As Filed with the Securities and Exchange Commission on October 27, 1999
Registration No. 333-85755
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM S-1 - Amendment No. 1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
DELAWARE
[State of organization]
6289 51-0387638
(Primary SIC Number) (I.R.S. EIN)
c/o Corporate Systems, Inc.
101 N. Fairfield Dr.
Dover, DE 19901
Telephone: (302) 697-2139
(address and telephone number of registrant's principal executive offices)
Ms. Shira Del Pacult
5916 N. 300 West
Fremont, Indiana 46737
Telephone: (219) 833-1306; Facsimile (219) 833-4411
(Name, address and telephone number of agent for service of process)
Copies to:
William Sumner Scott, Esquire
The Scott Law Firm, P.A.
5121 Sarazen Drive
Hollywood, FL 33021
(954) 964-1546; Facsimile (954) 964-1548
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement
If any of the securities being offered on the Form are to be offered on a
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Title of Each Class Amount being Maximum Offering Maximum Aggregate Amount of
of Securities Being Registered:(1) Price Per Unit: (2) Offering Price: Registration Fee:
Registered:
<S> <C> <C> <C> <C>
Limited Partnership 7,000 $1,000 $7,000,000 $1,946
Interests ("Units")
</TABLE>
(1) This amount is based upon the number of Units to be initially offered.
The exact number of Units issued will vary because of the issuance of
additional Units for interest earned during the Escrow period.
(2) Initial offering price per Unit prior to the sale of the Minimum; after
sale of Minimum, trading will commence and the sales price per Unit will
fluctuate each month to reflect expenses and additions and subtractions
for trading results.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission acting pursuant to said
section 8(a), may determine.
*******************************************************************************
Prospectus
Bromwell Financial Fund, Limited Partnership
7,000 Units of Limited Partnership Interest
Sold at $1,000 per Unit Until the Minimum of 700 Units is Sold
The Offering
The partnership is a registered commodity pool which employs independent
commodity trading advisors to trade futures and forward contracts.
The partnership is managed exclusively by two general partners, Belmont Asset
Management, Inc. and Mrs. Shira Del Pacult. We refer to them collectively as
"the general partner." The general partner may employ and terminate
commodity trading advisors, as well as change the terms of their agreements
with the partnership.
The Units
The Units are offered by Futures Investment Company on a best efforts basis.
You must purchase at least $25,000 in Units, though the general partner may
reduce this to no less than $5,000. You must receive this prospectus at
least five business days before the sale of Units to you is completed.
All subscriptions received before the minimum of 700 Units is sold will be
placed in an escrow account at Star Financial Bank. Any interest accrued on
your subscription amount will be used to buy additional Units for you. If we
do not sell the minimum within one year of the date of this prospectus, we
will return your subscription with any earned interest.
After the minimum is sold, Units will be sold at their value at the end of
the month in which the subscription is received.
The Risks - These securities are highly speculative and involve a high degree
of risk. Consider carefully the risk factors beginning on page 4 of this
prospectus.
* Our business is the speculative trading in futures, commodity options and
forward contracts selected by professional commodity trading advisors.
* This partnership will pay substantial fixed management fees and commission
costs. There is no guarantee that you will receive a return on your
investment.
* The individual general partner is the principal of the general partner of
another commodity pool, Fremont Fund, LP, which has not been profitable for
the past three years.
* To receive your investment back after one year, the partnership must
generate a return of 23.57%.
* Transfer of your Units will be restricted and there are limitations on your
right to surrender your Units in return for their value (redemption). No
public market for the Units exists and none is expected to develop.
* This partnership will not make distributions. To receive a return on your
investment, you must use our redemption procedure.
* Although you will not receive distributions, you must pay Federal and state
income taxes on your share of any profits earned by this partnership.
* The general partner and affiliates have conflicts of interest with regard
to the management of this partnership.
The general partner has limited experience in the management of commodity
pools.
You are required to make representations and warranties in connection with
this investment. Therefore, you are encouraged to discuss this investment
with your individual financial and tax advisers.
The Commodity Futures Trading Commission has not passed upon the merits of
participating in this pool nor has the Commission passed on the adequacy or
accuracy of this disclosure document.
These securities have not been approved or disapproved by the Securities and
Exchange Commission, or any state securities commission or agency, nor have
any of them confirmed or passed upon the accuracy or adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
Initial Price Sales Commissions(2) Proceeds to
to Public(1) Partnership(3)
Per Limited
Partnership Unit $ 1,000 $0 $ 1,000
Total Minimum(4) $ 700,000 $0 $ 700,000
Total Maximum $7,000,000 $0 $7,000,000
Futures Investment Company
5916 N. 300 West - Fremont, Indiana 46737
Telephone: (219) 833-1306
Sales Agent/Broker-Dealer
The date of this prospectus is October 27, 1999
Commodity Futures Trading Commission - Risk Disclosure Statement
You should carefully consider whether your financial condition permits you to
participate in a commodity pool. In so doing, you should be aware that
futures and options trading can quickly lead to large losses as well as
gains. Such trading losses can sharply reduce the net asset value of the
pool and consequently the value of your interest in the pool. In addition,
restrictions on redemptions may affect your ability to withdraw your
participation in the pool.
Further, commodity pools may be subject to substantial charges for
management, and advisory and brokerage fees. It may be necessary for those
pools that are subject to these charges to make substantial trading profits
to avoid depletion or exhaustion of their assets. This disclosure document
contains a complete description of each expense to be charged this pool at
page 4 and a statement of the percentage return necessary to break even, that
is, to recover the amount of your initial investment, at page 12.
This brief statement cannot disclose all the risks and other factors
necessary to evaluate your participation in this commodity pool. Therefore,
before you decide to participate in this commodity pool, you should carefully
study this disclosure document, including a description of the principal risk
factors of this investment, at page 4.
You should also be aware that this commodity pool may trade foreign futures
or options contracts. Transactions on markets located outside the United
states, including markets formally linked to a United states market, may be
subject to regulations which offer different or diminished protection to the
pool and its participants. Further, United states regulatory authorities may
be unable to compel the enforcement of the rules of regulatory authorities or
markets in non-United states jurisdictions where transactions for the pool
may be effected.
Table of Contents
Commodity Futures Trading Commission - Risk disclosure statement ii
Table of contents v
Notice to all purchasers v
Specific notices vi
Summary of the offering 1
The partnership 1
Description of securities offered for sale 1
Plan for sale of Units and use of escrow 1
Subscription procedure 1
Who will benefit from an investment in the partnership 1
Business objectives and expenses 1
Summary risk factors 1
Charges to the partnership 2
Use of proceeds 2
Selection of commodity trading advisors and allocation of equity 2
Federal income tax aspects 2
Redemptions 2
Diagram of partnership structure & commissions 3
Risk factors 4
The general partner has only 3 years of prior operation experience. 4
We must pay substantial charges, which may limit your ability to receive a
return on your investment. 4
You may not transfer your Units and must rely on our redemption procedures to
receive your investment back. 4
Your right of redemption is limited. 4
The partnership depends upon Mrs. Pacult, and her absence could cause the
partnership to cease operations. 4
General partner and commodity trading advisor will serve other businesses and
may not have adequate time to devote to the partnership. 5
This partnership has no operating history that you can review to determine
past performance. 5
There are conflicts of interest in the partnership structure which may limit
our profits. 5
You will be taxed on profits regardless of whether they are distributed.
5
You will have to pay taxes on profits in a current year which may be lost in
future years. 5
If the general partner selects a new trading advisor, it may not be as
profitable as the previous one and will not be responsible for recouping any
previous losses. 5
The general partner may change the commodity trading advisor and its
allocation of equity without notice. 5
You will not participate in management and may not contest the business
decisions of the general partner. 5
Commodity futures trading is speculative 5
During partnership trading, a small price movement can lead to large losses. 6
The general partner does not control the trading advisor or its methods and
may not be able to prevent large losses. 6
The partnership may be unable to execute a trade before large losses are
incurred due to market illiquidity. 6
Changes in trading equity may adversely affect performance. 6
The equity raised by the sale of the minimum $700,000 of Units may be
insufficient to trade profitably. 6
Failure of commodity brokers or banks could result in loss of assets. 7
When trading in foreign exchanges, if the creditworthiness of the other
parties is not maintained, we may lose the value of our positions in those
markets. 7
Options trading is highly risky and requires less equity to secure a trade,
thus providing greater potential for loss. 7
If the price of a contract changes dramatically, we may not be able to exit
the position without sustaining substantial loss due to government imposed
price limits. 7
We may not be able to compete with others with greater resources. 7
We cannot assure that Units necessary to commence business will be sold.
7
We may not commence business at an optimal time for maximizing profits. 7
Resignation of Mrs. Pacult as a general partner and subsequent failure of
Belmont to maintain its net worth may cause suspension of trading or taxation
as a corporation. 8
The general partner will not advise you, and you must rely upon your own
investment counsel before investing in the partnership. 8
The partnership is not covered by the Investment Company Act of 1940. 8
Possibility of audit - you may be subject to audit and penalties. 8
General partner may settle IRS claim not in your best interest. 8
You may be subject to back taxes and penalties. 8
Year 2000 issues may cause temporary suspension of trading. 9
Conflicts of interest 9
General partner, the commodity trading advisor, and their principals may
preferentially trade for themselves and others. 9
Possible retention of voting control by the general partner may limit your
ability to control issues. 9
The general partner is not likely to resign, even if it would be in your best
interest. 9
Partnership fees may be higher than they would be if they were negotiated.
10
If multiple traders are employed in the future, our profitability may be
limited due to their competition for similar trades and their
unaccountability for previous losses. 10
Your ability to redeem your Units may be lessened due to the nature of the
general partner's compensation. 10
Commodity trading advisor may engage in high risk trading to generate fees.
