<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 18, 1997
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)
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DELAWARE 6799 52-1823554
(State of Organization) (Primary Standard Industrial (I.R.S. Employer
Classification Number) Identification Number)
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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:
MICHAEL J. SCHMIDTBERGER
SIDLEY & AUSTIN
875 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 906-2348
------------------------------------
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 (the "Securities Act") check the following box. [X]
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TITLE OF EACH CLASS OF AMOUNT BEING MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
SECURITIES BEING REGISTERED REGISTERED(1) PRICE PER UNIT OFFERING PRICE REGISTRATION FEE
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Units of Limited Partnership Interest......... $60,000,000 $18,182
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If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
Pursuant to Rule 429, the Prospectus contained herein also relates to
Registration Statement No. 333-19117 declared effective on February 14, 1997 and
this constitutes Post Effective Amendment No. 1 to such Registration Statement.
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.
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<PAGE> 2
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
CROSS REFERENCE SHEET
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ITEM
NO. PROSPECTUS HEADING
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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............................... Conflicts of Interest
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CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
$125,000,000 Units of Limited Partnership Interest
------------------------
Campbell Strategic Allocation Fund, L.P. (the "Fund"), is a Delaware limited
partnership organized to engage in the speculative trading of 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 trading activities by establishing
pre-defined loss levels on each trade and diversifying positions across a broad
spectrum of markets. Campbell & Company has been trading futures and related
contracts pursuant to its technical trading systems for over 25 years and, as of
April 30, 1997, had over $670 million under its management ($570 million in the
Financial, Metal & Energy Large Portfolio, the program primarily utilized to
trade the Fund's assets).
Units of Limited Partnership Interest of the Fund (the "Units") are offered
at the Net Asset Value per Unit on an ongoing basis (the "Continuing Offering"),
as of the close of business on the last business day of each month (each, a
"Closing Date"). No maximum number of Units available can be calculated and
there is no minimum amount that must be sold. Net Asset Value per Unit is
determined in accordance with generally accepted accounting principles and
represents the Net Assets of the Fund divided by the number of Units outstanding
as of the date of determination.
All of the proceeds of the Continuing Offering will be available for trading
purposes. The Fund commenced trading operations in April 1994, and as of April
30, 1997 the Net Asset Value per Unit was $1,271.56. The Fund was initially
capitalized at $9,692,439 and was capitalized at $136,438,677 as of April 30,
1997. The Fund's performance record from inception through April 30, 1997 is set
forth herein. 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. Limited Partners may redeem the Units at
the Net Asset Value per Unit on the last business day of each month, net of any
redemption fee, on ten business days' prior written notice. Redemption fees
apply through the first twelve month-ends following purchase (from and including
the Closing Date on which the Unit is purchased) as follows: 4% of Net Asset
Value per Unit redeemed through the third month-end, 3% of Net Asset Value per
Unit redeemed through the sixth month-end, 2% of Net Asset Value per Unit
redeemed through the ninth month-end, and 1% of Net Asset Value per Unit
redeemed through the twelfth month-end. After the twelfth month-end following
purchase of a Unit, no redemption fees apply. THESE ARE SPECULATIVE SECURITIES
AND INVOLVE A HIGH DEGREE OF RISK. SEE "PLAN OF DISTRIBUTION" AND "CONFLICTS OF
INTEREST." SEE "RISK FACTORS" ON PAGE 15 FOR A MORE DETAILED DESCRIPTION OF THE
FOLLOWING RISKS AND OTHER SIGNIFICANT RISK FACTORS APPLICABLE TO AN INVESTMENT
IN THE FUND. THERE IS NO ASSURANCE THAT THE FUND WILL ACHIEVE ITS OBJECTIVES.
- Futures and forward trading is speculative and involves a high degree of
risk, including the possible loss of all or substantially all of one's
investment. See "Risk Factors."
- Past performance of managed futures in general and the Fund in particular
is not necessarily indicative of future results.
- 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's 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."
------------------------
SUBSCRIBERS TO THE FUND WILL BE REQUIRED TO MAKE 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 PROSPECTUS.
------------------------
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.
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PROCEEDS TO THE
PRICE TO PUBLIC (1)(5) SELLING COMMISSIONS FUND (2)(3)(4)
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Continuing Offering Period................................... Net Asset Value (2) Net Asset Value
- ----------------------------------------------------------------------------------------------------------------------------------
Total Maximum................................................ $125,000,000 (2) $125,000,000
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See Notes on the following page.
The date of this Prospectus is July 1, 1997.
<PAGE> 4
The Fund is subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith files, or will file, reports,
proxy statements and other information with the Securities and Exchange
Commission (the "SEC"). These reports, proxy statements and other information
can be inspected and copied at the public reference facilities maintained by the
SEC at the SEC's office at 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549, and at its regional offices located at 7 World Trade Center, Suite 1300,
New York, New York 10048; and 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Such reports and information for registrants that file
electronically with the SEC are also available on the SEC's internet Web site at
http://www.sec.gov. Copies of such material can be obtained from the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, and at the regional offices described above at prescribed rates.
The Fund has filed with the SEC, in Washington, D.C., a Registration
Statement on Form S-1 under the Securities Act of 1933 with respect to the Units
offered hereby. This Prospectus does not contain all the information included in
the Registration Statement, certain items of which are omitted in accordance
with the Rules and Regulations of the SEC, 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 SEC in Washington,
D.C., and copies of all or part thereof may be obtained from the SEC upon
payment of the prescribed fees. For further information about the Fund and the
Units offered hereby, reference is made to the Registration Statement and the
exhibits thereto.
2
<PAGE> 5
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 the Continuing Offering. Subscriptions received during the
Continuing Offering Period can be accepted on a monthly basis. Subscribers whose
subscriptions are canceled 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,
1997 totaled $3,098,422 and for the nine months commencing on the date hereof
are estimated at $1,200,000. 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
3
<PAGE> 6
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.
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.
See "Plan of Distribution" for information relating to indemnification
arrangements with respect to the Selling Agents.
REGULATORY NOTICES
THIS PROSPECTUS MUST BE ACCOMPANIED BY SUMMARY FINANCIAL INFORMATION FOR
THE FUND CURRENT WITHIN SIXTY (60) CALENDAR DAYS.
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."
COMMODITY FUTURES TRADING COMMISSION
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.
4
<PAGE> 7
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 42 AND A
STATEMENT OF THE PERCENTAGE RETURN NECESSARY TO BREAK EVEN, THAT IS, TO RECOVER
THE AMOUNT OF YOUR INITIAL INVESTMENT, AT PAGE 45.
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 15.
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.
5
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TABLE OF CONTENTS
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sec.1. Summary............................................................................ 10
sec.2. Risk Factors....................................................................... 15
A. Market Risks................................................................ 15
(i) Futures and Forward Trading Is Volatile............................... 15
(ii) Futures and Forward Trading Is Highly Leveraged....................... 15
(iii) Futures and Forward Markets Can Be Illiquid or Disrupted............. 15
(iv) Forward Transactions Are Not Regulated and Are Subject to Credit
Risk................................................................. 15
(v) Limited Ability to Liquidate Investment in Units...................... 15
(vi) Futures Trading is Highly Speculative................................. 15
(vii) Non-Correlated, Not Negatively Correlated, Performance Objective..... 15
B. Trading Risks............................................................... 16
(i) Trading Methods Based Upon Technical Criteria Are Dependent on the
Occurrence and Recognition of Price Trends........................... 16
(ii) Other Trend-Following Programs May Reduce the Effectiveness of Trend-
Following Techniques................................................. 16
(iii) Speculative Position Limits May Alter Trading Decisions for the
Fund................................................................. 16
(iv) Increase in Assets Under Management May Affect Trading Decisions...... 16
(v) Trading Methods Involve Proprietary Methods........................... 16
C. Tax Risks................................................................... 16
(i) Limited Partners' Tax Liability May Exceed Distributions.............. 16
(ii) Taxation of Interest Income Irrespective of Trading Losses............ 16
(iii) Deductibility of Certain Expenses.................................... 17
D. Other Risks................................................................. 17
(i) Fees and Commissions Are Charged Regardless of Profitability.......... 17
(ii) Failure of Brokerage Firms; Disciplinary History of Commodity
Broker............................................................... 17
(iii) Past Performance Is Not Necessarily Indicative of Future Results..... 17
(iv) Conflicts of Interest................................................. 17
(v) Reliance on Campbell & Company........................................ 17
(vi) Possibility of Termination of the Fund Before Expiration of its Stated
Term................................................................. 17
(vii) Lack of Statutory Regulation......................................... 18
(viii) Proposed Regulatory Change Is Impossible to Predict................. 18
(ix) Swaps, Hybrids and Other Derivatives Are Not Subject to CFTC
Regulation........................................................... 18
(x) Foreign Futures Contracts Are Not Subject to U.S. Regulation........... 18
(xi) Restrictions on Transferability....................................... 18
(xii) Restrictions on Investment by ERISA Accounts......................... 18
(xiii) A Single Advisor Fund May Be More Volatile Than a Multi-Advisor
Fund................................................................ 19
sec.3. Selected Financial Data............................................................ 19
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6
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sec.4. Investment Factors................................................................. 19
A. Value of Diversifying into Managed Futures.................................. 19
B. Advantages of Futures Fund Investments...................................... 21
(i) Profit Potential...................................................... 22
(ii) 100% Interest Credit.................................................. 22
(iii) Global Diversification Within a Single Investment..................... 22
(iv) Ability to Profit (or Lose) in a Rising or Falling Market
Environment.......................................................... 22
(v) Professional Trading.................................................. 22
(vi) Convenience........................................................... 22
(vii) Liquidity............................................................. 22
(viii)Limited Liability..................................................... 22
sec.5. Campbell & Company, Inc. .......................................................... 23
A. Description................................................................. 23
B. The Advisory Agreement...................................................... 24
C. The Trading Systems......................................................... 24
sec.6. Management's Discussion and Analysis of Financial Condition and Results of
Operations................................................................ 28
A. Introduction................................................................ 28
B. Capital Resources........................................................... 28
C. Liquidity................................................................... 28
D. Results of Operations....................................................... 29
E. Off-Balance Sheet Risk...................................................... 30
sec.7. Past Performance of Campbell Strategic Allocation Fund, L.P........................ 31
sec.8. Conflicts of Interest.............................................................. 32
A. Campbell & Company, Inc. ................................................... 32
B. The Commodity Broker and the Foreign Exchange Dealers....................... 33
C. The Selling Agents.......................................................... 33
D. Fiduciary Duty and Remedies................................................. 33
E. Indemnification and Standard of Liability................................... 33
sec.9. Charges to the Fund................................................................ 34
A. Campbell & Company, Inc. ................................................... 35
B. The Commodity Broker........................................................ 36
C. Selling Agents.............................................................. 36
D. Foreign Exchange Dealers.................................................... 36
E. Offering Expenses........................................................... 36
F. Cash Management............................................................. 37
G. Other....................................................................... 37
H. Estimate of Breakeven Level................................................. 37
sec.10. Use of Proceeds.................................................................... 38
sec.11. The Commodity Broker............................................................... 38
sec.12. Foreign Exchange Dealers........................................................... 43
sec.13. Capitalization..................................................................... 43
sec.14. Distributions and Redemptions...................................................... 43
</TABLE>
7
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<TABLE>
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A. Distributions............................................................... 43
B. Redemptions................................................................. 44
sec.15. The Futures and Forward Markets.................................................... 44
A. Futures Contracts........................................................... 44
B. Forward Contracts........................................................... 45
C. Regulation.................................................................. 45
D. Margin...................................................................... 45
sec.16. Agreement of Limited Partnership................................................... 46
A. Organization and Limited Liabilities........................................ 46
B. Management of Partnership Affairs........................................... 46
C. Sharing of Profits and Losses............................................... 46
(i) Fund Accounting....................................................... 46
(ii) Federal Tax Allocation................................................ 46
D. Dispositions................................................................ 47
E. Dissolution and Termination of the Fund..................................... 47
F. Amendments and Meetings..................................................... 47
G. Indemnification............................................................. 48
H. Reports to Limited Partners................................................. 48
sec.17. Federal Income Tax Aspects......................................................... 48
A. The Fund's Partnership Tax Status........................................... 48
B. Taxation of Limited Partners on Profits and Losses of the Fund.............. 49
C. Limitations on Deductibility of Fund Losses by Limited Partners............. 49
D. Treatment of Income and Loss Under the "Passive Activity Loss Rules"........ 49
E. Cash Distributions and Redemptions of Units................................. 50
F. Gain or Loss on Section 1256 Contracts...................................... 50
G. Gain or Loss on Non-Section 1256 Contracts.................................. 50
H. Tax on Capital Gains and Losses............................................. 50
I. Limited Deduction for Certain Expenses...................................... 50
J. Interest Income............................................................. 51
K. Limitation on Deductibility of Interest on Investment Indebtedness.......... 51
L. "Unrelated Business Taxable Income"......................................... 51
M. Section 754 Elections....................................................... 52
N. IRS Audits of the Fund and Its Limited Partners............................. 52
O. State and Other Taxes....................................................... 52
sec.18. Investment by ERISA Accounts....................................................... 52
A. General..................................................................... 52
B. "Plan Assets"............................................................... 53
C. Ineligible Purchasers....................................................... 54
</TABLE>
8
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sec.19. Plan of Distribution............................................................... 55
A. Subscription Procedure...................................................... 55
B. Minimum Investment.......................................................... 55
C. Investor Suitability........................................................ 55
D. The Selling Agents.......................................................... 56
sec.20. Certain Legal Matters.............................................................. 57
sec.21. Experts............................................................................ 57
sec.22. Most Recent Monthly Reports........................................................ 58
sec.23. Index to Financial Statements...................................................... 59
</TABLE>
<TABLE>
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APPENDICES
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Appendix I Glossary
Appendix II Supplementary Performance Information
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EXHIBITS
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<S> <C>
Exhibit A Agreement of Limited Partnership
Exhibit B Request for Redemption
Exhibit C Subscription Requirements
Exhibit D Subscription Agreement and Power of Attorney
</TABLE>
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<PAGE> 12
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
SEC.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 currently active futures
manager -- and has been developed and refined over a period of more than 25
years. See "Past Performance of the Fund" for a performance record of the Fund
through April 30, 1997. Also, see the "Glossary" in Appendix I for definitions
of terms used in this Prospectus.
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 provides review in outline form of 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, and each
section heading corresponds to a section heading in the Prospectus where a more
complete discussion is provided. The intended effective date for use of this
document is July 1, 1997.
PLAN OF DISTRIBUTION
Subscription Procedures
- Units will be sold monthly at the Net Asset Value per Unit as of the
applicable Closing Date (until Campbell & Company elects to terminate the
Continuing Offering).
- Subscriptions will be accepted into escrow throughout the Continuing
Offering. Units will be sold by transfer of subscription funds from
escrow to the Fund on each 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 subscriptions will be returned with 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.
- Subscribers must complete, execute and deliver to their Selling Agents a
fully complete copy of the current Subscription Agreement and Power of
Attorney included as Exhibit D to 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."
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.
Investor 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)
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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.
RISK FACTORS
- The Fund is a highly volatile and 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.
- 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, excluding
interest income, 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
performance is not necessarily indicative of future results.
- 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 other "alternative" investments such as real
estate or venture capital, liquidity is restricted as the Units may only
be redeemed on a monthly basis, upon ten business days' notice.
Redemption fees apply to Units redeemed on or prior to the twelfth
month-end following purchase.
- 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."
- 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 (as defined herein) and the
Foreign Exchange Dealers (as defined herein) 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 responsibil-
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<PAGE> 14
ity to the Limited Partners to exercise good faith and fairness in all
dealings affecting the Fund. See "Conflicts of Interest."
SEE "RISK FACTORS" AND "CONFLICTS OF INTEREST" 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.
INVESTMENT FACTORS
- The Fund is a leveraged investment fund managed by an experienced,
professional trading manager.
- The Fund trades in a wide range of markets, including primarily
financial instrument contracts, as well as metals, energy, and
agricultural markets.
- Campbell & Company utilizes several independent and different trading
systems for the Fund.
- If profitable, the Fund has the potential to provide a valuable
component of diversification to traditional securities portfolios.
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.
"Non-correlation" means that there is no statistically valid relationship
on a historical basis between the returns generated from managed futures
and those generated by investments in stocks or bonds. This term is often
confused with "negative correlation," which means that the returns
generated are in direct opposition to each other, i.e., when one
investment class performs poorly, the other investment class tends to
perform well, and vice versa. 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 the returns of
Campbell & Company's portfolios have been non-correlated with the returns
of traditional stock and bond investments. However, no assurance can be
given that this non-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.
- An investment in the Units offers the advantage of limited liability in
highly leveraged trading.
- 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.
The Fund receives all interest earned on its assets. (Maintenance of the
Fund's assets in U.S. government securities and banks does not reduce the
risk of loss from trading futures contracts.)
CAMPBELL & COMPANY, INC.
- Description -- 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 25 years of experience trading in the futures markets. As of
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<PAGE> 15
April 30, 1997, Campbell & Company was managing approximately $670
million in the futures markets, including approximately $570 million in
its Financial, Metal & Energy Large Portfolio (the "FME Large
Portfolio"). The FME Large Portfolio, to which approximately 75% of the
Fund's Assets are currently allocated, is concentrated in the financial
markets (in interest rates, stock indices and foreign exchange), as well
as metals and energy products. The remaining 25% of the Fund's 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, rubber, orange juice, coffee, and fibers. Campbell
& Company currently allocates the Fund's assets as follows: approximately
79% to financial markets, 5% to metals, 13% to energy products, and 3% to
agricultural markets. These percentages will fluctuate as market
conditions, such as a given market's profitability and/or viability,
change, and Campbell & Company reserves the right to respond to these
changes by rebalancing the portfolio traded by changing allocations and
adding or deleting markets traded within the given sectors. Campbell &
Company has sole authority and responsibility for directing investment
and reinvestment of the Fund's assets.
- Trading Systems -- Campbell & Company employs a computerized, technical,
trend-following approach combined with quantitative portfolio management
analysis and seeks to identify and profit from sustained price trends.
Two main trading systems (each utilizing two parameter sets) are utilized
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. Campbell &
Company utilizes a proprietary volatility-based model for allocating
capital to a portfolio's constituent markets. Each market is assigned a
dollar risk value based on contract size and volatility, which forms the
basis for structuring a risk-balanced portfolio.
CHARGES TO THE FUND
- 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.
<TABLE>
<S> <C>
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 the Fund's Net Assets,
excluding interest income (and as adjusted for subscriptions
and redemptions).
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.......... 0.125 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).
</TABLE>
- 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."
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<PAGE> 16
<TABLE>
<S> <C>
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%
========
</TABLE>
- No upfront sales commissions are 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. This reimbursement obligation is subject to a maximum of 2.5% of
the subscriptions accepted by Campbell & Company.
DISTRIBUTIONS AND REDEMPTIONS
- The Fund is intended to be a medium - to long-term investment (3 to 5
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. Redemption fees apply through the
first twelve month-ends following purchase (from and including the
Closing Date on which the Unit is purchased) as follows: 4% of Net Asset
Value per Unit redeemed through the third month-end, 3% of Net Asset
Value per Unit redeemed through the sixth month-end, 2% of Net Asset
Value per Unit redeemed through the ninth month-end, and 1% of Net Asset
Value per Unit redeemed through the twelfth month-end. After the twelfth
month-end following purchase of a Unit, no redemption fees apply.
- Campbell & Company does not intend to make distributions, choosing
instead to retain the Fund's capital for trading purposes.
