UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1997
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)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: 10,000,000
Units of
Limited
Partnership
Interest
(Title of Class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to this
form 10-K [ ]
<PAGE>
PART I
Item 1. Business.
(a) General development of business. Smith Barney
International Advisors Currency Fund L.P., (the "Partnership") is a limited
partnership organized on May 29, 1991 under the limited partnership laws of the
State of New York to engage in 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 operations on March 12, 1992. A total
of 10,000,000 Units of Limited Partnership Interest in the Partnership ("Units")
were offered to the public. A Registration Statement on Form S-1 relating to the
public offering became effective on September 30, 1991. Between September 30,
1991 and February 27, 1992, 1,109,024 Units were sold to the public at $10 per
Unit. Proceeds of the offering were held in an escrow account and were
transferred, along with the General Partner's contribution of $143,760, to the
Partnership's trading account on March 12, 1992 when the Partnership commenced
trading. Sales of additional Units and redemptions of Units for the years ending
December 31, 1997, 1996 and 1995 are reported in the Statement of Partners'
Capital on page F-5 under "Item 8. Financial Statements and Supplementary Data."
The General Partner has agreed to make additional capital
2
<PAGE>
contributions, if necessary, so that its general partnership interest will be
equal to the greater of (i) an amount to entitle it to 1% of each material item
of Partnership income, loss, deduction or credit or (ii) the greater of (a) 1%
of the Partners' contributions to the Partnership or (b) $25,000. The
Partnership will be liquidated on December 31, 2011; if the Net Asset Value per
Unit falls below $4 as of the end of a trading day; or upon the earlier
occurrence of certain other circumstances set forth in the Limited Partnership
Agreement.
Smith Barney Futures Management Inc. acts as the general partner (the
"General Partner") of the Partnership and is a wholly owned subsidiary of Smith
Barney Inc. ("SB"). SB acts as commodity broker for the Partnership. On November
28, 1997, Smith Barney Holdings Inc. was merged with Salomon Inc to form Salomon
Smith Barney Holdings Inc. ("SSBH"), a wholly owned subsidiary of Travelers
Group Inc. SB is a wholly owned subsidiary of SSBH.
The Partnership's trading of futures contracts on commodities is done
on United States and foreign commodity exchanges. It engages in such trading
through a commodity brokerage account maintained with SB.
As of December 31, 1997, the General Partner, on behalf of the
Partnership, has entered into Management Agreements (the "Management
Agreements") with Friedberg Commodity Management Inc. and Trendview Management
Inc., (collectively, the "Advisors") who make all commodity trading decisions
for the Partnership. None of the Advisors is affiliated with the General Partner
or SB. The Advisors are not responsible for the organization or operation of
3
<PAGE>
the Partnership. Pursuant to the terms of each Management Agreement, the
Partnership is obligated to pay the Advisors an incentive fee payable quarterly
of 20% of New Trading Profits (as defined in the Limited Partnership Agreement)
of the Partnership.
The Customer Agreement (the "Customer Agreement") provides that the
Partnership pays SB a monthly brokerage fee equal to 7/12 of 1% of month-end Net
Assets (7% per year) in lieu of brokerage commissions on a per trade basis. From
its brokerage fee, SB pays each Advisor a monthly management fee equal to 1/6 of
1% (2% per year) of Net Assets allocated to the Advisor as of the end of the
month. SB also pays a portion of its brokerage fees to its financial consultants
who have sold Units and who are registered as associated persons with the
Commodity Futures Trading Commission (the "CFTC"). The Partnership pays for
National Futures Association ("NFA") fees, exchange and clearing fees, give-up
and user fees and floor brokerage fees. The Customer Agreement between the
Partnership and SB gives the Partnership the legal right to net unrealized gains
and losses. Brokerage fees will be paid for the life of the Partnership,
although the rate at which such fees are paid may be changed.
In addition, SB pays the Partnership interest on 85% of the average
daily equity maintained in cash in its account during each month at the rate
equal to the average noncompetitive yield of 13- week U.S. Treasury Bills as
determined at the weekly auctions thereof during the month.
4
<PAGE>
(b) Financial information about industry segments. The Partnership's
business consists of only one segment, speculative trading of commodity
interests. The Partnership does not engage in sales of goods or services. The
Partnership's net income (loss) from operations for the years ended December 31,
1997, 1996, 1995, 1994 and 1993 are set forth under "Item 6. Select Financial
Data." The Partnership capital as of December 31, 1997 was $3,481,352.
(c) Narrative description of business.
See Paragraphs (a) and (b) above.
(i) through (x) - Not applicable.
(xi) through (xii) - Not applicable.
(xiii) - The Partnership has no employees.
(d) Financia Information About Foreign and Domestic Operations and
Export Sales. The Partnership does not engage in sales of goods or
services, and therefore this item is not applicable.
Item 2. Properties.
The Partnership does not own or lease any properties. The General
Partner operates out of facilities provided by its affiliate, SB.