10
No resolution of conflicts procedures 10
Interests of named experts and counsel 10
Management's discussion and analysis 10
The partnership 10
The general partners 11
Experience 11
Authority 11
Partnership books and records 11
The commodity trading advisor 11
The advisory contract 12
Business objective and expenses 12
Securities offered 13
Management's discussion 13
Description of intended operations 13
Risk control 14
Trading risks 14
Fiduciary responsibility of the general partner 14
Indemnification 15
Provisions of limited partnership agreement 15
Provisions of law 15
Provisions of federal and state securities laws 15
Provisions of the securities act of 1933 16
Provisions of the clearing agreement 16
Other indemnification provisions 16
Relationship with the futures commission merchant and the introducing broker 16
Fixed commissions are competitive 16
Trading fees 16
Relationship with the commodity trading advisor 16
The commodity trading advisor will trade for
other accounts 16
Non-disclosure of the commodity trading
advisor's methods 17
Charges to the partnership 17
Compensation of general partner 17
Compensation of the commodity trading advisor 17
Restrictions on management fees 18
Fees to futures commission merchant and compensation of introducing broker
18
Fee paid by partnership to the introducing broker 18
Brokerage fees paid by introducing broker to the futures commission merchant 18
Trailing commissions paid to others 18
Fee retained by introducing broker 18
Miscellaneous fees to futures commission
merchant 18
Rights of general partner 18
Other expenses 19
Charges to the partnership 19
Investor suitability 20
Potential advantages 20
Equity management 20
Investment diversification 20
Limited liability 20
Administrative convenience 20
Access to the cta 21
Use of proceeds 21
Determination of the offering price 21
The general partner 21
Identification 21
Shira Del Pacult 22
Ownership in commodity trading advisor and
futures commission merchant 22
Trading by the general partner; interest in the pool 22
No prior performance and regulatory notice 22
Trading management 23
Advisory agreement and power of attorney 23
No affiliation with commodity trading advisor 23
Rights of the general partner with respect to commodity trading advisor
selection and allocation of equity 23
The commodity trading advisor 23
Business background 23
Description of trading program 24
Performance record of the commodity trading advisor 25
Performance record of other programs sponsored by the general partner 26
Fremont Fund, Limited Partnership 26
Performance record of Atlas Futures Fund, Limited Partnership 27
The futures commission merchant 27
Federal income tax aspects 28
Scope of tax presentation 28
No legal opinion as to certain material tax aspects 28
Partnership tax status and net worth of the general partner 28
No IRS ruling 29
Tax opinion 29
Passive loss and unrelated business income taxes rules 30
Basis loss limitation 30
At-risk limitation 30
Income and losses from passive activities 30
Allocation of profits and losses 31
Taxation of futures and forward transactions 31
Section 988 foreign currency transactions 32
Capital gain and loss provisions 32
Business for profit 32
Self-employment income and tax 32
Individual alternative minimum tax 32
Interest related to tax exempt obligations 32
Not a tax shelter 32
Taxation of foreign partners 32
Partnership entity-audit provisions-penalties 33
Employee benefit, retirement plans and IRA's 33
The limited partnership agreement 33
Formation of the partnership 33
Units 33
Management of partnership affairs 33
Additional offerings 34
Partnership accounting, reports, and distributions 34
Federal tax allocations 34
Transfer of Units only with consent of the general partner 34
Termination of the partnership 35
Meetings 35
Redemptions 35
Plan for sale of Units 35
The selling agent 35
Escrow and commencement of business 36
Subscription procedure 36
Subscription amounts 37
Revocation 37
Net worth tests 37
Investor warranties 37
Legal matters 37
Litigation and claims 37
Legal opinion 38
Experts 38
Additional information 38
FINANCIAL STATEMENTS
A. Bromwell Financial Fund, Limited Partnership
Audited Financial Statements as of August 4, 1999
Notes to Statement of Financial Condition
B. Belmont Capital Management, Inc.
Audited Financial Statements as of August 4, 1999
Notes to Statement of Financial Condition
Appendix I - Commodity Terms And Definitions; State Regulatory Glossary
Exhibit A - Limited Partnership Agreement
Exhibit B - Request For Redemption
Exhibit C - Suitability Information
Exhibit D - Subscription Agreement And Power Of Attorney
Exhibit E - Escrow Agreement
Exhibit F - Investment Advisory Contract
Notice To All Purchasers
Until 90 days after the date hereof, all dealers effecting transactions in
the Units, whether or not participating in this distribution, may be required
to deliver a prospectus. This is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters or best efforts sellers.
The selling agent and additional sellers must also deliver any supplemented
or amended prospectus issued by the partnership.
No dealer, salesman, officer, employee or agent of the partnership or the
general partner and or any other person has been authorized, in connection
with this offering, to give any information or to make any representations
other than those contained in this prospectus and, if given or made, such
information or representations must not be relied upon as having been
authorized by the partnership, the general partner, the selling agents, or
any other person connected with this offering. This prospectus speaks as of
the date of its issuance. Neither the delivery of this prospectus nor any
sale made hereunder shall, under any circumstances, create any implication
that the information contained herein is correct as of any time subsequent to
the date hereof or that there has been no change in the affairs of the
partnership since the date of this prospectus. This prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any Units by
anyone in any state in which such offer, solicitation, or purchase is not
authorized or in which the person making the offer or solicitation is not
qualified to do so, or to any person to whom it is unlawful to make such
offer or solicitation.
The regulations of the Commodity Futures Trading Commission require that no
commodity pool operator may solicit, accept or receive funds, securities or
other property from a prospective participant in a commodity pool without
first delivering a disclosure document (this "prospectus") to such
prospective participant. The general partner must furnish all partners
annual and monthly reports complying with Commodity Futures Trading
Commission and National Futures Association requirements. The annual reports
will contain certified and audited, and the monthly reports unaudited,
financial information in regard to the operation of the partnership and its
general partner.
Bromwell Financial Fund, Limited Partnership, is not a mutual fund and is not
subject to regulation under the Investment Company Act of 1940. Consequently,
investors will not have the benefit of the protective provisions of such
legislation.
Investors must rely on their own examination of the issuer and the terms of
the offering, including the merits and risks involved. Investors should be
aware that they will be required to bear the financial risks of this
investment for an indefinite period of time. Accordingly, the Units may be
sold, assigned, transferred or otherwise disposed of only in accordance with
the terms of the limited partnership agreement, including the consent of the
general partner. No public market exists or is expected to develop for the
Units and, consequently, prospective investors who desire liquidity should
not purchase the Units. Each investor (purchaser of Units) must meet the
following suitability standards: (i) an investor must have (a) had an annual
gross income in excess of $45,000 in the last calendar year and reasonably
expects to have gross income in excess of $45,000 for the current year
together with a net worth, exclusive of principal residence, home
furnishings, and automobile of $45,000; or (b) the investor has a net worth
(exclusive of principal residence, home furnishings and automobile) in excess
of $150,000; and (ii) the investor is represented by a purchaser
representative or otherwise demonstrates to the general partner sufficient
knowledge to accept the risks of this investment. A general partnership or
other entity making investment must meet the financial suitability
requirements prescribed for natural persons. A qualified pension, profit-
sharing or Keogh employee plan, the fiduciary for such plan, or the donor of
any such plan who directly or indirectly supplies the funds to purchase an
interest (the "Units") in the partnership must meet the minimum financial
suitability standards. "Accredited investors", as that term is defined under
regulation D of the act, who have a net worth in excess of $1,000,000 are
deemed to have such knowledge and experience in financial business matters as
to be capable of evaluating the merits and risks of the proposed investment
and, at the time of purchase of a $25,000 Unit, can afford a complete loss.
The act and the securities laws of certain states grant purchasers of
securities sold, either in violation of the registration or qualification
provisions of such laws or within certain time limitations, the right to
rescind their purchase of such securities and to receive back their
consideration paid, plus interest. Many of these laws which grant the right
of rescission also provide that suits for such violations must be brought
within a specified time, usually one year from discovery of facts
constituting such violation. Should any investor institute an action on the
theory that the offering conducted as described herein was required to be
registered or qualified, the partnership will contend that the contents of
this prospectus provided notice of sufficient facts to commence the time from
which an action for rescission should have been brought. Also, should any
investor contend the offer was not qualified for presentation or the investor
not suitable to make such investment, the general partner will plead reliance
upon the information supplied by the investor in the subscription documents.
Specific Notices
Notice to California Investors
California residents are required to have a liquid net worth of $100,000 and
annual income of $50,000 to be able to purchase partnership interests in this
commodity pool. The transfer of the limited partnership interests offered
and sold pursuant to this offering can not be resold or transferred without
permission of the general partner and fulfillment of other terms and
conditions contained in the partnership agreement. Accordingly, (a) the
limited partnership, as issuer of a security upon which a restriction on
transfer has been imposed must cause a copy of rule 260.141.11 to be
delivered to each issuee or transferee of such security at the time the
certificate evidencing the security is delivered to the issuee or transferee;
and, (b) it is unlawful for the holder of any such security to consummate a
sale or transfer of such security, or any interest therein, without the prior
written consent of the commissioner (until this condition is removed pursuant
to section 260.141.12 of these rules), except as provided in the code. The
certificates, whether upon initial issuance or upon any transfer, shall bear
on their face, in capital letters of 10-point size, as follows: "it is
unlawful to consummate a sale or transfer of this security, or any interest
therein, or to receive any consideration therefor, without the prior written
con-sent of the commissioner of corporations of the state of California,
except as permitted in the commissioner's rules".
Notice to Michigan Investors
Investors who are residents of Michigan are required to have a net worth of
$225,000 or net worth of $60,000 and taxable annual income of $60,000 to be
eligible to invest in this offering of partnership interests in a commodity
pool. Net worth in all cases must be calculated exclusive of home, home
furnishings and automobiles. In addition, no more than ten percent (10%) of
the investor's net worth may be invested in this limited partnership.
Notice to Oregon Investors
Investors who are residents of Oregon are required to have a net worth of
$225,000 or net worth of $60,000 and annual income of $60,000 to be eligible
to invest in this offering of partnership interests in this commodity pool.
Notice to foreign investors
The securities have been registered with the United states securities and
exchange commission and several selected states. However, the securities may
not be offered, sold, renounced or transferred, directly or indirectly, in
the United States of America, its territories, possessions, and all areas
subject to its jurisdiction ("United States" or in Canada (collectively,
"North America"), or to or for the benefit of any person who is a national
citizen or a resident or normally a resident thereof, the estates of such a
person or any corporation or other entity created or organized under any law
of the United states or Canada or any political subdivision thereof
(collectively referred to as "North American persons") unless (i) the
securities are duly registered under the applicable state act, or (ii) an
exemption from registration under the applicable state act and the company
has received an opinion of counsel to such effect reasonably satisfactory to
it, or (iii) such securities are sold on foreign exchange in accordance with
procedures approved by such foreign stock exchange.
Summary of the Offering
This summary is to assist your understanding of the offer. To be certain you
have a full understanding of the risks of this investment, you must carefully
review the entire document, including the exhibits.
The Partnership
Bromwell Financial Fund, Limited Partnership:
* is a Delaware limited partnership organized on January 12, 1999
* maintains its main business office at c/o Corporate Systems, Inc. 101 North
Fairfield Drive, Dover, DE 19901, (302) 697-2139
* is operated pursuant to a limited partnership agreement which is included
as Exhibit A
* The Partnership is managed and controlled by Belmont Capital Management,
Inc., a Delaware corporation, and Shira Del Pacult, which we collectively
refer to as the general partner.
