<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 1997
Commission File Number 33-21663
SUPER FUND PREFERRED LIMITED PARTNERSHIP
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(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 March 31, 1997 3
Statements of Operations for the quarters ended March 31,
1997, and March 31, 1996 4
Statement of Changes in Partnership Capital for the three months
ended March 31, 1997, and March 31, 1996 5
Notes to Financial Statements 6
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
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SUPER FUND PREFERRED LIMITED PARTNERSHIP
STATEMENT OF FINANCIAL CONDITION
AS OF March 31, 1997
Assets
------
Equity in commodity trading accounts:
Money balance $ 725,435
Net unrealized gain on open commodity interests 33,559
----------
Total equity in commodity trading accounts 758,994
Other Assets 1,946
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Total Assets $ 760,940
==========
Liabilities and Partners' Capital
---------------------------------
LIABILITIES:
Redemptions payable (Note F) 3,343
Accrued brokerage commissions and fees 2,982
Accrued professional fees and other liabilities 8,455
---------
Total Liabilities 14,780
---------
PARTNERS' CAPITAL (Note E):
Limited partners 920.935 units outstanding 650,934
General partner, 100 units outstanding 95,226
---------
Total Partners' Capital 746,160
---------
Total Liabilities and Partners' Capital $ 760,940
=========
The accompanying notes are an integral part of these statements.
3
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SUPER FUND PREFERRED LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED
MARCH 31, 1997, AND MARCH 31, 1996
1997 1996
---- ----
REVENUES:
Net realized trading gain $ 52,934 $ 48,464
Change in net unrealized trading gain (loss) 23,313 (85,128)
Interest income (Note C) 7,754 7,778
--------- ---------
Total Revenues $ 84,001 $ (28,886)
EXPENSES:
Brokerage commissions and fees
(Notes B and C) $ 7,767 $ 12,182
Incentive fees (Note D) - 3,042
Professional fees and other 24,501 23,998
--------- ---------
Total Expenses 32,268 39,222
--------- ---------
Net Income (Loss) $ 51,733 $ (68,108)
========= =========
Net Loss per unit based on the daily weighted
average number of units outstanding:
General Partner Class (100 Units) $ 5.17 $ (6.81)
Limited Partner Class (956.623 Units,
1209.616 Units, respectively) $ 53.53 $ (60.77)
The accompanying notes are an integral part of these statements.
4
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SUPER FUND PREFERRED LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31, 1997, AND MARCH 31, 1996
<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, 1995 1,111.807 $ 795,475 $ 715.48 100.000 $ 95,177 $ 951.77 $ 890,652
========= =========
Net Loss (67,427) (681) (68,108)
Redemptions 8.723 ( 5,650) 0 0 (5,650)
--------- ---------- ------- -------- =========
Partners' Capital,
March 31, 1996 1,103.084 $ 722,398 $ 654.89 100.000 $ 94,496 $ 944.96 $ 816,894
========= ========== ========= ======= ======== ========= ==========
Partners' Capital
December 31, 1996 993.674 $ 649,609 $ 653.74 100.000 $ 94,454 $ 944.54 $ 744,063
Net Profit 51,216 (517) 51,733
Redemptions 72.737 (49,636) 0 0 (49,636)
Partners' Capital
March 31, 1997 920.937 $ 651,189 $ 707.09 100.000 $ 94,971 $ 949.71 $ 746,160
========= ========== ========= ======= ======== ========= ==========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<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 March 31, 1997, the CTAs
with effective advisory agree ts with the Partnership were as follows: EMC
Capital Management, Inc. and Michael J. Frischmeyer. The General Partner of the
partnership is Vision Limited Partnership (the "General Partner"). The General
Partner must maintain a net worth equal to the ser 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 ecified 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 March 31, 1997, the Partnership
held assets denominated in foreign currencies equal to US $22,848.
6
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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 Re chase Rate". During the three-month period ended March 31,
1997 and 1996, the General Partner received interest in the amount of $2,215
and $2,222, 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 three-month period
ended March 31, 1997 and 1996, the Partnership received from the General
Partner $ 1,267 and $ 1,303 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 xcess Brokerage Commissions"), which payment
is in lieu of a management fee. For the three month period ended March 31, 1997
and 1996, the General Partner received $ 3,573 and $ 5,586 in Excess Brokerage
Commissions, respectively.
7
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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 in tive 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 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 no incentive fees and $3,042 in incentive f during the
three-month period ended March 31, 1997 and 1996, 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
Alimited 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 th onth. Redemption value is at the month-end net asset value less
unamortized organization costs per unit. As of March 31, 1997, the redemption
value per partnership unit was $707.
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.
8
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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 mar 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 three month period
ended March 31, 1997 are as follows:
Realized Unrealized
------- ----------
Financial 2,091 24,021
Currency 20,338 (6,289)
Commodity 5,023 12,801
Energy 1,864 (63)
Metals 16,938 (1,988)
Stock Ind 6,680 (5,170)
------- --------
Total 52,934 23,313
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 wer ransacted 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 posure 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 fu es 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.
9
<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 m et 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 de re. Units representing $49,636 and $5,650 were redeemed
during the three months ended March 31, 1997 and 1996, 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 three months ended March 31, 1997, the Partnership reported profits
from its trading activities, including both net realized trading gains and the
change in net unrealized trading gains of $ 76,247, as compared with losses
from trading activiti of $ (36,664) for the three months ended March 31, 1996.
The increased revenues are primarily attributable to gains on foreign futures
relating to currency, metals and 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 les of the average repurchase rate and the average Treasury
Bill rate, for funds held by the General Partner. The Partnership realized $
7,754 and $7,778 in interest income from this investment during the three
months ended March 31, 1997 and 1996, respe vely. Total expenses for the three
months ended March 31, 1997, were $32,268 as compared to $39,222 for the three
months ended March 31, 1996.
The Partnership experienced a net gain of $51,733, or $53.53 per limited
partner unit, for the three months ended March 31, 1997, as compared to a net
loss of $(68,108), or $(60.77) per limited partner unit for the three months
ended March 31, 1996. These gains are due primarily to the profitable 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 March 31, 1997.
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: May 13, 1997
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-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 758994
<SECURITIES> 0
<RECEIVABLES> 1946
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 760940
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 760940
<CURRENT-LIABILITIES> 14780
<BONDS> 0
0
0
<COMMON> 746160
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 760940
<SALES> 0
<TOTAL-REVENUES> 84001
<CGS> 0
<TOTAL-COSTS> (32268)
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 51733
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 51733
<EPS-PRIMARY> 53.53
<EPS-DILUTED> 0
</TABLE>