Item 3. Legal Proceedings.
There are no pending legal proceedings to which the Partnership is a
party or to which any of its assets is subject. No material legal proceedings
affecting the Partnership were terminated during the fiscal year.
5
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Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted to the security holders for a vote during
the fiscal year covered by this report.
PART II
Item 5. Market for Registrant's Common Equity and Related Security
Holder Matters.
(a) Market Information. The Partnership has issued no stock. There
is no established public trading market for the Units of Limited
Partnership Interest.
(b) Holders. The number of holders of Units of Partnership Interest
as of December 31, 1997 was 137.
(c) Distribution. The Partnership did not declare a
distribution in 1997 or 1996.
6
<PAGE>
Item 6. Select Financial Data. Realized and unrealized trading gains (losses),
interest income, net income (loss) and increase (decrease) in net asset value
per Unit and distribution per Unit for the years ended December 31, 1997, 1996,
1995, 1994 and 1993 and total assets at December 31, 1997, 1996, 1995, 1994 and
1993 were as follows:
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Realized and unrealized trading
gains(losses) net of brokerage
commissions and clearing fees
of $237,265, $263,649, $694,687,
$1,226,232, and $1,733,747,
respectively $ 590,534 $ 712,497 $ (320,012) $ (2,201,591) $ 682,801
Interest income 141,341 150,381 459,661 584,880 610,487
------------ ------------ ------------ ------------ ------------
$ 731,875 $ 862,878 $ 139,649 $ (1,616,711) $ 1,293,288
============ ============ ============ ============ ============
Net Income (loss) $ 556,770 $ 715,392 $ (364,410) $ (1,930,322) $ 342,398
============ ============ ============ ============ ============
Increase (decrease)
in net asset value
per Unit $ 2.11 $ 2.11 $ (0.49) $ (1.14) $ 0.09
============ ============ ============ ============ ============
Distributions per
Unit $ 0.85
============
Total assets $ 3,617,429 $ 3,504,725 $ 6,935,713 $ 13,532,638 $ 20,955,934
============ ============ ============ ============ ============
</TABLE>
7
<PAGE>
Item 7. Management's Discussion and Analysis of Financia Condition and Results
of Operations.
(a) Liquidity. The Partnership does not engage in sales of goods
or services. Its only assets are its commodity futures trading account,
consisting of cash and cash equivalents, net unrealized appreciation
(depreciation) on open commodity contracts, commodity options, 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. Such substantial losses could lead to a material
decrease in liquidity. To minimize this risk, the Partnership follows certain
policies including:
(1) Partnership funds are invested only in commodity contracts
which are traded in sufficient volume to permit, in the opinion of the Advisors,
ease of taking and liquidating positions.
(2) No Advisor initiates additional positions in any commodity
if such additional positions would result in aggregate positions for all
commodities requiring as margin more than 66-2/3% of the Partnership's assets
allocated to the Advisor. For the purpose of this limitation, forward contracts
in currencies are deemed to have the same margin requirements as the same or
similar futures contracts traded on the Chicago Mercantile Exchange.
(3) The Partnership does not employ the trading technique
commonly known as "pyramiding", in which the speculator uses unrealized profits
on existing positions as margin for the purchase or sale of additional positions
in the same or related commodities.
8
<PAGE>
(4) The Partnership does not utilize borrowings except
short-term borrowings if the Partnership takes delivery of any cash commodities,
provided that neither the deposit of margin with a commodity broker nor
obtaining and drawing a line of credit with respect to forward contracts shall
constitute borrowing.
(5) The Advisors may, from time to time, employ trading
strategies such as spreads or straddles on behalf of the Partnership. The term
"spread" or "straddle" describes a commodity futures trading strategy involving
the simultaneous buying and selling of futures contracts on the same commodity
but involving different delivery dates or markets and in which the trader
expects to earn a profit from a widening or narrowing of the difference between
the prices of the two contracts.
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
amounts of the instruments. The fair value of off-exchange traded forward
currency contracts at December 31, 1997 and 1996 was approximately $(462,000)
and $(33,000), respectively.
9
<PAGE>
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. (See also "Item 8. Financial Statements and Supplementary Data.,"
for further information on financial instrument risk included in the notes to
financial statements.)
Other than the risks inherent in commodity futures trading, the
Partnership knows of no trends, demands, commitments, events or uncertainties
which will result in or which are reasonably likely to result in the
Partnership's liquidity increasing or decreasing in any material way. The
Limited Partnership Agreement provides that the General Partner may, at its
discretion, cause the Partnership to cease trading operations and liquidate
all open positions upon the first to occur of the
10
<PAGE>
following: (i) December 31, 2011; (ii) the vote to dissolve the Partnership by
limited partners owning more than 50% of the Units; (iii) assignment by the
General Partner of all of its interest in the Partnership or withdrawal,
removal, bankruptcy or any other event that causes the General Partner to cease
to be a general partner under the Partnership Act unless the Partnership is
continued as described in the Limited Partnership Agreement; or (iv) the
occurrence of any event which shall make it unlawful for the existing
Partnership to be continued. The General Partner may, in its discretion,
dissolve the Partnership if the net asset value per Unit falls below $4 as of
the end of any business day after trading.
