<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
_____________
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 1995 Commission File Number 33-21663
SUPER FUND PREFERRED LIMITED PARTNERSHIP
----------------------------------------
(Name of small business issuer in its charter)
Illinois 36-3570836
- -------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Whitehall Street, 15th Floor, New York, New York 10004
- ------------------------------------------------------------
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (212) 859-0200
Securities registered pursuant to Section 12(b) of the Act:
None None
- ---- ----
Title of each class Name of each exchange on which registered
Securities registered pursuant to section 12(g) of the Act: None
----
(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past twelve 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: ____
Check if there is no disclosure of delinquent filers pursuant in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB [X].
State issuer's revenues for its most recent fiscal year: $422,322
State the aggregate market value of the partnership interests held by
non-affiliates computed by reference to the price at which such interests were
sold, or the average bid and asked prices, as of a specified date within the 60
days prior to December 31, 1995: N/A - No Market.
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PART I
ITEM I. DESCRIPTION OF BUSINESS
A. Business Development
Super Fund Preferred Limited Partnership (the "Partnership") was organized
on March 28, 1988, under the Illinois Uniform Limited Partnership Act to
engage in the speculative trading of commodity interests as a commodity
pool. A public offering registered on Form S-1 commenced under a
Prospectus dated June 30, 1988, as amended September 27, 1988, December 6,
1988, and January 31, 1989, which offering terminated on September 30,
1989. The Partnership commenced trading on November 8, 1988.
Vision Limited Partnership, an Illinois limited partnership, is the sole
general partner of the Partnership (the "General Partner" or "Vision").
The General Partner was formed on January 12, 1988, and capitalized by a
limited public offering under Regulation D of the Securities Act of 1933 to
act as sponsor of one or more investment limited partnerships, including
commodity pools and equipment leasing programs, and to act as a futures
commission merchant. The General Partner has contributed $100,000 to the
capital of the Partnership, as required by the Agreement of Limited
Partnership (the "Partnership Agreement").
The officers of the General Partner's general partner, Vision Capital
Management, Inc. (see Item IX below), provide certain services to the
Partnership. Vision Capital Management, Inc. is referred to herein as
"Vision Capital."
B. Business of the Issuer
Principal Products and Services of Their Markets:
At the beginning of the year ended December 31, 1995, the Partnership had
advisory agreements with two CTAs. The General Partner took no actions
regarding addition or termination of advisors.
The Partnership's advisors are as follows:
1. EMC Capital Management, Inc. ("EMC") is an Illinois corporation,
registered with the Commodity Futures Trading Commission (the "CFTC")
as a CTA and a member of the National Futures Association ("NFA").
Ms Elizabeth Cheval is the President and sole principal of EMC.
EMC's trading systems are purely technical in nature, based upon the
analysis of patterns of price fluctuations over certain periods of
time. The systems do not rely upon the analysis of fundamental
factors such as crop prospects, supply and demand, and so forth. The
systems are strictly trend-following; trade initiations and
liquidations are in the
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direction of the trend. EMC takes every trade indicated by its
systems in every market traded, although certain trades in short-term
markets will not be indicated by the system and will, therefore, not
be taken. The program emphasizes diversification and uses what are
believed to be optimal stop-losses for each trade.
2. Loran Futures, Inc. ("Loran") is an Illinois corporation registered
with the CFTC as a CTA and member of the NFA. The principals of
Loran are John A. Marshall, Dottie Marshall, John W. Marshall, G.
Peter Saurbier, J. G. Oldfin, and Rose Mary Mallos.
Loran's trading method is basically a trend following system that
utilizes a unique quantitative approach, supplemented with strong
pattern recognition considerations.
The General Partner designates a partnership trading account (a "Designated
Trading Account") at either Lind Waldock ("Lind") or Vision to each CTA
with whom it has entered into an advisory agreement and allocates a portion
of the Partnership's funds to each such Designated Trading Account. Each
CTA is an independent controller of the account designated to it and trades
the account, subject to the Partnership's trading policies, using its
independent judgment. The General Partner can reallocate the Partnership's
funds between and among the Designated Trading Accounts as it deems
advisable to reflect, among other things, performance.
