| 2. SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
| Dec. 31, 2014 |
| Notes to Financial Statements | |
| SIGNIFICANT ACCOUNTING POLICIES | A. | Method of Reporting | | | | | | | |
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| The Partnership’s financial statements are prepared in accordance with Accounting Principles Generally Accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions 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 income (loss) and expenses during the reporting period. Actual results could differ from these estimates. | | | | | | | |
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| Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), referred to as ASC or the Codification, is the single source of U.S. GAAP. | | | | | | | |
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| The Partnership has elected not to provide a statement of cash flows as permitted under ASC Topic 230, Statement of Cash Flows. | | | | | | | |
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| B. | Cash and Cash Equivalents | | | | | | | |
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| The Partnership has defined cash and cash equivalents as cash and short-term, highly liquid investments with maturities of three months or less when acquired. Money market mutual funds, which are included in cash equivalents, are classified as Level 1 fair value estimates (unadjusted quoted prices in active markets for identical assets) under the fair value hierarchy provisions as described in ASC Topic 820, Fair Value Measurement. At December 31, 2014 and 2013, the Partnership had investments in money market mutual funds of $7,751,841 and $9,774,207, respectively. Interest received on cash deposits and dividends received from money market mutual funds are included as interest income and recognized on an accrual basis. | | | | | | | |
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| C. | Due from Brokers | | | | | | | |
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| Due from brokers represents deposits required to meet margin requirements and excess funds not required for margin. Due from brokers at December 31, 2014 and 2013 consisted of cash on deposit with the brokers of $1,723,176 and $1,845,048, respectively. The Partnership is subject to credit risk to the extent any broker with whom the Partnership conducts business is unable to deliver cash balances or securities, or clear securities transactions on the Partnership’s behalf. The General Partner monitors the financial condition of the brokers with which the Partnership conducts business and believes that the likelihood of loss under the aforementioned circumstances is remote. Interest income is recognized on an accrual basis. | | | | | | | |
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| D. | Investments in Futures Contracts, Options on Futures Contracts, and Forward Currency Contracts | | | | | | | |
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| Investments in futures contracts, options on futures contracts, and forward currency contracts are recorded on the trade date and open contracts are reported in the financial statements at their fair value on the last business day of the reporting period. The fair value of exchange-traded futures and options on futures contracts is determined by the various futures exchanges, and reflects the settlement price for each contract as of the close of the last business day of the reporting period. Accordingly, such contracts are classified as Level 1 fair value estimates under the fair value hierarchy as described within ASC Topic 820, Fair Value Measurement. The fair value of forward currency (non-exchange traded) contracts is determined based on the interpolation of mid spot rates and forward points, as provided by a leading data provider. Such valuation technique for forward currency contracts represents both a market approach and an income approach to fair value measurements, and accordingly, forward currency contracts are categorized as Level 2 fair value estimates under ASC Topic 820. Gains or losses are realized when contracts are liquidated, on a first-in-first-out basis. Realized gains are netted with realized losses for financial reporting purposes and shown under the caption “Net realized gains on closed contracts” in the Statements of Income (Loss). | | | | | | | |
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| As the Partnership has the right of offset, the Partnership presents the aggregate net unrealized gains on open futures contracts with such brokers as “Net unrealized gains on open futures contracts” and the aggregate net unrealized losses on open futures contracts with such brokers as “Net unrealized losses on open futures contracts” in the Statements of Financial Condition, as applicable. The net unrealized gains on open futures contracts with one broker are not offset against net unrealized losses on open futures contracts from another broker in the Statements of Financial Condition where applicable (see Note 4., Derivative Instruments, for disclosures about offsetting derivative assets and liabilities). | | | | | | | |
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| Any change in net unrealized gain or loss from the preceding period is reported in the Statements of Income (Loss) under the caption “Change in net unrealized gains (losses) on open contracts”. | | | | | | | |