FEDERAL INCOME TAX ASPECTS
- In the opinion of counsel, the Fund will be classified as a partnership
(and not be considered a publicly-traded partnership taxable as a
corporation) for federal income tax purposes. As such, whether or not
Campbell & Company has distributed any cash to the Partners, each Limited
Partner will be required to report his or her allocable share of items of
taxable gain, loss, income and deduction of the Fund and is individually
liable for income tax on such share. The Fund invests in futures and
other commodity contracts, gain or loss on which will, depending on the
contracts traded, constitute a mixture of (i) ordinary income or loss and
(ii) 60% long-term capital gain or loss and 40% short-term capital gain
or loss. Trading losses of the Fund, which may constitute ordinary or
capital loss, depending on the contracts traded, may only be available to
offset a limited amount of interest income allocated to the Limited
Partners. Although Campbell & Company treats the Brokerage Fees and
performance fees paid to Campbell & Company as ordinary expenses, such
expenses may be subject to restrictions on deductibility for federal
income tax purposes or be treated as non-deductible costs by the IRS. See
"Federal Income Tax Aspects."
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<PAGE> 17
SEC.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. Significant amounts can, therefore,
be lost in a brief period of time, including all, or substantially all, of an
investment.
(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
illiquidity 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
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 one or more trades.
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 Are Not Regulated and Are Subject to Credit
Risk. 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. Furthermore,
redemption fees apply to Units redeemed on or prior to the twelfth month-end
following their purchase. 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 a forced liquidation could adversely affect
the Fund.
(vi) Futures Trading is Highly Speculative. 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.
(vii) Non-Correlated, Not Negatively Correlated, Performance
Objective. Historically, managed futures have been generally non-correlated to
the performance of other asset classes such as stocks and bonds. Non-correlation
means that there is no statistically valid relationship between the past
performance of futures and stocks or bonds (as opposed to negative correlation,
where the performance would be exactly opposite
15
<PAGE> 18
between two asset classes). Because of this non-correlation, the Fund cannot be
expected to be automatically profitable during unfavorable periods for the stock
market, or vice versa. The futures markets are fundamentally different from the
securities markets in a number of respects, and any comparison between them is
subject to certain inherent and material limitations. If the Fund does not
perform in a manner non-correlated with the general financial markets or does
not perform successfully, investors will obtain no diversification benefits by
investing in the Units.
B. TRADING RISKS
(i) Trading Methods Based Upon Technical Criteria Are Dependent on the
Occurrence and Recognition of Price Trends. 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 that 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) Other Trend-Following Programs May Reduce the Effectiveness of
Trend-Following Techniques. 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) Speculative Position Limits May Alter Trading Decisions for the
Fund. 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) Increase in Assets Under Management May Affect Trading Decisions.
Campbell & Company's current equity under management is at or near its all-time
high. Campbell & Company has not agreed to limit the amount of additional equity
which it may manage, and is actively engaged in seeking major new accounts.
Future increases in equity under management may require Campbell & Company to
modify its trading decisions for the Fund. It is not possible to predict the
effect of any such modifications on Campbell & Company's future performance.
(v) 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) 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 Limited Partners whether or not
any cash has been distributed to the Partners.
(ii) 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.
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<PAGE> 19
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.)
(iii) 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 Are Charged Regardless of Profitability. 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" spreads 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 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 described in "The Commodity Broker."
(iii) Past Performance Is Not Necessarily Indicative of Future Results. No
assurance can be given that the Fund will perform successfully in the future
inasmuch as past performance is not necessarily indicative of future results.
(iv) Conflicts of Interest. Campbell & Company has a conflict of interest
because it acts as the general partner and sole trading advisor for the Fund.
The fees payable to Campbell & Company were established by it and were 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.
Rather, the Fund is wholly dependent upon the services of Campbell & Company.
There can be no assurance that such services will be available for any length of
time following the term of the Advisory Agreement. Furthermore, the incapacity
of Campbell & Company's principals could have a material and adverse effect on
Campbell & Company's ability to discharge its obligations under the Advisory
Agreement.
(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
17
<PAGE> 20
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) Lack of Statutory Regulation. If the registrations with the CFTC or
memberships in the National Futures Association ("NFA") 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, Campbell & Company is not registered as
an investment adviser under the Investment Advisers Act of 1940 and the Fund is
not subject to the Investment Company Act of 1940. Accordingly, investors do not
have the protection of those statutes.
(viii) Proposed Regulatory Change Is Impossible to Predict. The futures
markets are subject to comprehensive 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 and forward transactions in the United
States is a rapidly changing area of law and is subject to modification by
government and judicial action. The effect of any future regulatory change on
the Fund is impossible to predict, but could be substantial and adverse.
(ix) Swaps, Hybrids and Other Derivatives Are Not Subject to CFTC
Regulation. 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.
(x) Foreign Futures Contracts Are Not Subject to U.S. Regulation. 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 CFTC, NFA 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. See the last paragraph of the "Commodity Futures Trading
Commission -- Risk Disclosure Statement" on page 5 of this Prospectus. 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.
(xi) 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."
(xii) 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 will be no secondary market in which such fiduciary can sell or otherwise
dispose of the Units. See "Federal Income Tax Aspects" and "Investments by ERISA
Accounts."
18
<PAGE> 21
(xiii) A Single Advisor Fund May Be More Volatile Than a Multi-Advisor
Fund. The Fund is a single-advisor managed futures fund. Potential investors
should understand that many managed futures funds are structured as
multi-advisor funds in order to attempt to control risk and reduce volatility
through combining advisors whose historical performance records have exhibited a
significant degree of non-correlation with each other. As a single-advisor
managed futures fund, it is expected that the Fund will have a greater profit
potential than investment vehicles employing multiple advisors, but will also
have increased performance volatility and a higher risk of loss. The "MAR
Fund/Pool Qualified Universe," discussed below under "Investment Factors," is a
dollar weighted index of 420 managed futures funds. Accordingly, such index
reflects the volatility and risk of loss characteristics of a very broadly
diversified universe of advisors and not of a single-advisor fund. No
representation is made that the Fund's performance volatility and risk of loss
characteristics will be similar to those of the MAR Fund/Pool Qualified
Universe.
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.
SEC.3. SELECTED FINANCIAL DATA
DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
3 MONTHS ENDED ----------------------- PERIOD ENDED
MARCH 31, 1997 1996 1995 DECEMBER 31, 1994
-------------- -------- ------- -----------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Total Assets................................ $135,948 $111,367 $46,492 $ 21,066
Total Partners' Capital..................... 133,659 107,737 45,074 20,599
Total Income (Loss)......................... 7,690 26,624 6,201 (1,215)
Net Income (Loss)........................... 4,354 19,058 3,509 (2,236)
Net Income (Loss) Per General and Limited
Partner Unit.............................. 48.77 327.00 103.74 (133.42)
Increase (Decrease) in Net Asset Value per
General and Limited Partner Unit.......... 50.87 296.12 88.27 (116.23)
</TABLE>
NOTE: The Fund commenced trading in April 1994; financial information is
provided since that inception date.
19
<PAGE> 22
SECTION 4. INVESTMENT FACTORS
A. Value of Diversifying into Managed Futures. The grey area of the chart
below shows the benefit of adding 10% managed futures to a hypothetical
portfolio made up of 55% stocks and 35% bonds, assuming an initial investment of
$10,000. The combined portfolio showed improved returns over the last seventeen
years, and lower volatility (a common measure of risk) than a portfolio made up
of stocks and bonds alone.
VALUE OF INITIAL $10,000 PORTFOLIO
WITH A 10% ALLOCATION TO THE MAR FUND/POOL QUALIFIED UNIVERSE
VS. A STOCKS AND BONDS PORTFOLIO
January 1980 -- December 1996
<TABLE>
<CAPTION>
MONTH 60/40 55/35/10
------ ---------- ----------
<S> <C> <C>
$10,000.00 $10,000.00
Jan-80 $ 9,934.40 $10,145.40
Feb-80 $ 9,730.55 $ 9,966.28
Mar-80 $ 9,517.64 $ 9,809.66
Apr-80 $ 9,882.36 $10,140.64
May-80 $10,042.85 $10,308.06
Jun-80 $10,913.56 $11,154.10
Jul-80 $10,865.54 $11,246.01
Aug-80 $10,729.51 $11,111.00
Sep-80 $11,420.49 $11,780.83
Oct-80 $11,374.80 $11,775.05
Nov-80 $11,370.71 $11,771.46
Dec-80 $12,145.51 $12,446.14
Jan-81 $12,147.94 $12,529.22
Feb-81 $12,087.20 $12,518.13
Mar-81 $12,304.28 $12,628.42
Apr-81 $12,194.04 $12,576.64
May-81 $12,320.86 $12,762.52
Jun-81 $12,166.85 $12,747.78
Jul-81 $12,092.38 $12,726.30
Aug-81 $12,031.92 $12,678.77
Sep-81 $11,330.22 $11,957.16
Oct-81 $11,568.61 $12,130.54
Nov-81 $11,884.20 $12,519.56
Dec-81 $12,262.59 $12,792.80
Jan-82 $12,293.99 $12,866.36
Feb-82 $12,368.72 $13,011.49
Mar-82 $11,882.60 $12,646.20
Apr-82 $11,994.77 $12,733.45
May-82 $12,064.34 $12,808.52
Jun-82 $11,967.34 $12,824.72
Jul-82 $12,159.30 $12,898.91
Aug-82 $12,368.92 $13,145.47
Sep-82 $13,389.61 $14,223.60
Oct-82 $13,631.16 $14,394.78
Nov-82 $13,678.05 $14,385.28
Dec-82 $15,281.93 $15,950.97
Jan-83 $15,284.38 $16,110.33
Feb-83 $15,426.83 $16,122.17
Mar-83 $16,346.89 $16,952.14
Apr-83 $16,488.78 $17,068.68
May-83 $16,424.80 $17,049.48
Jun-83 $17,536.43 $17,973.13
Jul-83 $17,427.00 $17,857.93
Aug-83 $17,467.43 $18,065.97
Sep-83 $17,651.54 $18,222.24
Oct-83 $17,675.55 $18,240.28
Nov-83 $17,752.61 $18,225.05
Dec-83 $17,813.68 $18,238.17
Jan-84 $17,933.39 $18,367.85
Feb-84 $17,907.57 $18,330.19
Mar-84 $17,598.12 $18,062.21
Apr-84 $17,601.64 $18,027.80
May-84 $17,443.23 $17,986.06
Jun-84 $17,248.56 $17,678.77
Jul-84 $17,510.05 $18,241.57
Aug-84 $17,614.41 $18,197.34
Sep-84 $18,781.54 $19,349.96
Oct-84 $19,068.52 $19,546.36
Nov-84 $19,200.48 $19,472.96
Dec-84 $19,529.96 $19,932.23
Jan-85 $19,683.07 $20,163.65
Feb-85 $19,548.44 $20,150.24
Mar-85 $20,777.25 $21,235.63
Apr-85 $20,942.64 $21,427.28
May-85 $21,328.82 $21,785.01
Jun-85 $22,357.30 $22,666.65
Jul-85 $22,331.36 $22,899.10
Aug-85 $22,476.97 $23,007.52
Sep-85 $21,982.47 $22,300.62
Oct-85 $22,147.78 $22,619.52
Nov-85 $22,341.79 $22,958.24
Dec-85 $24,919.59 $25,502.48
Jan-86 $24,973.42 $25,597.09
Feb-86 $25,373.99 $26,298.07
Mar-86 $27,919.00 $28,874.49
Apr-86 $27,965.91 $28,692.58
May-86 $27,710.86 $28,275.68
Jun-86 $29,050.40 $29,371.92
Jul-86 $29,134.07 $29,540.22
Aug-86 $29,463.86 $29,980.23
Sep-86 $28,047.83 $28,356.95
Oct-86 $28,202.65 $28,326.60
Nov-86 $28,332.39 $28,350.54
Dec-86 $29,299.65 $29,213.39
Jan-87 $31,795.40 $31,813.97
Feb-87 $32,635.43 $32,620.29
Mar-87 $33,124.31 $33,163.42
Apr-87 $32,621.48 $33,148.00
May-87 $32,735.66 $33,187.11
Jun-87 $33,880.75 $34,224.54
Jul-87 $34,882.95 $35,274.55
Aug-87 $35,585.49 $35,842.29
Sep-87 $34,841.75 $35,101.25
Oct-87 $30,880.94 $31,488.11
Nov-87 $29,414.71 $30,358.16
Dec-87 $30,897.80 $31,989.82
Jan-88 $32,082.43 $32,875.33
Feb-88 $33,116.76 $33,887.07
Mar-88 $32,366.34 $33,125.29
Apr-88 $32,513.28 $33,179.62
May-88 $32,590.66 $33,450.69
Jun-88 $33,776.31 $35,058.00
Jul-88 $33,607.43 $34,752.64
Aug-88 $32,948.72 $34,171.23
Sep-88 $34,078.21 $35,241.13
Oct-88 $34,886.54 $36,047.80
Nov-88 $34,422.55 $35,638.48
Dec-88 $34,836.31 $35,948.36
Jan-89 $36,543.29 $37,722.23
Feb-89 $35,675.02 $36,734.85
Mar-89 $36,260.80 $37,383.22
Apr-89 $37,700.36 $38,679.86
May-89 $38,972.37 $40,255.48
Jun-89 $39,359.75 $40,606.31
Jul-89 $41,824.46 $43,103.59
Aug-89 $42,035.25 $43,122.56
Sep-89 $42,004.15 $42,992.33
Oct-89 $41,854.61 $42,663.22
Nov-89 $42,529.31 $43,365.25
Dec-89 $43,170.65 $44,107.44
Jan-90 $41,189.12 $42,344.03
Feb-90 $41,540.87 $42,752.86
Mar-90 $42,198.05 $43,437.97
Apr-90 $41,416.54 $42,868.94
May-90 $44,301.62 $45,386.20
Jun-90 $44,400.86 $45,521.00
Jul-90 $44,542.94 $45,835.55
Aug-90 $41,879.27 $43,562.79
Sep-90 $40,816.37 $42,619.88
Oct-90 $40,977.19 $42,867.92
Nov-90 $42,929.34 $44,746.40
Dec-90 $43,914.14 $45,625.21
Jan-91 $45,250.89 $46,728.20
Feb-91 $47,295.33 $48,628.64
Mar-91 $48,078.54 $49,588.33
Apr-91 $48,359.31 $49,834.78
May-91 $49,685.33 $51,029.82
Jun-91 $48,292.15 $49,759.18
Jul-91 $49,872.27 $51,071.57
Aug-91 $51,044.27 $51,993.16
Sep-91 $50,961.58 $52,136.40
Oct-91 $51,550.69 $52,603.02
Nov-91 $50,510.40 $51,599.09
Dec-91 $54,666.39 $56,217.99
Jan-92 $53,715.20 $54,974.44
Feb-92 $54,217.97 $55,248.49
Mar-92 $53,457.84 $54,512.86
Apr-92 $54,535.55 $55,421,32
May-92 $55,099.45 $55,925.65
Jun-92 $54,922.03 $56,034.70
Jul-92 $56,823.43 $58,145.81
Aug-92 $56,335.88 $57,885.90
Sep-92 $56,254.76 $57,751.89
Oct-92 $56,048.86 $57,554.09
Nov-92 $57,157.51 $58,633.81
Dec-92 $58,021.73 $59,396.63
Jan-93 $58,759.77 $60,021.78
Feb-93 $59,779.84 $61,269.04
Mar-93 $60,615.58 $62,018.36
Apr-93 $59,922.12 $61,543.61
May-93 $60,859.30 $62,467.07
Jun-93 $61,505.63 $63,135.15
Jul-93 $61,507.35 $63,375.95
Aug-93 $63,456.15 $65,175.96
Sep-93 $63,260.58 $64,937.51
Oct-93 $64,142.05 $65,736.21
Nov-93 $63,493.06 $65,142.51
Dec-93 $64,052.69 $65,865.89
Jan-94 $65,971.71 $67,507.59
Feb-94 $63,815.09 $65,353.93
Mar-94 $61,022.54 $62,888.78
Apr-94 $61,201.46 $62,982.86
May-94 $61,635.13 $63,503.76
Jun-94 $60,487.49 $62,641.07
Jul-94 $62,505.35 $64,415.06
Aug-94 $63,850.47 $65,589.67
Sep-94 $62,104.79 $64,063.07
Oct-94 $62,851.29 $64,762.64
Nov-94 $61,637.01 $63,666.53
Dec-94 $62,561.56 $64,450.58
Jan-95 $64,014.12 $65,690.87
Feb-95 $66,104.94 $67,766.93
Mar-95 $67,441.98 $69,446.57
Apr-95 $69,027.54 $71,023.53
May-95 $71,795.69 $73,674.02
Jun-95 $73,017.51 $74,692.30
Jul-95 $74,362.20 $75,859.97
Aug-95 $74,822.20 $76,329.96
Sep-95 $77,004.02 $78,223.71
Oct-95 $77,637.14 $78,759.03
Nov-95 $80,166.56 $81,179.69
Dec-95 $81,548.31 $82,733.71
Jan-96 $83,410.88 $84,621.28
Feb-96 $82,249.80 $83,264.38
Mar-96 $82,451.97 $83,518.46
Apr-96 $82,970.09 $84,329.17
May-96 $84,197.55 $85,325.90
Jun-96 $84,824.49 $85,883.12
Jul-96 $82,660.79 $83,831.89
Aug-96 $83,446.06 $84,596.44
Sep-96 $86,817.95 $87,953.56
Oct-96 $89,018.61 $90,443.44
Nov-96 $93,675.53 $95,141.48
Dec-96 $92,179.91 $93,679.58
</TABLE>
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. The
graph depicts the actual performance of the MAR Fund/Pool Qualified Universe, in
combination with stocks and bonds. The "Stocks" portion is represented by the
S&P 500 Index and the "Bonds" portion by the Lehman Brothers Government Bond
Index. These are passive indices of equity and debt securities which are
generally purchased by investors with an investment objective of capital
preservation, growth or income. The MAR Fund/Pool Qualified Universe Index is a
dollar weighted index of 420 managed futures funds, including the performance of
current as well as retired funds, whose objective is speculative trading
profits. The performance for all indices was calculated using compounded monthly
returns. A prospective investor is advised that neither the above graph, nor the
performance tables in this Prospectus should be interpreted to mean that the
Fund will obtain similar results or generate any profits whatsoever in the
future.
Modern Portfolio Theory suggests that a portfolio manager should diversify
into asset categories that have little or no correlation with the other asset
categories in the portfolio. The Nobel Prize for Economics in 1990 was awarded
to Dr. Harry Markowitz for demonstrating that the total return can increase,
and/or risks can be reduced, when portfolios have positively performing asset
categories that are essentially non-correlated. Even an investor who diversifies
into international stocks and bonds may not obtain enough non-correlation. Over
time, alternative investment classes such as real estate and international
stocks and bonds may correlate
20
<PAGE> 23
closely with domestic equities as the global economy expands and contracts. The
logical question that then arises is: "What investment can add value to a
portfolio by enhancing returns and reducing portfolio volatility?"
Historically, managed futures investments have had very little correlation
to the stock and bond markets. Campbell & Company believes that the performance
of the Fund should also exhibit a substantial degree of non-correlation (not,
however, necessarily negative correlation) with the performance of traditional
equity and debt portfolio components. Unlike short selling in the securities
markets, selling futures short is no more difficult than establishing a long
position. The profit and loss potential of futures trading is not dependent upon
economic prosperity or interest rate or currency stability. Diversifying assets
among different investments that generate positive but non-correlated returns
has the potential to decrease risk without a corresponding decrease in
returns -- enhancing the reward/risk profile of a portfolio, as demonstrated in
the graphs below. Non-correlation will not provide any diversification
advantages unless the non-correlated assets are outperforming other portfolio
assets, and there is no guarantee that the Fund will outperform other sectors of
the portfolio (or not produce losses). Additionally, although adding managed
futures funds to a portfolio may provide diversification, managed futures funds
are not a hedging mechanism and there is no guarantee that managed futures funds
will appreciate during periods of inflation or stock and bond market declines.