Each CTA receives as its sole compensation an incentive fee based on its
individual performance, calculated and paid at either the end of each month
or the end of each quarter, in an amounts equal to 25% of the CTA's new
trading profits, if any, as defined by the advisory agreement between the
Partnership and such CTA. The independent nature of the Designated Trading
Accounts may result in one or more of the CTAs receiving an incentive fee
when the overall account of the Partnership has not been profitable. In
addition, if after an incentive fee is paid to a CTA on account of new
trading profits, the net asset value of that Designated Trading Account
declines for any subsequent month or quarter, as the case may be, the CTA
is nonetheless entitled to retain such fees previously paid by the
Partnership. However, no subsequent incentive fee based on new trading
profits will be paid to a CTA until the Partnership recoups its losses in
that Designated Trading Account and experiences new trading profits. The
Partnership incurred approximately $140,299 and $28,461 in incentive fees
to its CTAs for the years ended December 31, 1995 and 1994, respectively.
The General Partner attributes the $111,838 increase in incentive fees from
1994 to 1995 primarily to profitable results during 1995.
The Partnership has entered into agreements with Lind and Vision to act as
clearing broker, pursuant to which the Partnership pays a brokerage
commission on a monthly basis consisting of all exchange, clearing, floor
brokerage, and NFA fees attributable to trading by the CTAs on behalf of
the Partnership. For the years ended December 31, 1995 and 1994, the
Partnership incurred approximately $102,319 and $183,205 in aggregate
brokerage commissions, respectively.
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As noted, out of these funds, the clearing firm retains a clearing
commission consisting of all exchange, clearing, floor brokerage, and NFA
fees attributable to trading by the CTAs on behalf of the Partnership and
up to $10.00 per round turn trade as compensation in exchange for its
clearing services; trail commissions are paid to all non-affiliated selling
agents, and the remainder is paid over to the General Partner as a trail
commission in lieu of management fees.
In the years ended December 31, 1995 and 1994, the General Partner received
approximately $57,400 and $130,400 in trail commissions, respectively.
The General partner attributes the decrease in the aggregate amount of such
commissions paid to the General Partner primarily to decreased trading
activity.
Number of Employees:
The Partnership has no direct employees. The General Partner has full and
exclusive discretion in management and control of the Partnership.
ITEM II. DESCRIPTION OF PROPERTY
The Partnership does not own or lease any physical properties.
ITEM III. LEGAL PROCEEDINGS
The Partnership is not aware of any pending legal proceedings to which it is a
party or to which any of its assets are subject.
ITEM IV. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the security holders during the
year ended December 31, 1995.
PART II
ITEM V. MARKET FOR ISSUER'S SECURITIES AND RELATED SECURITY HOLDER MATTERS
A. Market Information
Although the Partnership's securities were registered with the Securities
and Exchange Commission pursuant to a registration on Form S-1, there is no
established public market for the Partnership's securities ("Units").
There are no outstanding options or warrants to purchase, or
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other securities convertible into, Units.
The Units are valued and can be redeemed on the last business day of each
calendar month after complying with certain notice provisions. Redemption
of rights may be limited or delayed if the Partnership cannot accurately
value or liquidate its assets.
B. Holders
Holders of record of Units at December 31, 1995:
General Partners 1
Limited Partners 86
C. Dividends
The Partnership Agreement does not provide for regular or periodic
dividends or distributions of any kind, and gives the General Partner sole
discretion as to distributions. No dividends or distributions were made to
the limited partners in the years ended December 31, 1995, or 1994, and
none are presently anticipated.
ITEM VI. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Partnership's capital consists of capital contributions of the partners as
increased or decreased by gains or losses on commodity interest trading,
interest income, expenses, and redemptions of Units and distributions of
profits, if any. Commodity trading is highly leveraged and speculative.
Therefore, gains and losses on such trading are not predictable with any level
of reliability. Much of the market movement in commodities is based upon
fundamental and technical factors which the trading advisors may not be able to
identify and are not subject to the control of the Partnership.
Units of Limited Partnership interest were offered and sold through May 31,
1989. As of the date of this report, the General Partner is not contemplating
the issue of additional Units.
