<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
---------------------------
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
---------------------------
For the quarterly period ended September 30, 1996
Commission File Number 33-21663
SUPER FUND PREFERRED LIMITED PARTNERSHIP
-----------------------------------------------------------
(Name of small business issuer as specified in its charter)
Illinois 36-3570836
- ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Whitehall Street, Suite 1500, New York, New York 10004
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(Address of principal executive office)
(212) 859-0200
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the 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: ____
<PAGE>
PART I
Item 1. Financial Statements
Statement of Financial Condition as of September 30, 1996 3
Statements of Operations for the quarters ended September 30,
1996, and September 30, 1995 4
Statements of Operations for the nine months ended September 30,
1996, and September 30, 1995 5
Statement of Changes in Partnership Capital for the nine months
ended September 30, 1996, and September 30, 1995 6
Notes to Financial Statements 7
No Statement of Cash Flows is presented because the information required by a
Statement of Cash Flows is not material to an understanding of the
Partnership's operations.
2
<PAGE>
SUPER FUND PREFERRED LIMITED PARTNERSHIP
STATEMENT OF FINANCIAL CONDITION
AS OF September 30, 1996
Assets
------
Equity in commodity trading accounts:
Money balance $ 737,573
Net unrealized gain on open commodity interests 35,656
----------
Total equity in commodity trading accounts 773,229
Other Assets 2,049
----------
Total Assets $ 775,278
==========
Liabilities and Partners' Capital
---------------------------------
LIABILITIES:
Redemptions payable (Note F) 11,827
Accrued brokerage commissions and fees 22,796
Accrued professional fees and other liabilities 34,550
---------
Total Liabilities 69,173
---------
PARTNERS' CAPITAL (Note E):
Limited partners 1,018.290 units outstanding 612,190
General partner, 100 units outstanding 93,915
---------
Total Partners' Capital 706,105
---------
Total Liabilities and Partners' Capital $ 775,278
=========
The accompanying notes are an integral part of these statements.
3
<PAGE>
SUPER FUND PREFERRED LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1996, AND SEPTEMBER 30, 1995
1996 1995
---- ----
REVENUES:
Net realized trading loss $ (41,353) $ (205,679)
Change in net unrealized trading loss 18,278 (160,887)
Interest income (Note C) 7,887 11,313
--------- ---------
Total Revenues $ (15,188) $ (355,253)
EXPENSES:
Brokerage commissions and fees
(Notes B and C) $ 2,849 $ 24,512
Incentive fees (Note D) 7,207 (152)
Professional fees and other 24,500 19,900
--------- ---------
Total Expenses 34,556 44,260
--------- ---------
Net Loss $( 49,744) $(399,513)
========= =========
Net loss per unit based on the daily weighted average number of units
outstanding:
General Partner Class (100 Units) $ ( 4.97) $ ( 39.95)
Limited Partner Class (1052.479 Units,
1241.652 Units, respectively) $ ( 46.79) $ (318.54)
The accompanying notes are an integral part of these statements.
4
<PAGE>
SUPER FUND PREFERRED LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1996, AND SEPTEMBER 30, 1995
1996 1995
---- ----
REVENUES:
Net realized trading gain $ 10,043 $ 591,843
Change in net unrealized trading loss (45,223) (252,117)
Interest income (Note C) 23,049 31,125
--------- ---------
Total Revenues $ (12,131) $ 370,851
EXPENSES:
Brokerage commissions and fees
(Notes B and C) $ 24,491 $ 89,455
Incentive fees (Note D) 11,586 140,299
Professional fees and other 77,998 79,550
--------- ---------
Total Expenses 114,078 309,304
--------- ---------
Net Income (Loss) $(126,209) $ 61,547
========= =========
Net income (loss) per unit based on the daily weighted average number of units
outstanding:
General Partner Class (100 Units) $ ( 12.62) $ 6.15
Limited Partner Class (1085.518 Units,
1340.856 Units, respectively) $ (115.10) $ 45.44
The accompanying notes are an integral part of these statements.
