As Filed with the Securities Exchange Commission on June 11, 1996
Registration No. ________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
(Exact name of registrant as specified in its charter)
Delaware 6799 52-1823554
(State of (Primary Standard (I.R.S. Employer
Organization) Industrial Identification
Classification Number) Number)
c/o Campbell & Company, Inc.
Court Towers Building
210 West Pennsylvania Avenue
Baltimore, Maryland 21204
(410) 296-3301
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
Theresa D. Livesey
Campbell & Company, Inc.
Court Towers Building
210 West Pennsylvania Avenue
Baltimore, Maryland 21204
(410) 296-3301
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
David M. Matteson
Foley & Lardner
330 North Wabash Avenue
Suite 3300
Chicago, Illinois 60611
(312) 755-2562
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of
this Registration Statement
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 check the following box [X]
CALCULATION OF REGISTRATION FEE
Title of Each
Class of Maximum Maximum
Securities Amount Being Offering Aggregate Amount of
Being Registered Price Per Offering Registration
Registered (1) Unit (1) Price Fee
Units of
Limited
Partnership
Interest $30,000,000 $10,345
(1) Pursuant to Rule 457(o), the "Amount Being Registered" and
"Maximum Offering Price Per Unit" are omitted.
Pursuant to Rule 429, the Prospectus contained herein also relates to
Registration Statement No. 33-98056 and this constitutes Post Effective
Amendment No. 1 to such Registration Statement. Based on sales of Units
through April 30, 1996 and Unit value as of such date, $15,065,960 of
securities are being carried forward from the previous Registration
Statement. The registration fee related to the amount of securities being
carried forward is $5,195.
The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until this registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
Cross Reference Sheet
Item
No. Prospectus Heading
1. Forepart of the
Registration Statement
and Outside Front Cover
Page of Prospectus . . . Cover Page
2. Inside Front and Outside
Back Cover Pages of
Prospectus . . . . . . . Inside Cover Page; Table
of Contents
3. Summary Information, Risk
Factors and Ratio of
Earnings to
Fixed Charges . . . . .
Risk Disclosure
Statement; Summary; Risk
Factors; Charges to the
Fund
4. Use of Proceeds . . . . Use of Proceeds; Campbell
& Company, Inc.; The
Futures and Forwards
Markets
5. Determination of Offering
Price . . . . . . . . . Inside Cover Page; Plan
of Distribution
6. Dilution . . . . . . . . Not Applicable
7. Selling Security Holders Not Applicable
8. Plan of Distribution . . Inside Cover Page; Plan
of Distribution
9. Description of Securities
to Be
Registered . . . . . . . Cover Page; Distributions
and Redemptions;
Agreement of Limited
Partnership--Sharing of
Profits and Losses
10. Interests of Named
Experts and
Counsel . . . . . . . . Certain Legal Matters;
Experts
11. Information with Respect
to the
Registrant . . . . . . . Summary; Risk Factors;
Use of Proceeds; Risk
Factors; Campbell &
Company, Inc.; Charges to
the Fund; The Futures
Markets; Index to
Financial Statements;
12. Disclosure of Commission
Position on
Indemnification for
Securities Act
Liabilities . . . . . . Not Applicable
<PAGE>
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
$45,065,960 in Units of Limited Partnership Interests
________________________________
Campbell Strategic Allocation Fund, Limited Partnership (the "Fund"),
is a Delaware limited partnership organized to engage in the speculative
trading of financial futures contracts, forward contracts and related
options.
Campbell & Company, Inc., a Maryland corporation ("Campbell &
Company"), is the general partner and trading advisor of the Fund. The
Fund's objective is to achieve substantial capital appreciation over the
medium- to long-term while controlling the risks associated with the
trading activities through the use of active stop-loss provisions and
modern portfolio diversification techniques. Campbell & Company has been
trading futures contracts pursuant to technical trading systems for over
24 years and currently has over $400 million under its management ($340
million in the Financial, Metal & Energy Large Portfolio primarily
utilized to trade the Fund's assets). Past performance is not necessarily
indicative of and may significantly exceed future performance. Futures and
forward trading is speculative and involves a high degree of risk.
Units of Limited Partnership ("Units") of the Fund are being offered
on an ongoing basis (the "Continuing Offering Period"), which began after
the Initial Offering Period terminated on April 15, 1994. A total of
$64,934,040 has been raised in the Initial and Continuing Offering Period
through June 1, 1996; redemptions over the same time period total
approximately $10,403,602. Campbell & Company may terminate the Continuing
Offering Period in its discretion. The Unit value as of April 30, 1996
was $1,048.88.
All of the proceeds of the offering will be available for trading
purposes. Units will be sold as of the first business day of each month
(the "Continuing Offering Period") at Net Asset Value per Unit. The
minimum investment is $10,000; $5,000 for eligible employee benefit plans
and Individual Retirement Accounts ($5,000 and $2,000, respectively, for
registered representatives of NASD registered broker-dealers). Limited
Partners may increase their investment in the Fund with a minimum
investment of $1,000.
No market will exist for the Units. Units may be redeemed monthly,
with the charges explained below, at Net Asset Value per Unit, at the
election of the Limited Partner on ten business days' written notice prior
to month-end. During the 12 months following the purchase, the General
Partner charges a redemption fee as follows: 4% of Net Asset Value on
Units redeemed in the first quarter following purchase, 3% during the
second quarter, 2% during the third quarter, and 1% in the fourth quarter.
After the fourth quarter, no redemption fees are charged. THESE ARE
SPECULATIVE SECURITIES AND INVOLVE A HIGH DEGREE OF RISK. THESE SECURITIES
ARE SUITABLE FOR INVESTMENT ONLY BY A PERSON WHO CAN AFFORD TO LOSE THE
ENTIRE INVESTMENT. SEE "PLAN OF DISTRIBUTION," "RISK FACTORS," AND
"CONFLICTS OF INTEREST." RISK FACTORS RELATING TO THE UNITS INCLUDE THE
FOLLOWING:
- Futures and forward trading is speculative and involves a high degree
of risk. See "Risk Factors."
- The Fund is subject to significant charges, unrelated to
profitability. Campbell & Company estimates that the Fund will need
to generate gross trading profits, in addition to interest income on
its assets, of approximately $45 per Unit (based on a $1,000 initial
net asset value per unit), or 4.50%, in order for unit value to
remain constant for the next 12 months. See "Charges to the Fund."
- Redemption rights with respect to the Units are limited and there are
substantial restrictions on transferability. See "Distributions and
Redemptions" and "Agreement of Limited Partnership-Dispositions."
- Campbell & Company and the Fund are subject to significant conflicts
of interest. These conflicts include Campbell & Company acting as
both general partner and trading advisor of the Fund and establishing
its fees without arm's length negotiation. See "Conflicts of
Interest."
- Limited Partners will be taxed each year on their allocable share of
income or gain recognized by the Fund despite not having received any
cash distributions. See "Federal Income Tax Aspects."
- The success of the Fund is dependent upon Campbell & Company and
there can be no assurance that Campbell & Company will trade
profitably or avoid significant losses. See "Campbell & Company,
Inc."
See "Risk Factors" on page ___ for a more detailed description of the
foregoing risks and other significant risk factors applicable to an
investment in the Fund. There is no assurance that the Fund will achieve
its objectives.
________________________________
SUBSCRIBERS TO THE FUND WILL BE REQUIRED TO GIVE CERTAIN REPRESENTATIONS
AND WARRANTIES IN THE SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY.
________________________________
THE COMMODITY FUTURES TRADING COMMISSION HAS NOT PASSED UPON THE MERITS OF
PARTICIPATING IN THIS POOL NOR HAS THE COMMISSION PASSED ON THE ADEQUACY
OR ACCURACY OF THIS DISCLOSURE DOCUMENT.
________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Proceeds to
Price to Selling the Fund
Public (1)(5) Commissions (2)(3)(4)
Net Asset Net Asset
Continuing Offering Period Value (2) Value
Total Maximum $45,065,960 (2) $45,065,960
*See Notes on the following page.
The date of this Prospectus is August 9, 1996.
<PAGE>
NOTES:
(1) The Units are offered on a "best efforts" basis without any firm
underwriting commitment through broker-dealers including, but not limited
to, PaineWebber Incorporated, A.G. Edwards & Sons, Inc., J.C. Bradford &
Company, Inc. and Interstate/Johnson Lane Corporation, which are
registered broker-dealers and members of the National Association of
Securities Dealers, Inc. (the "Selling Agents"). Units are offered until
such time as Campbell & Company terminates such offering (the "Continuing
Offering Period"). Subscriptions received during the Continuing Offering
Period can be accepted on a monthly basis. Subscribers whose subscriptions
are cancelled or rejected will be notified of when their subscriptions,
plus interest, will be returned, which shall be promptly after rejection.
Subscribers whose subscriptions are accepted will be issued fractional
Units, calculated to three decimal places, in an amount equal to the
interest earned on their subscriptions. Campbell & Company may suspend,
limit or terminate the offering of Units at any time.
The Fund's escrow account is maintained at Mercantile Safe Deposit &
Trust Company, Baltimore, Maryland (the "Escrow Agent"). All subscription
funds are required to be promptly transmitted to the Escrow Agent.
Subscriptions must be accepted or rejected by Campbell & Company within
five business days of receipt, and the settlement date for the deposit of
subscription funds in escrow must be within five business days of
acceptance. No fees or costs will be assessed on any subscription while
held in escrow, irrespective of whether the subscription is accepted or
subscription funds returned.
Subscriptions from clients of any of the Selling Agents may also be
made by authorizing such Selling Agent to debit the subscriber's customer
securities account at the Selling Agent on the settlement date. Promptly
after debiting the customer's securities account, the Selling Agent shall
send payment to the Escrow Agent as described above, in the amount of the
subscription so debited.
(2) No selling commissions are paid by the investor or from the
proceeds of subscriptions. The Selling Agents receive from Campbell &
Company selling commissions of up to 4% of the subscription amount,
subject to additional amounts being paid by Campbell & Company as
described in Note (3) below.
(3) Ongoing payments are made to those Selling Agents (or assignees
thereof) which are registered "futures commission merchants" or
"introducing brokers" (or obtain such registration prior to the
commencement of such ongoing payments), to the extent such payments are
attributable to Units sold by such Selling Agents which remain outstanding
more than twelve months. These ongoing payments are paid monthly beginning
at the end of the thirteenth full month after the sale of the Units in
respect of which such compensation is paid, and equal, on an annual basis,
up to 4% of the average month-end Net Assets of the Fund. Units sold at
different Closing Dates have different dates when ongoing compensation
becomes payable in respect of such Units. For investors who purchase Units
at different times, a "first-in, first-out" assumption is made in
determining when Units redeemed were sold. Account executives who are
registered with the Commodity Futures Trading Commission ("CFTC") and have
satisfied all applicable proficiency requirements are eligible to receive
all or a portion of such ongoing payments, to the extent attributable to
Units sold by such account executives which remain outstanding for more
than twelve months, from the applicable Selling Agents.
Selling Agents and registered representatives who are not registered
with the CFTC as described above may receive additional selling
commissions from Campbell & Company, paid on the same basis as the ongoing
payments, provided that the total of such additional selling commissions
plus the initial 4% selling commission, salaries, expenses and bonuses of
employees of Campbell & Company engaged in wholesaling activities and per
Unit organization and offering costs properly deemed to constitute costs
allocable to the Selling Agents (such as a selling brochure, seminar costs
and travel expenses) do not exceed 10% of such Units' initial sale price.
Such ongoing payments, salaries and bonuses and additional selling
commissions may be deemed to constitute underwriting compensation.
(4) Offering expenses related to the Continuing Offering as of March
31, 1996 totalled $1,579,774 and for the nine months commencing on the
date hereof are estimated at $350,000. Campbell & Company will advance
such expenses and will be reimbursed by the Fund, without interest, in
30-month installment periods throughout the Continuing Offering. Such
reimbursements, however, will not exceed 2.5% of the aggregate
subscriptions accepted by Campbell & Company as general partner.
Organization and offering expenses equal to $240,961 were incurred during
the Initial Offering Period and were advanced by Campbell & Company. Such
expenses are being reimbursed in the same manner and subject to the same
2.5% limit.
(5) The price per Unit during the Continuing Offering Period will
vary depending upon the month-end Net Asset Value per Unit. The Units are
being offered at a minimum subscription of $10,000; $5,000 for eligible
employee benefit plans and Individual Retirement Accounts or $5,000 and
$2,500, respectively, for registered representatives of NASD registered
broker-dealers. Limited Partners may increase their investment in the Fund
with a minimum investment of $1,000. Under the federal securities laws and
those of certain states, investors may be subject to special minimum
purchase and/or investor suitability requirements. A description of these
requirements is included in the Subscription Agreement and Power of
Attorney, included as Exhibit D to this Prospectus.
(6) See "Plan of Distribution" for information relating to
indemnification arrangements with respect to the Selling Agents.
REGULATORY NOTICES
UNTIL NOVEMBER 6, 1996 (90 DAYS AFTER THE DATE HEREOF), ALL DEALERS
EFFECTING TRANSACTIONS IN THE UNITS WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
THE SELLING AGENTS MUST ALSO DELIVER ANY SUPPLEMENTED OR AMENDED
PROSPECTUSES ISSUED BY THE FUND.
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
FUND, CAMPBELL & COMPANY, THE SELLING AGENTS, OR ANY OTHER PERSON. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION MAY NOT LAWFULLY BE
MADE.
THE DIVISION OF INVESTMENT MANAGEMENT OF THE SECURITIES AND EXCHANGE
COMMISSION REQUIRES THAT THE FOLLOWING STATEMENT BE SET FORTH HEREIN:
"CAMPBELL STRATEGIC ALLOCATION FUND, L.P. IS NOT A MUTUAL FUND AND IS NOT
SUBJECT TO REGULATION UNDER THE INVESTMENT COMPANY ACT OF 1940.
CONSEQUENTLY, INVESTORS WILL NOT HAVE THE BENEFIT OF THE PROTECTIVE
PROVISIONS OF SUCH LEGISLATION."
THE FUND IS SUBJECT TO THE INFORMATIONAL REQUIREMENTS OF THE
SECURITIES EXCHANGE ACT OF 1934 AND IN ACCORDANCE THEREWITH FILES REPORTS
AND OTHER INFORMATION WITH THE SECURITIES AND EXCHANGE COMMISSION. SUCH
REPORTS AS WELL AS PROXY AND INFORMATION STATEMENTS MAY BE INSPECTED AND
COPIED AT PUBLIC REFERENCE FACILITIES MAINTAINED BY THE COMMISSION IN
WASHINGTON, D.C. 20549 AND COPIES MAY BE OBTAINED FROM THE COMMISSION UPON
PAYMENT OF THE PRESCRIBED FEES.
RISK DISCLOSURE STATEMENT
YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION
PERMITS YOU TO PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD
BE AWARE THAT FUTURES AND OPTIONS TRADING CAN QUICKLY LEAD TO LARGE LOSSES
AS WELL AS GAINS. SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET
VALUE OF THE POOL AND CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL.
IN ADDITION, RESTRICTIONS ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO
WITHDRAW YOUR PARTICIPATION IN THE POOL.
FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR
MANAGEMENT, AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR
THOSE POOLS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING
PROFITS TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE
DOCUMENT CONTAINS A COMPLETE DESCRIPTION OF EACH EXPENSE TO BE CHARGED
THIS POOL AT PAGE 33 AND A STATEMENT OF THE PERCENTAGE RETURN NECESSARY TO
BREAK EVEN, THAT IS, TO RECOVER THE AMOUNT OF YOUR INITIAL INVESTMENT, AT
PAGE 34.
THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS
NECESSARY TO EVALUATE YOUR PARTICIPATION IN THIS COMMODITY POOL.
THEREFORE, BEFORE YOU DECIDE TO PARTICIPATE IN THIS COMMODITY POOL, YOU
SHOULD CAREFULLY STUDY THIS DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION
OF THE PRINCIPAL RISK FACTORS OF THIS INVESTMENT, AT PAGE 11.
YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN
FUTURES OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE
UNITED STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES
MARKET, MAY BE SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT OR DIMINISHED
PROTECTION TO THE POOL AND ITS PARTICIPANTS. FURTHER, UNITED STATES
REGULATORY AUTHORITIES MAY BE UNABLE TO COMPEL THE ENFORCEMENT OF THE
RULES OF REGULATORY AUTHORITIES OR MARKETS IN NON-UNITED STATES
JURISDICTIONS WHERE TRANSACTIONS FOR THE POOL MAY BE EFFECTED.
TABLE OF CONTENTS
Section Page
1. Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
A. Market Risks . . . . . . . . . . . . . . . . . . . . . . . . 10
B. Trading Risks . . . . . . . . . . . . . . . . . . . . . . . . 10
C. Tax Risks . . . . . . . . . . . . . . . . . . . . . . . . . . 11
D. Other Risks . . . . . . . . . . . . . . . . . . . . . . . . . 11
3. Investment Factors 13
A. Professional Trading Management . . . . . . . . . . . . . . . 13
B. Trading Diversification . . . . . . . . . . . . . . . . . . . 13
C. Trading Systems Diversification . . . . . . . . . . . . . . . 13
D. Investment Diversification . . . . . . . . . . . . . . . . . 13
E. Limited Liability . . . . . . . . . . . . . . . . . . . . . . 13
F. Interest Income . . . . . . . . . . . . . . . . . . . . . . . 13
4. Campbell & Company, Inc. 13
A. Description . . . . . . . . . . . . . . . . . . . . . . . . . 13
B. The Advisory Agreement . . . . . . . . . . . . . . . . . . . 14
C. Management Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . 15
D. The Trading Systems . . . . . . . . . . . . . . . . . . . . . 15
5. Past Performance of Campbell & Company, Inc. 17
6. Conflicts of Interest 31
A. Campbell & Company, Inc. . . . . . . . . . . . . . . . . . . 31
B. The Commodity Broker and the Foreign Exchange Dealers . . . . 31
C. Selling Agents . . . . . . . . . . . . . . . . . . . . . . . 31
D. Fiduciary Duty and Remedies . . . . . . . . . . . . . . . . . 31
E. Indemnification and Standard of Liability . . . . . . . . . . 32
7. Charges to the Fund 33
A. Campbell & Company, Inc. . . . . . . . . . . . . . . . . . . 33
B. The Commodity Broker . . . . . . . . . . . . . . . . . . . . 34
C. Selling Agents . . . . . . . . . . . . . . . . . . . . . . . 34
D. Foreign Exchange Dealers . . . . . . . . . . . . . . . . . . 34
E. Offering Expenses . . . . . . . . . . . . . . . . . . . . . . 34
F. Cash Management . . . . . . . . . . . . . . . . . . . . . . . 34
G. Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
H. Estimate of Breakeven Level . . . . . . . . . . . . . . . . . 35
8. Use of Proceeds 35
9. The Commodity Broker 36
10. Foreign Exchange Dealers 40
11. Capitalization 40
12. Distributions and Redemptions 40
13. The Futures and Forwards Markets 41
A. Futures Contracts . . . . . . . . . . . . . . . . . . . . . . 41
B. Forward Contracts . . . . . . . . . . . . . . . . . . . . . . 41
C. Regulation . . . . . . . . . . . . . . . . . . . . . . . . . 41
D. Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14. Agreement of Limited Partnership 42
A. Organization and Liabilities . . . . . . . . . . . . . . . . 42
B. Management of Partnership Affairs . . . . . . . . . . . . . . 42
C. Sharing of Profits and Losses . . . . . . . . . . . . . . . . 42
D. Dispositions . . . . . . . . . . . . . . . . . . . . . . . . 43
E. Dissolution and Termination of the Fund . . . . . . . . . . . 43
F. Amendments and Meetings . . . . . . . . . . . . . . . . . . . 43
G. Indemnification . . . . . . . . . . . . . . . . . . . . . . . 44
H. Reports to Limited Partners . . . . . . . . . . . . . . . . . 44
15. Federal Income Tax Aspects 44
A. Introduction . . . . . . . . . . . . . . . . . . . . . . . . 44
B. Partnership Classification . . . . . . . . . . . . . . . . . 44
C. Publicly-Traded Partnership Status . . . . . . . . . . . . . 45
D. Fund Allocations . . . . . . . . . . . . . . . . . . . . . . 45
E. "At-Risk" Limitation and Basis Adjustments . . . . . . . . . 45
F. Application of Passive Loss Rules . . . . . . . . . . . . . . 45
G. Cash Distributions and Redemptions . . . . . . . . . . . . . 46
H. Taxation of Transactions . . . . . . . . . . . . . . . . . . 46
I. Limitation on Deductibility of Capital Losses . . . . . . . . 46
J. Alternative Minimum Tax . . . . . . . . . . . . . . . . . . . 46
K. Deductibility of Investment Interest . . . . . . . . . . . . 46
L. Tax Elections . . . . . . . . . . . . . . . . . . . . . . . . 46
M. Limited Deduction for Certain Expenses . . . . . . . . . . . 47
N. Fund Audits . . . . . . . . . . . . . . . . . . . . . . . . . 47
O. Syndication Costs . . . . . . . . . . . . . . . . . . . . . . 47
P. State and Local Taxes . . . . . . . . . . . . . . . . . . . . 47
Q. Laws Subject to Change . . . . . . . . . . . . . . . . . . . 47
16. Investment by ERISA Accounts 47
17. Plan of Distribution 48
A. Subscription Procedure . . . . . . . . . . . . . . . . . . . 48
B. Investor Suitability . . . . . . . . . . . . . . . . . . . . 48
C. The Selling Agents . . . . . . . . . . . . . . . . . . . . . 49
18. Certain Legal Matters 50
19. Experts 50
20. Additional Information 50
21. Index to Financial Statements 51
Appendices
Appendix I Campbell & Company, Inc. Financial, Metal & Energy Large
Portfolio Pro Forma
Appendix II Glossary
Exhibits
Exhibit A Agreement of Limited Partnership
Exhibit B Request for Redemption
Exhibit C Subscription Requirements
Exhibit D Subscription Agreement and Power of Attorney
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
SECTION 1. SUMMARY
The Fund offers investors an opportunity to participate in a
portfolio primarily focused on financial futures (including interest
rates, foreign exchange and stock indices) with a secondary emphasis on
metal, energy and agricultural products. Campbell & Company uses its
computerized, trend- following technical trading and risk control methods
in an attempt to capitalize on these opportunities while seeking to
control risk and volatility. Campbell & Company's technical approach has
been in use in actual trading since 1972 - one of the longest performance
records of any active futures manager - and has been developed and refined
over a period of more than 24 years. The Fund began trading April 18,
1994 with approximately $9.7 million in assets. Through May 31, 1996, a
total of $$64,934,040 has been raised in the Initial and Continuing
Offering Period. See Table 1 in "Past Performance of Campbell & Company,
Inc." for a performance record of the Fund through April 30, 1996.
Disclosure of the material aspects of, and the risks involved in an
investment in the Fund, including compliance with applicable regulatory
disclosure requirements, has resulted in the considerable length of this
Prospectus. In an effort to make these disclosures more readily
comprehensible, the following summary reviews in outline form certain
important aspects of an investment in the Fund. The following summary is
qualified in its entirety by the information set forth elsewhere in this
Prospectus. The intended effective date for use of this document is August
9, 1996.
Plan of Distribution
Securities Offered
Units will be sold monthly at the Net Asset Value per Unit as of the
last day of each month (until Campbell & Company elects to terminate
the offering).
- Subscriptions will be accepted into escrow throughout the Continuing
Offering Period. Units will be sold by transfer of subscription funds
from escrow to the Fund on each closing date (a "Closing Date").
- Subscribers which are accepted as investors in the Fund will receive
additional Units, in fractions calculated to three decimal places, in
lieu of interest earned on their subscription funds while held in
escrow. Rejected subscribers will receive such interest in cash. No
fees or charges will be assessed against any funds held in escrow.
- The Units are offered on a "best efforts" basis by the Selling
Agents, without any firm underwriting commitment.
Minimum Investment
$10,000 except for trustees or custodians of eligible employee
benefit plans and individual retirement accounts, for which the
minimum investment is $5,000 (these minimums are reduced to $5,000
and $2,000, respectively, for registered representatives of NASD
registered broker-dealers). Limited Partners may increase their
investment in the Fund with a minimum investment of $1,000.
Suitability
- An investment in the Fund is speculative and involves a high degree of
risk. Each investor must, at a minimum, have (i) a net worth of at
least $150,000 (exclusive of home, furnishings and automobiles) or
(ii) a net worth (similarly calculated) of at least $45,000 and an
annual gross income of at least $45,000. A number of jurisdictions in
which the Units are offered impose higher minimum suitability
standards on prospective investors. These suitability standards are,
in each case, regulatory minimums only, and merely because a
prospective investor meets such standards does not mean that an
investment in the Units is suitable for him. See Exhibit C -
Subscription Requirements. No one may invest more than 10% of his
"liquid" net worth (exclusive of home, furnishings and automobiles)
in the Fund.
Subscription Procedures
- Subscribers must complete, execute and deliver to their Selling Agent
a copy of the Subscription Agreement and Power of Attorney included as
Exhibit D at the back of this Prospectus. The Subscription Agreement
and Power of Attorney requires investors to make certain specific
representations and warranties. Read the Subscription Agreement and
Power of Attorney as well as this Prospectus carefully before you
decide whether to invest. See "Plan of Distribution - Subscription
Procedure."
Investment Factors
Overview
- A leveraged, professionally managed investment fund emphasizing
financial instrument trading; the Fund trades in a wide range of
domestic and international markets.
- The Fund trades in approximately 26 financial instrument contracts,
including six different currency contracts.
- Objectives of substantial capital appreciation with controlled
volatility.
- If profitable, the Fund has the potential to provide a valuable
component of diversification to traditional securities portfolios.
- An investment in the Units offers the advantage of limited liability
in highly leveraged trading, as well as administrative convenience,
in a fund which participates in complex trading strategies in various
United States and international markets.
Campbell & Company, Inc.
- The office of Campbell & Company, Inc. and the Fund is located at 210
West Pennsylvania Avenue, Baltimore, Maryland 21204 (telephone: (410)
296-3301). The books and records of the Fund are kept at this office.
- Campbell & Company, the general partner and trading advisor, is a
Maryland corporation organized in April 1978. It administers the Fund
as well as directs its trading, and its principals have over 24 years
of experience trading in the futures markets. As of April 30, 1996,
Campbell & Company was managing approximately $400 million in the
futures markets, including approximately $340 million in its
Financial, Metal & Energy Large Portfolio (FME Large Portfolio) which
concentrates in financial markets in interest rates, stock indices
and foreign exchange, as well as metals and energy products, which is
the portfolio currently traded by 75% of the Fund. The remaining 25%
of assets is traded in the Global Diversified Portfolio, which
includes many of the same markets as the FME Large Portfolio, as well
as agricultural markets such as grains, meats, sugar, coffee, and
fibers. Campbell & Company currently allocates the Fund's assets as
follows: approximately 79% to financial markets, 9% to metals, 7% to
energy products, , and 5% to agricultural markets. The percentages
will fluctuate as market conditions change.
- Employs a computerized, technical, trend-following approach combined
with quantitative portfolio management analysis and seeks to identify
and profit from sustained price trends.
- Implements two trading systems in most markets traded. Each system is
used in the analysis of market movements and internal market and
price configurations. A third trading system is also used for
certain markets which appear to respond well to both trend-following
and contra-trend following techniques.
- Utilizes a proprietary "value-weighted/volatility-time" model for
allocating capital to a portfolio's constituent markets.
Business Terms
- The Fund's charges, as set forth below, are substantial and must be
offset by trading gains to avoid depletion of the Fund's assets.
Campbell & Company . . Brokerage Fee equal to 8% of Net Assets per
annum, of which portions are remitted to other
entities as set forth below.
20% of quarterly appreciation in Unit Value,
excluding interest income.
Reimbursement of offering expenses over a
30-month period, estimated at and not to exceed
2.5% of the aggregate subscriptions accepted by
Campbell & Company.
Dealers . . . . . . . . Bid-ask spread in off-exchange contracts.
Cash Management . . . . .125 of 1% per annum of assets in trust account,
plus 25% of any incremental return generated
above an index of the 90-day U.S. Treasury Bill
rate.
Others . . . . . . . . Operating expenses such as legal, auditing,
printing and postage (up to a maximum of 0.5 of
1% of Net Assets per annum).
- The Brokerage Fee is paid to Campbell & Company, which, in turn,
remits 1% to the Commodity Broker, 4% to the Selling Agents and
retains the remaining 3%.
Estimate of Break-Even Level
- In order for an investor to "break-even" on his investment in the
first year of trading (i.e. for ending net asset value to equal the
initial amount invested), assuming an initial investment of $1,000,
the Fund must earn $45 per Unit, or 4.50%. See "Charges to the Fund."
Assumed Initial Selling Price Per Unit $ 1,000.00
--------
Brokerage Fee (8%) $ 80.00
Organization & Offering Expense Reimbursement (1%) 10.00
Operating Expenses (0.5%) 5.00
Less: Interest Income (5%) (net of cash management
fee) (50.00)
--------
Amount of Trading Income Required for the Fund's Net
Asset Value per Unit at the End of One Year to Equal
the Initial Selling Price per Unit $ 45.00
========
Percentage of Assumed Initial Selling Price per Unit 4.50%
========
- The Fund meets its margin requirements by depositing U.S. government
securities with the Commodity Broker and the dealers. In this way,
substantially all (i.e., 95% or more) of the Fund's assets, whether
used as margin for trading purposes or as reserves for such trading,
can be invested in U.S. government securities and time deposits with
U.S. banks. Maintenance of the Fund's assets in U.S. government
securities and banks does not reduce the risk of loss from trading
futures contracts. The Fund receives all interest earned on its
assets.
- No upfront sales commissions paid by investors.
- All offering expenses will be advanced by Campbell & Company
throughout the Continuing Offering and will be reimbursed, without
interest, by the Fund in 30 equal monthly installments following the
incurrence of the expense. The reimbursement is subject to a maximum
equal to 2.5% of the subscriptions accepted by Campbell & Company.
- A medium - to long-term investment (2 to 3 years).
- Units are transferable, but no market exists for their sale and none
will develop. Monthly redemptions are permitted upon ten business
days' written notice to Campbell & Company. During the 12 months
following the purchase, the General Partner charges a redemption fee
as follows: 4% of Net Asset Value on Units redeemed in the first
quarter following purchase, 3% during the second quarter, 2% during
the third quarter, and 1% in the fourth quarter. After the fourth
quarter, no redemption fees are charged.
- Campbell & Company does not intend to make distributions, choosing
instead to retain the Fund's capital for trading purposes. Due to the
redemption rights they typically provide, few futures funds make
distributions.
Diversification
- Expected non-correlation with traditional portfolio components such as
stocks and bonds.
- Ability to shift capital quickly among different domestic markets and
international economies.
- According to modern portfolio theory, diversification of a portfolio
over various non-correlated asset classes can increase overall return
and reduce the volatility (a primary measure of risk) of a portfolio.
As a zero-sum risk transfer activity, futures and forward trading has
no inherent correlation with any other investments. The Fund can
provide diversification benefits only if it is profitable and other
sectors of the portfolio are under-performing. The Fund may or may
not be profitable when other sectors of the portfolio are
under-performing. If the Fund were to be highly correlated with
other investments in a Limited Partner's portfolio, the Fund would
not provide additional diversification to such portfolio.
Historically Campbell & Company's portfolios have had a low
correlation with traditional stock and bond investments. However, no
assurance can be given that a low correlation will continue in the
future, or that the Fund will be profitable. The Fund's profitability
depends on the success of the trading techniques. Of course, an
investment in the Fund may not necessarily have a positive rate of
return, and if unprofitable the Fund will not increase the return on
an investor's portfolio or achieve its diversification objectives.
Risk Factors
- No subscriber may invest more than 10% of the subscriber's liquid
assets (exclusive of home, furnishings and automobiles) and in no
event more than such subscriber can afford to lose.
- The Fund is a highly speculative investment.
- There can be no assurance whatsoever that the Fund will achieve its
objectives or avoid substantial losses, which could include the loss
of a subscriber's entire investment.
- The portfolio of primarily financial, metal and energy contracts
traded by the Fund may produce more volatile performance and greater
risk than would a more diversified approach utilizing Campbell &
Company's trading methods.
- A single advisor fund such as the Fund may be inherently more
volatile than multi-advisor managed futures products.
- The Fund is subject to 8% per annum Brokerage Fees payable to
Campbell & Company irrespective of profitability as well as quarterly
performance fees equal to 20% of aggregate cumulative appreciation in
Net Asset Value, if any. The Fund pays "bid-ask" spreads on its
forward trades.
- Although Campbell & Company is an experienced professional manager,
past results are not necessarily indicative of and may significantly
exceed future performance.
- Campbell & Company has from time to time in the past incurred
substantial losses in trading on behalf of its clients. See "Past
Performance of Campbell & Company."
- Futures and forward trading is a "zero-sum" game in that for every
gain there is an equal and offsetting loss. Such trading also has no
inherent value or participation in economic growth. Unlike typical
securities investments, there is no consistency of yield (as in the
case of debt) or growth (as in the case of equity). Any increase in
Unit value is entirely speculative.
- Although liquid compared to such other investments as real estate or
venture capital, the Units may only be redeemed on a monthly basis,
only upon ten business days' notice. During the 12 months following
the purchase, the General Partner charges a redemption fee as
follows: 4% of Net Asset Value on Units redeemed in the first
quarter following purchase, 3% during the second quarter, 2% during
the third quarter, and 1% in the fourth quarter. After the fourth
quarter, no redemption fees are charged. See "Redemptions and
Distributions."
- The Fund trades in futures and forward contracts and is therefore a
party to financial instruments with elements of off-balance sheet
market risk, including market volatility and possible illiquidity. In
addition to market risk, there is a credit risk that a counterparty
will not be able to meet its obligations to the Fund. See
"Management's Discussion and Analysis of Financial Condition and
Results of Operations."
- There are significant income tax considerations in connection with an
investment in the Fund. For example, although the Fund has received
an opinion of counsel that the Fund will be classified as a
partnership for federal income tax purposes, no ruling has been
obtained from the Internal Revenue Service confirming this tax
treatment. In addition, futures contracts held by the Fund at the
end of each year are "marked-to-market" and treated for tax purposes
as if they were realized gains or losses. See "Federal Income Tax
Aspects."
- The Fund is subject to numerous conflicts of interest including the
following: (i) Campbell & Company is both the general partner and
trading advisor of the Fund and its fees were not negotiated at arm's
length; (ii) Campbell & Company, the Commodity Broker and the Foreign
Exchange Dealers may have incentives to favor other accounts over the
Fund; and (iii) Campbell & Company, the Commodity Broker and the
Foreign Exchange Dealers and their respective principals and
affiliates may trade in the commodity markets for their own accounts
and may take positions opposite or ahead of those taken for the Fund.
See "Conflicts of Interest."
- Limited Partners take no part in the management of the Fund.
- Because Campbell & Company is both the general partner and trading
advisor of the Fund, it has a disincentive to add or replace
advisors, even if doing so may be in the best interests of the Fund.
Notwithstanding such conflict, Campbell & Company, as general
partner, has a fiduciary responsibility to the Limited Partners to
exercise good faith and fairness in all dealings affecting the Fund.
See "Conflicts of Interest."
See "Risk Factors" for a more detailed description of the foregoing
and other significant risks applicable to an investment in the Fund.
Futures and forward trading involves a high degree of risk. An
investment in the Fund is speculative, and suitable only for a limited
portion of the risk segment of an investor's portfolio. There can be no
assurance that the Fund will achieve its objectives or avoid substantial
losses.
SECTION 2. RISK FACTORS
THE FOLLOWING RISK FACTORS DO NOT PURPORT TO BE A COMPLETE
EXPLANATION OF ALL THE RISKS INVOLVED IN PURCHASING UNITS. POTENTIAL
INVESTORS SHOULD READ THIS ENTIRE PROSPECTUS BEFORE DETERMINING TO INVEST
IN THE UNITS.
A. Market Risks
(i) Futures and Forward Trading Is Volatile. Futures and forward
contracts have a high degree of price variability. Futures and forward
prices are subject to occasional rapid and substantial changes. Thus,
substantial amounts can be lost in a brief period of time.
(ii) Futures and Forward Trading Is Highly Leveraged. The amount of
margin funds necessary to be deposited with a futures broker in order to
enter into a futures or forward contract position is typically about
2%-10% of the total value of the contract but can be more or less.
Accordingly, a relatively small movement in the price of a contract can
produce a loss that is equal to or substantially greater than the margin
deposit. Combined with the volatility of futures and forward markets, the
leveraged nature of the trading can cause the Fund to sustain large and
sudden losses of its capital.
(iii) Futures and Forward Markets Can Be Illiquid or Disrupted.
Futures and forward positions cannot always be liquidated at the desired
price; this can occur when the market is thinly traded (relatively small
volume of buy and sell orders). Futures trading also is subject to daily
price fluctuation limits. These limits are restrictions imposed by futures
exchanges for many futures contracts on the maximum price fluctuation that
may occur in a futures contract on any one trading day. For example, if
the price of a futures contract rises to its daily limit, no trades may
take place that day above the limit price. Futures prices have moved to
the daily limit for several consecutive days with little or no trading,
and such situations could recur. Therefore, Campbell & Company may be
unable for some time to liquidate certain unprofitable positions, thereby
increasing the loss to the Fund from the trade. Disruptions may occur in
any market due to political events. For example, foreign governments may
take or be subject to political actions which disrupt the markets in their
currency or major exports such as energy products or metals. These actions
could result in losses to the Fund.
(iv) Forward Transactions. The Fund trades forward contracts in
foreign currencies and may do so in energy products and metals. Forward
contracts are traded through a dealer market which is dominated by major
money center banks and are not regulated by the CFTC. Thus, investors do
not receive the protection of CFTC regulation or the statutory scheme of
the Commodity Exchange Act in connection with this trading activity by the
Fund. The Fund is subject to the risk of the inability or refusal on the
part of the principals or agents with or through which the Fund trades to
perform with respect to such contracts.
(v) Limited Ability to Liquidate Investment in Units. There is no
market for the Units. While the Units have redemption rights, there are
restrictions. For example, redemptions can occur only at the end of a
month. During the 12 months following the purchase, the General Partner
charges a redemption fee as follows: 4% of Net Asset Value on Units
redeemed in the first quarter following purchase, 3% during the second
quarter, 2% during the third quarter, and 1% in the fourth quarter. After
the fourth quarter, no redemption fees are charged. If a large number of
redemption requests were to be received at one time, the Fund might have
to liquidate positions to generate cash to satisfy the requests. Such
premature liquidation could adversely affect the Fund.
B. Trading Risks
(i) Trading Methods Based Upon Technical Criteria. The trading systems
used by Campbell & Company for the Fund are technical, trend-following
methods. The profitability of trading under these systems depends on,
among other things, the occurrence of significant price trends (sustained
movements, up or down, in futures prices). Such trends may not develop;
there have been periods in the past without price trends. The
profitability of Campbell & Company's systems also depends on its ability
to recognize trends if they occur. There can be no assurance Campbell &
Company will be successful in that regard. No assurance can be given that
Campbell & Company's methods will be successful or that investment results
of the Fund will be similar to those achieved by Campbell & Company in the
past.
(ii) Possible Effects of Other Trend-Following Programs. The increase
in the number of trading advisors using technical, trend-following systems
could operate to the detriment of the Fund. It may become more difficult
for the Fund to implement its trading strategy if other trading advisors
using technical systems are, at the same time, also attempting to initiate
or liquidate futures or forward positions or otherwise alter trading
patterns.
(iii) Possible Effects of Speculative Position and Trading Limits. The
CFTC has established limits ("speculative position limits") on the maximum
net long or net short positions which any person may hold or control in
certain futures contracts. Exchanges also have established such limits.
All accounts controlled by Campbell & Company, including the account of
the Fund, are combined for speculative position limit purposes. If
positions in those accounts were to approach the level of the particular
speculative position limit, such limits could cause a modification of
Campbell & Company's trading decisions for the Fund or force liquidation
of certain futures positions.
(iv) Trading Methods Involve Proprietary Methods. Investors will be
committing funds to trading under Campbell & Company's trading methods,
and the specific elements of these methods are proprietary to Campbell &
Company. Therefore, a Limited Partner will not be able to determine the
full details of the methods or whether the methods are being followed.
C. Tax Risks
(i) Possibility of Taxation as a Corporation. Campbell & Company has
received an opinion from Foley & Lardner that under current federal income
tax law the Fund would be classified as a partnership for federal income
tax purposes and not as an association taxable as a corporation. See
"Federal Income Tax Aspects" for important conditions to such opinion. No
ruling from the Internal Revenue Service (the "IRS") in this regard has
been obtained because Campbell & Company is relying on the opinion of
counsel.
If the Fund were treated as a corporation for federal income tax
purposes, income or loss of the Fund would not be passed through to
Limited Partners, and the Fund would be subject to tax on its income at
the rate of tax applicable to corporations. In addition, all or a portion
of distributions (if any) of Fund income would generally be taxable to
Limited Partners as corporate dividends, and Limited Partners' tax
liability with respect to such distributions would be in addition to the
corporate tax paid by the Fund on the same income.
(ii) Limited Partners' Tax Liability May Exceed Distributions.
Distributions to Limited Partners of the Fund's profits (if any) are at
the discretion of Campbell & Company. If the Fund generates taxable income
for a taxable year, that income will be taxable to the Partners whether or
not any cash has been distributed to the Partners.
(iii) Taxation of Interest Income Irrespective of Trading Losses. The
Net Asset Value of the Units reflects the trading profits and losses as
well as the interest income earned and expenses incurred by the Fund.
However, losses on the Fund's trading will be almost exclusively capital
losses, and for non-corporate Limited Partners, net capital losses are
deductible against ordinary income only to the extent of $3,000 per year.
Consequently, if a non-corporate Limited Partner had, for example, an
allocable trading (e.g., capital) loss of $10,000 in a given fiscal year
and allocable interest (after reduction for expenses) of $5,000, the
Limited Partner would have incurred a net loss in the Net Asset Value of
his Units equal to $5,000 but would recognize taxable income of $2,000.
(The non-deductible $7,000 of capital loss would carry forward and could
be used to offset gains and, subject to the $3,000 limitation, interest
income in subsequent years.)
(iv) Deductibility of Certain Expenses. Although Campbell & Company
treats the Brokerage Fees and performance fees paid to Campbell & Company
as ordinary and necessary business expenses, upon audit, the Fund may be
required to treat such fees as "investment advisory fees," which are
subject to substantial restrictions on deductibility for federal income
tax purposes, and such treatment may create or increase the liability of
non-corporate Limited Partners for the alternative minimum tax. In
addition, it is possible that the IRS may require the Fund to treat a
portion of the Brokerage Fee as a non-deductible syndication cost.
