<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, 1997 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: $58,356
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.
The Partnership announced its liquidation effective November 30, 1997 and
accordingly, these financial statements have been prepared on the
liquidation basis of accounting. Under such basis, assets have been
recorded at their estimated realizable value; liabilities reflect
estimated remaining obligations to be incurred (including liquidation
expenses) in the winding up of the Partnership's affairs. Assets will be
liquidated and distributed in accordance with the Partnership Agreement.
The liquidation and distributions will be directed by Vision Limited
Partnership (the "General Partner").
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, in the normal
course of liquidation proceedings, terminated all advisors.
The Partnership's advisors during 1996 were 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
<PAGE>
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.
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 $ 0 and $11,585 in incentive fees to
its CTAs for the years ended December 31, 1997 and 1996, respectively.
The General Partner attributes the decrease in incentive fees from 1996
to 1997 primarily to unprofitable results during 1997.
The Partnership had 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, 1997 and 1996, the
Partnership incurred approximately $30,105 and $31,660 in aggregate
brokerage commissions, respectively.
3
<PAGE>
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, 1997 and 1996, the General Partner
received approximately $21,000 and $22,300 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, 1997.
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
<PAGE>
other securities convertible into, Units.
The Units are valued and may have been redeemed on the last business day
of each calendar month after complying with certain notice provisions.
Redemption of rights could have been limited or delayed if the
Partnership could not accurately value or liquidate its assets.
B. Holders
There were no holders of record as of December 31, 1997.
C. Dividends
The Partnership Agreement did not provide for regular or periodic
dividends or distributions of any kind, and it gave the General Partner
sole discretion as to distributions. No dividends or distributions were
made to the limited partners in the years ended December 31, 1997, or
1996, other than the proceeds from liquidation amounting to $438,381 on
November 30, 1997.
ITEM VI. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Partnership's capital consisted 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 could not be predicted 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. The Partnership announced its liquidation effective November 30, 1997
and accordingly, these financial statements have been prepared on the
liquidation basis of accounting. Under such basis, assets have been recorded
at their estimated realizable value; liabilities reflect estimated remaining
obligations to be incurred (including liquidation expenses) in the winding up
of the Partnership's affairs. Assets will be liquidated and distributed in
accordance with the Partnership Agreement. The liquidation and distributions
will be directed by Vision Limited Partnership (the "General Partner").
The General Partner was permitted to make distributions of profits, if profits
were substantial and certain Net Asset Value levels are achieved. However, no
distributions had been made since the Partnership's inception.
The Limited Partners could have redeemed their Units as of the last day of the
month upon written notice of the General Partner. The Limited Partners could
have redeemed their Units on such other redemption dates as the General
Partner in its sole discretion might declare. Units representing $661,441
(including thoses proceeds remaining upon liquidation at November 30, 1997)
and $74,320 were redeemed during the years ended December 31, 1997 and 1996,
respectively.
5
<PAGE>
For the year ended December 31, 1997, the Partnership reported revenues from
its trading activities, including both net realized trading gain/loss and the
change in net unrealized trading of $32,600 as compared with revenues from
trading activities of $25,361 for the year ended December 31, 1996. The
General Partner believes that the commodity markets in 1997 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 $25,756
and $31,188 in interest income from this investment during the years ended
December 31, 1997 and 1996, respectively. The decrease in interest income
experienced by the Partnership from 1996 to 1997 was due to a decline in net
assets.
Total expenses for the year ended December 31, 1997, were $140,978 compared to
$128,818 for the year ended December 31, 1996. The year ended December 31,
1997, exhibited a $13,140 decrease in trading costs and fees due to a decrease
in incentive fees.
The Partnership experienced a net loss of ($82,622), or ($95.95), per partner
unit (($106.28) per limited partner unit), for the year ended December 31,
1997, as compared to the profit of $72,269 or $61.93 per partner unit ( $67.06
per limited partner unit), loss for the year ended December 31, 1996. These
losses are due primarily to the unprofitability of the CTA trading.
6
<PAGE>
C O N T E N T S
Page
----
Report of Independent Certified Public Accountants 8
Financial Statements
Statement of Net Assets in Liquidation as of December 31, 1997
and Statement of Financial Condition as of December 31, 1996 9
Statements of Operations and Special Allocation 10
Statements of Changes in Net Assets in Liquidation and
Partners' Capital 11
Notes to Financial Statements 12 - 19
7
<PAGE>
REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
To the Partners of
Super Fund Preferred Limited Partnership
We have audited the accompanying statement of net assets in liquidation of
Super Fund Preferred Limited Partnership as of December 31, 1997 and the
statement of financial condition as of December 31, 1996, and the related
statements of operations and special allocation and changes in net assets in
liquidation and 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.
