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, 1999
Commission File Number 0-21588
SMITH BARNEY INTERNATIONAL ADVISORS CURRENCY FUND L.P.
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(Exact name of registrant as specified in its charter)
New York 13-3616914
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Smith Barney Futures Management LLC
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
(Registrant's telephonenumber, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: 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 [X]
As of February 29, 2000 Limited Partnership Units with an aggregate value of
$2,297,326 outstanding and held by non-affiliates.
DOCUMENTS INCORPORATED BY REFERENCE
None
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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, 1999, 1998 and 1997 are reported in the Statement of Partners'
Capital on page F-6 under "Item 8. Financial Statements and Supplementary Data.@
The general partner has agreed to make additional capital 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
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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 LLC acts as the general partner (the
"General Partner") of the Partnership. The General Partner changed its form of
organization from a corporation to a limited liability company on October 1,
1999. The Partnership's commodity broker is Salomon Smith Barney Inc. ("SSB").
SSB is an affiliate of the General Partner. The General Partner is wholly owned
by Salomon Smith Barney Holdings Inc. ("SSBHI"), which is the sole owner of SSB.
SSBHI is a wholly owned subsidiary of Citigroup Inc.
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 SSB. As of December 31,
1999, 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 SSB. The Advisors are not
responsible for the organization or operation of the Partnership. Pursuant to
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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 SSB 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, SSB 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. SSB 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 SSB 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, SSB 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.
(b) Financial information about industry segments. The Partnership's
business consists of only one segment, speculative trading of commodity
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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,
1999, 1998, 1997, 1996 and 1995 are set forth under "Item 6. Selected Financial
Data." The Partnership capital as of December 31, 1999 was $2,632,841.
(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) Financial Information About Geographic Areas. The Partnership does
not engage in sales of goods or services or own any long lived assets 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, SSB.
Item 3. Legal Proceedings.
There have been no material administrative, civil or criminal actions
within the past five years against SSB or any of its individual principals and
no such actions are currently pending, except as follows.
In September 1992, Harris Trust and Savings Bank (as trustee for
Ameritech Pension Trust), Ameritech Corporation, and an officer of Ameritech
sued Salomon Brothers Inc ("SBI") and Salomon Brothers Realty Corporation
("SBRC") in the U.S. District Court for the Northern District of Illinois
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(Harris Trust Savings Bank, not individually but solely as trustee for the
Ameritech Pension Trust, Ameritech Corporation and John A. Edwardson v. Salomon
Brothers Inc and Salomon Brothers Realty Corp.). The complaint alleged that
purchases by Ameritech Pension Trust from the Salomon entities of approximately
$20.9 million in participations in a portfolio of motels owned by Motels of
America, Inc. and Best Inns, Inc. violated the Employee Retirement Income
Security Act ("ERISA"), the Racketeer Influenced and Corrupt Organization Act
("RICO") and state law. SBI had acquired the participations issued by Motels of
America and Best Inns to finance purchases of motel portfolios and sold 95% of
three such issues and 100% of one such issue to Ameritech Pension Trust.
Ameritech Pension Trust's complaint sought (1) approximately $20.9 million on
the ERISA claim, and (2) in excess of $70 million on the RICO and state law
claims as well as other relief. In various decisions between August 1993 and
July 1999, the courts hearing the case have dismissed all of the allegations in
the complaint against the Salomon entities. In October 1999, Ameritech appealed
to the U.S. Supreme Court and in January 2000, the Supreme Court agreed to hear
the case and oral argument will be heard April 17, 2000. The appeal seeks review
of the decision of the U.S. Court of Appeals for the Seventh Circuit that
dismissed the sole remaining ERISA claim against the Salomon entities.
Both the Department of Labor and the Internal Revenue Service ("IRS")
have advised SBI that they were or are reviewing the transactions in which
Ameritech Pension Trust acquired such participations. With respect to the IRS
review, SSBHI, SBI and SBRC have consented to extensions of time for the
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assessment of excise taxes that may be claimed to be due with respect to the
transactions for the years 1987, 1988 and 1989. As of the date of this report,
the IRS has not issued such 30-day letters to SSBHI, SBI or SBRC.
In December 1996, a complaint seeking unspecified monetary damages was
filed by Orange County, California against numerous brokerage firms, including
SSB, in the U.S. Bankruptcy Court for the Central District of California.
(County of Orange et al. v. Bear Stearns & Co. Inc. et al.) The complaint
alleged, among other things, that the brokerage firms recommended and sold
unsuitable securities to Orange County. SSB and the remaining brokerage firms
settled with Orange County in mid 1999.