D. Other Risks
(i) Fees and Commissions. The Fund is subject to substantial charges
payable irrespective of profitability in addition to performance fees
which are payable based on the Fund's profitability. Included in these
charges are Brokerage Fees and operating expenses. See "Charges to the
Fund." On the Fund's forward trading, "bid-ask" spreads are incorporated
into the pricing of the Fund's forward contracts by the counterparties in
addition to the Brokerage Fees paid by the Fund. It is not possible to
quantify the "bid-ask" spread paid by the Fund because the Fund cannot
determine what, if any, profit its counterparty is making on the forward
trades into which it enters. These spreads may represent a material
execution cost to the Fund.
(ii) Failure of Brokerage Firms; Disciplinary History of Commodity
Broker. The Commodity Exchange Act requires a clearing broker to
segregate all funds received from such broker's customers from such
broker's proprietary assets. If the Commodity Broker were not, in fact, to
do so to the full extent required by law, the assets of the Fund might not
be fully protected in the event of the bankruptcy of the Commodity Broker.
Furthermore, in the event of the Commodity Broker's bankruptcy, the Fund
could be limited to recovering only a pro rata share of all available
funds segregated on behalf of the Commodity Broker's combined customer
accounts, even though certain property specifically traceable to the Fund
(for example, Treasury bills deposited by the Fund with the Commodity
Broker as margin) was held by the Commodity Broker. Dealers in forward
contracts are not regulated by the Commodity Exchange Act and are not
obligated to segregate customer assets.
The Commodity Broker has been the subject of certain regulatory and
private causes of action. The material actions are set forth in "Commodity
Broker."
(iii) Past Results Not Necessarily Indicative of Future Performance.
There has been regulatory concern in recent years over the potentially
misleading character of the performance records included in futures fund
prospectuses. No assurance can be given that the Fund will perform
successfully in the future inasmuch as past results are not necessarily
indicative of future performance.
(iv) Conflicts of Interest. Campbell & Company has a conflict of
interest because it acts as the general partner and trading advisor. The
fees payable to Campbell & Company were established by it and not the
subject of arm's length negotiation. Since Campbell & Company acts as both
trading advisor and general partner, it is very unlikely that its advisory
contract will be terminated by the Fund. Other conflicts are also present.
See "Conflicts of Interest."
(v) Reliance on Campbell & Company. Limited Partners are not entitled
to participate in the management of the Fund or the conduct of its
business. Any such participation may subject a Limited Partner to
unlimited liability as a general partner and may adversely affect the
status of the Fund.
(vi) Possibility of Termination of the Fund Before Expiration of its
Stated Term. As general partner, Campbell & Company may withdraw from the
Fund upon 120 days notice, which would cause the Fund to terminate unless
a substitute general partner were obtained. Certain other events could
also cause the Fund to terminate before the expiration of its stated term.
See "Agreement of Limited Partnership."
(vii) Statutory Regulation. If the registrations with the CFTC or
memberships in the National Futures Association of Campbell & Company or
the Commodity Broker were revoked or suspended, such entity would no
longer be able to provide services to the Fund. Although the Fund and
Campbell & Company are subject to regulation by the CFTC, the Fund is not
regulated by the Investment Company Act of 1940 and investors do not have
the protection of that law.
(viii) Proposed Regulatory Change. The futures markets are subject to
comprehensive new statutes, regulations, and margin requirements. In
addition, the CFTC and the exchanges are authorized to take extraordinary
actions in the event of a market emergency, including, for example, the
retroactive implementation of speculative position limits or higher margin
requirements, the establishment of daily price limits and the suspension
of trading. The regulation of futures transactions in the United States is
a rapidly changing area of law and various regulatory procedures are
subject to modification by government action. The effect of any future
regulatory change on the Fund is impossible to predict, but could be
substantial and adverse.
(ix) Options. Options on futures contracts may be used by the Fund to
generate premium income or capital gains. Futures options involve risks
similar to futures in that options are speculative and highly leveraged.
The buyer of an option risks losing the entire purchase price (the
premium) of the option. The writer (seller) of an option risks losing the
difference between the premium received for the option and the price of
the commodity or futures contract underlying the option which the writer
must purchase or deliver upon exercise of the option. Specific market
movements of the commodities or futures contracts underlying an option
cannot accurately be predicted. The Fund does not currently trade
options, but may do so in the future.
(x) Swaps, Hybrids and Other Derivatives. In the future, the Fund may
trade swap agreements, hybrid instruments and other off-exchange
contracts. Swap agreements involve trading income streams such as fixed
rate for floating rate interest. Hybrids are instruments which combine
features of a security with those of a futures contract. The dealer market
for off-exchange instruments is becoming more liquid. There is no exchange
or clearinghouse for these contracts and they are not regulated by the
CFTC. Investors will not receive the protections which are provided by the
CFTC's regulatory scheme.
(xi) Foreign Futures and Foreign Options. The risk of loss in trading
foreign futures contracts and foreign options can be substantial.
Participation in foreign futures contracts and foreign options
transactions involves the execution and clearing of trades on or subject
to the rules of a foreign board of trade. Neither the Commodity Futures
Trading Commission, the National Futures Association nor any domestic
exchange regulates activities of any foreign boards of trade, including
the execution, delivery and clearing of transactions, or has the power to
compel enforcement of the rules of a foreign board of trade or any
applicable foreign laws. Generally, the foreign transaction will be
governed by applicable foreign law. This is true even if the exchange is
formally linked to a domestic market so that a position taken on the
market may be liquidated by a transaction on another market. Moreover,
such laws or regulations will vary depending on the foreign country in
which the foreign futures or foreign options transaction occurs. For these
reasons, customers who trade foreign futures or foreign options contracts
may not be afforded certain of the protective measures provided by the
Commodity Exchange Act, the Commission's regulations and the rules of the
National Futures Association and any domestic exchange, including the
right to use reparations proceedings before the Commission and arbitration
proceedings provided by the National Futures Association or any domestic
futures exchange. In particular, funds received from customers for foreign
futures or foreign options transactions may not be provided the same
protections as funds received in respect of transactions on United States
futures exchanges. The price of any foreign futures or foreign options
contract and, therefore, the potential profit and loss thereon, may be
affected by any variance in the foreign exchange rate between the time the
order is placed and the time it is liquidated, offset or exercised.
(xii) Restrictions on Transferability. Limited Partners may transfer
or assign Units owned by them only upon 30 days' prior written notice to
Campbell & Company and if Campbell & Company is satisfied that the
transfer complies with applicable laws and would not result in the
termination of the Fund for federal income tax purposes. A transferee
shall not become a substituted Limited Partner without the written consent
of Campbell & Company. See "Agreement of Limited Partnership."
(xiii) Restrictions on Investment by ERISA Accounts. ERISA Account
means a pension, profit-sharing, stock bonus or other retirement plan
qualified under Section 401(a) of the Internal Revenue Code. When
considering an investment in the Fund of the assets of an ERISA Account, a
fiduciary with respect to such plan should consider among other things:
(i) the definition of "plan assets" under the Employee Retirement Income
Security Act ("ERISA") and regulations issued by the Department of Labor
("DOL") regarding the definition of plan assets and the potential
retroactive application of such plan asset regulations issued by the DOL;
(ii) whether the investment satisfies the diversification requirements of
Section 404(a)(1) of ERISA; (iii) whether the investment satisfies the
prudence requirements of Section 404(a)(1) of ERISA; and (iv) that there
may be no market in which such fiduciary can sell or otherwise dispose of
the Units. Moreover, profits allocable to an ERISA investor resulting from
an investment in the Fund may be subject to tax as unrelated business
income, particularly if the Fund is deemed to be a "publicly traded
partnership". See "Federal Income Tax Aspects" and "Investments by ERISA
Accounts".
THE FOREGOING LIST OF RISK FACTORS DOES NOT PURPORT TO BE A COMPLETE
EXPLANATION OF RISKS INVOLVED IN THIS OFFERING. PROSPECTIVE INVESTORS
SHOULD READ THE ENTIRE PROSPECTUS BEFORE DECIDING TO INVEST IN THE FUND.
SECTION 3. INVESTMENT FACTORS
Limited Partners are able to obtain certain advantages which might
otherwise be unavailable to them if they were to engage directly in
futures transactions. For those prepared to accept the risks, the Fund
offers the following advantages:
A. Professional Trading Management. Trading decisions are made for
the Fund by Campbell & Company, which is in the business of managing
accounts and funds which trade futures and forward contracts. If an
investor were to open a managed account to be traded by Campbell &
Company, the minimum investment would be substantially more than the
minimum investment in the Fund.
B. Trading Diversification. Campbell & Company trades numerous
financial futures and forward contracts for the Fund. Such diversification
in trading is not possible for an individual investor in futures contracts
unless a substantially larger investment is made than the minimum required
for investment in the Fund.
C. Trading Systems Diversification. Campbell & Company has developed
and utilizes two principal independent trend-following trading systems.
These systems serve to diversify the possible risks from relying upon a
single trading system. Both systems are utilized for the benefit of the
Fund. By contrast, individual trading accounts are typically not of
sufficient size to allow full implementation of multiple trading systems.
A third trading system, recently developed, is being implemented on a
limited basis for certain markets which appear to respond well to
contra-trend following techniques.
D. Investment Diversification. An investor who is not prepared to
spend substantial time trading various futures and forward contracts may
participate in these markets through the Fund, thereby obtaining
diversification from stocks, bonds, real estate, and other traditional
investments.
According to modern portfolio theory, diversification of a portfolio
over various non-correlated asset classes can increase overall return and
reduce the volatility (a primary measure of risk) of a portfolio. As a
zero-sum risk transfer activity, futures and forward trading has no
inherent correlation with any other investments. The Fund can provide
diversification benefits only if it is profitable and other sectors of the
portfolio are under-performing. The Fund may or may not be profitable when
other sectors of the portfolio are under-performing. If the Fund were to
be highly correlated with other investments in a Limited Partner's
portfolio, the Fund would not provide additional diversification to such
portfolio. Historically, Campbell & Company's portfolios have had a low
correlation with traditional stock and bond investments. However, no
assurance can be given that a low correlation will continue in the future,
or that the Fund will be profitable. The Fund's profitability depends on
the success of the trading techniques. Of course, an investment in the
Fund may not necessarily have a positive rate of return, and if
unprofitable the Fund will not increase the return on an investor's
portfolio or achieve its diversification objectives.
E. Limited Liability. Unlike an individual who engages in futures and
forward trading for his own account, a Limited Partner in the Fund cannot
be subjected to margin calls, and his exposure is limited to the loss of
the amount of capital contribution and profits, if any (which includes
undistributed profits, and may include, in certain circumstances,
distributed profits and payments made in connection with redemption of
Units), plus interest thereon. See "Agreement of Limited Partnership."
F. Interest Income. The Fund receives all of the interest income
earned on its assets.
SECTION 4. CAMPBELL & COMPANY, INC.
A. Description. Campbell & Company, Inc. ("Campbell & Company") is
the general partner and trading advisor of the Fund. It is a Maryland
corporation organized in April 1978 as a successor to a partnership
originally organized in January, 1974. Its offices are located at 210 West
Pennsylvania Avenue, Baltimore, Maryland 21204, and its telephone number
is (410) 296-3301. Its sole business is the trading and management of
discretionary futures accounts, including commodity pools. As of May 31,
1996, Campbell & Company had approximately $400 million under management
in the futures and forwards markets (including over $340 million traded
pursuant to the same Financial, Metal & Energy Large Portfolio as
primarily traded by the Fund).
Campbell & Company is a member of the National Futures Association and
has been registered as a Commodity Pool Operator since September 10, 1982
and as a Commodity Trading Advisor since May 6, 1978. It was the sole pool
operator and general partner of The Capital Fund I for a period of time as
well as co- pool operator and co-general partner of other pools with
Mr. D. Keith Campbell. Campbell & Company's compensation is discussed in
"Charges to the Fund." The principals of Campbell & Company have not
purchased and do not intend to purchase Units of the Fund. Campbell &
Company has agreed that its capital account as general partner at all
times will equal at least 1% of the net aggregate capital contributions of
all Partners. There has never been any material administrative, civil or
criminal proceedings brought against Campbell & Company or its principals,
whether pending, on appeal or concluded. Required past performance
information for Campbell & Company and Mr. D. Keith Campbell begins on
page 13.
Campbell & Company's principals are Richard M. Bell, D. Keith Campbell,
William C. Clarke III, Bruce L. Cleland, James M. Little, Theresa D.
Livesey, David M. Salmon, and C. Douglas York. The sole voting stockholder
of Campbell & Company is D. Keith Campbell.
Richard M. Bell, age 43, serves as Vice President of Trading. Mr. Bell
began his employment with Campbell in May, 1990. His duties include
managing daily trade execution of the assets under Campbell's management.
From 1986 through 1990 Mr. Bell was the managing general partner of
several partnerships registered as broker-dealers involved in market
making on the floor of the Philadelphia Stock Exchange (PHLX) and
Philadelphia Board of Trade (PBOT). From 1975 through 1986, Mr. Bell was a
stockholder and Executive Vice President of Tague Securities, Inc., a
registered broker-dealer. Mr. Bell owns a seat on the PHLX and a
Philadelphia Currency Participation, which are leased out. Mr. Bell
graduated from Lehigh University with a B.S. in Finance.
D. Keith Campbell, age 53, has served as Chairman of the Board of
Directors of Campbell & Company and Chief Executive Officer since it began
operations and was President until January, 1994. Mr. Campbell is the
sole voting stockholder. From 1971 through June 1978, he was a registered
representative of a futures commission merchant. He has acted as a
commodity trading advisor since January 1972 when, as general partner of
Campbell Fund, a limited partnership engaged in commodity futures trading,
he assumed sole responsibility for trading decisions made on behalf of
Campbell Fund. Since that time he has applied various technical trading
systems to numerous discretionary commodity trading accounts in which
Campbell & Company has had discretionary trading authority. Mr. Campbell
is registered with the Commodity Futures Trading Commission and National
Futures Association as a commodity pool operator. He is an associated
person of Campbell & Company.
William C. Clarke III, age 45, joined Campbell & Company in June, 1977.
He is Executive Vice President and a Director of Campbell & Company.
Mr. Clarke holds a B.S. in Finance from Lehigh University where he
graduated in 1973. Mr. Clarke currently oversees all aspects of research
which involves the development of proprietary trading models and portfolio
management methods. Mr. Clarke is an associated person of Campbell &
Company.
Bruce L. Cleland, age 48, joined Campbell & Company in January, 1993.
Since January, 1994, he has been President and Chief Operating Officer and
a Director. Prior to January, 1994, he was Executive Vice President.
During the last five years, Mr. Cleland has served in various principal
roles with the following firms; President, F&G Management, Inc., a
commodity trading advisor; President, Institutional Brokerage Corp., a
floor broker; Principal, Institutional Advisory Corp., a commodity trading
advisor and commodity pool operator; Principal, Hewlett Trading
Corporation, a commodity pool operator; Principal of Institutional Energy
Corporation, an introducing broker. Prior to this Mr. Cleland was employed
by Rudolf Wolff Futures, Inc., a futures clearing merchant, where he
served as President until 1986. Mr. Cleland graduated in 1969 from
Victoria University in Wellington, New Zealand where he received a
Bachelor of Commerce and Administration degree. Mr. Cleland is an
associated person of Campbell & Company.
James M. Little, age 50, serves as Senior Vice President-Marketing and
as a Director of Campbell & Company. Mr. Little holds a B.S. in Economics
and Psychology from Purdue University. Mr. Little joined Campbell &
Company in April, 1990. Immediately prior to that, Mr. Little was a
registered representative of A.G. Edwards & Sons, Inc. For the three years
prior to that he was the Chief Executive Officer of James Little &
Associates, Inc., a registered commodity pool operator and registered
broker-dealer. Mr. Little has extensive experience in the futures industry
having worked in the areas of hedging, floor trading and managed futures.
He is the co-author of The Handbook of Financial Futures, and is a
frequent contributor to investment publications. Mr. Little is an
associated person of Campbell & Company.
Theresa D. Livesey, age 33, serves as the Chief Financial Officer,
Treasurer, Secretary and a Director of Campbell & Company. Ms. Livesey
joined Campbell & Company in June, 1991. In addition to her role as CFO,
Ms. Livesey also oversees administration and compliance at Campbell &
Company. From December, 1987 to June, 1991 she was employed by Bank
Maryland Corp, a publicly held company. When she left she was Vice
President and Chief Financial Officer. Prior to that time, she worked with
Ernst & Young. Ms. Livesey is a C.P.A. and has a B.S. in Accounting from
the University of Delaware.
David M. Salmon, age 55, is a Director of Campbell & Company. Since
January, 1976 Mr. Salmon has participated actively as a consultant in the
development and implementation of research and trading software at
Campbell & Company. During this time, Mr. Salmon has not been an employee
of Campbell, but has worked under a consulting contract with his own
computer consulting firm, David Salmon, Inc. Prior to his work with
Campbell & Company, Mr. Salmon worked in the field of systems development
and optimization with Systems Control, Inc. and Stanford Research
Institute. Mr. Salmon holds a B.S.E.E. from the University of Auckland,
New Zealand, M.S.E.E. from Northeastern University and Ph.D. in Electrical
Engineering from the University of Illinois, Urbana.
C. Douglas York, 38, has been employed by Campbell & Company since
November, 1992 . He is the Director of Foreign Exchange for Campbell &
Company. His duties include managing daily trade execution for foreign
exchange markets and forward contracts on precious metals and energy
markets. From January 1991 to November 1992, Mr. York worked for Black &
Decker as Global Foreign Exchange Manager. He holds a B.A. in Government
from Franklin and Marshall College. Mr. York is an associated person of
Campbell & Company.
B. The Advisory Agreement. The term of the Advisory Agreement between
the Fund and Campbell & Company is for successive one year periods subject
to the each party's right to terminate on 60 days' prior written notice.
Inasmuch as Campbell & Company is the trading advisor and the general
partner, it is highly unlikely that the Fund will terminate the Advisory
Agreement.
C. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Introduction. The offering of the Fund's Units of Limited Partnership
Interests commenced on January 12, 1994, and the initial offering
terminated on April 15, 1994 with proceeds of $9,692,439. The Continuing
Offering Period commenced immediately after the termination of the initial
offering period; additional subscriptions totaling $55,241,601 have been
accepted during the Continuing Offering Period as of June 1, 1996.
Redemptions over the same time period total approximately $10,403,602.
The Fund commenced operations on April 18, 1994.
Capital Resources. The Fund will raise additional capital only through
the sale of Units offered pursuant to the continuing offering, and does
not intend to raise any capital through borrowing. Due to the nature of
the Fund's business, it will make no capital expenditures and will have no
capital assets which are not operating capital or assets.
Liquidity. Most United States commodity exchanges limit fluctuations
in commodity futures contracts prices during a single day by regulations
referred to as "daily price fluctuation limits" or "daily limits." During
a single trading day, no trades may be executed at prices beyond the daily
limit. Once the price of a futures contract has reached the daily limit
for that day, positions in that contract can neither be taken nor
liquidated. Commodity futures prices have occasionally moved to the daily
limit for several consecutive days with little or no trading. Similar
occurrences could prevent the Fund from promptly liquidating unfavorable
positions and subject the Fund to substantial losses which could exceed
the margin initially committed to such trades. In addition, even if
commodity futures prices have not moved to the daily limit, the Fund may
not be able to execute futures trades at favorable prices, if little
trading in such contracts is taking place. Other than these limitations
on liquidity, which are inherent in the Fund's commodity futures trading
operations, the Fund's assets are expected to be highly liquid.
Results of Operations. The return for the four months ended April 30,
1996 was 7.91%and for the year ending December 31, 1995 was 9.99%. The
Fund is unaware of any (i) anticipated known demands, commitments or
capital expenditures; (ii) material trends, favorable or unfavorable, in
its capital resources; or (iii) trends or uncertainties that will have a
material effect on operations. From time to time, certain regulatory
agencies have proposed increased margin requirements on commodity futures
contracts. Because the Fund generally uses a small percentage of assets
as margin, the Fund does not believe that any increase in margin
requirements, if adopted as proposed, will have a material effect on the
Fund's operations. Management cannot predict whether the Fund's Net Asset
Value per Unit will increase or decrease. Inflation is not a significant
factor in the Fund's operations, except to the extent that inflation may
affect futures' prices.
Off-Balance Sheet Risk. The Fund trades in futures and forward
contracts and is therefore a party to financial instruments with elements
of off-balance sheet market and credit risk. In entering into these
contracts there exists a risk to the Fund (market risk) that such
contracts may be significantly influenced by market conditions, such as
interest rate volatility, resulting in such contracts being less valuable.
If the markets should move against all of the futures interests positions
of the Fund at the same time, and if the Fund's trading advisor was unable
to offset futures interests positions of the Fund, the Fund could lose all
of its assets and the Limited Partners would realize a 100% loss.
Campbell & Company minimizes market risk through real-time monitoring of
open positions, diversification of the portfolio and maintenance of a
margin-to-equity ratio that rarely exceeds 30%. In addition to market
risk, in entering into futures and forward contracts there is a credit
risk that a counterparty will not be able to meet its obligations to the
Fund. The counterparty for futures contracts traded in the United States
and on most foreign futures exchanges is the clearinghouse associated with
such exchange. In general, clearinghouses are backed by the corporate
members of the clearinghouse who are required to share any financial
burden resulting from the non-performance by one of their members and as
such, should significantly reduce this credit risk. In cases where the
clearinghouse is not backed by the clearing members (i.e. some foreign
exchanges), it is normally backed by a consortium of banks or other
financial institutions. In the case of forward contracts, which are traded
on the the interbank market rather than on exchanges, the counterparty is
generally a single bank or other financial institution, rather than a
group of financial institutions, thus there may be greater counterparty
credit risk. Campbell & Company trades for the Fund only with those
counterparties which it believes to be creditworthy. All positions of the
Fund are valued each day on a mark-to-market basis. There can be no
assurance that any clearing member, clearinghouse, or other counterparty,
will be able to meet its obligations to the Fund.
D. The Trading Systems. The Fund's trading decisions will be made by
Campbell & Company based on its computerized technical trading systems.
These systems are used in the analysis of market movements and internal
market and price configurations. Investors are cautioned that the elements
of the trading system to be employed are proprietary to Campbell &
Company. Thus, it is impossible to determine whether Campbell & Company is
following the trading system. There can be no assurance that, even if the
trading system were followed, it would produce results similar to those in
the past.
Campbell & Company, Inc. offers six distinct trading portfolios: the
Financial, Metal & Energy Large Portfolio, the Financial, Metal & Energy
Small Portfolio, the Foreign Exchange Portfolio, the Global Diversified
Portfolio, the Interest Rates, Stock Indices and Commodities ("ISC")
Portfolio, and the Ark Portfolio. The Financial, Metal & Energy Large
Portfolio is appropriate for accounts greater than $10 million in size.
Accounts in this Portfolio trade certain contracts in the cash
markets which do not have futures equivalents. Additionally, the
Financial, Metal & Energy Large Portfolio accounts trade certain futures
contracts which Campbell & Company does not believe are appropriate for
accounts smaller than $10 million. 75%of the Fund is traded pursuant to
the Financial, Metal & Energy Large Portfolio which trades financial
futures and foreign exchange forwards including precious metals,
petroleum, stock market indices, interest rate instruments and foreign
currencies. The remaining 25% of the Fund's assets istraded pursuant to
the Global Diversified Portfolio, which trades in a wide range of futures
markets including but not limited to, petroleum, coffee, sugar, precious
metals, grains, fibers, meat and livestock, stock market indices, interest
rates and foreign currencies. Currently, Campbell & Company allocates the
Fund's assets as follows: 79% to financial markets, 9% to metals, 7% to
energy products, and 5% to agricultural markets. The percentages will
fluctuate as market conditions change. The Foreign Exchange Portfolio
includes only the currency markets traded by Campbell & Company in either
the forward market or the futures markets including outright and
cross-rate positions. The ISC Portfolio trades in all markets traded by
the Global Diversified Portfolio except for currencies. The Ark Portfolio
is a portfolio designed for smaller accounts with assets of less than
$500,000 ($150,000 minimum), which trades in financial markets.
Portfolio Composition as of June 1, 1996:
[Graphic: Pie Chart of Portfolio Sectors showing relative sizes of
eight primary sectors and listing breakdowns of each as follows:]
LONG TERM INTEREST RATES - 28%
Australian 3-Yr. Note - 1% Australian 10-Yr. Note - 2%
British Bond - 1% German Bund - 4%
French Bond - 2% Italian Bond - 3%
Japanese Bond - 5% U.S. 10 Year Note - 3%
U.S. 30 Year Bond - 4%
U.S. 5 Year Note - 3%
ENERGY - 7% SHORT TERM INTEREST RATES - 7%
Brent Crude - 1.5% Australian 90-Day Bill - 0.5%
Crude Oil - 2% Eurodollar - 3%
Gas Oil - 0.5% Euroyen - 3.5%
Natural Gas - 3%
METALS - 9% CROSS RATES - 19%
Aluminum - 3% AD/JY - 2% SF/JY - 2%
Copper - 3% BP/JY - 2% BP/DM - 3%
Lead - 0.5% CD/JY - 3.5% DM/IL - 3%
Nickel - 1.5% DM/JY - 2.5% DM/PT - 1%
Zinc - 0.5%
Gold - 0.5%
AGRICULTURAL - 5% CURRENCIES - 17%
Coffee - 1.5% Meats - 0.5% Australian Dollar - 2%
Corn - 0.5% Soy Products British Pound - 1%
Cotton - 1.5% & Wheat - 1.0% Deutsche Mark - 3%
Japanese Yen - 5%
STOCK INDICES - 8% Spanish Peseta - 2%
Australian SPI - 2% Swiss Franc - 4%
Nikkei - 4%
S&P 500 - 2%
(Portfolio composition, including markets traded and percentage
allocations to each market, may change at any time, if Campbell & Company
determines such change to be in the best interest of the Fund).
Campbell & Company renders trading decisions for all its Portfolios
largely pursuant to two proprietary trading systems, both of which are
utilized for the Fund. Each of these systems combines computerized
technical trend-following with quantitative portfolio management analysis.
These systems are used in the analysis of market movements and internal
market and price configurations. The principal objective of the trading
systems is to profit from major and sustained futures price trends.
The differences between the two principal proprietary systems used by
Campbell & Company are primarily in their sensitivity to price action. One
system, for example, may assume positions relatively quickly and place
comparatively close stop-loss orders on market entry while the other
system may tend to assume positions less quickly and consolidate profits,
where available, more slowly than the first system. Furthermore, each
system may vary as to the time or price at which the transaction
determined by it is signaled. For example, one system may attempt a
transaction at any time during the day that a price objective is reached,
and the other may attempt a transaction at the opening of the market or at
the close of trading on the same day. On occasion one of the systems may
trigger a long position signal in one delivery month while the other
system recommends a short position in another delivery month of the same
financial instrument. It is unlikely that both positions would prove
profitable, and in retrospect one or both trades will appear to have been
unnecessary. On occasion, the systems might temporarily recommend opposing
positions in the same delivery month of the same financial instrument, in
which case the recommendations would cancel each other out, and a neutral
position would be assumed. It is Campbell & Company's policy to follow
trades signaled by each system independent of what the other system may be
recommending. Campbell & Company believes that utilizing more than one
trading system on the same account offers diversification, and is most
beneficial when numerous contracts of each commodity are traded.
A third trading system is also used for certain markets which appear to
respond well to both trend-following and contra-trend following
techniques.
While it follows a disciplined computerized approach to the markets, on
occasion it may, if Campbell & Company deems it advisable, override its
system signals. Computer signals may therefore be modified under certain
market conditions. Such modifications may, or may not, prove beneficial to
the results achieved.
Campbell & Company also employs a quantitative portfolio management
strategy the purpose of which is to assess and manage overall portfolio
risk. This component of the overall Campbell & Company approach includes
several elements, including portfolio balance, capital allocation, and
risk limitation. One objective of portfolio management is to determine
periods of high and low portfolio risk. When, in the opinion of Campbell &
Company, such points are reached, positions may be reduced or increased so
that portfolio risk is decreased or increased, respectively. It is
possible, however, that during periods of reduction the markets may
continue to produce profits before the portfolio cash can be redeployed in
market positions. The return that would otherwise have been realized, had
the account been more fully invested, would thereby be reduced. Campbell &
Company may, from time to time, increase or decrease the number of
contracts held based on increases or decreases in the Fund's assets
allocated to its management, changes in internal market conditions,
perceived changes in portfolio-wide risk factors, or other factors which
Campbell & Company deems relevant.
Campbell & Company utilizes a proprietary
"value-weighted/volatility-time" model for the purpose of allocating
capital to a portfolio's constituent markets. This model seeks to achieve
theoretically equal weighting for the individual markets and groups that
make up a portfolio. An average of between 1% and 3% of portfolio assets
are allocated to any given market position based on this risk assessment.
Long and short positions receive equal weight. Stops are placed, monitored
and adjusted according to the trading model, the purpose being to minimize
losses while maximizing gains. During periods of loss, trading likely will
continue to be based on the pre-loss asset level of the portfolio.
Campbell & Company may, in the future, develop additional trading
systems and modifications of systems currently in use and, in all
likelihood, will employ such systems for the Fund. The systems currently
in use by Campbell & Company may be modified or even eliminated from use
if, in Campbell & Company's opinion, such action is warranted.
Campbell & Company endeavors to achieve a balance in market
commitments, based primarily upon number of contracts, contract value,
margin requirements, total available capital and market volatility for
each future. From time to time there may be a wide variance in the
positions held, based on any of the aforementioned factors. Campbell &
Company estimates that based on the margin required to maintain a
position, normal commitments to each commodity or financial instrument
range between 1% and 3% of the Fund's Net Assets.
In some instances, due to the lack of volume in a particular future,
the Fund's position will be limited to the number of contracts that
Campbell & Company believes can be bought or sold without undue adverse
price action at the time of execution. Thus, in certain cases, the Fund's
portfolio would be influenced by liquidity factors to the extent that its
positions in such commodities might be substantially smaller than its
positions in other commodities which appear to offer greater liquidity.
Campbell & Company monitors the Fund's level of trading commitments as
a whole, and in each commodity or financial instrument, with regard to the
margins required, market volatility, the likelihood of trends, and other
factors as from time to time Campbell & Company deems appropriate.
Campbell & Company believes that risk control is a highly important factor
in successful portfolio management and that balancing the level of margin
committed to each commodity tends to lower risk. However, the Fund may in
some instances hold the same or a larger number of contracts in more
volatile commodities than in less volatile commodities. While this does
not create a completely balanced portfolio, it is Campbell & Company's
belief that more volatile commodities tend, over time, to be more
profitable because of a greater likelihood of substantial price trends.
Therefore, the Fund's portfolio may not necessarily be balanced among all
commodities with respect to either margin requirements or volatility.
Campbell & Company issues its orders to the various brokerage firms
through which it executes trades from time to time during the day.
Executions for the Fund's account and Campbell & Company's other accounts
may be made during the day on a "stop" basis where an order becomes a
market order when the specified stop price is reached; "at the market"
where the order is executed as soon as possible after being received on
the floor of the exchange; on a "limit" basis where an order is placed to
buy or sell at a specified price or better than the specified price; and
on a "closing price" basis which is a contingent order based on the
closing range of the market close. Order placement varies in accordance
with the system being used, the type of market encountered, and the type
of order that can be used on the exchange where a particular future is
traded. In the case of the Fund, it is the responsibility of the Commodity
Broker to obtain execution of such orders.
SECTION 5. PAST PERFORMANCE OF CAMPBELL & COMPANY, INC.
The tables set forth below reflect the actual performance through April
30, of the Fund, the Portfolios traded by the Fund, and other pools and
accounts of Campbell & Company. Table 1 presents the actual performance of
the Fund from inception on April 18, 1994 through April 30, 1996 . For a
pro forma presentation of actual performance results of the Financial,
Metal & Energy Large Portfolio adjusted for the various fees charged the
Fund, for the period January 1989 through March 1994, see Appendix I.
Table 2 presents the performance data required to be disclosed for the
most recent five calendar years and year-to-date 1996 for both Portfolios
currently utilized by the Fund, the Financial Metal & Energy Large
Portfolio and the Global Diversified Portfolio. Tabless 3 & 4 provide
"capsule" information on each of the portfolios and pools, respectively,
operated by Campbell & Company and D. Keith Campbell for the past five
years and the year-to-date 1996. In Tables 5 through 7, supplementary
information is presented which provides performance information since the
inception of trading for both of the Portfolios traded by the Fund as well
as the composite performance of all accounts ever advised by Campbell &
Company.
Specific accounts in the tables may have had more or less favorable
results than the composite information indicates due to a variety of
factors, including varying account sizes, fees, commission rates,
intra-day differences in timing of trade execution, and starting and
ending periods of the accounts. For example, larger accounts might have
positions of six contracts of one commodity and could be traded under both
systems, whereas small accounts may be able to trade in only one contract
of each commodity and in some instances may not have enough capital to
trade in all commodities monitored by Campbell & Company's method.
During the periods covered by the tables, most futures being monitored
by Campbell & Company's programs at times incurred substantial price
trends in both upward and downward directions. No assurances can be made
that similar trends will occur in the future. Also, because of the
potentially volatile nature of commodities prices, it is possible that the
performance of some or all of the accounts and pools advised by Campbell &
Company may change significantly during the Continuing Offering Period
from the performance information which is presented herein.
The results set forth below are not indicative of any results which may
be obtained by Campbell & Company in the future, and it should not be
assumed that Limited Partners of the Fund will experience returns, if any,
comparable to those experienced by investors in other pools and accounts
managed by Campbell & Company.
WITH REGARD TO THE COMPOSITE PERFORMANCE TABLES FOR CAMPBELL & COMPANY,
THE NOTES ACCOMPANYING THE TABLES SHOULD BE READ AS INTEGRAL TO THE
APPLICABLE TABLES.
THE FUND WILL NOT EXPERIENCE IN THE FUTURE THE RESULTS SHOWN IN
THE COMPOSITE TABLES BECAUSE OF DIFFERENCES IN BROKERAGE FEES, ADVISORY
AND PERFORMANCE FEES AND TREATMENT OF INTEREST INCOME BETWEEN THE FUND AND
ACCOUNTS INCLUDED IN SUCH TABLES. THE SIZE OF THE FUND'S ASSETS ALSO MAY
AFFECT PARTICULAR TRADING DECISIONS, SUCH AS THE RELATIVE SIZE OF
POSITIONS TAKEN, DEGREE OF DIVERSIFICATION AND PARTICULAR COMMODITIES
TRADED AND MAY AFFECT GENERALLY THE DESIGN AND EXECUTION OF CAMPBELL &
COMPANY'S TRADING METHODS. IN ANY EVENT, PAST PERFORMANCE IS NOT
NECESSARILY INDICATIVE OF FUTURE RESULTS.
Index to Performance Records
Required Disclosures: Page
Table 1: Campbell Strategic Allocation Fund, L.P. (April
1994 (Inception) -April, 1996) . . . . . . . . . . . . . . 20
Table 2: Performance of Trading Portfolios Utilized by the
Fund (January 1990 - April, 1996) . . . . . . . . . . . . . 21
Table 3: Performance of Other Portfolios Traded by Campbell
& Company (January 1990-April, 1996) . . . . . . . . . . . 22
Table 4: Performance of Pools Operated by Campbell & Company
and D. Keith Campbell (January 1990 -April, 1996) . . . . . 23
Notes to Tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Supplementary Disclosures:
Table 5: Financial, Metal & Energy Large Portfolio (April,
1983 (Inception) -April, 1996) . . . . . . . . . . . . . . 24
Table 6: Global Diversified Portfolio (February, 1986 -
April, 1996) . . . . . . . . . . . . . . . . . . . . . . . 26
Table 7. Composite of All Accounts Traded by Campbell &
Company (January 1972 -April, 1996) . . . . . . . . . . . . 28
Notes to Supplementary Tables . . . . . . . . . . . . . . . . . . . . 30
<PAGE>
Table 1
Campbell Strategic Allocation Fund, L.P.
Type of Pool: Publicly offered
Inception of Trading: April 18, 1994
Aggregate Gross Capital Subscriptions to the Pool: $64,934,040
Current Net Asset Value of the Fund: $55,688,032
Worst Monthly Percentage Draw-down*: November, 1994 / 6.67%
Worst Peak-to-Valley Draw-down*: June, 1994 - January, 1995 / 17.99%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Rate of Return
(Computed on a compounded monthly
basis)
1996
Month Year-to-Date 1995 1994
January 5.79% -4.67%
February -5.97% 4.21%
March 4.72% 8.77%
April 3.59% 1.13% 0.16%
May -0.84% -2.42%
June -1.77% 5.15%
July -3.82% -3.94%
August 5.47% -3.89%
September -3.93% 5.20%
October 0.79% -0.14%
November -0.15% -6.67%
December 5.35% -4.98%
Total 7.91% 9.99% -11.62%
* "Draw-down" means losses experienced by the Fund or portfolio over a
specified period.
See the note on page 23, which is an integral part of the performance
presentation.
<PAGE>
Table 2
Performance of Trading Portfolios
The Financial, Metal & Energy Large Portfolio is currently traded by
75% of the Fund's assets. The other 25% is traded according to the
Global Diversified Portfolio. 80% of the Global Diversified Portfolio
trades the same markets as the Financial, Metal & Energy Large Portfolio,
with the other 20% trading agricultural markets. Thus, 5% of the Fund's
assets (25% of 20%) is traded in agricultural markets while the remaining
95% is traded in financial, metal, and energy markets.
During the period specified below, the Financial, Metal & Energy
Large Portfolio had 254 accounts closed, 75 with profits and 179 with
losses. The accounts within the portfolio incurred management fees
ranging from 0% to 6% per annum, performance fees ranging from 15% to 25%
of trading profits, commissions ranging from $10 per round turn per
contract to $60 per round turn per contract, and other expenses ranging
from 0 to 4% per annum of net asset value. The Global Diversified
Portfolio had 6 accounts close during the same time period, 4 with profits
and 2 with losses. The accounts within the portfolio incurred management
fees ranging from $10 per round turn per contract to $60 per round turn
per contract, and other expenses ranging from 0 to 4% per annum of net
asset value.
Financial, Metal &
Energy Large Global Diversified
Portfolio Portfolio
Commodity Trading Campbell & Company, Campbell & Company,
Advisor: Inc. Inc.
Inception of CTA's
Trading: January, 1972 January, 1972
Total Assets Under
Management by CTA: $418.0 Million $418.0 Million
Inception of Trading of
the Portfolio: April, 1983 February, 1986
Total Assets/Accounts
Currently Traded in the $346.0 Million / 4 $22.8 Million / 13
Portfolio: Accounts Accounts
Worst Monthly Percentage
Draw-down*: July, 1991 / 7.96% July, 1991 / 8.54%
Worst Peak-to-Valley July 1993 - January July 1993 - February
Draw-down*: 1995 / 31.72% 1994 / 26.05%
Annual Returns:
1996 YTD (through
April) 8.78% 4.69%
1995 19.46% 6.52%
1994 -16.73% 9.61%
1993 4.68% 2.39%
1992 13.47% 7.68%
1991 31.12% 14.86%
*"Draw-down" means losses experienced by the Fund or portfolio over a
specified period.
See the note on page 23, which is an integral part of the performance
presentation.
<PAGE>
Table 3
Performance of Other Portfolios Traded by Campbell & Company, Inc.
In addition to the two portfolios utilized by the Fund, Campbell &
Company also currently manages assets in the Financial, Metal & Energy
Small Portfolio, the Foreign Exchange Portfolio, and the Interest Rates,
Stock Indices, & Commodities Portfolio. Currently, only proprietary
assets are traded in the Ark Portfolio. Campbell & Company's Diversified
Portfolio closed in January, 1995 when all assets under management in the
Portfolio were merged into the Global Diversified Portfolio. The Global
Financial Portfolio ceased trading in March 1995 when the last account
under management in the Portfolio closed.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
<TABLE>
<CAPTION>
Financial, Metal Foreign Exchange Interest Rates, Diversified Global Financial
& Energy Small Portfolio Stock Indices & Portfolio Portfolio
Portfolio Commodities
<S> <C> <C> <C> <C> <C>
Commodity Trading Advisor: Campbell & Company, Inc.
Inception of CTA's Trading: January, 1972
Total Assets Under $418.0 Million
Management by CTA:
Inception of Trading of the
Portfolio: February, 1995 November, 1990 February, 1996 January, 1972 December, 1993
Total Assets/Accounts $36.4Million $3.2 Million $9.6 Million $0 $0
Currently Traded in the 49 Accounts 1 Account 1 Account (closed 2/95) (closed 3/95)
Portfolio:
Worst Monthly Percentage Sept. 1995 July, 1991 February, 1996 July, 1991 February, 1994
Draw-down*: 5.78% 17.01% 5.56% 11.50% 5.24%
Worst Peak-to-Valley April 1995 - July 1993 - February, 1996 July, 1993- December, 1993-
Draw-down*: July 1995 6.50% January, 1995 5.56% February, 1994 January, 1995
44.73% 32.10% 19.20%
Accounts closed: 47 19 0 23 1
Accounts closed with
profit 9 6 19 0
Accounts closed with loss 38 13 4 1
Range of annual management
fees: 2% to 6% 0% to 6% 2% 2% to 6% 0.5%
Range of incentive fees: 15% to 25% 15% to 20% 15% 10% to 20% 20%
Range of commissions: $10/RT to $60/RT $0/RT to $60/RT $10/RT to $15/RT $10/RT to $60/RT $10/RT to $12/RT
Range of other expenses: 0% to 4% 0% to 2% 1.5% 0% to 4% 2%
Annual Returns:
1996 YTD (through 10.37% 11.01% 2.03% - -
April)
1995 20.34% 26.36% -4.21% 9.30%
1994 -21.19% 8.52% -13.16%
1993 -8.49% -5.79 -2.64%
1992 17.67% -1.80%
1991 21.23% -0.08%
</TABLE>
*"Draw-down" means losses experienced by the Fund or portfolio over a
specified period.
See the note on page 23, which is an integral part of the performance
presentation.
<PAGE>
Table 4
Performance of Pools Operated by Campbell &
Company, Inc. and D. Keith Campbell
<TABLE>
<CAPTION>
Campbell Campbell Institutional The Advantage The Capital
Strategic Financial Futures Fund Futures Fund, Fund II, A
Allocation Futures Campbell Limited A Limited Limited
Name of Pool Fund, L.P. Fund L.P. Trust Partnership Partnership Partnership
<S> <C> <C> <C> <C> <C> <C>
Type of Pool 1 2 2 2 1 1,3
Inception of Trading Apr 1994 Aug 1992 Mar 1972 Feb 1986 Dec 1983 Dec 1983
Aggregate
Subscription ($ x
1,000) 61,031 12,809 2,579 14,816 4,275 9,457
Current Total NAV($ x
1,000) 55,688 5,447 1,133 12,841 905 1,512
Worst Monthly % 6.67% 7.68% 11.42% 8.36%
Drawdown 11/94 2/94 11.72%7/91 9.07%7/91 2/94 7/91
Worst Peak-to-Valley 17.99% 29.42% 29.59% 25.46% 33.13% 26.10%
Drawdown 6/94-1/95 7/93-1/95 7/93-2/94 7/93-2/94 7/93-2/94 7/93-4/94
Trading Portfolio
Used FME Large FME Small Global Div. Global Div. Global Div. Global Div.