The general partner employs independent professional trading managers called
commodity trading advisors (CTAs) to select trades for the partnership
Description of Securities Offered for Sale
We are offering $7,000,000 Units of limited partnership interest at a value
per Unit which was initially established by the general partner at $1,000.
Plan For Sale of Units And Use of Escrow
All sales will be made using our best efforts, which means we will try, but
not guarantee, to sell all Units.
Subscription Procedure
To purchase Units, you must:
* complete and execute a subscription agreement (Exhibit D), and deliver your
executed subscription documents and check for your investment, which should
be made payable, if the minimum Units have not been sold, to the escrow agent
"Star Financial Bank-Escrow Agent for Bromwell Financial Fund, LP" and, after
the sale of the minimum, payable to "Bromwell Financial Fund, L. P."
* pay for at least $25,000 in Units, though the general partner may reduce
this amount to not less than $5,000.
And you must have at least:
* a minimum net worth (exclusive of home, home furnishings and automobiles)
of $150,000, or
* a minimum annual gross income of $45,000 and a minimum net worth of $45,000
(exclusive of home, home furnishings and automobiles).
The State where you live may impose higher net worth and income requirements
regarding your purchase of Units.
Who Will Benefit From An Investment In The Partnership
You are likely to benefit from an investment in the partnership if you have
risk capital and want to diversify your portfolio. You have the opportunity
to participate in markets which are typically not represented in most
investors' portfolios and which can be profitable in both rising and falling
markets.
However, if you cannot afford the risk of losing your entire investment, you
should not invest in the partnership.
Business Objectives and Expenses
We are organized to be a commodity pool to engage in the speculative trading
of:
* futures and forward contracts, which are instruments designed to permit
producers to hedge or investors to speculate in various interest rates,
commodities, currencies, stock indices and other financial instruments
* options on futures and forward contracts, which give the purchaser the
right to acquire or sell a given contract at a specified time at a specified
price, and
* other financial instruments.
We do not anticipate you will receive distributions and cannot guarantee that
we will meet our objectives or avoid substantial losses.
We are subject to substantial charges. To return your initial investment at
$1,000 per Unit after one year, we must earn a profit of 23.57% ($235.70 per
Unit), assuming the minimum number of Units are sold. Although you will not
receive distributions, you will pay Federal, state and local taxes upon the
profits, if any.
Summary Risk Factors
Investment in the Units is speculative, illiquid, and highly risky. You
should purchase Units only if you can afford to lose your entire investment.
For a complete description of the risks of an investment in the partnership,
see the Risk Factors section beginning on page 4.
Our business is the speculative trading in futures and forward contracts, and
options on those contracts, selected by professional commodity trading
advisors. This trading is highly leveraged and takes place in very volatile
markets.
Past results of the commodity trading advisor and the general partner do not
guarantee future results.
This partnership will pay substantial fixed management fees and commission
costs. There is no guarantee that you will receive a return on your
investment.
The individual general partner is the principal of the general partner of
another commodity pool, Fremont Fund, LP, which has not been profitable for
the past three years.
Transfer of your Units will be restricted and there are limitations on your
right to surrender your Units in return for their value (redemption). No
public market for the Units exists and none is expected to develop.
This partnership will not make distributions. To receive a return on your
investment, you must use our redemption procedure.
Although you will not receive distributions, you must pay Federal and state
income taxes on your share of any profits earned by this partnership.
The general partner and affiliates have conflicts of interest with regard to
the management of this partnership. Specifically, the general partner is
affiliated with the selling agent, and no due diligence will be performed.
The general partner has limited experience in the management of commodity
pools.
Charges To The Partnership
The following table identifies who is compensated for what, and at what rate:
<TABLE>
Entity Nature of Service Amount of Compensation
<S> <C> <C>
The general partner Manages the partnership 3% annual management fee, paid
(Belmont Capital monthly, of all equity assigned to
Management, Inc.) all trading advisors to trade
The commodity trading advisor Makes trades for the partnership 1% annual management fee, paid
(Ansbacher Investment monthly, of the equity assigned to
Management, Inc.) it to trade
20% quarterly incentive fee on all
new net profits it has generated
(this includes all profits
generated during the quarter,
adjusted for changes in trading
equity and losses in previous
quarters)
The introducing broker Negotiates and pays trading costs; 11% annual fixed fee, paid
(Futures Investment Company) assumes credit risk of the monthly, on all equity assigned
partnership to the futures for trading
commission merchant
The futures commission merchant Clears the trades; holds trading Paid by introducing broker - 4%
(Vision Limited Partnership) advisor's equity annual fixed fee, paid monthly, on
all equity on deposit to cover the
brokerage commissions, or the
costs of entering trades
The selling agent Solicits and maintains investment Paid by introducing broker - No
(Futures Investment Company) in the partnership selling commissions are charged.
6% annual trailing commissions are
paid after the first year of
operation on the net assets of the
partnership
Lawyers and Accountants Continuing legal and accounting After the first year, annual legal
(The Scott Law Firm, P.A., work costs of $18,000 and annual
Frank L. Sassetti & Co., accounting costs of $5,000.
James D. Hepner & Co.)
</TABLE>
Use Of Proceeds
After we commence business, Belmont Capital Management, Inc. will be
reimbursed for its advance of the 47,000 in offering expenses and $5,000 in
organizational expenses. Upon the sale of additional Units, we will charge
the new limited partners their allocated portion of the previously paid
expenses to reimburse the prior partners. The general partner will apply the
remaining partnership assets toward trading commodities and toward cash
reserves.
Selection Of Commodity Trading Advisors And Allocation Of Equity
The general partner selects the commodity trading advisors which will trade
on our behalf. At the commencement of trading, the general partner expects
to use only one trading advisor, Ansbacher Investment Management, Inc. The
trading advisor will be solely responsible for making trades, and neither the
general partner or you will approve trades made. The general partner,
without prior notice to you, may terminate or add trading advisors, or change
the amount of equity allocated to any such advisor.
Federal Income Tax Aspects
Although you will not be paid distributions, you will be have to pay income
taxes on profits and interest, if any.
Redemptions
You may request the general partner to accept the surrender of your Units for
cash. The general partner will try to comply with all redemption requests,
but may not be able to because of insufficient liquid assets. No redemptions
will be made during the first 6 months of operation. We will charge 4% of
the redeemed Units' value if you request redemption at the end of the 6th
month. Thereafter, we will reduce the redemption fee by 1% for every 6
months you remain in the partnership. See, The Limited Partnership
Agreement, Redemptions.
Diagram of Partnership Structure & Commissions
Bromwell Financial Fund, Limited Partnership
Please see the previous table under Charges to the Partnership for a
description of the below parties.
[Diagram omitted]
Risk Factors
Investment in the Units is speculative, illiquid, and highly risky. You
should purchase Units only if you can afford to lose your entire investment.
All of the following risks, except payment of fixed expenses, are present
without regard to the number of Units sold.
The general partner has only 3 years of prior operation experience.
Belmont Capital Management, Inc., the corporate general partner, is a
recently formed Delaware corporation. It has not previously operated a
commodity pool or engaged in any other business. Mrs. Pacult, the other
general partner, is the individual general partner of another commodity pool,
Atlas Futures Fund, LP, which commenced business on October 15, 1999.
However, Mrs. Pacult currently manages the corporate general partners of two
other commodity pools, Fremont Fund, LP and Atlas Futures Fund, LP. She has
operated Fremont Fund for 3 years. She also has over eighteen years of
experience selecting commodity trading advisors to manage individual investor
accounts, and explaining to investors how individual managed futures accounts
are administered.
We must pay substantial charges, which may limit your ability to receive a
return on your investment.
We must pay substantial charges, which must be paid before you will realize a
profit. They are:
* fixed brokerage commissions of 11% per year upon the assets assigned for
trading
* a management fee to the general partner of 3% per year of our net assets
* a management fee on the equity assigned to the commodity trading advisor of
1% per year
* yearly expenses estimated at $23,000, ($18,000 in accounting and audit
charges and $5,000 in legal)
* offering expenses estimated to be $47,000 to be paid upon commencement of
business
* organizational expenses of $5,000, amortized on a straight line method over
the first 5 years of our operation
* variable operating expenses (such as incentive fees to the CTA, telephone,
postage, and office supplies), and
* extra-ordinary expenses (such as claims and defense of claims from brokers,
partners, and other parties).
The incentive fees will be determined on a quarterly basis and will be paid
to the commodity trading advisor. We may be subject to substantial incentive
fees in the initial quarters of any given year which will not be refunded,
even if we experience subsequent losses which produce a net loss for that
year. See Charges to the Partnership.
You may not transfer your Units and must rely on our redemption procedures to
receive your investment back.
You can assign or transfer your Units only with the consent of the general
partner, which will probably withhold its consent to protect our right to be
taxed as a partnership, and not as a corporation. See Tax Aspects and The
Limited Partnership Agreement, Transfer Of Units Only With Consent Of The
General Partner and the Limited Partnership Agreement (Exhibit A).
Therefore, you must rely on our redemption procedures to receive your initial
investment adjusted to reflect profits, payment of expenses, and losses. See
The Limited Partnership Agreement, Redemptions.
Your right of redemption is limited.
Our redemption procedures provide:
* you will be charged a fee that decreases with time over the first two years
of your investment
* it must be approved by the general partner, and
* it may not be granted if we do not have enough liquid assets.
Subject to the foregoing limitations, the general partner attempts to grant
all redemption requests within ten days after the last day of the month in
which the redemption request was received. You may be prevented from
redeeming your Units before they are significantly devalued. See The Limited
Partnership Agreement, Exhibit A, Redemptions.
Further, substantial redemption requests could adversely affect us by:
* the liquidation of positions too rapidly or on unfavorable terms which
prevent us from satisfaction of all redemption requests, or
* the reduction of our available trading equity at a time when we have an
opportunity to earn substantial profit.
The partnership depends upon Mrs. Pacult, and her absence could cause the
partnership to cease operations.
You will be relying entirely on the ability of the general partner to select
and monitor the commodity trading advisor or advisors selected for the
partnership. Mrs. Pacult is the individual general partner and the sole
principal and officer of the corporate general partner.
If Mrs. Pacult becomes unable to perform her duties, we could be required to
cease operations and trading until a replacement could be found.
General partner and commodity trading advisor will serve other businesses and
may not have adequate time to devote to the partnership.