VALUE OF INITIAL $10,000 PORTFOLIO WITH A 10% ALLOCATION TO THE MAR FUND/POOL
QUALIFIED UNIVERSE
VS. A STOCKS AND BONDS PORTFOLIO
January 1980-December 1996
<TABLE>
<CAPTION>
RISK AS MEASURED BY
GROWTH OF INITIAL STANDARD DEVIATION OF
$10,000 INVESTMENT MONTHLY RETURNS
------------------ ---------------------
<S> <C> <C>
60% Stocks/40% Bonds ..................... $92,180 2.94%
55% Stocks/35% Bonds 10% Futures ......... $93,680 2.75%
</TABLE>
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. The
graphs depict the actual performance of the MAR Fund/Pool Qualified Universe, in
combination with stocks and bonds. The "Stocks" portion is represented by the
S&P 500 Index and the "Bonds" portion by the Lehman Brothers Government Bond
Index. These are passive indices of equity and debt securities which are
generally purchased by investors with an investment objective of capital
preservation, growth or income. The MAR Fund/Pool Qualified Universe Index is a
dollar weighted index of 420 managed futures funds, including the performance of
current as well as retired funds, whose objective is speculative trading
profits. The performance for all indices was calculated using compounded monthly
returns. A prospective investor is advised that neither the above graph, nor the
performance tables in this Prospectus should be interpreted to mean that the
Fund will obtain similar results or generate any profits whatsoever in the
future.
Non-correlated performance is not negatively correlated performance.
Campbell & Company has no expectation that the performance of the Fund will be
inversely related to that of the general debt and equity markets, i.e., likely
to be profitable when the latter are unprofitable or vice versa. Non-correlation
means only that the performance of the Fund has, in Campbell & Company's
judgment, a substantial likelihood of being unrelated to the performance of
equities and debt instruments, reflecting Campbell & Company's belief that
certain factors which affect equity and debt prices may affect the Fund
differently and that certain factors
21
<PAGE> 24
which affect the former may not affect the latter. The Net Asset Value per Unit
may decline or increase more or less than equity and debt instruments during
both bear and bull markets.
B. Advantages of Futures Fund Investments. There are many structural
advantages offered by the futures markets in general, and a futures fund in
particular, that make managed futures an efficient way to trade global markets.
(i) Profit Potential. The leverage available in trading futures, forward
and option contracts offers profit opportunity. Of course, leverage also
increases the magnitude of any losses incurred.
(ii) 100% Interest Credit. Unlike some "alternative investment" funds, the
Fund will not be required to borrow money in order to obtain the leverage used
in its trading strategy. Accordingly, the Fund will not incur any interest
expense. Rather, the Fund's margin deposits will be maintained in cash
equivalents, such as U.S. Treasury bills. Interest is earned on 100% of the
Fund's available assets (which include unrealized profits credited to the Fund's
accounts).
(iii) Global Diversification Within a Single Investment. Futures and
related contracts can be traded in many countries, which makes it possible to
spread risk and profit opportunity around the globe. This diversification is
available not only geographically, but also across market sectors. For example,
an investor can trade interest rates, stock indices, and currencies in several
countries around the world, as well as energy, base metals, meats, grains and
tropical commodities. While the Fund itself trades across a diverse selection of
global markets, an investment in the Fund is not a substitute for overall
portfolio diversification.
(iv) Ability to Profit (or Lose) in a Rising or Falling Market
Environment. Because there are no prohibitions against short sales in the
futures and related markets, it is no more difficult to establish short
positions and thereby profit from declining markets, than it is to establish
long positions. It is this potential to make money, whether markets are rising
or falling, anywhere around the globe, which makes managed futures particularly
attractive to sophisticated investors. Of course, if markets go higher while an
investor has a short position, he will lose money until the short position is
exited.
(v) Professional Trading. The Fund provides access to the trading skills
of one of the world's largest and most experienced Commodity Trading
Advisors -- Campbell & Company. Campbell & Company's approach includes the
following elements:
a) Disciplined Money Management. The amount allocated to any single
market position ranges typically from 1% to 3% of portfolio equity.
However, no guarantee is made that losses will be limited to these
percentages.
b) Balanced Risk. The portfolio is balanced by allocating capital among
more than 40 markets around the globe. Among the factors considered
for determining the portfolio mix are: market volatility, liquidity
and trending characteristics.
c) Capital Management. When proprietary risk/reward indices reach
predetermined levels, commitments may be increased during favorable
periods and decreased during less favorable periods in an attempt to
reduce performance volatility.
d) Multiple Systems. While the Fund's approach is to find emerging
trends and follow them to conclusion, no one system is right all of
the time. The Fund utilizes a multi-system strategy that divides
capital among different trading systems in an attempt to reduce
performance volatility.
(vi) Convenience. The Fund provides a convenient means to participate in
global markets and opportunities without the time required to master complex
trading strategies and monitor multiple international markets.
(vii) Liquidity. In most cases the underlying markets have excellent
liquidity. Some markets trade 24 hours on business days. There can be
exceptional cases where there may be no buyer or seller for a particular market.
However, one of the selection criteria for a market to be included in the Fund
is good liquidity, and "lock limit" situations have not been common. Investors
may redeem all or a portion of their Units on a monthly basis, subject to a
declining redemption fee during the first year of ownership.
22
<PAGE> 25
(viii) Limited Liability. The liability of investors in the Campbell
Strategic Allocation Fund, L.P. is limited to the amount of their investment in
the Fund. Limited Partners will never be required to contribute additional
capital to the Fund.
SEC.5. 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 April 30, 1997, Campbell & Company had
approximately $670 million under management in the futures and forwards markets
(including $570 million traded pursuant to the same Financial, Metal & Energy
Large Portfolio as primarily traded by the Fund).
Campbell & Company is a member of the NFA 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.
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. Additional past performance information for
Campbell & Company begins on page APP-II-1.
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 44, serves as Vice President of Trading. Mr. Bell
began his employment with Campbell & Company in May, 1990. His duties include
managing daily trade execution of the assets under Campbell & Company'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 54, 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 CFTC and NFA as a commodity pool operator. He is
an Associated Person of Campbell & Company.
William C. Clarke III, age 46, 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.
23
<PAGE> 26
Bruce L. Cleland, age 49, 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 51, 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 34, 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 56, 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, 39, 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 Advisory Agreement delegates to Campbell &
Company sole authority and responsibility for directing the investment and
reinvestment of the Fund's assets. The term of the Advisory Agreement is for
successive one year periods subject to each party's right to terminate on 60
days prior written notice. The Advisory Agreement provides that Campbell &
Company shall not be liable to the Fund except by conduct constituting
negligence, misconduct, a material breach of the Advisory Agreement, or a
misleading statement or omission of a material fact relating to Campbell &
Company in the Prospectus. Campbell & Company has agreed to indemnify the Fund
for liabilities incurred by it, provided that Campbell & Company is liable to
the Fund pursuant to the standard set forth earlier in this paragraph. There are
conflicts of interest inherent in Campbell & Company acting as a general partner
and advisor of the Fund. These include that (i) the selection of itself as
advisor was not objective, (ii) it has a disincentive to replace itself as the
advisor, and (iii) the fees were not negotiated at arm's length. See "Conflicts
of Interest." The Advisory Agreement is not intended to alter any state-law
fiduciary duty standards. Inasmuch as Campbell &
24
<PAGE> 27
Company is the trading advisor and the general partner, it is highly unlikely
that the Fund will terminate the Advisory Agreement.
C. 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 produced in the past.
Campbell & Company 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. Approximately 75% of the
Fund's assets are currently allocated to trading pursuant to the Financial,
Metal & Energy Large Portfolio which trades futures and foreign exchange forward
contracts including precious metals, petroleum, stock market indices, interest
rate instruments and foreign currencies. The remaining approximately 25% of the
Fund's assets are currently allocated to trading pursuant to the Global
Diversified Portfolio, which trades in a wide range of futures markets,
including, but not limited to, petroleum, coffee, rubber, orange juice, 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, 5% to metals, 13% to energy
products, and 3% to agricultural markets. These 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.
25
<PAGE> 28
PORTFOLIO COMPOSITION OF THE FUND AS OF MAY 1, 1997:
(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 interests of the Fund).
<TABLE>
<S> <C> <C>
SHORT-TERM INTEREST RATES 4% Australian 90-Day Bill
Canadian 90-Day Bill
Eurodollar
Euroyen
Short Sterling
CROSS RATE 25% SK/DK SF/JY
BP/DM DM/IL
AD/JY JY/IL
BP/JY DM/PT
CD/JY DM/SF
DM/JY
CURRENCIES 17% Australian Dollar
British Pound
Deutsche Mark
ECU
French Franc
Japanese Yen
New Zealand Dollar
Spanish Peseta
Swiss Franc
STOCK INDICES 12% Australian SPI
London FT-SE
German Stock Index
Nikkel
S&P 500
Spanish Stock Index
AGRICULTURAL 3% Coffee Meats
Corn Soy Products
Cotton & Wheat
Orange Juice Rubber
METALS 5% Aluminum
Copper
Nickel
Gold
ENERGY 13% Brent Crude Oil
New York Crude Oil
Gas Oil
Natural Gas
LONG-TERM INTEREST RATES 21% Australian 3-Yr. Note
British Bond
French Bond
Japanese Bond
U.S. 30 Year Bond
U.S. 5 Year Note
Australian 10-Yr. Note
German Bund
German Bobl
Italian Bond
Spanish Bond
U.S. 10 Year Note
</TABLE>
Campbell & Company renders trading decisions for all its Portfolios based
on its proprietary technical trend-following systems. These systems are designed
to follow intermediate to long-term price trends and also utilize quantitative
portfolio management analysis. The principal objective of the systems is to
profit from major and sustained price trends. The basic concepts on which they
are built were developed through research efforts in 1976 and 1980. Since that
time, Campbell & Company's systems have continued to evolve as ongoing research
and increased computing power expand its analysis of price and market
parameters.
Campbell & Company has two main trend-following trading systems. The
differences between the two systems 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. 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
26
<PAGE> 29
utilizing more than one trading system on the same account offers
diversification, and is most beneficial when numerous contracts of each
commodity are traded.
Over the past several years, Campbell & Company's research has resulted in
several systems changes and portfolio enhancements that have increased the
quality of returns (i.e., decreased variability or volatility of performance,
while still maintaining attractive returns).
First, a number of additional markets were added. Most of these were
foreign markets with low correlation to the existing markets traded, thus
increasing overall diversity of the portfolios. Additional markets may be added
in the future. Some markets may also be deleted from time to time if their
performance does not meet expectations.
Second, an additional set of parameters was added to each trading system,
as it was found that using several different parameter sets to measure market
movement also increased diversity and smoothed the volatility of performance.
This improved quality of performance allowed for an increase in leverage,
without an increase in volatility.
Third, a "risk reduction" method was added to Campbell & Company's models
to analyze market volatility and make adjustments to market positions. Over the
course of a long-term trend, there are times when the risk (volatility) of the
market is not justified by the potential reward. Risk reduction assesses the
risk/reward ratio of the trend, and if this ratio becomes imbalanced, the model
is signaled to exit the trade, prior to the end of the trend. While there is
some risk to this method (for example, being out of the market during a
significant, fast moving trend), research indicates that it has also added to
the smoothing of performance.
A third trading system is also used for certain markets which appear to
respond well to both trend-following and contratrend 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.
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 volatility-based 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, in order 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.
27
<PAGE> 30
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, forward or option
contract traded. 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. On an overall basis, aggregate commitments to margin for all contracts
traded range between 25% and 40% of the Fund's Net Assets. From time to time,
margin commitments may be above or below the foregoing ranges.
In some instances, due to the lack of volume in a particular future,
forward or option contract traded, 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 strategy 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 futures
contract is traded. In the case of the Fund, it is the responsibility of the
Commodity Broker to obtain execution of such orders.
SEC.6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
A. Introduction. The offering of the Fund's Units of Limited Partnership
Interest 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 $126,746,238 have been accepted during the
Continuing Offering Period as of May 1, 1997. Redemptions over the same time
period total $17,381,964. The Fund commenced operations on April 18, 1994.
B. 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.
C. Liquidity. Most United States commodity exchanges limit fluctuations
in commodity futures contract 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
28
<PAGE> 31
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.
D. Results of Operations. The returns for the 3 months ended March 31,
1997 was 4.01%, and for the years ended December 31, 1996 and 1995 were 30.46%
and 9.99%, respectively.
The majority of trading gains for the first quarter of 1997 came from the
foreign exchange sector, where the U.S. dollar continued to show strength early
in the quarter. Short foreign currency positions realized profit as the U.S.
dollar's upward trend remained intact. Another strong contributor to first
quarter profits was the energy sector. The warm weather in February gave
direction to January's volatility in energy. Short positions in natural gas and
London Gasoil proved profitable. The interest rate sector was the poorest
performer. Mid-quarter gains based on good employment and inflation numbers
quickly turned to losses after Federal Reserve Chairman Alan Greenspan's
Congressional testimony. However, strong economic data and a Federal Reserve
rate hike combined to push bonds lower, providing a profit on the short position
and offsetting some losses. As the equity market consolidated, the Fund
experienced slight losses. These losses, though painful, are expected as
Campbell & Company's trading moves from trend to trend. The 4.01% return was the
result of an approximate 5.78% increase in Net Asset Value due to trading gains
(before commissions) and an approximate 1.30% increase in Net Asset Value due to
interest income, offset by an approximate 3.07% decrease in Net Asset Value as
the result of brokerage fees, performance fees and operating costs borne by the
Fund.
For 1996, the majority of the increase occurred in the last quarter of the
year, when approximately 70% of the total trading gains for the year were
posted. Upward trends in foreign and domestic bonds, coupled with a strong U.S.
dollar and British pound were the best performers during this quarter, with
bullish trends in natural gas and copper also providing profits on the Fund's
long positions. The long position maintained in the S&P 500 also proved
profitable in this quarter, although performance in this market was flat for the
Fund for the year. Downside volatility was well contained, and the largest
draw-down for the year of 5.97% occurred in February 1996, when long U.S. and
Australian bond positions were covered and reversed in sharply falling markets.
The 30.46% increase was the result of an approximate 37.38% increase in Net
Asset Value due to trading gains (before commissions) and an approximate 5.18%
increase in Net Asset Value due to interest income, offset by an approximate
12.10% decrease in Net Asset Value as the result of brokerage fees, performance
fees and operating costs borne by the Fund.
In 1995, the majority of the 9.99% increase in Net Asset Value occurred in
the first quarter of the year. Overall, 1995 performance was generally good, and
the Fund was able to benefit from the significant price movements that occurred
throughout the year in global currencies, interest rates, and energy. The 9.99%
increase in Net Asset Value was the result of an approximate 12.57% increase in
Net Asset Value due to trading gains (before commissions) and an approximate
5.09% increase in Net Asset Value due to interest income, offset by an
approximate 7.67% decrease in Net Asset Value as the result of brokerage fees
and operating costs borne by the Fund.
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.
29
<PAGE> 32
E. 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 interest positions of the Fund at the same time, and if Campbell &
Company was unable to offset positions, 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 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.
30
<PAGE> 33
SEC.7. PAST PERFORMANCE OF CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
(APRIL 1994 (INCEPTION) -- APRIL, 1997)
TYPE OF POOL: Publicly offered
INCEPTION OF TRADING: April 18, 1994
AGGREGATE GROSS CAPITAL SUBSCRIPTIONS TO THE FUND: $136,438,677
CURRENT NET ASSET VALUE OF THE FUND: $137,650,733
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.
COMPOUND VALUE OF INITIAL $10,000 INVESTMENT
April 1994 - April 1997
<TABLE>
<S> <C>
Apr-94 10016
9773.6128
10276.954
Jul-94 9872.0419
9488.0194
9981.3965
Oct-94 9967.4225
9302.5954
8839.3262
Jan-95 8426.5296
8781.2865
9551.4054
Apr-95 9659.3362
9578.1978
9408.6637
Jul-95 9049.2528
9544.2469
9169.158
Oct-95 9241.5943
9227.7319
9721.4156
Jan-96 10284.286
9670.3137
10126.753
Apr-96 10490.303
10261.614
10338.576
Jul-96 10257.936
10446.682
10631.558
Oct-96 11954.157
13269.115
12683.947
Jan-97 13257.261
13526.383
13192.282
Apr-97 12717.36
</TABLE>
RATE OF RETURN(1)
(Computed on a compounded monthly basis)
<TABLE>
<CAPTION>
MONTH 1997 1996 1995 1994
- ----- ---- ---- ---- ----
<S> <C> <C> <C> <C>
January 4.52% 5.79% -4.67%
February 2.03% -5.97% 4.21%
March -2.47% 4.72% 8.77%
April -3.60% 3.59% 1.13% 0.16%
May -2.18% -0.84% -2.42%
June 0.75% -1.77% 5.15%
July -0.78% -3.82% -3.94%
August 1.84% 5.47% -3.89%
September 1.77% -3.93% 5.20%
October 12.44% 0.79% -0.14%
November 11.00% -0.15% -6.67%
December -4.41% 5.35% -4.98%
Total 0.27% 30.46% 9.99% -11.62%
</TABLE>
*"Draw-down" means losses experienced by the Fund over a specified period.
NOTE TO TABLE
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. "Rate
of Return" for the Portfolios is calculated using the Only Accounts Traded
31
<PAGE> 34
(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 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.
SEC.8. 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 will 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 that 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 and related contracts
for its 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
32
<PAGE> 35
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 trading 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 that 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. Having disclosed such conflicts and fees,
Campbell & Company may have obtained the Limited Partners' informed consent.
Such informed consent may be a defense asserted by Campbell & Company in an
action or claim brought by a Limited Partner alleging breach of fiduciary duty.
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.
In the case of most public companies, the management is required to make
numerous decisions in the course of the day-today operations of the company and
is protected in doing so by the so-called "business judgment rule." This rule
protects management from liability for decisions made in the course of operating
a business if the decisions are made on an informed basis and with the honest
belief that the decision is in the best interest of the company. Campbell &
Company believes that similar principles apply to it with respect to its
management of the Fund.
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
33
<PAGE> 36
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 (in accordance
with Section 15.2 of the Limited Partnership Agreement). The position of the
Securities and Exchange Commission is that any such indemnification is contrary
to the federal securities laws and therefore unenforceable.
SEC.9. 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.
<TABLE>
<C> <C> <C> <S>
W 1% to Commodity Broker
W 4% to Selling Agents
W 2% to Campbell & Company
Fund W 8% Brokerage Fee W Campbell & Company (as trading advisor)
W 1% to Campbell & Company
(as general partner)
</TABLE>
The above fee is the complete compensation that will be received by
Campbell & Company, Inc. or its affiliates from the Fund (with the exception of
redemption fees which will be charged to some Limited Partners, if they redeem
prior to one year of ownership).
34
<PAGE> 37
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 expenses. As incurred; to be reimbursed, up to
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. 0.125 of 1% per annum, payable
Harriman & Co. quarterly, 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, postage As incurred, up to a maximum of 0.5%
and administrative costs. of average month-end Net Assets per
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.
