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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
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 0-21286
THE FOUR SEASONS FUND II L.P.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of # 54-1640874
incorporation or organization) (I.R.S. Employer
Identification No.)
c/o JAMES RIVER MANAGEMENT CORP.
103 Sabot Park
Manakin-Sabot, Virginia
(Address of principal executive offices)
23103
(Zip Code)
(804) 784-4500 Attention: Mr. Paul Saunders
(Registrant's telephone number, including area code)
Formerly c/o KIDDER PEABODY FUTURES MANAGEMENT CORP.
(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 l5(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
-1-
<PAGE>
FORM 10-Q PART 1 ITEM 1 FINANCIAL STATEMENTS
THE FOUR SEASONS FUND II L.P.
COMBINED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
---- ----
(Unaudited)
<S> <C> <C>
ASSETS:
Net Receivable From Commodity Broker:
Receivable For Cash Retained $ 389,097 $ 435,891
Net Unrealized Gain on 116,934 32,663
Open Futures Contracts
Net Unexpired Option Premiums - (29,400)
Accrued Interest Receivable 955 1,116
Other - 914
U.S. Treasury Strip Securities
(Cost plus Accrued) 2,080,192 2,282,981
--------- ---------
TOTAL ASSETS $ 2,587,178 $ 2,724,165
=============== ===============
LIABILITIES:
Accrued Brokerage Commissions $ 25,509 $ 5,637
Accrued Advisory Fees 4,155 4,461
Accrued Sponsor Fees 7,980 1,753
Other Accrued Expenses 20,156 10,637
Redemptions Payable 332,724 15,000
------- ------
390,524 37,488
Minority interest in Trading Company 7,223 21,076
----- ------
TOTAL LIABILITIES 397,747 58,564
------- ------
PARTNERS' CAPITAL:
General Partner (22.7171 units - 09/30/98) 26,467 96,767
(86.7171 units - 12/31/97)
Limited Partners
(1856.4775 units - 09/30/98) 2,162,964 2,568,834
(2302.055 units - 12/31/97) --------- ---------
TOTAL PARTNERS' CAPITAL 2,189,431 2,665,601
--------- ---------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 2,587,178 $2,724,165
============ ==========
PARTNERSHIP UNITS OUTSTANDING 1,879.195 2,388.772
========= =========
NET ASSET VALUE PER PARTNERSHIP UNIT $ 1,165.09 $ 1,115.89
============ ==========
</TABLE>
The accompanying notes are an integral part of these combined statements.
2
<PAGE>
FORM 10-Q PART 1 ITEM 1 FINANCIAL STATEMENTS
THE FOUR SEASONS FUND II L.P.
STATEMENT OF OPERATIONS (UNAUDITED) - FOR THE THREE MONTHS AND NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997.
<TABLE>
<CAPTION>
Three months Three months Nine months Nine months
ended 09/30/98 ended 09/30/97 ended 09/30/98 ended 09/30/97
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUES
Trading Profit (Loss)
Net realized gains $ (36,358) $ 174,588 $ 114,391 $ 357,004
Net option premiums - 36,249 (38,564) (1,357)
Net change in unrealized
gains on open futures contracts 111,081 (37,191) 84,270 11,906
Net change in unexpired options - (34,550) 29,400 (34,550)
-------- ------- ------ -------
Total Trading Results 74,723 139,096 189,497 333,003
Gain on sale of U.S. Treasury Strip
Securities 7,892 1,644 10,306 10,745
Interest income 37,684 41,575 118,960 161,457
------ ------ ------- -------
Total Revenues 120,299 182,315 318,763 505,205
EXPENSES
Brokerage commissions 15,742 17,445 50,048 66,277
Management fees 6,194 6,865 19,681 26,004
Sponsor fees 4,656 5,156 14,786 19,530
Administrative expenses 11,969 6,458 26,216 23,176
------ ----- ------ ------
Total Expenses 38,561 35,924 110,731 134,987
------ ------ ------- -------
INCOME BEFORE ALLOCATION OF MINORITY INTEREST 81,738 146,391 208,031 370,218
ALLOCATION OF MINORITY INTEREST (633) (5,304) (3,146) (8,812)
---- ------ ------ ------
NET INCOME: $ 81,105 $ 141,087 $204,885 $361,406
======== ========== ========= ========
Limited Partners $ 80,254 $ 136,098 $199,547 $351,106
General Partner 851 4,989 5,338 10,300
Net income per unit $ 37 $ 58 $ 89 $ 119
</TABLE>
The accompanying notes are an integral part of
these combined Financial Statements.