(b) Capital resources. (i) The Partnership has made no material
commitments for capital expenditures.
(ii) The Partnership's capital consists of the capital
contributions of the partners as increased or decreased by gains or losses on
commodity trading and by expenses, interest income, redemptions of Units and
distributions of profits, if any. Gains or losses on commodity futures trading
cannot be predicted. Market moves in commodities are dependent upon fundamental
and technical factors which the Partnership may or may not be able to identify.
Partnership expenses will consist of, among other things, commissions, and
incentive fees. The level of these expenses is dependent upon the level of
trading and the ability of the Advisors to identify and take advantage of price
movements in the commodity markets, in addition to the level of Net Assets
maintained. In addition, the amount of interest income payable by SB is
dependent upon interest rates over which the Partnership has no control.
11
<PAGE>
No forecast can be made as to the level of redemptions in any
given period. For the year ended December 31, 1997, 36,943.6113 Units were
redeemed totaling $434,394. For the year ended December 31, 1996, 167,750.4101
Units were redeemed totaling $1,654,807. For the year ended December 31, 1995,
751,596.7759 Units were redeemed totaling $7,223,568 which includes the General
Partner's redemption representing 15,278.8416 Unit equivalents totaling
$142,301.
During the year ended December 31, 1996, the Partnership ceased
the offering of Units. For the year ended December 31, 1995, there were
additional sales of 2,533.6091 Units totaling $24,500.
A Limited Partner may elect automatically to reinvest the amount
of his distribution, if any, in additional Units and fractional Units at their
Net Asset Value as of the ex-dividend date. This election may be made at the
time of subscription and is contingent upon the availability of Units. If a
Limited Partner elects to reinvest and no Units are available as of a
distribution date, the Limited Partner's SB account will be credited with the
amount of the distribution.
(c) Results of Operations.
For the year ended December 31, 1997, the Net Asset Value per
Unit increased 18.5% from $11.41 to $13.52. For the year ended December
31, 1996, the Net Asset Value per Unit increased 22.7% from $9.30 to $11.41.
For the year ended December 31, 1995, the Net Asset Value per Unit decreased
5.0% from $9.79 to $9.30.
12
<PAGE>
The Partnership experienced net trading gains of $827,799 before
commissions and expenses for the year ended December 31, 1997. Gains were
primarily attributable to the trading of Japanese Yen, Spanish Peseta,
Italian Lira and Malaysian Ringgit.
The Partnership experienced net trading gains of $976,146
before commissions and expenses for the year ended December 31, 1996. These
gains were primarily attributable to the trading of major currencies, in
particular, Japanese Yen, British Pound and Deutsche Mark.
The Partnership experienced net trading gains of $374,675
before commissions and expenses for the period ended December 31, 1995. Realized
trading gains of $777,627 were attributable to the trading of financial
commodity futures.
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 those price trends correctly. 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.
13
<PAGE>
Item 8. Financial Statements and Supplementary Data.
SMITH BARNEY INTERNATIONAL ADVISORS CURRENCY FUND L.P.
INDEX TO FINANCIAL STATEMENTS
Page
Number
Report of Independent Accountants. F-2
Financial Statements:
Statement of Financial Condition at
December 31, 1997 and 1996. F-3
Statement of Income and Expenses for
the years ended December 31, 1997, 1996
and 1995. F-4
Statement of Partners' Capital for the
years ended December 31, 1997, 1996, and
1995. F-5
Notes to Financial Statements. F-6 - F-11
F-1
Continued
<PAGE>
Report of Independent Accountants
To the Partners of
Smith Barney International Advisors
Currency Fund L.P.:
We have audited the accompanying statement of financial condition of SMITH
BARNEY INTERNATIONAL ADVISORS CURRENCY FUND L.P. (a New York Limited
Partnership) as of December 31, 1997 and 1996, and the related statements of
income and expenses and of partners' capital for the years ended December 31,
1997, 1996 and 1995. These financial statements are the responsibility of the
management of the General Partner. 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 audit 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 the
management of the General Partner, 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 Smith Barney International
Advisors Currency Fund L.P. as of December 31, 1997 and 1996, and the results of
its operations for the years ended December 31, 1997, 1996 and 1995, in
conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
New York, New York
March 6, 1998
F-2
<PAGE>
Smith Barney
International Advisors Currency Fund L.P.