Rates of Return
(computed on a
compounded monthly
basis)
1996 (YTD through 4.17% 12.46% 5.32% 6.11% 3.25% 2.48%
1995 9.98% 17.12% 4.83% 7.11% 3.23% 5.45%
1994 -11.62% -15.84% 11.05% 9.49% 9.48% -1.92%
1993 5.29% -1.84% 2.94% -6.53% -7.59%
1992 -0.56% -0.36% 8.56% -4.36% -3.29%
1991 6.55% 15.10% 4.99% 5.63%
</TABLE>
Key to Type Of 1- publicly 2- privately 3- multi-advisor
Pool offered pool offered pool pool
*"Draw-down" means losses experienced by the Fund or portfolio over a
specified period.
Note to Tables
"Rate of Return" for a period is calculated by dividing the net profit or
loss by the assets at the beginning of such period. Additions and
withdrawals occurring during the period are included as an addition to or
deduction from beginning net assets in the calculations of "Rates of
Return ", except for accounts which close on the last day of a period in
which case the withdrawal is not subtracted from beginning net assets for
purposes of this calculation. Beginning in January, 1987, "Rate of Return"
is calculated using the Only Accounts Traded (OAT) method of computation.
This computation method is one of the methods approved by the CFTC to
reduce the distortion caused by significant additions or withdrawals of
capital during a month. The records of many of the accounts in the tables
prior to 1987 do not document the exact dates of capital additions and
withdrawals. Accordingly, there is insufficient data to calculate rate of
return during such periods using the OAT method. Campbell & Company has no
reason to believe that the pre-1987 annual rates of return would be
materially different if the OAT method were used to calculate such
returns. The OAT method excludes from the calculation of rate of return
those accounts which had material intra-month additions or withdrawals and
accounts which were open for only part of the month. In this way, the
composite rate of return is based on only those accounts whose rate of
return is not distorted through intra-month capital changes.
<PAGE>
SUPPLEMENTARY PERFORMANCE INFORMATION
Table 5
Financial, Metal & Energy Large Portfolio (3)
Worst Monthly Percentage Draw-down*: June, 1986/17.68%
Worst Peak-to-Valley Draw-down*: March - November, 1986 / 41.94%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
[Line graph illustrating performance of Financial, Metal
and Energy Large Portfolio VAMI from 1983 to YTD 1996 as
reflected in tables below]
<TABLE>
<CAPTION>
Rate of Return (1)
(Computed on a compounded monthly basis)
1996 YTD 1995 1994 1993 1992
Month Return VAMI(2) Return VAMI(2) Return VAMI(2) Return VAMI(2) Return VAMI(2)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 5.46% $ 5,875 -4.53% $ 4,452 -4.67% $ 5,339 -0.71% $ 5,312 -5.54% $ 4,454
February -5.63% 5,544 5.85% 4,713 -6.81% 4,975 13.74% 6,042 -3.58% 4,294
March 5.62% 5,856 9.58% 5,164 7.00% 5,324 -5.79% 5,692 1.05% 4,339
April 3.49% 6,060 2.08% 5,271 -1.77% 5,229 2.99% 5,862 -2.78% 4,219
May 0.88% 5,318 -2.78% 5,084 2.81% 6,027 1.14% 4,267
June -0.90% 5,270 5.25% 5,351 2.55% 6,181 10.66% 4,722
July -4.05% 5,057 -4.36% 5,118 5.55% 6,524 10.40% 5,213
August 5.83% 5,351 -3.79% 4,924 -4.33% 6,241 4.99% 5,473
September -3.47% 5,166 6.92% 5,264 -4.83% 5,940 -2.17% 5,354
October 1.20% 5,228 0.36% 5,283 -6.19% 5,572 -4.67% 5,104
November -0.24% 5,215 -7.02% 4,912 0.59% 5,605 6.26% 5,424
December 6.82% 5,571 -5.07% 4,663 -0.08% 5,600 -1.36% 5,350
Year 8.78% 19.46% -16.73% 4.68% 13.47%
</TABLE>
*"Draw-down" means losses experienced by the fund or portfolio over a
specified period.
See the notes on page 30, which are an integral part of the performance
presentation.
<TABLE>
<CAPTION>
Rate of Return (1)
(Computed on a compounded monthly basis)
1991 1990 1989 1988 1987
Month Return VAMI(2) Return VAMI(2) Return VAMI(2) Return VAMI(2) Return VAMI(2)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January -7.89% $ 3,312 3.00% $ 2,739 7.90% $ 2,017 -0.08% $ 1,730 33.71% $ 1,409
February -1.59% 3,260 0.59% 2,755 -1.99% 1,977 2.39% 1,772 3.23% 1,454
March 20.41% 3,925 3.37% 2,848 10.74% 2,189 -1.88% 1,738 13.51% 1,650
April -1.87% 3,852 4.62% 2,979 1.94% 2,232 -5.12% 1,649 15.39% 1,904
May 2.81% 3,960 -11.50% 2,637 13.72% 2,538 1.63% 1,676 -4.17% 1,825
June 1.49% 4,019 8.29% 2,855 1.88% 2,586 8.29% 1,815 -3.21% 1,766
July -7.96% 3,699 10.04% 3,142 0.55% 2,600 -0.68% 1,803 9.80% 1,940
August 3.79% 3,839 12.30% 3,528 -0.81% 2,579 -0.22% 1,799 -1.12% 1,918
September 6.07% 4,072 2.59% 3,620 -4.27% 2,469 4.80% 1,885 2.71% 1,970
October 0.63% 4,098 1.25% 3,665 -6.88% 2,299 -0.06% 1,884 -13.45% 1,705
November -2.03% 4,015 -1.35% 3,616 2.46% 2,356 -0.35% 1,877 -0.53% 1,696
December 17.45% 4,715 -0.54% 3,596 12.88% 2,659 -0.42% 1,870 2.11% 1,732
Year 31.12% 35.24% 42.23 7.96% 64.38%
<CAPTION>
Rate of Return (1)
(Computed on a compounded monthly basis)
1986 1985 1984 1983
Month Return VAMI(2) Return VAMI(2) Return VAMI(2) Return VAMI(2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
January -6.28% $ 1,419 3.63% $ 1,180 1.27% $ 908
February 17.84% 1,673 11.59% 1,316 2.12% 927
March 6.48% 1,781 0.74% 1,326 2.44% 950 $ 1,000
April -7.87% 1,641 5.97% 1,405 0.09% 951 -0.40% 996
May 5.01% 1,723 2.92% 1,446 9.78% 1,044 0.18% 998
June -17.68% 1,418 -2.18% 1,415 -5.50% 986 -3.71% 961
July 5.21% 1,492 5.48% 1,492 6.86% 1.054 3.27% 992
August 7.61% 1,606 -3.63% 1,438 -1.34% 1,040 -1.47% 978
September -17.22% 1,329 -11.29% 1,276 8.32% 1,126 0.83% 986
October -11.74% 1,173 3.95% 1,326 2.79% 1,158 -4.18% 945
November -11.84% 1,034 10.45% 1,465 -3.12% 1,122 -1.93% 926
December 1.84% 1,053 3.40% 1,515 1.49% 1,138 -3.21% 897
Year -30.45% 33.05% 26.96% -10.34%
</TABLE>
See the notes on page 30, which are an integral part of the performance
presentation.
<PAGE>
Table 6
Global Diversified Portfolio (4)
Worst Monthly Percentage Draw-down*: April, 1986/14.41%
Worst Peak-to-Valley Draw-down: March - November, 1986 / 29.71%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
[Line graph illustrating performance of Global Diversified
Portfolio VAMI from 1986 to YTD 1996 as reflected in tables below]
<TABLE>
<CAPTION>
Rate of Return (1)
(Computed on a compounded monthly basis)
1996 YTD 1995 1994 1993
Month Return VAMI(2) Return VAMI(2) Return VAMI(2) Return VAMI(2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
January 3.77% $2,981 -2.87% $ 2,619 -3.77% $ 2,367 0.31% $ 2,410
February -7.22% 2,765 4.85% 2,746 -8.45% 2,167 12.43% 2,710
March 3.41% 2,860 4.02% 2,857 6.35% 2,305 -3.09% 2,626
April 5.15% 3,007 1.40% 2,897 -3.74% 2,219 -0.01% 2,626
May -1.30% 2,859 3.49% 2,296 2.79% 2,699
June 0.08% 2,861 14.90% 2,638 3.81% 2,802
July -5.49% 2,704 2.53% 2,705 4.60% 2,931
August 2.57% 2,774 -3.35% 2,614 -6.12% 2,751
September -2.75% 2,697 3.48% 2,705 -7.07% 2,557
October -0.75% 2,677 0.50% 2,719 -5.45% 2,417
November 0.77% 2,698 2.84% 2,796 -2.31% 2,362
December 6.47% 2,872 -3.56% 2,697 4.17% 2,460
Year 4.69% 6.52% 9.61% 2.39%
</TABLE>
*"Draw-down" means losses experienced by the portfolio over a specified
period.
See the notes on page 30, which are an integral part of the performance
presentation.
<TABLE>
<CAPTION>
Rate of Return (1)
(Computed on a compounded monthly basis)
1992 1991 1990 1989
Month Return VAMI (2) Return VAMI (2) Return VAMI (2) Return VAMI (2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
January -5.55% $2,108 -7.59% $1,795 5.63% $1,553 -3.86% $1,120
February -5.04% 2,001 -2.58% 1,749 2.45% 1,591 -1.28% 1,106
March -2.61% 1,949 16.04% 2,029 5.68% 1,681 10.69% 1,224
April -2.22% 1,906 -1.66% 1,996 8.34% 1,821 -1.01% 1,212
May -2.26% 1,863 2.66% 2,049 -12.09% 1,601 11.35% 1,349
June 10.64% 2,061 5.43% 2,160 4.55% 1,674 0.72% 1,359
July 11.14% 2,291 -8.54% 1,976 4.32% 1,746 4.64% 1,422
August 4.53% 2,394 -2.92% 1,918 8.98% 1,903 -4.47% 1,358
September -0.43% 2,384 2.11% 1,958 0.72% 1,917 -2.68% 1,322
October -3.21% 2,307 0.31% 1,964 2.13% 1,957 -3.08% 1,281
November 4.24% 2,405 -2.09% 1,923 0.07% 1,959 4.07% 1,333
December -0.11% 2,403 16.01% 2,231 -0.82% 1,943 10.24% 1,470
Year 7.68% 14.86% 32.18% 26.16%
<CAPTION>
Rate of Return (1)
(Computed on a compounded monthly basis)
1988 1987 1986
Month Return VAMI (2) Return VAMI (2) Return VAMI (2)
<S> <C> <C> <C> <C> <C> <C>
January -5.70% $ 922 12.05% $ 823 $ 1,000
February 1.69% 937 -1.09% $ 814 -0.11% 999
March -3.03% 909 3.24% 840 4.14% 1,040
April -5.83% 856 16.56% 980 -14.41% 890
May 9.86% 940 -1.28% 967 3.56% 922
June 25.99% 1,185 -1.53% 952 -5.68% 870
July -2.01% 1,161 5.25% 1,002 6.53% 926
August 0.65% 1,168 -3.88% 963 5.08% 974
September 0.28% 1,172 -1.72% 947 -9.92% 877
October -0.10% 1,171 -10.16% 851 -10.93% 781
November 1.05% 1,183 8.18% 920 -6.41% 731
December -1.51% 1,165 6.23% 977 0.47% 734
Year 19.18% 33.08% -26.55%
</TABLE>
See the notes on page 30, which are an integral part of the performance
presentation.
<PAGE>
Table 7
Composite of All Accounts Traded by Campbell & Company
Inception of Trading: January, 1972
Total Current Net Assets: $418.0 Million
Worst Monthly Percentage Draw-down*: April, 1986/16.70%
Worst Peak-to-Valley Draw-down*: March - November, 1986 / 37.61%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
[Line graph illustrating Composite VAMI from 1972 to YTD 1996 as
reflected in tables below]
<TABLE>
<CAPTION>
Rate of Return (1)
(Computed on a compounded monthly basis)
1996 YTD 1995 1994 1993 1992 1991
VAMI VAMI VAMI
Month Return (2) Return (2) Return VAMI (2) Return (2) Return VAMI (2) Return VAMI (2)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 5.74% $56,921 -4.48% $43,557 -4.59% $51,933 -1.23% $52,618 -5.53% $44,492 -8.05% $34,217
February -5.69% 53,682 5.64% 46,013 -6.86% 48,370 13.90% 59,932 -3.88% 42,766 -2.28% 33,437
March 5.31% 56,533 9.45% 50,361 6.02% 51,282 -5.74% 56,492 0.52% 42,988 19.78% 40,051
April 3.54% 58,534 1.80% 51,268 -2.20% 50,154 2.96% 58,164 -2.71% 41,823 -1.99% 39,254
May 0.17% 51,355 -2.80% 48,750 2.76% 59,769 0.80% 42,158 2.75% 40,334
June -1.07% 50,806 5.92% 51,636 2.81% 61,449 10.72% 46,677 2.32% 41,269
July -3.83% 48,860 -3.24% 49,963 5.47% 64,810 10.23% 51,452 -8.46% 37,778
August 6.04% 51,811 -4.14% 47,894 -4.85% 61,667 4.93% 53,989 2.56% 38,745
September -3.62% 49,935 6.67% 51,089 -5.06% 58,546 -2.42% 52,682 5.51% 40,880
October 1.10% 50,485 0.57% 51,380 -6.59% 54,688 -3.66% 50,754 0.54% 41,101
November -0.16% 50,404 -6.55% 48,015 -0.18% 54,590 5.97% 53,784 -2.12% 40,229
December 6.80% 53,831 -5.03% 45,599 -0.29% 54,431 -0.95% 53,273 17.07% 47,097
Year 8.74% 18.05% -16.23% 2.17% 13.11% 26.56%
</TABLE>
*"Draw-down" means losses experienced by the composite over a specified
period.
See the notes on page 30, which are an integral part of the performance
presentation.
Composite Performance of All Accounts (cont.)
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
<TABLE>
<CAPTION>
Rate of Return (1)
(Computed on a compounded monthly basis)
1990 1989 1988 1987 1986 1985
VAMI VAMI VAMI VAMI VAMI
Month Return (2) Return (2) Return (2) Return (2) Return (2) Return VAMI (2)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 3.70% $29,092 1.23% $22,131 -6.64% $19,536 11.72% $19,439 -0.62% $24,086 1.47% $18,800
February 0.44% 29,220 -1.99% 21,691 1.27% 19,784 -2.35% 18,982 10.91% 26,714 9.45% 20,576
March 3.86% 30,348 10.73% 24,018 -4.05% 18,983 2.53% 19,462 4.19% 27,833 1.47% 20,879
April 5.44% 31,999 0.12% 24,047 -7.79% 17,504 17.53% 22,874 -16.70% 23,185 2.89% 21,482
May -11.69% 28,258 13.34% 27,255 6.98% 18,726 -1.74% 22,476 1.35% 23,498 -2.44% 20,958
June 7.08% 30,259 1.13% 27,563 21.37% 22,728 -2.80% 21,847 -6.89% 21,879 -7.70% 19,344
July 8.58% 32,855 2.15% 28,155 -2.48% 22,164 4.71% 22,876 5.97% 23,185 12.40% 21,743
August 11.33% 36,578 -2.70% 27,395 -0.20% 22,120 -5.25% 21,675 4.72% 24,279 -1.12% 21,500
September 2.19% 37,379 -4.09% 26,275 1.10% 22,363 -3.02% 21,020 -10.78% 21,662 -8.82% 19,603
October 1.64% 37,992 -6.27% 24,627 -0.96% 22,149 -13.41% 18,201 -13.32% 18,777 12.24% 22,003
November -1.25% 37,517 2.46% 25,233 0.21% 22,195 7.78% 19,617 -7.51% 17,367 3.74% 22,826
December -0.81% 37,213 11.18% 28,054 -1.50% 21,862 6.67% 20,926 0.19% 17,400 6.18% 24,236
Year 32.65% 28.32% 4.47% 20.27% -28.21% 30.81%
<CAPTION>
Rate of Return (1)
(Computed on a compounded monthly basis)
1984 1983 1982 1981 1980
Month Return VAMI (2) Return VAMI (2) Return VAMI (2) Return VAMI (2) Return VAMI (2)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January 3.79% $16,160 11.37% $17,153 2.82% $13,260 2.58% $16,410 25.29% $12,275
February -1.19% 15,967 -0.90% 16,999 4.50% 13,856 -0.63% 16,306 0.73% 12,364
March -0.07% 15,956 -3.03% 16,484 5.66% 14,641 -6.87% 15,186 10.45% 13,656
April -0.83% 15,824 -1.78% 16,190 4.24% 15,261 -6.93% 14,134 -0.41% 13,600
May 6.73% 16,889 7.16% 17,350 3.46% 15,789 -1.95% 13,858 7.38% 14,604
June -4.99% 16,046 -9.29% 15,738 8.74% 17,169 3.27% 14,311 0.10% 14,619
July 12.98% 18,129 -3.56% 15,177 -8.49% 15,712 -10.50% 12,809 9.16% 15,958
August -2.90% 17,603 11.90% 16,984 12.46% 17,669 2.52% 13,131 -5.06% 15,150
September 5.30% 18,536 -6.72% 15,842 10.87% 19,590 -3.54% 12,667 -1.24% 14,962
October -1.11% 18,330 1.32% 16,051 -7.61% 18,099 -7.25% 11,748 -7.07% 13,905
November -1.07% 18,134 -3.36% 15,512 -9.22% 16,431 20.15% 14,116 0.27% 13,942
December 2.17% 18,527 0.37% 15,570 -6.26% 15,402 -8.64% 12,896 14.74% 15,997
Year 19.00% 1.09% 19.43% -19.39% 63.29%
<CAPTION>
Rate of Return (1)
(Computed on a compounded monthly basis)
1979 1978 1977 1976
Qtr Ending Return VAMI (2) Return VAMI (2) Return VAMI (2) Return VAMI (2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 7.51% $11,654 17.80% $13,198 8.66% $ 9,212 -25.90% $ 5,336
June 8.96% 12,698 -8.51% 12,074 19.87% 11,043 62.33% 8,661
September 5.04% 13,338 7.44% 12,973 -2.83% 10,730 -5.07% 8,222
December -26.55% 9,797 -16.44% 10,840 4.41% 11,203 3.11% 8,478
Year -9.62% -3.24% 32.15% 17.74%
<CAPTION>
Rate of Return (1)
(Computed on a compounded monthly basis)
1975 1974 1973 1972
Qtr Ending Return VAMI (2) Return VAMI (2) Return VAMI (2) Return VAMI (2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 0.37% $ 6,578 9.04% $ 5,499 29.37% $ 2,286 -6.52% $ 935
June -12.44% 5,760 11.50% 6,132 95.77% 4,476 19.62% 1,118
September 22.34% 7,046 23.39% 7,566 20.71% 5,403 16.18% 1,299
December 2.19% 7,201 -13.38% 6,554 -6.65% 5,043 36.03% 1,767
Year 9.87% 29.94% 185.39% 76.72%
</TABLE>
See the notes on page 30, which are an integral part of the performance
presentation.
NOTES TO SUPPLEMENTARY TABLES
1. The "Rate of Return" for a period is calculated by dividing the net
profit or loss by the assets at the beginning of such period. Additions
and withdrawals occurring during the period are included as an addition to
or deduction from beginning net assets in the calculations of "Rates of
Return", except for accounts which close on the last day of a period in
which case the withdrawal is not subtracted from beginning net assets for
purposes of this calculation. Beginning in January, 1987, "Rate of Return"
is calculated using the Only Accounts Traded (OAT) method of computation.
This computation method is one of the methods approved by the CFTC to
reduce the distortion caused by significant additions or withdrawals of
capital during a month. The records of many of the accounts in the tables
prior to 1987 do not document the exact dates of capital additions and
withdrawals. Accordingly, there is insufficient data to calculate rate of
return during such periods using the OAT method. Campbell & Company has no
reason to believe that the pre-1987 annual rates of return would be
materially different if the OAT method were used to calculate such
returns. The OAT method excludes from the calculation of rate of return
those accounts which had material intra-month additions or withdrawals and
accounts which were open for only part of the month. In this way, the
composite rate of return is based on only those accounts whose rate of
return is not distorted through intra-month capital changes.
2. The "VAMI" ("Value of an Initial $1,000 Investment") is calculated
by multiplying the "Rate of Return" times the prior period VAMI and then
adding this number to the prior period VAMI.
3. Table 5 contains the composite performance of accounts traded
pursuant to the Financial, Metal & Energy Large Portfolio, which is the
portfolio primarily utilized for the Fund. The data presented reflects the
composite performance of 367 accounts traded according to the Financial,
Metal & Energy Large Portfolio. The data below is as of March 31, 1996.
From inception of Campbell & Company's Financial, Metal & Energy Large
Portfolio in April 1983, 363 accounts have been closed; 96 of the accounts
closed transferred to the Financial, Metal & Energy Small Portfolio. Of
the remaining 267 closed accounts, 79 closed with a profit and 188 closed
with a loss. 4 accounts remained open, 3 of which were profitable and 1 of
which was unprofitable. The open accounts ranged in size from $13,000,000
to in excess of $100,000,000, with an average account size of
approximately $83,300,000. The average composite monthly return for the
period from January, 1991 through March, 1996 was 0.95% compared to the
average of average monthly returns for all accounts of 0.44% over the same
time period. The data in this composite table do not reflect the
performance of any one account. Therefore, an individual account may have
realized more or less favorable results than the composite results
indicate. The "Net Performance" figures in the tables are net of
management and incentive fees; these fees range from 0% to 6% for
management fees and 15% to 25% for incentive fees. For the period from
January 1989 to June 1994, the fees reflected in "Net Performance" in
Table 1 represent blended rates of approximately 1% (per annum) management
fees and 16% incentive fees (both accrued monthly). Prior to January 1988,
most of the client equity traded pursuant to the Financial, Metal & Energy
Portfolio consisted of one large account. Due to client-imposed
restrictions on this account and the small amount of equity in other
accounts, certain markets were not traded, including stock indices,
precious metals and energies. These differences affected performance
during this period.
4. Table 6 reflects the composite performance of all accounts (a total
of 20 accounts) traded according to the Global Diversified Portfolio. Of
these accounts, 6 had closed as of March 31, 1996, 4 with aggregate gains
and 2 with net losses. Of the 13 open accounts, 12 are profitable and 1
is unprofitable (the remaining account transferred to a combination of the
Foreign Exchange Portfolio and the Interest Rates, Stock Indices and
Commodities Portfolio). The open accounts range in size from $300,000 to
$12,000,000, with an average account size of approximately $1,600,000. The
average composite monthly return for the period from January 1991 through
March 1996 is 0.77% compared to the average of average monthly returns for
all accounts of 0.68% over the same time period. The net assets under
management in the Portfolio include "notional equity " in one account
which totaled $500,000 as of March 31, 1996. Such notional funds
represent less than 10% of ending net assets and do not materially distort
rates of return for the periods involved. The data in this composite
table do not reflect the performance of any one account. Therefore, an
individual account may have realized more or less favorable results than
the composite results indicate.
5. Table 7 reflects the composite performance results of all accounts
advised by Campbell & Company for all of its trading portfolios. A total
of 545 accounts have been managed by Campbell & Company pursuant to all
its trading portfolios. On or prior to March 31, 1996, 476 accounts
closed; 169 of which closed with a profit and 307 of which closed with a
loss. Of the 69 open accounts, 49 accounts are profitable and 20 accounts
are unprofitable. The open accounts range in size from $99,000 to in
excess of $100,000,000, with an average account size of approximately
$5,900,000. The net assets under management include "notional equity" in
34 accounts which totaled approximately $7,430,000 as of March 31, 1996.
Such notional funds represent less than 10% of ending net assets and do
not materially distort rates of return for the periods involved. The data
in this composite table do not reflect the performance of any one account,
but rather is a combination of the historical performance of multiple
accounts and portfolios. Therefore, an individual account and a
particular trading portfolio may have realized more or less favorable
results than the composite indicates.
6. The "Pro Forma Rate of Return" for the month is calculated by
dividing the pro forma net profit or loss by the assets at the beginning
of such period. Additions and withdrawals occurring during the period are
included as an addition to or deduction from beginning net assets in the
calculations of "Rates of Return." In accordance with the OAT method (see
Note 1), the pro forma rate of return calculation for March 1990, December
1992 and January 1994 has been adjusted to take into account the
significant additions made to the portfolio in these time periods.
Amortization of organization and offering expenses are not included in the
pro forma net performance or in the calculation of "Pro Forma Rate of
Return."
SECTION 6. CONFLICTS OF INTEREST
A. Campbell & Company, Inc. A conflict exists between Campbell &
Company's interests and its responsibilities to the Fund. The conflicts
are inherent in Campbell & Company acting as general partner and advisor
to the Fund. The conflicts and the potential detriments to the Limited
Partners are described below.
Due to the fact that Campbell & Company is both general partner and
trading advisor, the selection of itself as trading advisor was not
objective. In addition, it has a disincentive to replace itself as
advisor. The Advisory Agreement between the Fund and Campbell & Company,
including the fee arrangement, was not negotiated at arm's length.
Investors should note, however, that Campbell & Company believes that the
fee arrangements are fair to the Fund and competitive with compensation
arrangements in pools involving independent general partners and advisors.
Campbell & Company shall review its compensation terms annually to
determine whether such terms continue to be competitive with other pools
for similar services and to lower such fees if it concludes, in good
faith, that its fees are no longer competitive. Neither Campbell & Company
nor any advisor may receive per-trade compensation directly or indirectly
from the Fund.
Campbell & Company earns fees based upon the Fund's Net Asset Value. It
is unlikely, therefore, to make distributions to the Limited Partners of
Fund assets because it will earn larger fees if the Fund's assets are not
reduced through distributions. Limited Partners, however, have certain
rights to redeem their Units and receive their capital.
Campbell & Company (or its principals) acts as general partner to other
commodity pools (see Appendix II) and trading advisor to other accounts,
which may compete with the Fund for Campbell & Company's services. Thus,
Campbell & Company could have a conflict between its responsibilities to
the Fund and to those other pools and accounts. Campbell & Company
believes it has sufficient resources to discharge its responsibilities in
this regard in a fair manner.
Campbell & Company may receive higher advisory fees from some of those
other accounts than it receives from the Fund. Campbell & Company,
however, trades all accounts of the Financial, Metals & Energy Large
Portfolio (including the Fund) in a substantially similar manner, given
the differences in size and timing of the capital additions and
withdrawals. In addition, Campbell & Company may find that futures
positions established for the benefit of the Fund, when aggregated with
positions in other accounts of Campbell & Company, approach the
speculative position limits in a particular commodity. Campbell & Company
may decide to address this situation either by liquidating the Fund's
positions in that futures contract and reapportioning the portfolio in
other contracts or by trading contracts in other markets which do not have
restrictive limits.
Any principal of Campbell & Company may trade futures interests for
their own accounts. In addition, Campbell & Company manages proprietary
accounts for its deferred compensation plan and a principal. There are no
written procedures for proprietary trading. Trading records for all
proprietary trading are available for review by clients and investors upon
reasonable notice. A conflict of interest exists if proprietary trades are
in the same markets and at the same time, using the Commodity Broker to be
used by the Fund. To the extent executions are bundled and then allocated
among accounts held at the Commodity Broker, the Fund may receive less
favorable executions than such other accounts. It is Campbell & Company's
policy to objectively allocate trade executions that afford each account
the same likelihood of receiving favorable or unfavorable executions over
time. A potential conflict also may occur when Campbell & Company or its
principals trade their proprietary accounts more aggressively, take
positions in proprietary accounts which are opposite, or ahead of, the
position taken by the Fund, or take any other actions that would not
constitute a violation of their fiduciary duties.
B. The Commodity Broker and the Foreign Exchange Dealers. The
Commodity Broker and the Foreign Exchange Dealers and their affiliates and
personnel of such entities, may trade futures and forward contracts for
their own accounts. This could give rise to conflicts of interest with the
Fund. The Commodity Broker also may serve as a broker for other commodity
pools and the Foreign Exchange Dealers act as dealers for other clients,
which could give rise to conflicts of interest between their
responsibility to the Fund and to those pools and clients.
C. The Selling Agents. The Selling Agents (or their assignees) which
are registered futures commission merchants or introducing brokers will
receive, beginning in the thirteenth month after the sale of the Units,
ongoing compensation based on the Net Asset Value of the Units which
remain outstanding. Consequently, in advising clients whether they should
redeem their Units or purchase additional Units, such Selling Agents will
have a conflict of interest between the Selling Agent's interest in
maximizing the ongoing compensation which they will receive and their
interest in giving their client the financial advice which is in such
clients' best interests.
D. Fiduciary Duty and Remedies. In evaluating the foregoing conflicts
of interest, a prospective investor should be aware that Campbell &
Company, as general partner, has a responsibility to Limited Partners to
exercise good faith and fairness in all dealings affecting the Fund. In
the event that a Limited Partner believes Campbell & Company has violated
its fiduciary duty to the Limited Partners, he may seek legal relief
individually or on behalf of the Fund under applicable laws, including
partnership and commodities laws, to recover damages from or require an
accounting by Campbell & Company. The Limited Partnership Agreement is
governed by Delaware law and any breach of Campbell & Company's fiduciary
duty under the Limited Partnership Agreement will generally be governed by
Delaware law. The Limited Partnership Agreement does not limit Campbell &
Company's fiduciary obligations under Delaware or common law, however,
Campbell & Company may assert as a defense to claims of breach of
fiduciary duty that the conflicts of interest and fees payable to
Campbell & Company have been disclosed herein. Limited Partners may also
have the right, subject to applicable procedural and jurisdictional
requirements, to bring partnership class actions in federal court to
enforce their rights under the federal securities laws and the rules and
regulations promulgated thereunder by the Securities and Exchange
Commission. Limited Partners who have suffered losses in connection with
the purchase or sale of the Units may be able to recover such losses from
Campbell & Company where the losses result from a violation by Campbell &
Company of the federal securities laws. State securities laws may also
provide certain remedies to Limited Partners. Limited Partners should be
aware that performance by Campbell & Company of its fiduciary duty to the
Partnership is measured by the terms of the Limited Partnership Agreement
as well as applicable law.
Limited Partners are afforded certain rights to institute reparations
proceedings under the Commodity Exchange Act for violations of the
Commodity Exchange Act or of any rule, regulation or order of the CFTC by
Campbell & Company.
E. Indemnification and Standard of Liability. Campbell & Company and
its controlling persons may not be liable to the Fund or any Limited
Partner for errors in judgment or other acts or omissions not amounting to
misconduct or negligence, as a consequence of the indemnification and
exculpatory provisions described in the following paragraph. Purchasers of
Units may have more limited rights of action than they would absent such
provisions.
Campbell & Company and its controlling persons shall not have any
liability to the Fund or to any Limited Partner for any loss suffered by
the Fund which arises out of any action or inaction if Campbell & Company,
in good faith, determined that such course of conduct was in the best
interests of the Fund and such course of conduct did not constitute
negligence or misconduct of Campbell & Company. The Fund has agreed to
indemnify Campbell & Company and its controlling persons against claims,
losses or liabilities based on their conduct relating to the Fund,
provided that the conduct resulting in the claims, losses or liabilities
for which indemnity is sought did not constitute negligence or misconduct
or breach any fiduciary obligation to the Fund and was done in good faith
and in a manner Campbell & Company, in good faith, determined to be in the
best interests of the Fund. Controlling persons of Campbell & Company are
entitled to indemnity only for losses resulting from claims against such
controlling persons due solely to their relationship with Campbell &
Company or for losses incurred in performing the duties of Campbell &
Company. See Article 15 of the Limited Partnership Agreement, included as
Exhibit A to the Prospectus.
The Fund will not indemnify Campbell & Company or its controlling
persons for any liability arising from securities law violations in
connection with the offering of the Units unless Campbell & Company or its
controlling persons prevails on the merits or obtains a court approved
settlement which includes court approved indemnification as described in
Section 15 of the Limited Partnership Agreement.
SECTION 7. CHARGES TO THE FUND
Brokerage Fee
The Fund pays a single asset-based fee for all brokerage and management
services. This fee, which is equal to 8% per annum of month-end Net Assets
of the Fund (prior to accruals for such Brokerage Fee or performance
fees), is paid to Campbell & Company. Campbell & Company, in turn, remits
a portion of such Brokerage Fee to third parties as set forth below.
- 1% to Commodity Broker
- 4% to Selling Agents
Fund - 8% Brokerage Campbell & - 2% to Campbell & Company
Fee - Company (as trading advisor)
- 1% to Campbell & Company
(as general partner)
The above fee is the complete compensation that will be received by
Campbell & Company, Inc. or its affiliates from the Fund.
Other Fund Expenses
The Fund also will be subject to the following fees and expenses.
<TABLE>
<CAPTION>
Recipient Nature of Payment Amount of Payment
<S> <C> <C>
Campbell & Company Quarterly Performance Fee. 20% of cumulative appreciation in
Net Asset Value per Unit, excluding
interest income, after deduction for
Brokerage Fees.
Reimbursement of offering As incurred; to be reimbursed, up to
expenses. 2.5% of aggregate subscriptions, in
30-month payment periods.
Dealers "Bid-ask" spreads. Indeterminable because imbedded in
price of forward contract.
Brown Brothers Cash management fee. .125 of 1% per annum, payable
Harriman & Co. monthly, of the assets in the Fund's
trust account, plus 25% of any
incremental return generated above
an index of the 90-day U.S. Treasury
Bill rate.
Others Legal, accounting, printing, As incurred, up to a maximum of 0.5%
postage and administrative of average month-end Net Assets per
costs. annum.
</TABLE>
A. Campbell & Company, Inc. As general partner, Campbell & Company
receives Brokerage Fees, payable monthly, equal to 8% of the Fund's
month-end Net Assets per year, calculated each month prior to accruals for
such period's Brokerage Fee and performance fee, if any. From such 8%
Brokerage Fee, Campbell & Company remits 1% to the Commodity Broker for
execution and clearing costs and 4% to the Selling Agents for ongoing
services to the Limited Partners. Campbell & Company will retain the
remaining 3% as management fees (2% for providing advisory services and 1%
for acting as general partner). Campbell & Company also receives a
performance fee of 20% of the aggregate cumulative appreciation (if any)
in the Net Asset Value per Unit at the end of each calendar quarter,
exclusive of appreciation attributable to interest income. See Section 7.4
of the Agreement of Limited Partnership for the definition of Net Assets.
The General Partner receives redemption fees on Units redeemed during the
12 months following the purchase as follows: 4% of Net Asset Value on
Units redeemed in the first quarter following purchase, 3% during the
second quarter, 2% during the third quarter, and 1% in the fourth quarter.
After the fourth quarter, no redemption fees are charged.
The performance fee equals 20% of the aggregate cumulative appreciation
in the Net Asset Value of the Units calculated pursuant to the terms of
the Advisory Agreement and paid quarterly. "Aggregate cumulative
appreciation" means the total increase in Unit value from the commencement
of trading, minus the total increase in Unit value for all prior quarters,
multiplied by the number of Units outstanding. The performance fee is paid
only on profits attributable to Units outstanding, and no fee is paid with
respect to interest income. Units which are redeemed other than at the end
of the quarter will pay a performance fee, if any would otherwise be due,
as of the end of the month in which the redemption occurs.
In the event of a carryforward loss, redemptions of Units will
proportionately reduce such carryforward loss. If any payment is made by
the Fund in respect of a performance fee, and the Fund thereafter incurs a
net loss, Campbell & Company will retain the amount previously paid. Thus,
Campbell & Company may be paid a performance fee during a year in which
the Fund overall incurred net losses. Trading losses shall be carried
forward and no further performance fees may be paid until the prior losses
have been recovered.
The Brokerage Fee and performance fee may be changed upon sixty days'
notice to the Limited Partners, which notice explains their redemption and
voting rights. See Section 8.1 (2) of the Amended Agreement of Limited
Partnership (attached as Exhibit A).
B. The Commodity Broker. As described in paragraph A. above, in
return for executing and clearing the Fund's futures trades, the Commodity
Broker receives from Campbell & Company (and not the Fund) a portion of
the 8% Brokerage Fee equal to 1% per annum of Net Assets of the Fund. The
Commodity Broker is responsible for pit brokerage, exchange and NFA fees,
"give-up" and transfer fees. The compensation to the Commodity Broker is
competitive with rates paid by other trading funds having assets and
structure similar to the Fund. The asset-based compensation to the
Commodity Broker is equivalent to approximately $10-$15 per round-turn
trade per contract. The compensation to be paid to the Commodity Broker
will not exceed the guidelines established by the North American
Securities Administrators Association ("NASAA").
C. Selling Agents. The Selling Agents receive from Campbell & Company
(and not the Fund) selling commissions of up to 4% of the subscription
amount. In addition, commencing thirteen months after the sale of Units
and in return for ongoing services to the Limited Partners, Campbell &
Company will pay those Selling Agents (or their assignees) which are
registered at such time as futures commission merchants or introducing
brokers, a portion of the 8% Brokerage Fee of up to 4% per annum of
average month-end Net Assets of all Units which remain outstanding.
Selling Agents and registered representatives who are not registered
with the CFTC as described above may receive additional selling
commissions from Campbell & Company, paid on the same basis as the ongoing
payments, provided that the total of such additional selling commissions
plus the initial 4% selling commission, salaries, expenses and bonuses of
employees of Campbell & Company engaged in wholesaling activities and per
Unit organization and offering costs properly deemed to constitute costs
allocable to the Selling Agents (such as a selling brochure, seminar costs
and travel expenses) do not exceed 10% of such Units' initial sale price.
Any such ongoing payments or additional selling commissions will be paid
by Campbell & Company and not by the Fund but may be deemed to constitute
underwriting compensation.
D. Foreign Exchange Dealers. The Fund engages in trading currency
forward contracts. Such contracts are traded among dealers which act as
"principals" or counterparties to each trade. The execution costs are
included in the price of the forward contract purchased or sold, and,
accordingly, such costs cannot be determined. Campbell & Company believes
the bid/ask spreads will be at the prevailing market prices.
E. Offering Expenses. The offering expenses during the Continuing
Offering Period as of March 31, 1996 totalled $1,579,774and are estimated
at $350,000 for the nine months following the date of this Prospectus, all
of which will be advanced by Campbell & Company. Such expenses include all
fees and expenses in connection with the distribution of the Units
including legal, accounting, printing, mailing, filing fees, escrow fees,
salaries and bonuses of employees while engaged in sales activities and
marketing expenses of Campbell & Company and the Selling Agents which are
paid by the Fund. Subject to the limit described below, Campbell & Company
will be reimbursed, without interest, by the Fund in 30-month payment
periods throughout the Continuing Offering. In no event shall the
reimbursement exceed 2.5% of the total subscriptions accepted by
Campbell & Company, which based on the 30-month amortization period,
represents a maximum of 1% of month-end Net Assets per annum. Organization
and offering expenses equal to $240,961 were incurred during the Initial
Offering Period and were advanced by Campbell & Company. Such expenses are
being reimbursed in the same manner and are subject to the same 2.5%
limit.
The Fund is required by certain state securities administrators to
disclose that the "organization and offering expenses" of the Fund, as
defined by the NASAA Guidelines (see Appendix III), will not exceed 15% of
the total subscriptions accepted. Campbell & Company, and not the Fund,
shall be responsible for any expenses in excess of such limitation. Since
Campbell & Company has agreed to limit its reimbursement of such expenses
to 2.5% of total subscriptions, the NASAA Guideline limit of 15% of total
subscriptions (even when added to the selling commissions) will not be
reached.
F. Cash Management. The Fund pays Brown Brothers Harriman & Co.
("Brown Brothers") an asset-based fee for providing cash management
services to the Fund. It is paid on a quarterly basis at the rate of .125
of 1% per annum of the Fund's trust account balances, plus, beginning
December 31, 1996, 25% of any incremental return generated above an index
of the 90-day U.S. Treasury Bill rate, paid on a quarterly basis. Brown
Brothers is not affiliated with Campbell & Company. The Fund may engage
other firms, unaffiliated with Campbell & Company, from time to time to
provide cash management services. Such services would be provided
pursuant to similar terms and fees as those that apply to Brown Brothers..
G. Other. The Fund bears its operating expenses, including but not
limited to, legal and accounting fees, and any taxes or extraordinary
expenses payable by the Fund. Such expenses are estimated to be 0.5% of
Net Assets per annum. Campbell & Company shall be responsible for any such
expenses during any year of operations which exceed such percentage
estimate. For the years ended December 31, 1995 and 1994, operating
expenses were 0.35% and 0.19% (annualized), respectively, of the Fund's
year-end Net Assets. Indirect expenses in connection with the
administration of the Fund, such as salaries, rent, travel and other
overhead of Campbell & Company may not be charged to the Fund.
H. Estimate of Breakeven Level
In order for an investor to "break-even" on his investment in the first
year of trading (i.e. for ending net asset value to equal the initial
amount invested), assuming an initial investment of $1,000, the Fund must
earn $45 per unit, or 4.50%. No performance fees are included in the
break-even analysis because all expenses are deducted from the Fund prior
to calculation of the performance fee. Similarly, redemption fees are not
included because the analysis assumes the Units are held for one year, and
at that point, there is no redemption fee.
Initial Selling Price Per Unit $ 1,000.00
-------
Brokerage Fee (8%) $ 80.00
Organization & Offering Expense Reimbursement (1%) 10.00
Operating Expenses (0.5%) 5.00
Less: Interest Income (estimated at 5%) (net of
cash management fee) (50.00)
-------
Amount of Trading Income Required for the Fund's Net
Asset Value per Unit atthe End of One Year to Equal
the Initial Selling Price per Unit $ 45.00
=======
Percentage of Initial Selling Price per Unit 4.50%
=======
___________
The maximum offering expense reimbursement is 2.5% of the total
subscription amount over 30 months. This represents a maximum during a
twelve-month period of 1% of average month-end Net Assets. Operating
expenses are subject to a maximum limit of 0.5% of Net Assets per annum.
The estimates also do not account for the bid/ask spreads in connection
with the Fund's foreign exchange forward contract trading.
SECTION 8. USE OF PROCEEDS
The entire offering proceeds, without deductions, will be credited to
the Fund's bank and brokerage accounts to engage in trading activities and
as reserves for that trading. The Fund meets its margin requirements by
depositing U.S. government securities with the Commodity Broker and the
Foreign Exchange Dealers. In this way, substantially all (i.e., 95% or
more) of the Fund's assets, whether used as margin for trading purposes or
as reserves for such trading, can be invested in U.S. government
securities and time deposits with U.S. banks. Investors should note that
maintenance of the Fund's assets in U.S. government securities and banks
does not reduce the risk of loss from trading futures contracts. The Fund
receives all interest on its assets. No other person shall receive any
interest or other economic benefits from the deposit of Fund assets.