As disclosed in Note A to the financial statements, the Partnership announced
its liquidation effective November 30, 1997. As a result, the Partnership has
changed its basis of accounting, as of November 30, 1997, from the accrual
basis to the liquidation basis.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets in liquidation of Super Fund Preferred
Limited Partnership as of December 31, 1997 and the financial position as of
December 31, 1996, 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
March 17, 1998
8
<PAGE>
Super Fund Preferred Limited Partnership
(in liquidation)
STATEMENT OF NET ASSETS IN LIQUIDATION AS OF
DECEMBER 31, 1997 AND STATEMENT OF FINANCIAL CONDITION
AS OF DECEMBER 31, 1996
ASSETS
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Equity in commodity futures trading accounts
Money balance ...................................................................... $475,152 $772,468
Net unrealized gain on open commodity contracts .................................... 20,896
-------- --------
Total equity in commodity futures trading accounts ............................ 475,152 793,364
Due from broker .................................................................... 1,942
Other .............................................................................. 2,080
-------- --------
$475,152 $797,386
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable .............................................................. $438,190 $ 8,957
Due to broker .................................................................... 6,259
Incentive fees payable ........................................................... 11
Accrued brokerage commissions and fees ........................................... 21,855
Accrued professional fees and other .............................................. 30,703 22,500
-------- --------
475,152 53,323
-------- --------
Partners' capital
Limited Partners, 993.674 units outstanding as of
December 31, 1996 ............................................................. 649,609
General Partner, 100.000 units outstanding as of
December 31, 1996 ............................................................. 94,454
-------- --------
-- 744,063
-------- --------
Total liabilities and partners' capital as of December 31,1996 ....................... $797,386
========
Net assets in liquidation as of December 31, 1997 .................................... $ --
========
</TABLE>
The accompanying notes are an integral part of these statements.
9
<PAGE>
Super Fund Preferred Limited Partnership
(in liquidation )
STATEMENTS OF OPERATIONS AND SPECIAL ALLOCATION
Year ended December 31,
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Revenues
Net realized trading gain ................................................................ $ 53,496 $ 101,196
Change in net unrealized trading gain .................................................... (20,896) (75,835)
Interest income .......................................................................... 25,756 31,188
--------- ---------
58,356 56,549
--------- ---------
Expenses
Brokerage commissions and fees ........................................................... 30,105 31,660
Incentive fees ........................................................................... 11,585
Professional fees and other .............................................................. 110,873 85,573
--------- ---------
140,978 128,818
--------- ---------
NET LOSS ....................................................................... (82,622) (72,269)
Less special allocation to the General Partner ............................................... 9,789 5,023
--------- ---------
Net loss available for pro rata distribution to all partners ................................. $ (92,411) $ (77,292)
========= =========
Net loss per unit based on the daily weighted average number of units outstanding, 861.120
in 1997 and 1,166.921 in 1996 ............................................................ $ (95.95) $ (61.93)
========= =========
Net loss per limited partner unit based on the daily weighted average number of limited
partner units outstanding, 769.613 in 1997 and 1,066.921 in 1996 ......................... $ (106.28) $ (67.06)
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
10
<PAGE>
Super Fund Preferred Limited Partnership
(in liquidation)
STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
AND PARTNERS' CAPITAL
Years ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
Limited Partners General Partner
---------------------------------- ----------------------------------
Net Net
asset asset
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, 1996 ..... 1,111.807 $ 795,475 $ 715.48 100.000 $ 95,177 $ 951.77 $ 890,652
Allocation of net income
Special allocation .................... 5,023 5,023
Pro rata allocation ................... (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
Allocation of net loss
Special allocation .................... 9,789 9,789
Pro rata allocation ................... (82,051) (10,360) (92,411)
Redemptions .............................. (993.674) (567,558) (100.000) (93,883) (661,441)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net assets in liquidation at
December 31, 1997 .................... $ $ $ $ $
========== ========== ========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
11
<PAGE>
Super Fund Preferred Limited Partnership
(in liquidation)
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996
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 was to realize capital appreciation through the
speculative trading of commodity futures, forwards and options on futures
contracts and other commodity interests, pursuant to the trading methods
and strategies of the retained Commodity Trading Advisors ("CTAs"). The
Partnership announced its liquidation effective November 30, 1997 and
accordingly, these financial statements have been prepared on the
liquidation basis of accounting. Under such basis, assets have been
recorded at their estimated realizable value; liabilities reflect
estimated remaining obligations to be incurred (including liquidation
expenses) in the winding up of the Partnership's affairs. Assets will be
liquidated and distributed in accordance with the Partnership Agreement.