Redemption fees apply through the first twelve month-ends following purchase
(from and including the Closing Date on which the Unit is purchased) as follows:
4% of Net Asset Value per Unit redeemed through the third month-end, 3% of Net
Asset Value per Unit redeemed through the sixth month-end, 2% of Net Asset Value
per Unit redeemed through the ninth month-end, and 1% of Net Asset Value per
Unit redeemed through the twelfth month-end. After the twelfth month-end
following purchase of a Unit, no redemption fees apply.
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.
Because aggregate cumulative appreciation is calculated on an overall Fund
basis but is allocated equally to each outstanding Unit, the performance fees
which reduce the Net Asset Value of a particular investor's Units may not
correspond to such investor's investment experience in the Fund. For example, an
investor may
35
<PAGE> 38
acquire Units after the Fund's trading has resulted in losses reducing aggregate
cumulative appreciation below its prior highest level. If so, that investor's
Units will not be subject to having their Net Asset Value reduced by any
allocable performance fee until sufficient gains have been achieved to exceed
such losses, despite the fact that all gain allocated to such Units from the
date of purchase will constitute aggregate cumulative appreciation in respect of
such Units. Conversely, the Units which had been outstanding when such losses
were incurred may be subject to having their Net Asset Value reduced by
allocable performance fees, even though the Net Asset Value per Unit is below
the Net Asset Value at which such Units were issued. In addition, when Units are
issued at a Net Asset Value reduced by an accrued performance fee and such
accrued performance fee is subsequently reversed due to trading losses, the
reversal will be allocated equally among all outstanding Units (increasing the
Net Asset Value per Unit), including those Units whose purchase price had itself
been reduced by the accrued performance fees being reversed.
Performance fees are not reduced by redemption charges.
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 the 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 of
each subscription for Units. 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, 1997 totaled $3,098,422 and are estimated at
$1,200,000 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
36
<PAGE> 39
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 Guidelines 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. This fee is accrued monthly and paid on a quarterly basis at the rate of
0.125 of 1% per annum of the Fund's trust account balances, plus 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 which are 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 the Fund's 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, 1996 and 1995, operating expenses were 0.22% and 0.35%,
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.
<TABLE>
<S> <C>
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 (estimated at 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%
========
</TABLE>
- ---------------
The maximum offering expense reimbursement is 2.5% of the total subscription
amount over 30 months. This amount 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.
37
<PAGE> 40
SEC.10. 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 earned 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 LIBOR (London Interbank Offered Rate). See "Risk
Factors -- Foreign Futures and Foreign Options" and 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
that 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.
SEC.11. 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.
38
<PAGE> 41
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.
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, 1989 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.
In 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.
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
39
<PAGE> 42
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 Eastern 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.
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<PAGE> 43
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, 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
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<PAGE> 44
fine of $87,000 as partial reimbursement for the Alabama Securities 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 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 plaintiffs' 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 from the date of the order and
continuing for three years, in all new customer account packages, mailed to
Missouri residents from 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 sale 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.
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
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<PAGE> 45
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.
SEC.12. 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.
SEC.13. CAPITALIZATION
The Fund was formed on May 11, 1993. The table below shows the
capitalization of the Fund as of May 1, 1997 and as adjusted for the sale of the
maximum amount of Units registered.
<TABLE>
<CAPTION>
AS ADJUSTED FOR
SALE OF MAXIMUM
OUTSTANDING AS OF AMOUNT
TITLE OF CLASS MAY 1, 1997 (1)(2)
- -------------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
Units of General Partnership Interest......................... 1,099.549 2,065.580
Units of Limited Partnership Interest......................... 107,154.026 204,492.440
Total Partners' Capital....................................... $ 137,650,733 $ 262,650.733
</TABLE>
(See accompanying notes)
(1) This calculation assumes that the sale of all Units is made during the
Continuing Offering at the April 30, 1997 Net Asset Value per Unit of
$1,271.56. 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, 1997, Campbell & Company owned 1,099.549 units of
general partnership interest.
SEC.14. 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. Because of the potential volatility of futures
funds, especially in the short-term, the Fund is recommended for those seeking a
medium-to long-term investment (i.e. 3-5 years).
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
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<PAGE> 46
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 payment of charges 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 a written
request of such withdrawal to Campbell & Company not less than ten (10) business
days prior to the end of the month (or such shorter period as permitted by
Campbell & Company). Redemption fees apply through the first twelve month-ends
following a Unit's purchase (from and including the Closing Date on which the
Unit is purchased) as follows: 4% of Net Asset Value per Unit redeemed through
the third month-end, 3% of Net Asset Value per Unit redeemed through the sixth
month-end, 2% of Net Asset Value per Unit redeemed through the ninth month-end,
and 1% of Net Asset Value per Unit redeemed through the twelfth month-end. After
the twelfth month-end following purchase of a Unit, no redemption fees apply.
For example, if a Unit were purchased on September 30, 1997 (the Closing Date
for such Unit), a redemption fee of 4% would apply if the Unit were redeemed on
October 31, 1997 or November 30, 1997, a redemption fee of 3% would apply if the
Unit were redeemed on December 31, 1997, January 31, 1998 or February 28, 1998,
a redemption fee of 2% would apply if the Unit were redeemed on March 31, April
30 or May 31, 1998, a redemption fee of 1% would apply if the Unit were redeemed
on June 30, July 31 or August 30, 1998 and no redemption fee would apply if the
Unit were redeemed on or after September 30, 1998.
In determining whether redemption fees apply to a particular Limited
Partner's Units, Units shall be deemed to be redeemed on a "first-in, first-out"
basis.
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, forward and option 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."
SEC.15. THE FUTURES AND FORWARD 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
44
<PAGE> 47
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 dealers with whom it trades. 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 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.
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<PAGE> 48
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.
SEC.16. 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.
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<PAGE> 49
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. Limited
Partners who wish to assign their units should contact their broker, who will
provide them with the appropriate transfer forms and assist them in the transfer
process.
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 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
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<PAGE> 50
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 prior year-end 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.
SEC.17. FEDERAL INCOME TAX ASPECTS
Campbell & Company has been advised by its counsel, Sidley & Austin, that,
in its opinion, the following Summary correctly describes the material federal
income tax consequences, as of the date hereof, to the Fund and the material
federal income tax consequences, as of the date hereof, to a United States
individual taxpayer who invests in the Fund. This Summary is based on current
statutes, regulations and administrative rulings, any of which could be changed
at any time. This Summary does not address the income tax consequences to
non-individual taxpayers who invest in the Fund, which may vary. Such investors
should consult their own tax advisers.
A. The Fund's Partnership Tax Status. Campbell & Company has been advised
by its counsel, Sidley & Austin, that, in its opinion, the Fund is properly
classified as a partnership for federal income tax purposes; consequently, the
Limited Partners individually, not the Fund itself, are subject to tax. Campbell
& Company believes that all of the income expected to be generated in the future
by the Fund will constitute "qualifying income" and has so advised Sidley &
Austin. As a result, Campbell & Company has been advised by Sidley & Austin
that, in its opinion, the Fund is not subject to tax as a corporation under the
provisions applicable to "publicly traded partnerships."
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B. Taxation of Limited Partners on Profits and Losses of the Fund. Each
Limited Partner is required for federal income tax purposes to take into
account, in his taxable year with which or within which a taxable year of the
Fund ends, his allocable share of all items of Fund income, gain, loss,
deduction and other items for such taxable year of the Fund. A Limited Partner
must take such items into account even if the Fund does not make any cash
distributions to such Limited Partner.
A Limited Partner's share of such items for federal income tax purposes
generally is determined by the allocations made pursuant to the Limited
Partnership Agreement unless such items so allocated do not have "substantial
economic effect" or are not in accordance with the Limited Partners' interests
in the Fund. Under the Limited Partnership Agreement, allocations are generally
made in proportion to Limited Partners' capital accounts (each Unit sharing
equally in the Net Assets of the Fund), and therefore such allocations should
have substantial economic effect. However, in cases in which a Limited Partner
redeems part or all of his or her interest in the Fund, the allocations of
capital gain or loss specified in the Limited Partnership Agreement will not be
in proportion to capital accounts. Because such allocations are consistent with
the economic effect of the Limited Partnership Agreement that bases the amount
to be paid to a redeeming Limited Partner upon his share of the realized and
unrealized gains and losses at the time his Units are redeemed, Campbell &
Company intends to file the Fund's tax returns based upon the allocations
specified in the Limited Partnership Agreement. In the opinion of Sidley &
Austin, the foregoing allocations should be upheld if audited by the IRS.
Nevertheless, a legal opinion is not binding on the IRS, and it is not certain
that such allocation would, in fact, be respected upon audit. If such
allocations were challenged and not sustained, some or all of a redeeming
Limited Partner's capital gain or loss that is the subject of such allocations
would be increased (solely for tax purposes).
C. Limitations on Deductibility of Fund Losses by Limited Partners. The
amount of any Fund loss (including capital loss) that a Limited Partner is
entitled to include in his personal income tax return is limited to his tax
basis for his interest in the Fund as of the end of the Fund's taxable year in
which such loss occurred. Generally, a Limited Partner's tax basis for his
interest in the Fund is the amount paid for such interest reduced (but not below
zero) by his share of any Fund distributions, realized losses and expenses and
increased by his share of the Fund's realized income, including gains.
A Limited Partner that is subject to the "at risk" limitations (generally,
non-corporate taxpayers and closely- held corporations) may not deduct losses of
the Fund (including capital losses) to the extent that they exceed the amount he
has "at risk" with respect to his interest in the Fund at the end of the year.
The amount that a Limited Partner has "at risk" is generally the same as his
adjusted basis as described above, except that it does not include any amount
that he has borrowed on a nonrecourse basis or from a person who has an interest
in the Fund or a person related to such person.
Losses denied under the foregoing basis or "at risk" limitations are
suspended and may be deducted in subsequent years, subject to these and other
applicable limitations.
Because of the limitations imposed upon the deductibility of capital losses
(see "-- H. Tax on Capital Gains and Losses," below), a Limited Partner's
distributive share of any capital losses of the Fund will not materially reduce
the federal income tax payable on his ordinary income (including his allocable
share of the Fund's interest income).
D. Treatment of Income and Loss Under the "Passive Activity Loss
Rules." The Internal Revenue Code of 1986, as amended (the "Code"), contains
rules (the "Passive Activity Loss Rules") designed to prevent the deduction of
losses from passive activities" against income not derived from such activities,
including income from investment activities not constituting a trade or
business, such as interest and dividends ("Portfolio Income"), and salary. The
trading activities of the Fund do not constitute a "passive activity," with the
result that income derived from the Fund's trading activities constitutes
Portfolio Income or other income not from a passive activity. Thus, losses
resulting from a Limited Partner's "passive activities" cannot be offset against
such income, and net losses from Fund operations are deductible in computing the
taxable income of such Limited Partner (subject to other limitations on the
deductibility of such losses, in particular the annual limitation applicable to
non-corporate investors that no more than $3,000 of capital losses can be
deducted against ordinary income).
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E. Cash Distributions and Redemptions of Units. Cash received from the
Fund by a Limited Partner as a distribution with respect to his Units or in
redemption of less than all of his Units generally is not reportable as taxable
income by a Limited Partner, except as described below. Rather, such
distribution or withdrawal reduces (but not below zero) the total tax basis of
all of the Units held by the Limited Partner after the distribution or
withdrawal. Any cash distribution in excess of a Limited Partner's adjusted tax
basis for all of his Units is taxable to him as gain from the sale or exchange
of such Units and, assuming that the Limited Partner has held his Units for more
than one year, constitutes long-term capital gain.
Redemption for cash of the entire interest held by a Limited Partner
results in the recognition of gain or loss for federal income tax purposes. Such
gain or loss is equal to the difference, if any, between the amount of the cash
distribution and the Limited Partner's adjusted tax basis for his interest.
Assuming that the Limited Partner has held his Units for more than one year, any
gain or loss on their redemption constitutes long-term capital gain or loss.
F. Gain or Loss on Section 1256 Contracts. Except as discussed below with
respect to certain foreign currency transactions, gain or loss on non-Section
1256 Contracts is generally capital gain or loss and generally is taken into
account when realized.
Under the "mark-to-market" system of taxing futures and certain option
contracts traded on United States exchanges and certain foreign currency forward
contracts ("Section 1256 Contracts"), any unrealized profit or loss on positions
in such Section 1256 Contracts which are open as of the end of a taxpayer's
fiscal year is treated as if such profit or loss had been realized for tax
purposes as of such time. In general, with respect to futures and options traded
on United States exchanges, 60% of the net gain or loss which is generated as a
result of the "mark-to-market" system is treated as long-term capital gain or
loss, and the remaining 40% of such net gain or loss is treated as short-term
capital gain or loss.
G. Gain or Loss on Non-Section 1256 Contracts. Foreign currency
transactions ("Section 988 transactions") include entering into or acquiring any
forward contract, futures contract or similar instrument if the amount paid or
received is denominated in terms of a foreign currency other than the taxpayer's
functional currency or if the underlying property to which the contract or
instrument ultimately relates is a foreign currency other than the taxpayer's
functional currency. In general, foreign currency gain or loss on Section 988
transactions is treated as ordinary income or loss, unless the Fund elects, if
it is permitted to do so, to have Section 988 transactions treated as giving
rise to capital gain or loss. (See "-- F. Gain or Loss on Section 1256
Contracts," above).
H. Tax on Capital Gains and Losses. Net capital gain (i.e., the excess of
net long-term capital gain over net short-term capital loss) is taxed for
noncorporate taxpayers at a maximum rate of 28% and for corporate taxpayers at
the same rates as other income. See "-- K. Limitation on Deductibility of
Interest on Investment Indebtedness," below (for a discussion of the reduction
in the amount of a non-corporate taxpayer's net capital gain for a taxable year
to the extent such gain is taken into account by such taxpayer as investment
income). Capital losses are deductible by non-corporate taxpayers only to the
extent of capital gains for the taxable year plus $3,000.
If a non-corporate taxpayer incurs a net capital loss for a year, the
portion thereof, if any, which consists of a net loss on Section 1256 Contracts
may, at the election of the taxpayer, be carried back three years. Losses so
carried back may be deducted only against net capital gain for such year to the
extent that such gain includes gains on Section 1256 Contracts. Losses so
carried back are deemed to consist of 60% long-term capital loss and 40%
short-term capital loss (see "F. Gain or Loss on Section 1256 Contracts,"
above). To the extent that such losses are not used to offset gains on Section
1256 Contracts in a carryback year, they carry forward indefinitely as losses on
Section 1256 Contracts in future years.
I. Limited Deduction for Certain Expenses. The Code provides that, for
non-corporate taxpayers who itemize deductions when computing taxable income,
expenses of producing income, including "investment advisory fees," are
aggregated with unreimbursed employee business expenses, other expenses of
producing income and certain other deductions (collectively, "Aggregate
Investment Expenses"), and that the aggregate amount of such expenses is
deductible only to the extent that such amount exceeds 2% of a non-corporate
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taxpayer's adjusted gross income (the "2% floor"). Aggregate Investment Expenses
in excess of the 2% floor, when combined with a taxpayer's deductions for
certain items, are subject to a reduction equal to, generally, 3% of the
taxpayer's adjusted gross income in excess of a certain threshold amount (the
"3% phase-out"). Moreover, such Aggregate Investment Expenses are miscellaneous
itemized deductions which are not deductible by a non-corporate taxpayer in
calculating its alternative minimum tax liability.
Campbell & Company will -- barring administrative, regulatory or statutory
clarification to the contrary -- treat the Brokerage Fee and performance fees,
as well as other ordinary expenses of the Fund, as ordinary business deductions
not subject to the 2% floor or the 3% phase-out. However, the IRS could contend
that some or all of these charges should be characterized as "investment
advisory fees" or brokerage commissions incurred by the Fund. To the extent the
characterization of these payments as brokerage commissions were to be
sustained, the amounts recharacterized would reduce the amount of capital gain
(or increase the amount of capital loss) realized with respect to the Fund's
trading activities, rather than the Limited Partners' ordinary income. To the
extent the characterization of these payments as investment advisory expenses
were to be sustained, each non-corporate Limited Partner's pro rata share of the
amounts so characterized would be deductible only to the extent that such
non-corporate Limited Partner's Aggregate Investment Expenses exceeded the 2%
floor and, when combined with certain other itemized deductions, exceeded the 3%
phase-out. In addition, each non-corporate Limited Partner's distributive share
of income from the Fund would be increased (solely for tax purposes) by such
Limited Partner's pro rata share of the amounts so recharacterized.
J. Interest Income. Interest received by the Fund is taxed as ordinary
income.
The Fund's trading generates both ordinary income (or loss) and capital
gain (or loss). Capital losses can be deducted against ordinary income, in the
case of non-corporate taxpayers, only to the extent of $3,000 per year.
Accordingly, the Fund could incur significant capital losses but an investor,
nevertheless, could be required to pay substantial taxes in respect of such
investor's allocable share of the Fund's interest income and other ordinary
income.
Syndication Fees
Neither the Fund nor any Limited Partner is entitled to any deduction for
syndication expenses, nor can these expenses be amortized by the Fund or any
Limited Partner even though the payment of such expenses reduces Net Asset
Value.
The IRS could take the position that a portion of the Brokerage Fee paid by
the Fund to Campbell & Company or part or all of any redemption fees paid by a
Limited Partner constitutes non-deductible syndication expenses.
K. Limitation on Deductibility of Interest on Investment
Indebtedness. Interest paid or accrued on indebtedness properly allocable to
property held for investment constitutes "investment interest." Interest expense
incurred by a Limited Partner to acquire or carry his Units (as well as other
investments) constitutes "investment interest." Such interest is generally
deductible by non-corporate taxpayers only to the extent that it does not exceed
net investment income (that is, generally, the excess of (i) gross income from
interest, dividends, rents and royalties, which would include a Limited
Partner's share of the Fund's interest income, and (ii) certain gains from the
disposition of investment property, over the expenses directly connected with
the production of such investment income). Any investment interest expense
disallowed as a deduction in a taxable year solely by reason of the above
limitation is treated as investment interest paid or accrued in the succeeding
taxable year. A non-corporate taxpayer's net capital gain from the disposition
of investment property is included in clause (ii) of the second preceding
sentence only to the extent such taxpayer elects to make a corresponding
reduction in the amount of net capital gain that is subject to tax at the
maximum 28% rate described above. (See "-- H. Tax on Capital Gains and Losses,"
above.)
L. "Unrelated Business Taxable Income." In the opinion of Sidley Austin,
income earned by the Fund will not constitute "unrelated business taxable
income" under Section 511 of the Code to employee benefit plans and other
tax-exempt entities which purchase Units, provided that the Units held by such
plans and
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entities are not "debt-financed" within the meaning of Section 514 of the Code.
Campbell & Company intends that the Fund will continue to trade so as not to
generate "unrelated business taxable income."
M. Section 754 Elections. The Code provides for optional adjustments to
the basis of Fund property upon distributions of Fund property to a Limited
Partner (Code sec.734) and transfers of Units, including by reason of death
(Code sec.743), provided that an election has been made pursuant to Code
sec.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 Code sec.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.
N. IRS Audits of the Fund and Its Limited Partners. The tax treatment of
Fund-related items is determined at the Fund level rather than at the Limited
Partner level. Campbell & Company acts as "tax matters partner" with the
authority to determine the Fund's responses to an audit, except that Campbell &
Company does not have the authority to settle tax controversies on behalf of any
Limited Partner who files a statement with the IRS stating that Campbell &
Company has no authority to settle Fund tax controversies on such Limited
Partner's behalf. The limitations period for assessment of deficiencies and
claims for refunds with respect to items related to the Fund is three years
after the Fund's return for the taxable year in question is filed, but Campbell
& Company has the authority to, and may, extend such period with respect to all
Limited Partners.