In June 1998, complaints were filed in the U.S. District Court for the
Eastern District of Louisiana in two actions (Board of Liquidations, City Debt
of the City of New Orleans v. Smith Barney Inc. et ano. and The City of New
Orleans v. Smith Barney Inc. et ano.), in which the City of New Orleans seeks a
determination that Smith Barney Inc. and another underwriter will be responsible
for any damages that the City may incur in the event the IRS denies tax exempt
status to the City's General Obligation Refunding Bonds Series 1991. The
complaints were subsequently amended. SSB has asked the court to dismiss the
amended complaints. In May 1999, the Court denied SSB's motion to dismiss, but
stayed the litigation because the matter was not ripe. In March 2000, the city
filed a notice of discontinuance dismissing the conplaint.
In November 1998, a class action complaint was filed in the United States
District Court for the Middle District of Florida (Dwight Brock as Clerk for
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Collier County v. Merrill Lynch, et al.). The complaint alleged that, pursuant
to a nationwide conspiracy, 17 broker-dealer defendants, including SSB, charged
excessive mark-ups in connection with advanced refunding transactions. Among
other relief, plaintiffs sought compensatory and punitive damages, restitution
and/or rescission of the transactions and disgorgement of alleged excessive
profits. In October 1999, the plaintiff filed a second amended complaint. SSB
has asked the court to dismiss the amended complaint.
In connection with the Louisiana and Florida matters, the IRS and SEC
have been conducting an industry-wide investigation into the pricing of Treasury
securities in advanced refunding transactions.
In December 1998, SSB was one of twenty-eight market making firms that
reached a settlement with the SEC in the matter titled In the Matter of Certain
Market Making Activities on NASDAQ. As part of the settlement of that matter,
SSB, without admitting or denying the factual allegations, agreed to an order
that required that it: (i) cease and desist from committing or causing any
violations of Sections 15(c)(1) and (2) of the Securities Exchange Act of 1934
and Rules 15c1-2, 15c2-7 and 17a-3 thereunder, (ii) pay penalties totaling
approximately $760,000, and (iii) submit certain policies and procedures to an
independent consultant for review.
In March 1999, a complaint seeking in excess of $250 million was filed
by a hedge fund and its investment advisor against SSB in the Supreme Court of
the State of New York, County of New York (MKP Master Fund, LDC et al. v.
Salomon Smith Barney Inc.). The complaint included allegations that, while
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acting as prime broker for the hedge fund, SSB breached its contracts with
plaintiffs, misused their monies, and engaged in tortious (wrongful) conduct,
including breaching its fiduciary duties. SSB asked the court to dismiss the
complaint in full. In October 1999, the court dismissed the tort claims,
including the breach of fiduciary duty claims. The court allowed the breach of
contract and misuse of money claims to stand. In December 1999, SSB filed an
answer and asserted counterclaims against the investment advisor. In response to
plaintiff's motion to strike the counterclaims, in January 2000, SSB amended its
counterclaims against the investment advisor to seek indemnification and
contribution. Plaintiffs moved to strike SSB's amended counterclaims in February
2000. SSB will continue to contest this lawsuit vigorously.
In the course of its business, SSB, as a major futures commission
merchant and broker-dealer is a party to various claims and routine regulatory
investigations and proceedings that the general partner believes do not have a
material effect on the business of SSB.
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.
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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, 1999 was 115.
(c) Distribution. The Partnership did not declare a distribution in
1999 or 1998.
(d) Use of Proceeds. There were no additional sales in the years
ended December 31, 1999, 1998 and 1997.
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Item 6. Selected Financial Data. Realized and unrealized trading gains (losses),
interest income, net income (loss) and increase (decrease) in net asset value
per Unit for the years ended December 31, 1999, 1998, 1997, 1996 and 1995 and
total assets at December 31, 1999, 1998, 1997, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1999 1998 1997 1996 1995
----------- ----------- ---------- ----------- ------------
Realized and unrealized trading gains
(losses) net of brokerage commissions
and clearing fees of $220,519, $243,077,
$237,265, $263,649 and $694,687,
respectively $ (367,668) $ (35,118) $ 590,534 $ 712,497 $ (320,012)
Interest income 128,795 134,578 141,341 150,381 459,661
----------- ----------- ----------- ----------- -----------
$ (238,873) $ 99,460 $ 731,875 $ 862,878
=========== =========== =========== ===========
$ 139,649
Net income (loss) $ (322,133) $ 23,296 $ 556,770 $ 715,392 $ (364,410)
=========== =========== =========== =========== ===========
Increase (decrease)
in net asset value
per Unit $ (1.45) $ 0.04 $ 2.11 $ 2.11 $ (0.49)
=========== =========== =========== =========== ===========
Total assets $ 2,698,678 $ 3,211,970 $ 3,617,429 $ 3,504,725 $ 6,935,713
=========== =========== =========== =========== ===========
</TABLE>
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Item 7. Management's Discussion and Analysis of Financial 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, net unrealized appreciation (depreciation) on open commodity contracts,
commodity options, if applicable, 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.