The liquidation and distributions will be directed by 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. As
of December 31, 1996, CTAs with effective advisory agreements were EMC
Capital Management Inc. and Loran Futures, Inc.
The clearing broker of the Partnership is Lind-Waldock & Company
("Lind-Waldock"). The General Partner acts as introducing broker for the
Partnership.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Revenue Recognition
Futures, options on futures and forward contracts are recorded on the
trade date and open contracts are reflected in the statement of
financial condition at their fair value. Fair values of futures,
options on futures and forward 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.
12
<PAGE>
Super Fund Preferred Limited Partnership
(in liquidation )
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1997 and 1996
NOTE B (continued)
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.
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 December 31, 1996 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 received 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,
1997 and 1996, the General Partner received approximately $2,000 and
$1,900, respectively, in interest income on these deposits. The
remaining interest was retained by the clearing broker.
For investment accounts held directly with the General Partner, the
General Partner 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,
1997 and 1996, the
13
<PAGE>
Super Fund Preferred Limited Partnership
(in liquidation )
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1997 and 1996
NOTE C (continued)
Partnership received from the General Partner approximately $10,900
and $16,300, respectively, as interest income, on these deposits.
2. Brokerage Commissions
The General Partner received 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 were retained by the General Partner. For the years ended
December 31, 1997 and 1996, the General Partner received commissions
of approximately $21,000 and $22,300, respectively.
3. Due To / From Broker
The Partnership maintains an operating account with the General
Partner. The funds in this account are held at Lind-Waldock. As of
December 31, 1997 and 1996 the balance in this account is reflected
in the statement of net assets in liquidation and the statement of
financial condition as "Due to broker" and "Due from broker",
respectively.
NOTE D - INCENTIVE FEES
The Partnership paid incentive fees to its CTAs. The incentive fee was
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 was paid by the Partnership
to the CTAs on new trading profits, and the net asset value of the
Partnership's account thereafter declined for any subsequent month, the
CTAs were entitled to retain such amounts previously paid by the
Partnership. However, no subsequent incentive fee based on new trading
profits would be paid to the CTAs until the Partnership recouped its
losses and earned new trading profits.
14
<PAGE>
Super Fund Preferred Limited Partnership
(in liquidation )
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1997 and 1996
NOTE E - ALLOCATION OF PROFIT AND LOSS FOR
PARTNERSHIP ACCOUNTING
The Partnership's profits and losses were allocated one percent to the
General Partner and ninety-nine percent to the limited partners. Among
the limited partners the profit and loss was 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 partners' capital
accounts. To the extent that the ratio of the General Partner's capital
account to the capital accounts of all partners was greater or less than
1%, the General Partner was 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 have caused any or all of
his units to be redeemed as of the last day of any month provided that
the General Partner 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, redemption
value per limited partnership unit was $653.74.
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.
15
<PAGE>
Super Fund Preferred Limited Partnership
(in liquidation )
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1997 and 1996
NOTE I - SUBSEQUENT TRANSACTIONS
The General Partner, on behalf of the Partnership, made a final
distribution to Limited Partners in February 1998 in accordance with the
Partnership Agreement.
NOTE J - OFF-BALANCE SHEET RISK AND FAIR VALUE OF
DERIVATIVE FINANCIAL INSTRUMENTS
The Partnership traded futures, options on futures and forward contracts
which derive their value from the fair values of financial instruments,
stock indices, commodities, energy and metals. The Partnership's revenues
from each of these reporting categories for the years ended December 31,
1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
--------------------------------- ---------------------------------
Realized Unrealized Realized Unrealized
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Financial instruments $ 32,024 $ (6,514) $127,545 $(40,402)
Stock indices 19,480 (4,862) (22,648) 2,543
Commodities (4,777) (2,796) (13,190) (14,433)
Energy (17,292) (51) 31,593 (39,819)
Metals 24,061 (6,673) (22,104) 16,276
------- -------- -------- -------
$ 53,496 $(20,896) $101,196 $(75,835)
======= ======= ======= =======
</TABLE>
Market and Credit Risk
The Partnership traded derivative financial instruments which involve
varying degrees of off-balance sheet market and credit risk as the values
of contracts traded may have changed or counterparties may have been
unable to perform under the terms of these contracts.
