Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Alternative Asset Growth Fund, L.P.
Commission File #0-18500
Dear Sirs:
This filing contains Form 10-Q for the quarter ended September 30, 2003.March 31, 2004.
Very truly yours,
Gary D. Halbert, President
ProFutures, Inc., General Partner
Alternative Asset Growth Fund, L.P.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
X Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended September 30, 2003March 31, 2004
------------
Commission File Number 0-18500
------------
Alternative Asset Growth Fund, L.P.
-----------------------------------
(Exact name of Partnership)
Delaware 74-2546493
- ----------------------- ------------------------------------
(State of Organization) (I.R.S. Employer Identification No.)
ProFutures, Inc.
11612 Bee Cave Road, Suite 100
Austin, Texas 78738
------------------------------
(Address of principal executive office)
Partnership's telephone number
(800) 348-3601
--------------
Indicate by check mark whether the Partnership (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 Partnership 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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes
No X
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
ALTERNATIVE ASSET GROWTH FUND, L.P.
STATEMENTS OF FINANCIAL CONDITION
September 30, 2003March 31, 2004 (Unaudited) and December 31, 20022003 (Audited)
-----------
September 30,March 31, December 31,
2004 2003 2002
---- ----
ASSETS
Equity in broker trading accounts
Cash $ 5,307,9535,778,437 $ 6,052,2895,199,101
Net option premiums (received) (15,150) 0
Unrealized gain on open futures contracts 143,590 450,588204,656 372,991
----------- -----------
Deposits with broker 5,451,543 6,502,8775,967,943 5,572,092
Cash and cash equivalents 874,477 2,9192,686 3,339
Cash deposits in forward trading
collateral accounts 815,735 787,636
Unrealized gain (loss) on open forward contracts (225) 05,045 22,416
----------- -----------
Total assets $ 6,325,7956,791,409 $ 6,505,7966,385,483
=========== ===========
LIABILITIES
Accounts payable $ 20,69915,700 $ 22,38314,206
Commissions and other trading fees
on open contracts 5,054 8,4717,977 7,187
Incentive fees payable 21,006 28,982196,654 47,603
Management fees payable 54,991 70,13559,666 55,583
Redemptions payable 53,528 16,372159,343 221,241
----------- -----------
Total liabilities 155,278 146,343439,340 345,820
----------- -----------
PARTNERS' CAPITAL (Net Asset Value)
General Partner - 101 units outstanding
at September 30, 2003March 31, 2004 and December 31, 2002 133,500 133,6112003 152,869 137,933
Limited Partners - 4,5874,113 and 4,7264,340 units
outstanding at September 30, 2003March 31, 2004 and
December 31, 2002 6,037,017 6,225,8422003 6,199,200 5,901,730
----------- -----------
Total partners' capital
(Net Asset Value) 6,170,517 6,359,4536,352,069 6,039,663
----------- -----------
$ 6,325,7956,791,409 $ 6,505,7966,385,483
=========== ===========
See accompanying notes.
ALTERNATIVE ASSET GROWTH FUND, L.P.
CONDENSED SCHEDULE OF INVESTMENTS
September 30,March 31, 2004 (Unaudited) and December 31, 2003 (Unaudited)(Audited)
-----------
March 31, 2004 December 31, 2003
------------------ -------------------
% of % of
Net Asset Net Asset
Description Value Value Value Value
----------- ----- --------- ----- ---------
LONG FUTURES CONTRACTS
- ----------------------
% of Net
Description Value Asset Value
----------- ----- -----------
Agricultural $ 45,300 0.73704 0.01 % $ 7,743 0.13 %
Currency 211,741 3.43(21,749) (0.34)% 99,904 1.66 %
Energy 760 0.01(216) (0.00)% 36,223 0.60 %
Interest rate 84,241 1.36135,887 2.14 % 29,036 0.48 %
Metal 15,614 0.2563,160 0.99 % 100,416 1.66 %
Stock index (138,672) (2.25)41,296 0.65 % --------- ------107,513 1.78 %
-------- ------- -------- -------
Total long futures contracts $ 218,984 3.55$219,082 3.45 % --------- ------$380,835 6.31 %
-------- ------- -------- -------
SHORT FUTURES CONTRACTS
- -----------------------
Agricultural $ (18) (0.00)(7,379) (0.12)% $ 2,672 0.04 %
Currency (4,430) (0.07)(6,012) (0.09)% (8,313) (0.13)%
Energy (61,138) (0.99)(560) (0.01)% 0 0.00 %
Interest rate (11,928) (0.19)718 0.01 % (3,673) (0.06)%
Metal (1,988) (0.03)% 0 0.00 %
Stock index 2,120 0.03 (3,780) (0.06)% --------- ------1,470 0.02 %
-------- ------- -------- -------
Total short futures contracts $(19,001) (0.30)% $ (75,394) (1.22)(7,844) (0.13)%
--------- -------------- ------- -------- -------
Total futures contracts $200,081 3.15 % $372,991 6.18 %
======== ======= ======== =======
WRITTEN OPTIONS ON FUTURES CONTRACTS
- ------------------------------------
Stock Index Options $(10,575) (0.17)% $ 143,590 2.330 0.00 %
========= ======-------- ------- -------- -------
Total written options on
futures contracts (premiums
received - $15,150 and
$0, respectively) $(10,575) (0.17)% $ 0 0.00 %
======== ======= ======== =======
FORWARD CURRENCY CONTRACTS
- -------------------------------
% of Net
Description Value Asset Value
----------- ----- -------------------------------------
Long forward currency
contracts $ (11,860) (0.19)$(23,944) (0.38)% $(52,165) (0.86)%
Short forward currency
contracts 11,635 0.1928,989 0.46 % ---------74,581 1.23 %
-------- ------- -------- -------
Total forward currency
contracts $ (225) 0.005,045 0.08 % =========$ 22,416 0.37 %
======== ======= ======== =======
See accompanying notes.