The General Partner may make distributions of profits, if profits are
substantial and certain Net Asset Value levels are achieved. However, no
distributions have been made since the Partnership's inception.
The Limited Partners may redeem their Units as of the last day of the month upon
written notice of the General Partner. The Limited Partners may also redeem
their Units on such other redemption dates as the General Partner in its sole
discretion may declare. Units representing $288,465 and $309,572 were redeemed
during the years ended December 31, 1995 and 1994, respectively.
The General Partner believes the Partnership will continue to meet both its
long-term and short-term cash requirements for operating expenses and unit
redemptions from the cash generated by operations and, if necessary, from
withdrawals of funds from the Trading Advisors' Designated Trading Accounts.
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However, the Unit redemption value may be reduced in the event of future losses.
No assurance can be given in this regard. There are substantial risks of loss
involved in commodities trading.
For the year ended December 31, 1995, the Partnership reported revenues from its
trading activities, including both net realized trading gain/loss and the change
in net unrealized trading of $383,252 as compared with losses from trading
activities of ($434,546) for the year ended December 31, 1994. The General
Partner believes that the commodity markets in 1995 exhibited more long-term
trending characterics causing the Partnership to experience an increase in its
net asset value. Profitable results can be attributed to trading in financials
and stock index instruments.
Futures positions are margined with cash or cash equivalents. Funds not
required to be on deposit for margin are held in cash or cash equivalents which
bear interest at rates based on the overnight repurchase rate, for funds held by
Lind, or at the lesser of the average repurchase rate and the average treasury
bill rate, for funds held by Vision. The Partnership realized $39,070 and
$43,572 in interest income from this investment during the years ended December
31, 1995 and 1994, respectively. The decrease in interest income experienced by
the Partnership from 1994 to 1995 was due to a decline in net assets.
Total expenses for the year ended December 31, 1995, were $351,267 compared to
$315,478 for the year ended December 31, 1994. The year ended December 31,
1995, exhibited a $30,952 increase in trading costs and fees due to an increase
in incentive fees resulting from a trading gain of $383,252 in 1995. This gain
was offset by a decrease in brokerage commissions and fees of $80,886 from 1994
to 1995.
The Partnership experienced a net profit of $71,055, or $50.89, per partner
unit ($54.27 per limited partner unit), for the year ended December 31, 1995, as
compared to the loss of $706,452 or ($396.73) per partner unit, for the year
ended December 31, 1994. As a result of the net profit experienced in 1995, the
net asset value per limited partner unit increased from $688 at December 31,
1994, to $715 per unit at December 31, 1995. These gains are due primarily to
the profitability of the CTA trading. The General Partner is unable to predict
whether the Partnership will experience net trading income or whether it will
generate net losses in the future.
ITEM VII. FINANCIAL STATEMENTS
Report of Grant Thornton, LLP, Independent Certified Public Accountants 7
Statements of Financial Condition as of December 31, 1995 and 1994 8
Statements of Operations and Special Allocations for the Years Ended
December 31, 1995 and 1994 9
Statements of Changes in Partners' Capital for the Years Ended
December 31, 1995 and 1994 10
Notes to Financial Statements 11
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REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
To the Partners of
Super Fund Preferred Limited Partnership
We have audited the accompanying statements of financial condition of Super Fund
Preferred Limited Partnership as of December 31, 1995 and 1994, and the related
statements of operations and changes in partners' capital for the years then
ended. 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 audits 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 Super Fund Preferred Limited
Partnership as of December 31, 1995 and 1994, and the results of its operations
for the years then ended in conformity with generally accepted accounting
principles.