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(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 SSB 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 over the counter forward currency
contracts at December 31, 1999 and 1998 was $(854) and $59,967, respectively.
The Partnership is party to financial instruments with
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off-balance sheet risk, including derivative financial instruments and
derivative commodity instruments, in the normal course of its business. These
financial instruments may 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 AItem 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 Partnership will cease trading
operations and liquidate all open positions upon the first to occur of the
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
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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,
management fees and incentive fees. The level of these expenses is dependent
upon the level of trading gains or losses 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 SSB is dependent upon interest rates over which the
Partnership has no control.
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No forecast can be made as to the level of redemptions in any
given period. For the year ended December 31, 1999, 16,039.8885 Units were
redeemed totaling $211,018. For the year ended December 31, 1998, 23,888.7779
Units were redeemed totaling $338,656. For the year ended December 31, 1997,
36,943.6113 Units were redeemed totaling $434,394.
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 SSB account will be credited with the
amount of the distribution.
(c) Results of Operations.
For the year ended December 31, 1999, the Net Asset Value per
Unit decreased 10.7% from $13.56 to $12.11. For the year ended December 31,
1998, the Net Asset Value per Unit increased 0.3% from $13.52 to $13.56. For the
year ended December 31, 1997, the Net Asset Value per Unit increased 18.5% from
$11.41 to $13.52.
The Partnership experienced net trading losses of $147,149
before commissions and expenses for the year ended December 31, 1999. Losses
were primarily attributable to the trading of British Pounds, Japanese Yen,
Australian Dollar, New Zealand Dollar, Danish Krone, Swedish Krona, Mexican
Peso, Saudi Riyal and Hong Kond Dollar and partially offset by gains in
Brazilian Real, Czech Koruna and Swiss Francs.
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The Partnership experienced net trading gains of $207,959
before commissions and expenses for the year ended December 31, 1998. Gains were
attributable to the trading of Canadian Dollar, Mexican Peso, Thai Baht,
Indonesian Rupia and Malaysian Ringgit and partially offset by losses in British
Pounds, Brazilian Real and Russian Ruble.
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.
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,
governmental, 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.
(d) Operational Risk
The Partnership is directly exposed to market risk and credit
risk, which arise in the normal course of its business activities. Slightly less
direct, but of critical importance, are risks pertaining to operational and back
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office support. This is particularly the case in a rapidly changing and
increasingly global environment with increasing transaction volumes and an
expansion in the number and complexity of products in the marketplace. Such
risks include:
Operational/Settlement Risk - the risk of financial and
opportunity loss and legal liability attributable to operational problems, such
as inaccurate pricing of transactions, untimely trade execution, clearance
and/or settlement, or the inability to process large volumes of transactions.
The Partnership is subject to increased risks with respect to its trading
activities in emerging market securities, where clearance, settlement, and
custodial risks are often greater than in more established markets.
Technological Risk - the risk of loss attributable to technological limitations
or hardware failure that constrain the Partnership's ability to gather, process,
and communicate information efficiently and securely, without interruption, to
customers, among units within the Partnership, and in the markets where the
Partnership participates.
Legal/Documentation Risk - the risk of loss attributable to deficiencies in the
documentation of transactions (such as trade confirmations) and customer
relationships (such as master netting agreements) or errors that result in
noncompliance with applicable legal and regulatory requirements.
Financial Control Risk - the risk of loss attributable to limitations in
financial systems and controls. Strong financial systems and controls ensure
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that assets are safeguarded, that transactions are executed in accordance with
management's authorization, and that financial information utilized by
management and communicated to external parties, including the Partnership's
unitholder, creditors, and regulators, is free of material errors.
Risk of Computer System Failure (Year 2000 Issue)
SSBHI's computer systems and business processes successfully handled
the date change from December 31, 1999 to January 1, 2000. SSBHI is not aware of
any significant year 2000 problems encountered internally or with the third
parties with which it interfaces, including customers and counterparties, the
global financial market infrastructure, and the utility infrastructure on which
all corporations rely.
Based on operations since January 1, 2000, SSBHI does not expect any
significant impact to its ongoing business as a result of the year 2000 issue.