Both general partners expect to manage additional pools in the future which
may use the commodity trading advisor (and, thus, trading methods similar to
ours). They may also use Futures Investment Company, the introducing broker,
to negotiate better terms for clearing and other services. The commodity
trading advisor currently manages other commodity accounts and may manage new
accounts, including personal accounts and other commodity pools. Although
the commodity trading advisor intends to use similar trading methods for all
accounts it manages, it may vary those methods slightly. We cannot guarantee
our trading results will be similar to or better than any of the trading
advisor's other accounts. Our business could be adversely affected by the
failure of either Mrs. Pacult (the individual general partner and also the
sole principal of the corporate general partner) or the trading advisor to
devote sufficient time to the partnership affairs. See Risk Factors, Trading
Management, and The Commodity Trading Advisor.
This partnership has no operating history that you can review to determine
past performance.
Because we are a newly formed partnership, we have no history of generating
profits or losses. Though we provide the performance histories for other
accounts managed by the commodity trading advisor who will select our trades,
its past performance does not guarantee future results of this partnership.
There are conflicts of interest in the partnership structure which may limit
our profits.
Before investing in this partnership, you must consider the actual and
potential conflicts of interest that exist in our structure and operation.
Specifically, Mrs. Pacult is also a principal of Futures Investment Company,
the introducing broker and selling agent. Therefore, the general partner
will probably not replace Futures Investment Company as the introducing
broker because:
* it is paid 11% in fixed commissions to pay round-turn brokerage commissions
and trailing commissions and
* the selling agent pays her 6% in trailing commissions.
In addition, because the selling agent is affiliated with the general
partner, no independent due diligence of this offering will be conducted for
your protection. See Risk Factors, Conflicts of Interest, and the Limited
Partnership Agreement (Exhibit A).
You will be taxed on profits regardless of whether they are distributed.
We do not intend to make cash distributions from profits. Regardless of
whether distributions have been made, if we realize profits for a fiscal
year, you will pay taxes.
You will have to pay taxes on profits in a current year which may be lost in
future years.
We might sustain losses which offset our profits after the end of the year.
So you might never receive a distribution equal to your share of our prior
year's taxable income. See Federal Income Tax Aspects and The Limited
Partnership Agreement (Exhibit A).
If the general partner selects a new trading advisor, it may not be as
profitable as the previous one and will not be responsible for recouping any
previous losses.
We rely upon a single commodity trading advisor to generate profits pursuant
to an Advisory Contract and Power of Attorney (Exhibit F). Either the
general partner or the trading advisor may terminate their relationship at
any time. If this happens, or if the trading advisor becomes unable to serve
us for any other reason, the general partner would have to find one or more
alternate trading advisors. We cannot guarantee that any alternate trading
advisors will trade as profitably as the original trading advisor, or that
they will be retained on as favorable terms. Also, any new trading advisors
will not be obligated to recoup losses, if any, incurred by the prior trading
advisor before they are paid incentive fees.
The general partner may change the commodity trading advisor and its
allocation of equity without notice.
Without prior notice to you, the general partner may change the commodity
trading advisor and the amount of equity allocated to it at any time, for any
reason.
You will not participate in management and may not contest the business
decisions of the general partner.
You may not manage or conduct our business in any way or you would be a
general partner, which is not allowed by the Limited Partnership Agreement
(Exhibit A). Accordingly, you are bound by the business decisions of the
general partner.
Commodity Futures Trading Is Speculative
Commodity futures, forward, and option contract prices are highly volatile.
Specifically:
* price movements are influenced by such unpredictable variables as: changes
in supply and demand; weather; agricultural trade, fiscal, monetary and
exchange control programs and policies of governments; national and
international political and economic events; and, changes in interest rates
* governments, exchanges, and other market authorities intervene to influence
prices
* even if the analysis of the fundamental conditions by the commodity trading
advisor is correct, prices still may not react as predicted
* it is possible for most of our open positions to be unprofitable at the
same time.
* price changes may reach a limit upon which trading rules require a
suspension of trading for a specified period of time. It is possible for
these limits to be reached in the same direction for successive days. This
may prevent us from exiting a position, and when the market reopens, we could
suffer a substantial loss on the position.
* losses are not limited to the margin allocated to hold the position and may
exceed the total equity in our account.
During partnership trading, a small price movement can lead to large losses.
A small amount of money, called margin, must be deposited to hold or short a
contract relative to its value. The margin amount is typically between 3%
and 20%. This permits a large percentage gain or loss relative to the margin
deposit. For example, if at the time of purchase, 5% of the futures contract
price is deposited as margin, a 5% decrease in the position's value will
cause a loss of all the equity allocated to the trade, which could equal the
entire value of the account. The losses could be substantially more than the
margin deposited and the total value of the account.
The general partner does not control the trading advisor or its methods and
may not be able to prevent large losses.
The commodity trading advisor will enter trades on our behalf directly with
the futures commission merchant. The general partner will not know the
trades before they are made, nor will it know the trading advisor's methods,
the number of contracts bought or sold, or the margin required. The trading
advisor will not notify the general partner of any modifications, additions
or deletions to its trading methods and money management principles. We may
suddenly suffer large losses before the general partner knows remedial action
must be taken.
The partnership may be unable to execute a trade before large losses are
incurred due to market illiquidity.
It is not always possible to execute a buy or sell order. Such illiquidity
can be caused by:
* a lack of interest in the contract caused by market conditions which
produce no persons willing to buy or sell, or
* the suspension of trading which may occur because the price limit for a
contract has been reached).
Most United States commodity exchanges limit price movement in a single
direction by rules referred to as price limits. Once these limits have been
reached, no trades may be executed at prices beyond the limits for a
specified amount of time, usually until the next trading day. However, given
sufficient price movement the following day, price limits may be imposed
again. Accordingly, price limits may be in effect for protracted time
periods. No trading may be made in the direction of the price movement while
the limit is in place. The frequency of the imposition of price limits or
the length of time they will be in effect cannot be predicted. This causes
illiquidity and exposure to substantial losses. These losses could exceed the
total equity in our account.
Changes in trading equity may adversely affect performance.
Commodity trading advisors often are unable to adjust to changes in the
amount the money the manage. This is because:
* the larger amount of equity under management requires larger trades to be
made, which may be more difficult to execute
* there are legal limits called position limits upon the number of positions
that may be taken on a particular commodity, and
* it may be more difficult to scale in positions, which is when a trading
advisor takes positions at different prices at different times and then
allocates those positions on a ratable basis when a change in his allocated
equity occurs.
See Appendix I for the full definitions of position limits and scale in
positions.
The commodity trading advisor will not limit the total equity it accepts and
may suffer losses which cause a withdrawal of the equity it manages. A
commodity trading advisor's rate of return tends to decrease as the amount of
equity under management increases.
The equity raised by the sale of the minimum $700,000 of Units may be
insufficient to trade profitably.
We will commence business after selling the minimum $700,000 of Units. The
general partner has used its best judgment to set this minimum high enough
for us to trade profitably. However, after we repay the $52,000 in offering
and organizational expenses, we may not have enough equity to sustain
substantial losses. See Risk Factors, Increased Trading Equity To Commodity
Trading Advisor May Adversely Affect Its Performance.
Failure of commodity brokers or banks could result in loss of assets.
If the futures commission merchant or other entities with which our money is
on deposit become bankrupt, we might only recover some, if any, of the equity
in our account. The deposits in our bank accounts will be insured for only
$100,000 and payment on insured deposits may be delayed.
When trading in foreign exchanges, if the creditworthiness of the other
parties is not maintained, we may lose the value of our positions in those
markets.
Trading commodities involves entering a contract (or option to contract) for
the delivery of goods or money at a future date. The value of the contract
or option depends directly upon the creditworthiness of the parties. The
commodity trading advisor will trade commodities on United States commodity
exchanges, foreign commodity exchanges, and the inter-bank currency markets.
The commodity exchange contracts and options traded on United States
exchanges are guaranteed by the members' credit. Contracts and options upon
foreign commodity exchanges and the inter-bank currency markets are usually
not regulated by specific laws and are backed only by the parties to the
contracts. It is possible for a price movement in a particular contract or
option to be large enough to destroy the creditworthiness of
* the contracts and options issued by a particular party, or
* all of the contracts and options of an entire market.
In that situation, we could lose the entire value of a position with little
recourse to regain any of its value. To minimize this risk, the commodity
trading advisor will trade only a small percentage of its assigned equity in
these markets.
Options trading is highly risky and requires less equity to secure a trade,
thus providing greater potential for loss.
We expect to trade options, both puts and calls. After a position is taken,
a liquid market may not exist for any particular commodity option or at any
particular time. In an illiquid market, we may not be able to buy or sell to
offset (liquidate) the positions we have taken.
Options trading allows us to trade with less equity on deposit. Accordingly,
the risk of loss of the entire account is great.
If the price of a contract changes dramatically, we may not be able to exit
the position without sustaining substantial loss due to government imposed
price limits.
The Commodity Futures Trading Commission and the United States commodity
exchanges have established limits referred to as Speculative Position Limits
or Position Limits. These are different from the price limits described
before. They are limits on the maximum net long or net short futures or
options positions which any person or group of persons may own, hold, or
control in futures contracts. The positions taken among all commodity
accounts owned, controlled or managed by the trading advisor and its
principals will be combined for position limit purposes. Thus, the trading
advisor may not be able to hold sufficient positions for us to maximize the
return on a particular trade because it may be taking similar positions for
others.
We may not be able to compete with others with greater resources.
Commodity futures trading is highly competitive. We will be competing with
others who may have (1) greater experience, (2) more extensive information
about developments affecting the futures markets, (3) more sophisticated
means of analyzing and interpreting the futures markets, and (4) greater
financial resources.
Those with greater experience and financial resources have a better chance at
trading profitably. For instance, we will not maintain a warehouse to take
delivery of commodities and will not have a large capital base to allow us to
hold positions through bad times.
We cannot assure that Units necessary to commence business will be sold.
The selling agent(s) will sell the Units on a best efforts basis only, and
will not be obligated to purchase Units or otherwise support the price of the
Units. See Subscription Procedure and Plan For Sale of Units.
We may not commence business at an optimal time for maximizing profits.
After we sell the minimum Units, we will assign equity to the commodity
trading advisor, which will begin trading. However, this may occur at a
difficult time (such as after sustained moves in the commodities markets)
which result in significant initial losses.
Resignation of Mrs. Pacult as a general partner and subsequent failure of
Belmont to maintain its net worth may cause suspension of trading or taxation
as a corporation.
The North American Securities Administrators Association (NASAA) have
established guidelines for commodity pools structured as limited
partnerships. Those guidelines require that a sole corporate general partner
maintain a net worth during the offering period of either 5% of the offering
amount or not less than $50,000, but in no case no more than $1,000,000.
When the sole general partner of a partnership is a corporation, the tax
rules require conditions to be met to allow the partnership to be taxed as a
partnership and not as a corporation. The tax rules contain a significant
net worth test, also called a safe harbor, which requires a sole corporate
general partner to maintain a net worth of the smaller of either:
* 15% of the first $2,500,000 of the capital invested in the partnership, or
* $250,000, and 10% of all capital invested above $2,500,000.