If an audit results in an adjustment, all Limited Partners may be required
to pay additional taxes, plus interest, and, possibly, tax penalties and
additions to tax. There can be no assurance that the Fund's or a Limited
Partner's tax return will not be audited by the IRS or that no adjustments to
such returns will be made as a result of such an audit.
O. State and Other Taxes. In addition to the federal income tax
consequences described above, the Fund and the Limited Partners may be subject
to various state and other taxes. Certain of such taxes could, if applicable,
have a significant effect on the amount of tax payable in respect of an
investment in the Fund.
THE FOREGOING DISCUSSION IS NOT INTENDED AS A SUBSTITUTE FOR CAREFUL TAX
PLANNING, PARTICULARLY SINCE CERTAIN OF THE INCOME TAX CONSEQUENCES OF AN
INVESTMENT IN THE FUND MAY NOT BE THE SAME FOR ALL TAXPAYERS. ACCORDINGLY,
PROSPECTIVE INVESTORS IN THE FUND ARE URGED TO CONSULT THEIR TAX ADVISERS WITH
SPECIFIC REFERENCE TO THEIR OWN TAX SITUATION UNDER FEDERAL LAW AND THE
PROVISIONS OF APPLICABLE STATE AND OTHER LAWS BEFORE DETERMINING WHETHER TO
SUBSCRIBE FOR UNITS.
SEC.18. INVESTMENT BY ERISA ACCOUNTS
Although there can be no assurance that an investment in the Fund, or any
other managed futures product, will achieve the investment objectives of an
employee benefit plan in making such investment, futures investments have
certain features which may be of interest to such a plan. For example, the
futures markets are one of the few investment fields in which employee benefit
plans can participate in leveraged strategies without being required to pay tax
on "unrelated business taxable income." See "Federal Income Tax
Consequences -- 'M. Unrelated Business Taxable Income'." In addition, because
they are not taxpaying entities, employee benefit plans are not subject to
paying annual tax on their profits (if any) from the Fund.
A. General. The following section sets forth certain consequences under
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
the Code, which a fiduciary of an "employee
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benefit plan" as defined in and subject to ERISA or of a "plan" as defined in
Section 4975 of the Code who has investment discretion should consider before
deciding to invest the plan's assets in the Fund (such "employee benefit plans"
and "plans" being referred to herein as "Plans," and such fiduciaries with
investment discretion being referred to herein as "Plan Fiduciaries"). The
following summary is not intended to be complete, but only to address certain
questions under ERISA and the Code which are likely to be raised by the Plan
Fiduciary's own counsel.
In general, the terms "employee benefit plan" as defined in ERISA and
"plan" as defined in Section 4975 of the Code together refer to any plan or
account of various types which provide retirement benefits or welfare benefits
to an individual or to an employer's employees and their beneficiaries. Such
plans and accounts include, but are not limited to, corporate pension and profit
sharing plans, "simplified employee pension plans," KEOGH plans for
self-employed individuals (including partners), individual retirement accounts
described in Section 408 of the Code and medical plans.
Each Plan Fiduciary must give appropriate consideration to the facts and
circumstances that are relevant to an investment in the Fund, including the role
that an investment in the Fund would play in the Plan's overall investment
portfolio. Each Plan Fiduciary, before deciding to invest in the Fund, must be
satisfied that such investment is prudent for the Plan, that the investments of
the Plan, including the investment in the Fund, are diversified so as to
minimize the risk of large losses and that an investment in the Fund complies
with the Plan and related trust.
EACH PLAN FIDUCIARY CONSIDERING ACQUIRING UNITS MUST CONSULT WITH ITS OWN
LEGAL AND TAX ADVISERS BEFORE DOING SO. AN INVESTMENT IN THE FUND IS SPECULATIVE
AND INVOLVES A HIGH DEGREE OF RISK. THE FUND IS NOT INTENDED AS A COMPLETE
INVESTMENT PROGRAM.
B. "Plan Assets." A regulation issued under ERISA (the "ERISA
Regulation") contains rules for determining when an investment by a Plan in an
equity interest of an entity will result in the underlying assets of such entity
being considered to constitute assets of the Plan for purposes of ERISA and
Section 4975 of the Code (i.e., "plan assets"). Those rules provide that assets
of an entity will not be considered assets of a Plan which purchases an equity
interest in the entity if certain exceptions apply, including an exception
applicable if the equity interest purchased is a "publicly-offered security"
(the "Publicly-Offered Security Exception"). If the underlying assets of a
partnership are considered to be assets of any Plan for purposes of ERISA or
Section 4975 of the Code, the operations of such partnership would be subject to
and, in some cases, limited by, the provisions of ERISA and Section 4975 of the
Code.
The Publicly-Offered Security Exception applies if the equity interest is a
security that is (1) "freely transferable," (2) part of a class of securities
that is "widely held" and (3) either (a) part of a class of securities
registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934,
or (b) sold to the Plan as part of a public offering pursuant to an effective
registration statement under the Securities Act of 1933 and the class of which
such security is a part is registered under the Securities Exchange Act of 1934
within 120 days (or such later time as may be allowed by the SEC) after the end
of the fiscal year of the issuer in which the offering of such security
occurred. The ERISA Regulation states that the determination of whether a
security is "freely transferable" is to be made based on all relevant facts and
circumstances. The ERISA Regulation specifies that, in the case of a security
that is part of an offering in which the minimum investment is $10,000 or less,
the following requirements, alone or in combination, ordinarily will not affect
a finding that the security is freely transferable: (i) a requirement that no
transfer or assignment of the security or rights in respect thereof be made that
would violate any federal or state law; (ii) a requirement that no transfer or
assignment be made without advance written notice given to the entity that
issued the security; (iii) any requirement that not less than a minimum number
of units of such security be transferred or assigned by any investor, provided
that such requirement does not prevent transfer of all of the then remaining
units held by an investor; (iv) any administrative procedure which establishes
an effective date prior to which a transfer or assignment will not be effective;
(v) any requirement that reasonable transfer or administrative fees be paid in
connection with a transfer or assignment; and (vi) any restriction on
substitution of an assignee as "a limited partner of a partnership, including a
general partner consent requirement, provided that the
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economic benefits of ownership of the assignor may be transferred or assigned
without regard to such restriction or consent" (other than compliance with any
of the foregoing restrictions). Under the ERISA Regulation, a class of
securities is "widely held" only if it is of a class of securities owned by 100
or more investors independent of the issuer and of each other. A class of
securities will not fail to be widely held solely because subsequent to the
initial offering the number of independent investors falls below 100 as a result
of events beyond the issuer's control.
Campbell & Company expects that the Publicly Offered Security Exception
will apply with respect to the Units. First, the Units are being sold only as
part of a public offering pursuant to an effective registration statement under
the Securities Act of 1933, and the Units will be registered under the
Securities Exchange Act of 1934 within 120 days (or such later time as may be
allowed by the SEC after the end of the fiscal year of the Fund in which the
offering of Units occurred).
Second, it appears that the Units are freely transferable because the
minimum investment is not more than $10,000 and Limited Partners may assign
their economic interests in the Fund by giving written notice to Campbell &
Company, provided such assignment would not violate any federal or state
securities laws and would not adversely affect the tax status of the Fund.
Although the Limited Partnership Agreement states that, generally, no transfer
or assignment will be permitted unless the amount of the transfer is at least
the minimum subscription amount, Campbell & Company intends to permit a Limited
Partner to transfer or assign an amount that is less than the minimum
subscription amount if the amount of the transfer or assignment equals the
entire capital account of the Limited Partner.
Third, Campbell & Company expects that the Units will be owned by at least
100 investors independent of the Fund and of each other.
C. Ineligible Purchasers. In general, Units may not be purchased with the
assets of a Plan if Campbell & Company, the Selling Agents, the Commodity
Broker, or any of their respective affiliates, any of their respective employees
or any employees of their respective affiliates: (a) has investment discretion
with respect to the investment of such Plan assets; (b) has authority or
responsibility to give 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. A party that is described in clause (a) or (b) of the preceding sentence
is a fiduciary under ERISA and the Code with respect to the Plan, and any such
purchase might result in a "prohibited transaction" under ERISA and the Code.
Except as otherwise set forth, the foregoing statements regarding the
consequences under ERISA and the Code of an investment in the Fund are based on
the provisions of the Code and ERISA as currently in effect, and the existing
administrative and judicial interpretations thereunder. No assurance can be
given that administrative, judicial or legislative changes will not occur that
will not make the foregoing statements incorrect or incomplete.
ACCEPTANCE OF SUBSCRIPTIONS ON BEHALF OF PLANS IS IN NO RESPECT A
REPRESENTATION BY THE FUND, CAMPBELL & COMPANY, THE COMMODITY BROKER, THE
SELLING AGENTS OR ANY OTHER PARTY THAT THIS INVESTMENT MEETS SOME OR ALL OF THE
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 OR HER ATTORNEY AND FINANCIAL
ADVISERS AS TO THE PROPRIETY OF AN INVESTMENT IN THE UNITS IN LIGHT OF THE
CIRCUMSTANCES OF THE PARTICULAR PLAN AND CURRENT TAX LAW.
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SEC.19. PLAN OF DISTRIBUTION
A. Subscription Procedure
The Fund is offering the Units to the public during the Continuing Offering
at the Net Asset Value per Unit as of each Closing Date on which subscriptions
are accepted. Subscriptions will be accepted once cleared payments are received,
provided that subscriptions must be received at least ten business days prior to
the applicable month-end Closing Date. 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. Minimum Investment
The minimum investment in the Fund is $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.
C. 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.
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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.
D. 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 up to 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 $1,200,000.
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.
56
<PAGE> 59
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.
SEC.20. CERTAIN LEGAL MATTERS
Legal matters in connection with the Units being offered hereby will be
passed upon for Campbell & Company by Sidley & Austin, New York, New York and
Chicago, Illinois. In the future, Sidley & Austin 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 Sidley &
Austin. Sidley & Austin has not represented, nor will it represent, either the
Fund or the Limited Partners in matters relating to the Fund.
SEC.21. EXPERTS
The financial statements of the Fund as of and for the years ended December
31, 1996, 1995 and 1994 and the balance sheet of Campbell & Company, Inc. as of
December 31, 1996, 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 March 31, 1997 and for the three
months ended March 31, 1997 and 1996 and the balance sheet of Campbell &
Company, Inc. as of March 31, 1997 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.
57
<PAGE> 60
SEC.22. MOST RECENT MONTHLY REPORTS
MONTHLY REPORT -- APRIL, 1997 FOR PARTNER #XXXX
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
<TABLE>
<S> <C>
NAV per unit on 30-Apr-1997................................................... $ 1,271.56
NAV per unit on 31-Mar-1997................................................... $ 1,319.03
Unit Value Monthly Gain (Loss)................................................ (3.60)%
Fund 1997 YTD Gain (Loss)..................................................... .27%
Number of units you own....................................................... XXXX
Total value of units you own.................................................. $ XXXXX
STATEMENT OF CHANGES IN NET ASSET VALUE
Net Asset Value (101,330.652 units) at March 31, 1997......................... $133,658,602
-----------
Additions of 7,375.115 units on April 30, 1997................................ 9,377,922
Redemptions of 452.192 units on April 30, 1997................................ (574,989)
Offering Costs................................................................ (89,197)
Net Income (Loss) -- April, 1997.............................................. (4,721,605)
-----------
Net Asset Value (108,253.575 units) at April 30, 1997......................... $137,650,733
===========
Net Asset Value per Unit at April 30, 1997.................................... $ 1,271.56
===========
STATEMENT OF INCOME (LOSS)
INCOME:
Gains (losses) on futures contracts:
Realized................................................................. $ (836,865)
Change in unrealized..................................................... (3,723,119)
Gains (losses) on forward contracts:
Realized................................................................. 0
Change in unrealized..................................................... 152,359
Interest income............................................................. 588,462
-----------
(3,819,163)
EXPENSES:
Brokerage fee............................................................... 864,749
Performance fee............................................................. 0
Operating expenses.......................................................... 37,693
-----------
902,442
-----------
NET INCOME (LOSS) -- April, 1997....................................... $ (4,721,605)
===========
</TABLE>
To the best of my knowledge and belief, the information contained herein is
accurate and complete.
/s/ THERESA D. LIVESEY
Theresa D. Livesey, Chief Financial Officer
Campbell & Company, Inc.
General Partner
Campbell Strategic Allocation Fund, L.P.
Prepared without audit
- --------------------------------------------------------------------------------
Campbell & Company, Inc. 210 W Pennsylvania Ave. Baltimore, Maryland
21204 Phone: (410) 296-3301
58
<PAGE> 61
SEC.23. INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
STATEMENTS OF FINANCIAL CONDITION
March 31, 1997 (Unaudited) and December 31, 1996 (Audited)........................... 74
STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three Months Ended March 31, 1997 and 1996................................... 75
STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Three Months Ended March 31, 1997 and 1996................................... 76
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (NET ASSET VALUE) (UNAUDITED)
For the Three Months Ended March 31, 1997 and 1996................................... 77
NOTES TO (UNAUDITED) FINANCIAL STATEMENTS.............................................. 78
INDEPENDENT AUDITOR'S REPORT........................................................... 84
STATEMENTS OF FINANCIAL CONDITION
December 31, 1996 and 1995........................................................... 85
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1996, 1995 and 1994................................. 86
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1996, 1995 and 1994................................. 87
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (NET ASSET VALUE)
For the Years Ended December 31, 1996, 1995 and 1994................................. 88
NOTES TO FINANCIAL STATEMENTS.......................................................... 89
CAMPBELL & COMPANY, INC.
BALANCE SHEET
March 31, 1997 (Unaudited)........................................................... 95
NOTES TO (UNAUDITED) FINANCIAL STATEMENT............................................... 96
INDEPENDENT AUDITOR'S REPORT........................................................... 103
BALANCE SHEET December 31, 1996........................................................ 104
NOTES TO FINANCIAL STATEMENT........................................................... 105
</TABLE>
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.
59
<PAGE> 62
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
STATEMENTS OF FINANCIAL CONDITION
March 31, 1997 (Unaudited) and December 31, 1996 (Audited)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
Equity in broker trading accounts
Cash........................................................ $ 14,027,589 $ 15,907,914
United States government securities......................... 11,081,868 10,583,946
Unrealized gain on open futures contracts................... 1,552,392 304,907
------------ ------------
Deposits with broker...................................... 26,661,849 26,796,767
Cash and cash equivalents...................................... 85,458,189 46,977,151
United States government securities............................ 25,830,029 35,925,168
Unrealized gain (loss) on open forward contracts............... (2,001,783) 1,667,873
------------ ------------
Total assets.............................................. $135,948,284 $111,366,959
============ ============
LIABILITIES
Accounts payable............................................... $ 62,818 $ 117,865
Brokerage fee.................................................. 836,715 662,993
Performance fee................................................ 811,122 2,082,519
Offering costs payable......................................... 74,267 56,627
Redemptions payable............................................ 286,477 577,116
Subscription deposits.......................................... 218,283 133,036
------------ ------------
Total liabilities......................................... 2,289,682 3,630,156
------------ ------------
PARTNERS' CAPITAL (NET ASSET VALUE)
General Partner -- 1,020.905 and 885.938 units outstanding at
March 31, 1997 and December 31, 1996........................ 1,346,608 1,123,514
Limited Partners -- 100,309.747 and 84,069.060 units
outstanding at
March 31, 1997 and December 31, 1996........................ 132,311,994 106,613,289
------------ ------------
Total partners' capital (Net Asset Value)................. 133,658,602 107,736,803
------------ ------------
$135,948,284 $111,366,959
============ ============
</TABLE>
See accompanying notes.
60
<PAGE> 63
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
----------- ----------
<S> <C> <C>
INCOME
Trading gains (losses)
Realized....................................................... $ 8,705,045 $1,928,119
Change in unrealized........................................... (2,422,170) 572,831
---------- ----------
Gain from trading............................................ 6,282,875 2,500,950
Interest income................................................... 1,407,149 580,444
---------- ----------
Total income................................................. 7,690,024 3,081,394
---------- ----------
EXPENSES
Brokerage fee..................................................... 2,418,103 951,528
Performance fee................................................... 816,384 0
Operating expenses................................................ 101,835 46,937
---------- ----------
Total expenses............................................... 3,336,322 998,465
---------- ----------
NET INCOME................................................... $ 4,353,702 $2,082,929
========== ==========
NET INCOME PER GENERAL AND
LIMITED PARTNER UNIT
(based on weighted average number of units
outstanding during the period).................................... $ 48.77 $ 44.19
========== ==========
INCREASE IN NET ASSET
VALUE PER GENERAL AND LIMITED
PARTNER UNIT...................................................... $ 50.87 $ 40.51
========== ==========
</TABLE>
See accompanying notes.
61
<PAGE> 64
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES
Net income.................................................... $ 4,353,702 $ 2,082,929
Adjustments to reconcile net income to net cash from operating
activities
Net change in unrealized................................. 2,422,170 (572,831)
Increase (decrease) in accounts payable and accrued
expenses............................................... (1,152,722) 22,374
----------- -----------
Net cash from operating activities.................. 5,623,150 1,532,472
----------- -----------
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES
Net (purchases) maturities of investments in United States
government and agency securities............................. 9,597,218 (16,039,390)
----------- -----------
Net cash from (for) investing activities............ 9,597,218 (16,039,390)
----------- -----------
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES
Addition of units............................................. 22,508,396 5,713,169
Increase in subscription deposits............................. 85,247 273,990
Redemption of units........................................... (717,508) (1,922,123)
Decrease in redemptions payable............................... (290,639) (462,100)
Offering costs charged........................................ (222,791) (128,793)
Increase in offering costs payable............................ 17,640 5,744
----------- -----------
Net cash from financing activities.................. 21,380,345 3,479,887
----------- -----------
Net increase (decrease) in cash and cash equivalents............... 36,600,713 (11,027,031)
CASH AND CASH EQUIVALENTS
Beginning of period........................................... 62,885,065 33,729,444
----------- -----------
End of period................................................. $99,485,778 $22,702,413
========== ==========
</TABLE>
See accompanying notes.
62
<PAGE> 65
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (NET ASSET VALUE)
For the Three Months Ended March 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
PARTNERS' CAPITAL
----------------------------------------------------------------------------------------
GENERAL LIMITED TOTAL
------------------------- --------------------------- ----------------------------
UNITS AMOUNT UNITS AMOUNT UNITS AMOUNT
--------- ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
THREE MONTHS ENDED MARCH
31, 1997
Balances at December 31,
1996................... 885.938 $1,123,514 84,069.060 $106,613,289 84,954.998 $107,736,803
Additions................ 134.967 180,000 16,778.890 22,328,396 16,913.857 22,508,396
Net income for the three
months ended March 31,
1997................... 45,356 4,308,346 4,353,702
Redemptions.............. 0.000 0 (538.203) (717,508) (538.203) (717,508)
Offering costs........... (2,262) (220,529) (222,791)
------- -------- ---------- ----------- ---------- -----------
Balances at March 31,
1997................... 1,020.905 $1,346,608 100,309.747 $132,311,994 101,330.652 $133,658,602
========= ========= =========== =========== =========== ===========
THREE 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
======= ======== ========== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE PER UNIT
---------------------------------------------------------
MARCH 31, DECEMBER 31, MARCH 31, DECEMBER 31,
1997 1996 1996 1995
--------- ------------ --------- ------------
<S> <C> <C> <C> <C>
$1,319.03 $1,268.16 $1,012.55 $972.04
========== ============ ========== ============
</TABLE>
See accompanying notes.
