-----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, KJpcPxpdQd9pSgDh19vyIqGP84IKpvNv7wShkCyZOu3WrdRt5x6qa5j9p6YxIVv8 YjNRALfwl8RjmMYHpHPS8Q== 0000841941-97-000007.txt : 19971113 0000841941-97-000007.hdr.sgml : 19971113 ACCESSION NUMBER: 0000841941-97-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 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: SEC FILE NUMBER: 000-18467 FILM NUMBER: 97716131 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, 1997 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: Statement of Financial Condition at September 30, 1997 and December 31, 1996. 3 Statement of Income and Expenses and Partners' Capital for the Three and Nine Months ended September 30, 1997 and 1996. 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 STATEMENT OF FINANCIAL CONDITION SEPTEMBER 30, DECEMBER 31, 1997 1996 ----------- ----------- ASSETS: (Unaudited) Equity in commodity futures trading account: Cash and cash equivalents $1,832,704 $2,570,817 Net unrealized appreciation on open futures contracts 136,747 25,099 ---------- ---------- 1,969,451 2,595,916 Interest receivable 6,224 8,855 __________ __________ $1,975,675 $2,604,771 ========== ========== LIABILITIES AND PARTNERS' CAPITAL: Liabilities: Accrued expenses: Commissions $ 12,348 $ 16,280 Management fees 3,700 5,393 Incentive fees 0 27,557 Professional fees 17,256 22,649 Other 638 3,022 Redemptions payable 115,886 157,496 __________ __________ 149,828 232,397 ---------- ---------- Partners' Capital: General Partner, 24 Unit equivalents outstanding in 1997 and 1996, respectively 30,903 34,053 Limited Partners, 1,394 and 1,648 Units of Limited Partnership Interest outstanding in 1997 and 1996, respectively 1,794,944 2,338,321 ---------- ---------- 1,825,847 2,372,374 ---------- ---------- $1,975,675 $2,604,771 ========== ========== See Notes to Financial Statements. 3 SHEARSON HUTTON PERFORMANCE PARTNERS STATEMENT OF INCOME AND EXPENSES AND PARTNERS' CAPITAL (UNAUDITED)
THREE-MONTHS ENDED NINE-MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------------------- --------------------------------- 1997 1996 1997 1996 ------------ ----------- ------------ ------------- Income: Net gains (losses) on trading of commodity futures: Realized gains (losses) on closed positions $ 86,309 $ 5,671 $ (193,890) $ (210,640) Change in unrealized gains / losses on open positions 33,950 219,681 111,648 156,718 ___________ ___________ ___________ ___________ 120,259 225,352 (82,242) (53,922) Less, brokerage commissions and clearing fees ($2,196, $1,236, $6,131 and $3,793, respectively) (43,343) (51,131) (136,829) (173,229) ___________ ___________ ___________ ___________ Net realized and unrealized gains (losses) 76,916 174,221 (219,071) (227,151) Interest income 19,749 24,810 62,139 83,531 ___________ ___________ ___________ ___________ 96,665 199,031 (156,932) (143,620) ___________ ___________ ___________ ___________ Expenses: Management fees 11,237 13,838 35,902 46,666 Other 11,482 11,719 31,120 34,908 ___________ ___________ ___________ ___________ 22,719 25,557 67,022 81,574 ___________ ___________ ___________ ___________ Net income (loss) 73,946 173,474 (223,954) (225,194) Redemptions (115,886) (241,391) (322,573) (639,358) ___________ ___________ ___________ ___________ Net decrease in Partners' capital (41,940) (67,917) (546,527) (864,552) Partners' capital, beginning of period 1,867,787 2,381,899 2,372,374 3,178,534 ___________ ___________ ___________ ___________ Partners' capital, end of period $ 1,825,847 $ 2,313,982 $ 1,825,847 $ 2,313,982 =========== =========== =========== =========== Net Asset Value per Unit (1,418 and 1,783 Units outstanding at September 30, 1997 and 1996, respectively) $ 1,287.62 $ 1,297.80 $ 1,287.62 $ 1,297.80 =========== =========== =========== =========== Net income (loss) per Unit of Limited Partnership Interest and General Partnership Unit equivalent $ 49.03 $ 88.10 $ (131.26) $ (87.79) =========== =========== =========== ===========
See Notes to Financial Statements. 4 SHEARSON HUTTON PERFORMANCE PARTNERS NOTES TO FINANCIAL STATEMENTS September 30, 1997 (Unaudited) 1. General: Shearson Hutton Performance Partners (the "Partnership") was organized under the laws of the State of Delaware on October 3, 1988 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 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 TrendLogic Associates, 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, 1997 and the results of its operations for the three and nine months ended September 30, 1997 and 1996. 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, 1996. 