<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 March 31, 2000
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>
Item 1. Financial Statements
Following are Financial Statements for the fiscal quarter ended March 31, 2000
and the additional time frames as noted:
<TABLE>
<CAPTION>
Fiscal Quarter Year to Date Fiscal Year Fiscal Quarter Year to Date
Ended 3/31/00 To 3/31/00 Ended 12/31/99 Ended 3/31/00 To 3/31/00
------------- ---------- -------------- ------------- ----------
<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 II, L.P.
STATEMENTS OF FINANCIAL CONDITION
UNAUDITED
<TABLE>
<CAPTION>
Mar 31, 2000 Dec 31, 1999
------------ ------------
<S> <C> <C>
ASSETS
Equity in commodity futures trading accounts:
Cash on deposit with clearing broker $7,227,404 8,533,968
Unrealized gain on open
futures contracts 401,030 446,557
------------ ------------
7,628,434 8,980,525
Interest receivable 36,133 31,072
------------ ------------
TOTAL ASSETS $7,664,567 $9,011,597
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued commissions on open
futures contracts due to AXP Advisors and CIS $18,388 $12,624
Accrued management fee 22,903 27,236
Accrued incentive fee 0 0
Accrued operating expenses 19,905 32,000
Redemptions payable 203,845 81,245
------------ ------------
Total liabilities 265,040 153,105
Partners' Capital:
Limited partners (13,645.96 units
outstanding at 3/31/00, 14,887.18 7,065,832 8,490,927
units outstanding at 12/31/99) (see Note 1)
General partners (644.45 units outstanding at
3/31/00 and 12/31/99) (see Note 1) 333,694 367,565
------------ ------------
Total partners' capital 7,399,526 8,858,492
------------ ------------
TOTAL LIABILITIES AND
PARTNERS' CAPITAL $7,664,567 $9,011,597
============ ============
</TABLE>
In the opinion of management, these statements reflect all adjustments necessary
to fairly state the financial condition of IDS Managed Futures II, L.P. (See
Note 6)
<PAGE>
IDS MANAGED FUTURES II, L.P.
STATEMENTS OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
Jan 1, 2000 Jan 1, 2000 Jan 1, 1999 Jan 1, 1999
through through through through
Mar 31, 2000 Mar 31, 2000 Mar 31, 1999 Mar 31, 1999
------------ ------------ ------------ ------------
<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 ($612,068) ($612,068) $163,087 $163,087
Change in unrealized gain (loss)
on open positions (45,526) (45,526) (1,128,934) (1,128,934)
Interest income 91,247 91,247 100,665 100,665
Foreign currency transaction gain (loss) (34,524) (34,524) (32,048) (32,048)
---------- ---------- ----------- ------------
Total revenues ($600,871) ($600,871) ($897,230) ($897,230)
EXPENSES
Commissions paid to AXP Advisors and CIS 115,689 115,689 115,179 115,179
Exchange fees 3,960 3,960 2,760 2,760
Management fees 72,113 72,113 103,160 103,160
Incentive fees 0 0 0 0
Operating expenses 8,187 8,187 9,500 9,500
---------- ---------- ------------ ------------
Total expenses 199,948 199,948 230,599 230,599
---------- ---------- ------------ ------------
NET PROFIT (LOSS) ($800,820) ($800,820) ($1,127,829) ($1,127,829)
========== ========== ============ ============
PROFIT (LOSS) PER UNIT OF
PARTNERSHIP INTEREST ($52.55) ($52.55) ($65.73) ($65.73)
========== ========== ============ ============
</TABLE>
These Statements of Operations, in the opinion of management, reflect all
adjustments necessary to fairly state the financial condition of IDS Managed
Futures II, L. P. (See Note 6)
<PAGE>
IDS MANAGED FUTURES II, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIOD JANUARY 1, 2000 THROUGH MARCH 31, 2000
UNAUDITED
<TABLE>
<CAPTION>
Limited General
Units* Partners Partners Total
------ -------- -------- -----
<S> <C> <C> <C> <C>
Partners' capital at January 1, 2000 14,887.18 $8,490,927 $367,565 $8,858,492
Net profit (loss) (766,949) (33,871) (800,820)
Redemptions (see Note 1) (1,241.22) (658,146) 0 (658,146)
---------- ----------- --------- -----------
Partners' capital at March 31, 2000 13,645.96 $7,065,832 $333,694 $7,399,526
========== =========== ========= ===========
Net asset value per unit
January 1, 2000 $570.35 $570.35
Net profit (loss) per unit (52.55) (52.55)
----------- ---------
Net asset value per unit
March 31, 2000 $517.80 $517.80
</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 II, L. P. (See Note 6)
<PAGE>
IDS MANAGED FUTURES II, L.P.
STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
Jan 1, 2000 Jan 1, 1999
through through
Mar 31, 2000 Mar 31, 1999
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net profit/(loss) ($800,820) ($1,127,829)
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 45,527 1,060,818
Interest receivable (5,061) (3,150)
Accrued liabilities (10,664) (34,034)
Redemptions payable 122,600 17,948
----------- ------------
Net cash provided by (used in)
operating activities (648,418) (86,247)
Cash flows from financing activities:
Partner redemptions (658,146) (270,805)
----------- ------------
Net cash provided by (used in)
financing activities (658,146) (270,805)
----------- ------------
Net increase (decrease) in cash (1,306,564) (357,051)
Cash at beginning of period 8,533,968 11,060,948
----------- ------------
Cash at end of period $7,227,404 $10,703,897
=========== ============
</TABLE>
These Statement of Cash Flows, in the opinion of management, reflects all
adjustments necessary to fairly state the financial condition of IDS Managed
Futures II, L. P. (See Note 6)
<PAGE>
IDS MANAGED FUTURES II, L.P.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(1) GENERAL INFORMATION AND SUMMARY
IDS Managed Futures II, L.P. (the "Partnership") is a limited partnership
organized on April 21, 1987 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, 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 by AEFA commencing
July 14, 1987 through December 31, 1988. The total amount of the offering was
$40,000,000. There is no definite number of Units authorized for the Partnership
because investors affiliated with the Selling Agent of the Partnership were not
required to pay selling commissions. 60,127.14 Units representing a total
investment of $14,983,249 had been sold and accepted into the Partnership during
the offering period from July 14, 1987 to December 31, 1988 (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.
No redemptions were permitted by a subscriber during the first six months after
he or she was 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 Limited Partnership Agreement
<PAGE>
contains a full description of redemption and distribution procedures.
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) disassociation of the General Partners with the
Partnership; (3) bankruptcy 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
partners elect to terminate 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 and marked to market daily. 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 91-day Treasury bill rate for U.S. Treasury bills issued
during that month.
REDEMPTIONS
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. Redemptions are
based on the Net Asset Value per unit as of the last day of the month and
require ten days' written notice to the General Partners. Payment will be made
within ten 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
<PAGE>
Brokerage commissions and National Futures Association clearing and exchange
fees are accrued on a round-turn basis on open commodity futures contracts. The
Partnership pays CIS commissions on trades executed on its behalf at a rate of
$58.75 per round turn contract. For trades executed by Welton Investment
Corporation, the Partnership pays $43.75 per round turn contract. The
Partnership pays these commissions directly to CIS and CIS then reallocates the
appropriate portion to AEFA.
FOREIGN CURRENCY TRANSACTIONS
Trading accounts in foreign currency denominations are susceptible to both
movements in underlying contract markets as well as fluctuations in currency
rates. Translation of foreign currencies 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.
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.
<PAGE>
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 and incentive fees are accrued
monthly and paid quarterly. 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 dated July 8, 1997, 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) 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 for both periods ended March 31, 2000 and March 31, 1999.