The values of the Partnership's open positions at December 31, 1996 were
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 have resulted in
cash settlements in excess of the amounts recognized in the statement of
financial condition. The Partnership's exposure to market risk was
directly influenced by a number of factors, including the volatility and
liquidity of the markets in which the financial instruments were 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
16
<PAGE>
Super Fund Preferred Limited Partnership
(in liquidation )
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1997 and 1996
NOTE J (continued)
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.
The Partnership's assets held in such segregated trading accounts were
$260,924 and $592,536 at December 31, 1997 and 1996, respectively. In
addition, Partnership assets in the amounts of $214,228 and $200,828 as
of December 31, 1997 and 1996, 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 had procedures in place that attempt to control
market risk, although there can be no assurance that they would, in fact,
succeed in doing so. The procedures included monitoring the trading
activity of the CTAs, daily review of the Partnership's open positions to
insure that investments were diversified and weekly calculation of the
Partnership's Net Asset Value to monitor trading performance. While the
General Partner would, itself, not intervene in the markets to hedge or
diversify the Partnership's market exposure, the General Partner may have
urged the CTAs to close out positions, or itself reallocate Partnership
assets among CTAs. However, such interventions were unusual and the
General Partner's basic control procedures consisted 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, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
----------------------------------------- ---------------------------------------
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)
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Financial
instruments ...... $ - $ - $4,895,833 $ 784,464
Stock indices ....... - - - 83,600
Commodities ......... - - 81,413 191,168
Energy .............. - - 60,018 -
Metals .............. - - 312,183 536,946
----------------- ----------------- ----------------- -----------------
$ - $ - $5,349,447 $1,596,178
================= ================= ================= =================
</TABLE>
17
<PAGE>
Super Fund Preferred Limited Partnership
(in liquidation )
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1997 and 1996
NOTE J (continued)
All futures and options on futures contracts held at December 31, 1996
expired within one year.
Contract amounts represented 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 on futures 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 statement 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.
Fair Value
The derivative financial instruments used in the Partnership's trading
activities were marked to market daily, resulting in unrealized gains or
losses which represented the contracts' fair value and were recorded in
the statements of financial condition. The related changes in fair value
were reflected as income or loss in trading revenues.
At December 31, 1997 and 1996, the fair values of derivative financial
instruments are presented below. Assets represent unrealized gains and
liabilities represent unrealized losses.
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
-------------------------------- -----------------------------
Assets Liabilities Assets Liabilities
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Financial instruments $ - $ - $10,403 $ 3,889
Stock indices - - 4,862 -
Commodities - - 3,994 1,198
Energy - - 600 549
Metals - - 17,181 10,508
------------ ------------ ------------ ------------
$ - $ - $37,040 $16,144
============ ============ ============ ============
</TABLE>
18
<PAGE>
Super Fund Preferred Limited Partnership
(in liquidation )
NOTES TO FINANCIAL STATEMENTS (continued)
December 31, 1997 and 1996
NOTE J (continued)
A portion of the amounts indicated as off-balance sheet market risk was
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, 1997 and 1996.
<TABLE>
<CAPTION>
1997 1996
------------------------ ------------------------
Assets Liabilities Assets Liabilities
------ ----------- ------ -----------
<S> <C> <C> <C> <C>
Financial
instruments ...... $20,814 $(1,883) $30,246 $ 1,718
Stock indices ........ - - 1,471 367
Commodities .......... 6,669 (3,339) 5,827 843
Energy ............... 1,240 (634) 2,245 864
Metals ............... 1,898 (3,217) 21,786 22,227
------- ------ ------ ------
$30,621 $(9,073) $61,575 $26,019
======= ======= ======= =======
</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 50, 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 36, 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 66, 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 $21,000 and $22,300 for the years
ended December 31, 1997 and 1996, 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
$2,000 and $1,900 for the years ended December 31, 1997 and 1996,
respectively.
ITEM XI. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
A. Certain Beneficial Owners as of December 31, 1997
There were no outstanding units at December 31, 1997.
B. Securities Owned by Management as of December 31, 1997
There were no outstanding units at December 31, 1997.
C. Changes in Control
None.
ITEM XII. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The General Partner received indirectly from the Partnership trail commissions
aggregating approximately $21,000 and interest of approximately $2,000 during
the year ended December 31, 1997. 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, 1997.
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 25, 1998
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
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 475152
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 475152
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 475152
<CURRENT-LIABILITIES> 475152
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 58356
<TOTAL-REVENUES> 58356
<CGS> 0
<TOTAL-COSTS> 140978
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (92411)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (92411)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