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| E. | Brokerage Commissions | | | | | | | |
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| Prior to November 1, 2014, the Class A limited partners paid to the General Partner a flat brokerage commission of 4.0% annually of the net asset value of the Class A limited partners’ capital as of the beginning of each month. Prior to November 1, 2014, Class B limited partners paid to the General Partner a flat brokerage commission equal to the following percentages of each Series’ applicable net asset value: Series 1 – 3%, Series 2 – 6%, and Series 3 – 5%. Effective November 1, 2014, each of Class A interests and Class B interests pay to the General Partner a flat-rate monthly brokerage commission of approximately 0.13% (1.56% per year) of the net asset value of the Class A interests and Class B interests as of the beginning of each month. The General Partner will pay from this amount all floor brokerage, exchange, clearing and NFA fees with respect to the Partnership’s trading, but the Partnership will pay all other execution costs, including give-up charges and service fees assessed by certain forward dealing desks. From these amounts, the General Partner paid (1) actual trading commissions incurred by the Partnership of $193,315 and $247,178 for the years ended December 31, 2014 and 2013, respectively, and, prior to November 1, 2014, (2) 3.0% to properly registered selling agents as their ongoing compensation for servicing Class B limited partners (and to the extent the amount was less than 3%, the brokerage commissions with respect to such Class B limited partnership interests would be reduced accordingly). Effective November 1, 2014, the properly registered selling agents are paid through the placement agent trail fee (see Note 2.I.). Approximately 35% to 45% of the actual trading commissions incurred by the Partnership is remitted by the brokers to an Introducing Broker affiliated with Bridgeton. | | | | | | | |
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| Brokerage commissions charged to each Class or Series of class were as follows for the years ended December 31: | | | | | | | |
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| | 2014 | | | 2013 | |
| Class A | | $ | 317,915 | | | $ | 498,031 | |
| Class B – Series 1 | | | 13,778 | | | | 46,278 | |
| Class B – Series 2 | | | 3,606 | | | | 5,065 | |
| Class B – Series 3 | | | 1,942 | | | | 2,152 | |
| Total | | $ | 337,241 | | | $ | 551,526 | |
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| As of December 31, 2014 and 2013, $9,815 and $17,557, respectively, were due from the General Partner for reimbursement of brokerage commissions advanced by the Partnership. |
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| F. | Allocation of Income (Loss) | | | | | | | |
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| Net realized and unrealized trading profits and losses, interest income and other operating income and expenses, except Class or Series specific brokerage commission charges or placement agent trail fees, are allocated to the partners monthly in proportion to their capital account balances, as defined in the Agreement. Class and/or Series specific commission charges or placement agent trail fees are allocated monthly to the partners of the respective Class and/or Series in proportion to their respective capital account balances within the Class and/or Series. | | | | | | | |
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| G. | Incentive Fees | | | | | | | |
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| Pursuant to the Trading Advisory Agreements with Willowbridge (“Willowbridge Agreement”), QIM (“QIM Agreement”), DPT (“DPT Agreement”), PJM (“PJM Agreement”), 3D Capital (“3D Capital Agreement”), Revolution (“Revolution Agreement”), and Bridgeton (“Bridgeton Agreement”), the Trading Advisors are entitled to an incentive fee based on the New Profits, the New Net Profits, the New Trading Profits, the New Net Total Return, or the Net New High Profits, as defined in the applicable Trading Advisory Agreements, of the Partnership’s trading assets allocated to the respective Trading Advisor. The Trading Advisors earn such incentive fees on a quarterly basis, except for 3D Capital; 3D Capital was entitled to a monthly incentive fee. |
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| Willowbridge was entitled to a quarterly incentive fee of 25% of any New Profits, as defined in the Willowbridge Agreement. The term “New Profits” for the purpose of calculating Willowbridge’s incentive fee only, is defined as the excess (if any) of (A) the net asset value of the Partnership’s trading assets allocated to Willowbridge as of the last day of any calendar quarter (before deduction of incentive fees paid or accrued for such quarter), over (B) the net asset value of the Partnership’s trading assets allocated to Willowbridge as of the last day of the most recent quarter for which an incentive fee was paid or payable (after deduction of such incentive fee). In computing New Profits, the difference between (A) and (B) above was (i) increased by the amount of any distributions or redemptions paid or accrued by the Partnership as of or subsequent to the date in (B) through the date in (A), (ii) adjusted (either decreased or increased, as the case may be) to reflect the amount of any additional allocations or negative reallocations of Partnership assets from the date in (B) to the last day of the quarter as of which the current incentive fee calculation is made, and (iii) increased by the amount of any losses attributable to redemptions. |
