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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR ( ) TRANSITION REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended March 31, 1996
Commission File Number 0-18467
SLH PERFORMANCE PARTNERS FUTURES FUND L.P.
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(Exact name of registrant as specified in its charter)
Delaware 13-3486116
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Smith Barney Futures Management Inc.
390 Greenwich St. - 1st. Fl.
New York, New York 10013
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(Address and Zip Code of principal executive offices)
(212) 723-5424
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 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
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SLH PERFORMANCE PARTNERS FUTURES FUND L.P.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page
Number
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<S> <C>
PART I - Financial Information:
Item 1. Financial Statements:
Statements of Financial Condition
at March 31, 1996 and December 31,
1995. 3
Statements of Income and Expenses
and Partners' Capital for the Three
Months ended March 31,1996 and 1995. 4
Notes to Financial Statements 5 - 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 7 - 8
PART II - Other Information 9
</TABLE>
2
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PART I
Item 1. Financial Statements
SLH PERFORMANCE PARTNERS FUTURES FUND L.P.
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
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ASSETS (Unaudited)
<S> <C> <C>
Equity in commodity futures trading account:
Cash and cash equivalents $2,931,477 $3,219,888
Net unrealized depreciation
on open futures contracts 34,835 116,804
---------- ----------
2,966,312 3,336,692
Interest receivable 10,124 12,031
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$2,976,436 $3,348,723
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued expenses:
Commissions 18,601 $ 20,929
Management fees 5,530 6,217
Incentive fees 0 1,896
Other 31,920 21,986
Redemptions payable 96,752 119,161
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152,803 170,189
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Partners' Capital
General Partner, 24 Unit equivalents
outstanding in 1996 and 1995 30,553 33,254
Limited Partners, 2,194 and 2,270
Units of Limited Partnership Interest
outstanding in 1996 and 1995,
respectively 2,793,080 3,145,280
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2,823,633 3,178,534
---------- ----------
$2,976,436 $3,348,723
========== ==========
</TABLE>
See Notes to Financial Statements.
3
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SLH PERFORMANCE PARTNERS FUTURES FUND L.P.
STATEMENTS OF INCOME AND EXPENSES AND PARTNERS' CAPITAL
(UNAUDITED)
<TABLE>
<CAPTION>
THREE-MONTHS ENDED
MARCH 31,
=================================
1996 1995
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<S> <C> <C>
Income:
Net gains (losses) on trading of commodity
futures:
Realized losses on closed positions ($ 112,428) ($ 119,633)
Change in unrealized gains/losses on open
positions (81,969) 574,396
----------- -----------
(194,397) 454,763
Less, brokerage commissions and clearing fees
($1,548 and $1,484, respectively) (65,765) (75,655)
----------- -----------
Net realized and unrealized gains (losses) (260,162) 379,108
Interest income 31,025 38,821
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(229,137) 417,929
----------- -----------
Expenses:
Incentive fees 0 72,152
Management fees 17,418 15,535
Other 11,594 10,089
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29,012 97,776
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Net income (loss) (258,149) 320,153
Redemptions (96,752) (316,777)
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Net increase (decrease) in Partners' capital (354,901) 3,376
Partners' capital, beginning of period 3,178,534 3,455,515
----------- -----------
Partners' capital, end of period $ 2,823,633 $ 3,458,891
=========== ===========
Net asset value per Unit
(2,218 and 2,697 Units outstanding at
March 31, 1996 and 1995, respectively) $ 1,273.05 $ 1,282.50
=========== ===========
Net income (loss) per Unit of Limited
Partnership Interest and General Partnership
Unit equivalent $ (112.54) $ 108.75
========== ===========
</TABLE>
See Notes to Financial Statements.
4
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SLH PERFORMANCE PARTNERS FUTURES FUND L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
General
SLH Performance Partners Futures Fund L.P. (the "Partnership") was
organized under the laws of the State of Delaware on October 3, 1988. The
Partnership engages in the speculative trading of commodity interests including
forward contracts on foreign currencies, commodity options and commodity futures
contracts on U.S. Treasuries and certain other financial instruments and foreign
currencies. The commodity interests that are traded by the Partnership are
volatile and involve a high degree of market risk. The Partnership commenced
trading operations on June 6, 1989.
Smith Barney Futures Management Inc. acts as the general partner (the
"General Partner") of the Partnership. Smith Barney Inc. ("SB"), an affiliate of
the General Partner, acts as commodity broker for the Partnership. All trading
decisions for the Partnership are being made by SJO, Inc. and Hyman Beck &
Company, Inc. (the "Advisors").
The accompanying financial statements are unaudited but, in the opinion
of management, include all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the Partnership's financial
condition as of March 31, 1996 and the results of its operations for the three
months ended March 31, 1996 and 1995. These financial statements present the
results of interim periods and do not include all disclosures normally provided
in annual financial statements. It is suggested that these financial statements
be read in conjunction with the financial statements and notes included in the
Partnership's annual report on Form 10-K filed with the Securities and Exchange
Commission for the year ended December 31, 1995.
Due to the nature of commodity trading, the results of operations for
the interim periods presented should not be considered indicative of the results
that may be expected for the entire year.
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SLH PERFORMANCE PARTNERS FUTURES FUND L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
(Continued)
Net Asset Value Per Unit
Changes in net asset value per Unit for the three months ended March
31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1996 1995
----------------------------
<S> <C> <C>
Net realized and unrealized
gains (losses) $ (113.41) $ 128.76
Interest income 13.52 13.18
Expenses (12.65) (33.19)
--------- ---------
Increase (decrease) for period (112.54) 108.75
Net Asset Value per Unit,
beginning of period 1,385.59 1,173.75
--------- ---------
Net Asset Value per Unit,
end of period $1,273.05 $1,282.50
========= =========
</TABLE>
6
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Liquidity and Capital Resources
The Partnership does not engage in the sale of goods or services. Its
only assets are its equity in its commodity futures trading account, net
unrealized appreciation (depreciation) on open futures contracts and interest
receivable. Because of the low margin deposits normally required in commodity
futures trading, relatively small price movements may result in substantial
losses to the Partnership. While substantial losses could lead to a decrease in
liquidity, no such losses occurred in the first quarter of 1996.
