Trading Activities

12 Months Ended

Dec. 31, 2017

5.	Trading Activities:

The Partnership’s objective is to profit from speculative trading in Futures Interests. Therefore, the Trading Advisor will take speculative positions in Futures Interests where it feels the best profit opportunities exist for its trading strategy. As such, the average number of contracts outstanding in absolute quantities (the total of the open long and open short positions) has been presented as a part of the volume disclosure, as position direction is not an indicative factor in such volume disclosures.

All of the Futures Interests owned by the Partnership are held for trading purposes. The monthly average number of futures contracts traded during the years ended December 31, 2017 and 2016 were 1,617 and 1,607, respectively. The monthly average number of metals forward contracts traded during the years ended December 31, 2017 and 2016 were 121 and 207, respectively. The monthly average notional values of currency forward contracts traded during the years ended December 31, 2017 and 2016 were $116,969,535 and $103,224,681, respectively.

The following tables summarize the gross and net amounts recognized relating to assets and liabilities of the Partnership’s derivative instruments and transactions eligible for offset subject to master netting agreements or similar arrangements as of December 31, 2017 and 2016, respectively.


	Gross Amounts Recognized		Gross Amounts Offset in the Statements of Financial Condition		Amounts Presented in the Statements of Financial Condition
							Gross Amounts Not Offset in the
							Statements of Financial Condition
							Financial		Cash Collateral
December 31, 2017							Instruments		Received/Pledged*		Net Amount
Assets
Futures	$	1,079,969	$	(838,067)	$	241,902	$	-	$	-	$	241,902
Forwards		893,676		(861,117)		32,559		-		-		32,559

Total assets	$	1,973,645	$	(1,699,184)	$	274,461	$	-	$	-	$	274,461

Liabilities
Futures	$	(838,067)	$	838,067	$	-	$	-	$	-	$	-
Forwards		(861,117)		861,117		-		-		-		-

Total liabilities	$	(1,699,184)	$	1,699,184	$	-	$	-	$	-	$	-

Net fair value											$	274,461	*


	Gross Amounts Recognized		Gross Amounts Offset in the Statements of Financial Condition		Amounts Presented in the Statements of Financial Condition
							Gross Amounts Not Offset in the
							Statements of Financial Condition
							Financial Instruments		Cash Collateral
December 31, 2016							Financial Instruments		Received/Pledged*		Net Amount
Assets
Futures	$	753,644	$	(384,998)	$	368,646	$	-	$	-	$	368,646
Forwards		630,512		(630,512)		-		-		-		-

Total assets	$	1,384,156	$	(1,015,510)	$	368,646	$	-	$	-	$	368,646

Liabilities
Futures	$	(384,998)	$	384,998	$	-	$	-	$	-	$	-
Forwards		(732,859)		630,512		(102,347)		-		-		(102,347)

Total liabilities	$	(1,117,857)	$	1,015,510	$	(102,347)	$	-	$	-	$	(102,347)

Net fair value											$	266,299	*

* In the event of default by the Partnership, MS&Co., the Partnership’s commodity futures broker and the sole counterparty to the Partnership’s non-exchange-traded contracts, as applicable, has the right to offset the Partnership’s obligation with the Partnership’s cash and/or U.S. Treasury bills held by MS&Co., thereby minimizing MS&Co.’s risk of loss. In certain instances, MS&Co. may not post collateral and as such, in the event of default by MS&Co., the Partnership is exposed to the amount shown in the Statements of Financial Condition. In the case of exchange-traded contracts, the Partnership’s exposure to counterparty risk may be reduced since the exchange’s clearinghouse interposes its credit between buyer and seller and the clearinghouse’s guarantee funds may be available in the event of a default.

The following tables indicate the gross fair values of derivative instruments of futures and forward contracts as separate assets and liabilities as of December 31, 2017 and 2016, respectively.


	December 31, 2017
Assets
Futures Contracts
Commodity	$	681,541
Equity		210,560
Currencies		1,556
Interest Rates		186,312

Total unrealized appreciation on open futures contracts		1,079,969


Liabilities
Futures Contracts
Commodity		(210,793)
Equity		(65,597)
Currencies		(5,709)
Interest Rates		(555,968)

Total unrealized depreciation on open futures contracts		(838,067)

Net unrealized appreciation on open futures contracts	$	241,902	*


Assets
Forward Contracts
Commodity	$	272,253
Currencies		621,423

Total unrealized appreciation on open forward contracts		893,676


Liabilities
Forward Contracts
Commodity		(126,051)
Currencies		(735,066)

Total unrealized depreciation on open forward contracts		(861,117)

Net unrealized appreciation on open forward contracts	$	32,559	**

This amount is in “Net unrealized appreciation on open futures contracts” in the Statements of Financial Condition.

This amount is in “Net unrealized appreciation on open forward contracts” in the Statements of Financial Condition.


	December 31, 2016
Assets
Futures Contracts
Commodity	$	307,440
Equity		235,457
Currencies		3,131
Interest Rates		207,616

Total unrealized appreciation on open futures contracts		753,644


Liabilities
Futures Contracts
Commodity		(217,794)
Equity		(73,498)
Currencies		(2,948)
Interest Rates		(90,758)

Total unrealized depreciation on open futures contracts		(384,998)

Net unrealized appreciation on open futures contracts	$	368,646	*


Assets
Forward Contracts
Commodity	$	82,024
Currencies		548,488

Total unrealized appreciation on open forward contracts		630,512


Liabilities
Forward Contracts
Commodity		(291,675)
Currencies		(441,184)

Total unrealized depreciation on open forward contracts		(732,859)

Net unrealized depreciation on open forward contracts	$	(102,347)	**

This amount is in “Net unrealized appreciation on open futures contracts” in the Statements of Financial Condition.

This amount is in “Net unrealized depreciation on open forward contracts” in the Statements of Financial Condition.

The following table indicates the trading gains and losses, by market sector, on derivative instruments for the years ended December 31, 2017, 2016 and 2015, respectively.


Sector	2017			2016			2015
Commodity	$	37,687		$	(1,989,218)		$	5,506,589
Equity		3,242,168			(90,552)			(261,308)
Currencies		(1,407,887)			(830,022)			(387,477)
Interest Rates		(1,397,885)			992,770			(293,651)

Total	$	474,083	***	$	(1,917,022)	***	$	4,564,153	***

*** This amount is in “Total trading results” in the Statements of Income and Expenses.

MORGAN STANLEY SMITH BARNEY CHARTER ASPECT L.P. 10-K