Approximately 15% to 30% of the Fund's assets normally are committed as
margin for futures contracts and held by the Commodity Broker, although
the amount committed may vary significantly. Such assets are maintained in
segregated accounts with the Commodity Broker pursuant to the Commodity
Exchange Act and regulations thereunder. Approximately 10% to 20% of the
Fund's assets are deposited with Foreign Exchange Dealers in order to
initiate and maintain currency forward contracts. Such assets are not held
in segregation or otherwise regulated under the Commodity Exchange Act,
unless such Foreign Exchange Dealer is registered as a futures commission
merchant. These assets are held either in U.S. government securities or
short-term time deposits with U.S.-regulated bank affiliates of the
Foreign Exchange Dealers. See "Risk Factors_Market Risks; Currency Forward
Transactions."
A small percentage of the Fund's assets (estimated at less than 15%)
are utilized as margin for foreign futures. Such funds are held in omnibus
accounts with carrying brokers used by the Commodity Broker. These
accounts are non-regulated segregated accounts. These assets may be held
in the appropriate local currency or in U.S. dollars and will earn
interest at rates equivalent to the overnight deposit rate in such
markets. For example, deposits held in British Pounds will earn the LIBOR
rate (London Interbank Offering Rate). See "Risk Factors - Foreign Futures
and Foreign Options" and Foreign Futures and Foreign Options Risk
Disclosure Statement in the front of this Prospectus.
Campbell & Company deposits those assets of the Fund which are not
required to be deposited as margin with the Commodity Broker or Foreign
Exchange Dealers in a trust account with Brown Brothers. Such trust
account constitutes approximately 50% to 75% of the Fund's assets and is
invested, directly or indirectly, by Brown Brothers. Brown Brothers does
not guarantee any interest or profits will accrue on the Fund's assets in
the trust account. Brown Brothers directs the investment of the Fund's
trust account in U.S. Treasury and agency securities, Eurodollar time
deposits and/or repurchase agreements, all with a minimum investment
quality of A or better. The Fund may engage other firms, unaffiliated
with Campbell & Company, from time to time to provide cash management
services. Such services would be provided pursuant to similar terms and
fees as those that apply to Brown Brothers..
The Fund's assets are not and will not be, directly or indirectly,
commingled with the property of any other person in violation of law or
invested with or loaned to Campbell & Company or any affiliated entities.
SECTION 9. THE COMMODITY BROKER
PaineWebber Incorporated, a Delaware corporation (the "Commodity
Broker" or "PaineWebber"), is the Fund's commodity broker and one of the
Selling Agents. The Commodity Broker's principal office is located at 1200
Harbor Boulevard, Weehawken, New Jersey 07087.
The Commodity Broker is a clearing member of all principal United
States futures exchanges. It is registered with the CFTC as a futures
commission merchant and is a member of the NFA.
All futures trades made on behalf of the Fund are cleared through the
Commodity Broker. The Commodity Broker is not affiliated with Campbell &
Company. The Commodity Broker did not sponsor the Fund and is not
responsible for the activities of Campbell & Company, it will act only as
the commodity broker and one of the Selling Agents.
Except as set forth below, neither the Commodity Broker nor any of its
principals have been involved in any administrative, civil or criminal
proceeding, whether pending, on appeal or concluded, within the past five
years that is material to a decision whether to invest in the Fund.
The Commodity Broker is involved in a number of proceedings concerning
matters arising in connection with the conduct of its business. Certain
actions, in which compensatory damages of $153 million or more appear to
be sought, are described below. PaineWebber is also involved in numerous
proceedings in which compensatory damages of less than $153 million appear
to be sought, or in which punitive or exemplary damages, together with the
apparent compensatory damages alleged, appear to exceed $153 million.
PaineWebber has denied, or believes it has legitimate defenses and will
deny, liability in all significant cases pending against it, including
those described below, and intends to defend actively each such case.
In March 1992, PaineWebber as well as other individuals and entities
including inter alia certain former officers and directors of Northview
Corporation ("Northview"), Calmark Holding Corporation and Calmark
Financial Corporation and their respective officers and directors, were
named as defendants in a purported class action filed by Northview in the
Superior Court of the State of California for the County of Los Angeles.
The Complaint sought to set aside as fraudulent and illegal certain
transfers of funds and distributions of cash, and to recover damages
allegedly caused by the defendants for breach of contract, impairment of
capital, unjust enrichment, breach of fiduciary duty, gross negligence and
looting of corporate assets.
As to PaineWebber, Plaintiff alleged that in November 1987, Northview
retained PaineWebber to render an opinion respecting the fair market value
of the common stock of Calmark Financial Corporation which Northview was
to receive in exchange for issuing its own stock to Calmark Holding
Corporation, the parent corporation of Calmark Financial Corporation. The
complaint asserted that PaineWebber issued a valuation opinion which
allegedly overstated the value of Calmark Financial Corporation's assets,
which enabled the transaction at issue in the form of a self-tender and
merger to go forward. Plaintiff contends that as a result of
PaineWebber's allegedly overstating the value of the assets of Calmark
Financial Corporation, Northview's assets were improperly transferred to
Calmark, whose principals depleted the assets subsequent to the merger.
On March, 16, 1990, Northview filed for protection under Chapter XI of the
Bankruptcy Law.
The Complaint sought damages in an amount to be proven at trial, the
imposition of a constructive trust of at least $100 million punitive
damages, interest costs and attorneys' fees from all the defendants.
The Complaint was amended three times before January 12, 1994. On
February 8, 1994, Plaintiff filed a motion for leave to file a Fourth
Amended Complaint, which motion was granted on March 15, 1994. The Fourth
Amended Complaint added a new cause of action for negligent
misrepresentation against PaineWebber and claims for professional
negligence and breach of fiduciary duty against the law firm of Troy &
Gould and certain of its principals who acted as outside counsel to both
Northview and Calmark in connection with their merger.
At the time of the filing of the Fourth Amended Complaint, the caption
of said Complaint was amended to reflect that Northview Corporation is now
known as Vagabond Inns, Inc. and a new party plaintiff, Thomas Sydorick as
Trustee for the Northview/Vagabond Creditor Trust was added. On July 13,
1994, the trial court overruled the demurrer filed by PaineWebber to
Plaintiff's Fourth Amended Complaint. On August 29, 1994, PaineWebber
served its answer to Plaintiff's latest pleading. The parties are
currently engaged in discovery.
On or about June 10, 1991, PaineWebber was served with a "First Amended
Complaint" in an action captioned Rolo v. City Investing Liquidating
Trust, et al,, Civ. Action 90-4420 D.N.J. filed on or about May 13, 1991
naming it and other entities and individuals as defendants. The First
Amended Complaint alleges conspiracy and aiding and abetting violations
of: (1) one or more provisions of the Racketeer Influenced and Corrupt
Organizations Act ("RICO"); (2) one or more provisions of the Interstate
Land Sales Full Disclosure Act; and (3) the common law, on behalf of all
persons (excluding defendants) who purchased lots and/or houses from
General Development Corporation ("GDC") or one of its affiliates and who
are members of an association known as the North Port Out-of-State Lot
Owners Association.
The secondary liability claims in the First Amended Complaint relating
to PaineWebber are premised on allegations that PaineWebber served as (1)
the co-lead underwriter in connection with the April 8, 1998 offering by
GDC of 12-7/8% senior subordinated notes pursuant to a Registration
Statement and Prospectus and (2) the underwriter for a 1989 offering of
Adjustable Rate General Development Residential Mortgage Pass-Through
Certificates, Series 1989-A, which Plaintiffs contend enabled GDC to
acquire additional financial resources for the perpetuation of (and/or
aided and abetted) an alleged scheme to defraud purchasers of GDC lots
and/or houses. The First Amended Complaint requests certain declaratory
relief, equitable relief, compensatory damages of not less than $500
million, punitive damages of not less than three times compensatory
damages, treble damages with respect to the RICO count, pre-judgment and
post-judgment interest on all sums awarded, and attorney's fees, costs,
disbursement and expert witness fees.
On December 27, 1993, the District Court entered an order dismissing
Plaintiff's First Amended Complaint against PaineWebber and the majority
of the other defendants for failure to state a claim upon which relief can
be granted.
On November 8, 1994, the United States Court of Appeals for the Third
Circuit affirmed the District Court's order dismissing this action against
PaineWebber. On November 18, 1994, Plaintiffs filed a Petition for
Rehearing and Suggestion for Rehearing En Banc with the Third Circuit.
This petition is pending.
In July 1994, PaineWebber, together with numerous unrelated firms, were
named as defendants in a series of purported class action complaints that
have since been consolidated for pre-trial purposes in the United States
District Court for the Southern District of New York under the caption In
Re NASDAQ Market-Maker Antitrust and Securities Litigation, MDL Docket No.
1023. The amended complaint in these actions alleges that the defendant
firms engaged in activities as market makers on the NASDAQ over-the-
counter market that violated the federal antitrust laws. The Plaintiffs
seek declaratory and injunctive relief, damages in an amount to be
determined and subject to trebling and additional relief. Defendants have
filed motions to dismiss these complaints.
In addition, in November 1994, PaineWebber together with another
broker-dealer, were named as defendants in a purported class action
complaint filed in the United States District Court for the District of
New Jersey under the caption Newton, et al. v. Merrill Lynch, et al. Civ.
No. 94-5343 (DRD). The complaint alleges that the defendants violated the
securities laws in connection with their actions as market makers on the
NASDAQ over-the-counter market. The plaintiffs seek damages in an
unspecified amount and injunctive, declaratory and other relief.
PaineWebber's time to answer or otherwise move has not yet expired.
A series of purported class actions concerning PaineWebber's sale and
sponsorship of various limited partnership investments have been filed
against PaineWebber and PaineWebber Group Inc. (together "PaineWebber")
among others, by allegedly dissatisfied partnership investors since
November 1994. Several such actions (the "Federal Court Limited
Partnership Actions") were filed in the United States District Court for
the Southern District of New York, one was filed in the United States
District Court for the Southern District of Florida and one complaint (the
"New York Limited Partnership Action") was filed in the Supreme Court of
the State of New York. The time to answer or otherwise move with respect
to these complaints has not yet expired.
The complaints in all these cases make substantially similar
allegations that, in connection with the sale of interests in
approximately 50 limited partnerships between 1980 and 1992, PaineWebber
(1) failed to provide adequate disclosure of the risks involved with each
partnership; (2) made false and misleading representations about the
safety of the investments and the anticipated performance of the
partnerships; and (3) marketed the partnerships to investors for whom such
investments were not suitable. The plaintiffs who purport to be suing on
behalf of all persons who invested in limited partnerships sold by
PaineWebber between 1980 and 1992, also allege that, following the sale of
the partnerships' units, PaineWebber misrepresented financial information
about the partnerships' value and performance. The Federal Court Limited
Partnership Actions also allege that PaineWebber violated the Racketeer
Influence and Corrupt Organization Act ("RICO"), and certain of them also
claim that PaineWebber violated the federal securities laws. The
plaintiffs seek unspecified damages, including reimbursement of all sums
invested by them in the partnerships, as well as disgorgement of all fees
and other income derived by PaineWebber from the limited partnerships. In
the Federal Court Limited Partnership Actions, he plaintiffs also seek
treble damages under RICO.
In addition, PaineWebber and several of its present or former officers
were sued in two other purported class actions (the "Geodyne Limited
Partnership Actions") filed in the state court in Harris County, Texas.
Those cases, Nedick v. Geodyne Resources, Inc. et al. and Wolff v. Geodyne
Resources, Inc. et al., are similar to the other Limited Partnership
Actions except that the plaintiffs purport to sue only on behalf of those
investors who bought interests in the Geodyne Energy Partnerships, which
were a series of oil and gas partnerships that PaineWebber sold over
several years. The plaintiffs in the Geodyne Limited Partnership Actions
allege that PaineWebber committed fraud and misrepresentation, breached
its fiduciary obligations to its investors and brokerage customers, and
breached certain contractual obligations. The complaints seek unspecified
damages, including reimbursement for all sums invested by them in the
partnerships, as well as disgorgement of all fees and other income derived
by PaineWebber from the Geodyne partnerships. PaineWebber has filed an
answer denying the allegations in plaintiff's complaint.
Another purported class action was filed in the state court in Brazoria
County, Texas on behalf of investors in the Pegasus aircraft leasing
partnerships. In this case, Mallia, et. al v. PaineWebber Incorporated,
et al., the plaintiffs allege that PaineWebber committed fraud and
misrepresentation in connection with the sale of these limited partnership
interests. The complaint seeks unspecified damages.
In addition to the foregoing private litigation, the following
administrative and exchange proceedings may be considered material.
In June 1991, the NFA East Regional Business Conduct Committee (the
"Committee") issued a complaint against PaineWebber which alleged that it
had violated NFA By-law 1101 by transacting business with non-members of
the NFA who were required to be registered with the CFTC; further, that it
had failed to observe high standards of commercial honor and just and
equitable principles of trade, in violation of NFA Compliance Rule 2-4, in
that it allegedly knew or in the exercise of reasonable diligence should
have known that it was transacting customer business with unregistered
persons who were required to be registered but who were not so registered.
Without admitting or denying the allegations contained in the complaint,
PaineWebber submitted an offer of settlement. The settlement was accepted
by the Committee on September 25, 1991, and in connection therewith the
Committee imposed a $25,000 fine.
On November 15, 1991, based on a hearing by the New York Stock Exchange
("NYSE"), Panel Decision 91-192, PaineWebber stipulated that during the
period 1984 to 1987 it violated various NYSE rules and federal regulations
relating to solicitations by its IEs of unsuitable transactions and
margins violations. During the period of 1984 to 1988 it violated NYSE
rules relating to annual audits of branch offices written tables of
supervisory responsibility, a system of follow-ups and review respecting
sales practice events to the NYSE on a timely basis. The NYSE imposed a
$800,000 fine on PaineWebber and required a payment of a contribution of
$100,000 toward fines imposed upon the present and former supervisory
personnel also being fined.
In January 1992, PaineWebber, without admitting any of the allegations
against it and solely for the purpose of settling the proceeding,
consented to the issuance by the Securities and Exchange Commission of an
order finding that in connection with participation in primary
distributions of certain unsecured debt securities issued by certain
government sponsored entities, it violated SEC rules 17a-3 and 17a-4 by
not accurately reflecting transactions in and customer orders for such
securities. The SEC's order and findings were substantially similar to
orders and findings by the SEC and other federal regulations with respect
to 97 other financial intermediaries involving the same conduct. The SEC
ordered PaineWebber to: (i) cease and desist from further violations; (ii)
pay a civil penalty of $100,000; and (iii) develop, implement and maintain
policies and procedures reasonably designed to ensure its future
compliance with the recordkeeping rules in connection with such
activities.
In March 1992, in connection with the SECs private investigation into
the government securities market, the SEC proposed a settlement of that
part of the inquiry that related to the sale of securities by government
sponsored enterprises (GSEs). In an administrative proceeding brought in
January 1992 by the SEC, together with the Comptroller of the Currency and
the Federal Reserve, 98 government, securities dealers consented to the
entry of an order relating to the recordkeeping requirements of the
federal securities laws, without admitting or denying any violations but
acknowledging the submission of inaccurate sales information to the GSEs.
The dealers paid an aggregate penalty of $5,165,000 with the approximately
40 largest dealers including PaineWebber, each paying $100,000. The
overall SEC investigation is still in progress.
In May 1992, in connection with the SEC's private investigation into
the government securities market, the SEC proposed a settlement of that
part of the inquiry that related to the sale of securities by government
sponsored enterprises ("GSEs"). IN an administrative proceeding brought
in January 1992, by the SEC, together with the Comptroller of the Currency
and the Federal Reserve, 98 government securities dealers consented to the
entry of an order relating to the recordkeeping requirements of the
federal securities laws, without admitting any violations but
acknowledging the submission of inaccurate sales information to the GSEs.
The dealers paid an aggregate penalty of $5,165,000 with the approximately
40 largest dealers, including PaineWebber, each paying $100,000. The
overall SEC investigation is still in progress.
In May 1992, the Chicago Mercantile Exchange ("CME") Probable Cause
Committee issued a Notice of Charge against PaineWebber which alleged that
it accepted contemporaneous buy and sell orders for the same customer
account in S&P 500 Index Futures on trade dates October 3, October 30, and
December 5, 1990, in violation of CME Rule 433b (Uncommercial Conduct).
Without admitting or denying the allegations, PaineWebber submitted an
offer of settlement. The settlement was accepted by the Floor Practices
Committee of the CME on June 28, 1991, and in connection therewith, the
Committee imposed a $7,500 fine.
On November 27, 1992, the CFTC filed a five count administrative
complaint against PaineWebber and a former employee. Simultaneous with
the filing of the complaint, the CFTC accepted an offer of settlement from
PaineWebber. The complaint alleged PaineWebber violated provisions of the
Commodity Exchange Act and CFTC regulations by failing to immediately make
a written record of orders placed, entering trades without account
identification, failing to properly time-stamp orders, failing to
supervise diligently the handling of customers' commodity futures accounts
and failing to maintain and produce to CFTC staff certain records relating
to orders entered. Without admitting or denying the allegations or the
findings contained in the complaint, PaineWebber consented to the entry of
a CFTC order which: (i) found that it violated the provisions of the ACT
and CFTC regulations: (ii) directed it to cease and desist from further
violations of those provisions; and (iii) imposed a civil monetary penalty
of $150,000.
On December 11, 1992, based on a hearing by the New York Stock Exchange
("NYSE"), Panel Decision 92-187, the NYSE alleged that PaineWebber
exercised conversion rights of customer's expiring rights and warrants
without the customer's authorizations; in violation of Exchange Act
Regulations `7 (a) (3). Without admitting or denying the allegations,
PaineWebber consented to a censure, $65,000 fine and undertakings.
On February 4, 1994, the Alabama Securities Commission issued
Administrative Order CV-93-0020. PaineWebber consented, without admitting
or denying the allegations, to finding of violations of the Alabama
Securities Act to place on the branch order ticket or other record of a
transaction before any order for purchase or sale of securities through
the block trading desk by registered representatives in Birmingham,
Alabama. The registered representatives shall deliver a copy of the
branch order ticket to the branch office manager or to his or her designee
prior to the time the order is placed with a block desk. The Alabama
Securities Commission will be provided with a copy of the consultant's
report concerning respondent's policies, practices and procedures prepared
attesting to the implementation of the recommendations contained in the
consultant's report. PaineWebber shall certify that all supervisory and
managerial personnel in its Birmingham office have attended the two-day
seminar required by the SEC order. PaineWebber will pay a fine of $87,000
as partial reimbursement for the Alabama Security Commission's cost for
examining this matter.
In July 1994, PaineWebber Incorporated ("PaineWebber") together with
numerous unrelated firms, were named as defendants in a series of
purported class action complaints that have since been consolidated for
pretrial purposes in the United States District Court for the Southern
District court of New York under the caption In RE NASDAQ Market-Maker
Antitrust and Securities Litigation MDL Docket No. 1023. The refiled
consolidated complaint in these actions allege that the defendant firms
engage in activities as market makers on the NASDAQ over the counter
market that violated the federal antitrust laws. The plaintiffs seek
declaratory and injunctive relief. On December 18, 1995, PaineWebber
filed its answer to plaintffs' refiled consolidated complaint. The
parties are presently engaged in pre-trial discovery.
PaineWebber and two other broker-dealers are name as defendants in
litigation brought in November 1994 and subsequently styled In Re Merrill
Lynch et al. Securities Litigation Civ. No. 94-5343 (DRD). The amended
complaint, filed in March 1995, alleged that defendants violated federal
securities laws in connection with the execution of orders to buy and sell
NASDAQ securities. On December 13, 1995, the District Court granted
defendants' motion for summary judgment. On January 19, 1996, the
plaintiffs filed a notice of appeal to the United States Court of Appeals
for the Third Circuit. The matter on appeal is Newton et al., v. Merrill
Lynch et al., No. 96-5054.
On July 28, 1994 in Order File No. AO-94-22 in the Missouri Division of
Securities alleged PaineWebber ("PW") failed to reasonably supervise a
former investment executive. PaineWebber consented, without admitting or
denying the allegations to maintain and make available to the Division
upon all request all customer or regulatory complaints received by PW
concerning any employee or agent working in a PW Missouri branch office or
concerning any security sold by such an employee or agent working in a PW
Missouri branch office or concerning any security sold by such an employee
or agent; to annually provide, for a period of three years from the date
of the order, a notice to all Missouri residents who open a securities
account with PW and all Missouri customers detailing procedures for filing
a complaint with PW or the Division; and to include, for a period
beginning thirty days form the date of the order and continuing for three
years, in all new customer account packages, mailed to Missouri residents
form any PW Missouri branch office, certain public information pieces
prepared by the Division. PaineWebber paid a $75,000 fine and $25,000 as
reimbursement for the costs of the investigation.
On September 27, 1995, in matter number 94-078-S, the state of Vermont
Department of Banking, Insurance and Securities, entered an Administrative
Consent Order alleging that between 1984 and 1988, PaineWebber
Incorporated ("PW") did not reasonably supervise two former investment
executives with respect to certain outside activities and limited
partnership investment recommendations. Without admitting or denying the
allegations, PW agrees, among other things, to pay an administrative fine
of $100,000.
On or about January 18, 1996, PaineWebber consented, without admitting
or denying the findings herein, to the entry of an Order by the Securities
and Exchange Commission which imposed a censure, a cease & desist order, a
$5 million civil penalty and various remedial sanctions. The SEC alleged
that PW violated the antifraud and recordkeeping provision of the federal
securities laws in connection with the offer and sale of certain limited
partnership interests between 1986 and 1992 and failed reasonably to
supervise certain registered representatives and other employees involved
in the dale of these interests. PW must comply with its representation
that it had paid and will pay a total of $292.5 million to investors,
including a payment of $40 million for claims fund.
Other than as may be set forth above, there have been no material
administrative, civil or criminal actions or proceedings whether
pending, on appeal or settled against either the Commodity Broker or any
of its respective principals.
The Fund has entered into a Customer Agreement with the Commodity
Broker pursuant to terms which are standard for such arrangement. The
Agreement provides that: the Commodity Broker is authorized to purchase
and sell futures and other contracts in accordance with the instructions
of Campbell & Company; the Commodity Broker will act as custodian for all
assets of the Fund on deposit with it; the Fund shall promptly satisfy all
margin requirements and trading losses that may occur; and either party
may terminate the Agreement on seven days' notice to the other party. In
the event of termination, the Fund would enter into a similar agreement
with another commodity broker. Although unlikely, the selection of another
commodity broker could result in higher fees to the Fund and a brief delay
in trading. The compensation to the Commodity Broker is described in
"Charges to the Fund." Other brokers may be used to execute certain orders
and then "give-up" such trade to the Commodity Broker to be cleared. In
addition, forward contracts and foreign futures contracts may be executed
through other brokers, dealers or banks selected by Campbell & Company.
SECTION 10. FOREIGN EXCHANGE DEALERS
The Fund engages in trading foreign exchange and other forward
contracts through "dealers" in such contracts. Unlike futures contracts
which are traded through brokers such as the Commodity Broker, foreign
exchange or currency forward contracts are traded through a network of
dealers. Campbell & Company currently executes trades through Smith Barney
Inc. but may use other dealers in the future (collectively referred to as
"Foreign Exchange Dealers"). Campbell & Company is not obligated to
continue to use the Foreign Exchange Dealer identified above and may
select additional ones in the future provided Campbell & Company believes
that their service and pricing are competitive.
SECTION 11. CAPITALIZATION
The Fund was formed on May 11, 1993. The table below shows the
capitalization of the Fund as of June 1, 1996 and as adjusted for the
sale of the maximum amount of Units registered.
As Adjusted
for Sale of
Outstanding Maximum
as of June 1, Amount
Title of Class 1996 (1)(2)
Units of General Partnership Interest 548.494 997.803
========== ===========
Units of Limited Partnership Interest 52,544.229 98,782.450
========== ===========
Total Partners' Capital $55,688,032 $104,657,512
========== ===========
(See accompanying notes)
(1) This calculation assumes that the sale of all Units is made during
the Continuing Offering at the April 30, 1996 Net Asset Value per
Unit of $1,048.88. The maximum amount will vary depending on the
Unit value and number of Units sold during the Continuing Offering.
(2) To organize the Fund, the initial limited partner purchased one Unit
for $1,000 and Campbell & Company purchased one general partnership
unit for $1,000. Campbell & Company has agreed to make capital
contributions to the Fund equal to at least 1% of the net aggregate
capital contributions of all Partners. As of April 30, 1996,
Campbell & Company owned 548.494 units of general partnership
interest.
SECTION 12. DISTRIBUTIONS AND REDEMPTIONS
A. Distributions. Campbell & Company is not required to distribute
any profit or income realized by the Fund. While Campbell & Company has
the authority to make such distributions, it does not intend to do so in
the foreseeable future. Campbell & Company believes that distributions of
Fund assets serve no useful purpose since the Limited Partners may redeem
any or all of their Units on a periodic basis. The amount and timing of
future distributions is uncertain.
If the Fund realizes profits for any fiscal year, such profits will
constitute taxable income to the Partners in accordance with their
respective investments in the Fund whether or not such profits have been
distributed to Partners. Because the Limited Partnership Agreement grants
Campbell & Company discretion in determining the amount and timing of any
distributions of profits and income, if any, (1) losses incurred by the
Fund after the end of the year may offset undistributed income on which
the Partners have been taxed, and (2) any distributions, if made, may be
inadequate to cover such taxes payable by the Partners. Subject to the
limitations on redemption of Units, a Limited Partner may redeem a portion
of his Units if he wishes to realize appreciation, if any, in the value of
his interest in the Fund.
B. Redemptions. A Limited Partner with the charges explained below,
may request any or all of his Units be redeemed by the Fund at the Net
Asset Value of a Unit as of the end of the month. Limited Partners must
transmit written request of such withdrawal to Campbell & Company not less
than ten business days prior to the end of the month (or such shorter
period as permitted by Campbell & Company). During the 12 months following
the purchase, the General Partner charges a redemption fee as follows: 4%
of Net Asset Value on Units redeemed in the first quarter following
purchase, 3% during the second quarter, 2% during the third quarter, and
1% in the fourth quarter. After the fourth quarter, no redemption fees
are charged.
The Request for Redemption must specify the number of Units for which
redemption is sought. Redemptions will be paid within 20 days after the
date of redemption, contingent upon the Fund having assets sufficient to
discharge all of its liabilities on the requested date of redemption. In
the event that redemptions are requested with respect to more Units than
Campbell & Company is able to honor pursuant to the foregoing contingency,
Campbell & Company will honor requests for redemption in the order
actually received and will hold requests for redemption in such order.
Limited Partners will be notified in the event a request for redemption
cannot be honored under the terms hereof, and their requests will be
honored thereafter at the first available opportunity.
The Net Asset Value of a Unit as of any date is the Limited Partners'
share of the sum of all cash, plus Treasury bills valued at cost plus
accrued interest, and other securities valued at market, plus the market
value of all open futures positions maintained by the Fund, less all
liabilities of the Fund and accrued performance fees, determined in
accordance with the principles specified in the Limited Partnership
Agreement and, where no principle is specified in the Limited Partnership
Agreement, in accordance with generally accepted accounting principles
under the accrual basis of accounting, divided by the number of Units then
outstanding. Thus, if the Net Asset Value of a Unit for purposes of
redemption is determined as of a month-end which is not the end of a
quarter, any performance fees payable to Campbell & Company will be
determined and charged to such Unit as though such month-end were the end
of the quarter and such performance fees will be paid to Campbell &
Company.
The federal income tax aspects of redemptions are described under
"Federal Income Tax Aspects."
SECTION 13. THE FUTURES AND FORWARDS MARKETS
A. Futures Contracts. Futures contracts are standardized agreements
traded on commodity exchanges that call for the future delivery of the
commodity or financial instrument at a specified time and place. A futures
trader that enters into a contract to take delivery of the underlying
commodity is "long" the contract, or has "bought" the contract. A trader
that is obligated to make delivery is "short" the contract or has "sold"
the contract. Actual delivery on the contract rarely occurs. Futures
traders usually offset (liquidate) their contract obligations by entering
into equal but offsetting futures positions. For example, a trader who is
long one September Treasury bond contract on the Chicago Board of Trade
can offset the obligation by entering into a short position in a September
Treasury bond contract on that exchange. Futures positions that have not
yet been liquidated are known as "open" contracts or positions.
Futures contracts are traded on a wide variety of commodities,
including agricultural products, metals, livestock products, government
securities, currencies and stock market indices. Options on futures
contracts are also traded on U.S. commodity exchanges. The Fund
concentrates its futures trading in financial instruments such as interest
rate, foreign exchange and stock index contracts, and metal and energy
contracts.
B. Forward Contracts. Currencies and other commodities may be
purchased or sold for future delivery through banks or dealers pursuant to
forward contracts. Currencies also can be traded pursuant to futures
contracts on organized futures exchanges, however, Campbell & Company uses
the dealer market in foreign exchange contracts for most of the Fund's
trading in currencies. Such dealer acts as "principal" in the transaction
and includes its profit in the price it quotes on the contract. Unlike
futures contracts, foreign exchange contracts are not standardized. In
addition, the forward market is largely unregulated. See " Regulation"
below. Forward contracts are not "cleared" or guaranteed by a third party.
Thus, the Fund is subject to the creditworthiness of the dealer with whom
the trade is done. There also is no daily settlement of unrealized gains
or losses on open foreign exchange contracts as there is with futures
contracts on U.S. exchanges. See "Risk Factors Market Risks."
C. Regulation. The U.S. futures markets are regulated under the
Commodity Exchange Act, which is administered by the CFTC, a federal
agency created in 1974. The CFTC licenses and regulates commodity
exchanges, commodity brokerage firms (referred to in the futures industry
as "futures commission merchants"), commodity pool operators, commodity
trading advisors and others. Campbell & Company (the general partner and
trading advisor) is licensed by the CFTC as a commodity pool operator and
commodity trading advisor. Futures professionals are also regulated by the
NFA, a self-regulatory organization for the futures industry that
supervises the dealings between futures professionals and their customers.
If the pertinent CFTC licenses or NFA memberships were to lapse, be
suspended or be revoked, Campbell & Company would be unable to act as the
Fund's commodity pool operator and commodity trading advisor.
The CFTC has adopted disclosure, reporting and recordkeeping
requirements for commodity pool operators and disclosure and recordkeeping
requirements for commodity trading advisors. The reporting rules require
pool operators to furnish to the participants in their pools a monthly
statement of account, showing the pool's income or loss and change in Net
Asset Value, and an annual financial report, audited by an independent
certified public accountant.
The CFTC and the exchanges have pervasive powers over the futures
markets, including the emergency power to suspend trading and order
trading for liquidation only (i.e., traders may liquidate existing
positions but not establish new positions). The exercise of such powers
could adversely affect the Fund's trading.
The CFTC does not regulate forward contracts. Federal and state banking
authorities also do not regulate forward trading or forward dealers. The
Securities and Exchange Commission has indicated that it may consider
foreign exchange contracts to constitute securities for purposes of the
Investment Company Act of 1940 (which regulates mutual funds) and the
Investment Advisers Act of 1940 (which regulates advisers which render
advice with respect to securities). Were the SEC to require the Fund to
register under the Investment Company Act of 1940 or the CFTC to prohibit
the Fund from trading foreign currency forward contracts, Campbell &
Company would likely trade foreign currency futures contracts instead of
forward contracts. Trading in foreign currency futures contracts may be
less liquid and the Fund's trading results may be adversely affected.
D. Margin. In order to establish and maintain a futures position, a
trader must make a type of good-faith deposit with its broker, known as
"margin," of approximately 2%-10% of contract value. Minimum margins are
established for each futures contract by the exchange on which the
contract is traded. The exchanges alter their margin requirements from
time to time, sometimes significantly. For their protection, commodity
brokers may require higher margins from their customers than the exchange
minimums. Margin also is deposited in connection with forward contracts
but is not required by any applicable regulation.
There are two types of margins. "Initial" margin is the amount a trader
is required to deposit with its broker to open a futures position. The
other type of margin is "maintenance" margin. When the contract value of a
trader's futures position falls below a certain percentage (typically
about 75%) of its value when the trader established the position, the
trader is required to deposit additional margin in an amount equal to the
loss in value.
SECTION 14. AGREEMENT OF LIMITED PARTNERSHIP
Set forth below is a description of certain terms and provisions, not
previously summarized in this Prospectus, of the Limited Partnership
Agreement, a form of which is attached as Exhibit A hereto and is
incorporated herein by reference. The following description is a summary
only and is qualified in its entirety by this reference.
A. Organization and Limited Liabilities. The Fund is organized under
the Delaware Revised Uniform Limited Partnership Act ("RULPA"). Interests
in the Fund other than those of Campbell & Company, are evidenced by Units
of Limited Partnership Interest. Each Unit, when issued, is fully paid and
non-assessable. In general, a Limited Partner's liability under RULPA is
limited to the amount of his capital contribution and his share of any
undistributed profits. However, if a Limited Partner receives a return of
any part of his capital contribution, (without violation of the Limited
Partnership Agreement or RULPA), he is liable to the Fund for a period of
one year thereafter for the amount of the returned contribution, but only
to the extent necessary to discharge the Fund's liabilities to creditors
who extended credit to the Fund during the period the contribution was
held by the Fund. Under RULPA, a Limited Partner also is liable to the
Fund for the amount of any part of his capital contribution returned to
him, for a period of six years, but only if such return was in violation
of the Limited Partnership Agreement or RULPA. See Article 7 of the
Limited Partnership Agreement. If a Limited Partner exerts management
control over the Fund, in contravention of the Limited Partnership
Agreement or RULPA, he may become liable as a general partner. Campbell &
Company, as general partner, is not personally liable for the return of
the capital or profits of any Limited Partner. Such return of capital
shall be solely from the assets of the Fund. See Article 14 of the Limited
Partnership Agreement.
B. Management of Partnership Affairs. Under the Limited Partnership
Agreement, responsibility for managing the Fund is vested solely in
Campbell & Company. Complete trading authority also is in the hands of
Campbell & Company. To facilitate the execution of various documents by
Campbell & Company on behalf of the Fund and the Limited Partners, the
Limited Partners must execute the attached Subscription Agreement and
Power of Attorney (Exhibit D), appointing Campbell & Company with power of
substitution, as their attorney-in-fact. The Limited Partners will take no
part in the management of the Fund. If any Limited Partner takes part in
the control of the business of the Fund, the limited liability of such
Limited Partner may be jeopardized.
C. Sharing of Profits and Losses. (i) Fund Accounting. Each Partner
has a capital account, with an initial balance equal to the amount he paid
for the Units. The Net Assets of the Fund are determined monthly, and any
increase or decrease from the end of the preceding month is added to or
subtracted from the accounts of the Partners in the ratio that each
account bears to all accounts.
(ii) Federal Tax Allocation. At the end of each fiscal year, the
Fund's realized capital gain or loss, realized ordinary income or loss,
and capital gain or loss to be taken into account after marking-to-market
at year-end, are allocated among the Partners in proportion to their
capital accounts and each Partner is required to include in his income tax
return his share of such items. See Article 7 of the Limited Partnership
Agreement, and "Federal Income Tax Aspects."
Net capital gain is allocated first to each Partner who has redeemed
Units during the year to the extent that the amount he receives on
redemption exceeds the tax basis of the Units. Remaining profit is
allocated among all Partners in proportion to each Partner's capital
account.
Net capital loss is allocated first to each Partner who has redeemed
Units during the year to the extent that the tax basis of the Units
redeemed exceeds the amount he receives on redemption. Remaining loss is
allocated among all Partners in proportion to each Partner's capital
account.
The allocations described above will be recognized for Federal income
tax purposes provided they have "substantial economic effect." For
purposes of these allocations, the amount each Partner paid for his or her
Units will be deemed to have increased by the amount of taxable income
allocated to him and reduced by any distributions he has received and the
amount of losses allocated to him.
Upon liquidation of the Fund, the assets of the Fund will be
distributed to each Partner in the ratio that his capital account bears to
the accounts of all Partners.
D. Dispositions. A Limited Partner may, subject to compliance with
applicable federal and state securities laws, assign his Units in the Fund
upon 30 days' notice to the Fund and Campbell & Company, as described in
Article 10 of the Limited Partnership Agreement. Insofar as the Fund tax
allocations discussed under "Sharing of Profits and Losses," above, are
concerned, assignees receive "carry-over" tax basis accounts and capital
accounts from their assignors, irrespective of the amount paid for the
assigned Units.
There are no certificates for the Units. Any transfers of Units will be
reflected on the books and records of the Fund. Transferors and
transferees of Units will each receive notification from Campbell &
Company to the effect that transfers have been duly so reflected. No
person who is assigned Units shall become a substituted Limited Partner
without the consent of Campbell & Company. Unless such person shall have
been admitted to the Fund as a Limited Partner, he shall not have any of
the rights of a Limited Partner except to receive that share of capital
and profits and right of redemption possessed by the person who assigned
him the Units. Campbell & Company has complete discretion to withhold
consent to a transferee becoming a substituted Limited Partner but only
intends to do so in order to prevent or minimize potential adverse legal
or tax consequences to the Fund. See Article 10 of the Limited Partnership
Agreement.
E. Dissolution and Termination of the Fund. The Fund will be
terminated and dissolved promptly thereafter upon the happening of the
earlier of: (i) the expiration of the Fund's stated term on December 31,
2023; (ii) an election to dissolve the Fund at any time by Limited
Partners owning more than 50% of the Units then outstanding; (iii) the
withdrawal of Campbell & Company unless one or more new general partners
have been elected or appointed pursuant to the Partnership Agreement; or
(iv) any event which shall make unlawful the continued existence of the
Fund. The Fund can be dissolved by operation of law under certain
circumstances such as the judicial dissolution of Campbell & Company or
the Fund. Such dissolution could occur if it were not reasonably
practicable to carry on the business of the Fund in conformity with the
Limited Partnership Agreement such as the bankruptcy of Campbell &
Company. Any distribution to Limited Partners upon termination or
liquidation shall be in cash. See Article 4 of the Limited Partnership
Agreement.
F. Amendments and Meetings. The Limited Partnership Agreement may be
amended by an instrument signed by Campbell & Company provided that it be
approved by the Limited Partners owning more than a majority of the Units
then owned by the Limited Partners.
Any Limited Partner, upon request to Campbell & Company, may obtain
from Campbell & Company (subject to confirmation that the information will
not be used for commercial purposes) a list of the names and addresses of
record of all Limited Partners and the number of Units held by each. Upon
receipt of a written request signed by the Limited Partners owning at
least 10% of the Units then owned by Limited Partners that a meeting of
the Fund be called to consider any matter upon which Limited Partners may
vote pursuant to the Limited Partnership Agreement, Campbell & Company
shall by written notice to each Limited Partner of record, mailed within
15 days after receipt of such request, call a meeting of the Fund. Such
meeting shall be held at least 30 days but not more than 60 days after the
mailing of such notice, and such notice shall specify the date, a
reasonable time and place, and the purpose of such meeting.
At any such meeting, upon the affirmative vote of Limited Partners
owning a majority of the Units, the following actions may be taken:
(i) the Limited Partnership Agreement may, with certain exceptions, be
amended without the consent of Campbell & Company; (ii) the Fund may be
dissolved; (iii) contracts with Campbell & Company may be terminated;
(iv) Campbell & Company may be removed and replaced as general partner;
and (v) the sale of all assets of the Fund may be approved. See Article 16
of the Limited Partnership Agreement.
Campbell & Company may make certain minor changes to the Limited
Partnership Agreement without approval of the Limited Partners. Such
changes include (i) clarifying any inconsistencies including between the
Agreement and the Prospectus, (ii) amendments which would benefit the
Limited Partners and are required by federal or state regulators, and
(iii) other amendments which are not materially adverse to the Limited
Partners.
G. Indemnification. The Fund has agreed to indemnify Campbell &
Company, as general partner, under certain circumstances. Indemnification
by the Fund is permitted only if (i) Campbell & Company's conduct was in
the best interests and on behalf of the Fund and (ii) the conduct was not
the result of negligence or misconduct on the part of Campbell & Company.
Indemnification by the Fund for alleged violation of securities laws is
more restricted, i.e., requiring successful adjudication of the underlying
claims or affirmative court approval of the indemnification payment. See
Article 15 of the Limited Partnership Agreement.
H. Reports to Limited Partners. The books and records of the Fund are
maintained at its principal office and the Limited Partners have the
right, at all times during reasonable business hours, to have access to
and copy the Fund's books and records in person or by authorized attorney
or agent. In addition, a Limited Partner may obtain from Campbell &
Company a list of all Limited Partners together with the number of Units
owned by each Limited Partner provided such request is not for commercial
purposes. Each month Campbell & Company will report to the Limited
Partners an unaudited balance sheet and income statement of the prior
month's activities as required by the CFTC. Additionally, audited
financial statements will be distributed to the Limited Partners not more
than 90 days after the close of the Fund's fiscal year. The annual audited
financial statements will be accompanied by a fiscal year-end summary of
the information contained in the monthly reports described above and any
other information required by the CFTC. Campbell & Company will
distribute, not more than 75 days after the close of such fiscal year, tax
information necessary for the preparation of the Limited Partners' annual
Federal income tax returns. See Article 9 of the Limited Partnership
Agreement.
In the event Net Asset Value per Unit as of the end of any business day
declines by 50% or more from either the initial Unit value prior to
trading or the prior month-end Unit value, Campbell & Company will suspend
trading activities, notify all Limited Partners of the relevant facts
within seven business days and declare a special redemption period.
SECTION 15. FEDERAL INCOME TAX ASPECTS
A. Introduction. Campbell & Company has received an opinion from its
counsel, Foley & Lardner, that the following section correctly describes
(subject to the uncertainties referred to below) the material federal
income tax consequences, as of the date hereof, of an investment in the
Fund to an investor who is an individual citizen or resident of the United
States and who holds the Units as a capital asset.
The following description is based upon the Internal Revenue Code of
1986, as amended (the "Code"), and rules, regulations and existing
interpretations relating thereto, any of which could be changed at any
time. A complete discussion of all federal, state and other tax aspects of
an investment in the Fund is beyond the scope of the following summary and
prospective investors must consult their own tax advisers on such matters.
Moreover, this discussion does not address all possible categories of
investors, some of whom may be subject to special rules. The tax and other
matters described in this Prospectus do not constitute and should not be
considered as, legal or tax advice to prospective investors.
Administrative controversy or litigation may result over tax aspects of
the Fund. Such controversy or litigation could be time-consuming and
costly for the Limited Partners. Further, the likelihood of such
controversy or the outcome thereof cannot be predicted.
If Fund operations are not conducted in conformity with the description
contained herein due to changes in circumstances or otherwise, or if such
operations are continued by a successor or amended Fund following the
removal or resignation of Campbell & Company, the tax consequences of such
operations may differ from those discussed herein.
