UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 10-Q Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly period ended September 30, 1999 Commission File Number: 2-73692 The Balanced Opportunity Fund L.P. (Exact name of registrant as specified in its charter) Illinois 36-3655854 (State or other jurisdiction of (I.R.S Employer incorporation or organization) Identification No.) Registrant's telephone number, including area code:(312) 460-9200 Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes__X__ No_____ The Balanced Opportunity Fund L.P. Index Page Part I - Financial Information Item 1. Financial Statements Statements of Financial Condition (unaudited) as of September 30, 1999 and 1998 3 Statements of Operations (unaudited) for the three months ended September 30, 1999 and 1998 4 Statements of Changes in Partners' Capital (unaudited) for the three month period ended September 30, 1999 and the years ended June 30, 1999, 1998 and 1997 5 Notes to Unaudited Financial Statements - September 30, 1999 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Part II - Other Information 8 Item 3. Exhibits and Reports on Form 8-K 8 Signatures 9 Part I. Financial Information Item 1. Financial Statements The Balanced Opportunity Fund Statement of Financial Condition (Unaudited) September 30, September 30 1999 1998 Assets Equity in futures and forward trading accounts: Cash $467,850 $600,458 Net unrealized gain/(loss) on open contracts (2,943) 122,492 --------- --------- Total equity in futures and forward trading account 464,907 722,950 Guaranteed yield pool, at market 1,798,609 2,284,842 Other receivable 1,575 2,231 -------- --------- Total Assets $2,265,091 $3,010,023 ========== ========== Liabilities and Partners' Capital Liabilities: Accrued administrative expenses $ 28,237 $37,751 Accrued brokerage commission and fees 5,223 10,460 Accrued management fees 1,855 2,424 Accrued incentive fees - - Redemption Payable - - Miscellaneous payables - - -------- --------- 35,315 50,635 Partners' Capital Limited Partners (units outstanding 1,031.8857; 1,374.8557) 2,013,035 2,729,913 General Partner (units outstanding : 111.1143) 216,741 229,475 -------- --------- 2,229,776 2,959,388 -------- -------- Total Liabilities and Partners' Capital $2,265,091 $3,010,023 ======== ========== Net Asset Value per Unit $ 1,950.61 $ 2,065.22 See Notes to the unaudited financial statements The Balanced Opportunity Fund L.P. Statement of Operations (unaudited) Three Months Ended September 30, Revenues 1999 1998 Trading profit/(loss): Realized $ (6,115) $(45,828) Change in unrealized (11,671) 121,905 Foreign currency gain/(loss) 1,371 2,351 -------- -------- Total trading profit and foreign currency gain/(loss) (16,415) 78,428 Guaranteed yield pool: Accrued Interest 28,975 36,485 Unrealized market value gain (loss) (4,294) 106,397 -------- -------- Total guaranteed yield pool revenue 24,681 142,882 Interest Income 5,048 4,517 -------- -------- Total Income 13,314 225,827 Expenses Brokerage commissions $ 23,109 $28,926 Management fees 5,574 7,041 Incentive fees - - Other administrative expenses 16,500 19,500 State taxes - - -------- -------- 45,181 55,467 -------- -------- Net Income/(Loss) $(31,867) $170,360 ======== ======== Net Income/(Loss) Allocated To: Limited Partners $(28,769) $157,150 ======== ======== General Partners $ (3,098) $13,210 ======== ======== Net Income/(Loss) per unit outstanding for entire period $ (27.88) $118.89 ========= ======== See Notes to the unaudited financial statements The Balanced Opportunity Fund L.P. Statement of Changes in Partners' Capital Total Units of Partnership Limited General Interest Partners Partners Total Partners Capital June 30, 1996 3,504 $5,305,000 $ 174,000 $5,479,000 Redemption (1,425) (2,356,000) (2,356,000) Net Income (loss) 422,000 16,000 438,000 ------- --------- --------- --------- Partners Capital June 30, 1997 2,079 $3,371,000 $ 190,000 $3,561,000 Redemption (646) (1,198,355) (1,198,355) Net Income (loss) 405,716 25,953 431,669 ------- --------- --------- --------- Partners Capital June 30, 1998 1,433 2,578,361 215,953 2,794,314 Redemption (290) (584,864) - (584,864) Net Income (loss) - 48,307 3,886 52,193 ------- --------- --------- --------- Partners Capital June 30, 1999 1,143 2,041,804 219,839 2,261,643 Net Income (loss) - (28,769) (3,098) (31,867) ------- --------- --------- --------- Partners Capital September 30, 1999 1,143 $2,013,035 $ 216,741 $2,229,776 ======= ========= ========= ========= See Notes to Financial Statements. The Balanced Opportunity Fund L.P. Notes to Unaudited Financial Statements September 30, 1999 Note - Basis of Presentation The unaudited financial statements of The Balanced Opportunity Fund L.P. (the "Partnership") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial condition and results of operations of the Partnership for the periods presented have been included. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-K for the year ended June 30, 1999. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Capital Resources The purpose of the Partnership is to trade commodity interests; as such, the Partnership does not have, nor does it expect to make, any capital expenditures or have any capital assets that are not operating capital or assets. The Partnership's use of assets is solely to provide necessary margin or premiums for, and to pay any losses incurred in connection with, its trading activity. The Net Asset Values are calculated and equity reports are reviewed by the General Partner on a daily basis to monitor the trading advisors' activity to maximize the market and credit risks of the Fund. The General Partner also monitors the trading advisors' compliance with investment objectives as set forth in the prospectus. Redemption of additional units in the future will impact the amount of funds available for trading commodity interest. The amount of funds available was reduced by $266,804 from redemptions of units during the quarter ended September 30, 1999. 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 a price beyond the daily limit. Once the price of a futures contract has reached the daily limit for that day, positions in that contract can neither be taken nor liquidated. Commodity futures prices have occasionally reached the daily limit for several consecutive days with little or no trading. Similar occurrences could prevent the Partnership from promptly liquidation unfavorable positions and subject the Partnership to substantial losses which could exceed the margin initially committed to such trades. In addition, even if commodity futures prices have not reached the daily limit, the Partnership 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 Partnership's trading of commodity interests, the Partnership's assets are highly liquid and are expected to remain so. The counterparty for all exchange traded and over-the counter contracts was Rosenthal Collins Group LP. A portion of the Fund's assets have been invested in certain United States treasury obligations. This investment is designed to provide ultimate repayment of the investors' initial contributions. These securities are not used for trading purposes. Results of Operations Given the volatility of the markets in which the Partnership trades, its quarterly results can fluctuate significantly and are not indicative of the expected results for the fiscal year. In the three month period ending September 30, 1999, the Fund experienced trading losses of $16,415 compared to trading gains of $78,428 for the same periods in 1998. In the three month period ending September 30, 1999, the total guaranteed yield pool revenue was $24,681 compared to $142,882 for the same periods in 1998. At September 30, 1999 there was no material credit risk exposure exceeding 10% of total assets for either exchange traded or over-the-counter contracts. Brokerage commissions and advisory fees, which are based on the net assets of the Fund, declined as a direct result of redemptions. Part II - Other Information Item 3. Exhibits and Reports on Form 8-K No reports were filed on Form 8-K during the three months ended September 30, 1999. Signatures Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934 and to the extent possible due to the acquisition of the registrant by the undersigned on April 24, 1998; the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The Balanced Opportunity Fund L.P. (Registrant) By: Rosenthal Collins Futures Management, Inc., General Partner By: /s/ J. Robert Collins ---------------------------- J. Robert Collins, President Date: October 10, 1999