See Federal Income Tax Aspects, Partnership Tax Status And Net Worth Of The
General Partner.
Our tax status has not been confirmed by an IRS ruling. No such ruling has
been or will be requested on our behalf. If we are taxed as a corporation
for Federal income tax purposes in any taxable year(s),
* our income or loss would not be passed through to you
* we would be taxed at corporate rates
* all or a portion of any distributions made to you would be taxed to you as
dividend income, and
* the amount of such distributions would not be deductible by us in computing
our taxable income.
See Federal Income Tax Aspects.
Mrs. Pacult intends to resign as a general partner once Belmont Capital
Management, Inc. has sufficient net assets to satisfy these guidelines. After
such time, Belmont will use its best efforts to maintain its net worth in
compliance with these guidelines. However, this cannot be assured. If
Belmont's net worth falls below these limits, it will suspend trading until
it can restore its net worth or liquidate the partnership.
The general partner will not advise you, and you must rely upon your own
investment counsel before investing in the partnership.
Purchasing a Unit does not itself create an Individual Retirement Account,
commonly called an IRA, and the creation and administration of an IRA are
solely your responsibility. The assets of a retirement account should be
carefully diversified and you should only allocate high risk capital to this
partnership. If you invest a significant portion of your retirement plan or
IRA assets in this partnership, you could be exposing that portion to
significant loss. The general partner will not advise you in any manner on
an investment in this partnership (including diversification, prudence and
liquidity). Accordingly, you must rely upon the experience of qualified
investment counsel you select.
The partnership is not covered by the Investment Company Act of 1940.
Stock investment companies and investment advisors must be registered under
the Investment Company Act of 1940, as amended. Because the business of the
partnership, Belmont Capital Management, Inc., Mrs. Pacult and the commodity
trading advisor involves only the trade of commodities, none of them are
required, nor do they intend, to be registered under the Investment Company
Act of 1940 or any similar state law. Therefore, you are not protected by
any such legislation. However, you are protected by the Commodity Exchange
Act, which requires the general partner and the commodity trading advisor to
be registered and otherwise protects your commodity investment in the
partnership similar to the protection the Investment Company Act offers to
stock investments.
Possibility of audit - you may be subject to audit and penalties.
Historically, partnerships have had a higher percentage of returns audited by
the IRS than other forms of business entities. If our return is audited, the
IRS may make adjustments to our reported items. If an audit results in an
adjustment, you may be:
* required to file amended returns
* subject to a separate audit, and
* required to pay back taxes, plus penalty and interest.
General partner may settle IRS claim not in your best interest.
Belmont Capital Management, Inc. is named tax matters partner. This grants
it the power to settle any IRS claim on your behalf, if you hold 1% or less
interest in this partnership and do not timely object to the tax matters
partner's authority, after notice. Such settlement may not necessarily be in
your best interest. See Federal Income Tax Aspects.
You may be subject to back taxes and penalties.
The Scott Law Firm, P.A. has delivered an opinion to the general partner that
this partnership, as it is intended to be operated by the general partner,
will be taxed as a partnership and not as a corporation. This opinion does
not include the tax treatment of expenses to prepare the prospectus and
selling expenses because they have to be allocated between expenses attendant
to formation and ordinary business expenses by the general partner. In
addition, commodity trading advisor fees are combined with employee business
expenses and other expenses of producing income. The aggregate of such
expenses is deductible only if such amount exceeds 2% of the taxpayer's
adjusted gross income. The general partner believes that our intended
operations will qualify as a trade or business.
Year 2000 issues may cause temporary suspension of trading.
Many computer systems were designed using only two digits to designate years.
These systems may not be able to distinguish the year 2000 from the year
1900. This is commonly known as the Year 2000 Problem. Like other
investment funds and financial business organizations, we could be adversely
affected if our computer systems or those used by our service providers do
not properly address this problem prior to January 1, 2000. Currently, we do
not anticipate that the transition to the 21st century will have any material
effect on us.
The general partner has taken steps to address all Year 2000 issues in a
timely manner. The cost of such steps have been borne by the introducing
broker, Futures Investment Company. Actions taken have included an analysis
of all in-house software and hardware to determine Year 2000 compliance. We
have already received, or are in the process of receiving, confirmations from
all third parties with which we have a material relationship that those
parties have taken the same actions. We have no mission critical systems
that would be affected by Year 2000 non-compliance. The partnership's
reliance upon computer technology is limited to storing contact information
for the partners as well as other information for which hard copies exist.
Despite the corrective measures that we have implemented, no assurance can be
given that our service providers have anticipated every step necessary to
avoid any adverse effect on us due to the Year 2000 Problem. The most likely
worst case scenario is one in which the partnership became unable to trade
contracts through its trading advisors due to the Year 2000 Problem. We
would be able to assess such a situation in advance of the December 31, 1999
deadline and either liquidate all positions prior to that date or establish
relationships with additional counterparties. Such action, including
reliance on our hard copy records in the unlikely event of our computer
failure, constitute our contingency plan. You should also understand that
the failure of third parties, such as futures exchanges, clearing
organizations or regulators, to timely resolve the Year 2000 Problem could
stop us from being able to trade until such problem is resolved.
Conflicts Of Interest
There are present and potential future conflicts of interest in our structure
and operation you should consider before you purchase Units. The general
partner will use this as a defense against any claim or other proceeding made
against Mrs. Pacult, Belmont Capital Management, Inc., the commodity trading
advisor, the futures commission merchant, the introducing broker, or any
principal or affiliate, agent or employee of any of them.
General partner, the commodity trading advisor, and their principals may
preferentially trade for themselves and others.
Because the general partner, the commodity trading advisor, the introducing
broker, and their principals and affiliates may trade for themselves and
others, conflicts of interest may exist or be created in the future. None of
these people are limited in trading commodities for their own account, and
you will not have access to any of their personal trading records. They
could possibly take their personal positions prior to the positions they know
they will place for you.
Possible retention of voting control by the general partner may limit your
ability to control issues.
The general partner, its principal and its affiliates may purchase an
unlimited number of Units. These persons include Mrs. Pacult as general
partner, and Mr. Michael Pacult as a principal of Futures Investment Company,
the introducing broker and selling agent. It is possible that they could
purchase enough Units to retain voting control. They could then vote,
individually or as a block, to create a conflict with our best interests.
Such voting control may limit the limited partners' ability to achieve a
majority vote on such issues as:
* amendment of the Limited Partnership Agreement
* change in our basic investment policy
* dissolution of this partnership, or
* the sale or distribution of our assets.
However, neither general partner may vote on the issue of their removal.
The general partner is not likely to resign, even if it would be in your best
interest.
It is unlikely that either general partner, Mrs. Pacult or Belmont Capital
Management, Inc., would voluntarily resign, even if it would be in your best
interest, because Belmont has financial interest in our operation (the 3%
management fee) and Mrs. Pacult serves as both a general partner and the
principal of Belmont.
Partnership fees may be higher than they would be if they were negotiated.
The management fee of 3% to Belmont Capital Management, Inc. and the 11% fee
to the introducing broker have not been negotiated at arm's length. The
introducing broker:
* accepts the credit risk of the partnership to the futures commission
merchant
* maintains the day to day contact with the general partner
* reviews the daily positions and margin requirements of the partnership
* pays the futures commission merchant charges, and
* pays the trailing commissions to the selling agent for communicating with
the investors and maintaining investment in the partnership.
Mrs. Pacult has a conflict of interest between her obligation to manage this
partnership and her financial interest in receiving the management fee as
principal of the corporate general partner and the trailing commissions as a
registered representative of Futures Investment Company, the selling agent.
Also, Mrs. Pacult is a principal and 50% owner of the introducing broker,
which keeps 1/11th of the 11% allocated to it annually, after payment of 4%
to the futures commission merchant and 6% to the associated persons, which
will include Mrs. Pacult, for the Units she sells.
If multiple traders are employed in the future, our profitability may be
limited due to their competition for similar trades and their
unaccountability for previous losses.
The general partner has sole and absolute discretion to select and terminate
commodity trading advisors. If it appoints multiple trading advisors, each
will trade independently of the others. Also, they may compete for similar
positions or take positions opposite each other, which may limit our
profitability. If a trading advisor is replaced, the new trading advisor
will receive any earned incentive fees regardless of the previous trading
advisor's performance. As incentive fees are paid based upon each trading
advisor's performance, it would be possible for us to experience a net loss
and be required to pay out incentive fees to one or more of the traders.
Your ability to redeem your Units may be lessened due to the nature of the
general partner's compensation.
The general partner receives a fee based upon our net asset value, which
accounts for our total assets, including all cash and cash equivalents, less
total liabilities. This gives it an incentive to withhold distributions and
to discourage redemption. The general partner will try to honor all
redemption requests within ten days after the last day of the preceding month
in which the request was made. However, if the partnership does not have
enough liquid assets, it may not be able to honor the request on time, or
possibly at all.
Commodity trading advisor may engage in high risk trading to generate fees.
As a general rule, the greater the risk assumed, the greater the potential
for profit. Because the commodity trading advisor receives 20% of our new
net profits, it might select trades which are otherwise too risky for us.
No Resolution Of Conflicts Procedures
As is typical in many futures partnerships, the general partner has not and
will not establish formal procedures to resolve potential conflicts of
interest. These future potential conflicts may adversely affect both you and
us.
The previous risk factors and conflicts of interest are complete as of the
date of this prospectus, however, additional risks and conflicts may occur
which are not presently foreseen by the general partner. You may not
construe this prospectus as legal or tax advice. Before making an investment
in this partnership, you should read this entire prospectus, including the
Limited Partnership Agreement (Exhibit A) and the subscription agreement.
You should also consult with your personal legal, tax, and other professional
advisors. See Investor Suitability.
Interests Of Named Experts And Counsel
The general partner has employed The Scott Law Firm, P.A. to prepare this
prospectus, provide tax advice and opine upon the legality of issuing the
Units. Neither the law firm, its principal, any accountant, nor any other
expert hired by the partnership to give advice on the preparation of this
offering document have been hired on a contingent fee basis. Nor do any of
them have any present or future expectation of interest in the general
partner, the selling agent, the commodity trading advisor, the introducing
broker, or the futures commission merchant.
Management's Discussion And Analysis
The Partnership
Bromwell Financial Fund, Limited Partnership is a Delaware limited
partnership organized on January 12, 1999 and maintains its main business
office at c/o Corporate Systems, Inc. 101 North Fairfield Drive, Dover, DE
19901, (302) 697-2139 . It is qualified to be a commodity pool to engage in
the speculative trading of futures, commodity options and forward contracts
on currencies, interest rates, energy and agriculture products, metals, and
stock indices.