63
<PAGE> 66
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. Unrealized gains or losses
on open contracts (the difference between contract purchase price and
market price) are reported in the statement of financial condition as a
net gain or loss, as there exists a right of offset of unrealized gains
or losses in accordance with Financial Accounting Standards Board
Interpretation No. 39 -- "Offsetting of Amounts Related to Certain
Contracts." Any change in net unrealized gain or loss from the
preceding period is reported in the statement of operations. United
States government and agency securities are stated at market value.
D. Cash and Cash Equivalents
Cash and cash equivalents includes cash, other demand deposits and
short-term time deposits held at financial institutions.
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 incurred total costs in connection with the
initial and continuous offering of Units of the Partnership (offering
costs) of $3,339,383 through March 31, 1997, $1,206,264 of which has
already been reimbursed to the General Partner by the Partnership. At
March 31, 1997, the Partnership reflects a liability in the statement
of financial condition for offering costs payable to the General
Partner of $74,267. The Partnership's liability for offering costs is
limited to the maximum of total offering costs incurred by the General
Partner or 2.5% of the aggregate subscriptions accepted during the
initial and continuous offerings; this maximum is further limited by a
pay-out schedule over 30 months. The Partnership is only liable for
payment of offering costs on a monthly basis as calculated based on the
limitations stated above. If the Partnership terminates prior to
completion of payment of the calculated amounts to the General Partner,
the General Partner will not be entitled to any additional payments and
the Partnership will have no further obligation to the General Partner.
64
<PAGE> 67
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(Unaudited)
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES --
(CONTINUED)
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, 1997 and 1996,
the amounts paid directly to the broker amounted to $302,263 and $118,941
respectively.
The General Partner is also paid a quarterly performance fee of 20% of the
Partnership's aggregate cumulative appreciation in the Net Assets, exclusive of
appreciation attributable to interest income and as adjusted for subscriptions
and redemptions.
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 0.5% per year of the average month-end Net Asset Value
of the Partnership. Actual operating expenses were less than 0.5% (annualized)
for the three months ended March 31, 1997 and 1996.
65
<PAGE> 68
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(Unaudited)
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, 1997 and December 31,
1996, subscription amounts received by the Partnership by prospective investors
who have not yet been admitted to the Partnership by the General Partner amount
to $218,283 and $133,036, 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 as of any month-end, subject to restrictions in the
Amended Agreement of Limited Partnership (including redemption fees which apply
to redemptions made in the first 12 months).
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 10% to 30% of Net Asset Value. The
market value of securities held to satisfy such requirements at March 31, 1997
and December 31, 1996 was $15,074,003 and $13,763,550, respectively, which
equals 11% and 13% of the Fund's Net Assets, respectively.
The Partnership trades forward contracts in unregulated markets between
principals and assumes the risk of loss from counterparty nonperformance.
Accordingly, the risks associated with forward contracts are generally greater
than those associated with exchange traded contracts because of the greater risk
of counterparty default. Additionally, the trading of forward contracts
typically involves delayed cash settlement.
The Partnership has a substantial portion of its assets on deposit with
financial institutions. 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, 1997 and 1996 was approximately $5,912,000 and
$3,006,000, respectively and the related fair values as of March 31, 1997 and
December 31, 1996 are approximately ($449,000) and $1,973,000, respectively.
66
<PAGE> 69
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(Unaudited)
NOTE 6. TRADING ACTIVITIES AND RELATED RISKS -- (CONTINUED)
Net trading results from derivatives are reflected in the statement of
operations and equal gain from trading less the portion of the brokerage fee
paid directly to the broker. Such trading results reflect the net gain 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, 1997 is June 1997. However, the
Partnership intends to close all contracts prior to maturity. At March 31, 1997
and December 31, 1996, the notional amount of open contracts is as follows:
<TABLE>
<CAPTION>
MARCH 31, 1997 DECEMBER 31, 1996
------------------------------ ----------------------------
CONTRACTS TO CONTRACTS TO CONTRACTS TO CONTRACTS TO
PURCHASE SELL PURCHASE SELL
------------ -------------- ------------ ------------
<S> <C> <C> <C> <C>
Futures contracts:
- Long-term interest
rates................... $ 42,400,000 $ 437,100,000 $154,000,000 $118,100,000
- Short-term interest
rates................... 0 797,100,000 134,200,000 0
- Currencies............... 19,400,000 14,400,000 11,400,000 21,200,000
- Stock indices............ 370,700,000 407,500,000 600,000 12,200,000
- Softs/Fibers............. 200,000 1,500,000 1,000,000 0
- Grains................... 3,800,000 600,000 0 0
- Meats.................... 400,000 200,000 400,000 0
- Metals................... 31,200,000 17,900,000 16,500,000 9,300,000
- Energy................... 0 27,000,000 18,300,000 0
Forward contracts:
- Currencies............... 178,600,000 152,000,000 119,900,000 155,700,000
------------ -------------- ------------ ------------
$646,700,000 $1,855,300,000 $456,300,000 $316,500,000
=========== ============= =========== ===========
</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, 1997, the Statements
of Operations for the three months ended March 31, 1997 and 1996, the Statements
of Cash Flows for the three months ended March 31, 1997 and 1996 and the
Statements of Changes in Partners' Capital (Net Asset Value) for the three
months ended March 31, 1997 and 1996 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, 1997 and the results of operations for the three months
ended March 31, 1997 and 1996.
67
<PAGE> 70
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, 1996 and 1995, and
the related statements of operations, cash flows and changes in partners'
capital (net asset value) for the years ended December 31, 1996, 1995 and 1994.
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, 1996 and 1995, and the results of its
operations, cash flows and the changes in its net asset values for the years
ended December 31, 1996, 1995 and 1994, in conformity with generally accepted
accounting principles.
ARTHUR F. BELL, JR. & ASSOCIATES, L.L.C.
Lutherville, Maryland
January 22, 1997
68
<PAGE> 71
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
STATEMENTS OF FINANCIAL CONDITION
December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
ASSETS
Equity in broker trading accounts
Cash.......................................................... $ 15,907,914 $ 1,238,207
United States government securities........................... 10,583,946 7,205,197
Unrealized gain on open futures contracts..................... 304,907 2,798,738
---------- ----------
Deposits with broker........................................ 26,796,767 11,242,142
Cash and cash equivalents........................................ 46,977,151 32,491,237
United States government and agency securities................ 35,925,168 2,985,505
Unrealized gain (loss) on open forward contracts.............. 1,667,873 (227,297)
---------- ----------
Total assets................................................ $111,366,959 $46,491,587
========== ==========
LIABILITIES
Accounts payable................................................. $ 117,865 $ 31,699
Brokerage fee.................................................... 662,993 301,006
Performance fee.................................................. 2,082,519 0
Offering costs payable........................................... 56,627 37,187
Redemptions payable.............................................. 577,116 1,018,007
Subscription deposits............................................ 133,036 30,154
---------- ----------
Total liabilities........................................... 3,630,156 1,418,053
---------- ----------
PARTNERS' CAPITAL (NET ASSET VALUE)
General Partner -- 885.938 and 472.222 units outstanding at
December 31, 1996 and 1995.................................... 1,123,514 459,018
Limited Partners -- 84,069.060 and 45,897.894 units outstanding
at December 31, 1996 and 1995................................. 106,613,289 44,614,516
---------- ----------
Total partners' capital (Net Asset Value)................... 107,736,803 45,073,534
---------- ----------
$111,366,959 $46,491,587
========== ==========
</TABLE>
See accompanying notes.
69
<PAGE> 72
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
----------- ---------- -----------
<S> <C> <C> <C>
INCOME
Trading gains (losses)
Realized............................................ $23,984,026 $1,760,402 $(1,642,526)
Change in unrealized................................ (598,661) 2,654,113 (82,672)
---------- ----------- ----------
Gain (loss) from trading.......................... 23,385,365 4,414,515 (1,725,198)
Interest income........................................ 3,238,486 1,786,353 509,876
---------- ----------- ----------
Total income (loss)............................... 26,623,851 6,200,868 (1,215,322)
---------- ----------- ----------
EXPENSES
Brokerage fee.......................................... 5,209,726 2,536,004 922,580
Performance fee........................................ 2,121,981 0 69,386
Operating expenses..................................... 234,090 155,631 28,349
---------- ----------- ----------
Total expenses.................................... 7,565,797 2,691,635 1,020,315
---------- ----------- ----------
NET INCOME (LOSS)................................. $19,058,054 $3,509,233 $(2,235,637)
========== =========== ==========
NET INCOME (LOSS) PER GENERAL AND LIMITED PARTNER UNIT
(based on weighted average number of units outstanding
during the period)..................................... $ 327.00 $ 103.74 $ (133.42)
========== =========== ==========
INCREASE (DECREASE) IN NET ASSET VALUE PER GENERAL AND
LIMITED PARTNER UNIT................................... $ 296.12 $ 88.27 $ (116.23)
========== =========== ==========
</TABLE>
See accompanying notes.
70
<PAGE> 73
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
------------ ----------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES
Net income (loss).............................. $ 19,058,054 $ 3,509,233 $ (2,235,637)
Adjustments to reconcile net income (loss) to
net cash from (for) operating activities
Net change in unrealized.................. 598,661 (2,654,113) 82,672
Increase in accounts payable and accrued
expenses................................ 2,530,672 190,151 142,554
----------- ----------- ------------
Net cash from (for) operating
activities......................... 22,187,387 1,045,271 (2,010,411)
----------- ----------- ------------
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES
Net (purchases) maturities of investments in
United States government and agency
securities................................... (36,318,412) 8,112,415 (18,303,117)
----------- ----------- ------------
Net cash from (for) investing
activities......................... (36,318,412) 8,112,415 (18,303,117)
----------- ----------- ------------
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES
Addition of units.............................. 52,969,550 27,182,425 24,398,383
Increase (decrease) in subscription deposits... 102,882 (222,071) 252,225
Redemption of units............................ (8,743,067) (5,885,426) (1,460,972)
(Decrease) increase in redemptions payable..... (440,891) 963,172 54,835
Offering costs charged......................... (621,268) (332,094) (104,378)
Increase in offering costs payable............. 19,440 20,557 16,630
----------- ----------- ------------
Net cash from financing activities........ 43,286,646 21,726,563 23,156,723
----------- ----------- ------------
Net increase in cash and cash equivalents........... 29,155,621 30,884,249 2,843,195
CASH AND CASH EQUIVALENTS
Beginning of year.............................. 33,729,444 2,845,195 2,000
----------- ----------- ------------
End of year.................................... $ 62,885,065 $33,729,444 $ 2,845,195
=========== =========== ============
</TABLE>
See accompanying notes.
71
<PAGE> 74
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (NET ASSET VALUE)
For the Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
PARTNERS' CAPITAL
----------------------------------------------------------------------------
GENERAL LIMITED TOTAL
-------------------- ------------------------- -------------------------
UNITS AMOUNT UNITS AMOUNT UNITS AMOUNT
------- ---------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
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) (104,378)
------- ---------- ----------- ----------- ----------- -----------
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) (332,094)
------- ---------- ----------- ----------- ----------- -----------
Balances at December 31,
1995.................. 472.222 459,018 45,897.894 44,614,516 46,370.116 45,073,534
Net income for the year
ended December 31,
1996.................. 190,771 18,867,283 19,058,054
Additions............... 413.716 480,000 46,205.096 52,489,550 46,618.812 52,969,550
Redemptions............. 0.000 0 (8,033.930) (8,743,067) (8,033.930) (8,743,067)
Offering costs.......... (6,275) (614,993) (621,268)
------- ---------- ----------- ----------- ----------- -----------
Balances at December 31,
1996.................. 885.938 $1,123,514 84,069.060 $106,613,289 84,954.998 $107,736,803
======= ========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
NET ASSET VALUE PER
GENERAL AND LIMITED PARTNER UNIT
-----------------------------------------
DECEMBER 31,
-----------------------------------------
1996 1995 1994
--------- ------- -------
<S> <C> <C> <C>
$1,268.16 $972.04 $883.77
========= ======= =========
</TABLE>
See accompanying notes.
72
<PAGE> 75
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. Unrealized gains and losses
on open contracts (the difference between contract purchase price and
market price) are reported in the statement of financial condition as a
net gain or loss, as there exists a right of offset of unrealized gains
or losses in accordance with Financial Accounting Standards Board
Interpretation No. 39 -- "Offsetting of Amounts Related to Certain
Contracts." Any change in net unrealized gain or loss from the
preceding period is reported in the statement of operations. United
States government and agency securities are stated at market value.
D. Cash and Cash Equivalents
Cash and cash equivalents includes cash, other demand deposits and
short-term time deposits held at financial institutions.
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 incurred total costs in connection with the
initial and continuous offering of Units of the Partnership (offering
costs) of $2,824,142 through December 31, 1996, $1,001,113 of which has
already been reimbursed to the General Partner by the Partnership. At
December 31, 1996, the Partnership reflects a liability in the
statement of financial condition for offering costs payable to the
General Partner of $56,627. The Partnership's liability for offering
costs is limited to the maximum of total offering costs incurred by the
General Partner or 2.5% of the aggregate subscriptions accepted during
the initial and continuous offerings; this maximum is further limited
by a pay-out schedule over 30 months. The Partnership is only liable
for payment of offering costs on a monthly basis as calculated based on
the limitations stated above. If the Partnership terminates prior to
completion of payment of the calculated amounts to the General Partner,
the General Partner will not be entitled to any additional payments and
the Partnership will have no further obligation to the General Partner.
73
<PAGE> 76
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES --
(CONTINUED)
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 1996, 1995 and 1994, the amounts paid directly to
the broker amounted to $651,216, $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 years ended December 31, 1996 and 1995 and for the period April 18, 1994
(commencement of operations) to December 31, 1994.
74
<PAGE> 77
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
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, 1996 and 1995, amounts
received by the Partnership by prospective limited partners who have not yet
been admitted to the Partnership by the General Partner total $133,036 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 15% to 30% of Net Asset Value. The
market value of securities held to satisfy such requirements at December 31,
1996 and 1995 was $13,763,550 and $10,190,702, respectively, which equals 13%
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.
Accordingly, the risks associated with forward contracts are generally greater
than those associated with exchange traded contracts because of the greater risk
of counterparty default. Additionally, the trading of forward contracts
typically involves delayed cash settlement.
The Partnership has a substantial portion of its assets on deposit with
financial institutions. 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
1996 and 1995 was approximately $4,850,000 and $830,000, respectively, and the
related year end fair values are approximately $1,973,000 and $2,571,000,
respectively.
Net trading results from derivatives are reflected in the statement of
operations and equal gain (loss) from trading less the portion of the brokerage
fee paid directly to the broker. Such trading results reflect the net gain
(loss) arising from the Partnership's speculative trading of futures and forward
contracts.
75
<PAGE> 78
CAMPBELL STRATEGIC ALLOCATION FUND, L.P.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 6. TRADING ACTIVITIES AND RELATED RISKS -- (CONTINUED)
Open contracts generally mature within three months; the latest maturity
date for open contracts as of December 31, 1996 is April 1997. However, the
Partnership intends to close all contracts prior to maturity. At December 31,
1996 and 1995, the notional amount of open contracts is as follows:
<TABLE>
<CAPTION>
1996 1995
---------------------------- ----------------------------
CONTRACTS TO CONTRACTS TO CONTRACTS TO CONTRACTS TO
PURCHASE SELL PURCHASE SELL
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Futures contracts:
- Long-term interest
rates.................... $154,000,000 $118,100,000 $148,500,000 $ 0
- Short-term interest
rates.................... 134,200,000 0 105,700,000 34,800,000
- Currencies................ 11,400,000 21,200,000 700,000 11,900,000
- Stock indices............. 600,000 12,200,000 10,500,000 0
- Softs/Fibers.............. 1,000,000 0 0 3,900,000
- Grains.................... 0 0 1,300,000 400,000
- Meats..................... 400,000 0 400,000 0
- Metals.................... 16,500,000 9,300,000 9,700,000 10,800,000
- Energy.................... 18,300,000 0 10,400,000 0
Forward contracts:
- Currencies................ 119,900,000 155,700,000 42,600,000 84,900,000
------------ ------------ ------------ ------------
$456,300,000 $316,500,000 $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.
76
<PAGE> 79
CAMPBELL & COMPANY, INC.
BALANCE SHEET
March 31, 1997 (Unaudited)
<TABLE>
<S> <C>
ASSETS
Current assets
Cash and cash equivalents................................................. $ 746,293
Accounts receivable
Advisory and performance fees........................................... 4,671,099
Receivable from Campbell Strategic Allocation Fund, L.P. ............... 492,625
Other receivables....................................................... 26,880
-----------
Total current assets................................................. 5,936,897
-----------
Property and equipment
Furniture and office equipment............................................ 1,172,668
Leasehold improvements.................................................... 85,434
-----------
1,258,102
Less accumulated depreciation and amortization............................ (809,311)
-----------
Total property and equipment......................................... 448,791
-----------
Other assets
Cash surrender value of life insurance, net of policy loans of $134,239... 51,564
General Partner interests in Limited Partnerships......................... 1,537,671
Other..................................................................... 2,960,288
-----------
Total assets......................................................... $10,935,211
==========
LIABILITIES
Accounts payable and accrued expenses........................................ $ 2,270,593
Demand notes payable......................................................... 987,375
Subordinated debt............................................................ 1,354,624
-----------
Total liabilities.................................................... 4,612,592
-----------
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......................................................... 6,265,451
-----------
6,322,619
-----------
Total liabilities and stockholders' equity........................... $10,935,211
==========
</TABLE>
See accompanying notes.
77
<PAGE> 80
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 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 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 accrued 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 state income taxes. The Company's taxable
income is 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 $1,346,608 as of March 31, 1997.
Summarized financial information with respect to Strategic as of and for
the three months ended March 31, 1997 is as follows:
<TABLE>
<S> <C>
Balance Sheet Data
Assets.............................................. $135,948,284
Liabilities......................................... (2,289,682)
------------
Net Asset Value.................................. $133,658,602
===========
Operating Data
Total income........................................ $ 7,690,024
Total expense....................................... (3,336,322)
------------
Net income.................................. $ 4,353,702
===========
General Partner income allocation..................... $ 43,094
===========
</TABLE>
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.
78
<PAGE> 81
CAMPBELL & COMPANY, INC.
NOTES TO FINANCIAL STATEMENT -- (CONTINUED)
(Unaudited)
NOTE 2. GENERAL PARTNER INTERESTS IN LIMITED PARTNERSHIPS -- (CONTINUED)
Campbell Strategic Allocation Fund, L.P. -- (Continued)
The Company, as General Partner, has contributed capital of $1,117,000 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 by all the 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 incurred costs in connection with
Strategic's initial and continuous offerings. The Company reflects a receivable
as of March 31, 1997 of $74,267 from Strategic for offering costs due to be
reimbursed as of said date. This amount is included in Receivable from Campbell
Strategic Allocation Fund, L.P. in the balance sheet. The remaining offering
costs of $2,058,852 as of March 31, 1997 are included in Other assets in the
balance sheet. They are carried on the Company's books as an asset, because of
the probable future economic benefit to be obtained from the eventual receipt
from Strategic of these reimbursements, even though Strategic is not liable for
this amount at the current time. The Company recognizes the newly recalculated
amount due from Strategic each month as a receivable, which reduces the balance
remaining as an Other asset. The Company analyzes the value of the remaining
Other asset on its balance sheet on a quarterly basis to ensure that the
carrying value is an accurate estimate of what the Company can expect to receive
out of the asset over time.