GRANT THORNTON LLP
New York, New York
February 12, 1996
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Super Fund Preferred Limited Partnership
STATEMENTS OF FINANCIAL CONDITION
December 31,
ASSETS 1995 1994
---- ----
Equity in commodity futures trading accounts:
Money balance $878,385 $ 943,758
Net unrealized gain on open commodity contracts 96,731 250,166
-------- ----------
Total equity in commodity futures trading accounts 975,116 1,193,924
Due from broker (Note C) 1,326 -
Other 1,728 2,421
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$978,170 $1,196,345
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Due to broker (Note C) $ - $ 123
Redemptions payable (Note F) 23,934 41,532
Incentive fees payable (Note D) 1,657 1,812
Accrued brokerage commissions and fees
(Notes B and C) 25,627 21,064
Accrued professional fees and other 36,300 23,752
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87,518 88,283
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Partners' capital (Note E)
Limited Partners, 1,111.807 and 1,473.776 units
outstanding as of December 31, 1995 and 1994,
respectively 795,475 1,013,596
General Partner, 100.000 units outstanding as of
December 31, 1995 and 1994 95,177 94,466
-------- ----------
890,652 1,108,062
-------- ----------
$978,170 $1,196,345
======== ==========
The accompanying notes are an integral part of these statements.
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Super Fund Preferred Limited Partnership
STATEMENTS OF OPERATIONS AND SPECIAL ALLOCATION
Year ended December 31,
1995 1994
---- ----
Revenues
Net realized trading gain (loss) $ 536,687 $(357,205)
Change in net unrealized trading gain (153,435) (77,341)
Interest income (Note C) 39,070 43,572
--------- ---------
422,322 (390,974)
--------- ---------
Expenses
Brokerage commissions and fees (Notes B and C) 102,319 183,205
Incentive fees (Note D) 140,299 28,461
Professional fees and other 108,649 103,812
--------- ---------
351,267 315,478
--------- ---------
NET INCOME (LOSS) 71,055 (706,452)
Less special allocation to the General Partner (Note E) - 33,108
--------- ---------
Net income (loss) available for pro rata distribution
to all partners $ 71,055 $(739,560)
========= =========
Net income (loss) per unit based on the daily
weighted average number of units outstanding,
1,396.201 in 1995 and 1,780.693 in 1994 $ 50.89 $ (396.73)
========= =========
Net income (loss) per limited partner unit based on
the daily weighted average number of limited partner
units outstanding, 1,296.201 in 1995 and 1,680.693
in 1994 $ 54.27 $ (416.13)
========= =========
The accompanying notes are an integral part of these statements.
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Super Fund Preferred Limited Partnership
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
Limited Partners General Partner
------------------------------------ ------------------------------
Net Net
asset assets
value value Total
Units Capital per unit Units Capital per unit capital
----- ------- -------- ----- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Partners' capital at January 1, 1994 1,867.820 $2,022,555 $1,082.84 100.000 $101,531 $1,015.31 $2,124,086
========= =========
Allocation of net loss
Special allocation (Note E) - 33,108 33,108
Pro rata allocation (Note E) (699,387) (40,173) (739,560)
Redemptions (394.044) (309,572) - (309,572)
--------- ---------- ------- -------- ----------
Partners' capital at December 31, 1994 1,473.776 1,013,596 $ 687.75 100.000 94,466 $ 944.66 1,108,062
========= =========
Allocation of net income
Special allocation (Note E) -
Pro rata allocation (Note E) 70,344 711 71,055
Redemptions (361.969) (288,465) - (288,465)
--------- ---------- --------- ------- -------- ----------
Partners' capital at December 31, 1995 1,111.807 $ 795,475 $ 715.48 100.000 $ 95,177 $ 951.77 $ 890,652
========= ========== ========= ======= ======== ========= ==========
</TABLE>
The accompanying notes are an integral part of this statement.
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Super Fund Preferred Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 and 1994
NOTE A - ORGANIZATION OF BUSINESS
Super Fund Preferred Limited Partnership (the "Partnership"), an Illinois
limited partnership, commenced its operations on November 8, 1988. The
Partnership's purpose is to realize capital appreciation through the
speculative trading of commodity futures, forward and options contracts and
other commodity interests, pursuant to the trading methods and strategies of
the retained Commodity Trading Advisors ("CTAs"). As of December 31, 1995
and 1994, CTAs with effective advisory agreements were EMC Capital
Management Inc. and Loran Futures, Inc. In addition to the current CTAs
listed above, Paul Rosenblum Management, Inc., Visioneering Research and
Development Company, and Murray Investment Company also traded for the
Partnership during the year ended December 31, 1994. The general partner of
the Partnership is Vision Limited Partnership (the "General Partner"). The
General Partner is required by the partnership agreement to maintain a net
worth of $1,000,000, which it has throughout the year. At December 31, 1995
and 1994, the General Partner's capital account was $95,177 and $94,466,
respectively.
