<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, 1996 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: $56,549
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, 1996: N/A - No Market.
<PAGE>
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 at no
additional cost 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, 1996, 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
2
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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 $11,585 and $140,299 in incentive fees
to its CTAs for the years ended December 31, 1996 and 1995, respectively.
The General Partner attributes the $128,714 decrease in incentive fees from
1995 to 1996 primarily to unprofitable results during 1996.
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, 1996 and 1995, the
Partnership incurred approximately $31,660 and $102,319 in aggregate
brokerage commissions, respectively.
3
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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, 1996 and 1995, the General Partner received
approximately $22,300 and $57,400 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, 1996.
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
4
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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, 1996:
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, 1996, or 1995, 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 $74,320 and $288,465 were redeemed
during the years ended December 31, 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.
5
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For the year ended December 31, 1996, the Partnership reported revenues from its
trading activities, including both net realized trading gain/loss and the change
in net unrealized trading of $25,361 as compared with revenues from trading
activities of $383,252 for the year ended December 31, 1995. The General Partner
believes that the commodity markets in 1996 exhibited more short-term trendless
characteristics causing the Partnership to experience a decrease in its net
asset value. Unprofitable 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 $31,188 and
$39,070 in interest income from this investment during the years ended December
31, 1996 and 1995, respectively. The decrease in interest income experienced by
the Partnership from 1995 to 1996 was due to a decline in net assets.
Total expenses for the year ended December 31, 1996, were $128,818 compared to
$351,267 for the year ended December 31, 1995. The year ended December 31, 1996,
exhibited a $199,373 decrease in trading costs and fees due to a decrease
in incentive fees and brokerage commissions. This reduction was offset by a
decrease in trading revenues of ($357,891) from 1995 to 1996.
The Partnership experienced a net loss of ($72,269), or ($61.93), per partner
unit (($67.06) per limited partner unit), for the year ended December 31, 1996,
as compared to the profit of $71,055 or $50.89 per partner unit ($54.27 per
limited partner unit), for the year ended December 31, 1995. As a result of the
net loss experienced in 1996, the net asset value per limited partner unit
decreased from $715 at December 31,1995, to $654 per unit at December 31, 1996.
These losses are due primarily to the unprofitability 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.
6
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ITEM VII. FINANCIAL STATEMENTS
Page
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Report of Independent Certified Public Accountants 8
Financial Statements
Statements of Financial Condition 9
Statements of Operations and Special Allocation 10
Statement of Changes in Partners' Capital 11
Notes to Financial Statements 12-19
7
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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, 1996 and 1995, and the related
statements of operations and special allocation 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, 1996 and 1995, and the results of its operations
for the years then ended in conformity with generally accepted accounting
principles.
New York, New York
January 27, 1997
8
<PAGE>
Super Fund Preferred Limited Partnership
STATEMENTS OF FINANCIAL CONDITION
December 31,
<TABLE>
<CAPTION>
ASSETS
1996 1995
---- ----
<S> <C> <C>
Equity in commodity futures trading accounts:
Money balance $772,468 $ 878,385
Net unrealized gain on open commodity contracts 20,896 96,731
-------- ---------
Total equity in commodity futures trading accounts 793,364 975,116
Due from broker (Note C) 1,942 1,326
Other 2,080 1,728
-------- --------
$797,386 $978,170
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable (Note F) $ 8,957 $ 23,934
Incentive fees payable (Note D) 11 1,657
Accrued brokerage commissions and fees
(Notes B and C) 21,855 25,627
Accrued professional fees and other 22,500 36,300
-------- --------
53,323 87,518
-------- --------
Partners' capital (Note E)
Limited Partners, 993.674 and 1,111.807 units
outstanding as of December 31, 1996 and 1995,
respectively 649,609 795,475
General Partner, 100.000 units outstanding as of
December 31, 1996 and 1995 94,454 95,177
-------- --------
744,063 890,652
-------- --------
$797,386 $978,170
======== ========
</TABLE>
9
The accompanying notes are an integral part of these statements.
<PAGE>
Super Fund Preferred Limited Partnership
STATEMENTS OF OPERATIONS AND SPECIAL ALLOCATION
Year ended December 31,
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Revenues
Net realized trading gain $101,196 $536,687
Change in net unrealized trading gain (75,835) (153,435)
Interest income (Note C) 31,188 39,070
--------- --------
56,549 422,322
--------- --------
Expenses
Brokerage commissions and fees (Notes B and C) 31,660 102,319
Incentive fees (Note D) 11,585 140,299
Professional fees and other 85,573 108,649
--------- --------
128,818 351,267
--------- --------
NET INCOME (LOSS) (72,269) 71,055
Less special allocation to the General Partner (Note E) 5,023 -
--------- --------
Net income (loss) available for pro rata distribution
to all partners $ (77,292) $ 71,055
========= ========
Net income (loss) per unit based on the daily weighted
average number of units outstanding,
1,166.921 in 1996 and 1,396.201 in 1995 $ (61.93) $ 50.89
========== ========
Net income (loss) per limited partner unit based on the
daily weighted average number of limited partner units
outstanding, 1,066.921 in 1996 and 1,296.201 in 1995 $ (67.06) $ 54.27
========== ========
10
The accompanying notes are an integral part of these statements.