ALTERNATIVE ASSET GROWTH FUND, L.P.
STATEMENTS OF OPERATIONS
For the Three Months Ended September 30,March 31, 2004 and 2003 and 2002
(Unaudited)
-----------
Three Months Ended
September 30,March 31,
2004 2003 2002
--------- ---------
INCOME
FuturesTRADING GAINS (LOSSES)
Gain (loss) from futures trading gains (losses)
Realized $ (538,396)1,183,329 $ 1,367,2701,124,524
Change in unrealized 371,652 3,022(168,335) (485,751)
Brokerage commissions (45,815) (43,941)
----------- -----------
Gain from futures trading 969,179 594,832
----------- -----------
Gain (loss) from forward trading
(166,744) 1,370,292
----------- -----------
Forward trading gains (losses)
Realized 71,29027,142 0
Change in unrealized (225)(17,371) 0
----------- -----------
Gain from forward trading 71,0659,771 0
----------- -----------
Total trading gains 978,950 594,832
----------- -----------
NET INVESTMENT INCOME (LOSS)
Income
Interest income 15,099 27,74314,036 21,065
----------- -----------
Total income (loss) (80,580) 1,398,035
----------- -----------
EXPENSES
Brokerage commissions 36,736 42,113Expenses
Incentive fees 21,006 209,675196,654 126,131
Management fees 107,798 121,394112,676 122,374
Operating expenses 36,584 29,49040,232 29,727
----------- -----------
Total expenses 202,124 402,672349,562 278,232
----------- -----------
NET INCOME (LOSS) $ (282,704) $ 995,363
=========== ===========
NET INCOME (LOSS) PER GENERAL
AND LIMITED PARTNER UNIT
(based on weighted average number of
units outstanding during the period
of 4,738 and 4,938, respectively) $ (59.66) $ 201.55
=========== ===========
INCREASE (DECREASE) IN NET ASSET VALUE
PER GENERAL AND LIMITED PARTNER UNIT $ (59.64) $ 201.45
=========== ===========
See accompanying notes.
ALTERNATIVE ASSET GROWTH FUND, L.P.
STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 2003 and 2002
(Unaudited)
-----------
Nine Months Ended
September 30,
2003 2002
--------- ---------
INCOME
Futures trading gains (losses)
Realized $ 889,123 $ 1,344,803
Change in unrealized (306,998) 190,460
----------- -----------
Gain from trading 582,125 1,535,263
----------- -----------
Forward trading gains (losses)
Realized 71,290 0
Change in unrealized (225) 0
----------- -----------
Gain from trading 71,065 0
----------- -----------
Interest income 54,876 76,426
----------- -----------
Total income 708,066 1,611,689
----------- -----------
EXPENSES
Brokerage commissions 115,769 168,342
Incentive fees 159,089 209,968
Management fees 339,418 337,523
Operating expenses 92,855 79,841
----------- -----------
Total expenses 707,131 795,674Net investment (loss) (335,526) (257,167)
----------- -----------
NET INCOME $ 935643,424 $ 816,015337,665
=========== ===========
NET INCOME PER GENERAL AND LIMITED PARTNER UNIT
(based on weighted average number of units
outstanding during the period of 4,7884,375 and
5,144,4,826, respectively) $ 0.20147.08 $ 158.6269.96
=========== ===========
INCREASE (DECREASE) IN NET ASSET VALUE PER
GENERAL AND LIMITED PARTNER UNIT $ (1.09)147.27 $ 176.3969.95
=========== ===========
See accompanying notes.