Statement of Financial Condition
December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Assets:
Equity in commodity futures
trading account:
Cash and cash equivalents
(Note 3c) $ 3,143,740 $ 3,525,670
Net unrealized appreciation
(depreciation) on open 462,188 (33,306)
futures contracts
----------- ----------
3,605,928 3,492,364
Interest receivable 11,501 12,361
----------- -----------
$ 3,617,429 $ 3,504,725
---------- -----------
Liabilities and Partners'
Capital:
Liabilities:
Accrued expenses:
Commissions $ 21,027 $ 20,444
Incentive fees 54,882 42,819
Other 27,954 33,891
Redemptions payable (Note 5) 19,439 48,595
Commodity options written at
market value (premiums
received $16,800
in 1997) 12,775 --
---------- -----------
136,077 145,749
Partners' Capital (Notes 1, 5
and 8):
General Partner, 8,000.2096
Unit
equivalents outstanding 108,162 91,282
in 1997 and 1996
Limited Partners,
249,401.2878 and
286,344.8991 Units of
Limited 3,373,190 3,267,694
----------- -----------
Partnership Interest
outstanding
in 1997 and 1996,
respectively 3,481,352 3,358,976
----------- ----------
$ 3,617,429 $ 3,504,725
----------- ----------
</TABLE>
See notes to financial statements.
F-3
<PAGE>
Smith Barney
International Advisors Currency Fund L.P.
Statement of Income and Expenses
for the years ended
December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Income:
Net gains on trading of commodity interests:
Realized gains on
closed
positions $ 328,280 $ 986,462 $ 777,627
Change in unrealized
gains/ losses on open
positions 499,519 (10,316) (402,952)
-------- -------- ---------
827,799 976,146 374,675
Less, brokerage
commissions
and clearing fees
($26, $934, and $9,754,
respectively)(Note 3c) (237,265) (263,649) (694,687)
--------- --------- ---------
Net realized and
unrealized
gains (losses) 590,534 712,497 (320,012)
Interest income (Note 3c) 141,341 150,381 459,661
--------- --------- ---------
731,875 862,878 139,649
--------- --------- ---------
Expenses:
Incentive fees (Note 3b) 143,122 83,905 130,186
Other 31,983 43,628 155,983
--------- --------- ---------
175,105 147,486 504,059
--------- --------- ---------
Net income (loss) $ 556,770 $ 715,392 $(364,410)
--------- --------- ---------
Net income (loss) per
Unit of Limited
Partnership Interest
and General Partner Unit
equivalent (Notes 1 and 8) $ 2.11 $ 2.11 $ (0.49)
--------- --------- ---------
</TABLE>
See notes to financial statements.
F-4
<PAGE>
Smith Barney
International Advisors Currency Fund L.P.
Statement of Partners' Capital for the
years ended December 31, 1997, 1996 and 1995
Limited General
Partners Partner Total
Partners' capital at
December 31, 1994 $11,633,968 $227,901 $11,861,869
Net loss (353,212) (11,198) (364,410)
Sale of 2,533.6091
Units of 24,500 -- 24,500
Limited Partnership
Interest
Redemption of 736,317.9343
Units of Limited
Partnership
Interest and General
Partner
redemption
representing
15,278.8416 Unit
equivalents (7,081,267) (142,301) (7,223,568)
--------- --------- ----------
Partners' capital at
December 31, 1995 4,223,989 74,402 4,298,391
Net income 698,512 16,880 715,392
Redemption of 167,750.4101
Units of Limited
Partnership
Interest (1,654,807) -- (1,654,807)
----------- -------- ----------
Partners' capital at
December 31, 1996 3,267,694 91,282 3,358,976
Net income 539,890 16,880 556,770
Redemption of
36,943.6113 Units
of Limited
Partnership Interest (434,394) -- (434,394)
----------- ----------- -----------
Partners' capital at
December 31, 1997 $3,373,190 $108,162 $3,481,352
---------- ----------- -----------
See notes to financial statements.
F-5
<PAGE>
Smith Barney International Advisors
Currency Fund L.P.
Notes to Financial Statements
1. Partnership Organization:
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 a diversified portfolio of commodity interests including futures
contracts, options and forward contracts. The commodity interests that are
traded by the Partnership are volatile and involve a high degree of market
risk. The Partnership was authorized to sell 10,000,000 Units of Limited
Partnership Interest ("Units").
Smith Barney Futures Management Inc. acts as the general partner (the
"General Partner") of the Partnership and is a wholly owned subsidiary of
Smith Barney Inc. ("SB"). SB acts as commodity broker for the Partnership
(see Note 3c). On November 28, 1997, Smith Barney Holdings Inc. was merged
with Salomon Inc to form Salomon Smith Barney Holdings Inc. ("SSBH"), a
wholly owned subsidiary of Travelers Group Inc. SB is a wholly owned
subsidiary of SSBH.
The General Partner and each limited partner share in the profits and losses
of the Partnership in proportion to the amount of Partnership interest owned
by each, except that no limited partner shall be liable for obligations of
the Partnership in excess of his initial capital contribution and profits,
if any, net of distributions.