<PAGE>
Super Fund Preferred Limited Partnership
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
Years ended December 31, 1996 and 1995
</TABLE>
<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, 1995 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
======= =======
Allocation of net loss
Special allocation (Note E) 5,023 5,023
Pro rata allocation (Note E) (71,546) (5,746) (77,292)
Redemptions (118.133) (74,320) - - (74,320)
--------- ---------- ------- ------- --------
Partners' capital at December 31, 1996 993.674 $ 649,609 $653.74 100.000 $94,454 $944.54 $ 744,063
========= ========== ======= ======= ======= ======= =========
</TABLE>
11
The accompanying notes are an integral part of this statement.
<PAGE>
Super Fund Preferred Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995
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, forwards 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, 1996 and 1995, CTAs with effective advisory agreements were
EMC Capital Management Inc. and Loran Futures, Inc. The general partner of
the Partnership is Vision Limited Partnership (the "General Partner"). The
General Partner is a futures commission merchant and commodity pool
operator, registered with the Commodity Futures Trading Commission
("CFTC"). The General Partner is required by the partnership agreement to
maintain a net worth of $1,000,000, which it has throughout the year.
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 upon the earlier to occur of December 31, 2008, a decline in the
Net Asset Value per unit to less than $500 or under certain other
circumstances as defined in the Partnership Agreement.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Revenue Recognition
Futures, forwards and option contracts are recorded on the trade date
and open contracts are reflected in the financial statements at their
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.
12
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Super Fund Preferred Limited Partnership
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1996 and 1995
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, 1996 and 1995,
the General Partner has received approximately $1,900 and $3,500,
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, 1996
and 1995, the Partnership received from the General Partner
approximately $16,300 and $13,200, respectively, as interest income, on
these deposits.
13
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Super Fund Preferred Limited Partnership
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1996 and 1995
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,
1996 and 1995, the General Partner received commissions of
approximately $22,300 and $57,400, 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, 1996 and 1995
is reflected in the statements of financial condition as "Due from
Broker."
NOTE D - INCENTIVE FEES
The Partnership pays incentive fees to its CTAs. The incentive fee is
calculated and paid at the end of each month 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, 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 earns new trading profits.
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Super Fund Preferred Limited Partnership
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1996 and 1995
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, 1996 and 1995,
redemption value per limited partnership unit was $653.74 and $715.48,
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, 1996 and 1995
NOTE I - OFF-BALANCE SHEET RISK AND FAIR VALUE OF
DERIVATIVE FINANCIAL INSTRUMENTS
The Partnership trades futures, options and forward contracts which derive
their value from the fair values of financial instruments, stock indices,
commodities, energy and metals. The Partnership's revenues by each of these
reporting categories for the years ended December 31, 1996 and 1995 are as
follows:
<TABLE>
<CAPTION>
1996 1995
---------------------------- ----------------------------
Realized Unrealized Realized Unrealized
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Financial instruments $127,545 $(40,402) $714,112 $ (68,869)
Stock indices (22,648) 2,543 94,808 2,319
Commodities (13,190) (14,433) (212,690) (83,088)
Energy 31,593 (39,819) 14,944 39,070
Metals (22,104) 16,276 (74,487) (42,867)
-------- -------- -------- ---------
$101,196 $(75,835) $536,687 $(153,435)
======== ======== ======== =========
</TABLE>
Market and Credit Risk
The Partnership trades derivative financial instruments which involve
varying degrees of off-balance sheet market and credit risk as the values
of contracts traded may change or counterparties may be unable to perform
under the terms of these contracts.
The values of the Partnership's open positions are subject to change due to
the level or volatility of interest rates, foreign currency exchange rates
or market values of the underlying financial instruments or commodities.
These changes may result in cash settlements in excess of the amounts
recognized in the statement of financial condition. The Partnership's
exposure to market risk is directly influenced by a number of factors,
including the volatility and liquidity of the markets in which the
financial instruments are traded.
The Partnership has credit risk because the sole counterparties with
respect to all of the Partnership's assets are the General Partner and
Lind-Waldock. Lind-Waldock and the General Partner, as registered futures
commission merchants, are required by the regulations of the CFTC to
separately account for and segregate all assets belonging to the
Partnership for the domestic trading of futures and options and are
prohibited from commingling these assets with their own.
16
<PAGE>
Super Fund Preferred Limited Partnership
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1996 and 1995
NOTE I (continued)
The Partnership's assets held in such segregated trading accounts were
$592,535 and $737,688 at December 31, 1996 and 1995, respectively. In
addition, Partnership assets in the amounts of $200,828 and $230,086 as of
December 31, 1996 and 1995, respectively, were secured or set aside by
Lind-Waldock for foreign trading purposes as required by Part 30.7 of the
CFTC's regulations.