-3-
<PAGE>
FORM 10-Q PART 1 ITEM 1 FINANCIAL STATEMENTS
THE FOUR SEASONS FUND II L.P.
STATEMENTS OF PARTNERS' CAPITAL (UNAUDITED) -
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998.
<TABLE>
<CAPTION>
UNITS OF
PARTNERSHIP LIMITED GENERAL
INTEREST PARTNERS PARTNER TOTAL
---------------- ---------------- ------------- --------------
<S> <C> <C> <C> <C>
PARTNERS' CAPITAL, DECEMBER 31, 1997 2,388.772 $ 2,568,834 $ 96,766 $ 2,665,600
Capital Withdrawals (509.578) (513,336) (72,168) (585,504)
Capital Distributions - (92,082) (3,469) (95,551)
Net Income - 199,547 5,338 204,885
---------------- ---------------- ------------- --------------
PARTNERS' CAPITAL, SEPTEMBER 30, 1998 1,879.194 $ 2,162,965 $ 26,466 $ 2,189,431
================ ================ ============= ==============
NET ASSET VALUE PER PARTNERSHIP UNIT:
December 31, 1997:
Amount $1,115.89
Units outstanding 2,388.772
September 30, 1998:
Amount $1,165.09
Units outstanding 1,879.195
</TABLE>
4
<PAGE>
FORM 10-Q PART 1 ITEM 1 FINANCIAL STATEMENTS
THE FOUR SEASONS FUND II L.P.
STATEMENT OF CASH FLOWS (UNAUDITED) - FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997.
<TABLE>
<CAPTION>
Nine months Nine months
ended 9/30/98 ended 9/30/97
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 204,885 $ 361,406
Adjustments To Reconcile Net Income To
Net Cash Provided By Operating Activities:
Net Change In Unrealized Gains
On Futures Contracts (84,270) (11,906)
Net Change In Unrealized
Option Premiums (29,400) 34,550
Accrued Interest From U.S. Treasury
Strip Securities (107,496) (146,246)
Gain on Sale of U.S. Treasury
Strip Securities (10,306) (10,745)
(Increase) Decrease In Operating Assets:
Net Receivable From Commodity
Broker For Cash Retained 47,708 242,429
Net Receivable From Commodity
Broker For Interest Receivable 161 1,763
Increase (Decrease) In Operating Liabilities:
Accrued Brokerage Commissions 19,872 (18,278)
Accrued Advisory Fees (306) (67)
Accrued Sponsor Fees 6,227 (5,389)
Other Accrued Expenses 9,519 4,865
Redemptions Payable 317,724 (539,730)
Allocation of Income to Minority Interest 3,146 8,812
--------------- ---------------
Net cash (used in) provided by operating activities 172,580 (439,942)
--------------- ---------------
NET CASH FLOWS FROM FINANCING ACTIVITIES
Limited Partner Additions - -
Minority Interest Redemption (17,000) -
Partner Redemptions (585,504) (2,415,337)
Partner Distributions (95,551) (190,489)
--------------- ---------------
Net cash used in financing activities (698,055) (2,605,826)
--------------- ---------------
NET CASH FLOWS FROM INVESTING ACTIVITIES
Maturity of U.S. Treasury Strip 97,000 192,000
Sale of U.S. Treasury Strip Securities 223,591 2,492,362
--------------- ---------------
Net cash provided by investing activities 320,591 2,684,362
--------------- ---------------
NET INCREASE IN CASH - -
CASH AT BEGINNING OF PERIOD - -
--------------- ---------------
CASH AT END OF PERIOD $ $ -
=============== ===============
</TABLE>
The Accompanying Notes Are An Integral Part Of
The Combined Financial Statements.