5
<PAGE>
SUPER FUND PREFERRED LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996, AND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Limited Partners General Partner
---------------------------------------- -------------------------------------
Net Asset Net Asset
Value Value Total
Units Capital Per Unit Units Capital Per Unit Capital
----- ------- -------- ----- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Partners' Capital
December 31, 1994 1,473.776 $1,013,596 $ 687.75 100.000 $ 94,466 $ 944.66 $1,108,062
========= =========
Net Profit 60,932 615 61,547
Redemptions 279.194 (231,969) 0 0 (231,969)
--------- ---------- ------- -------- =========
Partners' Capital,
September 30, 1995 1,194.582 $ 842,559 $ 705.31 100.000 $ 95,081 $ 950.81 $ 937,640
========= ========== ========= ======= ======== ========= ==========
Partners' Capital
December 31, 1995 1,111.807 $ 795,475 $ 715.48 100.000 $ 95,177 $ 951.77 $ 890,652
Net Loss (124,947) (1,262) (126,209)
Redemptions 93.517 (58,338) 0 0 (58,338)
Partners' Capital
September 30, 1996 1,018.290 $ 612,190 $ 601.19 100.000 $ 93,915 $ 939.15 $ 706,105
========= ========== ========= ======= ======== ========= ==========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
SUPER FUND PREFERRED LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
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 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 September 30, 1996, the
CTAs with effective advisory agreements with the Partnership were as follows:
EMC Capital
Management, Inc. and Loran Futures, Inc. The General Partner of the partnership
is Vision Limited Partnership (the "General Partner"). The General Partner must
maintain a net worth equal to the lesser of one million dollars or 10% of the
aggregate initial capital contributions to the Partnership by the limited
partners.
The clearing brokers of the Partnership are the General Partner and
Lind-Waldock & Company ("Lind-Waldock").
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
Revenue Recognition
Futures and option contracts are recorded on the trade date at the transacted
contract price and valued at market. Market values of futures and option
contracts are based upon exchange settlement prices.
Foreign Currency Translation
Assets and liabilities denominated in foreign currencies are translated at
year-end exchange rates. Gains and losses resulting from foreign currency
translations are calculated using month end exchange rates and included in the
accompanying statements of operations. As of September 30, 1996, the
Partnership held assets denominated in foreign currencies equal to US $ 26,462.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Brokerage Commissions and Fees
These expenses represent all brokerage commissions and exchange, National
Futures Association, and other fees incurred in connection with the execution
of commodity interests trades. Commissions and fees associated with open trades
at the end of the period are accrued on a round-turn basis.
NOTE C RELATED PARTY TRANSACTIONS
Interest Income
The Partnership and the General Partner receive 70% and 20%, respectively, of
the "Overnight Interest" on the Partnership's cash on deposit with the clearing
brokers not committed as margin. The clearing broker receives all remaining
Overnight Interest. Lind-Waldock has agreed to pay interest at a rate equal to
the "Overnight Repurchase Rate". During the nine-month period ended September
30, 1996 and 1995, the General Partner received interest in the amount of
$6,585 and $4,375, respectively.
The General Partner has agreed to pay interest at the lesser of the average
repurchase rate or the average Treasury bill rate. For the nine-month period
ended September 30, 1996 and 1995, the Partnership received from the General
Partner $ 1,622 and $ 9,998 in interest income, respectively.
Brokerage Commissions and Fees
The General Partner receives directly from the primary clearing broker,
Lind-Waldock & Co., all brokerage commissions in excess of brokerage
commissions paid to the clearing brokers and the trailing commission paid to
all non-affiliated selling agents ("Excess Brokerage Commissions"), which
payment is in lieu of a management fee. For the nine month period ended
September 30, 1996 and 1995, the General Partner received $ and $ 46,174 in
Excess Brokerage Commissions, respectively.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE D INCENTIVE FEES
The Partnership pays incentive fees to its CTAs. The incentive fees are
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 General Partner and the respective
CTAs. If any incentive fee is paid by the Partnership to the CTAs on account of
new trading profits, and the net asset value of the Partnership 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 will be paid to the CTAs
until the Partnership recoups its losses and experiences new trading profits.
The Partnership paid $ 11,586 and $140,299 in incentive fees during the
nine-month period ended September 30, 1996 and 1995, respectively.
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.
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 the month. Redemption value is at the month-end net asset
value . As of September 30, 1996, the redemption value per partnership unit was
$601.
