<PAGE>
FORM 10Q
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 June 30, 1996
Commission File Number 0-21588
SMITH BARNEY INTERNATIONAL ADVISORS CURRENCY FUND L.P.
(Exact name of registrant as specified in its charter)
New York 13-3616914
(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
(Address and Zip Code of principal executive offices)
(212) 723-5424
(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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SMITH BARNEY INTERNATIONAL ADVISORS CURRENCY FUND L.P.
FORM 10-Q
INDEX
Page
Number
PART I - Financial Information:
Item 1. Financial Statements:
Statements of Financial Condition at
June 30, 1996 and December 31, 1995 3
Statements of Income and Expenses and
Partners' Capital for the Three and Six
Months ended June 30, 1996 and 1995 4
Notes to Financial Statements 5 - 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 9 - 10
PART II - Other Information 11
2
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PART I
Item 1. Financial Statements
SMITH BARNEY INTERNATIONAL ADVISORS CURRENCY FUND L.P.
STATEMENTS OF FINANCIAL CONDITION
JUNE 30, DECEMBER 31,
1996 1995
ASSETS
-------------- -------------
(Unaudited)
Equity in commodity futures trading account:
Cash and cash equivalents $ 3,440,394 $ 6,912,939
Net unrealized appreciation (depreciation)
on open futures contracts 178,750 (22,990)
----------- -----------
3,619,144 6,889,949
Interest receivable 12,088 25,911
Other assets -- 19,853
----------- -----------
$ 3,631,232 $ 6,935,713
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued expenses:
Commissions $ 21,182 $ 40,342
Other 35,192 44,133
Redemptions payable 155,140 2,513,653
Incentive fee 2,800 --
Due to Smith Barney -- 39,194
----------- -----------
Partners' Capital 214,314 2,637,322
----------- -----------
General Partner, 8,000.2096 Unit equivalents
outstanding in 1996 and 1995 81,042 74,402
Limited Partners, 329,239.4684 and
454,095.3092 Units of Limited Partnership
Interest outstanding in 1996 and 1995,
respectively 3,335,876 4,223,989
----------- -----------
3,416,918 4,298,391
----------- -----------
$ 3,631,232 $ 6,935,713
=========== ===========
See Notes to Financial Statements.
3
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SMITH BARNEY INTERNATIONAL ADVISORS CURRENCY FUND L.P.
STATEMENTS OF INCOME AND EXPENSES AND PARTNERS' CAPITAL
(UNAUDITED)
<TABLE>
<CAPTION>
THREE-MONTHS THREE-MONTHS SIX-MONTHS SIX- MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995
--------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Income:
Net gains (losses) on trading of
commodity futures:
Realized gains on closed positions $ 193,576 $ 11 $ 227,878 $ 512,733
Change in unrealized gains /losses on
open positions 83,247 124,605 201,740 (96,059)
--------------- -------------- --------------- ---------------
276,823 124,616 429,618 416,674
Less, brokerage commissions and clearing
fees ($304, $1,965, $886 (65,151) (176,383) (140,110) (395,323)
and $7,520, respectively)
--------------- -------------- --------------- ---------------
Net realized and unrealized gains (losses) 211,672 (51,767) 289,508 21,351
Interest income 37,248 125,086 80,183 265,735
--------------- -------------- --------------- ---------------
248,920 73,319 369,691 287,086
--------------- -------------- --------------- ---------------
Expenses:
Incentive fees 2,800 21,950 2,800 61,840
Other 15,527 61,469 31,746 93,899
Organization expense and filing fees - 56,019 19,954 103,290
--------------- -------------- --------------- ---------------
18,327 139,438 54,500 259,029
--------------- -------------- --------------- ---------------
Net income (loss) 230,593 (66,119) 315,191 28,057
Partners' capital, beginning of period 3,697,766 10,895,056 4,298,391 11,861,869
Sale of Additional Limited Partnership Interest - - - 24,500
Redemptions of Limited Partnership Interest (511,441) (1,529,979) (1,196,664) (2,611,068)
Redemptions of General Partnership Interest - - - (4,400)
--------------- -------------- --------------- ---------------
Partners' capital, end of period $3,416,918 $9,298,958 $3,416,918 $9,298,958
=============== ============== =============== ===============
Net asset value per Unit
(337,239.6780 and 948,285.7366 Units
outstanding at June 30, 1996 and
1995 , respectively) $ 10.13 $ 9.81 $ 10.13 $ 9.81
=============== ============== =============== ===============
Net income per Unit of Limited Partnership
Interest and General Partnership
Unit equivalent $ 0.63 $ (0.07) $ 0.83 $ 0.02
=============== ============== =============== ===============
</TABLE>
See Notes to Financial Statements.