ALTERNATIVE ASSET GROWTH FUND, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (NET ASSET VALUE)
For the NineThree Months Ended September 30,March 31, 2004 and 2003 and 2002
(Unaudited)
-----------
Total Partners' Capital
Number of ----------------------------------
Units General Limited Total
----------- -------- ----------- -----------
Balances at
December 31, 2003 4,441 $137,933 $ 5,901,730 $ 6,039,663
Net income for the
three months ended
March 31, 2004 14,936 628,488 643,424
Redemptions (227) 0 (331,018) (331,018)
------ -------- ----------- -----------
Balances at
March 31, 2004 4,214 $152,869 $ 6,199,200 $ 6,352,069
====== ======== =========== ===========
Balances at
December 31, 2002 4,827 $133,611 $ 6,225,842 $ 6,359,453
Net income (loss)for the
ninethree months ended
September 30,March 31, 2003 (111) 1,046 9357,095 330,570 337,665
Redemptions (139)(4) 0 (189,871) (189,871)(6,479) (6,479)
------ -------- ----------- -----------
Balances at
September 30,March 31, 2003 4,688 $133,5004,823 $140,706 $ 6,037,0176,549,933 $ 6,170,517
====== ======== =========== ===========
Balances at
December 31, 2001 5,438 $106,803 $ 6,225,137 $ 6,331,940
Net income for the
nine months ended
September 30, 2002 19,178 796,837 816,015
Additions 10 10,000 0 10,000
Redemptions (550) 0 (591,233) (591,233)
------ -------- ----------- -----------
Balances at
September 30, 2002 4,898 $135,981 $ 6,430,741 $ 6,566,7226,690,639
====== ======== =========== ===========
Net asset value
per unit at
December 31, 2001 $ 1,164.33
===========
September 30, 2002 $ 1,340.72
===========
December 31, 2002 $ 1,317.35
===========
September 30,March 31, 2003 $ 1,316.261,387.30
===========
December 31, 2003 $ 1,359.96
===========
March 31, 2004 $ 1,507.23
===========
See accompanying notes.
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
-----------
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
-----------------------------------------------------------
A. General Description of the Partnership
Alternative Asset Growth Fund, L.P. (the Partnership) is a Delaware
limited partnership which operates as a commodity investment pool.
The Partnership engages in the speculative trading of futures and
options on futures contracts and interbank forward currency contracts.
B. Regulation
As a registrant with the Securities and Exchange Commission, the
Partnership is subject to the regulatory requirements under the
Securities Act of 1933 and the Securities Exchange Act of 1934. As a
commodity investment pool, the Partnership is subject to the
regulations of the Commodity Futures Trading Commission, an agency of
the United States (U.S.) government which regulates most aspects of
the commodity futures industry; rules of the National Futures
Association, an industry self-regulatory organization; and the
requirements of commodity exchanges, Futures Commission Merchants
(brokers), and interbank market makers through which the Partnership
trades.
C. Method of Reporting
The Partnership's financial statements are presented in accordance
with accounting principles generally accepted in the United States of
America, which require the use of certain estimates made by the
Partnership's management. Transactions are accounted for on the trade
date. Gains or losses are realized when contracts are liquidated.
Unrealized gains or losses on open contracts (the difference between
contract trade price and market price) are reflected in the statement
of financial condition 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.
For purposes of both financial reporting and calculation of redemption
value, Net Asset Value per Unit is calculated by dividing Net Asset
Value by the total number of units outstanding.
D. Brokerage Commissions
Brokerage commissions include other trading fees and are charged to
expense when contracts are opened.
E. Income Taxes
The Partnership prepares calendar year U.S. and applicable state
information tax returns and reports to the partners their allocable
shares of the Partnership's income, expenses and trading gains or
losses.
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
-----------
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
-----------------------------------------------------------
F. Foreign Currency Transactions
The Partnership's functional currency is the U.S. dollar; however, it
transacts business in currencies other than the U.S. dollar. Assets
and liabilities denominated in currencies other than the U.S. dollar
are translated into U.S. dollars at the rates in effect at the date of
the statement of financial condition. Income and expense items
denominated in currencies other than the U.S. dollar are translated
into U.S. dollars at the rates in effect during the period. Gains and
losses resulting from the translation to U.S. dollars are reported in
income currently.
G. Statements of Cash Flows
The Partnership has elected not to provide statements of cash flows as
permitted by Statement of Financial Accounting Standards No. 102 -
"Statement of Cash Flows - Exemption of Certain Enterprises and
Classification of Cash Flows from Certain Securities Acquired for
Resale."
H. Interim Financial Statements
In the opinion of management, the unaudited interim financial
statements reflect all adjustments, which were of a normal and
recurring nature, necessary for a fair presentation of financial
position as of September 30, 2003,March 31, 2004, and the results of operations for the
three and nine months ended September 30, 2003March 31, 2004 and 2002.2003.
Note 2. GENERAL PARTNER
---------------
The General Partner of the Partnership is ProFutures, Inc., which
conducts and manages the business of the Partnership. The Agreement
of Limited Partnership requires the General Partner to contribute to
the Partnership an amount equal to at least the greater of (i) 3% of
aggregate capital contributions of all partners or $100,000, whichever
is less, or (ii) the lesser of 1% of the aggregate capital
contributions of all partners or $500,000.
The Agreement of Limited Partnership also requires that the General
Partner maintain a net worth at least equal to the sum of (i) the
lesser of $250,000 or 15% of the aggregate capital contributions of
any limited partnerships for which it acts as general partner and
which are capitalized at less than $2,500,000; and (ii) 10% of the
aggregate capital contributions of any limited partnerships for which
it acts as general partner and which are capitalized at greater than
$2,500,000.
ProFutures, Inc. has callable subscription agreements with ABN AMRO
Incorporated (ABN), the Partnership's broker, whereby ABN has
subscribed to purchase (up to $7,000,000 subject to conditions set
forth in the subscription agreement as amended effective May 20, 2002)
the number of shares of common stock of ProFutures, Inc. necessary to
maintain the General Partner's net worth requirements.