B. Partnership Classification. For federal income tax purposes, a
partnership is not a taxable entity, but rather is a conduit through which
tax deductions and taxable income are passed to the partners. Each partner
in a partnership is separately liable for income tax on his share of
partnership items and is required to report separately his share of any
item of income, gain, deduction, loss or credit of the partnership. A
partner must report and pay tax on his share of partnership income whether
or not cash is actually distributed to him to pay such a tax.
Under the Code and currently applicable Treasury regulations, an
organization is classified for federal income tax purposes as a
partnership and not as an association taxable as a corporation if (i) the
organization does not have a preponderance of the corporate
characteristics described in the Treasury regulations under Code Section
7701, and (ii) the organization is not a "publicly-traded partnership"
("PTP") as defined in Code Section 7704(b) that is treated as a
corporation pursuant to Code Section 7704(a) (as discussed in C below).
Campbell & Company has received an opinion from Foley & Lardner to the
effect that the Fund will be classified for federal income tax purposes as
a partnership and not as an association taxable as a corporation because
the Fund does not have a preponderance of those corporate characteristics
set forth in the currently applicable Treasury regulations under
Code Section 7701. A ruling with respect to partnership classification
(and other tax consequences discussed herein) has not been requested from
the IRS and Campbell & Company does not intend to request such a ruling
but will rely on the opinion referred to above.
Should the Fund be classified under the Code Section 7701 Treasury
regulations as an association taxable as a corporation for federal income
tax purposes (or be considered to be a publicly-traded partnership that is
treated as a corporation under Code Section 7704, as discussed in
C below), the income and expense of the Fund would be reported by the Fund
and the Fund would be required to pay income taxes upon its net income, if
any, at the rates generally applicable to corporations. Limited Partners
would not be liable for income tax on the Fund's net income in their
individual capacities and would not be entitled to claim the Fund's losses
on their individual returns. Distributions to Limited Partners would be
treated as taxable dividends to the extent of current or accumulated
earnings and profits of the Fund. Distributions in excess of current or
accumulated earnings and profits would be treated first as a reduction of
basis, and then as capital gain.
C. Publicly-Traded Partnership Status. Under Code Section 7704,
certain PTPs are treated as corporations for federal income tax purposes.
Thus, even though the Fund is expected to be classified as a partnership
under the Code Section 7701 Treasury regulations discussed above, the Fund
will be taxed as a corporation if it is a PTP and it does not satisfy the
gross income requirements specified in Code Section 7704(c). A PTP is any
partnership whose interests are (i) "traded on an established securities
market," or (ii) "readily tradeable on a secondary market (or the
substantial equivalent thereof)." Treasury regulations were recently
promulgated in proposed form under Code Section 7704. It is likely that
the Fund will be treated as a PTP under these proposed regulations and
under existing guidance, which will remain in effect until the proposed
regulations are adopted in final form. However, Campbell & Company intends
to operate the Fund so that it will continue to satisfy the gross income
requirements of Code Section 7704(c). Accordingly, even if the Fund is
considered to be a PTP, the Fund should not be treated as a corporation
under Code Section 7704(a) provided that the Fund satisfies the gross
income requirements of Code Section 7704(c). However, a ruling with
respect to these PTP issues has not been and will not be requested from
the IRS and there is no assurance that the IRS will not assert that the
Fund is a PTP that is treated as a corporation.
D. Fund Allocations. For federal income tax purposes, a Limited
Partner's distributive share of items of Fund income, gain, loss,
deduction or credit generally is determined by the Limited Partnership
Agreement. The Limited Partnership Agreement contains a description of the
method of allocation of such items. Under this method of allocation,
appreciation or depreciation of Fund assets which economically occurs
prior to or subsequent to a Partner's ownership of his Units is not
allocated to that Partner, and thus, in a given year the Fund may
recognize an overall gain but some Partners may be allocated a gain for
tax purposes greater than the Fund's overall gain, while other Partners
may be allocated a loss for tax purposes. Campbell & Company believes that
such allocations will be respected for tax purposes, and the Treasury
regulations under Code Section 704 appear to support that belief.
If the allocation contained in the Limited Partnership Agreement were
determined to lack "substantial economic effect," each Limited Partner's
distributive share of items of Fund income, gain, loss, deduction or
credit would be determined in accordance with his interest in the Fund
(taking into account all the facts and circumstances). Alternatively, if
the allocation were determined to constitute a retroactive allocation of
Fund items to Limited Partners who have had some or all of their Units
redeemed, each Limited Partner's distributive share would be determined
strictly in accordance with his varying interests in the Fund during its
taxable year. In either case, such a reallocation of Fund items might
result in Limited Partners who have not redeemed Units during the taxable
year being required to include a larger share of Fund income or loss for
such taxable year than would be allocated to them by the Limited
Partnership Agreement.
E. "At-Risk" Limitation and Basis Adjustments. The amount of Fund
loss (including capital loss) which a Limited Partner is entitled to
include on his personal income tax return is limited to the lesser of the
tax basis or the "at-risk" basis of his Units as of the end of the Fund's
taxable year in which such loss occurs.
Generally, a Limited Partner's initial tax basis in his Units will be
the amount paid for his Units. A Limited Partner's initial "at-risk" basis
in his Units will generally also equal the amount paid for such Units.
However, a Limited Partner who borrows funds to purchase all or a portion
of his Units can include this amount in his at-risk basis only if such
Limited Partner is personally liable to repay the debt or has pledged
property other than his Units with respect to the borrowed funds. A
Limited Partner's "at-risk" basis does not include amounts borrowed from
persons who have a proprietary interest in the Fund or from certain
related persons or amounts borrowed for which he is protected against loss
through guarantees or similar arrangements. A Limited Partner's at-risk
basis also includes his share of liabilities incurred by the Fund to the
extent he is personally liable therefor, but it is not anticipated that
any Limited Partner will be personally liable to creditors of the Fund,
except to the limited extent described in "Agreement of Limited
Partnership." A Limited Partner's tax basis and "at-risk" basis for his
Units generally are reduced by his share of Fund distributions, losses and
expenses allocated to him and increased by his share of Fund income,
including gains.
F. Application of Passive Loss Rules. Code Section 469 contains rules
("Passive Loss Rules") designed to prevent investors from deducting losses
related to "passive activities" except to the extent of income resulting
from such activities. However, temporary Treasury regulations provide that
a partnership engaged in trading personal property (e.g., commodity
futures) will not be treated as engaged in a passive activity, even if the
partnership is engaged in a trade or business. Accordingly, Fund income
allocable to the Limited Partners may not be offset by passive losses
separately incurred by the Limited Partners, and Fund losses will not be
subject to limitation under the Passive Loss Rules.
G. Cash Distributions and Redemptions. Cash distributions to a
Limited Partner by the Fund (whether or not in redemption of the Limited
Partner's interest) are treated first as a nontaxable reduction of basis
and then as capital gain. A Limited Partner will recognize a loss upon a
complete redemption of his interest in the Fund in which no property other
than cash is distributed to such Limited Partner to the extent the Limited
Partner's tax basis exceeds the amount of cash received. Any redemption
fee imposed by the Fund will reduce the amount of cash received, and,
accordingly, increase the amount of loss on complete redemption. If the
Limited Partner has held his Units for more than one year, such gain or
loss is generally long-term capital gain or loss.
H. Taxation of Transactions. (i) Code Section 1256 Contracts. Any
Code Section 1256 contracts held by the Fund as capital assets at the end
of the taxable year generally are "marked to market" (i.e., the net
unrealized gain or loss from each such contract is treated as if such gain
or loss were realized on such date). Code Section 1256 contracts include
futures contracts (a) with respect to which the amount required to be
deposited and the amount which may be withdrawn is required to be adjusted
according to a system of "marking-to-market," and (b) which are traded on
a United States exchange regulated by the CFTC (or on any other exchange
determined by the Secretary of the Treasury to have rules adequate for
purposes of the "mark-to-market" rules of the Code).
Any gain or loss recognized by the Fund on Code Section 1256 contracts
(as a result of the mark-to-market rules on unrealized appreciation or
otherwise) is deemed to consist of 60% long-term capital gain or loss and
40% short-term capital gain or loss. Currently, the maximum stated tax
rate on net capital gains (the excess of net long-term capital gains over
net short-term capital losses) is 28% while the maximum stated tax rate on
all other income is 39.6%. Each Limited Partner will be required to take
into account his distributive share of the gain or loss on the Code
Section 1256 contracts held by the Fund in computing his federal income
tax liability.
The amount of such unrealized gain or loss recognized with respect to a
Code Section 1256 contract generally is determined by reference to the
prices quoted for such Code Section 1256 contract on the exchange on the
last business day of the Fund's taxable year. (Appropriate adjustments are
made to the gain or loss subsequently realized on disposition or closing
out of Code Section 1256 contracts to reflect the fact that unrealized
gain or loss was reported at the close of a prior taxable year.) Moreover,
taking or making delivery of the underlying property on a Code
Section 1256 contract also results in recognition of gain or loss.
(ii) Foreign Currency Contracts and Futures Options. Code
Section 1256 contracts also include (a) certain foreign currency forward
contracts which are traded on the interbank market and entered into at an
arm's-length price determined by reference to the price in the interbank
market, and with respect to which there is trading in Code Section 1256
contracts on the underlying currency, and (b) nonequity options, including
options on Code Section 1256 contracts ("futures options"). In addition,
exercise or assignment of a futures option constitutes a taxable event
requiring recognition of gain or loss. Foreign currency contracts may be
affected by Code Section 988. Code Section 988 provides that gains or
losses related to foreign currency contracts generally will be treated as
ordinary gain or loss. Code Section 988 also provides the ability for a
taxpayer to make certain elections including an election to be treated as
a "qualified fund" provided the Fund meets certain ownership, activity,
and income tests. Such elections generally allow the gain or loss on Code
Section 988 transactions to be treated as capital gain or loss. The Fund
has not made such elections and has not determined whether such elections
will be made. If such an election is made for a taxable year, the election
will be effective for such year and all succeeding taxable years unless
revoked with the consent of the IRS. Dealer equity options are also Code
Section 1256 contracts, but limited partners of option dealers do not
receive 60/40 treatment on such options but rather treat all gains or
losses on such options as short-term capital gains or losses. An "equity
option" is any option to buy or sell stock, or any option the value of
which is determined by reference to any stock (or group of stocks) or
stock index, except for any option with respect to any stock (or group of
stocks) or stock index for which there is a qualified CFTC-designated
contract market.
(iii) Treasury Bills. The accrued discount on Treasury bills is
included in income on a pro rata basis.
I. Limitation on Deductibility of Capital Losses. The excess of
capital losses over capital gains is deductible by an individual against
ordinary income, subject to an annual limitation of $3,000. If a taxpayer
other than a corporation has a net loss on Code Section 1256 contracts for
a taxable year, the taxpayer may elect to carry such loss back three
taxable years and deduct it against net gains on Code Section 1256
contracts included in the taxpayer's income for such years (as described
above). Losses so carried back are deemed to consist of 60% long-term
capital loss and 40% short-term capital loss, and, to the extent not used
to offset gains on Code Section 1256 contracts in a carryback year, carry
forward as losses on Code Section 1256 contracts to future years. Capital
losses of a taxpayer other than a corporation which are not attributable
to a Code Section 1256 contract may not be carried back.
J. Alternative Minimum Tax. In certain circumstances, taxpayers may
be subject to an alternative minimum tax in addition to the tax imposed on
regular taxable income. Long-term capital gains and gains on Code
Section 1256 contracts no longer result in tax preference items for
purposes of the alternative minimum tax.
K. Deductibility of Investment Interest. The deduction of interest on
funds borrowed to acquire or carry investment assets is limited to net
investment income (as defined in Code Section 163(d)). Net long-term
capital gains no longer constitute investment income for purposes of
Code Section 163(d), except to the extent the taxpayer elects to treat
such gains as ordinary income.
L. Tax Elections. The Code provides for optional adjustments to the
basis of Fund property upon distributions of Fund property to a Limited
Partner (Code Section 734) and transfers of Units, including by reason of
death (Code Section 743), provided that an election has been made pursuant
to Code Section 754. The general effect of such an election is that
transferees of Units are treated as though they had acquired a direct
interest in the Fund property and the Fund is treated upon certain
distributions to the Limited Partners as thought it had acquired a new
cost basis for such property. Any such election, once made, is irrevocable
without the consent of the IRS. Because all redemptions are at Net Asset
Value per Unit and, for both federal income tax and financial statement
purposes, the Fund has adopted the accrual method of accounting and
allocates gains, losses and other items (including for federal income tax
purposes) to the Limited Partners who economically realize them, it is not
clear whether adoption of a Code Section 754 election significantly
changes the tax consequences to the Limited Partners. Accordingly,
Campbell & Company has not made such an election and reserves the right
not to make such an election, particularly in view of the additional
complexity and the administrative costs that would be incurred by the
Fund.
M. Limited Deduction For Certain Expenses. For individual taxpayers,
expenses of producing income, including investment adviser fees, are
aggregated with employee business expenses and other expenses of producing
income (collectively, "Miscellaneous Itemized Deductions"), and the
aggregate amount of such expenses is deductible only to the extent such
amount exceeds 2% of the taxpayer's adjusted gross income. Unless the Fund
is treated as engaged in a "trade or business" (see discussion below), any
Brokerage Fees or performance fees payable to Campbell & Company will
likely be treated as Miscellaneous Itemized Deductions for this purpose.
In addition, the treatment of such fees as Miscellaneous Itemized
Deductions may create or increase the liability of a non-corporate Limited
Partner for the alternative minimum tax.
Individual taxpayers are subject to further limitations on the use of
certain itemized deductions (including Miscellaneous Itemized Deductions).
The aggregate amount of such deductions is allowable only to the extent
that they exceed 3% of the amount by which the adjusted gross income
exceeds specified levels (in 1996, $117,950 for married individuals filing
joint returns and single individuals).
It is Campbell & Company's position that the Fund may be deemed to be
engaged in a trade or business. If this position is sustained, the
Brokerage Fees and performance fees would be deductible as ordinary and
necessary business expenses for both regular and alternative minimum tax
purposes and would not be subject to the 2% rule or the 3% rule described
above. However, it is uncertain whether the IRS, upon audit, will agree
that the Fund is engaged in a trade or business.
N. Fund Audits. Any IRS examination relating to the tax treatment of
items of the Fund would be conducted in a single unified proceeding at the
Fund level, and not in separate proceedings with each individual Partner.
The tax matters partner responsible for handling an IRS audit of the Fund
is Campbell & Company. Any such Fund audit may lead to adjustments, in
which event the Limited Partners may be required to file amended personal
federal income tax returns. In addition, any such audit could lead to an
audit of a Limited Partner's individual tax return, which may in turn,
lead to adjustments other than those relating to items of the Fund. In
certain circumstances, a Limited Partner may be bound by any settlement of
disputed tax issues reached between the IRS and the Fund. The Fund (and,
in some cases, a Limited Partner) may also appeal any disputed issues to
an appropriate judicial tribunal for review.
O. Syndication Costs. The Fund's organization and offering expenses
generally will not be deductible or amortizable by the Fund or its
Partners. It is possible that the IRS could take the position that all or
a portion of the selling commission or Brokerage Fee may constitute a
non-deductible syndication cost.
P. State and Local Taxes. In addition to the federal income tax
consequences described above, the Fund and the Limited Partners may incur
tax liabilities under the state and local income tax laws of various
jurisdictions, including the jurisdiction of a Partner's residence, and
the jurisdiction where the Fund is organized, whether or not a Partner is
a resident thereof. The state and local laws vary from one locale to
another and like the federal income tax laws, are both complex and subject
to change. A Limited Partner's distributive share of the realized profits
of the Fund may be required to be included in determining his reportable
income for state tax purposes. Each Limited Partner is advised to consult
his own tax advisers concerning these matters.
Q. Laws Subject to Change. The various statutory provisions and
regulations discussed herein are subject to interpretation by the courts
and to amendment by legislative or administrative action. No prediction
can be made as to what new legislation or regulations will be proposed or
considered in the future, nor can any predictions be made as to whether
any currently proposed legislation or regulations will be adopted and, if
adopted, whether there will be any retroactive application resulting in
adverse tax consequences to the Fund or any Limited Partners.
SECTION 16. INVESTMENT BY ERISA ACCOUNTS
The purchase of Units by an employee benefit plan is subject to certain
additional considerations because investments by such plans are subject to
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
as well as certain restrictions imposed by Code Section 4975. Persons
investing on behalf of any employee benefit plan (as such term is
defined in Section 3(3) of ERISA) or any plan described in Code
Section 4975(e)(1) (all such employee benefits plans and plans are
collectively referred to herein as "employee benefit plan investors"
or "plans," and individually as an "employee benefit plan investor," or
"plan") are required to determine whether such investments will satisfy
the prudence, diversification, prohibited transaction and other standards
set forth in ERISA or the Code, as the case may be. Any such person must
also evaluate the risk (as discussed more fully below) that unintended
ERISA or Code prohibited transaction questions or fiduciary duty
delegation questions may arise if the underlying assets of the Fund are
treated under ERISA or the Code as assets of the employee benefit plan
investors. The person with investment discretion on behalf of an employee
benefit plan investor should consult his or her attorney or other adviser
with regard to whether the purchase of Units is a proper investment for
such plan.
For investment by employee benefit plans pursuant to which participants
exercise control over the assets in their account (so called
"self-directed plans"), investor suitability requirements must be met by
the plan participant, as opposed to the trustee or custodian of the
account under the plan.
The Department of Labor ("DOL") has issued regulations, which describe
the circumstances under which an employee benefit plan investor may invest
in a partnership without the underlying assets of such partnership being
considered "plan assets." Under these regulations, if the Fund's Units
qualify as "publicly-offered securities," the assets of the Fund will not
constitute assets of the employee benefit plans that purchase Units.
Campbell & Company believes that the Units are publicly-offered
securities. In the event Campbell & Company reaches a different conclusion
in the future, it may be compelled to redeem some or all of such Units.
Campbell & Company believes that the Fund's income will not constitute
"unrelated business taxable income" under Code Section 511.
Unless certain precautions are undertaken to ensure that no prohibited
transactions or other fiduciary self-dealing results from an employee
benefit plan's purchase of Units, Units may not be purchased with the
assets of an employee benefit plan if Campbell & Company, the Commodity
Broker, the Foreign Exchange Dealers or any of their respective affiliates
either: (a) has investment discretion with respect to the investment of
such plan assets; (b) has authority or responsibility to, or regularly
gives investment advice with respect to such plan assets, for a fee, and
pursuant to an agreement or understanding that such advice will serve as a
primary basis for investment decisions with respect to such plan assets
and that such advice will be based on the particular investment needs of
the plan; or (c) is an employer maintaining or contributing to such plan.
ACCEPTANCE OF SUBSCRIPTIONS ON BEHALF OF AN EMPLOYEE BENEFIT PLAN IS IN
NO RESPECT A REPRESENTATION BY THE FUND, CAMPBELL & COMPANY, THE COMMODITY
BROKER, OR SELLING AGENTS THAT THIS INVESTMENT MEETS ALL RELEVANT LEGAL
REQUIREMENTS WITH RESPECT TO INVESTMENTS BY ANY PARTICULAR PLAN, OR THAT
THIS INVESTMENT IS APPROPRIATE FOR ANY PARTICULAR PLAN. THE PERSON WITH
INVESTMENT DISCRETION SHOULD CONSULT WITH HIS ATTORNEY AS TO THE PROPRIETY
OF SUCH AN INVESTMENT IN LIGHT OF THE CIRCUMSTANCES OF THE PARTICULAR
PLAN.
SECTION 17. PLAN OF DISTRIBUTION
A. Subscription Procedure
The Fund is offering $45,065,960 of Units to the public during the
Continuing Offering Period at the Net Asset Value per Unit as of the last
day of the month in which the subscription is accepted. Subscriptions
will be accepted as of the first business day of the month immediately
following the month-end in which the subscription and cleared payment
therefor are received, provided such subscription is received at least ten
business days prior to such month-end. The Continuing Offering Period may
be terminated by Campbell & Company at any time.
Any purchases of Units by Campbell & Company will be for investment
purposes only and not with a view toward resale.
An investor who meets the suitability standards set forth below must
complete, execute and deliver to the relevant Selling Agent a copy of the
Subscription Agreement and Power of Attorney attached as Exhibit D hereto.
Subscription payments may be made by means of a check accompanying the
executed signature page and made payable to "Mercantile Safe & Deposit
Trust Company, as Escrow Agent for Campbell Strategic Allocation Fund, L.
P., Escrow Account No. 66127-09." All subscriptions will be forwarded to
the Escrow Agent by noon of the next business day following their receipt.
The determination of whether to accept or reject the subscription will be
made by Campbell & Company within five business days of receipt of the
subscription.
Subscription payments also may be made by authorizing the subscriber's
Selling Agent to debit his customer securities account for the amount of
his subscription. The account will be debited on a settlement date
specified by the Selling Agent and the amounts so debited will be
transmitted directly to the Escrow Agent. The check or wire transfer
should be made payable as described in the previous paragraph. The
settlement date shall be no later than five business days following
notification of acceptance of the subscription and in no event later than
the termination of the Continuing Offering Period. All subscriptions are
irrevocable once subscription payments have been deposited in escrow.
Subscribers will earn interest while such subscription funds are held
in escrow whether or not the subscription is accepted. Subscribers whose
subscriptions are rejected will be refunded their subscription with
interest actually earned within five business days. Subscribers whose
subscriptions are accepted will be issued fractional Units (to three
decimal places) in an amount equal to the interest earned on their
subscription. Subscription funds will be invested in short-term United
States Treasury bills or comparable authorized instruments while held in
escrow pending investment in the Units and, accordingly, will earn
interest at the prevailing rates on such instruments. No fees will be
charged on any subscriptions while held in escrow.
B. Investor Suitability
There can be no assurance that the Fund will achieve its objectives or
avoid substantial losses. An investment in the Fund is suitable only for a
limited segment of the risk portion of an investor's portfolio and no one
should invest more in the Fund than he can afford to lose. The
subscriber's Selling Agent is responsible for determining if the Units are
a suitable investment for the investor.
At an absolute minimum, investors contemplating even a $10,000
investment in the Fund must have (i) a net worth of at least $150,000
(exclusive of home, furnishings and automobiles) or (ii) an annual gross
income of at least $45,000 and a net worth (as calculated above) of at
least $45,000. No one may invest more than 10% of his net worth (as
calculated above) in the Fund.
THE FOREGOING STANDARDS (AND THE ADDITIONAL STANDARDS APPLICABLE TO
RESIDENTS OF CERTAIN STATES AS SET FORTH UNDER "EXHIBIT C SUBSCRIPTION
REQUIREMENTS" HEREIN) ARE REGULATORY MINIMUMS ONLY. QUALIFICATION UNDER
SUCH STANDARDS BY NO MEANS NECESSARILY IMPLIES THAT AN INVESTMENT IN THE
FUND IS SUITABLE FOR A PARTICULAR INVESTOR. PROSPECTIVE SUBSCRIBERS SHOULD
REVIEW EXHIBIT C AND CONSIDER THE HIGHLY SPECULATIVE AND ILLIQUID NATURE
OF AN INVESTMENT IN THE FUND AS WELL AS THE HIGH RISK AND HIGHLY LEVERAGED
NATURE OF THE FINANCIAL INSTRUMENT MARKETS IN DETERMINING WHETHER AN
INVESTMENT IN THE FUND IS CONSISTENT WITH THEIR OVERALL PORTFOLIO
OBJECTIVES AND BEFORE DETERMINING WHETHER TO SUBSCRIBE FOR UNITS.
C. The Selling Agents
The Units are offered for sale through broker-dealers, referred to
herein as Selling Agents, on a best efforts basis without any firm
underwriting commitment. The offering is made in accordance with the
Selling Agreements between the Fund and each Selling Agent. Certain
foreign dealers may elect to participate in the offering as Selling
Agents. Campbell & Company may terminate the offering at any time.
Selling commissions will not be paid from the proceeds of this
offering. Rather, the Selling Agents will receive from Campbell & Company,
as general partner, an amount up to 4% of the subscription amount as to
any Units sold. Campbell & Company also will pay ongoing payments to the
Selling Agents (or their assignees) which are registered as "futures
commission merchants" or "introducing brokers" (or obtain such
registration prior to commencement of such ongoing payments) in return for
continuing services to the Limited Partners of up to 4% per annum of the
month-end Net Asset Value of Units which remain outstanding beginning at
the end of the thirteenth full month after the Units were sold. Such
Selling Agents may pay all or a portion of such ongoing payments to
account executives who are also registered with the CFTC and have passed
all applicable proficiency requirements.
Selling Agents and registered representatives who are not registered
with the CFTC as described above may receive additional selling
commissions from Campbell & Company, paid on the same basis as the ongoing
payments, provided that the total of such additional selling commissions
plus the initial 4% selling commission, salaries, expenses and bonuses of
employees of Campbell & Company engaged in wholesaling activities and per
Unit offering costs properly deemed to constitute costs allocable to the
Selling Agents (such as a selling brochure, seminar costs and travel
expenses) do not exceed 10% of such Units' initial sale price. Such
ongoing payments, salaries and bonuses and additional selling commissions
may be deemed to constitute underwriting compensation.
H. Beck, Inc., a registered broker-dealer, solicits other
broker-dealers to become Selling Agents of the Fund, i.e., it acts as a
wholesaler. As such, H. Beck, Inc. does not act as an "underwriter" or
"promoter" as defined in the Securities Act of 1933 and the regulations
thereunder. The Selling Agents, and not H. Beck, Inc., have responsibility
with respect to the solicitation of prospective investors, including
determination of suitability of such investors. As compensation for its
activities, H. Beck, Inc. receives one-fourth of the selling commissions
otherwise payable to the Selling Agents. In the future, other
broker-dealers may be engaged by the Fund to conduct wholesaling
activities. Certain employees of Campbell & Company will provide
wholesaling services as well and will receive compensation therefor. The
maximum annual aggregate amount of such compensation is estimated at
$350,000.
Certain of the offering expenses paid by Campbell & Company might be
deemed to constitute costs properly allocated to the accounts of the
Selling Agents. Such costs will, for example, cover the expenses of
producing a selling brochure, organizing certain seminars and related
travel expenses. Such costs are estimated at approximately $50,000, and in
no event shall the aggregate amount of (i) such costs and (ii) the selling
commission exceed 10% of the gross proceeds of the offering of the Units,
plus an additional 0.5% of such proceeds in respect of reimbursement of
bona fide due diligence expenses.
Other than as described above, no person is paid or will be paid any
commissions or other fees by the Fund, Campbell & Company or any affiliate
of the foregoing in connection with the solicitation of purchases for
Units.
Campbell & Company will pay the Fund's offering expenses related to the
Continuing Offering and will be reimbursed, without interest, by the Fund
in 30-month installment periods throughout the Continuing Offering
Period. Such reimbursement, however, will not exceed 2.5% of the aggregate
subscriptions accepted by Campbell & Company as general partner.
Organization and offering expenses related to the Initial Offering are
being reimbursed in the same manner. See "Charges to the Fund Offering
Expenses".
In the Selling Agreement with each Selling Agent, Campbell & Company
has agreed to indemnify the Selling Agents against certain liabilities
that the Selling Agents may incur in connection with the offering and sale
of the Units, including liabilities under the Securities Act of 1933, as
amended.
SECTION 18. CERTAIN LEGAL MATTERS
Legal matters in connection with the Units being offered hereby will be
passed upon for Campbell & Company and the Fund by Foley & Lardner,
Chicago, Illinois. In the future, Foley & Lardner may advise Campbell &
Company (and its affiliates) with respect to its responsibilities as
general partner and trading advisor of, and with respect to, matters
relating to the Fund. The statements under "Federal Income Tax Aspects"
have been reviewed by Foley & Lardner.
SECTION 19. EXPERTS
The financial statements of the Fund as of and for the years ended
December 31, 1995 and 1994 and for the period May 11, 1993 (inception) to
December 31, 1993 and the balance sheet of Campbell & Company, Inc. as of
December 31, 1995, included in this Prospectus, have been audited by
Arthur F. Bell, Jr. & Associates, L.L.C., independent auditors, as stated
in their reports appearing herein. Such audited statements have been so
included in reliance upon such reports respectively, given upon the
authority of that firm as experts in auditing and accounting.
The financial statements of the Fund as of April 30, 1996 and for the
three months ended March 31, 1996 and 1995 and the balance sheet of
Campbell & Company, Inc. as of March 31, 1996 are unaudited. In the
opinion of Campbell & Company, Inc., such unaudited statements reflect all
adjustments, which were of a normal and recurring nature, necessary for a
fair presentation of financial position and results of operations.
SECTION 20. ADDITIONAL INFORMATION
This Prospectus constitutes part of the Registration Statement filed by
the Fund with the Securities and Exchange Commission in Washington, D.C.
This Prospectus does not contain all of the information set forth in such
Registration Statement, certain portions of which have been omitted
pursuant to the rules and regulations of the Securities and Exchange
Commission including, without limitation, certain exhibits thereto (for
example, the forms of the Selling Agreement, the Advisory Agreement and
the Customer Agreement). The descriptions contained herein of agreements
included as exhibits to the Registration Statement are necessarily
summaries, and the exhibits themselves may be inspected without charge at
the public reference facilities maintained by the Commission in
Washington, D.C., and copies of all or part thereof may be obtained from
the Commission upon payment of the prescribed fees.
SECTION 21 INDEX TO FINANCIAL STATEMENTS
Page
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
Monthly Report of Partnership Activities (unaudited) . . . . 52
Unaudited Financial Statements for the Periods Ended March
31, 1996 and 1995, including Audited Statement of
Financial Condition as of December 31, 1995 . . . . . . . 53
Notes to Unaudited Financial Statements . . . . . . . . . . 56
Independent Auditor's Report . . . . . . . . . . . . . . . . 60
Audited Statements of Financial Condition as of
December 31, 1995 and 1994 . . . . . . . . . . . . . . . . 61
Audited Statements of Operations for the Years Ended
December 31, 1995 and 1994 and for the period May 11,
1993 (inception) to December 31, 1993 . . . . . . . . . . 62
Audited Statements of Changes in Partners' Capital for the
Years Ended December 31, 1995 and 1994 and for the
period May 11, 1993 (inception) to December 31, 1993 . . . 63
Notes to Audited Financial Statements . . . . . . . . . . . 64
CAMPBELL & COMPANY, INC.
Unaudited Balance Sheet as ofMarch 31, 1996 . . . . . . . . 68
Notes to Unaudited Balance Sheet . . . . . . . . . . . . . . 69
Independent Auditor's Report . . . . . . . . . . . . . . . . 74
Audited Balance Sheet as of December 31, 1995 . . . . . . . 75
Notes to Audited Balance Sheet . . . . . . . . . . . . . . . 76
Schedules are omitted for the reason that they are not required or
are not applicable or that equivalent information has been included in the
financial statements or notes thereto.
<PAGE>
MONTHLY REPORT - APRIL , 1996
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
The net asset value of each unit as of April 30, 1996
was $1,048.88, up 3.59% from $1,012.55 per unit
as of March 31, 1996.
STATEMENT OF CHANGES IN NET ASSET VALUE
Net Asset Value (50,188.970 units)
at March 31, 1996 $ 50,818,716
Additions of 3,560.510 units
on April 30, 1996 3,734,543
Redemptions of 656.757 units
on April 30, 1996 (688,859)
Offering Costs (47,691)
Net Income (Loss) - April , 1996 1,871,323
-----------
Net Asset Value (53,092.723 units) at
April 30, 1996 $ 55,688,032
==========
Net Asset Value per Unit at April 30, 1996 $ 1,048.88
==========
STATEMENT OF INCOME (LOSS)
INCOME:
Gains (losses) on commodity futures
and options contracts
Realized $ 862,693
Change in unrealized 155,977
Gains (losses) on forward contracts
Realized 0
Change in unrealized 1,013,476
Interest income 213,854
---------
2,246,000
EXPENSES:
Brokerage fee 353,304
Other trading fees 0
Incentive fee 0
Operating expenses 21,373
----------
374,677
----------
NET INCOME (LOSS) $ 1,871,323
==========
To the best of my knowledge and belief, this statement is accurate and
complete.
/s/ Theresa D. Livesey
Theresa D. Livesey, Chief Financial Officer
Campbell & Company, Inc.
Campbell Strategic Allocation Fund, L.P.
<PAGE>
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
STATEMENTS OF FINANCIAL CONDITION
March 31, 1996 (Unaudited) and December 31, 1995 (Audited)
March 31, December 31,
1996 1995
ASSETS
Equity in broker trading accounts
Cash $ 2,998,121 $ 1,238,207
United States government securities 7,206,171 7,205,197
Unrealized gain on open futures
contracts 2,147,034 2,798,738
---------- ----------
Deposits with broker 12,351,326 11,242,142
Cash and cash equivalents 35,747,275 32,491,237
United States government securities 2,980,937 2,985,505
Unrealized gain (loss) on open forward
contracts 997,239 (227,297)
---------- ----------
Total assets $52,076,777 $46,491,587
========== ==========
LIABILITIES
Accounts payable $ 26,233 $ 31,699
Brokerage fee 328,846 301,006
Redemptions payable 555,907 1,018,007
Offering costs payable 42,931 37,187
Subscription deposits 304,144 30,154
--------- ---------
Total liabilities 1,258,061 1,418,053
--------- ---------
PARTNERS' CAPITAL (Net Asset Value)
General Partner - 472.222 units
outstanding at March 31, 1996 and
December 31,1995 478,147 459,018
Limited Partners - 49,716.748 and
45,897.894 units outstanding at
March 31, 1996 and December 31, 1995 50,340,569 44,614,516
---------- ----------
Total partners' capital
(Net Asset Value) 50,818,716 45,073,534
---------- ----------
$52,076,777 $46,491,587
========== ==========
See accompanying notes.
<PAGE>
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1996 and 1995
(Unaudited)
1996 1995
INCOME
Trading gains (losses)
Realized $ 1,928,119 $ (190,588)
Change in unrealized 572,831 2,358,589
--------- ---------
Gain from trading
2,500,950 2,168,001
Interest income 580,444 303,491
----------- ----------
Total income 3,081,394 2,471,492
----------- ----------
EXPENSES
Brokerage fee 951,528 443,234
Operating expenses 46,937 49,894
---------- ----------
Total expenses 998,465 493,128
---------- ----------
NET INCOME $ 2,082,929 $ 1,978,364
========= ==========
NET INCOME PER GENERAL
AND LIMITED PARTNER UNIT
(based on weighted average
number of units outstanding
during the period) $ 44.19 $ 80.34
======== =========
INCREASE IN NET ASSET
VALUE PER GENERAL
AND LIMITED PARTNER UNIT $ 40.51 $ 71.18
======== =========
See accompanying notes.
<PAGE>
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (NET ASSET VALUE)
For the Three Months Ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Partners' Capital
General Limited Total
Units Amount Units Amount Units Amount
<S> <C> <C> <C> <C> <C> <C>
Months Ended
March 31, 1996
Balances at
December 31, 1995 472.222 $ 459,018 45,897.894 $44,614,516 46,370.116 $45,073,534
Additions 0.000 0 5,723.443 5,713,169 5,723.443 5,713,169
Net income for the
three months ended
March 31, 1996 20,420 2,062,509 2,082,929
Redemptions 0.000 0 (1,904.589) (1,922,123) (1,904.589) (1,922,123)
Offering costs (1,291) (127,502) (128,793)
-------- --------- -------- --------- ---------- ---------
Balances at
March 31, 1996 472.222 $ 478,147 49,716.748 $50,340,569 50,188.970 $50,818,716
======== ========= ========== ========== ========== ==========
Three Months Ended
March 31, 1995
Balances at
December 31, 1994 253.300 $ 223,859 23,055.320 $20,375,537 23,308.620 $20,599,396
Additions 52.359 50,000 4,757.438 4,228,077 4,809.797 4,278,077
Net income for the
three months ended
March 31, 1996 18,657 1,959,707 1,978,364
Redemptions 0.000 0 (762.575) (671,493) (762.575) (671,493)
Offering Costs (627) (60,216) (60,843)
--------- --------- ---------- --------- ---------- ----------
Balances at
March 31, 1995 305.659 $ 291,889 27,050.183 $25,831,612 27,355.842 $26,123,501
========= ========= ========== ========== ========== ==========
</TABLE>
Net Asset Value Per Unit
March 31 December 31, March 31, December 31,
1996 1995 1995 1994
$ 1,012.55 $ 972.04 $ 954.95 $ 883.77
See accompanying notes.
<PAGE>
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. General Description of the Partnership
Campbell Strategic Allocation Fund, L.P. (the Partnership) is
a Delaware limited partnership which operates as a commodity
investment pool. The Partnership was formed on May 11, 1993
and commenced trading on April 18, 1994.
B. Regulation
As a registrant with the Securities and Exchange Commission,
the Partnership is subject to the regulatory requirements
under the Securities Acts of 1933 and 1934. As a commodity
investment pool, the Partnership is subject to the regulations
of the Commodity Futures Trading Commission, an agency of the
United States (U.S.) government which regulates most aspects
of the commodity futures industry, rules of the National
Futures Association, an industry self-regulatory organization,
and the requirements of the various commodity exchanges where
the Partnership executes transactions. Additionally, the
Partnership is subject to the requirements of Futures
Commission Merchants (brokers) and interbank market makers
through which the Partnership trades.
C. Method of Reporting
The Partnership's financial statements are presented in
accordance with generally accepted accounting principles,
which require the use of certain estimates made by the
Partnership's management. Gains or losses are realized when
contracts are liquidated. Net unrealized gain or loss on open
contracts (the difference between contract purchase price and
market price) is reported in the statement of financial
condition in accordance with Financial Accounting Standards
Board Interpretation No.39. Any change in net unrealized gain
or loss from the preceding period is reported in the statement
of operations. United States government securities are stated
at cost plus accrued interest, which approximates market
value.
D. Cash and Cash Equivalents
Cash and cash equivalents includes cash and short-term
investments in fixed income securities held at a financial
institution.
E. Income Taxes
The Partnership prepares calendar year U.S. and state
information tax returns and reports to the partners their
allocable shares of the Partnership's income, expenses and
trading gains or losses.
F. Offering Costs
The General Partner has advanced the Partnership the costs
incurred in connection with the initial offering of Units
(initial offering costs) of $240,961 and additional costs
incurred through March 31, 1996 in connection with the
subsequent offering of Units (continuous offering costs) of
$1,579,774. The General Partner is reimbursed by the
Partnership for such advanced amounts in approximately 30
equal installments commencing after the close of the initial
offering (for initial offering costs advanced) and throughout
the continuous offering (for continuous offering costs
advanced). Reimbursement for such advanced costs is limited to
2.5% of the aggregate subscriptions accepted during the
initial and continuous offerings. If the Partnership
terminates prior to completion of reimbursement to the General
Partner, the General Partner will not be entitled to any
additional reimbursement and the Partnership will have no
further obligation to the General Partner. The amount of
monthly reimbursement due to the General Partner is charged
directly to partners' capital.
G. Foreign Currency Transactions
The Partnership's functional currency is the U.S. dollar;
however, it transacts business in currencies other than the
U.S. dollar. Assets and liabilities denominated in currencies
other than the U.S. dollar are translated into U.S. dollars at
the rates in effect at the date of the statement of financial
condition. Income and expense items denominated in currencies
other than the U.S. dollar are translated into U.S. dollars at
the rates in effect during the period. Gains and losses
resulting from the translation to U.S. dollars are reported in
income currently.
Note 2. GENERAL PARTNER AND COMMODITY TRADING ADVISOR
The General Partner of the Partnership is Campbell & Company,
Inc., which conducts and manages the business of the
Partnership. The General Partner is also the commodity trading
advisor of the Partnership. The Amended Agreement of Limited
Partnership provides that the General Partner may make
withdrawals of its Units, provided that such withdrawals do not
reduce the General Partner's aggregate percentage interest in
the Partnership to less than 1% of the net aggregate
contributions.
The General Partner is required by the Amended Agreement of
Limited Partnership to maintain a net worth equal to at least 5%
of the capital contributed by all the limited partnerships for
which it acts as general partner, including the Partnership.
The minimum net worth shall in no case be less than $50,000 nor
shall net worth in excess of $1,000,000 be required.
The Partnership pays a monthly brokerage fee equal to 1/12 of 8%
(8% annualized) of month-end net assets. The General Partner
receives 7/8 of this fee, a portion (4/8 of the total brokerage
fee) of which is used to compensate selling agents for ongoing
services rendered and a portion (3/8 of the total brokerage fee)
of which is retained by the General Partner for trading and
management services rendered. The remaining 1/8 of the
brokerage fee is paid directly to the broker. During the three
months ended March 31, 1996 and 1995, the amounts paid directly
to the broker amounted to $118,941 and $55,404 respectively.
The General Partner is also paid a quarterly performance fee of
20% of the Partnership's aggregate cumulative appreciation in
the Net Asset Value per Unit, exclusive of appreciation
attributable to interest income.
Note 3. DEPOSITS WITH BROKER
The Partnership deposits funds with a broker subject to
Commodity Futures Trading Commission regulations and various
exchange and broker requirements. Margin requirements are
satisfied by the deposit of U.S. Treasury bills and cash with
such broker. The Partnership earns interest income on its
assets deposited with the broker.
Note 4. OPERATING EXPENSES
Operating expenses of the Partnership are limited by the Amended
Agreement of Limited Partnership to .5% per year of the average
month-end Net Asset Value of the Partnership. Actual operating
expenses were less than .5% (annualized) for the three months
ended March 31, 1996 and 1995.
Note 5. SUBSCRIPTIONS, DISTRIBUTIONS AND REDEMPTIONS
Investments in the Partnership are made by subscription
agreement, subject to acceptance by the General Partner. As of
March 31, 1996 and December 31, 1995, amounts received by the
Partnership by prospective limited partners who have not yet
been admitted to the Partnership by the General Partner amount
to $304,144 and $30,154, respectively.
The Partnership is not required to make distributions, but may
do so at the sole discretion of the General Partner. A Limited
Partner may request and receive redemption of Units owned after
the sixth full month after the Units are sold, subject to
restrictions in the Amended Agreement of Limited Partnership.
Note 6. TRADING ACTIVITIES AND RELATED RISKS
The Partnership engages in the speculative trading of U.S. and
foreign futures contracts and forward contracts (collectively,
"derivatives"). These derivatives include both financial and
non-financial contracts held as part of a diversified trading
program. The Partnership is exposed to both market risk, the
risk arising from changes in the market value of the contracts,
and credit risk, the risk of failure by another party to perform
according to the terms of a contract.
Purchase and sale of futures contracts requires margin deposits
with the broker. The Commodity Exchange Act requires a broker
to segregate all customer transactions and assets from such
broker's proprietary activities. A customer's cash and other
property (for example, U.S. Treasury bills) deposited with a
broker are considered commingled with all other customer funds
subject to the broker's segregation requirements. In the event
of a broker's insolvency, recovery may be limited to a pro rata
share of segregated funds available. It is possible that the
recovered amount could be less than total cash and other
property deposited.