4
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SMITH BARNEY INTERNATIONAL ADVISORS CURRENCY FUND L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
1. General:
Smith Barney International Advisors Currency Fund L.P., (the "Partnership")
is a limited partnership which was organized on May 29, 1991 under the
partnership laws of the State of New York to engage in the speculative trading
of commodity interests, including forward contracts, commodity options and
commodity futures contracts on 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 on March 12, 1992.
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 made by Friedberg Commodity Management Inc.
and Trendview Management Inc. (collectively, 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 at June 30, 1996 and the results of its operations for the three and
six months ended June 30, 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.
5
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Smith Barney International Advisors Currency Fund L.P.
Notes to Financial Statements
June 30, 1996
(Continued)
2. Net Asset Value Per Unit:
Changes in net asset value per Unit for the three and six months ended June
30, 1996 and 1995 were as follows:
THREE-MONTHS ENDED SIX-MONTHS ENDED
JUNE 30, JUNE 30,
--------- --------
1996 1995 1996 1995
---- ---- ---- ----
Net realized and unrealized
gains (losses) $ 0.57 $(0.06) $ 0.75 $ 0.01
Interest income 0.10 0.12 0.20 0.24
Expenses (0.04) (0.13) (0.12) (0.23)
------ ------ ------ ------
Increase (decrease) for
period 0.63 (0.07) 0.83 0.02
Net Asset Value per Unit,
beginning of period 9.50 9.88 9.30 9.79
------ ------ ------ ------
Net Asset Value per Unit,
end of period $10.13 $ 9.81 $10.13 $ 9.81
====== ====== ====== ======
3. Trading Activities:
The Partnership was formed for the purpose of trading contracts in a
variety of commodity interests, including derivative financial instruments and
derivative commodity instruments. The results of the Partnership's trading
activity are shown in the statements of income and expenses.
The Customer Agreement between the Partnership and SB gives the Partnership
the legal right to net unrealized gains and losses.
All of the commodity interests owned by the Partnership are held for
trading purposes. The fair value of these commodity interests, including options
thereon, at June 30, 1996 was $178,750 and the average fair value during the
quarter then ended, based on monthly calculation, was $145,387.
6
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4. Financial Instrument Risk:
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, to purchase or sell other financial
instruments at specific terms at specified future dates, or, in the case of
derivative commodity instruments, to have a reasonable possibility to be settled
in cash or with another financial instrument. These instruments may be traded on
an exchange or over-the-counter ("OTC"). Exchange traded instruments are
standardized and include futures and certain option contracts. OTC contracts are
negotiated between contracting parties and include forwards and certain options.
Each of these instruments is subject to various risks similar to those related
to the underlying financial instruments including market and credit risk. In
general, the risks associated with OTC contracts are greater than those
associated with exchange traded instruments because of the greater risk of
default by the counterparty to an OTC contract.
Market risk is the potential for changes in the value of the financial
instruments traded by the Partnership due to market changes, including interest
and foreign exchange rate movements and fluctuations in commodity or security
prices. Market risk is directly impacted by the volatility and liquidity in the
markets in which the related underlying assets are traded.
Credit risk is the possibility that a loss may occur due to the failure of
a counterparty to perform according to the terms of a contract. Credit risk with
respect to exchange traded instruments is reduced to the extent that an exchange
or clearing organization acts as a counterparty to the transactions. The
Partnership's risk of loss in the event of counterparty default is typically
limited to the amounts recognized in the statement of financial condition and
not represented by the contract or notional amounts of the instruments. The
Partnership has concentration risk because the sole counterparty or broker with
respect to the Partnership's assets is SB.
The Partnership engages in the trading of forward contracts in foreign
currencies. In this connection, the Partnership contracts with SB as the
counterparty to take future delivery of a particular foreign currency. In a
forward transaction, cash settlement does not occur until the agreed upon value
date of the transaction. The Partnership's credit risk in the event of
counterparty default is typically limited to the amounts recognized in the
statement of financial condition and not represented by the contract or notional
7
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amounts of the instruments. At June 30, 1996 the net unrealized appreciation for
off-exchange traded forward currency contracts was approximately $165,550.