Our business objective is to let our invested capital appreciate while
controlling losses; however, there can be no assurance that we will meet this
objective.
The partnership is managed by Belmont Capital Management, Inc., a Delaware
corporation, and Mrs. Shira Del Pacult.
We will not have officers or employees, which is why there is no report of
executive compensation in this prospectus.
We will operate pursuant to the terms of the limited partnership agreement
attached as Exhibit A, which:
* grants full management control to the general partner including, the right
to employ independent trading managers called commodity trading advisors, and
* will terminate at 11:59 p.m. on January 12, 2020, or upon an event causing
an earlier termination.
Except for the limited partnership agreement, the partnership may not enter
any contract with the general partner or commodity trading advisor that is
greater than one year in duration. However, all such contracts are expected
to be renewed yearly.
The General Partners
The corporate general partner is Belmont Capital Management, Inc., a Delaware
corporation incorporated on January 12, 1999. It was registered as a
commodity pool operator on August 5, 1999 and maintains its main business
office at c/o Corporate Systems, Inc. 101 North Fairfield Drive, Dover, DE
19901, (302) 697-2139.
The individual general partner is Shira Del Pacult, who was registered as a
commodity pool operator on May 27, 1999 and maintains her main business
office at 5916 N. 300 West, P.O. Box C, Fremont, IN 46737, (219) 833-1306.
Experience
Belmont has no prior experience in managing commodity pools. Mrs. Pacult has
been supervising individual managed commodity accounts for over 18 years and
serves in several capacities in three other commodity pools, as follows:
Commodity Pool Ms. Pacult Serves As
Atlas Futures Fund, LP Individual general partner and sole
(publicly offered, began principal of the corporate general partner
operations 10/99)
Fremont Fund, LP Sole principal of the corporate
(publicly offered; began general partner
operations 11/97)
Auburn Fund, LP Sole principal of the corporate
(privately offered; began general partner
operations 4/98)
Authority
Mrs. Pacult is the sole principal of Belmont Capital Management, Inc. and,
therefore, is the sole decision maker of this partnership. The signature of
either Belmont or Mrs. Pacult, individually, may bind this partnership.
The general partner is authorized to take all actions necessary to manage the
affairs of the partnership. See Article II of the Limited Partnership
Agreement attached as Exhibit A.
Partnership Books and Records
Our books and records will be maintained for six years c/o Corporate
Systems, Inc. 101 North Fairfield Drive, Dover, DE 19901. A duplicate set of
the books will be maintained by Mr. James Hepner, Certified Public
Accountant, 1824 N. Normandy, Chicago, IL 60635, (773) 804-0074. Mr. Hepner
will also prepare the Form K-1s for the partnership. You may access our
books and records by visiting either office at a time convenient for both
parties, and you may have copies made at that time at ten cents per page.
The general partner will serve as tax partner for the partnership. Frank L.
Sassetti, & Co., 6611 West North Avenue, Oak Park, IL 60302 will conduct our
annual audit and the annual audit of the general partner, as well as prepare
our tax returns.
The Commodity Trading Advisor
To conduct trading on our behalf, the general partner has initially selected
one independent commodity trading advisor, Ansbacher Investment Management,
Inc. Without prior notice to you, the general partner has sole discretion to
employ additional trading advisor, terminate any trading advisor, and change
the amount of equity any advisor may trade. However, the general partner
will give you notice of any change in trading advisors within seven days of
such change. Such notice will include a description of your right to:
* redemption
* vote to amend the limited partnership agreement
* remove one or both general partners
* elect a new general partner
* cancel any contract with a general partner or any of its affiliates upon 60
days notice, and
* dissolve the partnership.
No change in trading advisors will constitute a material change to the
limited partnership agreement or the structure of our operation. All trading
advisors employed to trade for the partnership will be registered with the
Commodity Futures Trading Commission and will have at least three years of
experience as a trading advisor.
The Advisory Contract
The general partner will assign a substantial portion of our assets to the
trading advisor, the terms of which are governed by an advisory contract and
power of attorney between us and the trading advisor. See Exhibit F.
This agreement provides the trading advisor with a revocable power of
attorney, which gives it sole authority to determine
* the markets to be traded
* the location of those markets
* the size of the position to be taken in each market, and
* the timing of entry and exit in a market.
The agreement may be terminated, at any time, upon notice from one party to
the other.
Business Objective And Expenses
Our objective is to achieve the potentially high rates of return which are
possible through the speculative trading of futures, commodity options and
forward contracts. We do not expect to engage in any other business.
The general partner organized this partnership to be a commodity pool, as
that term is defined under the Commodity Exchange Act. As such, it will
employ independent commodity trading advisors to trade for us.
The general partner intends to allocate substantially all of our net assets
to the trading advisor to conduct this trading. The trading advisor has
advised that it intends to allocate between 20% and 30% of the trading equity
assigned to it to secure the trading positions it selects.
Although we do not expect to make distributions, you will nevertheless be
required to pay yearly Federal, state and local taxes upon income, if any,
earned by this partnership. Accordingly, you should purchase Units as a
long-term investment only.
There can be no assurance that we will achieve our business objectives, be
able to pay the substantial fixed and other costs to do business, or avoid
substantial trading losses. See Charges to the Partnership.
Below is a chart explaining the expenses we expect to incur during our first
twelve months of operation. All interest income will be paid to the
partnership. The chart below assumes our Unit value remains at $1,000 during
the first 12 months of operations.
Expenses Per Unit
For The First 12-Month Period Of Operations
Minimum Maximum
Gross Units Sold $ 700,000.00 $7,000,000.00
Selling Price per Unit (1) $ 1,000.00 $ 1,000.00
Offering and Organizational Expenses (2) 68.57 6.86
General Partner's Management Fee 30.00 30.00
Trading Advisor's Management Fees (3) 10.00 10.00
Trading Advisor's Incentive Fees on New
Net Profits (4) 47.14 31.72
Brokerage Commissions and Trading Fees (5) 110.00 110.00
Redemption Fee (6) 30.00 30.00
Less Interest Income (7) (60.00) (60.00)
Amount of Trading Income Required to
Redeem Unit at $1,000. (8) $ 235.71 $ 158.58
Percentage of Initial Selling Price per Unit 23.57% 15.86%
Explanatory Notes:
(1) Investors will initially purchase Units at $1,000 per Unit. After the
commencement of business, Units will be purchased at the Net Unit Value,
determined monthly.
(2) Offering and organizational expenses includes all offering expenses of
$47,000 and one fifth ($1,000, or 12 months' worth) of the organizational
expenses, all of which were advanced by and must be repaid to Belmont Capital
Management, Inc. Our actual accounting, auditing, legal and other operating
expenses will be borne by us and are included in the $47,000 in offering
expenses.
(3) The commodity trading advisor will be paid a monthly management fee of
1/12 of 1% of the trading equity allocated to it.
(4) The commodity trading advisor will receive an incentive fee of 20% of new
net profits earned each quarter upon the trading equity assigned to it. The
$47.14 of incentive fees shown above is the amount the trading advisor would
earn if it produced enough profits to allow you to redeem your Units at the
original price of $1,000 per Unit at the end of the first year.
(5) Brokerage commissions and trading fees are fixed by the general partner
at 11% of our assets assigned for trading. For purposes of this calculation,
we assumed all equity will be assigned to trade.
(6) The redemption fee of 3% is computed upon the assumed $1,000 value of the
redeemed Unit.
(7) We will earn interest on margin deposits with the futures commission
merchant and on our bank deposits. Based on current interest rates, interest
income is estimated at 6% of our net assets.
(8) This computation assumes there will be no claims or extra-ordinary
expenses during the first year.
We do not represent that the above table will reflect our actual operating
expenses or interest income. There can be no assurance that our expenses
will not exceed the amounts projected or that there will not be claims or
extra-ordinary expenses.
Securities Offered
We, Bromwell Financial Fund, Limited Partnership will offer and sell Units of
limited partnership interests in this partnership at $l,000 per Unit. See
Determination Of The Offering Price.
You, the Investor:
* will have pro rata rights to profit and losses which will vary with your
capital contribution (your investment amount)
* will not be responsible for our debts in excess of your capital
contribution; unless:
* we become insolvent; and
* you receive distributions which represent a return on your investment (in
which case you would have to return the distributions to pay our debts)
* will not acquire any interest in the corporate general partner (Belmont
Capital Management, Inc.)
* will not manage this partnership, and
* will have the right to vote on partnership matters such as the replacement
of the general partner. See The Limited Partnership agreement attached as
Exhibit A.
See Plan For Sale of Units and Subscription Requirements.
Your subscription agreement and check:
* must be approved by the general partner and will be accepted or rejected
within five business days of receipt
* are irrevocable and may not be withdrawn; unless, a statutory withdrawal
period applies to you, and
* if received before we commence operations and break escrow:
* will be deposited and held in a separate escrow account in our name at the
escrow agent, Star Financial Bank, 2004 N. Wayne St., Angola, IN 46703.
There cannot be any assurance that the minimum Units or any additional Units
will be sold. The general partner is authorized, in its sole discretion, to
terminate this or any future offering of Units.
Management's Discussion
This is the first offering of our Units. We:
* may conduct future offerings after the close of this offering
* will not commence business until we sell the minimum 700 Units ($700,000
worth)
* have no prior operating history and, therefore, do not discuss any results
of operations
* intend to raise money only through offerings, such as this one, and do not
intend to borrow any money
* must pay expenses to qualify our Units for sale, such as office equipment,
fees for the preparation of this prospectus, as well as other expenses
* intend to allocate all our net assets to trading and other investments,
except those assets used to pay capital and operating expenses
* will not have any directors, officers or employees which is why there is no
report of executive compensation in this prospectus, and
* will conduct all our business through the general partner.
Description of Intended Operations
The general partner has authorized the introducing broker to select Vision
Limited Partnership to serve as the futures commission merchant. The futures
commission merchant holds the funds allocated to the commodity trading
advisor to trade. On a daily basis, the futures commission merchant has been
directed to send the general partner a computer or fax report which will
describe
* the positions held
* the margin allocated, and
* the profit or loss on the positions from the date the positions were taken
Risk Control
The general partner will review the daily transmissions and will make
appropriate adjustments to the allocation of trading equity. Based upon the
amount of available trading equity, the trading advisor has sole discretion
to:
* make specific trades,
* determine the number of positions taken, and
* decide the timing of entry and departure from the markets.