The clearing broker of the Partnership is Lind-Waldock & Company
("Lind-Waldock"). The General Partner acts as introducing broker for the
Partnership.
The Partnership is currently closed to new subscriptions and will be
dissolved on December 31, 2008 or upon the occurrence of certain events, as
specified in the Limited Partnership Agreement.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Revenue Recognition
Futures and option contracts are recorded on the trade date and open
contracts are reflected in the financial statements at their market value
or fair value. Fair values of futures and option contracts are based
upon exchange settlement prices. The difference between the original
contract amount and fair value is reflected in income as an unrealized
gain or loss.
2. Foreign Currency Translation
Assets and liabilities denominated in foreign currencies are translated
at year-end exchange rates. Gains and losses resulting from foreign
currency transactions are calculated using month-end exchange rates and
are included in the accompanying statements of operations.
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Super Fund Preferred Limited Partnership
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1995 and 1994
NOTE B (continued)
3. Brokerage Commissions and Fees
These expenses represent all brokerage commissions, exchange, National
Futures Association and other fees incurred in connection with the
execution of commodity trades. Commissions and fees associated with open
trades at the end of the period are accrued on a round-turn basis.
4. Use of Estimates in Financial Statements
In preparing financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions in
determining the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements, as well as the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
NOTE C - RELATED PARTY TRANSACTIONS
1. Interest Income
For investment accounts held directly with the clearing broker, the
Partnership and the General Partner receive 70% and 20%, respectively, of
the overnight interest at the overnight repurchase rate on the
Partnership's cash on deposit with the clearing broker that is not
committed as margin. For the years ended December 31, 1995 and 1994, the
General Partner has received approximately $3,500 and $6,900,
respectively, in interest income on these deposits.
For investment accounts held directly with the General Partner, the
General Partner has agreed to pay interest at the lesser of the average
repurchase rate or the average Treasury bill rate, on cash on deposit
that is not committed as margin. For the years ended December 31, 1995
and 1994, the Partnership received from the General Partner approximately
$13,200 and $10,900, respectively, as interest income, on these deposits.
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Super Fund Preferred Limited Partnership
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1995 and 1994
NOTE C (continued)
2. Brokerage Commissions
The General Partner receives directly from the clearing broker a portion
of the brokerage commissions in lieu of a management fee. For trading
accounts maintained by the General Partner, 100% of commissions are
retained by the General Partner. For the years ended December 31, 1995
and 1994, the General Partner received commissions of approximately
$57,400 and $130,400, respectively.
3. Due to/from Broker
The Partnership maintains an operating account with the General Partner.
The balance in the account as of December 31, 1995 is reflected in the
statements of financial condition as "Due from Broker" and as of December
31, 1994 as "Due to Broker."
NOTE D - INCENTIVE FEES
The Partnership pays incentive fees to its CTAs. The incentive fee is
calculated and paid at either the end of each month or the end of each
quarter in an amount equal to 25% of the Partnership's new trading profits,
if any, as defined by a written agreement between the Partnership, the
General Partner and the respective CTAs (the "Agreement"). If any incentive
fee is paid by the Partnership to the CTAs on new trading profits, and the
net asset value of the Partnership's account thereafter declines for any
subsequent month or quarter, the CTAs are entitled to retain such amounts
previously paid by the Partnership. However, no subsequent incentive fee
based on new trading profits shall be paid to the CTAs until the Partnership
recoups its losses and experiences new trading profits.
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Super Fund Preferred Limited Partnership
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1995 and 1994
NOTE E - ALLOCATION OF PROFIT AND LOSS FOR
PARTNERSHIP ACCOUNTING
The Partnership's profits and losses are allocated one percent to the
General Partner and ninety-nine percent to the limited partners. Among the
limited partners the profit and loss is allocated to each limited partner in
the ratio that the balance of such limited partner's capital account bears
to the total balance of all limited partner's capital accounts. To the
extent that the ratio of the General Partner's capital account to the
capital accounts of all partners is greater or lesser than 1%, the General
Partner is given a special allocation to bring its total allocation to 1% of
total profits and losses of the Partnership.
