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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
COMMISSION FILE NO. 333-46550
OR
FOR THE TRANSITION PERIOD FROM TO
SHAFFER DIVERSIFIED FUND, LP
(Name of registrant as specified in its charter)
DELAWARE 13-4132934
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
925 WESTCHESTER AVENUE, 10604
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WHITE PLAINS, NEW YORK (Zip Code)
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(Address of principal executive offices)
Issuer's Telephone Number, including Area Code: (800) 352-5265
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Securities registered under Section 12(b) of the Act: NONE
Securities registered under Section
12(g) of the Act:
NONE
(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
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Indicate by check mark if disclosure of delinquent filers in response to Item
405 of Regulation S-K is not contained in this form, and no disclosure will 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. Yes X No
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The Registrant has no voting stock. As of December 31, 2002 there were no Units
of Limited Partnership Interests issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Prospectus dated October 25, 2002 included within the Registration Statement on
Form S-1 (File No. 333-4655), incorporated by reference into Parts I and II.
SHAFFER DIVERSIFIED FUND, LP
INDEX
PART I - FINANCIAL INFORMATION Page No.
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Item 1. Financial Statements
Statements of Financial Condition 3
as of December 31, 2002 (unaudited)
and December 31, 2001 (audited)
Statements of Operations (unaudited) for the 4
Years ended December 31, 2002 and 2001 (audited)
Statements of Cash Flows (uaudited) for the 5
Years Ended December 31, 2002 and 2001 (audited)
Statements of Changes in Partners' Capital 6
(unaudited) for the Years Ended December 31, 2002
and 2001 (audited)
Notes to Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis 10
of Financial Condition and Results of Operations
PART II - OTHER INFORMATION 11
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Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SHAFFER DIVERSIFIED FUND, LP
STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 2002 (UNAUDITED) AND DECEMBER 31, 2001 (AUDITED)
December 31, December 31,
2002 2001
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ASSETS:
Cash -- 586
Cash in escrow account -- 413,000
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0 413,586
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Total assets $ 0 $413,586
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LIABILITIES:
Subscription deposits $ -- $413,000
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Total liabilities 0 413,000
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PARTNERS' CAPITAL (Net Asset Value)
General Partner - 0 units
outstanding at December 31, 2002
and 1 unit at December 31, 2001 -- 586
Limited Partners - 0 units
outstanding at December 31, 2002
and 1 unit at December 31, 2001 -- --
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Total partners' capital
(Net Asset Value) 0 586
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Total partners' capital and liabilities $ 0 $413,586
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See accompanying Notes to the Financial Statements.
SHAFFER DIVERSIFIED FUND, LP
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
Unaudited Audited
2002 2001
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INCOME
Trading gains
Realized $ 67,441 $ --
Change in unrealized -- --
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Gains (losses) from trading 67,441 0
Investment income
Interest income 13,601 --
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Total income (loss) 81,042 0
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OPERATING EXPENSES:
Brokerage trading fees $ 22,278 $ --
Management fees 33,665 --
Operating expenses 17,112 1,330
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Total expenses 73,055 1,330
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Net income (loss) before special
allocation to the General Partner 7,987 (1,330)
Special allocation to the general partner 19,052 --
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NET INCOME (LOSS) AVAILABLE FOR
PRO RATA DISTRIBUTION $(11,065) $ (1,330)
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NET INCOME (LOSS) PER UNIT OF PARTNERSHIP INTEREST
Weighted average number of units outstanding
during the period 1,068.225 2.000
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Net Income (Loss) per unit $ (10.36) $(665.00)
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See accompanying Notes to the Financial Statements.
SHAFFER DIVERSIFIED FUND, LP
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2002 and 2001
Unaudited Audited
2002 2001
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 7,987 $ (1,330)
Adjustments to reconcile net income (loss) to
net cash used in operating activities
Net change in unrealized - Futures Contracts -- --
Net change in unrealized - US Government Securities --
Net (purchases) of investments
in United States Government Securities --
Increase in account payable and
accrued expenses -- --
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Net cash used in operating activities 7,987 (1,330)
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CASH FLOWS
FROM FINANCING ACTIVITIES
Addition of units 1,161,000 --
Sales charges and syndication fees (55,550) --
Redemption of units and withdrawals 1,114,023 --
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Net cash provided by financing activities (8,573) --
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Net decrease in cash and cash equivalents (586) (1,330)
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CASH AND CASH EQUIVALENTS
Beginning of period 586 1,916
End of period $ 0 $ 586
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End of period cash and cash equivalents consists of:
Cash in bank -- 586
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Total end of period cash and cash equivalents $ 0 $ 586
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Supplemental Disclosure of Non Cash Financing Activities:
Subscription deposits received in advance $ 413,000 $ --
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See accompanying Notes to the Financial Statements
SHAFFER DIVERSIFIED FUND, LP
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
NET ASSET VALUE
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001
(UNAUDITED)
Total Partners' Capital
Units General Limited Total
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YEAR ENDED DECEMBER 31, 2002
Balances at December 31, 2001 2.00 $ (414) 1,000 $ 586
Additions 1,150.203 50,000 1,111,000 1,161,000
Allocation of net income
For the year ended December 31, 2002:
Special allocation to the General Partner 18.161 19,052 19,052
Net income available for
pro rata distribution (497) (10,568) (11,065)
Sales charges and syndication fees (55,550) (55,550)
Redemptions and withdrawals (1,170.364) (68,141) (1,045,882) (1,114,023)
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Balances at December 31, 2002 0.000 $ 0 $ 0 $ 0
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Net asset value per unit
At December 31, 2002 $ 0.00
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At December 31, 2001 $ 293.00
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See accompanying Notes to the Financial Statements.
