of the
month-end net asset value of the Partnership under their
management. Both of the CTAs receive 15% of the Partnership's
trading profits, if any, in each quarter attributable to each
manager's trading.
(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 Personal Property and Income Tax
based on the operating results of the Partnership. Such tax
amounted to $27,195 and $0 for the periods ended March 31, 1995
and March 31, 1994, respectively, and is included in operating
expenses in the Statements of Operations.
(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
Page 9 of 15<PAGE>
maintenance of minimum net capital at least equal to 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 Partnership holds futures and futures options positions
on the various exchanges throughout the world. 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. The Partnership has 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.
(6) FINANCIAL STATEMENT PREPARATION
The interim financial statements are unaudited but reflect
all adjustments that are, in the opinion of management, necessary
to a fair statement of the results for the interim periods
presented. These adjustments consist primarily of normal
recurring accruals.
The results of operations for interim periods will not
necessarily be indicative of the operating results for the fiscal
year.
Page 10 of 15
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation
Fiscal Quarter ended March 31, 1995
The Partnership recorded a profit of $1,808,624 or $74.45
per Unit for the first quarter of 1995. The first month of the
year was difficult due in part to losses in global interest rates
and foreign exchange. However, the next two months saw
profitable trends in the financial markets. As a result, the
first quarter ended positively for the Partnership's accounts
managed by John W. Henry & Co., Inc. but negatively for Sabre
Fund Management Limited.
In January the financial markets were impacted by
speculation regarding a possible Federal Reserve monetary
tightening as a further effort to moderate domestic economic
growth and inflation. The continued uncertainty regarding the
financial crisis in Mexico and possible ramifications of the
earthquake in Kobe, Japan also weighed on the financial markets.
Therefore, the Partnership recorded a loss of $288,704 or $11.72
per Unit in January.
During the month of February, global political and financial
events, including the sudden demise of the British merchant bank,
Barings PLC, sent stock prices falling around the world and
investors rushing to the safety of German marks and U.S. bonds.
The German mark benefited substantially from the uncertain state
of many world economies and gained steadily versus the U.S. and
other European currencies. The U.S. dollar also sank to new
postwar lows versus Japanese yen. Long positions in foreign
exchange and favorable positions in the Japanese financial
markets generated substantial gains for the Partnership. As a
result, the Partnership recorded a profit of $982,093 or $40.20
per Unit in February.
The decline in value of the U.S. dollar gained momentum and
accelerated in March. Market participants ignored efforts by
central bankers to support the dollar, including an unanticipated
move by the German Bundesbank to lower short term rates late in
March. By month end, the dollar reached yet another postwar low
against the U.S. dollar and fell considerably against the German
mark. Positive performance during the month was dominated by
strong trends in foreign exchange. Gains in currency
positions, global interest rates and stock indexes resulted in
the Partnership recording a profit of $1,115,235 or $45.97 per
Unit in March.
Page 11 of 15<PAGE>
On March 23, 1995, Juanita M. Costa resigned as a Vice
President and Director of IDS Futures Corporation, one of the
General Partners of the Partnership.
During the quarter, investors redeemed a total of 800.98
Units. At the end of the quarter there were 23,826.88 Units
outstanding (including 644.45 Units owned by the General
Partners).
Fiscal Quarter ended March 31, 1994
During the first quarter of 1994, the Partnership recorded a
loss of $575,178.41 or $21.60 per Unit. The first two months of
the year were especially difficult as the interest rate and
currency markets were unsettled, showing little direction.
March, however, brought some stability to the markets. As a
result, the first quarter ended on a negative note for the
Partnership's accounts of Chang Crowell Management Corp. and
Sabre Fund Management Limited but positive for John W. Henry &
Co., Inc. (Note: on November 16, 1994 Chang Crowell was
terminated as an Advisor to the Partnership and on December 12,
1994 the assets formerly managed by Chang Crowell were allocated
to Sabre Fund Management Limited).
Trading in the financial sector, particularly in global
interest rates which had contributed to much of last year's
substantial returns, began the year on a negative note. The
Japanese financial markets were unsettled due to the initial
failure of the government to generate support for its economic
revival package. Trading in foreign currency exchange was also
negative as the U.S. dollar seesawed against the German mark and
Japanese yen throughout the month. Therefore, the Partnership
posted a loss of $521,504.88 or $19.63 per Unit in January.
Considerable uncertainty and resulting volatility continued
in the financial markets in February. The Federal Reserve raised
its short term Fed Fund rate potentially signaling higher rates
in the months ahead. Global interest rate markets reacted
sharply as prices fell around the world. In addition, the
speculation of a trade war between the U.S. and Japan caused
price fluctuations in the yen/dollar relationship. Overall,
profits in global interest rates were offset by losses in the
foreign exchange markets. The Partnership recorded a loss of
$532,050.76 or $20.13 per Unit in February.
Page 12 of 15<PAGE>
March was a profitable month for all three of the traders of
the Partnership. Accelerating worldwide economic and political
turmoil created sharp declines in global stock and bond prices.
Political unrest, including trade tensions between the U.S. and
Japan, an assassination in Mexico, instability in Russia and a
potential conflict in Korea weighed heavily on the financial
markets. Collapsing markets provided definite trend following
opportunities in which both traders were able to profit. Trading
in currencies, most notably the Japanese yen, German mark and
Swiss franc also contributed to gains. Increased investor demand
for silver caused a profitable uptrend for the traders. The
Partnership posted a gain of $478,377.23 or $18.16 per Unit in
March.
During the quarter investors redeemed a total of 284.59
Units. At the end of the quarter there were 26,288.04 Units
outstanding (including the 644.45 Units owned by the General
Partners.)
Page 13 of 15<PAGE>
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. Exhibits and Reports on Form 8-K
a) Exhibits
None
b) Reports on Form 8-K
None
Page 14 of 15 <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.
Date: May , 1995 IDS MANAGED FUTURES II, L.P.
By: CIS Investments, Inc.
One of its General Partners
Date: May , 1995 By: /s/ Donald J. Zyck
Donald J. Zyck,
Secretary & Treasurer
(Duly authorized Officer of the
General Partner and the Principal
Financial Officer of the General
Partner)
Page 15 of 15<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from IDS Managed
Futures II, L.P. first quarter 1995 10-Q and is qualified in its entirety by
reference to such 10-Q.
</LEGEND>
<CIK> 0000813831
<NAME> IDS MANAGED FUTURES II, L.P.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<CASH> 11,151,492
<SECURITIES> 0
<RECEIVABLES> 44,028
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,195,520
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,195,520
<CURRENT-LIABILITIES> 446,272
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 10,749,248
<TOTAL-LIABILITY-AND-EQUITY> 11,195,520
<SALES> 0
<TOTAL-REVENUES> 2,179,516
<CGS> 0
<TOTAL-COSTS> 370,892
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,808,624
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,808,624
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,808,624
<EPS-PRIMARY> 74.45
<EPS-DILUTED> 74.45
</TABLE>