The Partnership will be liquidated on December 31, 2011; if the Net Asset
Value per unit falls below $4 as of the end of a trading day; or under
certain other circumstances set forth in the Limited Partnership Agreement.
2. Accounting Policies:
a. All commodity interests (including derivative financial instruments and
derivative commodity instruments) are used for trading purposes. The
commodity interests are recorded on trade date and open contracts are
recorded in the statement of financial condition at market value for
those commodity interests for which market quotations are readily
available or at fair value on the last business day of the year.
Investments in commodity interests denominated in foreign currency are
translated into U.S. dollars at the exchange rates prevailing on the last
business day of the year. Realized gain (loss) and changes in unrealized
values on commodity interests are recognized in the period in which the
contract is closed or the changes occur and are included in net gains
(losses) on trading of commodity interests.
F-6
<PAGE>
b. Income taxes have not been provided as each partner is individually
liable for the taxes, if any, on his share of the Partnership's income
and expenses.
c. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from these estimates.
3. Agreements:
a. Limited Partnership Agreement:
The Limited Partnership Agreement provides that the General Partner shall
manage the business of the Partnership and may make all trading decisions
for the Partnership.
b. Management Agreements:
The General Partner has entered into Management Agreements with Friedberg
Commodity Management Inc., and Trendview Capital Management
(collectively, the "Advisors"), registered commodity trading advisors.
The Advisors are not affiliated with one another, and none are affiliated
with the General Partner or SB and are not responsible for the
organization or operation of the Partnership. As compensation for their
services, the Partnership is obligated to pay each Advisor 20% of the New
Trading Profits of the Partnership earned by each Advisor.
c. Customer Agreement:
The Partnership has entered into a Customer Agreement which was assigned
to SB which provides that the Partnership will pay SB a monthly brokerage
fee equal to 7/12 of 1% of month-end Net Assets (7% per year) in lieu of
brokerage commissions on a per trade basis. From its brokerage fee SB
will pay each Advisor a monthly management fee equal to 1/6 of 1% (2% per
year) of Net Assets allocated to the Advisor as of the end of the month.
The Partnership will pay for National Futures Association ("NFA") fees,
exchange and clearing fees, user, give-up and floor brokerage fees. SB
will pay a portion of its brokerage fees to the financial consultants who
have sold Units. Brokerage fees will be paid for the life of the
Partnership, although the rate at which such fees are paid may be
changed. All the Partnership's assets are deposited in the Partnership's
account at SB. The Partnership's cash is deposited by SB in segregated
bank accounts as required by the Commodity Futures Trading Commission
regulations. At December 31, 1997 and 1996, the amount of cash held for
margin requirements was $501,989 and $95,916, respectively. SB has agreed
to pay the Partnership interest on 85% of the average daily equit
F-7
<PAGE>
maintained in cash in its account during each month at the rate of the
average noncompetitive yield of 13-week U.S. Treasury Bills as determined
at the weekly auctions thereof during the month. The Customer Agreement
between the Partnership and SB gives the Partnership the legal right to
net unrealized gains and losses. The Customer Agreement may be terminated
upon notice by either party.
4. 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 statement of income and expenses.
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 December 31,1997 and 1996 was $449,413 and $(33,306),
respectively, and the average fair value during the years then ended, based
on monthly calculation, was $93,357 and $168,437, respectively.
5. Distributions and Redemptions:
Distributions of profits, if any, will be made at the sole discretion of the
General Partner. A limited partner may redeem all or part of his Units at
their Net Asset Value by written or oral request to the General Partner at
least 15 days prior to the redemption date. No redemption may result in the
limited partner holding fewer than 300 Units after such redemption is
effected.
6. Reinvestment:
A limited partner may elect automatically to reinvest the amount of his
annual distribution, if any, in additional Units and fractional Units at
their Net Asset Value as of the day on which the distribution is declared.
This election may be made at the time of subscription and is contingent upon
the availability of Units during the Continuous Offering. If a limited
partner elects to reinvest and no Units are available as of a distribution
date, the limited partner's SB account will be credited with the amount of
the distribution.
F-8
<PAGE>
7. Organization and Offering Costs:
Offering expenses relating to the Continuous Offering of Partnership Units
were $330,064. The Partnership has reimbursed SB such costs in twenty-four
monthly installments (together with interest at the prime rate quoted by the
Chase Manhattan Bank) as of January, 1996. In addition, interest expense on
the reimbursement of these costs in the amounts of $101 and $8,319 for the
years ended 1996 and 1995, respectively, has been included in organization
expense.
8. Net Asset Value Per Unit:
Changes in the net asset value per Unit of Partnership interest for the
years ended December 31,1997, 1996 and 1995 were as follows:
1997 1996 1995
Net realized and
unrealized gains $ 2.24 $ 2.10 $(0.44)
(losses)
Interest income 0.49 0.42 0.46
Expenses (0.62) (0.41) (0.51)
------ ------ ------
Increase (decrease)
for year 2.11 2.11 (0.49)
Net asset value per
Unit, beginning
of year 11.41 9.30 9.79
------ ------ ------
Net asset value per
Unit, end of year $13.52 $11.41 $9.30
------ ------ ------
9. 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.