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. These monitoring systems allow the General Partner to statistically
analyze actual trading results with risk adjusted performance indicators and
correlation statistics. In addition, on-line monitoring systems provide account
analysis of futures, forwards and options positions by sector, margin
requirements, gain and loss transactions and collateral positions.
The notional or contractual amounts of these instruments, while not
recorded in the financial statements, reflect the extent of the Partnership's
involvement in these instruments. At June 30, 1996, the notional or contractual
amounts of the Partnership's commitment to purchase and sell these instruments
was $27,042,829 and $26,372,563, respectively, as detailed below. All of these
instruments mature within one year of June 30, 1996. However, due to the nature
of the Partnership's business, these instruments may not be held to maturity. At
June 30, 1996, the Partnership had net unrealized trading gains of $178,750, as
detailed below.
NOTIONAL OR CONTRACTUAL NET
AMOUNT OF COMMITMENTS UNREALIZED
TO PURCHASE TO SELL GAIN
----------- ------------ ---------
Currencies
- - Exchange Traded Contracts $0 $ 1,396,350 $ 13,200
- - OTC Contracts 27,042,829 24,976,213 165,550
----------- ----------- --------
Totals $27,042,829 $26,372,563 $178,750
=========== =========== ========
8
<PAGE>
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, consisting of
cash and cash equivalents, 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 second
quarter of 1996.
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 and additions of Units and
distributions of profits, if any.
For the six months ended June 30, 1996, Partnership capital decreased 20.5%
from $4,298,391 to $3,416,918. This decrease was attributable to the redemption
of 124,855.8408 Units totaling $1,196,664 which was partially offset by a net
gain from operations of $315,191 for the six months ended June 30, 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 second quarter of 1996, the net asset value per
Unit increased 6.6% from $9.50 to $10.13, as compared to a decrease of .7% in
the second quarter of 1995. The Partnership experienced a net trading gain
before commissions and expenses in the second quarter of 1996 of $276,823. These
gains were primarily attributable to the trading of major and minor forward
currency contracts and were partially offset by losses realized in the trading
of exotic currencies. The Partnership experienced a net trading gain before
commissions and expenses in the second quarter of 1995 of $124,616. Gains were
recognized in the trading of major and minor currencies and were partially
offset by losses realized in exotic currencies.
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,
9
<PAGE>
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 85% of the Partnership's daily equity maintained in cash
was earned on the monthly average 13-week U.S. Treasury bill yield. Interest
income for the three and six months ended June 30, 1996 decreased by $87,838 and
$185,552, respectively, as compared to the corresponding periods in 1995. These
decreases are primarily due to the effect of redemptions on the Partnership's
equity maintained in cash as well as a decrease in interest rates in the first
and second quarters of 1996 as compared to the corresponding periods in 1995.
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 and
six months ended June 30, 1996 decreased by $111,232 and $255,213, respectively,
as compared to the corresponding periods in 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. Trading performance for the three and six months ended
June 30, 1996 resulted in a decrease in incentive fees of $19,150 and $59,040,
respectively, as compared to the corresponding periods in 1995.
10
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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
11
<PAGE>
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.
SMITH BARNEY INTERNATIONAL ADVISORS CURRENCY FUND L.P.
By: Smith Barney Futures Management Inc.
(General Partner)
By: /s/ David J. Vogel, President
-------------------------------------
David J. Vogel, President
Date: 8/14/96
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: 8/14/96
By: /s/ Daniel A. Dantuono
-------------------------------------
Daniel A. Dantuono
Chief Financial Officer and Treasurer
Date: 8/14/96
12
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000876716
<NAME> SMITH BARNEY INTERNATIOANL ADVISORS CURRENCY FUND L.P.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 3,440,394
<SECURITIES> 178,750
<RECEIVABLES> 12,088
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,631,232
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,631,232
<CURRENT-LIABILITIES> 214,314
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,416,918
<TOTAL-LIABILITY-AND-EQUITY> 3,631,232
<SALES> 0
<TOTAL-REVENUES> 369,691
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 54,500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 315,191
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 315,191
<EPS-PRIMARY> 0.83
<EPS-DILUTED> 0
</TABLE>
