-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GZfjFm9KYtpo20jbvNPVcVfMdbDhfMOHu9EwBMjvkkfw2lQMT29StKpIv/xft63d gpQJ7+lYBch4gxiHhCIHnA== 0000841941-96-000003.txt : 19961118 0000841941-96-000003.hdr.sgml : 19961118 ACCESSION NUMBER: 0000841941-96-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SLH PERFORMANCE PARTNERS FUTURES FUND LP CENTRAL INDEX KEY: 0000841941 STANDARD INDUSTRIAL CLASSIFICATION: [6221] IRS NUMBER: 133486116 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18467 FILM NUMBER: 96666737 BUSINESS ADDRESS: STREET 1: 390 GREENWICH ST 1ST FLR STREET 2: C/O SMITH BARNEY FUTURES MGMT INC CITY: NEW YORK STATE: NY ZIP: 10013 BUSINESS PHONE: 2127235424 MAIL ADDRESS: STREET 1: C/O SMITH BARNEY FUTURES MANAGEMENT INC STREET 2: 390 GREENWICH ST 1ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10013 10-Q 1 SHEARSON HUTTON PERFORMANCE PARTNERS FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (X) QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ( ) TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter ended September 30, 1996 Commission File Number 0-18467 SHEARSON HUTTON PERFORMANCE PARTNERS (Exact name of registrant as specified in its charter) Delaware 13-3486116 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) c/o Smith Barney Futures Management Inc. 390 Greenwich St. - 1st. Fl. New York, New York 10013 (Address and Zip Code of principal executive offices) (212) 723-5424 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No SHEARSON HUTTON PERFORMANCE PARTNERS FORM 10-Q INDEX Page Number PART I - Financial Information: Item 1. Financial Statements: Statements of Financial Condition at September 30, 1996 and December 31, 1995. 3 Statements of Income and Expenses and Partners' Capital for the Three and Nine Months ended September 30, 1996 and 1995. 4 Notes to Financial Statements 5 - 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 - 10 PART II - Other Information 11 2 PART I Item 1. Financial Statements SHEARSON HUTTON PERFORMANCE PARTNERS STATEMENTS OF FINANCIAL CONDITION SEPTEMBER 30, DECEMBER 31, 1996 1995 ---------- ---------- (Unaudited) ASSETS Equity in commodity futures trading account: Cash and cash equivalents $2,319,007 $3,219,888 Net unrealized appreciation on open futures contracts 273,522 116,804 ---------- ---------- 2,592,529 3,336,692 Interest receivable 8,193 12,031 ---------- ---------- $2,600,722 $3,348,723 ========== ========== LIABILITIES AND PARTNERS' CAPITAL Liabilities: Accrued expenses: Commissions $ 16,254 $ 20,929 Management fees 4,838 6,217 Incentive fees - 1,896 Other 24,257 21,986 Redemptions payable 241,391 119,161 ---------- ---------- 286,740 170,189 ---------- ---------- Partners' Capital General Partner, 24 Unit equivalents outstanding in 1996 and 1995, respectively 31,147 33,254 Limited Partners, 1,759 and 2,270 Units of Limited Partnership Interest outstanding in 1996 and 1995, respectively 2,282,835 3,145,280 ---------- ---------- 2,313,982 3,178,534 ---------- ---------- $2,600,722 $3,348,723 ========== ========== See Notes to Financial Statements. 3 SHEARSON HUTTON PERFORMANCE PARTNERS STATEMENTS OF INCOME AND EXPENSES AND PARTNERS' CAPITAL (UNAUDITED)
THREE-MONTHS ENDED NINE-MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1996 1995 1996 1995 ----------- ----------- ----------- ----------- Income: Net gains (losses) on trading of commodity futures: Realized gains (losses) on closed positions $ 5,671 $ (120,335) $ (210,640) $ 866,900 Change in unrealized gains / losses on open positions 219,681 (29,107) 156,718 4,877 ----------- ----------- ----------- ----------- 225,352 (149,442) (53,922) 871,777 Less, brokerage commissions and clearing fees ($1,236, $997, $3,793 and $4,519, respectively) (51,131) (71,007) (173,229) (233,750) ----------- ----------- ----------- ----------- Net realized and unrealized gains (losses) 174,221 (220,449) (227,151) 638,027 Interest income 24,810 38,075 83,531 120,854 ----------- ----------- ----------- ----------- 199,031 (182,374) (143,620) 758,881 ----------- ----------- ----------- ----------- Expenses: Management fees 13,838 19,251 46,666 56,874 Incentive fees 139,686 Other 11,719 12,211 34,908 33,400 ----------- ----------- ----------- ----------- 25,557 31,462 81,574 229,960 ----------- ----------- ----------- ----------- Net income (loss) 173,474 (213,836) (225,194) 528,921 Redemptions (241,391) (148,864) (639,358) (763,554) ----------- ----------- ----------- ----------- Net decrease in Partners' capital (67,917) (362,700) (864,552) (234,633) Partners' capital, beginning of period 2,381,899 3,583,582 3,178,534 3,455,515 ----------- ----------- ----------- ----------- Partners' capital, end of period $ 2,313,982 $ 3,220,882 $ 2,313,982 $ 3,220,882 =========== =========== =========== =========== Net Asset Value per Unit (1,783 and 2,380 Units outstanding at September 30, 1996 and 1995, respectively) $ 1,297.80 $ 1,353.31 $ 1,297.80 $ 1,353.31 =========== =========== =========== =========== Net income (loss) per Unit of Limited Partnership Interest and General Partnership Unit equivalent $ 88.10 $ (85.88) $ (87.79) $ 179.56 =========== =========== =========== ===========