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| QIM was entitled to a quarterly incentive fee of 30% of any New Net Profits (as defined in the QIM Agreement) in the Partnership’s account as of each calendar quarter end. “New Net Profits”, for the purpose of calculating QIM’s incentive fee, is defined as the excess of cumulative gain/loss from commodity trading (excluding interest) less trading and management fees over its highest past value at any prior calendar quarterly period with respect to trading assets allocated to QIM. The “gain/loss from commodity trading” is the net gain or loss from closed and completed commodity transactions (after brokerage commissions) plus the increases/decreases in the value of open positions at the end of each calendar quarter (accounting for commissions that would be incurred by closing such open positions). In the event of any subsequent losses, the quarterly incentive fees were not charged until there were New Net Profits to offset such losses. |
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| DPT was entitled to a quarterly incentive fee of 10% of any New Trading Profits (as defined in the DPT Agreement) in the Partnership’s account as of each calendar quarter end. “New Trading Profits”, for the purpose of calculating DPT’s incentive fee, is defined as the excess of cumulative gain/loss from commodity trading (excluding interest) less trading and management fees over its highest past value at any prior calendar quarterly period with respect to trading assets allocated to DPT. The “gain/loss from commodity trading” is the net gain or loss from closed and completed commodity transactions (after brokerage commissions) plus the increases/decreases in the value of open positions at the end of each calendar quarter (accounting for commissions that would be incurred by closing such open positions). In the event of any subsequent losses, the quarterly incentive fees were not charged until there were New Trading Profits to offset such losses. |
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| PJM was entitled to a quarterly incentive fee of 20% of any New Trading Profits (as defined in the PJM Agreement) in the Partnership’s account as of each calendar quarter end. “New Trading Profits”, for the purpose of calculating PJM’s incentive fee, is defined as the excess of cumulative gain/loss from commodity trading (excluding interest) less trading and management fees over its highest past value at any prior calendar quarterly period with respect to trading assets allocated to PJM. The “gain/loss from commodity trading” is the net gain or loss from closed and completed commodity transactions (after brokerage commissions) plus the increases/decreases in the value of open positions at the end of each calendar quarter (accounting for commissions that would be incurred by closing such open positions). In the event of any subsequent losses, the quarterly incentive fees were not charged until there were New Trading Profits to offset such losses. |
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| 3D Capital traded allocated assets pursuant to two separate trading programs. 3D Capital was entitled to a monthly incentive fee of 15% of any New Net Profits (as defined in the 3D Capital Agreement) in the Partnership’s account for the respective trading program as of each calendar month end. “New Net Profits,” for the purpose of calculating 3D Capital’s incentive fee, is defined as 1) all realized gains and losses; plus 2) the change in value of open positions during the month; plus 3) interest earned in any account; minus 4) all commissions, transaction and other expenses incurred during the period, including the management fees and accounting fees. If New Net Profits for a month were negative, no incentive fee was generated and the negative amount constituted a “carryforward loss” for the beginning of the next month and was added to any carryforward loss since the last incentive fee was earned. 3D Capital did not earn additional incentive fees until New Net Profits generated since the last incentive fee was earned exceeded the aggregate carryforward loss recognized since the last incentive fee was earned. The effect of this calculation prevented 3D Capital from earning incentive fees on the recoupment of prior losses. |