NOTE F - REDEMPTIONS
A limited partner (or any assignee thereof) may cause any or all of his
units to be redeemed as of the last day of any month provided that the
General Partner has received a redemption notice in proper form not less
than ten days prior to the end of such month. Redemption value is the
month-end net asset value per unit. As of December 31, 1995 and 1994,
redemption value per limited partnership unit was $715.48 and $687.75,
respectively.
NOTE G - OPERATING EXPENSES
The Partnership bears all expenses incurred in connection with its
activities. These expenses include brokerage commissions and fees,
incentive fees and periodic legal, accounting and tax return preparation and
filing fees.
NOTE H - INCOME TAXES
No provision for income taxes has been made in the accompanying financial
statements. Partners are responsible for reporting income or loss based
upon their respective share of revenues and expenses of the Partnership as
reported for income tax purposes.
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Super Fund Preferred Limited Partnership
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1995 and 1994
NOTE I - OFF-BALANCE SHEET RISK AND FAIR VALUE OF
DERIVATIVE FINANCIAL INSTRUMENTS
The Partnership trades futures, options and forward contracts in financial
instruments, stock indices, commodities, energy and metals. The
Partnership's revenues by reporting category for the year ended December 31,
1995 are as follows:
Realized Unrealized
-------- ----------
Financial instruments $ 714,112 $ (68,869)
Stock indices 94,808 2,319
Commodities (212,690) (83,088)
Energy 14,944 39,070
Metals (74,487) (42,867)
--------- ---------
$ 536,687 $(153,435)
========= =========
Market Risk
Derivative financial instruments involve varying degrees of off-balance
sheet market risk whereby changes in the level or volatility of interest
rates, foreign currency exchange rates or market values of the underlying
financial instruments or commodities may result in cash settlements in
excess of the amounts recognized in the statements of financial condition.
The Partnership's exposure to market risk is directly influenced by a number
of factors, including the volatility of the markets in which the financial
instruments are traded and the liquidity of those markets.
The General Partner has procedures in place to control market risk, although
there can be no assurance that they will, in fact, succeed in doing so. The
procedures focus primarily on monitoring the trading activity of the CTAs
from time to time by the Partnership, daily review of the outstanding
positions to consider possible overconcentration on an individual CTA and
overall Partnership basis and calculating the Partnership's Net Asset Value
every week. While the General Partner will, itself, not intervene in the
markets to hedge or diversify the Partnership's market exposure, the General
Partner may urge the CTAs to reallocate positions, or itself reallocate
Partnership assets among CTAs. However, such interventions are unusual and
the General Partner's basic control procedures consist simply of the ongoing
process of CTA selection and monitoring, with market risk controls being
applied by the CTAs themselves.
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Super Fund Preferred Limited Partnership
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1995 and 1994
NOTE I (continued)
The contract values as of December 31, 1995 and 1994 were as follows:
1995 1994
--------------------------------- ---------------------------------
Commitments to Commitments to Commitments to Commitments to
purchase (futures, sell (futures, purchase (futures, sell (futures,
options and options and options and options and
forwards) forwards) forwards) forwards)
------------------ -------------- ------------------ --------------
Financial
instruments $7,038,614 $1,676,137 $15,593,969 $14,928,382
Stock indices 95,981 - - -
Commodities 334,182 88,693 972,502 415,060
Energy 823,976 - - 120,750
Metals 252,370 324,535 461,643 157,688
---------- ---------- ----------- -----------
$8,545,123 $2,089,365 $17,028,114 $15,621,880
========== ========== =========== ===========
All futures and options contracts held at December 31, 1995 expire through June
of 1996.
A portion of the contract amounts in the previous table indicated as off-balance
sheet risk is due to offsetting commitments to purchase and to sell the same
instrument on the same date in the future. These commitments are economically
offsetting but are not, as a technical matter, offset in the forward market
until settlement date.