(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
<PAGE>
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 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 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 CTA's 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 March 31, 2000 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.
<PAGE>
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
March 31, 2000:
<TABLE>
<CAPTION>
COMMODITY GROUP UNREALIZED GAIN/(LOSS)
--------------- ----------------------
<S> <C>
AGRICULTURAL COMMODITIES 6,346
FOREIGN CURRENCIES 82,350
STOCK INDICES 9,381
ENERGIES (26,975)
METALS 30,091
INTEREST RATE INSTRUMENTS 299,837
---------
TOTAL 401,030
</TABLE>
The range of maturity dates of these exchange traded open contracts is April of
2000 to December of 2000. The average open trade equity for the period of
January 1, 2000 to March 31, 2000 was $2,135,345.
The margin requirement at March 31, 2000 was $1,347,963. To meet this
requirement, the Partnership had on deposit with the Clearing Broker $6,594,039
in segregated funds and $1,034,395 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, 1999, as filed with the Securities and Exchange
Commission on March 28, 2000, 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.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
FISCAL QUARTER ENDED MARCH 31, 2000
The Partnership recorded a loss of $800,820 or $52.55 per Unit for the first
quarter of 2000. This compares to a loss of $1,127,829 or $65.73 per Unit for
the first quarter of 1999.
In the first month of the quarter the Partnership posted a loss resulting
primarily from volatility in the currency sector. The Partnership posted a loss
for the second month of the quarter resulting primarily from trading in global
interest rates. During the third month of the quarter currency destabilization
and massive capital shifts out of the U.S. dollar resulted in a loss for the
Partnership. Overall, the first quarter of fiscal 2000 ended negatively for the
Fund accounts managed by JWH(R) and Welton. At March 31, 2000, JWH was managing
60% of the Fund's assets and Welton was managing 40% of the Fund's assets.
January 2000 marked the turning of the millennium. This coupled with the
build-up to Y2K came and went without a hitch. However, the currency sector was
all but quiet as extreme volatility prompted large swings in the price of the
U.S. dollar relative to the Japanese yen. Within the first couple of days of the
New Year, the Japanese banks intervened and started pouring money into the
dollar. This abrupt reversal in the dollar/yen relationship resulted in a
reversal of the Partnership positions from long yen to short yen within a matter
of days. Short Australian dollar positions proved difficult and also resulted in
losses. Stock indices, namely the Nikkei fell in response to volatility in the
tech sector, which is factored into that index. Long positions hurt the
Partnership performance as did long positions in the S&P 500 and Paris CAC-40
index. Sustained long coffee positions were unprofitable as coffee prices
continue to fall. Despite realizing profits from short U.S. bond and long
Japanese Government Bond positions, as well as maintaining long profitable crude
oil and short aluminum positions, the Partnership posted overall losses. All in
all, the Partnership posted a loss of $464,596 or $29.91 per Unit in January.
Changing expectations regarding economic growth and inflation created a
difficult trading environment in February. The strategic news item was the U.S.
Federal Reserve's decision to buy back part of the debt, which led to a powerful
rally in the U.S.30-year bond. The decision by the Fed created havoc in our
interest rate portfolio, which was dominated by short positions. Losses were
taken in North American, Asian, and European interest rates. The yield on the
10-year U.S. government bond currently exceeds that of the 30-year, creating an
inverted yield curve, which is a very unusual occurrence. Currency trading was
mixed. Profitable long U.S. dollar positions were
<PAGE>
bolstered by the revised 4th quarter GNP number, which reflected a robust
economy. However, gains in the dollar were offset by losses incurred by long
European/short Japanese positions. Surging energy prices supported
performance in non-financial markets. Food and grain markets were once again
featureless. Precious metals trading suffered as gold prices rallied and then
fell sharply. Equity indices gained on some lost ground in January as U.S.
and European equity indices rose. Long positions here had a small positive
impact. On March 2, the General Partners received a letter from Verne
Sedlacek, President of John W. Henry & Company, Inc. detailing modifications
to the Financial and Metals trading program. All changes are designed to add
balance to the program without giving up any upside potential. Most
noteworthy are the dramatic reductions in precious metals and Far Eastern
interest rate trading as well as the addition of offshore stock indices, base
metals, and expansion of non-dollar currency trading. JWH remains steadfast
in their commitment to research. Overall, the Fund posted a loss of $258,991
or $17.38 per Unit in February.