SHAFFER DIVERSIFIED FUND, LP
NOTES TO FINANCIAL STATEMENTS
The financial statements are unaudited (except for the balance sheet
information as of December 31, 2001 and the statement of operations for
the year ended December 31, 2001, which is derived from the Fund's
audited financial statements) and reflect all adjustments (consisting
only of normal recurring adjustments), which are, in the opinion of
management, necessary for a fair presentation of the financial position
and operating results for the periods. The financial statements should
be read in conjunction with the notes thereto, together with
management's discussion and analysis of financial condition and results
of operations.
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) GENERAL DESCRIPTION
Shaffer Diversified Fund, LP (the "Partnership" or the "Fund")
was a limited partnership organized on August 29, 2000 under
the Delaware Revised Uniform Limited Partnership Act. The Fund
was a commodity investment pool. Specifically, the Fund
invested in a diversified portfolio consisting primarily of
currency, interest rate, grain, metal and energy futures
contracts.
The Fund discontinued its trading as of December 19, 2002,
returned all proceeds of the Fund to the Partners and
terminated its existence as of December 31, 2002.
The General Partner of the Fund was Shaffer Asset Management,
Inc. The General Partner was also the commodity-trading
advisor of the Fund. On December 19, 2002, Shaffer Asset
Management, Inc. ceased the trading operations of the Fund,
returned the proceeds to the Partners, terminated the trading
advisory agreement, terminated all other agreements with the
Fund and withdrew as the General Partner of the Fund.
B) FINANCIAL STATEMENT REPORTING
The Fund's financial statements are presented in conformity
with generally accepted accounting principles, which require
using certain estimates and assumptions made by the Fund's
management that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results may differ from these estimates.
Transactions are accounted for on the trade date. Gains or
losses are realized when contracts are liquidated. Unrealized
gains and losses on open contracts (the difference between
contract trade price and market price) are reported in the
statement of financial position as a net gain or loss, as
there exists a right of offset of unrealized gains or losses
in accordance with Financial Accounting Standards Board
Interpretation No. 39 - "Offsetting of Amounts Related to
Certain Contracts." Any change in net unrealized gain or loss
from the preceding period is reported in the statement of
operations. Brokerage expenses and other trading fees paid
directly to the broker are included in "brokerage fees" and
are charged to expenses when contracts are open. United States
government securities are stated at cost plus accrued
interest, which approximates market value.
C) CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash and money market
deposits held at financial institutions and short term
securities with maturity dates of less than three months from
the date of the financial statements.
D) INCOME TAXES
The Partnership is not subject to income taxes. The partners
report their allocable share of income, expense and trading
gains or losses on their own tax returns.
E) ORGANIZATION COSTS AND OPERATING EXPENSES
The General Partner had agreed to pay all expenses associated
with the organization of the Fund. Shaffer Asset Management,
Inc. incurred total costs in connection with the organization
of the Fund of approximately $463,000 through December 31,
2002. Shaffer Asset Management, Inc has terminated this
agreement.
F) REGULATION
The Fund's operations are regulated by the provisions of the
Commodity Exchange Act, the regulations of the Commodity
Futures Trading Commission, and the rules of the National
Futures Association. The Fund is subject to regulatory
requirements under the Securities Act of 1933 and the
Securities Exchange Act of 1934. As a commodity investment
pool, the Fund is subject to the regulations of the Commodity
Futures Trading Commission, an agency of the United States
("US") Government which regulates most aspects of the
commodity futures industry; the rules of the National Futures
Association, an industry self-regulatory organization; and the
requirements of the various commodity exchanges where the Fund
executes transactions. Additionally, the Fund is subject to
the requirements of Futures Commission Merchants or Brokers
through which the Fund trades.