Fair Value
The derivative instruments used in the Partnership's trading activities are
marked to market daily with the resulting unrealized gains or losses recorded in
the statements of financial condition and the related income or loss reflected
in trading revenues.
The fair value of derivative instruments at December 31, 1995, as well as the
average fair value for the year then ended, is presented in the table that
follows. Assets represent unrealized gains and liabilities unrealized losses.
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Super Fund Preferred Limited Partnership
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1995 and 1994
NOTE I (continued)
Average fair values
Year-end fair values for the year
---------------------- ----------------------
Assets Liabilities Assets Liabilities
------ ----------- ------ -----------
Financial instruments $ 59,066 $12,150 $117,737 $ 5,494
Stock Indices 2,319 - 25,043 1,774
Commodities 17,229 - 12,636 2,307
Energy 39,870 8,781 2,072
Metals - 9,603 4,156 21,208
-------- ------- -------- -------
$118,484 $21,753 $168,353 $32,855
======== ======= ======== =======
Credit Risk
The contract amounts in the above table represent the Partnership's extent of
involvement in the particular class of financial instrument, but not the credit
risk associated with counterparty nonperformance. The credit risk due to
counterparty nonperformance associated with these instruments is the net
unrealized gain, if any, included in the statements of financial condition. The
Partnership also has credit risk because the sole counterparties or brokers with
respect to most of the Partnership's assets are the General Partner and
Lind-Waldock. As of December 31, 1995, $975,116, of the Partnership's assets
was held in segregated trading accounts in accordance with Commodity Futures
Trading Commission regulations. The Partnership monitors the creditworthiness
of these counterparties and, if necessary, reduces its exposure to them.
The risks associated with exchange-traded contracts are typically perceived to
be less than those associated with over-the-counter transactions, because
exchanges typically (but not universally) provide clearinghouse arrangements in
which the collective credit (in some cases limited in amount, in some cases not)
of the members of the exchange is pledged to support the financial integrity of
the exchange, whereas in over-the-counter transactions, traders must rely solely
on the credit of their respective individual counterparties. Margins, which may
be subject to loss in the event of a default, are generally required in exchange
trading, and counterparties may require margin in the over-the-counter markets.
17
<PAGE>
Super Fund Preferred Limited Partnership
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1995 and 1994
NOTE I (continued)
The contract value of exchange-traded and non-exchange-traded contracts was as
follows:
December 31, 1995
---------------------------------------
Commitments to Commitments to
purchase (futures, sell (futures,
options and options and
forwards) forwards)
------------------ --------------
Exchange-traded $8,292,753 $1,836,995
Non-exchange-traded 252,370 252,370
---------- ----------
$8,545,123 $2,089,365
========== ==========
The gross unrealized gain and net unrealized gain (loss) on open contracts for
exchange-traded and non-exchange traded futures were as follows:
December 31, 1995
---------------------------------
Gross Net
unrealized unrealized
gain gain (loss)
---------- -----------
Exchange-traded $118,483 $106,078
Non-exchange-traded 1,608 (9,347)
-------- --------
$120,091 $ 96,731
======== ========
140(B) Mr. Howard Rothman
Super Fund Preferred Limited Partnership
1 Whitehall Street, 15th Floor
New York, New York 10004
2(B) Commodity Futures Trading Commission
Special Counsel
Front Office Audit Unit
Division of Trading and Markets
Three Lafayette Centre
1155 21st Street, N.W.
Washington, D.C. 20581
18
<PAGE>
2(B) Commodity Futures Trading Commission
Office of Audit and Financial Review
1 World Trade Center, Suite 3747
New York, New York 10048
1(B) National Futures Association
Director of Compliance
Compliance Department
200 West Madison Street, Suite 1500
Chicago, Illinois 60606
REPORT PURSUANT TO RULE 4.22(c)
AND REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
SUPER FUND PREFERRED LIMITED PARTNERSHIP
December 31, 1995 and 1994
1(B) Regional
1(B) Review
1(B) Hanover Square
1(B) New York Office
1(U) M. Luttinger
1(U) M. Wasnak
1(U) P. Rizzi
2(U) Workpapers
19
<PAGE>
ITEM VIII. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM IX. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS:
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
A. Directors, Executive Officers, Promoters, and Control Persons
The registrant has neither officers nor directors, nor does the General
Partner. The following are the directors and officers of Vision Capital
Management, Inc. ("Vision Capital"), the General Partner's general partner.