However, it is possible that the full impact of year 2000 issues has not been
fully recognized and no assurances can be given that year 2000 problems will not
emerge.
The pretax costs associated with required system modifications and
conversions totaled approximately $130 million. These costs were funded through
operating cash flow and expensed in the period in which they were incurred.
The expenditures and the General Partner's resources
dedicated to the preparation for Year 2000 do not and will not have a material
impact on the operation or results of the Partnership.
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The most likely and most significant risk to the Partnership
associated with the lack of Year 2000 readiness is the failure of outside
organizations, including the commodities exchanges, clearing organizations, or
regulators with which the Partnership interacts to resolve their Year 2000
issues in a timely manner. This risk could involve the inability to determine
the value of the Partnership at some point in time and would make effecting
purchases or redemptions of Units in the Partnership infeasible until such
valuation was determinable.
(e) New Accounting Pronouncements
The Partnership adopted Statement on Financial Accounting
Standards No. 133 ("SFAS 133"), Accounting For Derivative Financial Instruments
and Hedging Activities, on January 1, 1999. SFAS 133 requires that an entity
recognize all derivative instruments in the statement of financial condition and
measure those financial instruments at fair value. SFAS 133 has no impact on
Partners' Capital and operating results as all derivative instruments are
recorded at fair value, with changes therein reported in the statement of income
and expenss.
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk
Introduction
The Partnership is a speculative commodity pool. The market sensitive
instruments held by it are acquired for speculative trading purposes, and all or
substantially all of the Partnership's assets are subject to the risk of trading
loss. Unlike an operating company, the risk of market sensitive instruments is
integral, not incidental, to the Partnership's main line of business.
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Market movements result in frequent changes in the fair market value of
the Partnership's open positions and, consequently, in its earnings and cash
flow. The Partnership's market risk is influenced by a wide variety of factors,
including the level and volatility of interest rates, exchange rates, equity
price levels, the market value of financial instruments and contracts, the
diversification results among the Partnership's open positions and the liquidity
of the markets in which it trades.
The Partnership rapidly acquires and liquidates both long and short
positions in a wide range of different markets. Consequently, it is not possible
to predict how a particular future market scenario will affect performance, and
the Partnership's past performance is not necessarily indicative of its future
results.
Value at Risk is a measure of the maximum amount which the Partnership
could reasonably be expected to lose in a given market sector. However, the
inherent uncertainty of the Partnership's speculative trading and the recurrence
in the markets traded by the Partnership of market movements far exceeding
expectations could result in actual trading or non-trading losses far beyond the
indicated Value at Risk or the Partnership's experience to date (i.e., "risk of
ruin"). In light of the foregoing as well as the risks and uncertainties
intrinsic to all future projections, the inclusion of the quantification
included in this section should not be considered to constitute any assurance or
representation that the Partnership's losses in any market sector will be
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limited to Value at Risk or by the Partnership's attempts to manage its market
risk.
Quantifying the Partnership's Trading Value at Risk
The following quantitative disclosures regarding the Partnership's
market risk exposures contain "forward-looking statements" within the meaning of
the safe harbor from civil liability provided for such statements by the Private
Securities Litigation Reform Act of 1995 (set forth in Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934).
All quantitative disclosures in this section are deemed to be forward-looking
statements for purposes of the safe harbor except for statements of historical
fact (such as the terms of particular contracts and the number of market risk
sensitive instruments held during or at the end of the reporting period).
The Partnership's risk exposure in the various market sectors traded by
the Advisors is quantified below in terms of Value at Risk. Due to the
Partnership's mark-to-market accounting, any loss in the fair value of the
Partnership's open positions is directly reflected in the Partnership's earnings
(realized or unrealized) and cash flow (at least in the case of exchange-traded
contracts in which profits and losses on open positions are settled daily
through variation margin).
Exchange maintenance margin requirements have been used by the
Partnership as the measure of its Value at Risk. Maintenance margin requirements
are set by exchanges to equal or exceed the maximum losses reasonably expected
to be incurred in the fair value of any given contract in 95%-99% of any one-day
intervals. The maintenance margin levels are established by dealers and
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exchanges using historical price studies as well as an assessment of current
market volatility (including the implied volatility of the options on a given
futures contract) and economic fundamentals to provide a probabilistic estimate
of the maximum expected near-term one-day price fluctuation. Maintenance margin
has been used rather than the more generally available initial margin, because
initial margin includes a credit risk component which is not relevant to Value
at Risk.
In the case of market sensitive instruments which are not exchange
traded (exclusively currencies in the case of the Partnership), the margin
requirements for the equivalent futures positions have been used as Value at
Risk. In those rare cases in which a futures-equivalent margin is not available,
dealers' margins have been used.