The Partnership pays the General Partner a monthly management fee of
1/6 of 1% (2% annually) of month-end Net Asset Value.
Total management fees earned by ProFutures, Inc. for the three months
ended March 31, 2004 and 2003 were $32,102 and $34,404, respectively.
Management fees payable to ProFutures, Inc. as of March 31, 2004 and
December 31, 2003 were $10,898 and $10,478, respectively.
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
-----------
Note 2. GENERAL PARTNER (CONTINUED)
---------------------------
Total management fees earned by ProFutures, Inc. for the nine months
ended September 30, 2003 and 2002 were $99,806 and $88,004,
respectively. Such management fees earned for the three months ended
September 30, 2003 and 2002 were $31,540 and $31,790, respectively.
Management fees payable to ProFutures, Inc. as of September 30, 2003
and December 31, 2002 were $10,417 and $10,671, respectively.
Note 3. COMMODITY TRADING ADVISORS
--------------------------
The Partnership has trading advisory contracts with several commodity
trading advisors to furnish investment management services to the
Partnership. Certain advisors receive management fees ranging from 1%
to 2% annually of Allocated Net Asset Value (as defined in each
respective trading advisory contract). In addition, the trading
advisors receive quarterly incentive fees ranging from 20% to 25% of
Trading Profits (as defined).
Note 4. DEPOSITS WITH BROKER
--------------------
The Partnership deposits funds with ABN to act as broker, subject to
Commodity Futures Trading Commission regulations and various exchange
and broker requirements. Margin requirements are satisfied by the
deposit of cash with such broker. The Partnership earns interest
income on its assets deposited with the broker.
Note 5. OTHER MANAGEMENT FEES
---------------------
The Partnership employs a consultant who is paid a monthly fee of 1/6
of 1% (2% annually) of month-end Net Asset Value for administrative
services rendered to the Partnership. Total fees earned by this
consultant for the nine months ended September 30, 2003 and 2002 were
$99,806 and $88,004, respectively. Such fees earned for the three months ended September 30,March 31, 2004 and 2003 were
$32,102 and 2002 were $31,540 and $31,790,$34,404, respectively.
Kenmar Global Strategies Inc. (Kenmar) assists the General Partner in
making decisions about which commodity trading advisors to hire, the
allocations among the advisors and the day-to-day monitoring and risk
management of the Partnership's trading activities. Kenmar receives a
monthly management fee of 1/12 of 1% (1% annually) of month-end Net
Asset Value. Fees earned by Kenmar totaled $49,903$16,051 and $44,002 for
the nine months ended September 30, 2003 and 2002, respectively. Such
fees earned by Kenmar$17,202 for
the three months ended September 30,March 31, 2004 and 2003,
and 2002 totaled $15,770 and $15,895, respectively.
Note 6. DISTRIBUTIONS AND REDEMPTIONS
-----------------------------
The Partnership is not required to make distributions, but may do so
at the sole discretion of the General Partner. A Limited Partner may
request and receive redemption of units owned, subject to restrictions
in the Agreement of Limited Partnership.
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
-----------
Note 7. TRADING ACTIVITIES AND RELATED RISKS
------------------------------------
The Partnership engages in the speculative trading of U.S. and foreign
futures contracts, options on futures contracts and forward contracts
(collectively, "derivatives"). The Partnership is exposed to both
market risk, the risk arising from changes in the market value of the
contracts, and credit risk, the risk of failure by another party to
perform according to the terms of a contract.
Purchase and sale of futures and options on futures contracts requires
margin deposits with the broker. Additional deposits may be necessary
for any loss on contract value. The Commodity Exchange Act requires a
broker to segregate all customer transactions and assets from such
broker's proprietary activities. A customer's cash and other property
(for example, U.S. Treasury bills) deposited with a broker are
considered commingled with all other customer funds subject to the
broker's segregation requirements. In the event of a broker's
insolvency, recovery may be limited to a pro rata share of segregated
funds available. It is possible that the recovered amount could be
less than total cash and other property deposited.
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
-----------
Note 7. TRADING ACTIVITIES AND RELATED RISKS (CONTINUED)
------------------------------------------------
For derivatives, risks arise from changes in the market value of the
contracts. Theoretically, the Partnership is exposed to a market risk
equal to the notional contract value of futures and forward contracts
purchased and unlimited liability on such contracts sold short. As
both a buyer and seller of options, the Partnership pays or receives a
premium at the outset and then bears the risk of unfavorable changes
in the price of the contract underlying the option. Written options
expose the Partnership to potentially unlimited liability, and
purchased options expose the Partnership to a risk of loss limited to
the premiums paid.
The Partnership has a portion of its assets on deposit with a
financial institution in connection with its trading of forward
contracts and its cash management activities. In the event of a
financial institution's insolvency, recovery of Partnership assets on
deposit may be limited to account insurance or other protection
afforded such deposits. Since these forward contracts are traded in
unregulated markets between principals, the Partnership also assumes
the risk of loss from counterparty nonperformance.