F-9
<PAGE>
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 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.
F-10
<PAGE>
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 December 31, 1997, the notional or contractual amounts of
the Partnership's commitment to purchase and sell these instruments was
$8,492,956 and $16,663,901, respectively. All of these instruments mature within
one year of December 31, 1997. However, due to the nature of the Partnership's
business, these instruments may not be held to maturity. At December 31, 1997,
the fair value of the Partnership's derivatives, including options thereon, was
$449,413, as detailed below.
December 31, 1997
Notional or Contractual
Amount of Commitments
To Purchase To Sell Fair Value
---------- ----------- ---------
Currencies
-Exchange
Trade -- $ 16,800 $ (12,775)
-OTC Contracts $8,492,956 16,647,101 462,188
---------- ----------- ---------
Totals $8,492,956 $16,663,901 $ 449,413
---------- ----------- ---------
At December 31, 1996, the notional or contractual amounts of the Partnership's
commitment to purchase and sell these instruments was $34,179,252 and
$35,471,114, respectively, and the fair value of the Partnership's derivatives,
including options thereon, was $(33,306) as detailed below.
December 31, 1996
Notional or Contractual
Amount of Commitmen
To Purchase To Sell Fair Value
----------- ---------- ----------
Currencies
-OTC Contracts $34,179,252 $35,471,114 $(33,306)
---------- ----------- ---------
Totals $34,179,252 $35,471,114 $(33,306)
----------- ----------- --------
F-11
<PAGE>
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
During the last two fiscal years and any subsequent interim
period, no independent accountant who was engaged as the principal accountant
to audit the Partnership's financial statements has resigned or was dismissed.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The Partnership has no officers or directors and its affairs
are managed by its General Partner, Smith Barney Futures Management Inc.
Investment decisions are made by the Advisors.
Item 11. Executive Compensation.
The Partnership has no directors or officers. Its affairs are
managed by Smith Barney Futures Management Inc., its General Partner, which
receives compensation for its services, as set forth under "Item 1. Business."
SB, an affiliate of the General Partner, is the commodity broker for the
Partnership and receives brokerage commissions for such services, as described
under "Item 1. Business." During the year ended December 31, 1997, SB earned
$237,265 in brokerage commissions and clearing fees. The Advisors earned
$143,122 in incentive fees during 1997.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
(a). Security ownership of certain beneficial owners. As
of March 1, 1998, one beneficial owner who is neither a director nor executive
officer of the General Partner beneficially owns more than five percent (5%) of
14
<PAGE>
the outstanding Units issued by the Registrant as follows:
Title Name and Address of Amount and Nature of Percent of
of Class Beneficial Owner Beneficial Ownership Class
Units of Evelyn A. Freed 45,083.6120 Units 17.5%
Limited 1511 Clearview Lane
Partnership Santa Ana, CA 92705-1501
(b). Security ownership of management. Under the terms of the
Limited Partnership Agreement, the Partnership's affairs are managed by the
General Partner. The General Partner owns Units of general partnership interest
equivalent to 8,000.2096 Units (3.1%) of Limited Partnership Interest as of
December 31, 1997.
(c). Changes in control. None.
Item 13. Certain Relationships and Related Transactions.
Smith Barney Inc. and Smith Barney Futures Management Inc.
would be considered promoters for purposes of item 404(d) of Regulation S-K. The
nature and the amounts of compensation each promoter will receive from the
Partnership are set forth under "Item 1. Business." and "Item 11. Executive
Compensation."
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a) (1) Financial Statements:
Statement of Financial Condition at December 31, 1997, and 1996.
Statement of Income and Expenses for the years end December 31,
1997, 1996 and 1995.
15
<PAGE>
Statement of Partners' Capital for the years ended
December 31, 1997, 1996 and 1995.
(2) Financial Statement Schedules: Financial Data Schedule for the
year ended December 31, 1997.
(3) Exhibits:
3.1 - Limited Partnership Agreement (filed as
Exhibit 3.1 to the Registration Statement on
Form S-1 (File No.33-41438) and incorporated
herein by reference).
3.2 - Certificate of Limited Partnership of the
Partnership as filed in the office of the
Secretary of State of New York on May 29, 1991
(filed as Exhibit 3.2 to the Registration
Statement on Form S-1 (File No. 33-41438) and
incorporated herein by reference).
10.1 - Customer Agreement between the Partnership
and Lehman Brothers Capital Management Corp.
(filed as Exhibit 10.1 to the Registration
Statement on Form S-1 (File No. 33-41438)
and incorporated herein by reference).
10.3 - Escrow Instructions relating to escrow of
subscription funds (filed as Exhibit 10.3 to
the Registration Statement on Form S-1 (File
No. 33-41438) and incorporated herein by
reference).