In quantifying the Partnership's Value at Risk, 100% positive
correlation in the different positions held in each market risk category has
been assumed. Consequently, the margin requirements applicable to the open
contracts have simply been added to determine each trading category's aggregate
Value at Risk. The diversification effects resulting from the fact that the
Partnership's positions are rarely, if ever, 100% positively correlated have not
been reflected.
23
<PAGE>
The Partnership's Trading Value at Risk in Different Market Sectors
The following table indicates the trading Value at Risk associated with
the Partnership's open positions by market category as of December 31, 1999. All
open position trading risk exposures of the Partnership have been included in
calculating the figures set forth below. As of December 31, 1999, the
Partnership's total capitalization was $2,632,841.
December 31, 1999
Year to Date
% of Total High Low
Market Sector Value at Risk Capitalization Value at Risk Value at Risk
- --------------------------------------------------------------------------------
Currencies
- OTC Contracts $ 240,618 9.1% $1,410,156 $ 240,618
---------- ----
Total $ 240,618 9.1%
========== ====
24
<PAGE>
As of December 31, 1998, the Partnership's total capitalization was
$3,165,992. December 31, 1998
% of Total
Market Sector Value at Risk Capitalization
Currencies - OTC Contracts $175,780 5.55%
Exchange Traded Contracts 152,444 4.82%
-------- -----
Total $328,224 10.37%
======== =====
Material Limitations on Value at Risk as an Assessment of Market Risk
The face value of the market sector instruments held by the Partnership
is typically many times the applicable maintenance margin requirement (margin
requirements generally range between 2% and 15% of contract face value) as many
times well as the capitalization of the Partnership. The magnitude of the
Partnership's open positions creates a "risk of ruin" not typically found in
most other investment vehicles. Because of the size of its positions, certain
market conditions -- unusual, but historically recurring from time to time --
could cause the Partnership to incur severe losses over a short period of time.
The foregoing Value at Risk table -- as well as the past performance of the
Partnership -- give no indication of this "risk of ruin."
Non-Trading Risk
The Partnership has non-trading market risk on its foreign cash
balances not needed for margin. However, these balances (as well as any market
risk they represent) are immaterial.
25
<PAGE>
Materiality as used in this section, "Qualitative and Quantitative
Disclosures About Market Risk," is based on an assessment of reasonably possible
market movements and the potential losses caused by such movements, taking into
account the leverage, optionality and multiplier features of the Partnership's
market sensitive instruments.
Qualitative Disclosures Regarding Primary Trading Risk Exposures
The following qualitative disclosures regarding the Partnership's
market risk exposures - except for (i) those disclosures that are statements of
historical fact and (ii) the descriptions of how the Partnership manages its
primary market risk exposures - constitute forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act. The Partnership's primary market risk exposures as well as the
strategies used and to be used by the General Partner and the Advisors for
managing such exposures are subject to numerous uncertainties, contingencies and
risks, any one of which could cause the actual results of the Partnership's risk
controls to differ materially from the objectives of such strategies. Government
interventions, defaults and expropriations, illiquid markets, the emergence of
dominant fundamental factors, political upheavals, changes in historical price
relationships, an influx of new market participants, increased regulation and
many other factors could result in material losses as well as in material
changes to the risk exposures and the management strategies of the Partnership.
There can be no assurance that the Partnership's current market exposure and/or
26
<PAGE>
risk management strategies will not change materially or that any such
strategies will be effective in either the short- or long- term. Investors must
be prepared to lose all or substantially all of their investment in the
Partnership.
The following were the primary trading risk exposures of the
Partnership as of December 31, 1999, by market sector.
Currencies. The Partnership's currency exposure is to exchange rate
fluctuations, primarily fluctuations which disrupt the historical pricing
relationships between different currencies and currency pairs. These
fluctuations are influenced by interest rate changes as well as political and
general economic conditions. The Partnership trades in a large number of
currencies. The General Partner does not anticipate that the risk profile of the
Partnership's currency sector will change significantly in the future. The
currency trading Value at Risk figure includes foreign margin amounts converted
into U.S. dollars with an incremental adjustment to reflect the exchange rate
risk inherent to the dollar-based Partnership in expressing Value at Risk in a
functional currency other than dollars.
Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following were the only non-trading risk exposures of the
Partnership as of December 31, 1999.
Foreign Currency Balances. The Partnership's primary foreign currency
balances are in Japanese yen, German marks, British pounds and French francs.
27
<PAGE>
The Advisor regularly converts foreign currency balances to dollars in an
attempt to control the Partnership's non-trading risk.