In March, profit taking in U.S. stocks led to massive capital shifts out of the
U.S. dollar and into the Japanese yen. These events destabilized currency and
stock markets worldwide and resulted in losses for the Partnership. The
appreciation of the yen contributed to Partnership losses in that long positions
in the dollar and euro versus the yen both suffered. Marginal gains in dollar
positions against Europe and Australia's currencies proved inadequate in
offsetting these losses. Non-financial markets were, for the most part, quiet in
March. Profits in long crude oil, heating oil, and gasoline positions were
reduced when OPEC agreed to expand oil production. Performance in precious, as
well as, industrial metals was down slightly. The food and grain markets were
featureless. Positive performance in March came from the interest rate sector.
The 7% correction in tech stocks coupled with the U.S. treasury's continued
buying of longer dated bonds led to positive performance in the Partnership's
bond position. The European Central Bank's decision to raise short-term interest
rates led to purchasing European bonds, which assisted the Partnership position
as well. Stock indices, namely the appreciation in the S&P 500 contributed to
the Partnership performance. Overall, the Partnership posted a loss of $77,233
or $5.26 per Unit in March.
During the quarter, investors redeemed a total of 1,241.22 Units. At the end of
the quarter there were 14,290.41 Units outstanding (including 644.45 Units owned
by the General Partners).
During the fiscal quarter ended March 31, 2000, the Partnership had no material
credit exposure to a counterparty which is a foreign commodities exchange.
The Fund currently only trades on recognized global futures exchanges. In the
event the Fund 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
<PAGE>
reports of the Fund's performance, including monitoring of the daily net
asset value of the Fund. 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.
FISCAL QUARTER ENDED MARCH 31, 1999
The Partnership recorded a loss of $1,127,829 or $65.73 per Unit for the first
quarter of 1999. This compares to a loss of $272,893 or $14.17 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 67% of the Partnership's
assets and Welton was managing 33% 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 $510,801 or $29.62 per
Unit in January.
In February, agricultural prices declined steadily throughout the month as the
Partnership was positioned to profit from short positions in 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
<PAGE>
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 $103,337 or $6.03 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 $513,691 or
$30.08 per Unit in March.
During the quarter, investors redeemed a total of 418.16 Units. At the end of
the quarter there were 16,823.71 Units outstanding (including 644.45 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.
<PAGE>
PART II. OTHER INFORMATION
<TABLE>
<S> <C>
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
</TABLE>
<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 12, 2000 IDS MANAGED FUTURES II, L.P.
By: CIS Investments, Inc.,
One of its General Partners
By: /s/ Rebecca Steindel
--------------------
Rebecca Steindel
Treasurer & Secretary
(Duly authorized Officer of the
General Partner and the Principal
Financial Officer of the General
Partner)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM IDS MANAGED
FUTURES II, L.P. FOR THE FIRST QUARTER OF 2000 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-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 7,628,434
<SECURITIES> 0
<RECEIVABLES> 36,133
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,664,567
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,664,567
<CURRENT-LIABILITIES> 265,040
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 7,399,526
<TOTAL-LIABILITY-AND-EQUITY> 7,664,567
<SALES> 0
<TOTAL-REVENUES> (600,871)
<CGS> 0
<TOTAL-COSTS> 199,948
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 800,820
<INCOME-TAX> 0
<INCOME-CONTINUING> 800,820
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 800,820
<EPS-BASIC> (52.55)
<EPS-DILUTED> (52.55)
</TABLE>