16
<PAGE>
10.5 - Management Agreement among the Partnership,
the General Partner and Friedberg Commodity
Management Inc. (filed as Exhibit 10.5 to
the Registration Statement on Form S-1 (File
No. 33-41438) and incorporated herein by
reference).
10.6 - Management Agreement among the Partnership,
the General Partner and FX Concepts, Inc.
(filed as Exhibit 10.6 to the Registration
Statement on Form S-1 (File No. 33-41438)
and incorporated herein by reference).
10.7- Management Agreement among the
Partnership, the General Partner and the
team of Edwin Gill and David Hunter (filed
as Exhibit 10.7 to the Registration
Statement on Form S-1 (File No. 33-41438)
and incorporated herein by reference).
10.8- Management Agreement among the
Partnership, the General Partner and
Steiner & Cie (filed as Exhibit 10.8 to
the Registration Statement on Form S-1
(File No.33-41438) and incorporated herein
by reference).
10.9- Management Agreement among the Partnership,
the General Partner and Sunrise Commodities
Incorporated (filed as Exhibit 10.9 to the
Registration Statement on Form S-1 (File No.
33-41438) and incorporated herein by
reference).
17
<PAGE>
10.10- Letter dated September 22, 1992 from
General Partner to Steiner & Cie
terminating the Management Agreement
effective September 23, 1992 (filed as
Exhibit 10.10 to Form 10-K for the fiscal
year ended December 31, 1992. and
incorporated herein by reference).
10.11- Letter dated March 18, 1993 from General
Partner to Friedberg Commodity Management
Inc. extending Management Agreement (filed
as Exhibit 10.11 to Form 10-K for the
fiscal year ended December 31, 1993 and
incorporated herein by reference).
10.12- Letter dated March 18, 1993 from General
Partner to FX Concepts, Inc. extending
Management Agreement (filed as Exhibit
10.12 to Form 10-K for the fiscal year
ended December 31, 1993 and incorporated
herein by reference).
10.13- Letter dated March 18, 1993 from General
Partner to Gill Capital Management Ltd.
extending Management Agreement (filed as
Exhibit 10.13 to Form 10-K for the fiscal
year ended December 31, 1993 and
incorporated herein by reference).
10.14- Letter dated March 18, 1993 from General
Partner to Sunrise Commodities Incorporated
18
<PAGE>
extending Management Agreement (filed as
Exhibit 10.14 to Form 10-K for the fiscal
year ended December 31, 1993 and
incorporated herein by reference).
10.15 Management Agreement among the
Partnership, General Partner and Gandon
Fund Management Limited dated December 31,
1993 (filed as Exhibit 10.15 to Form 10-K
for the fiscal year ended December 31,
1993 and incorporated herein by
reference).
10.16- Letter dated March 22, 1994 from General
Partner to Gandon Securities Limited
terminating Management Agreement effective
March 31, 1994 (filed as Exhibit 10.16 to
Form 10-K for the fiscal year ended
December
31, 1994).
10.17- Letters dated February 16, 1995 from
General Partner to Friedberg Commodity
Management Inc. and Gill Asset Management
extending Management Agreements (filed as
Exhibit 10.17 to Form 10-K for the fiscal
year ended December 31, 1994).
10.18- Letter dated January 31, 1995 from General
Partner to Sunrise Commodity Incorporated
terminating Management Agreement (previously
filed).
10.19- Management Agreement among the Partnership,
General Partner and Commodity Monitors Inc.
dated April 20, 1995 (previously filed).
19
<PAGE>
10.20- Letter dated December 31, 1996 from General
Partner to Commodity Monitors Inc,
terminating Management Agreement (previously
filed).
10.21- Letter dated December 27, 1995 from General
Partner to Gill Capital Management Inc.
terminating Management Agreement (previously
filed).
10.22- Management Agreement among the Partnership,
General Partner and Trendview Management Inc.
dated January 2, 1996 (previously filed).
10.23- Letters extending Management Agreements
from the General Partner to Trendview
Management Inc. and Friedberg Commodity
Management Inc. for 1996 and 1997.
(filed herein)
(b) Report on Form 8-K: None Filed
20
<PAGE>
Supplemental Information To Be Furnished With Reports Filed Pursuant To
Section 15(d) Of The Act by Registrants Which Have Not Registered Securities
Pursuant To Section 12 Of the Act.
Annual Report to Limited Partners
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York
and State of New York on the 24th day of March 1998.
SMITH BARNEY INTERNATIONAL ADVISORS CURRENCY FUND L.P.
By: Smith Barney Futures Management Inc.