In addition to such registration requirements, the CFTC and
certain commodity exchanges have established limits on the
maximum net long and net short positions which any person,
including the Fund, may hold or control in particular
commodities. Most exchanges also limit the maximum changes in
futures contract prices that may occur during a single trading
day.
G) ALLOCATION OF INCOME
The General Partner and each Limited Partner share in the
profits and losses of the partnership in proportion to their
respective interests in the partnership, except for the
incentive allocation to the General Partner. A Limited
Partner's loss is limited to the amount of his or her
investment.
H) NET ASSET VALUE PER UNIT
Net Asset Value is calculated by dividing the Net Assets of
the Fund at the end of the reporting period by the number of
Fund Units outstanding at the end of the reporting period.
The Net Assets of the Fund is equal to: total assets, less
total liabilities, of the Fund determined on the basis of
generally accepted accounting principles. Net Assets shall
include any unrealized profits or losses on open positions,
and any fee or expense including net asset fees accruing to
the Fund.
NOTE 2. GENERAL PARTNER AND COMMODITY TRADING ADVISOR
The General Partner of the Fund was Shaffer Asset Management, Inc.
The General Partner was also the commodity-trading advisor of the
Fund. On December 19, 2002, Shaffer Asset Management, Inc. closed
the Fund, returned the proceeds to the Partners, terminated the
trading advisory agreement, terminated all other agreements with
the Fund and withdrew as the General Partner of the Fund.
The General Partner shares in all Fund income and losses to the
extent of its interest in the Fund. The General Partner also
received on a quarterly basis an incentive allocation from the
Fund equivalent to 15% per year of any increase in the cumulative
appreciation of the net asset value of the Fund, as defined in the
Partnership Agreement.
NOTE 3. DEPOSITS WITH BROKER AND FINANCIAL INSTITUTIONS
The Fund deposits assets with a broker subject to Commodity
Futures Trading Commission regulations and various exchange and
broker requirements and other financial institutions. The Fund
satisfies margin requirements by depositing U.S. Treasury bills
and cash with such broker and other financial institutions. The
Fund earns interest income on these assets.
NOTE 4. SUBSCRIPTIONS, DISTRIBUTIONS AND REDEMPTIONS
Investments in the Fund were made by subscription agreement,
subject to acceptance by Shaffer Asset.
NOTE 5. TRADING ACTIVITIES AND RELATED RISKS
The Fund engaged in the speculative trading of US commodity
futures contracts, which are derivative financial instruments.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Shaffer Diversified Fund, LP (the "Partnership" or the "Fund") was a
limited partnership organized on August 29, 2000 under the Delaware
Revised Uniform Limited Partnership Act as an investment vehicle that
allowed investors to include commodity futures contracts traded on the
United States commodity futures markets in their portfolios in the same
way that they include mutual funds, money market funds and limited
partnerships.
The Fund originally filed a registration statement with the United
States Securities and Exchange Commission on September 25, 2000 for the
sale of a minimum of $1,000,000 and a maximum of $25,000,000 in Units
of Limited Partnership at $1,000.00 each, ($950.00 + $50.00 sales
charges & syndication fees), which registration statement was declared
effective on October 16, 2001. The Fund's initial offering period
lasted approximately 120 days and ended February 13, 2002. During the
initial offering the Fund accepted subscriptions for 1,049 Units of
Limited Partnership Interests at a selling price of $1,000.00 ($950.00
+ $50.00 sales charges & syndication fees) for a total of $1,049,000.
Selling charges and expenses of $49,950.were disbursed at closing and
the Fund commenced trading activities with net proceeds of $996,550.
The Fund commenced trading February 14, 2002.
The Fund discontinued its trading as of December 19, 2002, returned all
proceeds of the Fund to the Partners and terminated its existence as of
December 31, 2002.
RESULTS OF OPERATIONS
The Fund commenced trading operations February 14, 2002 and
discontinued December 19, 2002. The return for the year ending December
31, 2002 was -0-%.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
None.
ITEM 2. Changes in Securities and Use of Proceeds
The Fund terminated its trading operations, liquidated all
assets, distributes the entire proceeds to the Partners and
ceased existence.
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. Exhibits and Reports on Form 8-K
A. Exhibits
Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the
United States Code - Daniel S. Shaffer
Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the
United States Code - Bruce I. Greenberg
B. Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements 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.
Shaffer Diversified Fund, LP
By: Shaffer Asset Management, Inc.
General Partner
Date: January 28, 2003
By:
/s/ Bruce Ira Greenberg
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Bruce I Greenberg
Chief Financial Officer
VP/Treasurer/Director
EXHIBIT INDEX
Exhibit
Index Exhibit
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99.1 Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of
the United States Code - Daniel S. Shaffer
99.2 Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of
the United States Code - Bruce I. Greenberg