The amount of required margin and good faith deposits with
brokers and interbank market makers usually range from 20% to
35% of Net Asset Value. The market value of securities held to
satisfy such requirements at March 31, 1996 and December 31,
1995 was $10,187,108 and $10,190,702, respectively, which equals
20% and 23% of Net Asset Value, respectively.
The Partnership trades forward contracts in unregulated markets
between principals and assumes the risk of loss from
counterparty nonperformance. Additionally, the trading of
forward contracts typically involves delayed cash settlement.
At March 31, 1996, the Partnership has approximately $2,700,000
of its cash on deposit with a financial institution. In the
event of a financial institution's insolvency, recovery of
Partnership assets on deposit may be limited to account
insurance or other protection afforded such deposits. In the
normal course of business, the Partnership requires collateral
for repurchase agreements.
For derivatives, risks arise from changes in the market value of
the contracts. Theoretically, the Partnership is exposed to a
market risk equal to the value of futures and forward contracts
purchased and unlimited liability on such contracts sold short.
The fair value of derivatives represents unrealized gains and
losses on open futures and forward contracts. The average fair
value of derivatives during the three months ended March 31,
1996 was approximately $3,006,000 and the related period end
fair value is approximately $3,144,000.
Net trading income from derivatives is reflected in the
statement of operations and equals gain (loss) from trading less
the portion of the brokerage fee paid directly to the broker.
Such trading income reflects the net gain (loss) arising from
the Partnership's speculative trading of futures and forward
contracts.
Open contracts generally mature within three months; the latest
maturity date for open contracts as of March 31, 1996 is June
1996. However, the Partnership intends to close all contracts
prior to maturity. At March 31, 1996 and December 31, 1995, the
notional amount of open contracts is as follows:
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
Contracts to Contracts to Contracts to Contracts to
Purchase Sell Purchase Sell
<S> <C> <C> <C> <C>
Derivatives:
Futures contracts:
- Long-term interest rates $ 5,500,000 $186,100,000 $ 148,500,000 $ 0
- Short-term interest rates 0 255,300,000 105,700,000 34,800,000
- Currencies 3,900,000 11,800,000 700,000 11,900,000
- Stock indices 477,800,000 5,900,000 10,500,000 0
- Softs/Fibers 1,600,000 0 0 3,900,000
- Grains 500,000 0 1,300,000 400,000
- Meats 600,000 0 400,000 0
- Metals 20,900,000 14,100,000 9,700,000 10,800,000
- Energy 11,100,000 0 10,400,000 0
Forward contracts:
- Currencies 52,800,000 66,700,000 42,600,000 84,900,000
---------- ---------- ---------- ----------
$574,700,000 $539,900,000 $329,800,000 $146,700,000
=========== =========== =========== ===========
</TABLE>
The above amounts do not represent the Partnership's risk of loss
due to market and credit risk, but rather represent the
Partnership's extent of involvement in derivatives at the date of
the statement of financial condition.
The General Partner has established procedures to actively monitor
and minimize market and credit risk. The Limited Partners bear
the risk of loss only to the extent of the market value of their
respective investments and, in certain specific circumstances,
distributions and redemptions received.
Note 7. INTERIM FINANCIAL STATEMENTS
The Statement of Financial Condition as of March 31, 1996, the
Statements of Operations for the three months ended March 31,
1996 and 1995 and the Statements of Changes in Partners'
Capital (Net Asset Value) for the three months ended March 31,
1996 and 1995 are unaudited. In the opinion of management, such
financial statements reflect all adjustments, which were of a
normal and recurring nature, necessary for a fair presentation
of financial position as of March 31, 1996 and the results of
operations for the three months ended March 31, 1996 and 1995.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Partners
Campbell Strategic Allocation Fund, L.P.
We have audited the accompanying statements of financial condition of
Campbell Strategic Allocation Fund, L.P. as of December 31, 1995 and 1994,
and the related statements of operations and changes in partners' capital
(net asset value) for the years ended December 31, 1995 and 1994 and for
the period May 11, 1993 (inception) to December 31, 1993. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Campbell Strategic
Allocation Fund, L.P. as of December 31, 1995 and 1994, and the results of
its operations and the changes in its net asset values for the years ended
December 31, 1995 and 1994 and for the period May 11, 1993 (inception) to
December 31, 1993, in conformity with generally accepted accounting
principles.
ARTHUR F. BELL, JR. & ASSOCIATES, L.L.C.
Lutherville, Maryland
January 29, 1996
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
STATEMENTS OF FINANCIAL CONDITION
December 31, 1995 and 1994
1995 1994
ASSETS
Equity in broker trading accounts
Cash $ 1,238,207 $ 1,431,616
United States government securities 7,205,197 13,213,659
Unrealized gain on open futures
contracts 2,798,738 125,445
---------- ----------
Deposits with broker 11,242,142 14,770,720
Cash and cash equivalents 32,491,237 1,413,579
United States government securities 2,985,505 5,089,458
Unrealized (loss) on open forward
contracts (227,297) (208,117)
---------- ----------
Total assets $46,491,587 $21,065,640
========== ==========
LIABILITIES
Accounts payable $ 31,699 $ 11,672
Brokerage fee 301,006 130,882
Redemptions payable 1,018,007 54,835
Offering costs payable 37,187 16,630
Subscription deposits 30,154 252,225
Total liabilities 1,418,053 466,244
PARTNERS' CAPITAL (Net Asset Value)
General Partner - 472.222 and 253.300
units outstanding at December 31,
1995 and 1994 459,018 223,859
Limited Partners - 45,897.894 and
23,055.320 units outstanding at
December 31, 1995 and 1994 44,614,516 20,375,537
----------- -----------
Total partners' capital
(Net Asset Value) 45,073,534 20,599,396
----------- -----------
$46,491,587 $21,065,640
========= ==========
See accompanying notes.
<PAGE>
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1995 and 1994 and
For the Period May 11, 1993 (inception) to December 31, 1993
1995 1994 1993
INCOME
Trading gains (losses)
Realized $ 1760,402 $(1,642,526) $ 0
Change in unrealized 2,654,113 (82,672) 0
--------- ---------- ---------
Gain (loss) from trading 4,414,515 (1,725,198) 0
Interest income 1,786,353 509,876 0
---------- ---------- ---------
Total income (loss) 6,200,868 (1,215,322) 0
---------- ---------- ---------
EXPENSES
Brokerage fee 2,536,004 922,580 0
Performance fee 0 69,386 0
Operating expenses 155,631 28,349 0
----------- ---------- ---------
Total expenses 2,691,635 1,020,315 0
----------- ---------- ---------
NET INCOME (LOSS) $ 3,509,233 $(2,235,637) $ 0
=========== ========== =========
NET INCOME (LOSS) PER GENERAL
AND LIMITED PARTNER UNIT
(based on weighted
average number of units
outstanding during the
period) $ 103.74 $ (133.42) $ 0
========= ========== ==========
INCREASE (DECREASE) IN NET
ASSET VALUE PER GENERAL
AND LIMITED PARTNER UNIT $ 88.27 $ (116.23) $ 0
========= ========== ==========
See accompanying notes.
<PAGE>
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (NET ASSET VALUE)
For the Years Ended December 31, 1995 and 1994 and
For the Period May 11, 1993 (inception) to December 31, 1993
<TABLE>
<CAPTION>
Partners' Capital
General Limited Total
Units Amount Units Amount Units Amount
<S> <C> <C> <C> <C> <C> <C>
Balances at
May 11, 1993 (inception) 0.000 $ 0 0.000 $ 0 0.000 $ 0
Additions 1.000 1,000 1.000 1,000 2.000 2,000
--------- ---------- ---------- --------- --------- ---------
Balances at
December 31, 1993 1.000 1,000 1.000 1,000 2.000 2,000
Additions 252.300 251,000 24,571.582 24,147,383 24,823.882 24,398,383
Net (loss) for the year
ended December 31, 1994 (26,836) (2,208,801) (2,235,637)
Redemptions 0.000 0 (1,517.262) (1,460,972) (1,517.262) (1,460,972)
Offering costs (1,305) (103,073)
--------- --------- ---------- ---------- ---------- ----------
Balances at
December 31, 1994 253.300 223,859 23,055.320 20,375,537 23,308.620 20,599,396
Net income for the year
ended December 31, 1995 33,569 3,475,664 3,509,233
Additions 218.922 205,000 29,148.037 26,977,425 29,366.959 27,182,425
Redemptions 0.000 0 (6,305.463) (5,885,426) (6,305.463) (5,885,426)
Offering costs (3,410) (328,684)
--------- -------- ---------- ---------- ----------- ---------
Balances at
December 31, 1995 472.222 $459,018 45,897.894 $44,614,516 46,370.116 $45,073,534
======== ======== ========== ========== ========== ==========
</TABLE>
Net Asset Value Per General and Limited Partner Unit
December 31,
1995 1994 1993
$972.04 $883.77 $1,000.00
======= ======= =========
See accompanying notes.
<PAGE>
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. General Description of the Partnership
Campbell Strategic Allocation Fund, L.P. (the Partnership) is a
Delaware limited partnership which operates as a commodity
investment pool. The Partnership was formed on May 11, 1993 and
commenced trading on April 18, 1994.
B. Regulation
As a registrant with the Securities and Exchange Commission, the
Partnership is subject to the regulatory requirements under the
Securities Acts of 1933 and 1934. As a commodity investment
pool, the Partnership is subject to the regulations of the
Commodity Futures Trading Commission, an agency of the United
States (U.S.) government which regulates most aspects of the
commodity futures industry, rules of the National Futures
Association, an industry self-regulatory organization, and the
requirements of the various commodity exchanges where the
Partnership executes transactions. Additionally, the
Partnership is subject to the requirements of Futures Commission
Merchants (brokers) and interbank market makers through which
the Partnership trades.
C. Method of Reporting
The Partnership's financial statements are presented in
accordance with generally accepted accounting principles, which
require the use of certain estimates made by the Partnership's
management. Gains or losses are realized when contracts are
liquidated. Net unrealized gain or loss on open contracts (the
difference between contract purchase price and market price) is
reported in the statement of financial condition in accordance
with Financial Accounting Standards Board Interpretation No. 39.
Any change in net unrealized gain or loss from the preceding
period is reported in the statement of operations. United
States government securities are stated at cost plus accrued
interest, which approximates market value.
D. Cash and Cash Equivalents
Cash and cash equivalents includes cash and short-term
investments in fixed income securities held at a financial
institution.
E. Income Taxes
The Partnership prepares calendar year U.S. and state
information tax returns and reports to the partners their
allocable shares of the Partnership's income, expenses and
trading gains or losses.
F. Offering Costs
The General Partner has advanced the Partnership the costs
incurred in connection with the initial offering of Units
(initial offering costs) of $240,961 and additional costs
incurred through December 31, 1995 in connection with the
subsequent offering of Units (continuous offering costs) of
$1,466,397. The General Partner is reimbursed by the
Partnership for such advanced amounts in approximately 30 equal
installments commencing after the close of the initial offering
(for initial offering costs advanced) and throughout the
continuous offering (for continuous offering costs advanced).
Reimbursement for such advanced costs is limited to 2.5% of the
aggregate subscriptions accepted during the initial and
continuous offerings. If the Partnership terminates prior to
completion of reimbursement to the General Partner, the General
Partner will not be entitled to any additional reimbursement and
the Partnership will have no further obligation to the General
Partner.
The amount of monthly reimbursement due to the General Partner
is charged directly to partners' capital.
G. Foreign Currency Transactions
The Partnership's functional currency is the U.S. dollar;
however, it transacts business in currencies other than the U.S.
dollar. Assets and liabilities denominated in currencies other
than the U.S. dollar are translated into U.S. dollars at the
rates in effect at the date of the statement of financial
condition. Income and expense items denominated in currencies
other than the U.S. dollar are translated into U.S. dollars at
the rates in effect during the period. Gains and losses
resulting from the translation to U.S. dollars are reported in
income currently.
Note 2. GENERAL PARTNER AND COMMODITY TRADING ADVISOR
The General Partner of the Partnership is Campbell & Company, Inc.,
which conducts and manages the business of the Partnership. The
General Partner is also the commodity trading advisor of the
Partnership. The Amended Agreement of Limited Partnership provides
that the General Partner may make withdrawals of its Units,
provided that such withdrawals do not reduce the General Partner's
aggregate percentage interest in the Partnership to less than 1% of
the net aggregate contributions.
The General Partner is required by the Amended Agreement of Limited
Partnership to maintain a net worth equal to at least 5% of the
capital contributed by all the limited partnerships for which it
acts as general partner, including the Partnership. The minimum
net worth shall in no case be less than $50,000 nor shall net worth
in excess of $1,000,000 be required.
The Partnership pays a monthly brokerage fee equal to 1/12 of 8%
(8% annualized) of month-end net assets. The General Partner
receives 7/8 of this fee, a portion (4/8 of the total brokerage
fee) of which is used to compensate selling agents for ongoing
services rendered and a portion (3/8 of the total brokerage fee) of
which is retained by the General Partner for trading and management
services rendered. The remaining 1/8 of the brokerage fee is paid
directly to the broker. During 1995 and 1994, the amounts paid
directly to the broker amounted to $317,000 and $115,323,
respectively.
The General Partner is also paid a quarterly performance fee of 20%
of the Partnership's aggregate cumulative appreciation in the Net
Asset Value per Unit, exclusive of appreciation attributable to
interest income.
Note 3. DEPOSITS WITH BROKER
The Partnership deposits funds with a broker subject to Commodity
Futures Trading Commission regulations and various exchange and
broker requirements. Margin requirements are satisfied by the
deposit of U.S. Treasury bills and cash with such broker. The
Partnership earns interest income on its assets deposited with the
broker.
Note 4. OPERATING EXPENSES
Operating expenses of the Partnership are limited by the Amended
Agreement of Limited Partnership to .5% per year of the average
month-end Net Asset Value of the Partnership. Actual operating
expenses were less than .5% (annualized) for the year ended
December 31, 1995 and for the period April 18, 1994 (commencement
of operations) to December 31, 1994.
Note 5. SUBSCRIPTIONS, DISTRIBUTIONS AND REDEMPTIONS
Investments in the Partnership are made by subscription agreement,
subject to acceptance by the General Partner. As of December 31,
1995 and 1994, amounts received by the Partnership by prospective
limited partners who have not yet been admitted to the Partnership
by the General Partner total $30,154 and $252,225, respectively.
The Partnership is not required to make distributions, but may do
so at the sole discretion of the General Partner. A Limited
Partner may request and receive redemption of Units owned after the
sixth full month after Units are sold, subject to restrictions in
the Amended Agreement of Limited Partnership.
Note 6. TRADING ACTIVITIES AND RELATED RISKS
The Partnership engages in the speculative trading of U.S. and
foreign futures contracts and forward contracts (collectively,
"derivatives"). These derivatives include both financial and non-
financial contracts held as part of a diversified trading program.
The Partnership is exposed to both market risk, the risk arising
from changes in the market value of the contracts, and credit risk,
the risk of failure by another party to perform according to the
terms of a contract.
Purchase and sale of futures contracts requires margin deposits
with the broker. The Commodity Exchange Act requires a broker to
segregate all customer transactions and assets from such broker's
proprietary activities. A customer's cash and other property (for
example, U.S. Treasury bills) deposited with a broker are
considered commingled with all other customer funds subject to the
broker's segregation requirements. In the event of a broker's
insolvency, recovery may be limited to a pro rata share of
segregated funds available. It is possible that the recovered
amount could be less than total cash and other property deposited.
The amount of required margin and good faith deposits with brokers
and interbank market makers usually range from 20% to 35% of Net
Asset Value. The market value of securities held to satisfy such
requirements at December 31, 1995 was $10,190,702, which equals 23%
of Net Asset Value.
The Partnership trades forward contracts in unregulated markets
between principals and assumes the risk of loss from counterparty
nonperformance. Additionally, the trading of forward contracts
typically involves delayed cash settlement.
At December 31, 1995, the Partnership has approximately $1,300,000
of its cash on deposit with a financial institution. In the event
of a financial institution's insolvency, recovery of Partnership
assets on deposit may be limited to account insurance or other
protection afforded such deposits. In the normal course of
business, the Partnership requires collateral for repurchase
agreements.
For derivatives, risks arise from changes in the market value of
the contracts. Theoretically, the Partnership is exposed to a
market risk equal to the value of futures and forward contracts
purchased and unlimited liability on such contracts sold short.
The fair value of derivatives represents unrealized gains and
losses on open futures and forward contracts. The average fair
value of derivatives during 1995 was approximately $831,000 and the
related year end fair value is approximately $2,571,000.
Net trading income from derivatives is reflected in the statement
of operations and equals gain (loss) from trading less the portion
of the brokerage fee paid directly to the broker. Such trading
income reflects the net gain (loss) arising from the Partnership's
speculative trading of futures and forward contracts.
Open contracts generally mature within three months; the latest
maturity date for open contracts as of December 31, 1995 is March
1996. However, the Partnership intends to close all contracts
prior to maturity. At December 31, 1995 and 1994, the notional
amount of open contracts is as follows:
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
Contracts to Contracts to Contracts to Contracts to
Purchase Sell Purchase Sell
<S> <C> <C> <C> <C>
Derivatives:
Futures contracts:
- Long-term interest rates $148,500,000 $ 0 $ 7,700,000 $ 11,500,000
- Short-term interest rates 105,700,000 34,800,000 0 71,200,000
- Currencies 700,000 11,900,000 0 0
- Stock indices 10,500,000 0 0 0
- Softs/Fibers 0 3,900,000 0 0
- Grains 1,300,000 400,000 0 0
- Meats 400,000 0 0 0
- Metals 9,700,000 10,800,000 1,400,000 3,000,000
- Energy 10,400,000 0 300,000 2,700,000
Forward contracts:
- Currencies 42,600,000 84,900,000 19,800,000 62,900,000
----------- ----------- ---------- -----------
$329,800,000 $146,700,000 $ 29,200,000 $151,300,000
=========== =========== ========== ===========
</TABLE>
The above amounts do not represent the Partnership's risk of loss
due to market and credit risk, but rather represent the
Partnership's extent of involvement in derivatives at the date of
the statement of financial condition.
The General Partner has established procedures to actively monitor
and minimize market and credit risk. The Limited Partners bear the
risk of loss only to the extent of the market value of their
respective investments and, in certain specific circumstances,
distributions and redemptions received.
<PAGE>
CAMPBELL & COMPANY, INC.
BALANCE SHEET
March 31, 1996
Unaudited
ASSETS
Current assets
Cash and cash equivalents $ 95,762
Accounts receivable
Advisory and performance fees 541,751
Receivable from Campbell Strategic
Allocation Fund, L.P. 1,089,848
Other receivables 20,099
---------
Total current assets 1,747,460
---------
Property and equipment
Furniture and office equipment 1,024,179
Leasehold improvements 85,434
---------
1,109,613
Less accumulated depreciation and
amortization (619,888)
---------
Total property and equipment 489,725
---------
Other assets
Receivable from Campbell Strategic
Allocation Fund, L.P. 762,997
Cash surrender value of life insurance,
net of policy loan of $119,832 48,239
General Partner interests in Limited
Partnerships 603,918
Condominium held for sale 59,161
Other 58,370
---------
Total assets $3,769,870
=========
LIABILITIES
Accounts payable and accrued expenses $ 264,195
Demand notes payable, including $557,786
payable to stockholder 1,224,513
----------
Total liabilities 1,488,708
----------
STOCKHOLDERS' EQUITY
Capital stock
Class A voting, no par, $100 stated
value; 2,500 shares authorized; 100
shares outstanding 10,000
Class B nonvoting, no par, $150 stated
value; 2,500 shares authorized; 5
shares outstanding 750
Additional paid-in capital 46,418
Retained earnings 2,223,994
---------
2,281,162
---------
Total liabilities and
stockholders' equity $3,769,870
=========
THE INVESTOR WILL NOT RECEIVE ANY INTEREST IN THIS COMPANY.
See accompanying notes.
<PAGE>
CAMPBELL & COMPANY, INC.
NOTES TO FINANCIAL STATEMENT
(Unaudited)
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. General
Campbell and Company, Inc. (the Company) earns fees as a
Commodity Trading Advisor registered with and subject to the
regulations of the Commodity Futures Trading Commission, an
agency of the United States (U.S.) government, which regulates
most aspects of the commodity futures industry. It is also
subject to the rules of the National Futures Association, an
industry self-regulatory organization.
The Company's valance sheet is presented in accordance with
generally accepted accounting principles, which require the use
of certain estimates made by the Company's management.
B. Revenue Recognition
Advisory and management fees accrue monthly based on a
percentage of assets under management. Performance fees may be
earned by achieving defined performance objectives.
Performance fees, if any, are recognized as revenue when the
conditions of the performance fee agreement are satisfied.
C. Cash and Cash Equivalents
Cash and cash equivalents consist of cash and investments
readily convertible into cash.
D. Property and Equipment
Property and equipment are stated at cost. Depreciation and
amortization is provided for over the estimated useful lives of
the assets using straight-line and accelerated methods. Such
lives range from 5 to 39 years.
E. Income Taxes
The Company has elected S corporation status, pursuant to which
the Company does not pay U.S. or Maryland income taxes. All
income earned by the Company will be taxable to the stockholders
on an individual basis.
Note 2. GENERAL PARTNER INTERESTS IN LIMITED PARTNERSHIPS
Campbell Strategic Allocation Fund, L.P.
The Company is the General Partner and trading manager of Campbell
Strategic Allocation Fund, L.P. (Strategic). The General Partner
interest is reported at net asset value of $478,148 as of the
balance sheet date.
Summarized financial information with respect to Strategic as of
and for the three months ended March 31, 1996 is as follows:
Balance Sheet Data
Assets $52,076,777
Liabilities (1,258,061)
----------
Net Asset Value $50,818,716
==========
Operating Data
Total income (loss) $ 3,081,394
Total expense (998,465)
----------
Net income (loss) $ 2,082,929
==========
General Partner income (loss) allocation $ 19,130
==========
The Company has committed to maintaining an investment in Strategic
equal to at least 1% of the net aggregate capital contributions of
all partners. The extent of this commitment is dependent on the
subscriptions Strategic receives during the continuing offering
period provided for in Strategic's prospectus. The Company, as
General Partner, has contributed capital of $457,000 to Strategic.
The Company is further bound by Strategic's Amended Agreement of
Limited Partnership to maintain net worth equal to at least 5% of
the capital contributed to all limited partnerships for which the
Company acts as General Partner. The minimum net worth shall in no
case be less than $50,000 nor shall net worth in excess of
$1,000,000 be required.
As General Partner, the Company has agreed to advance funds to
Strategic necessary to pay organization and offering costs related
to Strategic's initial and continuous offerings. The Company is
reimbursed such advanced amounts by Strategic in 30 equal monthly
installments commencing after the closing of the initial offering
and monthly during the continuous offering. Reimbursements for such
advanced costs are limited to 2.5% of the aggregate subscriptions
accepted. As of March 31, 1996, the Company has advanced
$1,820,735 to Strategic for initial and continuing offering costs
incurred for which it has been reimbursed $522,334.
The Company also pays, up-front, a 4% commission to selling agents
for Strategic. The Company is reimbursed by Strategic for this
cost, over twelve months, through a brokerage fee which is based on
the monthly net asset value of Strategic. As of March 31, 1996,
$554,444 in selling agent commissions are subject to future
reimbursement and are included in Receivable from Campbell
Strategic Allocation Fund, L.P. in the balance sheet.
In the event Strategic terminates prior to the completion of any
reimbursement of the above costs, the Company will not be entitled
to any additional reimbursement from Strategic.
Campbell Financial Futures Fund Limited Partnership
The Company has a General Partner interest in Campbell Financial
Futures Fund Limited Partnership (Financial Futures), reported at
net asset value of $125,769 as March 31, 1996.
Summarized financial information with respect to Financial Futures
as of and for the three months ended March 31, 1996 is as follows:
Balance Sheet Data
Assets $ 5,306,875
Liabilities (18,262)
----------
Net Asset Value $ 5,288,613
==========
Operating Data
Total income $ 533,020
Total expense (57,925)
----------
Net income (loss) $ 475,095
==========
General Partner income allocation $ 10,551
==========
Note 3. TRADING ACTIVITIES AND RELATED RISKS
The Limited Partnerships for which the Company is either the
sole General Partner or Co-General Partner engage in the
speculative trading of U.S. and foreign futures contracts,
options on U.S. futures contracts and forward contracts
(collectively, "derivatives"). These derivatives include both
financial and non-financial contracts held as part of a
diversified trading program. The partnerships are exposed to
both market risk, the risk arising from changes in the market
value of the contracts, and credit risk, the risk of failure by
another party to perform according to the terms of a contract.
Purchase and sale of futures and options on futures contracts
requires margin deposits with a broker. Additional deposits may
be necessary for any loss on contract value. The Commodity
Exchange Act requires a broker to segregate all customer
transactions and assets from such broker's proprietary
activities. A customer's cash and other property (for example,
U.S. Treasury bills) deposited with a broker are considered
commingled with all other customer funds subject to the broker's
segregation requirements. In the event of a broker's
insolvency, recovery may be limited to a pro rata share of
segregated funds available. It is possible that the recovered
amount could be less than total cash and other property
deposited. The partnerships also trade forward contracts in
unregulated markets between principals and assume the risk of
loss from counterparty nonperformance.
For derivatives, risks arise from changes in the market value of
the contracts. Theoretically, the partnerships and the Company,
as General Partner, are exposed to a market risk equal to the
value of derivatives purchased and unlimited liability on
derivatives sold short.
The average fair value of derivatives held by the partnerships
during the three months ended March 31, 1996 was approximately
$3,430,000 and the related period end fair value is
approximately $3,447,000. The fair value of derivatives
represents unrealized gains and losses on open futures and
forward contracts and long and short options at market value.
At March 31, 1996, the notional amount of contracts acquired by
the partnerships to purchase totaled approximately $588,000,000
and the notional amount of such contracts to sell totaled
approximately $598,100,000. These amounts do not represent the
partnerships' risk of loss due to market and credit risk, but
rather represent the partnerships' extent of involvement in
derivatives at the balance sheet date.
The Company has established procedures to actively monitor and
minimize market and credit risks.
Note 4. DEMAND NOTES PAYABLE
The Company entered into a general security agreement with a
financial institution in April, 1994 under which secured demand
notes may be executed to fund various costs incurred by the
Company as General Partner of Campbell Strategic Allocation
Fund, L.P. The agreement is continuous until either party
provides notice otherwise. Subject to the lender's demand, the
notes executed under the agreement are payable in twelve equal
monthly installments beginning on the last day of the month of
origination. Interest, also subject to demand, is payable
monthly beginning on the last day of the month of the respective
origination dates at various floating rates based on the London
Interbank Offered Rate (LIBOR), as specified in the agreement.
The weighted average interest rate is approximately 7.76% as
March 31, 1996 for all notes outstanding.
Amounts outstanding under the agreement are secured by all
personal property, other than equipment and fixtures, of the
Company and are guaranteed by a stockholder of the Company. The
agreement also contains certain covenants, including minimum
monthly cash flow requirements, which, if not met, could subject
amounts outstanding under the agreement to accelerated
repayment.
At March 31, 1996, $666,727, including accrued interest, was
outstanding under this agreement.
The Company has also entered into a demand note agreement with a
stockholder of the Company. The agreement is continuous until
either party provides notice otherwise. Interest is payable
quarterly at an annual rate of 8.5%; there is no payment
schedule for the principal balance. At March 31, 1996,
$557,786, including accrued interest, was outstanding under this
agreement.
Note 5. LEASE OBLIGATION
The Company leases office facilities under an agreement which
provides for minimum base annual rentals as outlined below, plus
a proportionate share of operating expenses. The lease expires
August 31, 1998. The Company has the option to renew the lease
for an additional 60 months. Effective July 5, 1995, the
Company is subleasing a portion of its office space through the
remainder of the lease term.
Period ending March 31
1997 $196,957
1998 200,072
1999 83,904
---------
Total base annual rentals 480,933
Less: Sublease income (80,498)
--------
Total net base annual rentals $400,435
========
The Company advanced $23,000 as a security deposit relating to this
lease.
Note 6. PROFIT SHARING PLAN
The Company has established a qualified 401(k) savings and profit
sharing plan (the Plan) for the benefit of its employees. The
Company is the plan administrator and certain Company employees are
trustees of the Plan. Under terms of the Plan, employees may elect
to defer a portion of their compensation. The Company matches
employee contributions up to a maximum of 3.75% of the employees'
compensation. The Company may also make optional additional
contributions to the Plan.
Note 7. INTERIM BALANCE SHEET
The balance sheet as of March 31, 1996 is unaudited. In the
opinion of management, it reflects all adjustments, which were of a
normal and recurring nature, necessary for a fair presentation of
financial position as of March 31, 1996.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Stockholders and Board of Directors
Campbell & Company, Inc.
We have audited the accompanying balance sheet of Campbell & Company, Inc.
as of December 31, 1995. This financial statement is the responsibility of
the Company's management. Our responsibility is to express an opinion on
this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the balance sheet is free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the balance sheet. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall balance sheet presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in
all material respects, the financial position of Campbell & Company, Inc.
as of December 31, 1995, in conformity with generally accepted accounting
principles.
ARTHUR F. BELL, JR. & ASSOCIATES, L.L.C.
Lutherville, Maryland
March 1, 1996
<PAGE>
CAMPBELL & COMPANY, INC.
BALANCE SHEET
December 31, 1995
ASSETS
Current assets
Cash and cash equivalents $ 133,845
Accounts receivable
Advisory and performance fees 417,137
Receivable from Campbell Strategic
Allocation Fund, L.P. 1,306,273
Other receivables 19,798
---------
Total current assets 1,877,053
---------
Property and equipment
Furniture and office equipment 975,174
Leasehold improvements 85,434
----------
1,060,608
Less accumulated depreciation and amortization (581,137)
----------
Total property and equipment 479,471
----------
Other assets
Receivable from Campbell Strategic
Allocation Fund, L.P. 808,968
Cash surrender value of life insurance,
net of policy loans of $119,832 48,239
General Partner interests in Limited Partnerships 574,237
Condominium held for sale 59,738
Other 58,370
---------
Total assets $3,906,076
=========
LIABILITIES
Accounts payable and accrued expenses $ 554,692
Demand notes payable, including $497,000 payable
to stockholder 1,286,389
---------
Total liabilities 1,841,081
---------
STOCKHOLDERS' EQUITY
Capital stock
Class A voting, no par, $100 stated value;
2,500 shares authorized; 100 shares outstanding 10,000
Class B nonvoting, no par, $150 stated value;
2,500 shares authorized; 5 shares outstanding 750
Additional paid-in capital 46,418
Retained earnings 2,007,827
----------
2,064,995
---------
Total liabilities and stockholders' equity $3,906,076
==========
See accompanying notes.
<PAGE>
CAMPBELL & COMPANY, INC.
NOTES TO FINANCIAL STATEMENT
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. General
Campbell and Company, Inc. (the Company) earns fees as a
Commodity Trading Advisor registered with and subject to the
regulations of the Commodity Futures Trading Commission, an
agency of the United States (U.S.) government, which regulates
most aspects of the commodity futures industry. It is also
subject to the rules of the National Futures Association, an
industry self-regulatory organization.
The Company's balance sheet is presented in accordance with
generally accepted accounting principles, which require the use
of certain estimates made by the Company's management.
B. Revenue Recognition
Advisory and management fees accrue monthly based on a
percentage of assets under management. Performance fees may be
earned by achieving defined performance objectives.
Performance fees, if any, are recognized as revenue when the
conditions of the performance fee agreement are satisfied.
C. Cash and Cash Equivalents
Cash and cash equivalents consist of cash and investments
readily convertible into cash.
D. Property and Equipment
Property and equipment are stated at cost. Depreciation and
amortization is provided for over the estimated useful lives of
the assets using straight-line and accelerated methods. Such
lives range from 5 to 39 years.
E. Income Taxes
The Company has elected S corporation status, pursuant to which
the Company does not pay U.S. or Maryland income taxes. All
income earned by the Company will be taxable to the stockholders
on an individual basis.
Note 2. GENERAL PARTNER INTERESTS IN LIMITED PARTNERSHIPS
Campbell Strategic Allocation Fund, L.P.
The Company is the General Partner and trading manager of Campbell
Strategic Allocation Fund, L.P. (Strategic). The General Partner
interest is reported at net asset value of $459,019 as of December
31, 1995.
Summarized financial information with respect to Strategic as of
and for the year ended December 31, 1995 is as follows:
Balance Sheet Data
Assets $46,491,587
Liabilities (1,418,053)
----------
Net Asset Value $45,073,534
==========
Operating Data
Total income $ 6,200,868
Total expense (2,691,635)
----------
Net income $ 3,509,233
==========
General Partner income allocation $ 30,160
==========
The Company has committed to maintaining an investment in Strategic
equal to at least 1% of the net aggregate capital contributions of
all partners. The extent of this commitment is dependent on the
subscriptions Strategic receives during the continuing offering
period provided for in Strategic's prospectus. The Company, as
General Partner, has contributed capital of $457,000 to Strategic.
The Company is further bound by Strategic's Amended Agreement of
Limited Partnership to maintain net worth equal to at least 5% of
the capital contributed to all limited partnerships for which the
Company acts as General Partner. The minimum net worth shall in no
case be less than $50,000 nor shall net worth in excess of
$1,000,000 be required.
As General Partner, the Company has agreed to advance funds to
Strategic necessary to pay organization and offering costs related
to Strategic's initial and continuous offerings. The Company is
reimbursed such advanced amounts by Strategic in 30 equal monthly
installments commencing after the closing of the initial offering
and monthly during the continuous offering. Reimbursements for such
advanced costs are limited to 2.5% of the aggregate subscriptions
accepted. As of December 31, 1995, the Company has advanced
$1,707,358 to Strategic for initial and continuing offering costs
incurred for which it has been reimbursed $399,285 through December
31, 1995.
The Company also pays, up-front, a 4% commission to selling agents
for Strategic. The Company is reimbursed by Strategic for this
cost, over twelve months, through a brokerage fee which is based on
the monthly net asset value of Strategic. As of December 31, 1995,
$807,168 in selling agent commissions are subject to future
reimbursement and are included in Receivable from Campbell
Strategic Allocation Fund, L.P. in the balance sheet.
In the event Strategic terminates prior to the completion of any
reimbursement of the above costs, the Company will not be entitled
to any additional reimbursement from Strategic.
Campbell Financial Futures Fund Limited Partnership
The Company has a General Partner interest in Campbell Financial
Futures Fund Limited Partnership (Financial Futures), reported at
net asset value of $115,218 as of December 31, 1995.
Summarized financial information with respect to Financial Futures
as of and for the year ended December 31, 1995 is as follows:
Balance Sheet Data
Assets $ 5,814,814
Liabilities (25,681)
----------
Net Asset Value $ 5,789,133
==========
Operating Data
Total income $ 1,181,586
Total expense (282,942)
----------
Net income $ 898,644
==========
General Partner income allocation $ 16,843
==========
Note 3. TRADING ACTIVITIES AND RELATED RISKS
The Limited Partnerships for which the Company is either the sole
General Partner or Co-General Partner engage in the speculative
trading of U.S. and foreign futures contracts, options on U.S.
futures contracts and forward contracts (collectively,
"derivatives"). These derivatives include both financial and non-
financial contracts held as part of a diversified trading program.
The partnerships are exposed to both market risk, the risk arising
from changes in the market value of the contracts, and credit risk,
the risk of failure by another party to perform according to the
terms of a contract.
Purchase and sale of futures and options on futures contracts
requires margin deposits with a broker. Additional deposits may be
necessary for any loss on contract value. The Commodity Exchange
Act requires a broker to segregate all customer transactions and
assets from such broker's proprietary activities. A customer's
cash and other property (for example, U.S. Treasury bills)
deposited with a broker are considered commingled with all other
customer funds subject to the broker's segregation requirements.
In the event of a broker's insolvency, recovery may be limited to a
pro rata share of segregated funds available. It is possible that
the recovered amount could be less than total cash and other
property deposited. The partnerships also trade forward contracts
in unregulated markets between principals and assume the risk of
loss from counterparty nonperformance.
For derivatives, risks arise from changes in the market value of
the contracts. Theoretically, the partnerships and the Company, as
General Partner, are exposed to a market risk equal to the value of
derivatives purchased and unlimited liability on derivatives sold
short.
The average fair value of derivatives held by the partnerships
during 1995 was approximately $964,000 and the related year end
fair value is approximately $3,001,000. The fair value of
derivatives represents unrealized gains and losses on open futures
and forward contracts and long and short options at market value.
At December 31, 1995, the notional amount of contracts acquired by
the partnerships to purchase totaled approximately $379,100,000,
and the notional amount of such contracts to sell totaled
approximately $163,700,000. These amounts do not represent the
partnerships' risk of loss due to market and credit risk, but
rather represent the partnerships' extent of involvement in
derivatives at the balance sheet date.
The Company has established procedures to actively monitor and
minimize market and credit risks.
Note 4. DEMAND NOTES PAYABLE
The Company entered into a general security agreement with a
financial institution in April, 1994 under which secured demand
notes may be executed to fund various costs incurred by the Company
as General Partner of Campbell Strategic Allocation Fund, L.P. The
agreement is continuous until either party provides notice
otherwise. Subject to the lender's demand, the notes executed
under the agreement are payable in twelve equal monthly
installments beginning on the last day of the month of origination.
Interest, also subject to demand, is payable monthly beginning on
the last day of the month of the respective origination dates at
various floating rates based on the London Interbank Offered Rate
(LIBOR), as specified in the agreement (currently a weighted
average rate of approximately 7.99% for all notes outstanding).
Amounts outstanding under the agreement are secured by all personal
property, other than equipment and fixtures, of the Company and are
guaranteed by a stockholder of the Company. The agreement also
contains certain covenants, including minimum monthly cash flow
requirements, which, if not met, could subject amounts outstanding
under the agreement to accelerated repayment.
At December 31, 1995, $789,389, including accrued interest, was
outstanding under this agreement.
The Company has also entered into a demand note agreement with a
stockholder of the Company. The agreement is continuous until
either party provides notice otherwise. Interest is payable
quarterly at an annual rate of 8.5%; there is no payment schedule
for the principal balance. At December 31, 1995, $497,000 was
outstanding under this agreement.
Note 5. LEASE OBLIGATION
The Company leases office facilities under an agreement which
provides for minimum base annual rentals as outlined below, plus a
proportionate share of operating expenses. The lease expires
August 31, 1998. The Company has the option to renew the lease for
an additional 60 months. Effective July 5, 1995, the Company is
subleasing a portion of its office space through the remainder of
the lease term.
Year ending December 31
1996 $198,119
1997 199,293
1998 134,246
--------
Total base annual rentals 531,658
Less: Sublease income (88,825)
-------
Total net base annual rentals $442,833
=======
The Company advanced $23,000 as a security deposit relating to this
lease.
Note 6. PROFIT SHARING PLAN
The Company has established a qualified 401(k) savings and profit
sharing plan (the Plan) for the benefit of its employees. The
Company is the plan administrator and certain Company employees are
trustees of the Plan. Under terms of the Plan, employees may elect
to defer a portion of their compensation. The Company matches
employee contributions up to a maximum of 3.75% of the employees'
compensation. The Company may also make optional additional
contributions to the Plan. For the year ended December 31, 1995,
the Company provided $149,438 in matching and optional
contributions to the Plan.
<PAGE>
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Appendix I
Campbell & Company, Inc.
Financial, Metal & Energy Large Portfolio ProForma
The following table is a pro forma presentation that reflects the
actual performance results from Campbell & Company, Inc.'s Financial,
Metal & Energy Large Portfolio for the period January 1989 through March
31, 1994, adjusted for various fees applicable to the Fund. (This table
ends in March, 1994 because actual trading for the Fund began in April,
1994. See Table 1 for the Fund's actual performance results.)The actual
management and performance fees and brokerage commissions which were
incurred by the accounts have been adjusted to reflect the management and
performance fees, brokerage fees and estimated operating expenses that
will be incurred by the Fund. Organization and offering expenses of the
Fund will be amortized over 30-month installment periods, not to exceed 1%
of Net Assets per annum. Due to the fact that such expenses are subject to
such 1% per annum limitation, the table has not been adjusted for
organization and offering expenses to be incurred by the Fund. The bid-ask
spreads charged by banks and dealers in forward contracts are included in
the price of the contract and cannot be determined. However, net
performance in the table is net of the actual bid-ask spreads.
Accordingly, the table has not been adjusted for pro forma bid-ask spread
expenses. The notes to the tables included in "Past Performance of
Campbell & Company, Inc." should be read as integral to this Appendix.
Although the table represents an estimate of how the Fund would have
performed during the period shown, the Fund did not exist during such
period and no representation is made that the Fund will generate returns
similar to those shown in the table. The pro forma calculations are made
on a month-to-month basis and do not carryover to succeeding months.
Accordingly, the table does not reflect on a cumulative basis the effect
of the differences between the fees to be charged to the Fund and the fees
actually charged to the accounts in Table 4.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
<TABLE>
<CAPTION>
Pro Forma Rate of Return (6)
(Computed on a compounded monthly basis)
1994 1993 1992 1991
Month Return VAMI (2) Return VAMI (2) Return VAMI (2) Return VAMI (2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
January -5.08% $ 2,085 -1.07% $ 2,184 -5.81% $ 1,917 -8.57% $ 1,510
February -7.50% 1,928 14.50% 2,501 -4.00% 1,841 -2.13% 1,478
March 6.66% 2,057 -7.14% 2,323 0.66% 1,853 20.15% 1,776
April 2.82% 2,388 -3.16% 1,794 -2.38% 1,734
May 2.88% 2,457 0.72% 1,807 2.32% 1,774
June 1.41% 2,492 10.41% 1,995 1.25% 1,796
July 5.75% 2,635 11.12% 2,217 -8.46 1,644
August -5.24% 2,497 5.09% 2,330 3.27% 1,698
September -5.32% 2,364 -4.07% 2,235 5.54% 1,792
October -6.82% 2,203 -5.05% 2,122 0.13% 1,794
November 0.21% 2,207 5.75% 2,244 -2.57 1,748
December -0.50% 2,196 -1.62% 2,208 16.44% 2,036
Year -6.35% -0.53% 8.47% 23.23%
<CAPTION>
Pro Forma Rate of Return (6)
(Computed on a compounded monthly basis)
1990 1989
Month Return VAMI (2) Return VAMI (2)
<S> <C> <C> <C> <C>
January 2.63% $ 1,341 8.29% $ 1,083
February 0.04% 1,341 -3.21% 1,048
March 3.32% 1,386 9.04% 1,143
April 4.73% 1,451 1.51% 1,160
May -12.81% 1,266 15.32% 1,338
June 7.69% 1,363 1.39% 1,319
July 10.71% 1,509 -0.04% 1,319
August 13.73% 1,716 -1.47% 1,299
September -1.42% 1,692 -4.90% 1,236
October 0.84% 1,706 -7.51% 1,143
November -2.03% 1,671 1.82% 1,164
December -1.15% 1,652 12.27% 1,306
Year 26.44% 30.65%
</TABLE>
<PAGE>
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APPENDIX II
GLOSSARY
The following glossary may assist prospective investors in
understanding the terms used in this Prospectus.