(General Partner)
By /s/ David J. Vogel
David J. Vogel, President & Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
/s/ David J. Vogel /s/ Jack H. Lehman III
David J. Vogel, Jack H. Lehman III
Director, Principal Executive Chairman and Director
Officer and President
/s/ Michael Schaefer /s/ Daniel A. Dantuono
Michael Schaefer Daniel A. Dantuono
Director Treasurer, Chief Financial
Officer and Director
/s/ Daniel R. McAuliffe, Jr. /s/ Steve J. Keltz
Daniel R. McAuliffe, Jr. Steve J. Keltz
Director Secretary and Director
/s/ Shelley Ullman
Shelley Ullman
Director
22
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000876716
<NAME> SMITH BARNEY INTERNATIONAL ADVISORS CURRENCY FUND L.P.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 3,143,740
<SECURITIES> 462,188
<RECEIVABLES> 11,501
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,617,429
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,617,429
<CURRENT-LIABILITIES> 136,077
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,481,352
<TOTAL-LIABILITY-AND-EQUITY> 3,617,429
<SALES> 0
<TOTAL-REVENUES> 731,875
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 175,105
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 556,770
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 556,770
<EPS-PRIMARY> 2.11
<EPS-DILUTED> 0
</TABLE>
May 31, 1996
Friedberg Commodity Mgt. Inc.
BCE Place, Suite 250
P.O. Box 866
Toronto, Ontario M5J2T3
Attention: Mr. Daniel Gordon
Re: Management Agreement Renewal
Smith Barney International Advisors Currency Fund L.P.
Dear Mr. Gordon:
We are writing with respect to your management agreement
concerning the commodity pool to which reference is made above
(the "Management Agreement"). We would like to extend the term
of the Management Agreement through June 30, 1997. All other
provisions of the Management Agreement will remain unchanged.
Please indicate your agreement to and acceptance of this
modification by signing one copy of this letter and returning it
to the attention of Mr. Daniel Dantuono at the address above.
Very truly yours,
SMITH BARNEY FUTURES MANAGEMENT INC.
By:
Chief Financial Officer,
Director & Treasurer
AGREED AND ACCEPTED
FRIEDBERG COMMODITY MGT. INC.
By:
Print Name:
DAD/sr
<PAGE>
May 31, 1996
Trendview Management Inc.
591 Camino de la Reina
Suite 316
San Deigo, California 93208-3105
Attention: Mr. Clark Smith
Re: Management Agreement Renewal
Smith Barney International Advisors Currency Fund L.P.
Dear Mr. Smith:
We are writing with respect to your management agreement concerning
the commodity pool to which reference is made above (the
"Management Agreement"). We would like to extend the term of the
Management Agreement through June 30, 1997. All other provisions
of the Management Agreement will remain unchanged.
Please indicate your agreement to and acceptance of this
modification by signing one copy of this letter and returning it to
the attention of Mr. Daniel Dantuono at the address above.
Very truly yours,
SMITH BARNEY FUTURES MANAGEMENT INC.
By:
Chief Financial Officer,
Director & Treasurer
AGREED AND ACCEPTED
TRENDVIEW MANAGEMENT INC.
By:
Print Name:
DAD/sr
rw/1
<PAGE>
June 24, 1997
Friedberg Commodity Mgt. Inc.
BCE Place, Suite 250
P.O. Box 866
Toronto, Ontario M5J2T3
Attention: Mr. Daniel Gordon
Re: Management Agreement Renewal
Smith Barney International Advisors Currency Fund L.P.
Dear Mr. Gordon:
We are writing with respect to your management agreement
concerning the commodity pool to which reference is made above
(the "Management Agreement"). We would like to extend the term
of the Management Agreement through June 30, 1998. All other
provisions of the Management Agreement will remain unchanged.
Please indicate your agreement to and acceptance of this
modification by signing one copy of this letter and returning it
to the attention of Mr. Daniel Dantuono at the address above.
Very truly yours,
SMITH BARNEY FUTURES MANAGEMENT INC.
By:
Chief Financial Officer,
Director & Treasurer
AGREED AND ACCEPTED
FRIEDBERG COMMODITY MGT. INC.
By:
Print Name:
DAD/sr
<PAGE>
June 24, 1997
Trendview Management Inc.
591 Camino de la Reina
Suite 316
San Deigo, California 93208-3105
Attention: Mr. Clark Smith
Re: Management Agreement Renewal
Smith Barney International Advisors Currency Fund L.P.
Dear Mr. Smith:
We are writing with respect to your management agreement concerning
the commodity pool to which reference is made above (the
"Management Agreement"). We would like to extend the term of the
Management Agreement through June 30, 1998. All other provisions
of the Management Agreement will remain unchanged.
Please indicate your agreement to and acceptance of this
modification by signing one copy of this letter and returning it to
the attention of Mr. Daniel Dantuono at the address above.
Very truly yours,
SMITH BARNEY FUTURES MANAGEMENT INC.
By:
Chief Financial Officer,
Director & Treasurer
AGREED AND ACCEPTED
TRENDVIEW MANAGEMENT INC.
By:
Print Name:
DAD/sr
rw/1