Robert M. Boshnack. Mr. Boshnack, age 48, is President, Chief Executive
Officer, a director, and a principal shareholder of Vision Capital. He is
a graduate of Queens College of New York with a Bachelors Degree (1969) and
a Masters Degree (1971) in Education and History. On June 12, 1984, Mr.
Boshnack founded and has since that time been President, sole shareholder,
and sole director of SFFG, a New York corporation engaged in various
commodity activities, including acting as a general partner in commodity
pool limited partnerships and introducing managed and discount accounts.
Howard M. Rothman. Mr. Rothman, age 34, is Executive Vice President,
Secretary, Chief Operating Officer, a director and a principal shareholder
of Vision Capital. He graduated in June 1983 from New York University with
a Bachelors Degree in Accounting and Finance. Since December 1986, he has
been Executive Vice President of SFFG and from January 1985 to December
1986 he was Vice President of Managed Account Programs of SFFG. On January
9, 1990, Mr. Rothman was elected to a three-year term on the Board of
Directors of the National Futures Association, representing the independent
introducing broker category and was re-elected in 1996.
Selma Breen. Ms Breen, age 64, is Senior Vice President and a director of
Vision Capital. She has been the Vice President of Administration for SFFG
from January 1985 to the present. From July 1980 to January 1985, she was
employed by the New York branch office of Rouse Woodstock, Inc. as the
Office Manager and was also associated with Justlee Management, Inc. in New
York.
B. Compliance with Section 16(a) of the Exchange Act
Not applicable.
ITEM X. EXECUTIVE COMPENSATION
The Partnership has no executive or other employees but receives such services
from officers and employees of Vision Capital.
20
<PAGE>
The General Partner receives certain trailing commissions from net brokerage
commissions, which totaled approximately $57,400 and $130,400 for the years
ended December 31, 1995 and 1994, espectively. The General Partner also
receives 20% of the interest earned on the Partnership's cash on deposit with
the clearing broker not committed as margin, which totaled approximately $3,500
and $6,900 for the years ended December 31, 1995 and 1994, respectively.
ITEM XI. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
A. Certain Beneficial Owners as of December 31, 1995
The Partnership is not aware of any person or group which owns beneficially
more than 5% of the Units.
B. Securities Owned by Management as of December 31, 1995
The General Partner manages the Partnership's affairs, and it presently
owns 100 Units of General Partner interest as an investment with no plan to
resell or otherwise distribute.
C. Changes in Control
None.
ITEM XII. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The General Partner received indirectly from the Partnership trail commissions
aggregating approximately $57,400 and interest of approximately $3,500 during
the year ended December 31, 1995. The method for determining such trail
commissions and interest is discussed in Items 1 and 10 above.
ITEM XIII. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
None
B. Reports on Form 8-K
There were no reports on Form 8-K filed by the Partnership during the
fourth quarter of the fiscal year ended December 31, 1995.
21
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereto duly authorized.
Date: March 30, 1996
SUPER FUND PREFERRED LIMITED PARTNERSHIP, REGISTRANT
By: VISION LIMITED PARTNERSHIP, GENERAL PARTNER
By: VISION CAPITAL MANAGEMENT, INC., GENERAL PARTNER
By: /s/ ROBERT BOSHNACK
---------------------
ROBERT BOSHNACK
PRESIDENT, CHIEF EXECUTIVE OFFICER, AND DIRECTOR
By: /s/ HOWARD ROTHMAN
---------------------
HOWARD ROTHMAN
EXECUTIVE VICE PRESIDENT, CHIEF OPERATING OFFICER,
SECRETARY, AND DIRECTOR
By: /s/ SELMA BREEN
---------------------
SELMA BREEN
SENIOR VICE PRESIDENT AND DIRECTOR
By: /s/ ERIC GAFFIN
---------------------
ERIC GAFFIN
ACTING CONTROLLER
22
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