The general partner will use its best efforts to monitor the daily net Unit
value, or the net asset value of the partnership divided by the number of
outstanding Units. If the net Unit value falls to less than 50% of the greater
of
* the original $1000 selling price less commissions and other charges, or
* such higher value earned through trading,
then the general partner will:
* immediately suspend all trading
* provide you with immediate notice of the reduction in net Unit value, and
* give you the opportunity, for 15 days after the date of such notice, to
redeem your Units according to the provisions of Article IX, Sections 9.5 and
9.6 of the Limited Partnership Agreement.
No trading shall commence until after such fifteen day period. See Exhibit A
attached.
Trading Risks
Most United States commodity exchanges limit daily fluctuations in commodity
futures contracts prices by regulations referred to as daily price
fluctuation limits or daily limits. Once the price of a futures contract has
reached the daily limit for that day, positions in that contract can neither
be taken nor liquidated. Commodity futures prices have occasionally moved
the daily limit for several consecutive days with little or no trading.
Such an occurrence could prevent us from promptly liquidating unfavorable
positions and subject us to substantial losses. These losses could exceed
the margin initially required to make the trade. In addition, even if
commodity futures prices have not moved the daily limit, we may not be able
to execute futures trades at favorable prices. This may be caused by light
trading in such contracts or by a sudden and substantial price move in a
futures or forward contract. These limitations on liquidity are inherent in
our proposed commodity futures trading operations. Otherwise, our assets are
expected to be highly liquid.
Once we commence business, except for payment of offering and other expenses,
the general partner is unaware of any anticipated:
* known demands, commitments or required capital expenditures,
* material trends, favorable or unfavorable, which will affect our capital
resources, or
* trends or uncertainties that will have a material effect on operations.
Each United States commodity exchange, with the approval of the Commodity
Futures Trading Commission, establishes minimum margin requirements for each
traded contract which are used by futures commission merchants who hold
membership in that exchange. Each futures commission merchant may increase
the margin requirements for any or all contracts for its customers. Because
we generally will use a small percentage of assets for margin, we do not
believe that any increase in margin requirements will materially affect our
proposed operations. Management cannot predict whether the value of our
Units will increase or decrease. Inflation is not projected to be a
significant factor in our operations, except to the extent inflation
influences futures prices.
Fiduciary Responsibility Of The General Partner
You have legal rights under Delaware partnership and applicable Federal and
state securities laws. In all dealings affecting this partnership, the
general partner has a fiduciary responsibility to you and all other partners
to exercise good faith and fairness. No contract shall permit the general
partner to contract away its fiduciary obligation under common law. The
limited partnership agreement conforms with the Uniform Limited Partnership
Act for the State of Delaware in regard to the definition of the fiduciary
duties of the general partner. Under Delaware law, as a limited partner, you
may institute legal action on your behalf and all others similarly situated
limited partners to recover damages from a general partner of the partnership
for violations of fiduciary duties. Or, you may institute action on behalf
of the partnership to recover damages from a third party where a general
partner has failed or refused to institute proceedings to recover such
damages.
In addition, you will have the right, subject to applicable procedural and
jurisdictional requirements, to bring class actions in federal court to
enforce your rights under the federal securities laws and the rules and
regulations promulgated thereunder by the Securities and Exchange Commission.
If you have suffered losses in connection with the purchase or sale of your
Units, you may be able to recover such losses from a general partner where
the losses result from a violation by the general partner of the anti-fraud
provisions of the federal securities laws.
You have the right to institute reparations proceedings under the Commodity
Exchange Act as well as legal proceedings in court when the general partner,
the commodity trading advisor, the introducing broker or the futures
commission merchant violate the Commodity Exchange Act or any rule,
regulation or order of the Commodity Futures Trading Commission. The
Commodity Exchange Act confers private rights of actions. As an investor in
this commodity pool, you may, therefore, invoke the protections provided by
such legislation. For example, excessive trading of our account may
constitute a violation of the Commodity Exchange Act.
If the general partner acts in good faith and exercises its best judgment, it
will not be liable merely because we lost money or otherwise did not meet our
business objectives. Additionally, there are substantial and inherent
conflicts of interest in the partnership's structure which are inconsistent
with the general partners' fiduciary duties. One purpose of this prospectus
is to disclose to you these conflicts of interest so the general partners may
have the opportunity to obtain your informed consent to such conflicts. If
you are not willing to consent to these conflicts of interest, you are
ineligible to invest in the partnership. The general partner intends to
raise such disclosures and consent as a defense in any proceeding brought
which seeks relief based on the existence of such conflicts of interest. See
Conflicts of Interest.
The responsibility of a general partner to you and other partners is a
changing area of the law. If you have questions concerning the
responsibilities of the general partner, you should consult your own legal
counsel.
Indemnification
Provisions of Limited Partnership Agreement
The limited partnership agreement protects the general partner from being
responsible or accountable for any act or omission, for which you, other
limited partners or the partnership itself may claim it is liable, provided
that:
* the general partner determined such act or omission was within the scope of
its authority and in the best interest of this partnership, and
* such action or failure to act does not constitute misconduct or a breach of
the Federal or state securities laws related to the sale of Units.
Specifically, if the general partner
* has acted within the scope of its authority and
* is being assessed a demand, claim or lawsuit by a partner or other entity,
the partnership will
* defend, indemnify and
* hold the general partner harmless
from and against any
* loss, liability, damage, cost or
* expense, including attorneys' and accountants' fees and expenses incurred
in defense of any demands, claims or lawsuits
which were actually and reasonably incurred and arising from any
* act, omission, activity or conduct undertaken by or on behalf of the
partnership.
Provisions of Law
According to applicable law, indemnification of the general partner is
payable only if:
* the general partner determined, in good faith, that the act, omission or
conduct that gave rise to the claim for indemnification was in the best
interest of the partnership
* the act, omission or activity that was the basis for such loss, liability,
damage, cost or expense was not the result of negligence or misconduct
* such liability or loss was not the result of negligence or misconduct by
the general partner, and
* such indemnification or agreement to hold harmless is recoverable only out
of the assets of the partnership and not from the partners, individually.
Provisions of Federal and State Securities Laws
This offering is made pursuant to Federal and state securities laws. If any
indemnification of the general partner arises out of an alleged violation of
such laws, it is subject to the following legal conditions.
Those conditions require that no indemnification may be made in respect of
any losses, liabilities or expenses arising from or out of an alleged
violation of Federal or state securities laws unless:
* there has been a successful adjudication on the merits of each count
involving alleged securities law violations as to the general partner or
other particular indemnitee, or
* such claim has been dismissed with prejudice on the merits by a court of
competent jurisdiction as to the general partner or other particular
indemnitee, or
* a court of competent jurisdiction approves a settlement of the claims
against the general partner or other agent of the partnership and finds that
indemnification of the settlement and related costs should be made, provided,
* before seeking such approval, the general partner or other indemnitee must
apprise the court of the position held by regulatory agencies against such
indemnification. These agencies are the Securities and Exchange Commission
and the securities administrator of the state or states in which the
plaintiffs claim they were offered or sold Units.
Provisions of the Securities Act of 1933
The Securities and Exchange Commission and the various state administrators
believe that indemnification for liabilities arising under the Securities Act
of 1933 are unenforceable because such indemnification is against public
policy as expressed in the Securities Act of 1933 and the North American
Securities Administrators Association, Inc. commodity pool guidelines.
Provisions of the Clearing Agreement
We clear trades through our futures commission merchant, Vision Limited
Partnership. According to the clearing agreement that governs these trades,
we must indemnify Vision Limited Partnership for any reasonable outside and
in-house attorney's fees incurred by Vision Limited Partnership arising from
any failure to perform our duties under the clearing agreement.
Other Indemnification Provisions
The general partner has indemnified the selling agent, Futures Investment
Company, and expects to indemnify any other selling agents it selects that
there are no misstatements or omissions of material facts in this prospectus.
Relationship With The Futures Commission Merchant And The Introducing Broker
The general partner has initially engaged Futures Investment Company in two
capacities:
* As the sole broker dealer, it will sell Units and supervise regulatory
compliance.
* As the introducing broker, it will supervise the relationship with the
futures commission merchant, including the negotiation of the round turn
commission rates incurred through trading via the commodity trading advisor.
Mrs. Shira Del Pacult serves as:
* a stockholder, director and officer of Futures Investment Company
* a general partner and commodity pool operator to this partnership, and
* the sole principal of Belmont Capital Management, Inc., the corporate
general partner and commodity pool operator.
Futures Investment Company has engaged Vision, Limited Partnership to act as
the futures commission merchant.
Fixed Commissions are Competitive
The general partner believes the introducing broker rates for fixed
commissions are competitive.
In that regard, the general partner is obligated by the North American
Securities Administrators Association guidelines to obtain the best
commission rates available to us. Accordingly, the general partner is free
to select any substitute or additional futures commission merchants or
introducing brokers at any time, for any reason. However, the general
partner is not likely to dismiss the current introducing broker due to their
affiliation through Mrs. Pacult.
The futures commission merchant and the introducing broker may act (and are
currently acting) for other commodity pools that have retained either or both
of the general partners of this partnership. The general partner and any
other commodity pools may obtain rates to clear trades from the affiliated
introducing broker which are more favorable to their accounts (as opposed to
the fixed commissions the introducing broker charges us in lieu of round-turn
commissions).
Trading Fees
Trades will be made by the partnership through the introducing broker.
Rather than charge a brokerage commission for every trade, the futures
commission merchant will retain 4% of the equity we have on deposit with it
every month to cover such fees. The introducing broker will pay this 4% from
the 11% annual fixed commissions we pay it. The futures commission merchant
will credit us with interest at the prevailing rate on 100% of the available
balances maintained in our account(s).
Relationship With The Commodity Trading Advisor
The Commodity Trading Advisor Will Trade For Other Accounts
The commodity trading advisor will trade for its own accounts and for others
on a discretionary basis. It may use trading methods, policies and
strategies for others which differ from those used for us. Consequently,
such accounts may have different trading results (for better or worse) from
those experienced by us.
Because the trading advisor trades for itself and others, it is possible for
it to take positions ahead of or opposite positions taken on our behalf,
which presents a potential conflict of interest. See Appendix I for Taking
Positions Ahead of the Partnership.
Pursuant to Commodity Futures Trading Commission Regulation 421.03, the
trading advisor will use the average price system for those futures and
options contracts where its use is authorized, when:
* trades taken on behalf of both the partnership and the trading advisor's
other accounts are identical, and
* the prices of such trades are different.
* See Appendix I for the definition of Average Price System.
The commodity trading advisor has also informed the general partner that when
the average price system is not available, trades will be filled in order
based on the numerical account numbers, with the lowest price allocated to
the lowest account number and in numerical matching sequence, thereafter.