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| Revolution was entitled to a quarterly incentive fee of 20% of any New Net Total Return (as defined in the Revolution Agreement) in the Partnership’s account as of each calendar quarter end. “New Net Total Return”, for the purpose of calculating Revolution’s incentive fee, is computed using the formula: (1) the net of realized profits and loss during the period, plus (2) the change in unrealized profit and loss on open positions during the period, plus (3) accrued interest income, minus (4) all brokerage commissions, transaction fees, management fees and other charges incurred during the period and minus (5) cumulative net loss, if any, carried over from previous periods. Cumulative net loss shall be computed by totaling all net profit in each period (quarter or month) in which there was such a profit and subtracting from it all net loss in each period (quarter or month) in which there was such a loss, provided that the full cumulative net loss would not be carried over where a withdrawal had occurred. Instead, a portion of the loss (calculated by dividing the withdrawn amount by the total under management and multiplying the result by the cumulative net loss) attributable to the withdrawn amount would first be subtracted from the cumulative net loss. |
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| Bridgeton is entitled to a quarterly incentive fee equal to 10% of the Net New High Profits (as defined in the Bridgeton agreement). “Net New High Profits” is defined as the excess of the cumulative realized and unrealized gain or loss from commodity trading plus interest, less monthly management fees and previous incentive fees over the highest past value at any previous calendar quarter end. In the event of subsequent losses, the incentive fee would not be charged until there are “Net New High Profits.” Incentive fees once earned are not subject to refund if subsequent periods result in losses. The incentive fee will be waived until such time that the respective Class or Series’ unit net asset value exceeds the high water mark achieved in December 2008. |
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| There were no incentive fees earned for Bridgeton, DPT, PJM, or QIM for the years ended December 31, 2014 and 2013. Incentive fees earned by Trading Advisors were as follows for the years ended December 31: | | | | | | | |
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| | 2014 | | | 2013 | |
| 3D Capital | | $ | - | | | $ | 9,999 | |
| Revolution | | | 22,236 | | | | 32,329 | |
| Willowbridge | | | 7,058 | | | | 319,982 | |
| Total | | $ | 29,294 | | | $ | 362,310 | |
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| As of December 31, 2013, incentive fees of $32,329 was due to Revolution. |
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| H. | Management Fees | | | | | | | |
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| Through October 31, 2014, the General Partner charged a general partner management fee each beginning of month at 1/12 of 1% of the Partnership’s net assets as of the beginning of the respective month. Effective November 1, 2014, the General Partner charges such management fee each beginning of month at 1/12 of 0.35% of the Partnership’s net assets as of the beginning of the respective month. For the years ended December 31, 2014 and 2013, such annual fees amounted to $84,390 and $141,080, respectively. | | | | | | | |
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| The Partnership paid to Willowbridge a quarterly trading advisor management fee of 0.25% (1% per year) of the Partnership’s trading assets allocated to Willowbridge. The Partnership paid PJM a monthly trading advisor management fee of 0.166% (2% per year) of the Partnership’s trading assets allocated to PJM. | | | | | | | |
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| The Partnership paid DPT a monthly trading advisor management fee of 0.083% (1% per year) of the Partnership’s trading assets allocated to DPT. The Partnership paid 3D Capital a monthly trading advisor management fee of 0.125% (1.5% per year) of the Partnership’s trading assets allocated to 3D Capital. The Partnership paid Revolution a monthly trading advisor management fee of 0.083% (1% per year) of the Partnership’s trading assets allocated to 3D Capital. The Partnership pays Bridgeton a monthly trading advisor management fee of 0.07083% (0.85% per year) of the Partnership’s trading assets allocated to Bridgeton. QIM was not paid a trading advisor management fee. The aggregate trading assets allocated to the Trading Advisors may exceed the net asset value of the Partnership, and accordingly management fees may exceed that which would be assessed based on net asset value. | | | | | | | |
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| Management fees earned by the Trading Advisors were as follows for the years ended December 31: | | | | | | | |
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| | 2014 | | | 2013 | |
| 3D Capital | | $ | - | | | $ | 18,572 | |
| Bridgeton | | | 17,085 | | | | - | |
| DPT | | | - | | | | 1,130 | |
| PJM | | | - | | | | 22,602 | |
| Revolution | | | 25,200 | | | | 6,713 | |
| Willowbridge | | | 47,035 | | | | 81,807 | |
| Total | | $ | 89,320 | | | $ | 130,824 | |
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| As of December 31, 2014, management fees of $253 was due to Bridgeton. As of December 31, 2013, Willowbridge, 3D Capital, and Revolution were due trading advisor management fees of $17,622, $1,739, and $3,380, respectively. |
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| I. | Placement Agent Trail Fees | | | | | | | |