The Partnership is party to financial instruments with off- balance
sheet risk, including derivative financial instruments and derivative commodity
instruments, in the normal course of its business. These financial instruments
include forwards, futures and options, whose value is based upon an underlying
asset, index, or reference rate, and generally represent future commitments to
exchange currencies or cash flows, or to purchase or sell other financial
instruments at specified terms at specified future dates. Each of these
instruments is subject to various risks similar to those relating to the
underlying financial instruments including market and credit risk. The General
Partner monitors and controls the Partnership's risk exposure on a daily basis
through financial, credit and risk management monitoring systems and,
accordingly believes that it has effective procedures for evaluating and
limiting the credit and market risks to which the Partnership is subject.
The Partnership's capital consists of the capital contributions of the
partners as increased or decreased by gains or losses on commodity futures
trading, expenses, interest income, redemptions of Units and distributions of
profits, if any.
For the three months ended March 31, 1996, Partnership capital
decreased 11.2% from $3,178,534 to $2,823,633. This decrease was attributable to
the redemption of 76 limited partnership Units resulting in an outflow of
$96,752 and by a net loss from operations of $258,149 for the three months ended
March 31, 1996. Future redemptions can impact the amount of funds available for
investments in commodity contract positions in subsequent periods.
Results of Operations
During the Partnership's first quarter of 1996, the net asset value per
Unit decreased 8.1% from $1,385.59 to $1,273.05 as compared to the first quarter
of 1995 in which the net asset value
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per Unit increased 9.3%. The Partnership experienced a net trading loss before
commissions and expenses in the first quarter of 1996 of $194,397. Losses were
recognized in the trading of commodity futures in interest rates, precious
metals, stock indices, currencies and agricultural products. The Partnership
experienced a net trading gain before commissions and expenses in the first
quarter of 1995 of $454,763. Gains were primarily realized in the trading of
commodity futures in metals, agricultural products and stock indices which were
partially offset by losses realized in the trading of grains and financials.
Commodity futures markets are highly volatile. Broad price fluctuations
and rapid inflation increase the risks involved in commodity trading, but also
increase the possibility of profit. The profitability of the Partnership depends
on the existence of major price trends and the ability of the Advisors to
identify correctly those price trends. These price trends are influenced by,
among other things, changing supply and demand relationships, weather,
governmental, agricultural, commercial and trade programs and policies, national
and international political and economic events and changes in interest rates.
To the extent that market trends exist and the Advisors are able to identify
them, the Partnership expects to increase capital through operations.
Interest income on 80% of the Partnership's daily average equity was
earned on the monthly average 13-week U.S. Treasury bill yield. Interest income
for the three months ended March 31, 1996 decreased by $7,796, as compared to
the corresponding period in 1995. This decrease was attributable to a decrease
in interest rates in the first quarter of 1996 as compared to 1995 coupled with
the effect of redemptions on the Partnership's equity maintained in cash.
Brokerage commissions are calculated on the adjusted net asset value on
the last day of each month and, therefore, vary according to trading performance
and redemptions. Accordingly, they must be compared in relation to the
fluctuations in the monthly net asset values. Commissions and clearing fees for
the three months ended March 31, 1996 decreased by $9,890, as compared to the
corresponding period in 1995.
Management fees are calculated as a percentage of the Partnership's net
asset value as of the end of each month and are affected by trading performance
and redemptions. Management fees for the three months ended March 31, 1996
increased by $1,883, as compared to the corresponding period in 1995. This
increase in management fees is the result of an overpayment of management fees
in 1994 that was adjusted in the first quarter of 1995.
Incentive fees are based on the new appreciation generated by each
Advisor as defined in the advisory agreements between the Partnership, the
General Partner and each Advisor. No incentive fees were earned during the three
months ended March 31, 1996. Trading performance for the three months ended
March 31, 1995 resulted in incentive fees of $72,152.
8
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PART II OTHER INFORMATION
Item 1. Legal Proceedings - None
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. (a) Exhibits - None
(b) Reports on Form 8-K - None
9
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SLH PERFORMANCE PARTNERS FUTURES FUND L.P.
By: Smith Barney Futures Management Inc.
------------------------------------
(General Partner)
By: /s/ David J.Vogel, President
David J. Vogel, President
Date: 5/10/96
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Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
By: Smith Barney Futures Management Inc.
------------------------------------
(General Partner)
By: /s/ David J.Vogel, President
------------------------------------
David J. Vogel, President
Date: 5/10/96
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By: /s/ Daniel A. Dantuono
------------------------------------
Daniel A. Dantuono
Chief Financial Officer and
Director
Date: 5/10/96
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10
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EXHIBIT INDEX
-------------
Exhibit
No. Description
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27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000841941
<NAME> SLH PERFORMANCE PARTNERS FUTURES FUND L.P.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,931,477
<SECURITIES> 34,835
<RECEIVABLES> 10,124
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,976,436
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,976,436
<CURRENT-LIABILITIES> 152,803
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,823,633
<TOTAL-LIABILITY-AND-EQUITY> 2,976,436
<SALES> 0
<TOTAL-REVENUES> (229,137)
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 29,012
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (258,149)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (258,149)
<EPS-PRIMARY> (112.54)
<EPS-DILUTED> 0
</TABLE>