Qualitative Disclosures Regarding Means of Managing Risk Exposure
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 General Partner monitors the Partnership's performance and the
concentration of its open positions, and consults with the Advisors concerning
the Partnership's overall risk profile. If the General Partner felt it necessary
to do so, the General Partner could require certain of the Advisors to close out
individual positions as well as enter certain positions traded on behalf of the
Partnership. However, any such intervention would be a highly unusual event. The
General Partner primarily relies on the Advisors' own risk control policies
while maintaining a general supervisory overview of the Partnership's market
risk exposures.
Each Advisor applies its own risk management policies to its trading.
The Advisors often follow diversification guidelines, margin limits and stop
loss points to exit a position. The Advisors' research of risk management often
suggests ongoing modifications to their trading programs.
As part of the General Partner's risk management, the General Partner
periodically meets with the Advisors to discuss their risk management and to
28
<PAGE>
look for any material changes to the Advisors' portfolio balance and trading
techniques. The Advisors are required to notify the General Partner of any
material changes to their programs.
29
<PAGE>
Item 8. Financial Statements and Supplementary Data.
SMITH BARNEY INTERNATIONAL ADVISORS CURRENCY FUND L.P.
INDEX TO FINANCIAL STATEMENTS
Page
Number
Oath or Affirmation F-2
Report of Independent Accountants. F-3
Financial Statements:
Statement of Financial Condition at
December 31, 1999 and 1998. F-4
Statement of Income and Expenses for
the years ended December 31, 1999, 1998
and 1997. F-5
Statement of Partners' Capital for the
years ended December 31, 1999, 1998, and
1997. F-6
Notes to Financial Statements. F-7 - F-11
F-1
Continued
<PAGE>
To The Limited Partners of
Smith Barney
International Advisors Currency Fund L.P.
To the best of the knowledge and belief of the undersigned, the information
contained herein is accurate and complete.
By: Daniel A. Dantuono, Chief Financial Officer
Smith Barney Futures Management LLC
General Partner, Smith Barney International
Advisors Currency Fund L.P.
Smith Barney Futures Management LLC
390 Greenwich Street
1st Floor
New York, N.Y. 10013
212-723-5424
F-2
<PAGE>
Report of Independent Accountants
To the Partners of Smith Barney International Advisors Currency Fund L.P.:
In our opinion, the accompanying statement of financial condition and the
related statements of income and expenses and of partners' capital present
fairly, in all material respects, the financial position of Smith Barney
International Advisors Currency Fund L.P. at December 31, 1999 and 1998, and the
results of its operations for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States. 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 of
these financial statements in accordance with auditing standards generally
accepted in the United States, which 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, assessing
the accounting principles used and significant estimates made by the management
of the General Partner, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
February 25, 2000
F-3
<PAGE>
Smith Barney
International Advisors Currency Fund L.P.
Statement of Financial Condition
December 31, 1999 and 1998
<TABLE>
<CAPTION>
<S> <C> <C>
1999 1998
Assets:
Equity in commodity futures trading account:
Cash (Note 3c) $ 2,689,251 $ 3,176,930
Net unrealized appreciation (depreciation) on
open futures contracts (854) 19,227
----------- -----------
2,688,397 3,196,157
Interest receivable 10,281 10,034
Other assets -- 5,779
----------- -----------
$ 2,698,678 $ 3,211,970
----------- -----------
Liabilities and Partners' Capital:
Liabilities:
Accrued expenses:
Commissions $ 15,448 $ 18,577
Professional fees 47,766 23,334
Other 2,623 4,067
----------- -----------
65,837 45,978
----------- -----------
Partners' Capital (Notes 1, 5 and 7):
General Partner, 8,000.2096 Unit equivalents outstanding
in 1999 and 1998 96,883 108,483
Limited Partners, 209,472.6214 and 225,512.5099 Units
of Limited Partnership Interest outstanding in 1999
and 1998, respectively 2,535,958 3,057,509
----------- -----------
2,632,841 3,165,992
----------- -----------
$ 2,698,678 $ 3,211,970
----------- -----------
</TABLE>
See notes to financial statements.
F-4
<PAGE>
Smith Barney
International Advisors Currency Fund L.P.