See Notes to Financial Statements. 4 SHEARSON HUTTON PERFORMANCE PARTNERS NOTES TO FINANCIAL STATEMENTS September 30, 1996 (Unaudited) 1. General: Shearson Hutton Performance Partners (the "Partnership") was organized under the laws of the State of Delaware on October 3, 1988 with the name SLH Performance Partners Futures Fund L.P. The Partnership engages in the speculative trading of commodity interests including forward contracts on foreign currencies, commodity options and commodity futures contracts on U.S. Treasuries and certain other financial instruments and foreign currencies. The commodity interests that are traded by the Partnership are volatile and involve a high degree of market risk. The Partnership commenced trading operations on June 6, 1989. Smith Barney Futures Management Inc. acts as the general partner (the "General Partner") of the Partnership. Smith Barney Inc. ("SB"), an affiliate of the General Partner, acts as commodity broker for the Partnership. All trading decisions for the Partnership are being made by SJO, Inc. and Hyman Beck & Company, Inc. (the "Advisors"). The accompanying financial statements are unaudited but, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the Partnership's financial condition as of September 30, 1996 and the results of its operations for the three and nine months ended September 30, 1996 and 1995. These financial statements present the results of interim periods and do not include all disclosures normally provided in annual financial statements. It is suggested that these financial statements be read in conjunction with the financial statements and notes included in the Partnership's annual report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1995. Due to the nature of commodity trading, the results of operations for the interim periods presented should not be considered indicative of the results that may be expected for the entire year. 5 SHEARSON HUTTON PERFORMANCE PARTNERS NOTES TO FINANCIAL STATEMENTS September 30, 1996 (Continued) 2. Net Asset Value Per Unit: Changes in net asset value per Unit for the three and nine months ended September 30, 1996 and 1995 were as follows: THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1996 1995 1996 1995 ---- ---- ---- ---- Net realized and unrealized gains (losses) $ 88.48 $ (88.54) $ (88.60) $ 217.97 Interest income 12.60 15.29 38.61 44.76 Expenses (12.98) (12.63) (37.80) (83.17) --------- --------- --------- --------- Increase (decrease) for period 88.10 (85.88) (87.79) 179.56 Net Asset Value per Unit, beginning of period 1,209.70 1,439.19 1,385.59 1,173.75 --------- --------- --------- --------- Net Asset Value per Unit, end of period $1,297.80 $1,353.31 $1,297.80 $1,353.31 ========= ========= ========= ========= 3. Trading Activities: The Partnership was formed for the purpose of trading contracts in a variety of commodity interests, including derivative financial instruments and derivative commodity instruments. The results of the Partnership's trading activity are shown in the statements of income and expenses. The Customer Agreement between the Partnership and SB gives the Partnership the legal right to net unrealized gains and losses. All of the commodity interests owned by the Partnership are held for trading purposes. The fair value of these commodity interests, including options thereon, at September 30, 1996 was $273,522 and the average fair value during the nine months then ended, based on monthly calculation, was $105,969. 