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 include monitoring the trading activity of the
CTAs, daily review of the Partnership's open positions to insure that
investments are diversified and weekly calculation of the Partnership's Net
Asset Value to monitor trading performance. 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
close out 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. To control credit risk, the Partnership monitors the
creditworthiness of its counterparties and, if necessary, reduces its
exposure to them.
The contract values of the Partnership's open positions as of December 31,
1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
Commitments to Commitments to Commitments to Commitments to sell
purchase (futures, sell (futures, purchase (futures, (futures, options and
options and options and options and forwards)
forwards) forwards) forwards) ---------
--------- --------- ---------
<S> <C> <C> <C> <C>
Financial
instruments $4,895,833 $ 784,464 $7,038,614 $1,676,137
Stock indices - 83,600 95,981 -
Commodities 81,413 191,168 334,182 88,693
Energy 60,018 - 823,976 -
Metals 312,183 536,946 252,370 324,535
---------- ---------- ---------- ----------
$5,349,447 $1,596,178 $8,545,123 $2,089,365
========== ========== ========== ==========
</TABLE>
All futures and options contracts held at December 31, 1996 and 1995 expire
within one year.
17
<PAGE>
Super Fund Preferred Limited Partnership
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1996 and 1995
NOTE I (continued)
Contract amounts represent the Partnership's potential involvement in the
particular class of contract that would exist if it were to take or make
delivery of all of the underlying quantities of the futures, forward and
option contracts. It is not the credit risk associated with counterparty
nonperformance. The credit risk due to counterparty nonperformance
associated with these instruments is the net unrealized gain (fair value),
if any, included in the statements of financial condition.
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. In 1995 it was believed that some of the Partnership's forward
trading constituted over-the-counter transactions, however, all of the
Partnership's transactions are conducted on organized exchanges.
Fair Value
The derivative financial instruments used in the Partnership's trading
activities are marked to market daily, resulting in unrealized gains or
losses which represent the contracts' fair value and are recorded in the
statements of financial condition. The related changes in fair value are
reflected as income or loss in trading revenues.
At December 31, 1996 and 1995, the fair value of derivative financial
instruments are presented below. Assets represent unrealized gains and
liabilities, unrealized losses.
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
----------------------------------- -------------------------------
Assets Liabilities Assets Liabilities
------ ----------- ------ -----------
<S> <C> <C> <C> <C>
Financial
instruments $10,403 $ 3,889 $ 59,066 $12,150
Stock indices 4,862 - 2,319 -
Commodities 3,994 1,198 17,229 -
Energy 600 549 39,870 -
Metals 17,181 10,508 - 9,603
------- ------- -------- ------
$37,040 $16,144 $118,484 $21,753
======= ======= ======== =======
</TABLE>
18
<PAGE>
Super Fund Preferred Limited Partnership
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1996 and 1995
NOTE I (continued)
A portion of the amounts indicated as off-balance sheet market 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.
The following table presents the average fair values of derivative
financial instruments for the years ended December 31, 1996 and 1995.
<TABLE>
<CAPTION>
1996 1995
---------------------- -----------------------
Assets Liabilities Assets Liabilities
------ ----------- -------- -----------
<S> <C> <C> <C> <C>
Financial
instruments $30,246 $ 1,718 $117,737 $ 5,494
Stock indices 1,471 367 25,043 1,774
Commodities 5,827 843 12,636 2,307
Energy 2,245 864 8,781 2,072
Metals 21,786 22,227 4,156 21,208
------- ------- -------- --------
$61,575 $26,019 $168,353 $32,855
======= ======= ======== =======
</TABLE>
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 49, 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 35, 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 65, 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 $22,300 and $57,400 for
the years ended December 31, 1996 and 1995, respectively. 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 $1,900 and $3,500 for the years ended December 31, 1996 and
1995, respectively.
ITEM XI. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
A. Certain Beneficial Owners as of December 31, 1996
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, 1996
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 $22,300 and interest of approximately
$1,900 during the year ended December 31, 1996. 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, 1996.
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 31, 1997
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 FINANCIAL OFFICER,
SECRETARY, AND DIRECTOR
By: /s/ SELMA BREEN
---------------------
SELMA BREEN
SENIOR VICE PRESIDENT AND DIRECTOR
By: /s/ ERIC GAFFIN
---------------------
ERIC GAFFIN
ACTING CONTROLLER
22
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000832453
<NAME> SUPER FUND PREFERRED LIMITED PARTNERSHIP
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 793364
<SECURITIES> 0
<RECEIVABLES> 4022
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 797386
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 797386
<CURRENT-LIABILITIES> 53323
<BONDS> 0
0
0
<COMMON> 744063
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 797386
<SALES> 56549
<TOTAL-REVENUES> 56549
<CGS> 0
<TOTAL-COSTS> 128818
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (77292)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (77292)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