Commodity. Goods, wares, merchandise, produce and in general
everything that is bought and sold in commerce. Out of this large class,
certain commodities, because of their wide distribution, universal
acceptance and marketability in commercial channels, have become the
subject of trading on various national and international exchanges located
in principal marketing and commercial areas. Traded commodities include:
grains, such as wheat, corn, oats and rice; oilseed products, such as
soybeans and soybean products (meal and oil); foods, such as livestock and
meat, sugar, cocoa and coffee; fibers, such as cotton, lumber and plywood;
metals, such as copper, silver, gold, palladium and platinum; financial
instruments, such as U.S. Treasury bonds, Eurodollars, German Bund,
Euromark deposit rates, and Short Sterling rates; foreign currencies, such
as British pounds, Canadian dollars, Deutsche marks, Japanese yen and
Swiss francs; energy supplies, such as petroleum and petroleum products
(heating oil); and stock indices, such as the Standard & Poor's Composite
Index, the New York Stock Exchange Composite Index and the Nikkei Stock
Index Average. Traded commodities are sold according to uniform
established grade standards, in convenient predetermined lots and
quantities such as bushels, pounds or bales, are fungible and, with a few
exceptions, are storable over periods of time.
Commodity Exchange Act. The statute providing the regulatory scheme
for trading in commodity futures and options contracts in the United
States under the administration of the Commodity Futures Trading
Commission.
Commodity exchanges. Centralized market facilities, sometimes referred
to as contract markets, for trading in futures contracts relating to
specified commodities. Principal exchanges in the United States include
the Board of Trade of the City of Chicago, the Chicago Mercantile Exchange
(including the International Monetary Market), and the Commodity
Exchange, Inc.
Commodity Futures Trading Commission ("CFTC"). An independent
regulatory commission of the United States government empowered to
regulate commodity futures transactions and other commodity transactions
under the Commodity Exchange Act.
Commodity Pool Operator. A person engaged in the business of operating
an organization that raises capital through the sale of interests in an
investment trust, syndicate or similar form of enterprise, and uses that
capital to invest either entirely or partially in commodity contracts.
Commodity Trading Advisor. A person who renders advice about
commodities or about the trading of commodities, as part of a regular
business, for profit.
Daily price fluctuation limit. The maximum permitted fluctuation
(imposed by an exchange and approved by the CFTC) in the price of a
commodity futures contract for a given commodity that can occur on a
commodity exchange on a given day in relation to the previous day's
settlement price, which maximum permitted fluctuation is subject to change
from time to time by the exchange (with CFTC approval).
Delivery. The process of satisfying a commodity futures contract by
transferring ownership of a specified quantity and grade of a cash
commodity to the purchaser thereof.
Forward contract. A cash market transaction in which buyer and seller
agree to the purchase and sale of a specific quantity of a commodity for
delivery at some future time under such terms and conditions as the two
may agree upon.
Futures Commission Merchant. The person or organization that solicits
or accepts orders for the purchase or sale of any commodity for future
delivery subject to the rules of any contract market and in connection
with such solicitation or acceptance of orders, accepts money or other
assets to margin, guarantee, or secure any trades or contracts that result
from such orders.
Futures contract. A contract providing for (i) the delivery or receipt
at a future date of a specified amount and grade of a traded commodity at
a specified price and delivery point, or (ii) cash settlement of the
change in the value of the contract. The terms of these contracts are
standardized for each commodity traded on each exchange and vary only with
respect to price and delivery months. A commodity futures contract should
be distinguished from the actual physical commodity, which is termed a
"cash commodity." Trading in commodity futures contracts involves trading
in contracts for future delivery of commodities and not the buying and
selling of particular lots of commodities. A contract to buy or sell may
be satisfied either by making or taking delivery of the commodity and
payment or acceptance of the entire purchase price therefor, or by
offsetting the contractual obligation with a countervailing contract on
the same exchange prior to delivery.
Limit order. A trading order which sets a limit on price of execution.
Limit orders (as contrasted with stop orders) do not become market orders.
Long contract. A commodity futures contract to accept delivery of
(buy) a specified amount and grade of a commodity at a future date at a
specified price.
Market order. A trading order to execute a trade at the most favorable
price as soon as possible.
Margin. A good faith deposit with a broker to assure fulfillment of
the terms of a commodity futures contract. Commodity margins do not
usually involve the payment of interest.
Margin call. A demand for additional monies after depletion of the
initial good faith deposit required to maintain a customer's account in
compliance with the requirements of a particular commodity exchange or of
a commodity broker.
Open position. A contractual commitment arising under a long contract
or a short contract that has not been extinguished by an offsetting trade
or by delivery.
Option contract. An option contract gives the purchaser of the option
contract the right (as opposed to the obligation) to acquire (call) or
sell (put) a given quantity of a commodity or a futures contract for a
specified period of time at a specified price.
Position limit. The maximum number of speculative futures contracts in
any one commodity (on one contract market) imposed by the CFTC or an
exchange that can be held or controlled at one time, by one person or a
group of persons acting together.
Round-turn trade. The initial purchase or sale of a commodity futures
contract and the subsequent offsetting sale or purchase of a contract.
Short contract. A futures contract to make delivery of (sell) a
specified amount and trade of a commodity at a future date at a specified
price.
Spot contract. A cash market transaction in which buyer and seller
agree to the purchase and sale of a specified commodity lot for immediate
delivery.
Spreads. A commodity futures trading transaction involving the
simultaneous holding of commodity futures contracts dealing with the same
commodity but involving different delivery dates or delivery markets, and
in which the trader expects to earn profits from a widening or narrowing
movement of the prices of the different commodity futures contracts.
Stop order. An order given to a broker to execute a trade in a futures
contract when the market price for the contract reaches the specified stop
order price. Stop orders are utilized to protect gains or losses on open
positions. Stop orders become market orders when the stop order price is
reached.
Unrealized profit or loss. The profit or loss which would be realized
on an open position if it were closed at the current settlement price or
the most recent appropriate quotation as supplied by the broker or bank
through which the transaction is effected.
<PAGE>
BLUE SKY GLOSSARY
The following definitions are included in this Appendix III in
compliance with the requirements of various state securities
administrators who review public futures fund offerings for compliance
with the "Guidelines for the Registration of Commodity Pool Programs"
Statement of Policy promulgated by the North American Securities
Administrators Association, Inc. The following definitions are reprinted
verbatim from such Guidelines and may, accordingly, not in all cases be
relevant to an investment in the Fund.
Definitions - As used in the Guidelines, the following terms have the
following meanings:
Administrator - The official or agency administering the security laws
of a state.
Advisor - Any person who for any consideration engages in the business
of advising others, either directly or indirectly, as to the value,
purchase, or sale of commodity contracts or commodity options.
Affiliate - An Affiliate of a Person means: (a) any Person directly or
indirectly owning, controlling or holding with power to vote 10% or more
of the outstanding voting securities of such Person; (b) any Person 10% or
more of whose outstanding voting securities are directly or indirectly
owned, controlled or held with power to vote, by such Person; (c) any
Person, directly or indirectly, controlling, controlled by, or under
common control of such Person; (d) any officer, director or partner of
such Person; or (e) if such Person is an officer, director or partner, any
Person for which such Person acts in any such capacity.
Capital Contributions - The total investment in a Program by a
Participant or by all Participants, as the case may be.
Commodity Broker - Any Person who engages in the business of effecting
transactions in commodity contracts for the account of others or for his
own account.
Commodity Contract - A contract or option thereon providing for the
delivery or receipt at a future date of a specified amount and grade of a
traded commodity at a specified price and delivery point.
Cross Reference Sheet - A compilation of the Guideline sections,
referenced to the page of the prospectus, Program agreement, or other
exhibits, and justification of any deviation from the Guidelines.
Net Assets - The total assets, less total liabilities, of the Program
determined on the basis of generally accepted accounting principles. Net
Assets shall include any unrealized profits or losses on open positions,
and any fee or expense including Net Asset fees accruing to the Program.
Net Asset Value Per Program Interest - The Net Assets divided by the
number of Program Interests outstanding.
Net Worth - The excess of total assets over total liabilities are
determined by generally accepted accounting principles. Net Worth shall be
determined exclusive of home, home furnishings and automobiles.
New Trading Profits - The excess, if any, of Net Assets at the end of
the period over Net Assets at the end of the highest previous period or
Net Assets at the date trading commences, whichever is higher, and as
further adjusted to eliminate the effect on Net Assets resulting from new
Capital Contributions, redemptions, or capital distributions, if any, made
during the period decreased by interest or other income, not directly
related to trading activity, earned on Program assets during the period,
whether the assets are held separately or in a margin account.
Organizational and Offering Expenses - All expenses incurred by the
Program in connection with and in preparing a Program for registration and
subsequently offering and distributing it to the public, including, but
not limited to, total underwriting and brokerage discounts and commissions
(including fees of the underwriter's attorneys), expenses for printing,
engraving, mailing, salaries of employees while engaged in sales activity,
charges of transfer agents, registrars, trustees, escrow holders,
depositories, experts, expenses of qualification of the sale of its
Program Interest under federal and state law, including taxes and fees,
accountants' and attorneys' fees.
Participant - The holder of a Program Interest.
Person - Any natural Person, partnership, corporation, association or
other legal entity.
Pit Brokerage Fee - Pit Brokerage Fee shall include floor brokerage,
clearing fees, National Futures Association fees, and exchange fees.
Program - A limited partnership, joint venture, corporation, trust or
other entity formed and operated for the purpose of investing in Commodity
Contracts.
Program Broker - A Commodity Broker that effects trades in Commodity
Contracts for the account of a Program.
Program Interest - A limited partnership interest or other security
representing ownership in a program.
Pyramiding - A method of using all or a part of an unrealized profit in
a Commodity Contract position to provide margin for any additional
Commodity Contracts of the same or related commodities.
Sponsor - Any Person directly or indirectly instrumental in organizing
a Program or any Person who will manage or participate in the management
of a Program, including a Commodity Broker who pays any portion of the
Organizational Expenses of the Program, and the general partner(s) and any
other Person who regularly performs or selects the Persons who perform
services for the Program. Sponsor does not include wholly independent
third parties such as attorneys, accountants, and underwriters whose only
compensation is for professional services rendered in connection with the
offering of the Units. The term "Sponsor" shall be deemed to include its
Affiliates.
Valuation Date - The date as of which the Net Assets of the Program are
determined.
Valuation Period - A regular period of time between Valuation Dates.
<PAGE>
EXHIBIT A
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
AMENDED AGREEMENT OF LIMITED PARTNERSHIP
ARTICLE 1.
Formation and Name
The parties to this Amended Agreement of Limited Partnership (the
"Agreement") have formed Campbell Strategic Allocation Fund, L.P. (the
"Partnership") under the Delaware Revised Uniform Limited Partnership Act
in effect on the date thereof (the "Act") and do hereby continue the
Partnership pursuant to the terms herein as of September 23, 1993. Each
Limited Partner hereby undertakes to furnish to the General Partner a
power of attorney which may be filed with this Agreement and any amendment
hereto and such additional information as is required from him to complete
such documents and to execute and cooperate in the filing, recording or
publishing of such documents at the request of the General Partner.
ARTICLE 2.
Principal Office and Registered Agent
The principal office of the Partnership shall be 210 West Pennsylvania
Avenue, Baltimore, Maryland 21204, or such other place as the General
Partner may designate from time to time. The Registered Agent for the
Limited Partnership is D. Keith Campbell, 210 West Pennsylvania Avenue,
Baltimore, Maryland 21204. The Tax Matters Partner for the Limited
Partnership is Campbell & Company, Inc.
ARTICLE 3.
Business and Purpose of the Partnership
The Partnership's business and purpose is to trade, buy, sell or
otherwise acquire, hold or dispose of futures and other related investment
interests and any activities incidental or related thereto. The objective
of the Partnership business is appreciation of its assets through
speculative trading.
ARTICLE 4.
Term, Dissolution and Fiscal Year
4.1 Term. The term of the Partnership commenced upon the execution
and filing of the Certificate of Limited Partnership, as amended, and
shall end upon the first to occur of the following: (i) December 31, 2023;
(ii) an election to dissolve the Partnership in accordance with the
provisions of Article 4.2 by Limited Partners owning more than 50% of the
Units then outstanding; (iii) the withdrawal of the General Partner, as
defined in, and subject to the limitations of Article 13; (iv) a
determination by the General Partner that the purpose of the Partnership
cannot be fulfilled; or (v) any event which constitutes a dissolution of a
limited partnership under the Act or otherwise makes it unlawful for the
existence of the Partnership to be continued.
4.2 Dissolution. Upon the occurrence of an event causing the
dissolution of the Partnership, the Partnership shall be wound up and
terminated. Upon dissolution and termination of the Partnership, the
General Partner shall contribute to the Partnership an amount equal in the
aggregate to the lesser of (a) the deficit balance in their capital
accounts, or (b) the excess of 1.01% of the total capital contributions
paid in by the Limited Partners over any capital previously contributed by
the General Partner. Payment of creditors, and distribution of the
Partnership's assets shall be effected as soon as practicable in
accordance with the Act, and the General Partner and each Limited Partner
(and any assignee) shall share in the assets of the Partnership pro rata
in accordance with such Partner's respective capital account, less any
amount owing by such Partner (or assignee) to the Partnership.
4.3 Fiscal Year. The fiscal year of the Partnership shall end on
December 31, unless the General Partner elects, with the approval of the
Internal Revenue Service and the CFTC, a different fiscal year.
ARTICLE 5.
General Partner
The General Partner is Campbell & Company, Inc., a Maryland
corporation, 210 West Pennsylvania Avenue, Baltimore, Maryland 21204.
ARTICLE 6.
Capital Contributions and
Units of Limited Partnership Interest
6.1 Units and Capital Contributions of Limited Partners. Interests in
the Partnership other than the General Partner's interests, shall be
evidenced by Units (individually a "Unit").
6.2 Capital Contributions by General Partner; Net Worth. The General
Partner has contributed cash to the capital of the Partnership in an
amount equal to at least 1% of the net aggregate contributions of all
Partners including the General Partner. The General Partner's contribution
shall be evidenced by Units of General Partnership Interest. The General
Partner may make withdrawals of its Units provided that such withdrawals
do not reduce the General Partner's aggregate percentage interest in the
Partnership to less than 1% of the net aggregate contributions. If
additional Limited Partners are admitted during any Continuing Offering
pursuant to the provisions of Article 11 herein, the General Partner shall
make such additional capital contributions as may be required to maintain
its interest at the required level in the Partnership at all times during
the term of the Partnership. The General Partner shall maintain a net
worth so long as it acts as general partner equal to at least 5% of the
capital contributed by all the limited partnerships for which it acts as
general partner, including the Partnership. The minimum required net
worth shall in no case be less than $50,000 nor shall net worth in excess
of $1,000,000 be required.
6.3 Availability of Contributions. The aggregate of all Partnership
contributions shall be available to the Partnership to carry on its
business and purpose, and no interest shall be paid to any Partner on any
such contributions.
ARTICLE 7.
Allocation of Profits and Losses
7.1 Capital Accounts. A capital account shall be established for each
Partner, including the General Partner. The initial balance of each
Partner's capital account shall be the amount of his initial capital
contribution to the Partnership.
7.2 Monthly Allocations. As of the close of business (as determined
by the General Partner) of the last day of each month, the following
determinations and allocations shall be made:
(1) The Net Assets of the Partnership (as defined in Article 7.4)
before the General Partner's Brokerage Fee, the direct administrative
expenses and the General Partner's performance fees payable shall be
determined.
(2) Brokerage Fees payable by the Partnership and the direct
administrative expenses shall then be charged against the Net Assets.
(3) Accrued performance fees, if any, shall then be charged against the
Net Assets.
(4) Any increase or decrease in the Net Assets as of the end of the
month (after the adjustments in subparagraphs (2) and (3)) shall then be
credited or charged to the capital accounts of each Partner in the ratio
that the balance of each account bears to the balance of all accounts.
(5) The amount of any distribution to a Partner, any amount paid to a
Limited Partner on redemption of Units, and any amount paid to the General
Partner by way of distribution or redemption of Units of General
Partnership Interest, shall be charged to such Partner's capital account.
7.3 Allocation of Profit and Loss for Federal Income Tax Purposes. At
the end of each taxable year, each item of Partnership taxable income,
gain, loss, deduction, or credit will be allocated among the Partners in
accordance with the following provisions:
(1) Capital gain shall be allocated first to each Partner who has
redeemed Units (Units of General Partnership Interest in the case of the
General Partner) during the year to the extent that the amount the Partner
received on redemption exceeds the amount paid for the redeemed Units (as
set forth in subparagraph (5));
(2) Capital gain remaining after the allocation in subparagraph (1)
shall be allocated among all Partners in the ratio that each Partner's
capital account bears to all Partner's capital accounts;
(3) Capital losses shall be allocated first to each Partner who has
redeemed Units (Units of General Partnership Interest in the case of the
General Partner) during the year to the extent that the amount the Partner
paid for the redeemed Units (as set forth in subparagraph (5)) exceeds the
amount the Partner received on redemption;
(4) Capital losses remaining after the allocation in subparagraph (3)
shall be allocated among all Partners in the ratio that each Partner's
capital account bears to all Partners' capital accounts;
(5) For the purpose of the allocations of capital gain and loss in
subparagraphs (1) and (3), the amount each Partner paid for each of his
Units shall be deemed to have increased by the amount of capital gain
allocated to him with respect to such Unit pursuant to subparagraph (2);
decreased by the amount of any capital loss allocated to him with respect
to such Unit pursuant to subparagraph (4); and decreased by the amount of
any distributions to him with respect to such Unit pursuant to Article
7.8;
(6) Items of ordinary income and expense will be allocated pro rata
among the Partners based upon their respective capital accounts as of the
end of each month in which the items of ordinary income or expense accrue;
(7) Notwithstanding subparagraphs (4) and (6), if the allocation of
such loss would cause a Limited Partner to have a capital account deficit,
then such loss shall be allocated to the General Partner, according to its
capital account, to the extent of such losses; and
(8) Allocations of capital gain or loss will be made pro rata from
short-term capital gain or loss and long-term capital gain or loss.
7.4 Definitions; Accounting.
(1) Net Assets. "Net Assets" of the Partnership shall mean the total
assets of the Partnership, including all cash and cash equivalents (valued
at cost), plus accrued interest thereon, and the market value of all open
commodity positions and other assets of the Partnership, less all
liabilities of the Partnership, including accrued performance fees
determined in accordance with the principles specified in this
subparagraph and, where no principle is specified, in accordance with
generally accepted accounting principles consistently applied under the
accrual basis of accounting. The market value of a commodity or commodity
futures contract traded on an exchange, or through a clearing firm or
through a bank, shall mean the most recent available settlement price or
closing quotation, as appropriate on the exchange, or of the clearing firm
or bank on or through which the commodity or contract is traded by the
Partnership on the day with respect to which Net Assets are being
determined. If such contract cannot be liquidated, due to the operation of
daily limits or otherwise, on a day as of which Net Assets are determined,
the liquidating value on the first subsequent day on which the contract
would be liquidated may be used or such other value as the General Partner
may deem fair and reasonable. The market value of a commodity forward
contract or a commodity futures contract traded on a foreign exchange
shall mean its market value as determined by the General Partner on a
basis consistently applied.
(2) Net Asset Value. The "Net Asset Value" of the Partnership shall
mean the total capital accounts of all Partners. The "Net Asset Value" of
a Unit shall be the total capital accounts of all Partners, divided by the
number of Units owned by all Partners.
(3) Blue Sky Glossary. The definitions in the Blue Sky Glossary in
Appendix III to the Partnerships Prospectus are hereby incorporated herein
by reference.
7.5 Expenses.
(1) The General Partner shall advance the organization and offering
expenses of the initial and continuous offerings of the Units, and no such
expenses shall be deducted from the proceeds of the offerings. Subject to
the limitation described below, the General Partner shall be reimbursed
such advanced amounts by the Partnership in approximately 30 equal
installments commencing after the closing of the initial offering and
monthly during the continuous offering. The General Partner shall have
discretion to adopt reasonable procedures to implement the amortization of
such expenses, including grouping expenses related to the same offering
period and expensing de minimis amounts as they are incurred. In no event
shall the General Partner be entitled to receive reimbursement in an
amount greater than 2.5% of the aggregate subscriptions accepted during
the initial and continuous offerings, as the case may be. In the event the
Partnership terminates prior to completion of the reimbursement, the
General Partner will not be entitled to receive additional reimbursement
and the Partnership will have no obligation to make further reimbursement
payments to the General Partner. For purposes of this Agreement,
organization and offering expenses shall mean all costs paid or incurred
by the General Partner or the Partnership in organizing the Partnership
and offering the Units, including legal and accounting fees incurred, bank
account charges, all blue sky filing fees, filing fees payable upon
formation and activation of the Partnership, and expenses of preparing,
printing and distributing the prospectus and registration statement, but
in no event shall exceed limits set forth in Article 8 herein or
guidelines imposed by appropriate regulatory bodies.
(2) The Partnership shall be obligated to pay all liabilities incurred
by it, including without limitation, (i) Brokerage Fees; (ii) operating
expenses and performance fees; (iii) legal and accounting fees; and
(iv) taxes and other extraordinary expenses incurred by the Partnership.
During any year of operations, the General Partner shall be responsible
for payment of operating expenses in excess of 0.5% of the Partnership's
month-end Net Asset Value during that year. Indirect expenses of the
General Partner, such as salaries, rent and other overhead expenses, shall
not be liabilities of the Partnership. The Partnership shall receive all
interest earned on its assets.
(3) Compensation to any party, including the General Partner (or any
advisor which may be retained in the future), shall not exceed the
limitations imposed as of the date hereof by the North American Securities
Administrators Association ("NASAA"). In the event the compensation
exceeds such limitations, the General Partner shall promptly reimburse the
Partnership for such excess. NASAA limitations on fees are as follows:
Management fees, advisory fees and all other fees, except for incentive
fees and commodity brokerage commissions, when added to the customary and
routine administrative expenses, shall not exceed 6% annually of net asset
value. The aggregate incentive fees shall not exceed 15% of new trading
profits. The sponsor or advisor will be entitled to an additional 2%
incentive fee for each 1% by which the net asset value fee is reduced
below 6%. Commodity brokerage rates will be presumptively reasonable if
they satisfy either 80% of the published retail rate plus pit brokerage
fees or 14% annually of average net assets, including pit brokerage fees.
The Partnership will pay an 8% per annum Brokerage Fee, of which 3% will
be for management services, allowing the incentive fee to be 20%, as
discussed above. The remaining 5% from the Brokerage Fee will be paid for
brokerage services (including the initial distribution of the Units,
execution of commodity transactions, and ongoing services to the Limited
Partners), which is less than the 14% limit imposed by NASAA.
(4) The Partnership shall also be obligated to pay any costs of
indemnification to the extent permitted under Article 15 of this
Agreement.
7.6 Limited Liability of Limited Partners. Each Unit purchased by a
Limited Partner is fully paid and non-assessable. A Limited Partner shall
be liable for the Partnership's obligations to the extent of the capital
contributed by him plus his share of profits remaining in the Partnership,
if any.
In addition, if a Limited Partner receives a return of any part of his
capital contribution, he shall be liable to the Partnership for a period
of one year thereafter for the amount of the returned contribution, but
only to the extent necessary to discharge the Partnership's liabilities to
creditors who extended credit to the Partnership during the period the
contribution was held by the Partnership.
A Limited Partner shall also be liable to the Partnership for return of
any part of his capital contribution returned to him, for a period of six
years, if such return was in violation of this Agreement or the Act.
7.7 Return of Limited Partner's Capital Contribution. Except to the
extent that a Limited Partner shall have the right to redeem Units, no
Limited Partner shall have any right to demand the return of his capital
contribution or any profits added thereto, except upon dissolution and
termination of the Partnership. In no event shall a Limited Partner be
entitled to demand or receive property other than cash.
7.8 Distributions. The General Partner shall have sole discretion in
determining what distributions (other than on redemption of Units or
dissolution), if any, the Partnership will make to its Partners (or any
assignee thereof). Distributions shall be made pro rata in accordance with
the respective capital accounts of the Partners.
ARTICLE 8.
Management
8.1 General.
(1) The General Partner, to the exclusion of the Limited Partners,
shall conduct and manage the business of the Partnership including,
without limitation, all functions necessary for administration of the
Partnership. The General Partner shall have the fiduciary responsibility
for the safekeeping and use of all assets of the Partnership, whether or
not in its immediate possession or control, shall not contract away such
duty and shall not employ or permit another to employ such assets in any
manner except for the exclusive benefit of the Partnership. The General
Partner, on behalf of the Partnership, shall make all investment decisions
regarding the Partnership and shall have complete trading discretion. The
General Partner shall seek the best price and services available in its
futures brokerage transactions, and all brokerage transactions for the
Partnership's futures trades will be effected at competitive rates.
(2) The General Partner shall receive from the Partnership:
(i) Brokerage Fees of 8% per annum of the month-end Net Assets; and (ii) a
quarterly "performance fee" of 20% of the Partnership's aggregate
cumulative appreciation in the Net Asset Value per Unit, exclusive of
interest income. The performance fee is paid on the cumulative increase,
if any, in the Net Asset Value per Unit over the highest previous
cumulative Unit value or Unit value as of the commencement of trading,
whichever is higher. In determining the fees in this paragraph,
adjustments shall be made for capital additions and withdrawals and Net
Assets shall not be reduced by the fees being calculated for such current
period. Such fees may be changed upon sixty days' notice to the Limited
Partners, provided that prior to the imposition of the revised fees,
Limited Partners have an opportunity to redeem (and there are no delays in
receiving payment therefor) and the notice explains their redemption and
voting rights. Further, any new contract with any advisor, including the
General Partner, shall carryforward all losses attributable to such
advisor or General Partner, as the case may be.
(3) The General Partner may take such other actions as it deems
necessary or desirable to manage the business of the Partnership
including, but not limited to, the following: entering into commercially
reasonable contracts, opening bank accounts, paying or authorizing the
payment of distributions to the Partners and expenses of the Partnership
including fees to the General Partner, taxes and other fees of
governmental agencies.
(4) The General Partner shall keep and retain for at least six years,
at the principal office of the Partnership, such books and records
relating to the business of the Partnership as it deems necessary to
substantiate that Units were sold only to purchasers for whom such
securities were suitable and which are required by the Commodity Exchange
Act, and the rules and regulations thereunder. Such books and records
shall be available to any Limited Partner or his authorized attorney or
agent for inspection and copying during normal business hours of the
Partnership.
(5) The General Partner may engage in other business activities and
shall not refrain from any other activity nor disgorge any profits from
any such activity, whether as general partner of additional partnerships
for investment in commodity futures or forward contracts or otherwise.
Subject to the terms and conditions set forth in this Agreement, the
General Partner may engage and compensate on behalf of the Partnership,
from funds of the Partnership, such persons, firms or corporations, as the
General Partner in its sole judgment shall deem advisable for the conduct
and operation of the business of the Partnership. The General Partner may
develop and implement a cash management facility. In such event, the
General Partner may cause the Partnership to participate in such facility
if doing so would be in the best interests of the Partnership. Competitive
management fees may be paid to the General Partner or an affiliate
thereof.
(6) No person dealing with the General Partner shall be required to
determine its authority to make any undertaking on behalf of the
Partnership, nor to determine any fact or circumstance bearing upon the
existence of such authority.
(7) Except as provided by Article 13, the General Partner may not sell,
assign, or otherwise dispose of all or substantially all of its General
Partnership Interest in the Partnership except for a sale or transfer of
all Partnership interests of all Partners or a sale of all or
substantially all of its interest to a corporation controlled by such
General Partner. The foregoing restriction shall not be applicable to the
General Partner mortgaging, pledging, hypothecating or granting a security
interest in its General Partnership Interest as collateral for a loan or
loans and any such assignment of all or any portion of the General
Partner's Interest shall not cause an event of withdrawal with respect to
the General Partner pursuant to Article 13 of this Agreement.
(8) The maximum period covered by any contract entered into by the
Partnership, except for certain provisions which survive the stated term,
shall be one year. Agreements between the Partnership and the General
Partner or any affiliate shall be terminable by the Partnership without
penalty on 60 days' written notice. All sales of Units in the United
States shall be made by registered brokers. No sales will be made by the
General Partner or an affiliate.
8.2 Prohibitions. The Partnership shall not: (i) engage in
pyramiding; (ii) commingle its assets with the assets of any other person,
except as permitted by law; (iii) make loans to the General Partner or any
affiliate thereof or to any person; (iv) pay per-trade compensation to the
General Partner or any advisor or any affiliate thereof or to any person
who receives any other form of compensation from the Partnership; or
(v) permit rebates or give-ups to be received by the General Partner or
affiliates thereof nor shall the General Partner participate in any
reciprocal business arrangements which would circumvent the foregoing or
any other provision of this Agreement; or (vi) borrow cash or other assets
from the General Partner.
ARTICLE 9.
Reports to Limited Partners
The books and records of the Partnership shall be audited annually by
an independent certified public accountant. Net Assets and Net Asset Value
per Unit shall be determined daily and will be supplied in writing to any
Limited Partner who requests such information. The General Partner will
cause each Partner to receive (i) within ninety (90) days after the close
of each fiscal year an annual report with audited financial statements
(including a balance sheet and income statement) for the fiscal year then
ended, and (ii) within seventy-five (75) days after the close of each
fiscal year such tax information as is necessary for the Partner to
complete his federal income tax return. In addition, the General Partner
will report within 30 days after the end of each month to the Limited
Partners the information required by the CFTC to be reported, which
information currently includes the following: the total amount of realized
net gain or loss on commodity interest positions liquidated during the
month; the change in unrealized net gain or loss on commodity interest
positions during the month; the total amount of net gain or loss from all
other transactions engaged in by the Partnership during the month,
including interest earned; the total amount of all Brokerage Fees and
performance fees, and all other expenses incurred or accrued by the
Partnership during the month; the Net Asset Value of a Unit as of the end
of the month and as of the end of the previous month; the total amount of
additions to the Net Assets of the Partnership made during the month; the
total amount of withdrawals from and redemptions of Units for the month;
and the total net income or loss of the Partnership during the month. In
the event either Net Asset Value per Unit as of the end of any business
day declines by more than 50% of the previous month's Net Asset Value per
Unit, or there is a material change in the advisory agreement with the
General Partner or otherwise affecting the compensation to any party,
including the General Partner, the General Partner will notify each
Limited Partner of such information, their redemption and voting rights
and any material effect on the Units within seven business days. In the
event of the 50% decline in Net Asset Value per Unit referred to in the
previous sentence, the General Partner will declare a special redemption
period and temporarily suspend the Partnership's trading during such
period.
ARTICLE 10.
Dispositions and Redemptions of Partnership Units
10.1 Permissible Dispositions. A Limited Partner may transfer,
assign, pledge, or encumber his Units only as provided in this Article
10.1. No such transferee, pledgee, assignee, or secured creditor shall
become a substituted Limited Partner unless the General Partner consents
in writing to such substitution. The General Partner has complete
discretion to withhold consent but only intends to do in order to prevent
or minimize potential adverse legal or tax consequences to the
Partnership. Any transfer or assignment of Units which is permitted
hereunder shall be effective as of the beginning of the month following
the month in which such transfer or assignment is made; provided, however,
that the Partnership need not recognize any transfer, assignment, or
pledge until it has received at least 30 days' prior written notice
thereof from the transferor, assignor, or pledgor, which notice shall
include (i) the name, signature, address and social security or taxpayer
identification number of the transferee, assignee, or pledgee, (ii) the
number of Units transferred, assigned or pledged, and (iii) the signature
of the transferor, assignor, or pledgor. The General Partner may, in its
discretion, waive receipt of the above described written notice or waive
any defect therein. No transfer or assignment shall be permitted unless
the General Partner is satisfied that (i) such transfer or assignment
would not be in violation of the Act; (ii) the amount of the transfer is
at least the minimum subscription amount except for transfers by gift,
inheritance, or to affiliates, including family members of the person
transferring the Units; and (iii) notwithstanding such transfer or
assignment, the Partnership shall continue to be classified as a
partnership rather than as a corporation or an association under the
Internal Revenue Code, as amended. No transfer or assignment of Units
shall be effective or recognized by the Partnership if following such
transfer or assignment there would result a termination of the Partnership
for federal income tax purposes as provided in Code 708(b) and any
attempted transfer or assignment in violation hereof shall be ineffective
to transfer or assign any such Units. Any transferee or assignee of Units
who has not been admitted to the Partnership as a substituted Limited
Partner shall not have any of the rights of a Limited Partner, except that
the assignee shall receive that share of capital and profits and shall
have that right of redemption to which his assignor would otherwise have
been entitled and shall remain subject to the other terms of this
Agreement binding upon Limited Partners. The transfer or assignment of
Units shall be subject to all applicable securities laws. The transferor
or assignor shall bear all costs (including any attorneys' fees) related
to such transfer or assignment.
10.2 Redemptions.
(1) A Limited Partner (or any assignee thereof) may withdraw all or
part of his capital contribution and undistributed profits, if any, by
requiring the Partnership to redeem all or part of his Units at the Net
Asset Value per Unit, reduced as hereinafter described (such withdrawal
being herein referred to as a "Redemption").
(2) Redemptions shall be effective as of the end of any month ending
after a Request for Redemption in proper form has been timely received by
the General Partner (the "Redemption Date"). During the 12 months
following the purchase, the General Partner charges a redemption fee as
follows: 4% of Net Asset Value on Units redeemed in the first quarter
following purchase, 3% during the second quarter, 2% during the third
quarter, and 1% in the fourth quarter. After the fourth quarter, no
redemption fees are charged. As used herein, "Request for Redemption"
shall mean a written request of such withdrawal transmitted by the Limited
Partner (or any assignee thereof) to the General Partner not less than ten
business days prior to the end of the month or such shorter period as
established by the General Partner. Upon Redemption, a Limited Partner (or
any assignee thereof) shall receive, per Unit redeemed, an amount equal to
the Net Asset Value per Unit as of the Redemption Date, less any amount
owing by such Limited Partner (and his assignee, if any) to the
Partnership pursuant to Article 15.3, and less any applicable redemption
fees due to the General Partner. If redemption is requested by an
assignee, all amounts owed to the Partnership under Article 15.3 by the
Partner to whom such Unit was sold, as well as all amounts owed by the
assignees of such Unit, shall be deducted from the amount payable upon
Redemption by any assignee. All Requests for Redemption in proper form
shall be honored and payment will be made within twenty (20) business days
following the Redemption Date, except that under special circumstances,
including, but not limited to, the inability on the part of the
Partnership to liquidate commodity positions or the default or delay in
payments due the Partnership from commodity brokers, banks, or other
persons, the Partnership may delay payment to Partners requesting
Redemption of Units. In the event that Redemptions are requested for more
Units than the General Partner is able to honor due to the foregoing
contingencies, the General Partner will honor Requests for Redemption in
the order actually received and will hold Requests for Redemption in such
order. Limited Partners will be notified within 10 days after month-end if
any Redemption cannot be honored under the terms hereof and their Requests
thereafter will be honored at the first available opportunity. The
Partnership shall not be obligated to redeem Units that are subject to a
pledge or otherwise encumbered in any fashion.
(3) Subparagraph (2) notwithstanding, if the Net Asset Value per Unit
is determined for purposes of Redemption as of a month-end which is not
the end of a quarter, any performance fees payable and applicable to such
Unit, will be determined and charged to such Unit as though such month-end
were the end of a quarter and such performance fees were payable and such
performance fees will be paid.
ARTICLE 11.
Offering of Units; Admission of Additional Limited Partners
The General Partner shall, from time to time, (i) cause the Partnership
to file a Registration Statement and such amendments as the General
Partner deems advisable, with the Securities and Exchange Commission for
the registration and public offering of the Units; (ii) seek to qualify
the Units for sale in various jurisdictions as the General Partner deems
advisable; and (iii) take such other actions as the General Partner deems
advisable.
The General Partner, at its option, may admit additional Limited
Partners to the Partnership without the consent of the Limited Partners at
any time. Such additional Limited Partners shall contribute capital to the
Partnership, and shall be admitted as Limited Partners as of the first
business day of the month immediately following the month-end as of which
their subscriptions were accepted by the General Partner at no less than
the Net Asset Value per Unit as of such month-end.
ARTICLE 12.
Special Power of Attorney
By execution of this Agreement, each Limited Partner irrevocably
constitutes and appoints the General Partner with full power of
substitution, as his true and lawful attorney-in-fact, in his name, place
and stead, to execute, acknowledge, swear to, file and record in his
behalf in the appropriate public offices and publish (i) this Agreement
and any amendments thereto; (ii) all instruments which the General Partner
deems necessary or appropriate to reflect any amendment, change, or
modification of the Limited Partnership Agreement or Certificate of
Limited Partnership in accordance with the terms of this Agreement; and
(iii) Certificates of Fictitious or Assumed Name. The Power of Attorney
granted herein shall be irrevocable and deemed to be a power coupled with
an interest and shall survive the incapacity or death of a Limited
Partner. Each Limited Partner hereby agrees to be bound by any
representation made by the General Partner and by any successor thereto,
acting in good faith pursuant to such Power of Attorney.
ARTICLE 13.
Withdrawal of a Partner
The Partnership shall terminate and be dissolved upon the withdrawal,
or insolvency of the General Partner (unless in the case of the withdrawal
of the General Partner, the actions necessary to continue the Partnership
are taken pursuant to Article 16). The General Partner shall cease to be a
general partner of the Partnership upon the occurrence of any of the
following events of withdrawal: (i) the General Partner's bankruptcy or
insolvency; (ii) any event prescribed in the Act that is not encompassed
in this Article 13; or (iii) 120 days' prior written notice to the Limited
Partners of the General Partner's intent to withdraw as a General Partner.
If the General Partner withdraws as general partner, it can redeem its
interests in the Partnership at Net Asset Value as of the next month-end
in which it is calculated. If the Limited Partners elect to continue the
Partnership, the withdrawing General Partner shall pay all Partnership
expenses incurred as a result of its withdrawal. The death, incompetency,
incapacity, withdrawal, insolvency, or dissolution of a Limited Partner
shall not dissolve or terminate the Partnership, and said Limited Partner,
his estate, custodian, or personal representative shall have no right to
withdraw or value such Limited Partner's Units except as provided in
Article 10 hereof. Each Limited Partner (and any assignee of such Limited
Partner) expressly agrees that in the event of his death, he waives on
behalf of himself and his estate, and he directs the legal representative
of his estate and any person interested therein to waive the furnishing of
any inventory, accounting, or appraisal of the assets of the Partnership
and any right to a special audit of the books and records of the
Partnership, provided that the waiver shall not relieve the General
Partner from its reporting obligations set forth in Article 9.
ARTICLE 14.
No Personal Liability for Return of Capital
Subject to the provisions of Article 15 below, the General Partner
shall not be personally liable for the return or repayment of all or any
portion of the capital or profits of any Partner (or assignee), it being
expressly agreed that any such return of capital or profits made pursuant
to this Agreement shall be made solely from the assets (which shall not
include any right of contribution from the General Partner) of the
Partnership.
ARTICLE 15.
Standard of Liability; Indemnification
15.1 Standard of Liability. The General Partner and its controlling
persons shall have no liability to the Partnership or any Limited Partner
for any loss suffered by the Partnership which arises out of any action of
the General Partner if the General Partner, in good faith, determined that
such course of conduct was in the best interests of the Partnership and
such course of conduct did not constitute negligence or misconduct of the
General Partner.
15.2 Indemnification by the Partnership. The Partnership shall
indemnify, defend, and hold harmless the General Partner (including
controlling persons and a former General Partner who has withdrawn from
the Partnership) from and against any loss, liability, damage, cost or
expense (including attorneys' fees, and expenses incurred in defense of
any demands, claims or lawsuit) arising from actions or omissions
concerning the business or activities undertaken by or on behalf of the
Partnership, from any source only if all of the following conditions are
satisfied: (i) the General Partner has determined, in good faith, that the
course of conduct which caused the loss or liability was in the best
interests of the Partnership, (ii) the General Partner was acting on
behalf of or performing services for the Partnership, (iii) such liability
or loss was not the result of negligence or misconduct by the General
Partner, and (iv) such indemnification is recoverable only out of the
Partnership's assets and not from the Limited Partners. In no event shall
the General Partner or any of the selling agents receive indemnification
from the Partnership arising out of alleged violations of federal or state
securities laws unless the following conditions are satisfied; (a) there
has been a successful adjudication on the merits of each count involving
alleged securities law violations, or (b) such claims have been dismissed
with prejudice on the merits by a court of competent jurisdiction, or (c)
a court of competent jurisdiction approves a settlement of the claims and
finds that indemnification of the settlement and related costs should be
made, and (d) in the case of subparagraph (c), the court considering the
request has been advised of the position of the Securities and Exchange
Commission and the states in which Units were offered and sold as to
indemnification for violations of securities laws; provided that the court
need only be advised and consider the positions of the securities
regulatory authorities in those states in which plaintiffs claim they were
offered or sold Units. The Partnership shall not incur the cost of that
portion of liability insurance which insures the General Partner for any
liability as to which the General Partner is prohibited from being
indemnified herein.
15.3 Advance Payment. Expenses incurred in defending a threatened or
pending civil, administrative or criminal action, suit or proceeding
against the General Partner may be paid by the Partnership in advance of
the final disposition of such action, suit or proceeding, if and to the
extent that (i) the legal action relates to acts or omissions with respect
to the performance of duties or services on behalf of the Partnership,
(ii) the legal action is initiated by a party who is not a Limited
Partner, or if by a Limited Partner, then a court of competent
jurisdiction specifically approves such advancement, and (iii) the General
Partner shall agree to reimburse the Partnership, together with the
applicable legal rate of interest thereon, in the event indemnification is
not permitted under this Article 15 upon final disposition.
ARTICLE 16.