The General Partner has established procedures to actively monitor
market risk and minimize credit risk, although there can be no
assurance that it will, in fact, succeed in doing so. The General
Partner's basic market risk control procedures consist of continuously
monitoring the trading activity of the various commodity trading
advisors, with the actual market risk controls being applied by
Kenmar, as a consultant, and the advisors themselves. The General
Partner seeks to minimize credit risk primarily by depositing and
maintaining the Partnership's assets at financial institutions and
brokers which the General Partner believes to be creditworthy. The
Limited Partners bear the risk of loss only to the extent of the
market value of their respective investments and, in certain specific
circumstances, distributions and redemptions received.
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
-----------
Note 8. FINANCIAL HIGHLIGHTS
--------------------
The following information presents per unit operating performance data
and other supplemental financial data for the three months ended
March 31, 2004 and nine months ended September 30, 2003 and 2002.2003. This information has been derived from
information presented in the financial statements.
Three months ended
September 30,March 31,
2004 2003 2002
(Unaudited) (Unaudited)
----------- -----------
Per Unit Performance
(for a unit outstanding throughout the entire period)
-----------------------------------------------------
Net asset value per unit at
beginning of period $1,375.90 $1,139.27$1,359.96 $1,317.35
--------- ---------
Income (loss) from operations:
Total trading gains (1) 223.97 123.23
Net investment (loss) (1), (3) (31.72) (67.39)
Net realized and change in unrealized
gain (loss) from trading (2), (3) (27.92) 268.84 (76.70) (53.28)
--------- ---------
Total income (loss) from operations (59.64) 201.45147.27 69.95
--------- ---------
Net asset value per unit at
end of period $1,316.26 $1,340.72$1,507.23 $1,387.30
========= =========
Total Return (5) (4.33)(3) 10.83 % 17.68 %
======= ======
Supplemental Data
Ratios to average net asset value: (6)
Expenses prior to incentive fees (4) 9.23 % 9.83 %
Incentive fees 1.34 % 13.65 %
------ -------
Total expenses (1) 10.57 % 23.48 %
======= =======
Net investment (loss) (4) (8.27)% (8.02)%
======= =======
Nine months ended
September 30,
2003 2002
(Unaudited) (Unaudited)
----------- -----------
Per Unit Performance
(for a unit outstanding throughout the entire period)
-----------------------------------------------------
Net asset value per unit at
beginning of period $1,317.35 $1,164.33
--------- ---------
Income (loss) from operations:
Net investment (loss) (1), (3) (112.04) (107.09)
Net realized and change in unrealized
gain from trading (2), (3) 110.95 283.48
--------- ---------
Total income (loss) from operations (1.09) 176.39
--------- ---------
Net asset value per unit at
end of period $1,316.26 $1,340.72
========= =========
Total Return (5) (0.08)% 15.155.31 %
======= =======
Supplemental Data
Ratios to average net asset value:
(6)
Expenses prior to incentive fees (4) 8.739.73 % 9.548.88 %
Incentive fees 3.21(3) 3.13 % 4.801.84 %
------- -------
Total expenses (1) 11.9412.86 % 14.3410.72 %
======= =======
Net investment (loss) (2), (4) (7.62)(8.84)% (7.79)(7.65)%
======= =======
Total returns are calculated based on the change in value of a unit
during the period. An individual partner's total returns and ratios
may vary from the above total returns and ratios based on the timing
of additions and redemptions.
--------------------
(1) Excludes brokerage commissions and other trading fees.
(2) Includes brokerage commissions and other trading fees.
(3) The net investment (loss) per unit is calculated by dividing the
net investment (loss) by the average number of units outstanding
during the period. The net realized and change in
unrealized gain (loss) fromTotal trading gains is a balancing amount
necessary to reconcile the change in net asset value per unit
with the other per unit information. Such balancing amount may
differ from the calculation of nettotal trading gain (loss)gains per unit
due to the timing of trading gains and losses during the period
relative to the number of units outstanding.
(4)(2) Excludes brokerage commissions, other trading fees and incentive fees.
(5)(3) Not annualized.
(6)(4) Annualized.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Critical Accounting Policies
----------------------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of income and expense during the reporting period. Management
believes that the estimates utilized in preparing the financial
statements are reasonable and prudent; however, actual results could
differ from those estimates. The Partnership's significant accounting
policies are described in detail in Note 1 to the Financial
Statements.
The Partnership records all investments at fair value in its financial
statements, with changes in fair value reported as a component of
realized and change in unrealized trading gain (loss) in the
Statements of Operations. Generally, fair values are based on market
prices; however, in certain circumstances, estimates are involved in
determining fair value in the absence of an active market closing
price (e.g., swap and forward contracts which are traded in the
inter-bank market).
A. LIQUIDITY: Substantially all of the Partnership's assets are
highly liquid, such as cash and open futures and forwardoption contracts.
It is possible that extreme market conditions or daily price
fluctuation limits at certain exchanges could adversely affect the
liquidity of open futures and forwardoption contracts. There are no
restrictions on the liquidity of these assets except for amounts
on deposit with the brokers needed to meet margin requirements on
open futures and forwardoption contracts.
B. CAPITAL RESOURCES: Since the Partnership's business is the
purchase and sale of various commodity interests, it will make
few, if any, capital expenditures.
The Partnership's offering of Units of Limited Partnership
Interest terminated in 1991.