Statement of Income and Expenses
for the years ended
December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998 1997
Income:
Net gains (losses) on trading of commodity
interests:
Realized gains (losses) on closed positions $(127,068) $ 654,945 $ 328,280
Change in unrealized gains (losses) on open
positions (20,081) (446,986) 499,519
--------- --------- ---------
(147,149) 207,959 827,799
Less, brokerage commissions including clearing fees
of $102, $57 and $26, respectively (Note 3c) (220,519) (243,077) (237,265)
--------- --------- ---------
Net realized and unrealized gains (losses) (367,668) (35,118) 590,534
Interest income (Note 3c) 128,795 134,578 141,341
--------- --------- ---------
(238,873) 99,460 731,875
--------- --------- ---------
Expenses:
Incentive fees (Note 3b) 15,931 33,083 143,122
Professional fees 64,235 40,204 29,553
Other 3,094 2,877 2,430
--------- --------- ---------
83,260 76,164 175,105
--------- --------- ---------
Net income (loss) $(322,133) $ 23,296 $ 556,770
--------- --------- ---------
Net income (loss) per Unit of Limited Partnership
Interest and General Partner Unit equivalent
(Notes 1 and 7) $ (1.45) $ 0.04 $ 2.11
--------- --------- ---------
</TABLE>
See notes to financial statements.
F-5
<PAGE>
Smith Barney
International Advisors Currency Fund L.P.
Statement of Partners' Capital for the
years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Limited General
Partners Partner Total
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
Net income 22,975 321 23,296
Redemption of 23,888.7779 Units of Limited
Partnership Interest (338,656) -- (338,656)
----------- ----------- -----------
Partners' capital at December 31, 1998 3,057,509 108,483 3,165,992
Net loss (310,533) (11,600) (322,133)
Redemption of 16,039.8885 Units of Limited
Partnership Interest (211,018) -- (211,018)
----------- ----------- -----------
Partners' capital at December 31, 1999 $ 2,535,958 $ 96,883 $ 2,632,841
----------- ----------- -----------
</TABLE>
See notes to financial statements.
F-6
<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 LLC acts as the general partner (the
"General Partner") of the Partnership. The General Partner changed its form
of organization from a corporation to a limited liability company on October
1, 1999. The Partnership's commodity broker is Salomon Smith Barney Inc.
("SSB"). SSB is an affiliate of the General Partner. The General Partner is
wholly owned by Salomon Smith Barney Holdings Inc. ("SSBHI"), which is the
sole owner of SSB. SSBHI is a wholly owned subsidiary of Citigroup Inc.
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 upon the first to occur of the following:
December 31, 2011; 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 fair value on the
last business day of the year, which represents market value for those
commodity interests for which market quotations are readily available.
Investments in commodity interests denominated in foreign currencies are
translated into U.S. dollars at the exchange rates prevailing on the last
business day of the year. Realized gains (losses) 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.
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.
F-7
<PAGE>
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 SSB 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, as defined in the Management Agreements, of the
Partnership earned by each Advisor.
c. Customer Agreement:
The Partnership has entered into a Customer Agreement which was assigned
to SSB which provides that the Partnership will pay SSB 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 SSB 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.
SSB 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 SSB. The Partnership's cash is deposited by SSB in segregated
bank accounts to the extent required by the Commodity Futures Trading
Commission regulations. At December 31, 1999 and 1998, the amount of cash
held for margin requirements was $240,618 and $381,580, respectively. SSB
has agreed to pay the Partnership interest on 85% of the average daily
equity 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 SSB 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.
F-8
<PAGE>
All of the commodity interests owned by the Partnership are held for trading
purposes. The average fair value during the years ended December 31, 1999
and 1998, based on a monthly calculation, was $86,012 and $148,854,
respectively. The fair value of these commodity interests, including options
thereon, if applicable, at December 31,1999 and 1998 was $(854) and $19,227,
respectively, as detailed below.
Fair Value
December 31, December 31,
1999 1998
Currencies:
-Exchange Traded Contracts $ -- $(40,740)
-OTC Contracts (854) 59,967
------ ---------
Total $(854) $19,227
----- --------
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 SSB account will be credited with the amount of
the distribution.
7. Net Asset Value Per Unit:
Changes in the net asset value per Unit of Partnership interest for the
years ended December 31,1999, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1999 1998 1997
Net realized and unrealized gains
(losses) $ (1.66) $ (0.20) $ 2.24
Interest income 0.58 0.56 0.49
Expenses (0.37) (0.32) (0.62)
------ ------ ------
Increase (decrease) for year (1.45) 0.04 2.11
Net asset value per Unit,
beginning of year 13.56 13.52 11.41
------ ------ ------
Net asset value per Unit, end of year $ 12.11 $ 13.56 $ 13.52
------ ------ ------
</TABLE>
F-9
<PAGE>
8. Financial Instrument Risks:
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 may 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, through physical delivery 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 (see table in Note 4). 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 SSB.