Amendments; Meetings
16.1 Amendments with Consent of the General Partner. If at any time
during the term of the Partnership the General Partner shall deem it
necessary or desirable to amend this Agreement, such amendment shall be
effective only if embodied in an instrument signed by the General Partner
and by the holders of more than fifty percent (50%) of the Units then
owned by the Limited Partners. Any such supplemental or amendatory
agreement shall be adhered to and have the same effect from and after its
effective date as if the same had originally been embodied in and formed a
part of this Limited Partnership Agreement, provided, however, that no
such supplemental or amendatory agreement shall, without the consent of
all Limited Partners, change or alter this Section 16, extend the term of
the Partnership, reduce the capital account of any Partner or modify the
percentage of profits, losses or distributions to which any Partner is
entitled. In addition, reduction of the capital account of any assignee or
modifications of the percentage of profits, losses or distributions to
which an assignee is entitled hereunder shall not be effected by any
amendment or supplement to this Limited Partnership Agreement without such
assignee's written consent. No meeting procedure or specified notice
period is required in the case of amendments made with the consent of the
General Partner, mere receipt of an adequate number of unrevoked written
consents being sufficient. The General Partner may amend this Limited
Partnership Agreement without the consent of the Limited Partners in order
(i) to clarify any clerical inaccuracy or ambiguity or reconcile any
inconsistency (including any inconsistency between this Agreement and the
Prospectus), (ii) to effect the intent of the tax allocations proposed
herein (including, without limitation, allocating capital gain and capital
loss on a net rather than a gross basis) to the maximum extent possible in
the event of a change in the Code or the interpretations thereof affecting
such allocations, (iii) to attempt to ensure that the Partnership is not
taxed as an association taxable as a corporation for federal income tax
purposes, (iv) to delete or add any provision of or to this Limited
Partnership Agreement required to be deleted or added by the staff of the
Securities and Exchange Commission or any other federal agency or any
state "Blue Sky" official or similar official or in order to opt to be
governed by any amendment or successor statute to the Act, (v) to change
the name of the Partnership and to make any modifications to this Limited
Partnership Agreement to reflect the admission of an additional or
substitute general partner, (vi) to make any amendment to this Limited
Partnership Agreement which the General Partner deems advisable, provided
that such amendment is not adverse to the Limited Partners and does not
alter the basic investment policies or structure of the Partnership, or
that is required by law, or (vii) to make any amendment that is
appropriate or necessary, in the opinion of the General Partner, to
prevent the Partnership or the General Partner or their respective
directors, officers or controlling persons from in any manner being
subject to the provisions of the Investment Company Act of 1940, as
amended, or "plan asset" regulations adopted under ERISA as a result of
their association with the Partnership.
16.2 Meetings. The General Partner will maintain at the office a list
of the names and addresses of all Limited Partners and the Units owned by
them. Upon request of any Limited Partner or his representative, the
General Partner shall make such list available for review by any Limited
Partner or his representative, and upon request, either in person or by
mail, the General Partner shall furnish a copy of such list by mail to any
Limited Partner or his representative, for the cost of duplication and
postage. Upon receipt of a written request, signed by Limited Partners
owning at least 10% of the Units then owned by Limited Partners, that a
meeting of the Partnership be called to vote upon any matter which the
Limited Partners may vote upon pursuant to this Agreement, the General
Partner shall, by written notice, either in person or by certified mail,
to each Limited Partner of record mailed within 15 days after such
receipt, call a meeting of the Partnership. Such meeting shall be held at
least 30 days but not more than 60 days after the mailing of such notice,
and such notice shall specify the date, a reasonable place and time, and
the purpose of such meeting.
16.3 Amendments and Actions Without Consent of the General Partner.
At any meeting called pursuant to Article 16.2, upon the affirmative vote
(which may be in person or by proxy) of Limited Partners owning more than
a majority of the Units then owned by the Limited Partners (any Units held
by the General Partner or it affiliates, shall be disregarded in
calculating the percentage of outstanding Units and the General Partner
shall be prohibited from voting as a Limited Partner) the following
actions may be taken: (i) this Agreement may be amended in accordance with
and only to the extent permissible under the Act, provided, however, that
consent of all Limited Partners shall be required in the case of
amendments requiring the consent of all Limited Partners under the Act;
(ii) the Partnership may be dissolved; (iii) the General Partner may be
removed and replaced; (iv) a new general partner may be elected if the
General Partner withdraws from the Partnership; (v) any contracts with the
General Partner may be terminated on 60 days written notice; and (vi) the
sale of all the assets of the Partnership may be approved; provided,
however, that none of the said actions may be taken unless the action is
permitted under the Act. In the event of the occurrence of an event
described in (iii) or (iv) above, the interest of the General Partner
shall be redeemed and paid to the General Partner on the basis of the Net
Assets allocable thereto on the date of such event.
ARTICLE 17.
Governing Law
The General Partner and Limited Partners expressly agree that all the
terms and provisions hereof shall be construed under the Delaware Revised
Uniform Limited Partnership Act as now adopted or as may be hereafter
amended and shall govern the partnership aspects of this Agreement absent
contrary terms contained in this Agreement.
ARTICLE 18.
Miscellaneous
18.1 Priority Among Limited Partners. No Limited Partner shall be
entitled to any priority or preference over any other Limited Partner in
regard to the affairs of the Partnership.
18.2 Notices. All notices under this Agreement, other than Requests
for Redemption of Units, notices of assignment, transfer or pledge of
Units, and reports by the General Partner to the Limited Partners, shall
be in writing and shall be effective upon personal delivery, or if sent by
first class mail, postage prepaid, addressed to the last known address of
the party to whom such notice is to be given, then, upon the deposit of
such notice in the United States mails. Reports by the General Partner to
the Limited Partners shall be in writing and shall be sent by first class
mail to the last known address of each Limited Partner. Requests for
Redemption and notices of assignment, transfer, or pledge of Units shall
be effective upon receipt by the Partnership.
18.3 Binding Effect. This Agreement shall inure to and be binding
upon all of the parties, their successors, assigns as permitted herein,
custodians, estates, heirs and personal representatives. For purposes of
determining the rights of any Partner or assignee hereunder, the
Partnership and the General Partner may rely upon the Partnership records
as to who are Partners and assignees, and all Partners and assignees agree
that their rights shall be determined and that they shall be bound hereby,
including all rights which they may have under Article 16 hereof.
18.4 Captions. Captions in no way define, limit, extend or describe
the scope of this Agreement nor the effect of any of its provisions.
18.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of
such counterparts together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first appearing above.
CAMPBELL & COMPANY, INC.
By: /s/ D. KEITH CAMPBELL
Name: D. Keith Campbell
Title: President
LIMITED PARTNERS
D. Keith Campbell as attorney-in-fact
for the Limited Partners who have agreed by
separate instrument to be a party hereto.
/s/ D. KEITH CAMPBELL
D. Keith Campbell
<PAGE>
EXHIBIT B
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
REQUEST FOR REDEMPTION
Campbell & Company, Inc.
Court Towers Building
210 West Pennsylvania Avenue
Baltimore, Maryland 21204 __________________
Social Security
Numbers/
Taxpayer ID Number
Dear Sirs:
The undersigned hereby requests redemption, as defined in and subject
to all the terms and conditions of the Limited Partnership Agreement of
CAMPBELL STRATEGIC ALLOCATION FUND, L.P. ("Fund"), of
(insert number of Units to be redeemed; if no number of units is entered
here, it will be assumed that the Limited Partner wishes to redeem ALL
units) of the undersigned's Limited Partnership Units ("Units") in the
Fund at the Net Asset Value per Unit, as described in the Prospectus, as
of the close of business at the end of the current month. Redemption shall
be effective as of the month-end immediately following receipt by you of
this Request for Redemption, provided that this Request for Redemption is
received ten (10) business days prior to the end of such month. During
the 12 months following the purchase, the General Partner charges a
redemption fee as follows: 4% of Net Asset Value on Units redeemed in the
first quarter following purchase, 3% during the second quarter, 2% during
the third quarter, and 1% in the fourth quarter. After the fourth
quarter, no redemption fees are charged.
The undersigned hereby represents and warrants that the undersigned is
the true, lawful and beneficial owner of the Units to which this Request
relates with full power and authority to request redemption of such Units.
Such Units are not subject to any pledge or otherwise encumbered in any
fashion.
United States Taxable Limited Partners Only
Under penalty of perjury, the undersigned hereby certifies that the
Social Security Number or Taxpayer ID Number indicated on this Request for
Redemption is the undersigned's true, correct and complete Social Security
Number or Taxpayer ID Number and that the undersigned is not subject to
backup withholding under the provisions of section 3406(a)(1)(C) of the
Internal Revenue Code.
Non-United States Limited Partners Only
Under penalty of perjury, the undersigned hereby certifies that (a) the
undersigned is not a citizen or resident of the United States or (b) (in
the case of an investor which is not an individual) the investor is not a
United States corporation, partnership, estate or trust.
SIGNATURE(S) MUST BE IDENTICAL TO NAME(S)
IN WHICH UNITS ARE REGISTERED
Please forward redemption funds by mail to the undersigned at:
________________________________________________________________________
Name Street City, State and Zip Code
Entity Limited Partner Individual Limited Partners(s)
_____________________________ _________________________________
(Name of Entity) (Signature of Limited Partner)
By: __________________________ _________________________________
(Authorized corporate officer, (Signature of Limited Partner)
partner, custodian or trustee)
______________________________
Title
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
EXHIBIT C
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
___________________________________
SUBSCRIPTION REQUIREMENTS
By executing the Subscription Agreement and Power of Attorney for
Campbell Strategic Allocation Fund, L.P. (the "Partnership"), each
purchaser ("Purchaser") of Limited Partnership Units in the Partnership
("Units") irrevocably subscribes for Units at a price equal to the Net
Asset Value per Unit as of the end of the month in which the subscription
is accepted provided such subscription is received at least ten business
days prior to such month end, as described in the Partnership's Prospectus
dated August 9, 1996 (the "Prospectus"). The minimum subscription is
$10,000 ($5,000 for eligible employee benefit plans and individual
retirement accounts); additional Units may be purchased with a minimum
investment of $1,000. Subscriptions must be accompanied by a check in the
full amount of the subscription and made payable to "Mercantile Safe
Deposit & Trust Company, as Escrow Agent for Campbell Strategic Allocation
Fund, L.P. Escrow Account No. 66127-09." Purchaser is also delivering to
the Selling Agent an executed Subscription Agreement and Power of Attorney
(Exhibit D to the Prospectus). If Purchaser's Subscription Agreement and
Power of Attorney is accepted, Purchaser agrees to contribute Purchaser's
subscription to the Partnership and to be bound by the terms of the
Partnership's Limited Partnership Agreement, attached as Exhibit A to the
Prospectus. Purchaser agrees to reimburse the Partnership and Campbell &
Company, Inc. (the "General Partner") for any expense or loss incurred as
a result of the cancellation of Purchaser's Units due to a failure of
Purchaser to deliver good funds in the amount of the subscription price.
By execution of the Subscription Agreement and Power of Attorney,
Purchaser shall be deemed to have executed the Limited Partnership
Agreement.
As an inducement to the General Partner to accept this subscription,
Purchaser (for the Purchaser and, if Purchaser is an entity, on behalf of
and with respect to each of Purchaser's shareholders, partners or
beneficiaries), by executing and delivering Purchaser's Subscription
Agreement and Power of Attorney, represents and warrants to the General
Partner, the Commodity Broker and the Selling Agent who solicited
Purchaser's subscription and the Fund, as follows:
(a) Purchaser is of legal age to execute the Subscription Agreement
and Power of Attorney and is legally competent to do so. Purchaser
acknowledges that Purchaser has received a copy of the Prospectus,
including the Limited Partnership Agreement,.
(b) All information that Purchaser has furnished to the General
Partner or that is set forth in the Subscription Agreement and Power of
Attorney submitted by Purchaser is correct and complete as of the date of
such Subscription Agreement and Power of Attorney, and if there should be
any change in such information prior to acceptance of Purchaser's
subscription, Purchaser will immediately furnish such revised or corrected
information to the General Partner.
(c) Unless (d) or (e) below is applicable, Purchaser's subscription is
made with Purchaser's funds for Purchaser's own account and not as
trustee, custodian or nominee for another.
(d) The subscription, if made as custodian for a minor, is a gift
Purchaser has made to such minor and is not made with such minor's funds
or, if not a gift, the representations as to net worth and annual income
set forth below apply only to such minor.
(e) If Purchaser is subscribing in a representative capacity,
Purchaser has full power and authority to purchase the Units and enter
into and be bound by the Subscription Agreement and Power of Attorney on
behalf of the entity for which he is purchasing the Units, and such entity
has full right and power to purchase such Units and enter into and be
bound by the Subscription Agreement and Power of Attorney and become a
Limited Partner pursuant to the Limited Partnership Agreement which is
attached to the Prospectus as Exhibit A.
(f) Purchaser either is not required to be registered with the
Commodity Futures Trading Commission ("CFTC") or to be a member of the
National Futures Association ("NFA") or if required to be so registered is
duly registered with the CFTC and is a member in good standing of the NFA.
(g) Purchaser represents and warrants that Purchaser has (i) a net
worth of at least $150,000 (exclusive of home, furnishings and
automobiles) or (ii) an annual gross income of at least $45,000 and a net
worth (similarly calculated) of at least $45,000. Residents of the
following states must meet the requirements set forth below (net worth in
all cases is exclusive of home, furnishings and automobiles). In addition,
Purchaser may not invest more than 10% of his net worth (exclusive of
home, furnishings and automobiles) in the Partnership.
1. Arizona - Net worth of at least $225,000 or a net worth of at least
$60,000 and an annual taxable income of at least $60,000.
2. California - Net worth of at least $100,000 and an annual income of
at least $50,000.
3. Iowa - Net worth of at least $225,000 or a net worth of at least
$60,000 and an annual income of at least $60,000.
4. Maine - Net worth of at least $200,000, or net worth of $50,000 and
an annual income of $50,000. Net worth is calculated exclusive of home,
home furnishings, and automobiles.
5. Massachusetts - Net worth of at least $225,000 or a net worth of at
least $60,000 and an annual income of at least $60,000.
6. Michigan - Net worth of at least $225,000 or a net worth of at least
$60,000 and a taxable income during the preceding year of at least $60,000
and the expectation of a taxable income during the current year of at
least $60,000.
7. Minnesota - Net worth of at least $225,000 or a net worth of at
least $60,000 and an annual taxable income of $60,000.
8. Missouri - Net worth of at least $225,000 or a net worth of at least
$60,000 and an annual taxable income of $60,000. 9. Missouri - Net worth
of at least $225,000 or a net worth of at least $60,000 and an annual
taxable income of $60,000.
10. North Carolina - Net worth of at least $225,000 or a net worth of
at least $60,000 and an annual taxable income of $60,000.
11. New Hampshire - Net worth of at least $225,000 or a net worth of at
least $60,000 and an annual income of at least $60,000.
12. Oklahoma - Net worth of at least $225,000 or a net worth of at
least $60,000 and an annual taxable income of $60,000.
13. Oregon - Net worth of at least $225,000 or a net worth of at least
$60,000 and an annual taxable income of $60,000.
14. Pennsylvania - Net worth of at least $175,000 or a net worth of at
least $100,000 and an annual taxable income of $50,000.
15. Tennessee - Net worth of at least $225,000 or a net worth of at
least $60,000 and an annual taxable income during the past two years and
anticipated taxable income in the current year of at least $60,000.
16. Texas - Net worth of at least $225,000 or a net worth of at least
$60,000 and an annual taxable income of at least $60,000.
17. Washington - A subscriber meets the necessary suitability standards
if: (1) the subscriber purchases at least 150 Units, and the subscriber's
total investment does not exceed 20% of the subscriber's net worth, or
joint net worth with the subscriber's spouse (in each case, exclusive of
home, furnishings and automobiles); (2) irrespective of the number of
Units purchased, the subscriber's net worth, or joint net worth with the
subscriber's spouse (in each case, exclusive of home, furnishings and
automobiles) exceeds $1,000,000; or (3) irrespective of the number of
Units purchased, the subscriber's income has been in excess of $200,000 in
each of the last two years and the subscriber reasonably expects income in
excess of $200,000 in the current year. Any entity in which all of the
equity owners qualify under one or more of the foregoing clauses will also
be considered to have met the applicable suitability standards.
<PAGE>
Exhibit D
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
LIMITED PARTNERSHIP UNITS
__________________________
SUBSCRIPTION AGREEMENT AND
POWER OF ATTORNEY
Campbell Strategic Allocation Fund, L.P.
c/o Campbell & Company, Inc.
Court Towers Building
210 West Pennsylvania Avenue
Baltimore, Maryland 21204
Dear Sirs:
1. Subscription for Units. I hereby subscribe for the number of
Limited Partnership Units ("Units") in Campbell Strategic Allocation Fund,
L.P. (the "Partnership") set forth below (minimum $10,000; $5,000 in the
case of trustees or custodians of employee benefit plans or individual
retirement accounts) in the Subscription Agreement and Power of Attorney
Signature Page, at Net Asset Value per Unit as set forth in the Prospectus
of the Partnership dated August 9, 1996 (the "Prospectus"). The
undersigned's check payable to "Mercantile Safe Deposit & Trust Company,
as Escrow Agent for Campbell Strategic Allocation Fund, L.P., Escrow
Account No. 66127-09," in the full amount of the undersigned's
subscription (additional investments in excess of the required minimum
investment may be made in increments of $1,000, as described in the
Prospectus), accompanies the Subscription Agreement and Power of Attorney
Signature Page. If this subscription is rejected, or if no Units are
sold, all funds remitted by the undersigned herewith will be returned,
together with any interest actually earned thereon. If this subscription
is accepted, subscribers will earn additional Units in lieu of interest
earned on the undersigned's subscription while held in escrow. The
General Partner may, in its sole and absolute discretion, accept or reject
this subscription in whole or in part. All subscriptions once submitted
are irrevocable. All Units are offered subject to prior sale.
2. Representations and Warranties of Subscriber. I have received the
Prospectus. By submitting this Subscription Agreement and Power of
Attorney I am making the representations and warranties set forth in
"Exhibit C _ Subscription Requirements" contained in the Prospectus,
including, without limitation, those representations and warranties
relating to my net worth and annual income set forth therein.
3. Power of Attorney. In connection with my acceptance of an interest
in the Partnership, I do hereby irrevocably constitute and appoint the
General Partner, and its successors and assigns, as my true and lawful
Attorney-in-Fact, with full power of substitution, in my name, place and
stead, to (i) file, prosecute, defend, settle or compromise litigation,
claims or arbitrations on behalf of the Partnership and (ii) make,
execute, sign, acknowledge, swear to, deliver, record and file any
documents or instruments which may be considered necessary or desirable by
the General Partner to carry out fully the provisions of the Limited
Partnership Agreement of the Partnership, which is attached as Exhibit A
to the Prospectus, including, without limitation, the execution of the
said Agreement itself and by effecting all amendments permitted by the
terms thereof. The Power of Attorney granted hereby shall be deemed to be
coupled with an interest and shall be irrevocable and shall survive, and
shall not be affected by, my subsequent death, incapacity, disability,
insolvency or dissolution or any delivery by me of an assignment of the
whole or any portion of my interest in the Partnership.
4. Irrevocability; Governing Law. I hereby acknowledge and agree that I
am not entitled to cancel, terminate or revoke this subscription or any of
my agreements hereunder after the Subscription Agreement and Power of
Attorney has been submitted (and not rejected) and that this subscription
and such agreements shall survive my death or disability. This
Subscription Agreement and Power of Attorney shall be governed by and
interpreted in accordance with the laws of the State of Delaware.
READ AND COMPLETE REVERSE SIDE
Exhibit D
Signature Page
IMPORTANT: READ REVERSE SIDE
BEFORE SIGNING
The investor named below, by execution and delivery of this Subscription
Agreement and Power of Attorney, by payment of the purchase price for
Limited Partnership Units in Campbell Strategic Allocation Fund, L.P. and
by either (i) enclosing a check payable to "Mercantile Safe Deposit &
Trust Company, as Escrow Agent for Campbell Strategic Allocation Fund,
L.P., Escrow Account No. 66127-09," or (ii) authorizing the Selling Agent
(or Additional Seller, as the case may be) to debit investor's customer
securities account in the amount set forth below, hereby subscribes for
the purchase of Units at Net Asset Value per Unit.
The named investor further acknowledges receipt of the Prospectus of the
Fund datedAugust 9, 1996, including the Fund's Limited Partnership
Agreement, the Subscription Requirements and the Subscription Agreement
and Power of Attorney set forth therein, the terms of which govern the
investment in the Units being subscribed for hereby.
1) Total $ Amount __________________ 2) Account # _________________
(minimum of $10,000, except $5,000 (must be completed)
minimum for IRA's and other [_] if payment is made by
qualified accounts; $1,000 debit to investor's
increments) securities account, check
box
3) Social Security Taxpayer ID
#________ - _______ - ________ #______ - _______ - _______
Taxable Investors [_] Trust other than a
Grantor or Revocable
Trust
(check one):
[_] Individual Ownership [_] Estate [_] UGMA/UTMA
(Minor)
[_] Joint Tenants with Right of [_] Partnership [_] Corporation
Survivorship
[_] Tenants in [_] Community
Common Property
[_] Grantor or Other
Revocable Trust
Non-Taxable Investors
(check one): Selling Agent Plan Non-Selling Agent Plan
[_] IRA [_] Profit Sharing [_] IRA [_] Profit Sharing
[_] IRA [_] Defined Benefit [_] IRA [_] Defined
Rollover Rollover Benefit
[_] Pension [_] Other (specify) [_] Pension [_] Other
(specify)
[_] SEP [_] SEP [_] check box if
Selling Agent in
No. 11 is Custodian
4) Limited Partner Name _________________________________________________
5) ______________________________________________________________________
Additional Information (For Estates, Partnerships and Corporations)
6) Resident Address of
Limited Partner ______________________________________________________
Street City State Zip Code
(P.O. Box
not acceptable)
7) Mailing Address
(if different) ______________________________________________________
Street City State Zip Code
(P.O. Box
not acceptable)
8) Custodian Name
and Mailing Address __________________________________________________
Name Street City State Zip Code
9) INVESTOR(S) MUST SIGN
X ________________________________________________
Signature of Investor Date Telephone No.
X ________________________________________________
Signature of Joint Investor (if any) Date
Executing and delivering this Subscription Agreement and Power of Attorney
shall in no respect be deemed to constitute a waiver of any rights under
the Securities Exchange Act of 1933 or under the Securities Exchange Act
of 1934.
UNITED STATES INVESTORS ONLY
I have checked the following box if I am subject to backup withholding
under the provisions of Section 3406(a)(1)(C) of the Internal Revenue
Code: [_]. Under penalties of perjury, by signature above I hereby certify
that the Social Security Number or Taxpayer ID Number next to my name is
my true, correct and complete Social Security Number or Taxpayer ID Number
and that the information given in the immediately preceding sentence is
true, correct and complete.
NON-UNITED STATES INVESTORS ONLY
Under penalties of perjury, by signature above I hereby certify that (a) I
am not a citizen or resident of the United States or (b) (in the case of
an investor which is not an individual) the investor is not a United
States corporation, partnership, estate or trust.
10) ACCOUNT EXECUTIVE MUST SIGN
I hereby certify that I have informed the investor of all pertinent facts
relating to the risks, tax consequences, liquidity, marketability,
management and control of the General Partner with respect to an
investment in the Units, as set forth in the Prospectus dated.August 9,
1996 I have also informed the investor of the unlikelihood of a public
trading market developing of the Units.
I have reasonable grounds to believe, based on information obtained from
this investor concerning his/her investment objectives, other investments,
financial situation and needs and any other information known by me, that
investment in the Fund is suitable for such investor in light of his/her
financial position, net worth and other suitability characteristics.
The Account Executive MUST sign below in order to substantiate compliance
with Article III, Section 34 of the NASD's Rules of Fair Practice.
X _________________________________ X __________________________________
Account Executive Signature Date Office Manager Signature Date
(if required by Selling Agent,
as the case may be, procedures)
11) Selling Agent ______________________________________________________
Account Executive
Name (please print) ________________________________________________
First M.I. Last Phone Number A.E. Number
Account Executive
Address _______________________________________________
(for confirmations) Street (P.O. Box City State Zip Code
not acceptable)
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
Campbell & Company will continue to advance certain of the
offering expenses, as described in the Prospectus, for which it shall be
reimbursed by the Registrant in monthly installments throughout the
offering period up to the lesser of the actual amount of offering expenses
advanced by Campbell & Company, Inc. or 2.5% of the aggregate
subscriptions accepted by Campbell & Company. Offering expenses related
to the initial offering and the continuing offering prior to the date of
the Prospectus included in this Registration Statement have been incurred.
Such expenses are included in the 2.5% maximum described above but are not
reflected in the figures below. The following is an estimate of the
expenses for the next nine-month period:
Approximate
Amount
Securities and Exchange Commission Registration
Fee . . . . . . . . . . . . . . . . . . . . $10,345
National Association of Securities Dealers, Inc.
Filing Fee . . . . . . . . . . . . . . . . . 3,500
Printing Expenses . . . . . . . . . . . . . . . . 75,000
Fees of Certified Public Accountants . . . . . . 10,000
Blue Sky Expenses (Excluding Legal Fees) . . . 10,000
Fees of Counsel . . . . . . . . . . . . . . . . . 25,000
Escrow Fees . . . . . . . . . . . . . . . . . . . 1,000
Salaries of Employees Engaged in Sales Activity . 150,000
Miscellaneous Offering Costs . . . . . . . . 65,155
--------
Total $350,000
Item 14. Indemnification of Directors and Officers.
Section 15 of the Amendment of Limited Partnership (attached as
Exhibit A to the Prospectus which forms a part of this Registration
Statement) provides for the indemnification of the General Partner and
certain of its controlling persons by the Registrant in certain
circumstances. Such indemnification is limited to claims sustained by
such persons in connection with the Registrant; provided that such claims
were not the result of negligence or misconduct on the part of Campbell &
Company or such controlling persons. The Registrant is prohibited from
incurring the cost of any insurance covering any broader indemnification
than that provided above. Advances of Registrant funds to cover legal
expenses and other costs incurred as a result of any legal action
initiated against Campbell & Company by a Limited Partner are prohibited
unless specific court approval is obtained.
Item 15. Recent Sales of Unregistered Securities.
On May 11, 1993, one Unit of limited partnership interest were
sold to an individual affiliated with Campbell & Company in order to
permit the filing of a Certificate of Limited Partnership for the
Registrant. The sale of these Units were exempt from registration under
the Securities Act of 1933 pursuant to Section 4(2) thereof. No discounts
or commissions were paid in connection with the sale, and no other offeree
or purchaser was solicited. There have been no other unregistered sales
of Units.
Item 16. Exhibits and Financial Statement Schedules.
The following documents (unless indicated) are filed herewith
and made a part of this Registration Statement.
(a) Exhibits
Exhibit
Number Description of Document
1.01 Form of Selling Agreement among the Partnership, the
General Partner, PaineWebber Incorporated and the Selling
Agent.**
1.02 Form of Auxiliary Selling Agreement.**
1.03 Form of Service Agreement among Steben Asset Management,
Inc., the Registrant and the General Partner.***
3.01 Agreement of Limited Partnership of the Registrant dated
May 11, 1993.*
3.02 Certificate of Limited Partnership of the Registrant.*
3.03 Amended Agreement of Limited Partnership of the Registrant
(included as Exhibit A to the Prospectus).
5.01 Opinion of Foley & Lardner relating to the legality of the
Units.
8.01 Opinion of Foley & Lardner with respect to federal income
tax consequences.
10.01 Advisory Agreement between the Partnership and Campbell &
Company, Inc.*
10.02 Customer Agreement between the Partnership and PaineWebber
Incorporated.*
10.03 Subscription Agreement and Power of Attorney (included as
Exhibit D to the Prospectus).
10.04 Escrow Agreement between the Partnership and PaineWebber
Incorporated.*
10.05 Commodity Client Agreement between Smith Barney, Inc. and
the Partnership.****
10.06 Investment Management Agreement between the Partnership and
Brown Brothers Harriman & Co.
24.01 Consent of Foley & Lardner (included in their opinions in
Exhibits 5.01 and 8.01).
24.02 Consent of Arthur F. Bell, Jr. & Associates.
* This exhibit is included in exhibits filed by the Registrant as part
of its Registration Statement on Form S-1 (No. 33-67164) on August 9, 1993
and is hereby incorporated herein by reference.
** This exhibit is included in exhibits filed by the Registrant as part
of its Amendment No. 2 to the Registration Statement on Form S-1 (No. 33-
67164) on December 20, 1993 and is hereby incorporated herein by
reference.
*** This exhibit is included in the exhibits filed by the Registrant as
part of its Post-Effective Amendment No. 1 to the Registration Statement
on Form S-1 (No. 33-84126) on May 22, 1995 and is hereby incorporated
herein by reference.
**** This exhibit is included in the exhibits filed by the Registrant as
part of its Registration Statement on Form S-1 (No. 33-98056) on October
12, 1995 and is hereby incorporated herein by reference.
(b) Financial Statement Schedules.
No Financial Schedules are required to be filed herewith.
Item 17. Undertakings.
(a)(1) The undersigned registrant hereby undertakes to file,
during any period in which offers or sales are being made, a post-
effective amendment to this registration statement:
(i) To include any prospectus required by section 10a(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represents a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act
shall be deemed to be part of this registration statement as of the time
it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities under the
Securities Act of 1933 may be permitted to directors, officers and con-
trolling persons of the registrant pursuant to the provisions described in
Item 14 above, or otherwise, the registrant had been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of
the registrant in the successful defense of any such action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
General Partner of the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Baltimore in the State of Maryland on the 11th
day of June, 1996.
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
By: Campbell & Company, Inc. General Partner
By: /s/ D. Keith Campbell
D. Keith Campbell
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on
behalf of the General Partner of the Registrant in the capacities and on
the date indicated.
Signatures Title with Registrant Date
/s/ D. Keith Campbell Chief Executive Officer June 11, 1996
D. Keith Campbell and Director (Principal
Executive Officer)
/s/ Bruce L. Cleland President and Director June 11, 1996
Bruce L. Cleland
/s/ Theresa D. Livesey Treasurer and Chief June 11, 1996
Theresa D. Livesey Financial Officer
(Principal Financial
Officer)
/s/ David M. Salmon Director June 11, 1996
David M. Salmon
/s/ William C. Clarke, III Executive Vice President June 11, 1996
William C. Clarke, III and Director
/s/ James M. Little Senior Vice President June 11, 1996
James M. Little and Director
(Being the principal executive officer, the principal financial and
accounting officer and a majority of the directors of Campbell & Company,
Inc.)
CAMPBELL & COMPANY, INC. General Partner of June 11, 1996
Registrant
By:/s/ D. Keith Campbell
D. Keith Campbell
Chief Executive Officer
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description of Document
5.01 Opinion of Foley & Lardner relating to the legality of the
Units.
8.01 Opinion of Foley & Lardner with respect to federal income
tax consequences.
10.06 Investment Management Agreement between Brown Brothers
Harriman & Co. and the Partnership.
24.01 Consent of Foley & Lardner (included in their opinions in
Exhibits 5.01 and 8.01).
24.02 Consent of Arthur F. Bell, Jr. & Associates.
Foley & Lardner
One IBM Plaza
330 North Wabash Avenue, Suite 3300
Chicago, IL 60611-3608
312-755-2562
EXHIBIT 5.01
June 11, 1996
Campbell & Company, Inc.
Court Towers Building
210 West Pennsylvania Avenue
Baltimore, Maryland 21204
Dear Sir:
We have acted as your counsel in connection with the preparation of
the Registration Statement on Form S-1, filed with the Securities and
Exchange Commission ("SEC") on June 11, 1996 (the "Registration
Statement"), relating to the registration under the Securities Act of
1933, as amended, of $30,000,000 of Limited Partnership Units ("Units") in
Campbell Strategic Allocation Fund, L.P., a Delaware limited partnership
(the "Partnership").
Based upon our familiarity with the Partnership, we are of the
opinion that the Units to be offered for sale as described in the
Registration Statement, when sold in the manner and under the conditions
set forth therein, will be legally issued and fully paid and non-
assessable. We are also of the opinion that purchasers of the Units will
become limited partners in the Partnership and that their liability for
the losses and obligations of the Partnership will be limited to the
extent provided by the Delaware Revised Uniform Limited Partnership Act
and the Limited Partnership Agreement of the Partnership.
We consent to the filing of this opinion with the SEC as an exhibit
to the Registration Statement, and to the statements regarding us and to
the use of our name in the Prospectus. In giving our consent, we do not
admit that we are "experts" within the meaning of Section 11 of the 1933
Act, or within the category of persons whose consent is required by
Section 7 of the 1933 Act.
Very truly yours,
FOLEY & LARDNER
Foley & Lardner
One IBM Plaza
330 North Wabash Avenue, Suite 3300
Chicago, IL 60611-3608
(312) 755-1900
EXHIBIT 8.01
June 11, 1996
Campbell & Company, Inc.
Court Towers Building
210 West Pennsylvania Avenue
Baltimore, Maryland 21204
Re: Registration Statement on Form S-1
Ladies and Gentlemen:
We have acted as your counsel in connection with the preparation
and filing with the Securities and Exchange Commission (the "SEC") under
the Securities Act of 1993, as amended (the "1933 Act"), of the
Registration Statement on Form S-1, filed with the SEC on June 11, 1996
(the "Registration Statement") relating to the Limited Partnership Units
("Units") of Campbell Strategic Allocation Fund, L.P. (the "Fund"), a
limited partnership organized under the Delaware Revised Uniform Limited
Partnership Act.
In preparing this opinion, we have reviewed the Registration
Statement and such other documents as we deemed necessary. We have
assumed, without independent verification, the accuracy of all of the
facts set forth in the Prospectus constituting a part of the Registration
Statement (the "Prospectus"), including the statements contained therein
concerning the future operations of the Fund. Without limiting the
foregoing, we have assumed, without independent verification, that (a)
Campbell & Company, Inc. will, when the Fund's Units are sold to the
public, have a capitalization not materially less than that indicated in
the audited financial statements included in the Registration Statement
and will both maintain such capitalization throughout the term of the Fund
and increase such capitalization as required by the terms of the Limited
Partnership Agreement; (b) Campbell & Company, Inc. has made and will
continue to make capital contributions to the Fund from time to time in at
least the amounts set forth in the Prospectus; (c) the Fund has been and
will continue to be operated so that it will satisfy the gross income
requirements described in "Federal Income Tax Aspects" in the Prospectus;
and (d) the Fund will not elect to be taxed as a corporation if permitted
to do so under future Treasury Regulations.
We hereby confirm our opinion expressed under the caption
"Federal Income Tax Aspects" in the Prospectus that, as of the date
hereof, the Fund will be classified as a partnership (and not as an
association taxable as a corporation) for federal income tax purposes.
We also advise that, in our opinion, the description set forth
under the caption "Federal Income Tax Aspects" in the Prospectus correctly
describes (subject to the uncertainties referred to therein) the material
aspects of the federal income tax consequences, as of the date hereof, of
an investment in the Fund to an investor who is an individual citizen or
resident of the United States and who holds the Units as a capital asset.
The opinions set forth above are based upon the applicable
provisions of the Internal Revenue Code of 1986, as amended; the Treasury
Regulations promulgated or proposed thereunder; current positions of the
Internal Revenue Service (the "IRS") contained in published revenue
rulings, revenue procedures, and announcements; existing judicial
decisions; and other applicable authorities. No tax rulings have been
sought from the IRS with respect to any of the matters discussed herein.
As explained above, our opinions as set forth herein are based
upon the factual statements contained in the Prospectus and the
representations set forth in the certificate of even date herewith
executed by an authorized officer of Campbell & Company, Inc., whether or
not specifically referred to herein, and the assumptions set forth herein.
If any such factual statement or assumption is inaccurate or incorrect in
any material respect on the date hereof or on any subsequent date, any or
all of the opinions expressed herein with respect to the Fund may become
inapplicable.
We consent to the filing of this opinion with the SEC as an
exhibit to the Registration Statement, and to the statements regarding us
and to the use of our name in the Prospectus. In giving our consent, we
do not admit that we are "experts" within the meaning of Section 11 of the
1933 Act, or within the category of persons whose consent is required by
Section 7 of the 1933 Act.
Very truly yours,
FOLEY & LARDNER
(Exhibit 10.06)
January 3, 1996
Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
Dear Sirs:
This will confirm our agreement as to the terms on which Brown
Brothers Harriman & Co. ("Brown Brothers") will act as investment manager
with respect to the assets (the "Portfolio") held from time to time in a
custodian account in the name of Campbell Strategic Allocation Fund, L.P.
(the "Fund") with Brown Brothers.
1.Appointment of Brown Brothers. Pursuant to resolution of the Board
of Directors of Campbell & Company, Inc., the General Partner of the
Fund (the "General Partner") adopted on December 15, 1995, Brown
Brothers is hereby appointed investment manager with respect to the
Portfolio.
2.Acceptance of Appointment. Brown Brothers hereby accepts its
appointment as investment manager of the Portfolio pursuant to the
terms of this Agreement.
3.Investment Guidelines. The investment objective of the Portfolio is
to achieve returns (net of any fees) in excess of prevailing 90-day
U.S. Treasury Bill rates with an investment grade portfolio. The
Portfolio's guidelines are as follows:
Maximum Portfolio Average Maturity = 180 days
Minimum Portfolio Investment Quality = A or Better
Maximum Maturity of Individual Security = 24 months
Minimum Investment Quality of Individual Security = A or Better
Allowable Investments
U.S. Treasury Bills
U.S. Treasury Notes
U.S. Treasury Strips
U.S. Government Agency Securities (Investments with any one
agency not to exceed 50% of the Portfolio's value.)
Euro dollar Time Deposits (Investments with any one bank not to
exceed 20% of the Portfolio's value.) with banks listed in Annex
II: (unacceptable banks are struck through)
Repurchase Agreements (overnight, term and demand/open) with
counterparties listed in Annex I:(unacceptable counterparties
are struck through)
Repurchase agreements will be subject to the following:
1) Not to exceed 40% of the Portfolio's value.
2) Underlying Collateral - US Treasury Securities (Bills, Notes
and Strips) with a time to maturity of less than 5 years and
subject to the following excess margin requirements:
Maturity of less then 1 year 100.5%
Maturity of 1 year but less than 3 years 101.0%
Maturity of 3 years but less than 4 years 101.5%
Maturity of 4 years but less than 5 years 102.0%
4.Discretionary Authority. Brown Brothers shall manage such sums of
money and other property acceptable to it and such earnings, profits,
increments and accruals thereon as may occur from time to time, which
shall constitute a part of the Portfolio. Subject to the investment
guidelines specified in (3) above and any other investment guidelines
received in writing from the General Partner and accepted by Brown
Brothers. Brown Brothers shall have complete discretion in the
investment and reinvestment of the assets in the Portfolio, with full
power and authority to make such purchases and sales, or to issue
directly to a broker or dealer orders for such purchases and sales,
of securities or other property or interests therein as it may deem
appropriate. Brown Brothers shall manage the Portfolio and carry out
its duties and obligations under this Agreement solely in accordance
with the express provisions of this Agreement.
5.Statements and Reports. Brown Brothers will provide the General
Partner with (1) daily statements of account and monthly recaps and
(2) confirmations of trades or debit/credit advices promptly after
execution of all transactions. Brown Brothers will also provide the
General Partner with other such periodic reports as the General
Partner and Brown Brothers may agree upon from time to time.
Discharge and Limitation of Liability. Except with respect to any
act or transaction of Brown Brothers as to which the General Partner
shall file a written objection with Brown Brothers within a period of
ninety (90) days from the date of filing each statement with respect
to the Portfolio, Brown Brothers shall upon the expiration of such
period be forever released and discharged from any liability or
accountability to the Fund as respects the propriety of its acts and
transactions shown in such statements.
Brown Brothers shall not be liable for errors of judgment or of fact
or for any action taken or omitted in connection with its duties
under this Agreement in the absence of bad faith or willful
misconduct.
6.Consultation with Counsel. Brown Brothers may consult with legal
counsel (who may be counsel to the General Partner) concerning any
questions that may arise with reference to its duties under this
Agreement, and the opinion of such counsel shall be full and complete
protection in respect of any action taken or omitted by Brown
Brothers in good faith and in accordance with such opinion.
7.Secretary's Certificate. The General Partner shall provide Brown
Brothers with a certificate of the Secretary of the General Partner
setting forth the names and specimen signatures of the individuals
who are authorized to act on behalf of the General Partner. Brown
Brothers shall not be liable and shall be fully protected in relying
upon any notice, instruction, direction or other communication that
Brown Brothers reasonably believes (based on the most recent
certificate of the Secretary of the General Partner that has been
received by Brown Brothers) to have been given by an individual who
is authorized to act on behalf of the General Partner.
8.Notices. All notices and other written communication specified
herein shall be deemed duly given if delivered or if sent by first
class mail, postage prepaid, to the party at the address specified
below or at such other address as the party may designate in writing
to the other party:
if to Brown Brothers: Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
Attention: Eugene C. Rainis
Telephone:
Facsimile:
if to the General Partner: Campbell & Company, Inc.
Suite 770
210 West Pennsylvania Avenue
Baltimore, MD 21204
Attention: Theresa D. Livesey
Telephone: 410-296-3301
Facsimile: 410-296-3311
1.Fees. As compensation for its services under this agreement, the
Fund shall pay Brown Brothers such compensation as may from time to
time be agreed upon in writing by the two parties.
2.Termination. Brown Brothers may terminate this agreement at any
time by giving written notice to the General Partner at least thirty
(30) days prior to the date on which such termination is to become
effective. The General Partner may terminate this agreement at any
time upon written notice to Brown Brothers, provided that the General
Partner shall honor any trades agreed to but not settled before the
date of termination.
3.Applicable Law. This Agreement shall be construed and enforced
according to the laws of the State of New York, and all provisions
hereof shall be administered according to the laws of said State.
If the foregoing is in accordance with your understanding, will you
kindly sign and return the enclosed copy of this letter, whereupon it
shall become a binding agreement between us.
Very truly yours,
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
Campbell & Company, Inc.
General Partner
By /s/ Theresa D. Livesey
Theresa D. Livesey
Chief Financial Officer
Accepted and agreed
BROWN BROTHERS HARRIMAN & CO.
By /s/ Jeffrey A. Schoenfeld
Jeffrey A. Schoenfeld
Partner
<PAGE>
AMENDMENT
AMENDMENT dated as of May 10, 1996 to Investment Advisory Agreement
dated as of January 3, 1996 (the "Agreement") between Brown Brothers
Harriman & Co. ("Brown Brothers") and Campbell Strategic Allocation Fund,
L.P. (the "Client").
Section 3. of the Agreement ("Investment Guidelines") is hereby
amended to reflect the following:
Maximum Portfolio Average Maturity = 270 days (9 months)
Maximum Maturity of Individual Security = 24 months
Except as provided herein, the Agreement is confirmed in all
respects.
BROWN BROTHERS HARRIMAN & CO. CAMPBELL STRATEGIC ALLOCATION
FUND, L.P.
By:/s/ Jeffrey A. Schoenfeld By: _/s/ Theresa D. Livesey_
Theresa D. Livesey, C.F.O.
Campbell & Company, Inc.,
General Partner
(Exhibit 24.02)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated January 29, 1996 on
the financial statements of Campbell Strategic Allocation Fund, L.P. as of
December 31, 1995 and 1994 and for the years ended December 31, 1995 and
1994 and for the period May 11, 1993 (inception) to December 31, 1993 and
our report dated March 1, 1996 on the Balance Sheet of Campbell & Company,
Inc. as of December 31, 1995, which appear in such Prospectus. We also
consent to the statements with respect to us as appearing under the heading
"Experts" in the Prospectus.
ARTHUR F. BELL, JR. & ASSOCIATES, L.L.C.
CERTIFIED PUBLIC ACCOUNTANTS
Lutherville, Maryland
June 10, 1996