C. RESULTS OF OPERATIONS: The Partnership's net income for the
ninethree months ended September 30,March 31, 2004 and 2003 and 2002 totaled:
2004 2003 2002
---- ----
Three months ended March 31 $ 337,665643,424 $ (465,616)
Three months ended June 30 (54,026) 286,268
Three months ended September 30 (282,704) 995,363
---------- ----------
Nine months ended September 30 $ 935 $ 816,015337,665
========== ==========
As of September 30, 2003, 4,688March 31, 2004, 4,214 Units are outstanding, including 101
General Partner Units, with an aggregate Net Asset Value of
$6,170,517$6,352,069 ($1,316.261,507.23 per Unit). This represents a decreasean increase
in Net Asset Value of $(188,936)$312,406 compared with December 31, 2002,2003,
due to first quarter net income exceeding redemptions of limited
partner units exceeding net income for the nine months ended
September 30, 2003.units.
As of September 30, 2002, 4,898March 31, 2003, 4,823 Units are outstanding, including 101
General Partner Units, with an aggregate Net Asset Value of
$6,566,722$6,690,639 ($1,340.721,387.30 per Unit). This represents an increase
in Net Asset Value of $234,782$331,186 compared with December 31, 2001. The increase is caused
by a2002,
due to first quarter net gain for the nine months ended September 30, 2002 offset byincome exceeding redemptions of limited
partner units.
ThirdFirst Quarter 20032004
------------------
The economy continued to improve in the third quarter.first quarter of 2004, and
most economic news was positive. The equityfutures markets were mostly up. Most analysts expect the economycontinued to
continue
to improve for the remainder of the year.be volatile, especially energy and currencies.
The Partnership had a lossgain of 3.70%0.76% in July. The Partnership had
losses in bonds and other interest rate contracts and foreign
currencies.January 2004. There were
gains in stock indexes, metals and interest rates. There were
small losses in energy, agricultural commodities and certain agricultural commodities.
In August 2003, theforeign
currencies.
The Partnership had a gain of 0.81%.10.13% in February 2004. The
Partnership
hadlargest gains were in foreign currencies and interest rates, with
smaller gains in energy, agricultural commodities, metals and
stock indexes and metals.
There were losses in bonds and certain agricultural commodities.
In September 2003, theindexes.
The Partnership had a loss of 1.46%. The
Partnership had0.12% in March 2004. There
were some gains in foreign currencies, which were offset by
losses in energy. The other sectors were generally flat.
The Partnership had a total return of (4.33)% for the quarterinterest rates and (0.08)% for the nine months ended September 30, 2003. For the third
quarter 2003, the majority of the Partnership's trading gains were in
stock indexes and the largest loss was in energy. In September 2003,
one new trader, Conquest Capital, was added to the Partnership.
Second Quarter 2003
-------------------
Futures were somewhat more stable in the second quarter as compared to
the first. The war with Iraq ended, and the stock markets began a
steady climb that lasted through the end of the quarter.
In April 2003, the Partnership had a loss of 0.09%. There were gains
in currencies, primarily because of the falling dollar.certain agricultural
commodities. However, these gains were mostly offset by losses in
nearly all of the other
sectors.
In May 2003,foreign currencies, equities and energy.
Overall, the Partnership gained 4.80%. The Partnership had gains
in interest rates, especially bonds. There were also gains in
currencies, metals and stock indexes. There were some losses in
energy and certain agricultural commodities.
In June 2003,ended the Partnership had a loss of 5.28%. There were losses
in interest rates, especially bonds. There were also losses in
energy, metals and certain agricultural commodities. Most other
sectors were basically flat.
At the beginning of June 2003, notional funds were added back to
trading, as the leverage was increased back to 150%. This is about
the same level as before the notional funds were temporarily
eliminated several months ago.
The Partnership hadquarter with a total return of
(0.82)% for the quarter and
4.44% for the six months ended June 30, 2003. For the second
quarter 2003, the majority of the Partnership's10.83%. The largest trading gains were in foreign currenciesthe interest rate and
the largest loss was in metals.metals sectors.
First Quarter 2003
------------------
The futures markets were quite volatile in the first quarter
of 2003. The looming war with Iraq caused energy prices to
skyrocket. Many other markets were choppy due to this
uncertainty. Consumer confidence dropped dramatically. The
traders were able to capitalize on the volatility in the markets.
In January 2003, the Partnership gained 6.01%. There were large
gains in foreign currencies and energy, with smaller gains in
interest rates, precious and base metals and stock indexes. There
were small losses in grains.
In February 2003, the Partnership gained 5.66%. There were large
gains in energy, with smaller gains in interest rates and
currencies. These were offset by losses in stock indexes and
metals. Most other sectors were basically flat.
In February 2003, the Partnership eliminated any notional funding
and traded at 100% of assets, rather than 150% of assets (with
notional funding). One advisor, Campbell & Company, also scaled
back their open positions. These changes were made due to the
uncertainty of the pending war with Iraq.
In March 2003, the Partnership lost 5.98%. There were large
losses in most sectors, especially energy, after oil prices
dropped. Some of the gains from the previous two months were
reversed in March.