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
appropriately not recorded in the financial statements, reflect the extent
of the Partnership's involvement in these instruments. The majority of
these instruments mature within one year of December 31, 1999. However, due
to the nature of the Partnership's business, these instruments may not be
held to maturity.
9. Subsequent Event:
There were additional redemptions as of January 31, 2000 representing
2,922.7226 Units of Limited Partnership Interest totaling $34,868.
F-10
<PAGE>
10. New Accounting Pronouncements:
The Partnership adopted Statement on Financial Accounting Standards No. 133
("SFAS 133"), Accounting for Derivative Financial Instruments and Hedging
Activities, on January 1, 1999. SFAS 133 requires that an entity recognize
all derivative instruments in the statement of financial condition and
measure those financial instruments at fair value. SFAS 133 has no impact
on Partners' Capital and operating results as all derivative instruments
are recorded at fair value, with changes therein reported in the statement
of income and expenses.
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 LLC
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 LLC, its General Partner, which
receives compensation for its services, as set forth under "Item 1. Business."
SSB, 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, 1999, SSB earned
$220,519 in brokerage commissions and clearing fees. The Advisors earned $15,931
in incentive fees during 1999.
30
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
(a). Security ownership of certain beneficial owners. As
of March 1, 2000, one beneficial owner who is neither a director nor executive
officer of the General Partner beneficially owns more than five percent (5%) of
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 20.7%
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 (3.7%) of Limited Partnership Interest as of
December 31, 1999.
(c). Changes in control. None.
Item 13. Certain Relationships and Related Transactions.
Salomon Smith Barney Inc. and Smith Barney Futures Management
LLC 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.", "Item 8. Financial
Statements and Supplementary Data." and "Item 11. Executive Compensation."
31
<PAGE>
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, 1999 and
1998.
Statement of Income and Expenses for the years ended
December 31, 1999, 1998 and 1997.
Statement of Partners' Capital for the years ended December
31, 1999, 1998 and 1997.
(2) Financial Statement Schedules: Financial Data Schedule for
the year ended December 31, 1999.
(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).
32
<PAGE>
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).
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).
33
<PAGE>
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)
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)
34
<PAGE>
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 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)
35
<PAGE>
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).
10.20- Letter dated December 31, 1996 from General Partner
to Commodity Monitors Inc, terminating Management
Agreement (previously filed).
36
<PAGE>
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 with
Trendview Management Inc. and Friedberg Commodity
Management Inc. for 1996 and 1997 (filed as Exhibit
10.23 to Form 10-K for the year ended December 31,
1997).
10.24- Letters extending Management Agreements with
Trendview Management Inc. and Friedberg Commodity
Management Inc. for 1998 (previously filed).
10.25- Letters extending Management Agreements with
Trendview Management Inc. and Friedberg Commodity
Management Inc. for 1999. (filed herein)
(b) Report on Form 8-K: None Filed
37
<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
38
<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 annual report on Form 10-K 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 30th day of March 2000.
SMITH BARNEY INTERNATIONAL ADVISORS CURRENCY FUND L.P.
By: Smith Barney Futures Management LLC
(General Partner)
By /s/ David J. Vogel
David J. Vogel, President & Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this annual
report on Form 10-K 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 R. Schaefer /s/ Daniel A. Dantuono
Michael R. 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
<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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 2,689,251
<SECURITIES> (854)
<RECEIVABLES> 10,281
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,698,678
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,698,678
<CURRENT-LIABILITIES> 65,837
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,632,841
<TOTAL-LIABILITY-AND-EQUITY> 2,698,678
<SALES> 0
<TOTAL-REVENUES> (238,873)
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 83,260
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (322,133)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (322,133)
<EPS-BASIC> (1.45)
<EPS-DILUTED> 0
</TABLE>
June 1, 1999
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, 2000
and 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 or fax to 212-723-8985. If you have any questions I can be
reached at 212-723-5416.
Very truly yours,
SMITH BARNEY FUTURES MANAGEMENT INC.
By:
Daniel A. Dantuono
Chief Financial Officer,
Director & Treasurer
AGREED AND ACCEPTED
FRIEDBERG COMMODITY MGT. INC.
By:
Print Name:
June 1, 1999
Trendview Management Inc.
600 B Street - Suite 1650
San Diego, California 92101
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, 2000
and 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 or fax to 212-723-8985. If you have any questions I can be
reached at 212-723-5416.
Very truly yours,
SMITH BARNEY FUTURES MANAGEMENT INC.
By:
Daniel A. Dantuono
Chief Financial Officer,
Director & Treasurer
AGREED AND ACCEPTED
TRENDVIEW MANAGEMENT INC.
By:
Print Name:
DAD/sr