The Company also pays, up-front, a 4% commission to selling agents for
Strategic. The Company is then 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, 1997, $1,262,823 in selling agent
commissions are subject to future reimbursement, of which $418,358 is included
in Receivable from Campbell Strategic Allocation Fund, L.P. and $844,465 is
included in Other assets 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
$171,439 as of March 31, 1997.
Summarized financial information with respect to Financial Futures as of
and for the three months ended March 31, 1997 is as follows:
<TABLE>
<S> <C>
Balance Sheet Data
Assets................................................ $6,551,447
Liabilities........................................... (130,886)
-----------
Net Asset Value.................................... $6,420,561
==========
Operating Data
Total income.......................................... $ 375,029
Total expense......................................... (106,493)
----------
Net income.................................... $ 268,536
==========
General Partner income allocation....................... $ 7,468
==========
</TABLE>
79
<PAGE> 82
CAMPBELL & COMPANY, INC.
NOTES TO FINANCIAL STATEMENT -- (CONTINUED)
(Unaudited)
NOTE 2. GENERAL PARTNER INTERESTS IN LIMITED PARTNERSHIPS -- (CONTINUED)
The Campbell Fund Trust
Effective January 2, 1996, the Company became the Managing Operator of The
Campbell Fund Trust (the Trust). The Trustee of the Trust has delegated to the
Managing Operator all of the power and authority to manage the business affairs
of the Trust. As of March 31, 1997, the Company's investment in the Trust is
reported at a net asset value of $19,624.
NOTE 3. TRADING ACTIVITIES AND RELATED RISKS
The Limited Partnerships and the Trust for which the Company is either the
sole General Partner, Co-General Partner or Managing Operator engage 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
partnerships and the trust 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 contracts requires margin deposits with the
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 and the trust 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, the trust and the Company, as
General Partner or Managing Operator, 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 and the
trust during the three months ended March 31, 1997 was approximately $6,096,000
and the related period end fair value was approximately $(352,000).
At March 31, 1997, the notional amount of contracts acquired by the
partnerships and the trust to purchase totaled approximately $691,139,000 and
the notional amount of such contracts to sell totaled approximately
$1,966,722,000. These amounts do not represent the partnerships' and the trust's
risk of loss due to market and credit risk, but rather represent the extent of
their 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 7.61% as of March 31, 1997 for all notes
outstanding.
80
<PAGE> 83
CAMPBELL & COMPANY, INC.
NOTES TO FINANCIAL STATEMENT -- (CONTINUED)
(Unaudited)
NOTE 4. DEMAND NOTES PAYABLE -- (CONTINUED)
Amounts outstanding under the agreement are secured by all personal
property, other than equipment and fixtures, 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, 1997, $987,375, including accrued interest, was outstanding
under this agreement.
NOTE 5. SUBORDINATED DEBT
Certain members of the Company's management have provided unsecured,
non-interest bearing advances to the Company to provide for working capital. The
agreements are continuous until either party provides notice otherwise.
At March 31, 1997, $1,354,624, was outstanding under these advances.
NOTE 6. LEASE OBLIGATION
The Company leases office facilities under an agreement which provides for
minimum base annual rentals 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. Minimum
base annual rentals through the original lease term are as follows:
<TABLE>
<S> <C>
April 1, 1997 - March 31, 1998............................ $200,072
April 1, 1998 - August 31, 1998........................... 83,904
--------
Total base annual rentals................................. 283,976
Less: Sublease income..................................... (47,189)
--------
Total net base annual rentals............................. $236,787
========
</TABLE>
The Company advanced $23,000 as a security deposit relating to this lease.
NOTE 7. 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 8. INTERIM BALANCE SHEET
The balance sheet as of March 31, 1997 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,
1997.
81
<PAGE> 84
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, 1996. 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, 1996, in conformity with generally accepted accounting principles.
ARTHUR F. BELL, JR. & ASSOCIATES, L.L.C.
Lutherville, Maryland
March 7, 1997
82
<PAGE> 85
CAMPBELL & COMPANY, INC.
BALANCE SHEET
December 31, 1996
<TABLE>
<S> <C>
ASSETS
Current assets
Cash and cash equivalents.................................................. $ 28,169
Accounts receivable
Advisory and performance fees............................................ 13,914,672
Receivable from Campbell Strategic Allocation Fund, L.P.................. 388,124
Other receivables........................................................ 11,987
----------
Total current assets.................................................. 14,342,952
----------
Property and equipment
Furniture and office equipment........................................... 1,120,145
Leasehold improvements................................................... 85,434
----------
1,205,579
Less accumulated depreciation and amortization........................... (772,903)
----------
Total property and equipment.......................................... 432,676
----------
Other assets
Cash surrender value of life insurance, net of policy loans of
$134,239................................................................ 51,564
General Partner interests in Limited Partnerships........................ 1,306,508
Other.................................................................... 3,119,825
----------
Total assets.......................................................... $19,253,525
==========
LIABILITIES
Accounts payable and accrued expenses......................................... $ 8,738,293
Demand notes payable.......................................................... 2,574,451
----------
Total liabilities..................................................... 11,312,744
----------
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........................................................ 7,883,613
----------
7,940,781
----------
Total liabilities and stockholders' equity............................ $19,253,525
==========
</TABLE>
See accompanying notes.
83
<PAGE> 86
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 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 accrued 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 state income taxes. The Company's taxable
income is 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 $1,123,514 as of December 31, 1996.
Summarized financial information with respect to Strategic as of and for
the year ended December 31, 1996 is as follows:
<TABLE>
<S> <C>
Balance Sheet Data
Assets.............................................. $111,366,959
Liabilities......................................... (3,630,156)
------------
Net Asset Value.................................. $107,736,803
===========
Operating Data
Total income........................................ $ 26,623,851
Total expense....................................... (7,565,797)
------------
Net income.................................. $ 19,058,054
===========
General Partner income allocation..................... $ 184,496
===========
</TABLE>
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 $937,000 to
Strategic. The Company is further
84
<PAGE> 87
CAMPBELL & COMPANY, INC.
NOTES TO FINANCIAL STATEMENT -- (CONTINUED)
NOTE 2. GENERAL PARTNER INTERESTS IN LIMITED PARTNERSHIPS -- (CONTINUED)
Campbell Strategic Allocation Fund, L.P. -- (Continued)
bound by Strategic's Amended Agreement of Limited Partnership to maintain net
worth equal to at least 5% of the capital contributed by all the 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 incurred costs in connection with
Strategic's initial and continuous offerings. The Company reflects a receivable
as of December 31, 1996 of $56,627 from Strategic for offering costs due to be
reimbursed as of said date. This amount is included in Receivable from Campbell
Strategic Allocation Fund, L.P. in the balance sheet. The remaining offering
costs of $1,766,402 as of December 31, 1996 are included in Other assets in the
balance sheet. They are carried on the Company's books as an asset, because of
the probable future economic benefit to be obtained from the eventual receipt
from Strategic of these reimbursements, even though Strategic is not liable for
this amount at the current time. The Company recognizes the newly recalculated
amount due from Strategic each month as a receivable, which reduces the balance
remaining as an Other asset. The Company analyzes the value of the remaining
Other asset on its balance sheet on a quarterly basis to ensure that the
carrying value is an accurate estimate of what the Company can expect to receive
out of the asset over time.
The Company also pays, up-front, a 4% commission to selling agents for
Strategic. The Company is then 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, 1996, $1,627,951 in selling agent
commissions are subject to future reimbursement, of which $331,497 is included
in Receivable from Campbell Strategic Allocation Fund, L.P. and $1,296,454 is
included in Other assets 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
$163,967 as of December 31, 1996.
Summarized financial information with respect to Financial Futures as of
and for the year ended December 31, 1996 is as follows:
<TABLE>
<S> <C>
Balance Sheet Data
Assets................................................ $6,089,965
Liabilities........................................... (300,177)
----------
Net Asset Value.................................... $5,789,788
=========
Operating Data
Total income.......................................... $2,258,703
Total expense......................................... (418,504)
----------
Net income.................................... $1,840,199
=========
General Partner income allocation....................... $ 48,753
=========
</TABLE>
The Campbell Fund Trust
Effective January 2, 1996, the Company became the Managing Operator of The
Campbell Fund Trust (the Trust). The Trustee of the Trust has delegated to the
Managing Operator all of the power and authority to manage the business affairs
of the Trust. As of December 31, 1996, the Company's investment in the Trust is
reported at a net asset value of $19,027.
85
<PAGE> 88
CAMPBELL & COMPANY, INC.
NOTES TO FINANCIAL STATEMENT -- (CONTINUED)
NOTE 3. TRADING ACTIVITIES AND RELATED RISKS
The Limited Partnerships and the Trust for which the Company is either the
sole General Partner, Co-General Partner or Managing Operator engage 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
partnerships and the trust 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 contracts requires margin deposits with the
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 and the trust 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, the trust and the Company, as
General Partner or Managing Operator, 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 and the
trust during 1996 was approximately $5,310,000 and the related year end fair
value was approximately $2,096,000.
At December 31, 1996, the notional amount of contracts acquired by the
partnerships and the trust to purchase totaled approximately $486,700,000 and
the notional amount of such contracts to sell totaled approximately
$334,600,000. These amounts do not represent the partnerships' and the trust's
risk of loss due to market and credit risk, but rather represent the extent of
their 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 7.82% as of December 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 (said guarantee was released in February 1997).
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, 1996, $1,073,764, including accrued interest, was
outstanding under this agreement.
The Company also executed a promissory note with a financial institution in
December, 1996, which is guaranteed by a stockholder of the Company. Interest is
payable monthly at the prime rate (8.25% at December 31, 1996), and principal is
due in full on March 31, 1997. At December 31, 1996, $1,500,687,
86
<PAGE> 89
CAMPBELL & COMPANY, INC.
NOTES TO FINANCIAL STATEMENT -- (CONTINUED)
NOTE 4. DEMAND NOTES PAYABLE -- (CONTINUED)
including accrued interest, was outstanding under this note. The Company repaid
the note in full in January 1997.
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,
1996, $0 is outstanding under this agreement.
NOTE 5. LEASE OBLIGATION
The Company leases office facilities under an agreement which provides for
minimum base annual rentals 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. Minimum
base annual rentals through the original lease term are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31
----------------------------------------------------------
<S> <C>
1997...................................................... $199,293
1998...................................................... 134,246
--------
Total base annual rentals................................. 333,539
Less: Sublease income..................................... (55,516)
--------
Total net base annual rentals............................. $278,023
========
</TABLE>
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, 1996, the Company
provided $183,410 in matching and optional contributions to the Plan.
NOTE 7. SUBSEQUENT EVENT
In March 1997, the Company made distributions to its stockholders
aggregating approximately $4,100,000. Such distributions do not impact the
Company's compliance with its net worth requirements. Additionally, certain
members of the Company's management made advances to the Company aggregating
approximately $1,400,000, to provide for additional working capital.
87
<PAGE> 90
(This page has been left blank intentionally.)
<PAGE> 91
APPENDIX I
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
APP-I-1
<PAGE> 92
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.
APP-I-2
<PAGE> 93
BLUE SKY GLOSSARY
The following definitions are included in this Appendix I 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.
APP-I-3
<PAGE> 94
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.
APP-I-4
<PAGE> 95
APPENDIX II
SUPPLEMENTARY PERFORMANCE INFORMATION
The following tables include a graphic presentation of the performance of
the Fund and the two portfolios in which the Fund trades.
Table 1 presents the actual performance of the Fund since inception,
compared to several investment indices. Tables 2 and 3 present the overall
performance of Campbell & Company's management and trading systems within the
portfolios in which the Fund trades. Campbell & Company is a highly systematic
trader, which uses essentially the same systematic approach in each market
traded, and the basic trading principles and policies have remained constant
since the inception of trading in the Portfolios. Investors should note that
both individual accounts within each Portfolio and other funds managed by
Campbell & Company have at times incurred significant losses, greater than any
losses sustained to date by the Fund. The Portfolio tables do not represent the
actual performance of the Fund and are not representative of how the Fund has or
will perform.
THE FOLLOWING TABLES INCLUDE THE PERFORMANCE OF PROGRAMS AND ACCOUNTS WHICH
HAVE TRADED PURSUANT TO THE SAME SYSTEMS AS THE FUND, BUT WHICH HAVE MATERIAL
DIFFERENCES FROM THE FUND. THE FUND WILL NOT EXPERIENCE IN THE FUTURE THE
RESULTS SHOWN IN THE PORTFOLIO 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.
FUTURES TRADING IS SPECULATIVE. INVESTORS MAY LOSE ALL OR
SUBSTANTIALLY ALL OF THEIR INVESTMENT.
APP-II-1
<PAGE> 96
TABLE 1
CAMPBELL STRATEGIC ALLOCATION FUND
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.
<TABLE>
<CAPTION>
RATE OF RETURN(1)
(Computed on a compounded
monthly basis)
MONTH 1997 1996 1995 1994
<S> <C> <C> <C> <C>
January 4.52% 5.79% -4.67%
February 2.03% -5.97% 4.21%
March -2.47% 4.72% 8.77%
April -3.60% 3.59% 1.13% 0.16%
May -2.18% -0.84% -2.42%
June 0.75% -1.77% 5.15%
July -0.78% -3.82% -3.94%
August 1.84% 5.47% -3.89%
September 1.77% -3.93% 5.20%
October 12.44% 0.79% -0.14%
November 11.00% -0.15% -6.67%
December -4.41% 5.35% -4.98%
Total 0.27% 30.46% 9.99% -11.62%
</TABLE>
<TABLE>
<S> <C>
CAMPBELL STRATEGIC ALLOCATION FUND
1994 (beg. April) -11.62%
1995 9.99%
1996 30.46%
1997 (through April) 0.26%
MAR FUND/POOL QUALIFIED UNIVERSE INDEX
1994 (beg. April) 0.97%
1995 9.66%
1996 11.89%
1997 (through April) 4.18%
S&P 500 INDEX
1994 (beg. April) 1.31%
1995 38.56%
1996 22.92%
1997 (through April) 8.81%
LEHMAN BROTHERS GOVERNMENT BOND INDEX
1994 (beg. April) -7.73%
1995 18.77%
1996 -0.72%
1997 (through April) -0.99%
</TABLE>
The first chart is a graphic presentation of the table at the left, which
presents the actual performance of Campbell Strategic Allocation Fund since
inception, net of all fees and commissions paid. The MAR Fund/Pool Qualified
Universe Index is a dollar weighted index of 420 managed futures funds,
including the performance of current as well as retired funds. Both of these
charts represent actively managed futures accounts whose objective is
speculative trading profits. Stocks are represented by the S&P 500 Index and
Bonds by the Lehman Brothers Government Bond Index. These are passive indices of
equity and debt securities which generally are purchased by investors with an
investment objective of capital preservation, growth or income. There is
generally no correlation between the returns of stocks, bonds, and futures
investments (see the discussions on non-correlation in Risk Factors sec.2.A.vii
and Investment Factors sec.4.D). The bars in each chart represent annual returns
(calculated on a compounded monthly basis).
*Draw-down" means losses experienced by the Fund over a specified period.
<PAGE> 97
TABLE 2
FINANCIAL, METAL & ENERGY LARGE PORTFOLIO(4)
WORST MONTHLY PERCENTAGE DRAW-DOWN(2): June, 1986/17.68%
WORST PEAK-TO-VALLEY DRAW-DOWN(3): March - November, 1986/41.94%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
<TABLE>
<CAPTION>
Financial, Metal & Energy Large Portfolio
<S> <C>
1983 (beg. April) -10.34%
1984 26.96%
1985 33.05%
1986 -30.45%
1987 64.38%
1988 7.96%
1989 42.23%
1990 35.24%
1991 31.12%
1992 13.47%
1993 4.68%
1994 -16.73%
1995 19.46%
1996 35.96%
1997 (through April) 1.49%
</TABLE>
The Financial, Metal & Energy Large Portfolio is the composite performance
of all accounts traded in the Portfolio since its inception, net of all fees and
commissions. This is not the Fund's performance, and individual accounts within
the Portfolio may have had returns that differ from the Portfolio composite. The
bars represent annual returns (calculated on a compounded monthly basis).
SEE TABLE 1 ON PAGE APP-II-2 FOR ACTUAL PERFORMANCE OF THE FUND.
APP-II-3
<PAGE> 98
RATE OF RETURN(1)
(Computed on a compounded monthly basis)
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993 1992 1991 1990
MONTH RETURN RETURN RETURN RETURN RETURN RETURN RETURN RETURN
<S> <C> <C> <C> <C> <C> <C> <C> <C>
January 5.26% 5.46% -4.53% -4.67% -0.71% -5.54% -7.89% 3.00%
February 2.26% -5.63% 5.85% -6.81% 13.74% -3.58% -1.59% 0.59%
March -2.09% 5.62% 9.58% 7.00% -5.79% 1.05% 20.41% 3.37%
April -3.70% 3.49% 2.08% -1.77% 2.99% -2.78% -1.87% 4.62%
May -1.71% 0.88% -2.78% 2.81% 1.14% 2.81% -11.50%
June 1.29% -0.90% 5.25% 2.55% 10.66% 1.49% 8.29%
July 0.01% -4.05% -4.36% 5.55% 10.40% -7.96% 10.04%
August 1.78% 5.83% -3.79% -4.33% 4.99% 3.79% 12.30%
September 2.47% -3.47% 6.91% -4.83% -2.17% 6.07% 2.59%
October 12.06% 1.20% 0.36% -6.19% -4.67% 0.63% 1.25%
November 12.22% -0.24% -7.02% 0.59% 6.26% -2.03% -1.35%
December -4.29% 6.82% -5.07% -0.08% -1.36% 17.45% -0.54%
Year 1.49% 35.96% 19.46% -16.74% 4.68% 13.47% 31.12% 35.24%
</TABLE>
RATE OF RETURN(1)
(Computed on a compounded monthly basis)
<TABLE>
<CAPTION>
1989 1988 1987 1986 1985 1984 1983
MONTH RETURN RETURN RETURN RETURN RETURN RETURN RETURN
<S> <C> <C> <C> <C> <C> <C> <C>
January 7.90% -0.08% 33.71% -6.28% 3.63% 1.27%
February -1.99% 2.39% 3.23% 17.84% 11.59% 2.12%
March 10.74% -1.88% 13.51% 6.48% 0.74% 2.44%
April 1.94% -5.12% 15.39% -7.87% 5.97% 0.09% -0.40%
May 13.72% 1.63% -4.17% 5.01% 2.92% 9.78% 0.18%
June 1.88% 8.29% -3.21% -17.68% -2.18% -5.50% -3.71%
July 0.55% -0.68% 9.80% 5.21% 5.48% 6.86% 3.27%
August -0.81% -0.22% -1.12% 7.61% -3.63% -1.34% -1.47%
September -4.27% 4.80% 2.71% -17.22% -11.29% 8.32% 0.83%
October -6.88% -0.06% -13.45% -11.74% 3.95% 2.79% -4.18%
November 2.46% -0.35% -0.53% -11.84% 10.45% -3.12% -1.93%
December 12.88% -0.42% 2.11% 1.84% 3.40% 1.49% -3.21%
Year 42.23% 7.96% 64.38% -30.45% 33.05% 26.96% -10.34%
</TABLE>
*SEE TABLE 1 ON PAGE APP-II-2 FOR ACTUAL PERFORMANCE OF THE FUND.
See the notes on page APP-II-7 which are an integral part of the performance
presentation.