Also in March 2003, Quay Capital Management had a change of
its top management, resulting in the departure of one of the
principals responsible for trading the account. As a result,
they were terminated as one of the Advisors in the Partnership.
No replacement Advisor was selected by month-end.
Overall, the Partnership had a total return of 5.31% for the three
months ended March 31, 2003. The majority of the Partnership's
trading gains were in energy and foreign currencies and the
largest loss was in stock index futures.
Third Quarter 2002
------------------
The futures markets continued to be volatile in the third quarter
of 2002. The equity markets suffered losses during the quarter,
which significantly impacted the commodities markets. The looming
threat of war with Iraq also had an impact on the markets,
especially oil and gas futures.
In July, the Partnership gained 8.13%. There were gains in
interest rates and stock indexes along with gains in certain
agricultural commodities. Those gains were partially offset
by losses in the energy complex and metals.
In August, the Partnership gained another 3.42%. Again, there
were gains in interest rate markets. There were also gains in
energy, precious metals, grains and livestock. There were losses
in foreign currencies, stock index futures, and base metals.
In September, the Partnership had another gain of 5.24%. There
were gains in interest rates along with additional gains in stock
indexes and energy. There were losses in precious metals.
The Partnership had a total return of 17.68% for the quarter and
15.15% for the nine months ended September 30, 2002. For the
third quarter 2002, the majority of the Partnership's trading
gains were in interest rate futures and stock index futures and
the largest loss was in foreign currencies.
Second Quarter 2002
-------------------
The futures markets continued to be volatile in the second quarter
of 2002, though there was a surge at the end of the quarter. The
extreme volatility of the equity markets, mainly on the downside,
had a major impact on the commodities markets. Many of the US and
overseas stock indexes and foreign currencies were very active.
Some of this was the result of the corporate scandals that
continue to rock the markets.
In April, the Partnership lost 5.15%. Although there were gains
in Swiss Francs, natural gas, and Euros, they were more than
offset by losses in the German Stock Index, the Japanese Yen,
Euribor futures, the NASDAQ 100, and various bond futures.
In May, the Partnership was essentially flat, with a loss of .17%.
There were gains in foreign currencies due to the drop of the U.S.
dollar. There were also gains in precious metals and agricultural
commodities. The gains were offset by losses in the energy
complex, interest rates and some metals.
In June, the Partnership had a gain of 11.46%. There were gains
in Euro futures and the Swiss Franc, and also a gain in EuroDollar
futures. There were also gains in various stock and bond indexes.
There were losses in British Pounds, the Nikkei Stock Index, and
Gold, but these were more than offset by the gains.
The Partnership had a total return of 5.53% for the quarter and
(2.15)% for the six months ended June 30, 2002. For the second
quarter 2002, the majority of the Partnership's trading gains
were in foreign currencies and the largest loss was in the energy
markets.
First Quarter 2002
------------------
The futures markets remained choppy in the first quarter of 2002.
While the economy was showing some signs of improvement, there
were also some negative signs that caused uncertainty. The
troubles in the Middle East lead to large increases in oil and gas
prices. Gold prices also moved higher early in the quarter, but
gave back some of their gains at the end of the quarter.
In January 2002, the Partnership lost 5.00%. There were large
losses in stock indexes and agricultural commodities. Large
losses were also incurred in interest rates and metals. Many of
the other sectors were essentially flat.
In February 2002, the Partnership lost 6.74%. The Partnership
once again experienced losses in stock indexes and interest rates.
In addition, there were also losses in the energy complex and
foreign currencies. There were some gains in agricultural
commodities and precious metals. These however, were not enough
to offset the losses for the month.
In March 2002, the Partnership managed to gain 4.66%. There were
gains in the energy complex, including Brent Crude Oil and
Unleaded Gas. There were also some gains in bonds and stock
indexes. There were losses in currencies, including the Japanese
Yen and the Swiss Franc. There were also some small losses in
cotton and aluminum. These losses however were not enough to
offset the gains.
For the first quarter 2002, the Partnership's losses overall were
primarily due to currencies and stock index futures.
Market and Credit Risk
----------------------
The General Partner, directly and/or indirectly through its
consultant, has established procedures to actively monitor
market risk and minimize credit risk, although there can be no
assurance that it will, in fact, succeed in doing so. The
General Partner's basic market risk control procedures consist of
continuously monitoring the trading activity of the various
trading advisors, with the actual market risk controls being
applied by Kenmar, as a consultant, and the advisors themselves. The General Partner seeks
to minimize credit risk primarily by depositing and maintaining
the Partnership's assets at financial institutions and brokers
which the General Partner believes to be creditworthy. The
Limited Partners bear the risk of loss only to the extent of the
market value of their respective investments and, in certain
specific circumstances, distributions and redemptions received.