- 5 -
<PAGE>
Form 10-Q Part 1 Item 2 Management's Discussion
THE FOUR SEASONS FUND II L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND OPERATING
RESULTS FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND
SEPTEMBER 30, 1997:
(A) SEPT 30, SEPT 30,
1998 1997
------------ ------------
PARTNERS' CAPITAL $ 2,189,431 $ 2,666,410
For the nine month period ending September 30, 1998, Partners'
Capital decreased $ 476,979, due primarily to net withdrawals of
$ 585,504 and operating expenses of $110,731. The decrease in
capital resulting from capital withdrawals and operating expenses
was partially offset by the appreciation in the value of the U.S.
Treasury Strip Securities' interest of $ 107,496, as well as
realized and unrealized trading profits of futures contracts,
options on futures contracts, and currency forwards of $ 124,805.
Largest gains in futures trading were concentrated in the
financial and indices markets, namely the S&P 500 Index, Deutsche
mark, and French Matif bonds.
In comparison, for the nine month period ended September 30,
1997, Partners' capital decreased $2,244,420 due primarily to net
withdrawals of $2,415,337 and operating expenses of $134,987. The
decrease in capital resulting from capital withdrawals and
operating expenses was partially offset by the appreciation in the
U.S. Securities' interest of $146,246 and the realized and
unrealized trading gains of futures contracts, options on futures
contracts, and currency forwards of $333,003. Largest gains in
futures trading were concentrated in the financial and currency
markets, namely the S&P 500 index, Deutsche mark, and U.S. Dollar
index contracts.
For the three month period ended September 30, 1998, Partners'
Capital decreased $ 251,618, due primarily to net withdrawals of
$ 332,724 and operating expenses of $ 38,561. The decrease in
capital resulting from capital withdrawals and operating expenses
was partially offset by the appreciation in the value of the U.S.
Treasury Strip Securities' interest of $ 34,509, as well as
realized and unrealized trading profits of futures contracts,
options on futures contracts, and currency forwards of $ 74,723.
Largest gains were in the financials sector, namely the
Eurodollar, French Matif, DTB 5-year Bond, Simex Government Bond,
Italian Government Bond, and CBOT 5-year bond markets.
For the three month period ended September 30, 1997, Partners'
Capital increased $ 85,588, due to trading gains of $ 139,096 and
the appreciation of the U.S. Treasury Strip Securities' interest
of $ 37,499. Trading profits resulted from futures trading
(S&P500) and currencies (Japanese yen).
(B) The U.S. Treasury Strip Securities are valued at the lower of cost
plus accrued interest or market value. As of September 30, 1998,
the cost plus accrued interest value (as shown on the Combined
Statement of Financial Condition) of the U.S. Treasury Strip
Securities is $ 2,080,192 and the value of said securities at
market value is $ 2,277,014. As of December 31, 1997, the value
of the U.S. Treasury Strip Securities at cost plus accrued
interest was $ 2,289,515 and the market value was $ 2,376,283.
<PAGE>
EXHIBITS
None
PART II
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 thereunto duly authorized.
THE FOUR SEASONS FUND II L.P.
(Registrant)
By JAMES RIVER MANAGEMENT CORP.
(General Partner)
By Edward M. Jasinski
--------------------------------
Director of Fund
Administration
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 1,432,704
<INVESTMENTS-AT-VALUE> 2,277,014
<RECEIVABLES> 390,052
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,587,178
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 397,747
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1,879
<SHARES-COMMON-PRIOR> 2,389
<ACCUMULATED-NII-CURRENT> 2,004,661
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 86,134
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,189,431
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 37,684
<OTHER-INCOME> 0
<EXPENSES-NET> 38,561
<NET-INVESTMENT-INCOME> 81,738
<REALIZED-GAINS-CURRENT> 28,466
<APPREC-INCREASE-CURRENT> 81,738
<NET-CHANGE-FROM-OPS> 28,466
<EQUALIZATION> 81,738
<DISTRIBUTIONS-OF-INCOME> (476,170)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> (286)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (103,244)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,194
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 38,561
<AVERAGE-NET-ASSETS> 2,468,913
<PER-SHARE-NAV-BEGIN> 1,127.62
<PER-SHARE-NII> 37.47
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1,165.09
<EXPENSE-RATIO> 1.56
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
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