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, 1997 (Continued) 2. Net Asset Value Per Unit: Changes in net asset value per Unit for the three and nine months ended September 30, 1997 and 1996 were as follows: THREE-MONTHS ENDED NINE-MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1997 1996 1997 1996 Net realized and unrealized gains (losses) $ 51.00 $ 88.48 $ (128.11) $ (88.60) Interest income 13.10 12.60 39.39 38.61 Expenses (15.07) (12.98) (42.54) (37.80) --------- --------- --------- --------- Increase (decrease) for period 49.03 88.10 (131.26) (87.79) Net Asset Value per Unit, beginning of period 1,238.59 1,209.70 1,418.88 1,385.59 --------- --------- --------- --------- Net Asset Value per Unit, end of period $1,287.62 $1,297.80 $1,287.62 $1,297.80 ========= ========= ========= ========= 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, 1997 was $136,747 and the average fair value during the nine months then ended, based on monthly calculation was $82,596. 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, 1997, the notional or contractual amounts of the Partnership's commitment to purchase and sell these instruments was $19,337,989 and $3,737,427, respectively, as detailed below. All of these instruments mature within one year of September 30, 1997. However, due to the nature of the Partnership's business, these instruments may not be held to maturity. At September 30, 1997, the fair value of the Partnership's derivatives was $136,747, as detailed below. NOTIONAL OR CONTRACTUAL AMOUNT OF COMMITMENTS TO PURCHASE TO SELL FAIR VALUE Currencies - - Exchange Traded Contracts $ 568,033 $ 195,520 $ (1,933) - - OTC Contracts 1,608,735 1,485,590 (6,933) Energy 235,932 0 10,302 Interest Rates U.S. 1,033,834 0 4,259 Interest Rates Non-U.S. 15,682,238 1,221,290 125,123 Grains 56,700 62,350 (3,362) Livestock 0 76,950 840 Softs 70,992 187,603 7,666 Metals 81,525 286,125 375 Indices 0 221,999 410 ------------ ----------- -------- Totals $19,337,989 $3,737,427 $136,747 ============ =========== ======== 5. Pending Merger: On September 24, 1997, Travelers Group Inc. ("Travelers") and Salomon Inc ("Salomon") announced an agreement and plan of merger pursuant to which Salomon will become a wholly owned subsidiary of Travelers and Smith Barney Holdings Inc., the parent company of Smith Barney Inc. and Smith Barney Futures Management Inc., will be merged into Salomon forming Salomon Smith Barney Holdings Inc. The transaction is expected to be completed by year-end 1997. 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 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 1997. 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, 1997, Partnership capital decreased 23% from $2,372,374 to $1,825,847. This decrease was attributable to a net loss from operations of $223,954 coupled with the redemption of 254 Units resulting in an outflow of $322,573 for the nine months ended September 30, 1997. 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 1997, the net asset value per Unit increased 4.0% from $1,238.59 to $1,287.62 as compared to the third quarter of 1996 in which the net asset value per Unit increased 7.3%. The Partnership experienced a net trading gain before commissions and expenses in the third quarter of 1997 of $120,259. This gain was attributable to the trading of commodity futures in currencies, energy products, U.S. and non U.S. interest rates and metals and was partially offset by losses in grains, softs, livestock and indices. The Partnership experienced a net trading gain before commissions and expenses in the third quarter of 1996 of $225,352. Gains were recognized in the trading of commodity futures in interest rates and were partially offset by losses recognized in agricultural products, currencies, indices and metals. 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 on the monthly average 13-week U.S. Treasury bill yield. Interest income for the three and nine months ended September 30, 1997 decreased by $5,061 and $21,392, respectively, as compared to the corresponding periods in 1996. This decrease was attributable to 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, 1997 decreased by $7,788 and $36,400, respectively, as compared to the corresponding periods in 1996. 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, 1997 decreased by $2,601 and $10,764, respectively, as compared to the corresponding periods in 1996. Incentive fees are based on the new trading profits generated by the Advisors as defined in the advisory agreement between the Partnership, the General Partner and each Advisor. No incentive fees were earned during the three and nine months ended September 30, 1997 or 1996. 10 PART II OTHER INFORMATION Item 1. Legal Proceedings - None Item 2. Changes in Securities and Use of Proceeds - 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: 11/12/97 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: 11/12/97 By: /s/ Daniel A. Dantuono Daniel A. Dantuono Chief Financial Officer and Director Date: 11/12/97 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 0000841941 Shearson Hutton Performance Partners 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 1,832,704 136,747 6,224 0 0 1,975,675 0 0 1,975,675 149,828 0 0 0 0 1,825,847 1,975,675 0 (156,932) 0 0 67,022 0 0 (223,954) 0 0 0 0 0 (223,954) (131.26) 0
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