Due to the speculative nature of trading commodity interests, the
Partnership's income or loss from operations may vary widely from
period to period. Management cannot predict whether the
Partnership's future Net Asset Value per Unit will increase or
experience a decline.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
D. POSSIBLE CHANGES: The General Partner reserves the right to
terminate certain and/or engage additional commodity trading
advisors in the future and reserves the right to change any of
the Partnership's clearing arrangements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
Item 4. Controls and Procedures
ProFutures, Inc., as general partnerGeneral Partner of Alternative Asset Growth Fund,
L.P., with the participation of the general partner'sGeneral Partner's President and
Chief Financial Officer, has evaluated the effectiveness of the design
and operation of its disclosure controls and procedures (as defined in
the Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) with
respect to the Partnership within 90
daysas of the filing dateend of the period covered by this
quarterly report, and, basedreport. Based on their evaluation, the President and Chief
Financial Officer have concluded that these disclosure controls and
procedures are effective. There were no significant changes in the general partner'sGeneral
Partner's internal controls with respect to the Partnership or in other factorscontrol over financial reporting applicable to the
Partnership identified in connection with the evaluation required by
paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that could significantlyoccurred
during the last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, these controls subsequentinternal control over
financial reporting applicable to the date of their evaluation.Partnership.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
Not Applicable.
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.
There were no reports filed on Form 8-K.
Exhibits filed herewith:
31.01 Certification of Gary D. Halbert, President, pursuant to Rules
13a-14 and 15d-14 of the Securities Exchange Act of 1934.
31.02 Certification of Debi B. Halbert, Chief Financial Officer,
pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange
Act of 1934.
32.01 Certification of Gary D. Halbert, President, pursuant to 18
U.S.C. Section 1350 as enacted by Section 906 of theThe Sarbanes-
Oxley Act of 2002.
32.02 Certification of Debi B. Halbert, Chief Financial Officer,
pursuant to 18 U.S.C. Section 1350 as enacted by Section 906
of theThe Sarbanes-Oxley Act of 2002.
SIGNATURESIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrantregistrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Alternative Asset Growth Fund,ALTERNATIVE ASSET GROWTH FUND, L.P.
(Registrant)
May 12, 2004 By /s/ GaryGARY D. Halbert
-----------------------------------HALBERT
- ------------------------ -----------------------------------------
Date Gary D. Halbert, President and Director
ProFutures, Inc.,
General Partner
Alternative Asset Growth Fund, L.P.May 12, 2004 By /s/ DEBI B. HALBERT
- ------------------------ -----------------------------------------
Date Debi B. Halbert, Chief Financial Officer,
Treasurer and Director
ProFutures, Inc.
General Partner
EXHIBIT 31.01
CERTIFICATION
-------------
I, Gary D. Halbert, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Alternative Asset
Growth Fund, L.P.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officersofficer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-1413a-15(e) and 15d-14)15d-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures, based on our evaluation as of the Evaluation Date;end of the period covered
by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officersofficer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent function)functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal controlscontrol over financial reporting which couldare reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls;information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.control
over financial reporting.
Date: November 10, 2003May 12, 2004
----------------------------------
/s/ GaryGARY D. HalbertHALBERT
- -----------------------------------------
Gary D. Halbert, President
ProFutures, Inc., General Partner
EXHIBIT 31.02
CERTIFICATION
-------------
I, Debi B. Halbert, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Alternative Asset
Growth Fund, L.P.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officersofficer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-1413a-15(e) and 15d-14)15d-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures, based on our evaluation as of the Evaluation Date;end of the period covered
by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officersofficer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent function)functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal controlscontrol over financial reporting which couldare reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls;information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.control
over financial reporting.
Date: November 10, 2003May 12, 2004
----------------------------------
/s/ DebiDEBI B. HalbertHALBERT
- -----------------------------------------
Debi B. Halbert, Chief Financial Officer
ProFutures, Inc., General Partner
EXHIBIT 32.01
CERTIFICATION
-------------
I, Gary D. Halbert, the President of ProFutures, Inc., as general partnerGeneral Partner of
Alternative Asset Growth Fund, L.P., certify that (i) the Form 10-Q for the
quarter ended September 30, 2003March 31, 2004 of Alternative Asset Growth Fund, L.P. fully
complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 and (ii) the information contained in the Form 10-Q for
the quarter ended September 30, 2003March 31, 2004 fairly presents, in all material respects,
the financial condition and results of operations of Alternative Asset Growth
Fund, L.P.
ALTERNATIVE ASSET GROWTH FUND, L.P.
By: ProFutures, Inc., General Partner
By: /s/ GaryGARY D. HalbertHALBERT
---------------------------------
Gary D. Halbert
President
November 10, 2003May 12, 2004
EXHIBIT 32.02
CERTIFICATION
-------------
I, Debi B. Halbert, the Chief Financial Officer of ProFutures, Inc., as general
partnerGeneral
Partner of Alternative Asset Growth Fund, L.P., certify that (i) the Form 10-Q
for the quarter ended September 30, 2003March 31, 2004 of Alternative Asset Growth Fund, L.P.
fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 and (ii) the information contained in the Form
10-Q for the quarter ended September 30, 2003March 31, 2004 fairly presents, in all material
respects, the financial condition and results of operations of Alternative
Asset Growth Fund, L.P.
ALTERNATIVE ASSET GROWTH FUND, L.P.
By: ProFutures, Inc., General Partner
By: /s/ DebiDEBI B. HalbertHALBERT
---------------------------------
Debi B. Halbert
Chief Financial Officer
November 10, 2003May 12, 2004