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.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE I FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND
CONCENTRATION OF CREDIT RISK
The Partnership trades financial futures contracts and options. These financial
instruments have elements of off-balance sheet credit and market risk in excess
of the amounts recognized in the statement of financial condition. Futures
contracts are marked to market daily, with variations in value settled on a
daily basis with the exchange upon which they are traded, and with the futures
commission merchant through which the commodity futures and options are
executed. The Partnership's revenues by reporting category for the nine month
period ended September 30, 1996 are as follows
<TABLE>
<CAPTION>
Realized Unrealized
-------- ----------
<S> <C> <C>
Financial 5,193 (32,878)
Currency 30,502 23,677
Commodities (11,060) (16,168)
Energy 37,181 (34,270)
Metals (27,947) 16,735
Stock Indices (23,827) ( 2,319)
</TABLE>
The broker with which each financial futures contract or option is executed
acts as the counterparty for the above contracts and, accordingly, creates a
risk of non-performance. All of the Partnership's open financial futures and
options positions were transacted with the General Partner and Lind-Waldock.
Based upon a quarterly review of financial disclosures, including statements of
net capital and segregation requirements, the General Partner monitors the
credit-worthiness of its counterparties and, when deemed necessary, reduces its
exposure to these counterparties. The Partnership's exposure to credit risk
associated with the non-performance of these counterparties in fulfilling
contractual obligations can be directly impacted by volatile financial markets.
Generally, financial futures contracts and options can be closed out at the
discretion of the CTAs or the General Partner, if he deems it to be in the best
interest of the Partnership. However, an illiquid market could prevent the
closeout of positions.
10
<PAGE>
Item 2.
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 sale 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 to 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 $ 58,338 and $ 231,969 were
redeemed during the nine months ended September 30, 1996 and 1995,
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.
However, the Unit redemption value may be reduced in the event that the
Partnership experiences net operating losses in the future. No assurance can be
given in this regard. There are substantial risks of loss involved in
commodities trading.
For the nine months ended September 30, 1996, the Partnership reported losses
from its trading activities, including both net realized trading gains and the
change in net unrealized trading loss of $(12,131), as compared with profits
from trading activities of $ 370,851 for the nine months ended September 30,
1995. The decreased revenues are primarily attributable to losses on foreign
futures relating to currency and other financial instruments.
11
<PAGE>
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
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 the General Partner. The Partnership
realized $ 23,049 and $ 31,125 in interest income from this investment during
the nine months ended September 30, 1996 and 1995, respectively. The decrease
in interest income experienced by the Partnership for the nine months ended
September 30, 1996, as compared with the same period ended September 30, 1995,
was due to the a decrease in funds available for trading. Total expenses for
the nine months ended September 30, 1996, were $ 114,078 as compared to $
309,304 for the nine months ended September 30, 1995. The nine months ended
September 30, 1996, exhibited a $ 64,964 decrease in brokerage commissions and
fees due to lower overall trading volume.
The Partnership experienced a net loss of $ 126,209, or $115.10 per limited
partner unit, for the nine months ended September 30, 1996, as compared to a
net profit of $ 61,547, or $ 45.44 per limited partner unit for the nine months
ended September 30, 1995. These losses are due primarily to the unprofitable
results of closed positions in foreign future contracts. The General Partner is
unable to predict whether the Partnership will experience net trading gains or
whether it will generate net losses in the future.
12
<PAGE>
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
PART II - OTHER INFORMATION
Item 1. 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 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
b. Reports on Form 8-K
There were no reports on Form 8-K filed by the Partnership during the
quarter ended September 30, 1996.
13
<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: November 20, 1996
SUPER FUND PREFERRED LIMITED PARTNERSHIP
By: Vision Limited Partnership, General Partner
By: Vision Capital Management, Inc., General Partner
By: /s/ Howard M. Rothman
--------------------------------------------
Howard M. Rothman, Executive Vice President,
Chief Operating Officer, Secretary, and
Director
/s/ Eric Gaffin
--------------------------------------------
Eric Gaffin, Acting Controller
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 773,229
<SECURITIES> 0
<RECEIVABLES> 2,049
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 775,278
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 775,278
<CURRENT-LIABILITIES> 69,173
<BONDS> 0
0
0
<COMMON> 706,105
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 775,278
<SALES> 0
<TOTAL-REVENUES> (12,131)
<CGS> 0
<TOTAL-COSTS> (114,078)
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (126,209)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (126,209)
<EPS-PRIMARY> (112.86)
<EPS-DILUTED> 0
</TABLE>