6 4. Financial Instrument Risk: The Partnership is party to financial instruments with off-balance sheet risk, including derivative financial instruments and derivative commodity instruments, in the normal course of its business. These financial instruments include forwards, futures and options, whose value is based upon an underlying asset, index, or reference rate, and generally represent future commitments to exchange currencies or cash flows, to purchase or sell other financial instruments at specific terms at specified future dates, or, in the case of derivative commodity instruments, to have a reasonable possibility to be settled in cash or with another financial instrument. These instruments may be traded on an exchange or over-the-counter ("OTC"). Exchange traded instruments are standardized and include futures and certain option contracts. OTC contracts are negotiated between contracting parties and include forwards and certain options. Each of these instruments is subject to various risks similar to those related to the underlying financial instruments including market and credit risk. In general, the risks associated with OTC contracts are greater than those associated with exchange traded instruments because of the greater risk of default by the counterparty to an OTC contract. Market risk is the potential for changes in the value of the financial instruments traded by the Partnership due to market changes, including interest and foreign exchange rate movements and fluctuations in commodity or security prices. Market risk is directly impacted by the volatility and liquidity in the markets in which the related underlying assets are traded. Credit risk is the possibility that a loss may occur due to the failure of a counterparty to perform according to the terms of a contract. Credit risk with respect to exchange traded instruments is reduced to the extent that an exchange or clearing organization acts as a counterparty to the transactions. The Partnership's risk of loss in the event of counterparty default is typically limited to the amounts recognized in the statement of financial condition and not represented by the contract or notional amounts of the instruments. The Partnership has concentration risk because the sole counterparty or broker with respect to the Partnership's assets is SB. The 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. 7 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 September 30, 1996, the notional or contractual amounts of the Partnership's commitment to purchase and sell these instruments was $49,420,153 and $5,157,109, respectively, as detailed below. All of these instruments mature within one year of September 30, 1996. However, due to the nature of the Partnership's business, these instruments may not be held to maturity. At September 30, 1996, the Partnership had net unrealized trading gains of $273,522, as detailed below. NOTIONAL OR CONTRACTUAL NET AMOUNT OF COMMITMENTS UNREALIZED TO PURCHASE TO SELL GAIN/(LOSS) ----------- ------- ----------- Currencies* $ 3,095,113 $ 2,974,685 $ 597 Interest Rates Non US 45,412,970 368,101 262,969 Metals 433,775 1,504,529 7,801 Softs - 309,794 3,013 Indices 478,295 - (858) ----------- ----------- -------- Totals $49,420,153 $5,157,109 $273,522 =========== ========== ======== *The notional or contractual commitment amounts and the net unrealized gain amount listed for the currency sector represent OTC contracts. All other sectors listed represent exchange traded contracts. 5. Subsequent Event: Effective October 1, 1996, Hyman Beck & Company Inc. was terminated as an Advisor to the fund and the assets previously managed by Hyman Beck were allocated to the Fund's Advisor, SJO, Inc. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Liquidity and Capital Resources The Partnership does not engage in the sale of goods or services. Its only assets are its equity in its commodity futures trading account, net unrealized appreciation (depreciation) on open futures and forward contracts and interest receivable. Because of the low margin deposits normally required in commodity futures trading, relatively small price movements may result in substantial losses to the Partnership. While substantial losses could lead to a decrease in liquidity, no such losses occurred in the third quarter of 1996. The Partnership's capital consists of the capital contributions of the partners as increased or decreased by gains or losses on commodity futures trading, expenses, interest income, redemptions of Units and distributions of profits, if any. For the nine months ended September 30, 1996, Partnership capital decreased 27.2% from $3,178,534 to $2,313,982. This decrease was attributable to the redemption of 511 limited partnership Units resulting in an outflow of $639,358 and by a net loss from operations of $225,194 for the nine months ended September 30, 1996. Future