APP-II-4
<PAGE> 99
TABLE 3
GLOBAL DIVERSIFIED PORTFOLIO(5)
WORST MONTHLY PERCENTAGE DRAW-DOWN(2): April, 1986/14.41%
WORST PEAK-TO-VALLEY DRAW-DOWN(3): March - November, 1986/29.71%
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
GLOBAL DIVERSIFIED PORTFOLIO
<TABLE>
<S> <C>
1986 -26.55%
1987 33.08%
1988 19.18%
1989 26.16%
1990 32.18%
1991 14.86%
1992 7.68%
1993 2.39%
1994 9.61%
1995 6.52%
1996 26.78%
1997 (through April) 0.22%
</TABLE>
The Global Diversified Portfolio is the composite performance of all
accounts traded in the Portfolio since its inception, net of all fees and
commissions. This is not the Fund's performance, and individual accounts within
the Portfolio may have had returns that differ from the Portfolio composite. The
bars represent annual returns (calculated on a compounded monthly basis).
SEE TABLE 1 ON PAGE APP-II-2 FOR ACTUAL PERFORMANCE OF THE FUND.
APP-II-5
<PAGE> 100
RATE OF RETURN(1)
(Computed on a compounded monthly basis)
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993 1992 1991
MONTH RETURN RETURN RETURN RETURN RETURN RETURN RETURN
<S> <C> <C> <C> <C> <C> <C> <C>
January 3.68% 3.77% -2.87% -3.77% 0.31% -5.55% -7.59%
February 1.77% -7.22% 4.85% -8.45% 12.43% -5.04% -2.58%
March -2.08% 3.41% 4.02% 6.35% -3.09% -2.61% 16.04%
April -3.00% 5.15% 1.40% -3.74% -0.01% -2.22% -1.66%
May -2.67% -1.30% 3.49% 2.79% -2.26% 2.66%
June 0.91% 0.08% 14.90% 3.81% 10.64% 5.43%
July -1.13% -5.49% 2.53% 4.60% 11.14% -8.54%
August 2.09% 2.57% -3.35% -6.12% 4.53% -2.92%
September 1.73% -2.75% 3.48% -7.07% -0.43% 2.11%
October 13.36% -0.75% 0.50% -5.45% -3.21% 0.31%
November 10.38% 0.77% 2.84% -2.31% 4.24% -2.09%
December -4.03% 6.47% -3.56% 4.17% -0.11% 16.01%
Year 0.22% 26.78% 6.52% 9.61% 2.39% 7.68% 14.86%
</TABLE>
RATE OF RETURN(1)
(Computed on a compounded monthly basis)
<TABLE>
<CAPTION>
1990 1989 1988 1987 1986
MONTH RETURN RETURN RETURN RETURN RETURN
<S> <C> <C> <C> <C> <C>
January 5.63% -3.86% -5.70% 12.05%
February 2.45% -1.28% 1.69% -1.09% -0.11%
March 5.68% 10.69% -3.03% 3.24% 4.14%
April 8.34% -1.01% -5.83% 16.56% -14.41%
May -12.09% 11.35% 9.86% -1.28% 3.56%
June 4.55% 0.72% 25.99% -1.53% -5.68%
July 4.32% 4.64% -2.01% 5.25% 6.53%
August 8.98% -4.47% 0.65% -3.88% 5.08%
September 0.72% -2.68% 0.28% -1.72% -9.92%
October 2.13% -3.08% -0.10% -10.16% -10.93%
November 0.07% 4.07% 1.05% 8.18% -6.41%
December -0.82% 10.24% -1.51% 6.23% 0.47%
Year 32.18% 26.16% 19.18% 33.08% -26.55%
</TABLE>
*SEE TABLE 1 ON PAGE APP-II-2 FOR ACTUAL PERFORMANCE OF THE FUND.
See the notes on page APP-II-7 which are an integral part of the performance
presentation.
APP-II-6
<PAGE> 101
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. "WORST MONTHLY PERCENTAGE DRAW-DOWN" is the largest monthly loss
experienced by the Portfolio on a composite basis in any calendar month
expressed as a percentage of the total equity in the Portfolio and includes
the month and year of such drawdown. A small number of accounts in the
Portfolio composites have experienced monthly drawdowns which are
materially larger than the largest composite monthly drawdown. These
variances result from such factors as small account size (i.e., accounts
with net assets of less than the prescribed Portfolio minimum, which
therefore trade fewer contracts than the standard Portfolio), intra-month
account opening or closing, significant intra-month additions or
withdrawals, trading commissions in excess of the stated average and
investment restrictions imposed by the client.
3. "WORST PEAK-TO-VALLEY DRAW-DOWN" is the largest cumulative loss experienced
by the Portfolio on a composite basis in any consecutive monthly period on
a compounded basis and includes the time frame of such drawdown. A small
number of accounts in the Portfolio composites have experienced
peak-to-valley drawdowns which are materially larger than the largest
composite peak-to-valley drawdown. These variances result from such factors
as small account size (i.e., accounts with net assets of less than the
prescribed Portfolio minimum, which therefore trade fewer contracts than
the standard Portfolio), intra-month account opening or closing,
significant intra-month additions or withdrawals, trading commissions in
excess of the stated average and investment restrictions imposed by the
client.
4. Table 2 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 366 accounts traded according to the Financial, Metal &
Energy Large Portfolio. The data below is as of March 31, 1997. From
inception of Campbell & Company's Financial, Metal & Energy Large Portfolio
in April 1983, 362 accounts have been closed; 96 of the accounts closed
transferred to the Financial, Metal & Energy Small Portfolio. Of the
remaining 266 closed accounts, 79 closed with a profit and 187 closed with
a loss. 4 accounts remained open, all of which were profitable. The open
accounts ranged in size from $18,000,000 to in excess of $100,000,000, with
an average account size of approximately $127,100,000. The average
composite monthly return for the period from January, 1992 through March,
1997 was 0.97% compared to the average of average monthly returns for all
accounts of 0.48% 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. 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.
APP-II-7
<PAGE> 102
5. Table 3 reflects the composite performance of all accounts (a total of 20
accounts) traded according to the Global Diversified Portfolio. Of these
accounts, 9 had closed as of March 31, 1997, 7 with aggregate gains and 2
with net losses. All of the 11 open accounts are profitable. The open
accounts range in size from $440,000 to $28,900,000, with an average
account size of approximately $3,500,000. The average composite monthly
return for the period from January 1992 through March, 1997 is 0.96%
compared to the average of average monthly returns for all accounts of
0.91% 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, 1997. 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.
APP-II-8
<PAGE> 103
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") dated as of July 1, 1997 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
A-1
<PAGE> 104
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.
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(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
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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.
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(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
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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
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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 year-end
or month-end 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
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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"). Redemption fees apply through the first twelve
month-ends following purchase (from and including the Closing Date on which the
Unit is purchased) as follows: 4% of Net Asset Value per Unit redeemed through
the third month-end, 3% of Net Asset Value per Unit redeemed through the sixth
month-end, 2% of Net Asset Value per Unit redeemed through the ninth month-end,
and 1% of Net Asset Value per Unit redeemed through the twelfth month-end. After
the twelfth month-end following purchase of a Unit, no redemption fees apply. 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.
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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.
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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
A-10
<PAGE> 113
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.
A-11
<PAGE> 114
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
A-12
<PAGE> 115
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. Redemption fees apply through the first twelve month ends following
purchase (from and including the Closing Date on which the Unit is purchased) as
follows: 4% of Net Asset Value per Unit redeemed through the third month-end, 3%
of Net Asset Value per Unit redeemed through the sixth month-end, 2% of Net
Asset Value per Unit redeemed through the ninth month-end, and 1% of Net Asset
Value per Unit redeemed through the twelfth month-end. After the twelfth
month-end following purchase of a Unit, no redemption fees apply.
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
- ------------------------------------------------------
(Name of Entity)
By:
- -------------------------------------------------
(Authorized corporate officer, partner,
custodian or trustee)
- ------------------------------------------------------
Title
Individual Limited Partners(s)
- ------------------------------------------------------
(Signature of Limited Partner)
- ------------------------------------------------------
(Signature of Limited Partner)
B-1
<PAGE> 116
(This page has been left blank intentionally.)
<PAGE> 117
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 July 1, 1997 (the
"Prospectus"). The minimum subscription 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);
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.
C-1
<PAGE> 118
(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. 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.
10. 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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.
C-2
<PAGE> 119
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 July 1,
1997 (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, but shall terminate with the full
redemption of all my Units in the Fund. 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
D-1
<PAGE> 120
EXHIBIT D
SIGNATURE PAGE
SUBSCRIPTION AGREEMENT
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
dated July 1, 1997, 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.
<TABLE>
<S> <C>
1) Total $ Amount
(minimum of $10,000, except $5,000 minimum for IRA's and other qualified
accounts; $1,000 increments)
2) Account # (must be completed)
[ ] if payment is made by debit to investor's securities account, check box
- --------------------------------------------------------------------------------
3) Social Security #-- Or Taxpayer ID #--
Taxable Investors (check one):
[ ] Individual Ownership
[ ] Joint Tenants with Right of Survivorship
[ ] Tenants in Common [ ] Community Property
[ ] Grantor or Other Revocable Trust
[ ] Trust other than a Grantor or Revocable Trust
[ ] Estate [ ] UGMA/UTMA (Minor)
[ ] Partnership [ ] Corporation
Non-Taxable Investors (check one):
[ ] IRA [ ] Profit Sharing
[ ] IRA [ ] Defined Benefit
Rollover
[ ] Pension [ ] Other (specify)
[ ] SEP
- --------------------------------------------------------------------------------
4) LIMITED PARTNER NAME
------------------------------------------------------------------------------------------------------
5)
---------------------------------------------------------------------------------------------------------------------------
ADDITIONAL INFORMATION (FOR ESTATES, PARTNERSHIPS, TRUSTS AND CORPORATIONS)
6)
RESIDENT ADDRESS
OF LIMITED PARTNER
------------------------------------------------------------------------------------------------------
CITY STATE ZIP
STREET (P.O. BOX NOT ACCEPTABLE) CODE
7)
MAILING ADDRESS
(IF DIFFERENT)
------------------------------------------------------------------------------------------------------
CITY STATE ZIP
STREET CODE
8)
CUSTODIAN NAME
AND MAILING ADDRESS
------------------------------------------------------------------------------------------------------
CITY STATE ZIP
NAME STREET 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 July 1, 1997. 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
ACCOUNT EXECUTIVE SIGNATURE DATE
X
OFFICE MANAGER SIGNATURE DATE
(if required by Selling Agent, as the case may be, procedures)
--------------------------------------------------------------------------------
11) SELLING FIRM -----------------------------------------------------------------------------------------------
ACCOUNT EXECUTIVE NAME -----------------------------------------------------------------------------------------------
(PLEASE PRINT) FIRST M.I. LAST FAX AND PHONE NUMBERS A.E. NUMBER
ACCOUNT EXECUTIVE ADDRESS -----------------------------------------------------------------------------------------------
(FOR CONFIRMATIONS) STREET (P.O. BOX NOT ACCEPTABLE) CITY STATE ZIP
CODE
</TABLE>
<PAGE> 121
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:
<TABLE>
<CAPTION>
APPROXIMATE
AMOUNT
-----------
<S> <C>
Securities and Exchange Commission Registration Fee...................... $ 18,182
National Association of Securities Dealers, Inc. Filing Fee.............. $ 10,500
Printing Expenses........................................................ $ 100,000
Fees of Certified Public Accountants..................................... $ 10,000
Blue Sky Expenses (Excluding Legal Fees)................................. $ 30,000
Fees of Counsel.......................................................... $ 25,000
Escrow Fees.............................................................. $ 1,000
Salaries of Employees Engaged in Sales Activity.......................... $ 825,000
Miscellaneous Offering Costs............................................. $ 180,318
--------
Total.................................................................... $ 1,200,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 15 of the Amended Agreement 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 was 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.
II-1
<PAGE> 122
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
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------ ----------------------------------------------------------------------------------
<C> <S>
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 Sidley & Austin relating to the legality of the Units.
8.01 Opinion of Sidley & Austin 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 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.*****
10.07 Agreement between Brown Brothers Harriman & Co. and the Partnership*****
23.01 Consent of Sidley & Austin
23.02 Consent of Arthur F. Bell, Jr. & Associates
</TABLE>
- ---------------
* 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 30, 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.
***** This exhibit is included in the exhibits filed by the Registrant as part
of its Registration Statement on Form S-1 (No. 333-5767) on June 12, 1996
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-2
<PAGE> 123
(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 posteffective 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 controlling 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.
II-3
<PAGE> 124
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, 1997.
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.
<TABLE>
<CAPTION>
SIGNATURES TITLE WITH REGISTRANT DATE
- ------------------------------------- ------------------------------------ -------------------
<C> <S> <C>
/s/ D. Keith Campbell Chief Executive Officer and Director June 11, 1997
- ------------------------------------- (Principal Executive Officer)
D. Keith Campbell
/s/ Bruce L. Cleland President June 11, 1997
- -------------------------------------
Bruce L. Cleland
/s/ Theresa D. Livesey Chief Financial Officer, Secretary, June 11, 1997
- ------------------------------------- Treasurer and Director
Theresa D. Livesey (Principal Financial Officer)
/s/ William C. Clarke, III Executive Vice President and June 11, 1997
- ------------------------------------- Director
William C. Clarke, III
/s/ James M. Little Senior Vice President and Director June 11, 1997
- -------------------------------------
James M. Little
</TABLE>
(Being the principal executive officer, the principal financial and
accounting officer and a majority of the directors of Campbell & Company, Inc.)
<TABLE>
<C> <S> <C>
CAMPBELL & COMPANY, INC. General Partner of Registrant June 11, 1997
By: /s/ D. Keith Campbell
- -------------------------------------
D. Keith Campbell
Chief Executive Officer
</TABLE>
II-4
<PAGE> 125
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------------------------------------------------------------------
<C> <S>
5.01 Opinion of Sidley & Austin relating to the legality of the Units.
8.01 Opinion of Sidley & Austin with respect to federal income tax consequences.
23.02 Consent of Arther F. Bell, Jr. & Associates
</TABLE>
II-5
<PAGE> 1
(EXHIBIT 5.01)
[LETTERHEAD OF SIDLEY & AUSTIN]
June 12, 1997
Campbell & Company, Inc.
General Partner of
Campbell Strategic Allocation Fund, L.P.
210 West Pennsylvania Avenue
Baltimore, Maryland 21204
Re: Campbell Strategic Allocation Fund, L.P.
Units of Limited Partnership
Interest (the "Units")
Dear Sir or Madam:
We refer to the Registration Statement on Form S-1 filed by Campbell
Strategic Allocation Fund, L.P. (the "Partnership") with the Securities and
Exchange Commission under the Securities Act of 1933 (the "Securities Act"), on
June 12, 1997 (the "Registration Statement") relating to the registration of
Units of the Partnership as set forth on the cover page of the prospectus
included therein.
We are familiar with the proceedings to date with respect to the proposed
issuance and sale of the Units and have examined such records, documents and
questions of law, and satisfied ourselves as to such matters of fact, as we have
considered relevant and necessary as a basis for this opinion.
For purposes of rendering this opinion, we have assumed the genuineness of
all signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as certified or photostatic copies, and the
authenticity of the original of copies.
Based on the foregoing, we are of the opinion that:
1. The Partnership has been duly formed and is validly existing in
good standing as a limited partnership under the Delaware Revised Uniform
Limited Partnership Act (the "Act").
2. The General Partner has taken all corporate action required to be
taken by it to authorize the issuance and sale of Units to the Subscribers
(as defined below) and to authorize the admission to the Partnership of the
limited partners of the Partnership.
3. Assuming (i) the due authorization, execution and delivery to the
General Partner of the Subscription Agreement by each subscriber for Units
(the "Subscribers"), (ii) the due acceptance by the General Partner of the
admission of the Subscribers as limited partners of the Partnership to the
Partnership, (iii) the payment by each Subscriber to the Partnership of the
full consideration due from it for the Units subscribed to by it, (iv) the
due authorization, execution and delivery by all parties thereto, including
the Subscribers as limited partners of the Partnership, of the Limited
Partnership Agreement, (v) that the books and records of the Partnership
set forth all information required by the Limited Partnership Agreement and
the Act, including all information with respect to all persons and entities
to be admitted as Partners and their contributions to the Partnership, (vi)
that the Subscribers, as limited partners of the Partnership, do not
participate in the control of the business of the Partnership, and (vii)
that the Units are offered and sold as described in the Registration
Statement and the Limited Partnership Agreement, the Units to be issued to
the Subscribers will represent valid limited partner interests in the
Partnership and, subject to the qualifications set forth herein, will be
fully paid and nonassessable limited partner interests in the Partnership,
as to which the Subscribers as limited partners of the Partnership, will
have no liability in excess of their obligations to make contributions to
the Partnership, their obligations to make other payments provided for in
the Limited Partnership Agreement
<PAGE> 2
and their share of the Partnership's assets and undistributed profits
(subject to the obligation of a Limited Partner to repay any funds
wrongfully distributed to it).
We express no opinion as to the application of the securities or blue sky
of the various states (including the state of Delaware) to the sale of the
Units.
We are members of the Bar of the States of Illinois, New York, California
and Texas and the District of Columbia and do not opine with respect to the laws
of any jurisdiction other than the States of Illinois, New York, Texas, and
California and of the District of Columbia, and the General Corporation Law of
the State of Delaware.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and all references to our firm included in or made a part
of the Registration Statement.
Very truly yours,
Sidley & Austin
<PAGE> 1
(EXHIBIT 8.01)
[LETTERHEAD OF SIDLEY & AUSTIN]
June 12, 1997
Campbell & Company, Inc.
General Partner of
Campbell Strategic Allocation Fund, L.P.
210 West Pennsylvania Avenue
Baltimore, Maryland 21204
Re: Registration Statement on Form S-1
Dear Sir or Madam:
We have acted as your counsel in connection with the preparation and filing
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, of the Registration Statement on Form S-1 filed with the Securities and
Exchange Commission on or about June 12, 1997, (the "Registration Statement"),
relating to Units of Limited Partnership Interest ("Units") of Campbell
Strategic Allocation Fund, L.P. (the "Fund"), a limited partnership organized
under the Delaware Revised Uniform Limited Partnership Act.
We have reviewed such data, documents, questions of law and fact and other
matters as we have deemed pertinent for the purpose of this opinion. Based upon
the foregoing, we hereby confirm our opinion expressed under the caption
"Federal Income Tax Aspects" in the Prospectus (the "Prospectus") constituting a
part of the Registration Statement that the Fund will be taxed as a partnership
for federal income tax purposes.
We also advise you 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 treatment to a United States individual taxpayer, as of the
date hereof, of an investment in the Fund.
Very truly yours,
Sidley & Austin
<PAGE> 1
(EXHIBIT 23.02)
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 22, 1997 on the
financial statements of Campbell Strategic Allocation Fund, L.P. as of December
31, 1996 and 1995 and for the years ended December 31, 1996, 1995 and 1994 and
our report dated March 7, 1997 on the balance sheet of Campbell & Company, Inc.
as of December 31, 1996, 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 9, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CAMPBELL STRATEGIC ALLOCATION FUND, L.P. AS OF AND FOR
THE THREE MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1996
<CASH> 99,486
<SECURITIES> 36,462
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 135,948
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 135,948
<CURRENT-LIABILITIES> 2,289
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 133,659
<TOTAL-LIABILITY-AND-EQUITY> 135,948
<SALES> 0
<TOTAL-REVENUES> 7,690
<CGS> 0
<TOTAL-COSTS> 3,336
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,354
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,354
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,354
<EPS-PRIMARY> 48.77
<EPS-DILUTED> 48.77
</TABLE>