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| Effective November 1, 2014, the Partnership pays properly registered selling agents a monthly Placement Agent Trail Fee of 0.083% (1.0% per year) for their ongoing service to the Partnership with regard to any Class A interests sold by said selling agents or a fee of 0.167% (2.0% per year) for their ongoing service to the Partnership with regard to any Class B2 interests sold by said selling agents. There is no Placement Agent Trail Fee paid by Class B1 interests. Prior to November 1, 2014, the General Partner paid such selling agent fees from the flat-rate General Partner brokerage commission charged to the Partnership. Placement agent trail fees separately paid by the Partnership for the year ended December 31, 2014 totaled $15,547. |
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| J. | Income Taxes | | | | | | | |
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| No provision for income taxes has been provided in the accompanying financial statements as each partner is individually liable for taxes, if any, on his or her share of the Partnership’s profits. |
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| The Partnership applies the provisions of Codification Topic 740, Income Taxes, which prescribe the minimum recognition threshold a tax position must meet in connection with accounting for uncertainties in income tax positions taken or expected to be taken by an entity before being measured and recognized in the financial statements. This accounting standard requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Partnership’s financial statements to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions with respect to tax at the Partnership level not deemed to meet the “more-likely-than-not” threshold would be recorded as an expense in the current year. The Partnership has elected an accounting policy to classify interest and penalties, if any, as interest expense. The General Partner has concluded there is no tax expense or interest expense related to uncertainties in income tax positions for the years ended December 31, 2014 and 2013. |
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| The Partnership files U.S. federal and state tax returns. The 2011 through 2014 tax years generally remain subject to examination by U.S. federal and most state authorities. |
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| K. | Subscriptions | | | | | | | |
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| Partnership units may be purchased on the first day of each month at the net asset value per unit determined on the last business day of the previous month. Partners’ contributions received in advance for subscriptions are recorded as prepaid subscriptions in the Statements of Financial Condition. |
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| L. | Redemptions | | | | | | | |
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| Limited partners may redeem some or all of their units at net asset value per unit as of the last business day of each month with at least ten days written notice to the General Partner. | | | | | | | |
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| M. | Foreign Currency Transactions | | | | | | | |
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| 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 respective 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. Realized gains resulting from the translation to U.S. dollars totaled $6,518 and $3,559 for the years ended December 31, 2014 and 2013, respectively, and are reported as a component of “Net realized gains on closed contracts” in the Statements of Income (Loss). | | | | | | | |
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| N. | Recent Accounting Pronouncement | | | | | | | |
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| In June 2013, the FASB issued Accounting Standards Update No. 2013-08 (ASU 2013-08), entitled Financial Services – Investment Companies (Topic 946) – Amendments to the Scope, Measurement, and Disclosure Requirements. ASU 2013-08 changes the approach to assessing whether an entity is an investment company, clarifies the characteristics of an investment company and provides comprehensive guidance for assessing whether an entity is an investment company. In addition, ASU 2013-08 requires non-controlling ownership interests in other investment companies to be measured at fair value and requires additional disclosures about the investment company’s status as an investment company. ASU 2013-08 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2013. The adoption of ASU 2013-08 did not have a material impact on the Partnership’s financial statements. | | | | | | | |
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| O. | Indemnifications | | | | | | | |
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| The Partnership has entered into agreements which provide for the indemnifications against losses, costs, claims and liabilities arising from the performance of its obligations under such agreements, except for gross negligence or bad faith. The Partnership’s individual maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Partnership that have not yet occurred. The Partnership generally expects the risk of loss from indemnification claims in the future to be remote. | | | | | | | |