redemptions can impact the amount of funds available for investments in commodity contract positions in subsequent periods. Results of Operations During the Partnership's third quarter of 1996, the net asset value per Unit increased 7.3% from $1,209.70 to $1,297.80 as compared to the third quarter of 1995 in which the net asset value per Unit decreased 6.0%. The Partnership experienced a net trading gain before commissions and expenses in the third quarter of 1996 of $225,352. This gain was primarily attributable to the trading of commodity futures in interest rates and was partially offset by losses recognized in metals, indices, agricultural products and currencies. The Partnership experienced a net trading loss before commissions and expenses in the third quarter of 1995 of $149,442. Losses were recognized in the trading of commodity futures in agricultural products, interest rates, and metals and were partially offset by gains recognized in currencies and indices. Commodity futures markets are highly volatile. Broad price fluctuations and rapid inflation increase the risks involved in commodity trading, but also increase the possibility of profit. The profitability of the Partnership depends on the existence of major price trends and the ability of the Advisors to identify correctly those price trends. Price trends are influenced by, 9 among other things, changing supply and demand relationships, weather, governmental, agricultural, commercial and trade programs and policies, national and international political and economic events and changes in interest rates. To the extent that market trends exist and the Advisors are able to identify them, the Partnership expects to increase capital through operations. Interest income on 80% of the Partnership's daily average equity was earned at the monthly average 13-week U.S. Treasury bill yield. Interest income for the three and nine months ended September 30, 1996 decreased by $13,265 and $37,323, respectively, as compared to the corresponding periods in 1995. This decrease was attributable to a decrease in interest rates in 1996 as compared to 1995 coupled with the effect of redemptions on the Partnership's equity maintained in cash. Brokerage commissions are calculated on the adjusted net asset value on the last day of each month and, therefore, vary according to trading performance and redemptions. Accordingly, they must be compared in relation to the fluctuations in the monthly net asset values. Commissions and clearing fees for the three and nine months ended September 30, 1996 decreased by $19,876 and $60,521, as compared to the corresponding periods in 1995. Management fees are calculated as a percentage of the Partnership's net asset value as of the end of each month and are affected by trading performance and redemptions. Management fees for the three and nine months ended September 30, 1996 decreased by $5,413 and $10,208 respectively, as compared to the corresponding periods in 1995. Incentive fees are based on the new appreciation generated by each Advisor as defined in the advisory agreements between the Partnership, the General Partner and each Advisor. No incentive fees were earned during the three and nine months ended September 30, 1996. Trading performance for the nine months ended September 30, 1995 resulted in incentive fees of $139,686. 10 PART II OTHER INFORMATION Item 1. Legal Proceedings - None Item 2. Changes in Securities - None Item 3. Defaults Upon Senior Securities - None Item 4. Submission of Matters to a Vote of Security Holders - None Item 5. Other Information - None Item 6. (a) Exhibits - None (b) Reports on Form 8-K - None 11 SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SHEARSON HUTTON PERFORMANCE PARTNERS By: Smith Barney Futures Management Inc. (General Partner) By: /s/ David J.Vogel, President David J. Vogel, President Date: 11/11/96 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: Smith Barney Futures Management Inc. (General Partner) By: /s/ David J.Vogel, President David J. Vogel, President Date: 11/11/96 By: /s/ Daniel A. Dantuono Daniel A. Dantuono Chief Financial Officer and Director Date: 11/11/96 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 0000841941 Shearson Hutton Performance Partners 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 2,319,007 273,522 8,193 0 0 2,600,722 0 0 2,600,722 286,740 0 0 0 0 2,313,982 2,600,722 0 (143,620) 0 0 81,574 0 0 (225,194) 0 0 0 0 0 (225,194) (87.79) 0
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