Non-Disclosure Of The Commodity Trading Advisor's Methods
We have provided a general description of the commodity trading advisor's
methods and strategies under The Commodity Trading Advisor, Description of
Trading Program. However, the specific details of its trading methods are
proprietary and complex in nature and will not be disclosed to you or any
other partner. No notice will be given to you of any changes the trading
advisor may make in its trading methods. See Risk Factors, No Notice of
Trades or Trading Method.
Charges To The Partnership
As an investor in this partnership, you will pay the cost of our operation.
These charges are described in narrative form and in the chart which follows
this narrative. In this prospectus, we have disclosed all compensation,
fees, profits and other benefits, including reimbursement of out-of-pocket
expenses, which the general partner and its affiliates will earn in
connection with this offering. Most of these charges were not negotiated at
arm's length, but rather were determined by the two general partners and
their affiliates.
Compensation Of General Partner
Each month, we will pay the corporate general partner, Belmont Capital
Management, Inc., a monthly management fee of 1/4% (3% annually) of our net
asset value. The general partner has reserved the right to increase this fee
to six percent (6%) per year, at its sole discretion. See Charges to the
Partnership, Restrictions on Management Fees.
In addition, we will pay any quarterly incentive fee earned by the commodity
trading advisor to the corporate general partner, Belmont Capital Management,
Inc., which will in turn pay that amount to the trading advisor.
Compensation Of The Commodity Trading Advisor
The commodity trading advisor will be allocated equity to trade, which will
be deposited in an account with the futures commission merchant. Each month,
we will deduct 1/12% (1% annually) from this account and pay it directly to
the trading advisor as a management fee. The general partner has reserved
the right to change this fee at its sole discretion. See Charges to the
Partnership, Restrictions on Management Fees.
For those quarters in which a commodity trading advisor operates profitably,
the corporate general partner will receive an incentive fee equal to 20% of
the new net profit produced by the trading advisor. The corporate general
partner will then pay this incentive fee directly to the trading advisor
within 10 business days.
New net profit:
* is calculated to determine how much a trading advisor has increased our net
assets through trading alone
* is based upon the net value of the equity assigned to the trading advisor
to trade
* is calculated quarterly
* is only paid when any losses in previous quarters have been offset by new
profits by the trading advisor, regardless of whether:
* the general partner has changed the trading advisor's compensation, or
* the partnership and trading advisor have entered a new contract
* is adjusted to eliminate the effects of:
* any new subscriptions for Units
* redemptions by partners
* interest income paid by the futures commission merchant, and
* any other income earned on our assets which are not related to such trading
activity, regardless of whether such assets are held separately or in a
margin account.
The management and incentive fees to the trading advisor will be calculated
from the net value of the trading equity assigned to it, as of the close of
business on the last business day of each month, determined before accrual of
any incentive fee.
Restrictions on Management Fees
Some of the states in which we wish to sell Units require that we comply with
the North American Securities Administrators Association Guidelines for
commodity pools. These guidelines provide that:
* the total management fees, including that of the general partner and the
commodity trading advisor, may not exceed 6% of our net assets, and
* incentive fees based upon profits earned may not exceed 15% of new net
profits.
However, for each 1% reduction in management fees below 6%, the incentive
fees may be increased by 2%.
Without prior notice to you, the general partner has reserved the right to
raise the current incentive fee to a maximum of 30%, provided the management
fees are correspondingly lowered to 0%.
Fees To Futures Commission Merchant And Compensation of Introducing Broker
Fee Paid By Partnership To The Introducing Broker
The introducing broker, Futures Investment Company, will be responsible for
introducing trades through the futures commission merchant, Vision Limited
Partnership. Accordingly, we will pay the introducing broker a monthly fixed
commission of 11/12% (11% annually) upon the assets assigned by the general
partner for trading. See The Futures Commission Merchant.
The fixed commission which we will pay is fair and reasonable. This is an
area of judgment which depends upon:
* the value of similar services provided by the same commodity trading
advisor for managed accounts and to other pools, and
* the value of similar services provided by other clearing firms to other
public commodity pools.
Brokerage Fees Paid By Introducing Broker To The Futures Commission Merchant
The introducing broker will pay the futures commission merchant a fixed
monthly fee of 1/3% (4% annually) to cover all clearing costs, including the
pit brokerage fees, which include, floor brokerage fees, NFA fees, and
exchange fees.
Trailing Commissions Paid To Others
The introducing broker will pay annual trailing commissions to the selling
agents and introducing brokers who are qualified to provide services to us
and the investors. Such persons will include Mrs. Pacult and her husband,
both of whom are principals of the selling agent, Futures Investment Company.
The amount of the trailing commissions will be 6% annually of the assets
assigned by the general partner for trading, and will be paid from the 11%
annual fee paid to the introducing broker.
The recipients of the trailing commission will be responsible for maintaining
investment in this partnership. This must be done to:
* spread the potential risk of losses over a large number of investors to
protect our ability to continue in business, and
* to allow the long-term trading strategies of the commodity trading advisor
to be profitable so additional investments can be solicited.
The introducing broker will pay trailing commissions to the persons
responsible for selling the Units as compensation for:
* maintaining this continuous contact and awareness during the time the
investors hold the Units
* explaining changes in trading advisors and results from operations
* answering questions regarding the partnership, and
* working to retain investment in the partnership.
Fee Retained By Introducing Broker
The introducing broker will retain 1/11th of the 11% annual fee, or 1% of the
trading equity assigned to the trading advisors.
Miscellaneous Fees To Futures Commission Merchant
We will reimburse the futures commission merchant for all delivery,
insurance, storage or other charges incidental to trading and paid to third
parties. No significant charges of this nature are anticipated.
Rights of General Partner
Without prior notification to you, the general partner has reserved the right
to:
* change the introducing broker
* change the futures commission merchant
* change the fixed commission rate
* suspend all trading during any month in which the trading advisor trades at
three times its normal frequency. See Limited Partnership Agreement,
attached as Exhibit A.
* have the partnership pay a per round-turn brokerage commission as opposed
to a fixed percentage of net assets, at any time, with or without a change in
circumstances; provided, however, such brokerage commissions cannot exceed
* 80% of the published retail rate of the introducing broker and other
similar introducing brokers (excluding pit brokerage fees), or
* 14% annually of the partnership's average net assets directly related to
trading activity (including pit brokerage fees).
Other Expenses
We must pay legal and accounting fees, as well as other expenses and claims.
The general partner projects we will incur the following expenses:
* offering expenses of $47,000 which must be paid to the corporate general
partner upon the break of escrow
* organizational expenses of $5,000 which must be paid to the corporate
general partner and will be amortized on a straight line method over 60
months, and
* legal and accounting costs of approximately $23,000 to be charged annually
after the first year, which includes $18,000 for accounting and audit and
$5,000 for legal
* customary and routine administrative expenses, and other direct expenses
We will reimburse the general partner for direct expenses, such as delivery
charges, statement preparation and mailing costs, telephone toll charges, and
postage.
Charges To The Partnership
The following table includes all charges to the partnership.
<TABLE>
<CAPTION>
Entity Form of Compensation Amount of Compensation
<S> <C> <C>
General Partner Management fee 3% annual management fee, paid monthly,
(Belmont Capital Management, of net asset value to Belmont
Inc., Shira Del Pacult)
Reimbursement of offering expenses Reimbursement to Belmont of offering
expenses upon the break of escrow
Reimbursement of organizational expenses Reimbursement to Belmont of organizational
expenses amortized over 60 months
Selling Agent Trailing Commission Trailing Commissions of 6%, paid annually,
(Futures Investment Company) from the 11% fixed commissions paid to the
introducing broker
Introducing Broker affiliated Fixed Commissions 11% of assets assigned by general partner
with the General Partner for trading, less 4% brokerage fees paid
(Futures Investment Company) to futures commission merchant and less 6%
trailing commissions paid to selling agents
(including affiliates of the general partner)
Futures Commission Merchant Round-turn commissions paid from the 4% of assets assigned by the general partner
(Vision Limited Partnership) fixed commissions paid by the Partnership for trading paid by introducing broker
Reimbursement of delivery, insurance, storage Reimbursement by the partnership of
and any other charges incidental to trading actual payments to third parties in
and paid to third parties connection with partnership trading
Commodity Trading Advisor Fixed Management Fee 1% annual management fee, paid monthly, of
(Ansbacher Investment the trading equity assigned to the advisor
Management, Inc.)
Incentive Fee 20% of the new net profits of the account
for each quarterly period that the net value
of the trading equity at the end of such
quarterly period for an advisor exceeds the
highest previous quarterly net value of the
trading equity for that advisor
Third Parties Legal, accounting fees, and other actual Estimated at $23,000 for each year after the
(The Scott Law Firm, P.A., expenses necessary to the operation of the first ($18,000 for accounting and $5,000 for
Frank L. Sassetti & Co., Partnership, and all claims and other legal). Claims and other costs can not be
& James D. Hepner, CPA) extraordinary expenses of the Partnership. estimated and will be paid as incurred.
</TABLE>
Investor Suitability
You should only invest a limited amount of the risk portion of your total
portfolio and should not invest more you can afford to lose.
To invest the minimum $25,000 in this partnership, you must have either:
* a net worth of at least $150,000 (exclusive of home, furnishings and
automobiles), or
* an annual gross income of at least $45,000 and a net worth (as calculated
above) of at least $45,000.
You may not invest more than 10% of your net worth in this partnership. The
foregoing standard and the additional standards applicable to residents of
certain states as set forth in this prospectus and the subscription documents
are regulatory minimums only.
Potential Advantages
Commodity trading is speculative and involves a high degree of risk. See Risk
Factors. However, your investment in this partnership will offer the
following potential advantages:
Equity Management
We offer the opportunity for you to:
* place equity with a professional commodity trading advisor who has
demonstrated an ability to trade profitably (in the judgment of the general
partner), and
* have that equity allocated to the trading advisor in a manner which is
intended by the general partner to optimize future profit potential.
Mrs. Pacult has experience managing several other commodity pools and has
over eighteen years of experience in selecting commodity trading advisors to
manage individual investor accounts and describing to investors how
individual managed futures accounts work.
We expect this experience to benefit us in the quality of trading advisors
selected and in the explanation to prospective investors of our operation and
the attendant risks of investment.
Investment Diversification
If you are not prepared to spend substantial time trading various commodity
contracts or options, you may participate in these markets through an
investment in the partnership (with a minimum investment of only $25,000),
thereby obtaining diversification from investments in stocks, bonds and real
estate.
Limited Liability
You will not be subject to margin calls and cannot lose more than your
original investment amount plus your share of distributed and undistributed
profits; provided the below bulleted legal conditions are met.
In the opinion of our legal counsel, there are no circumstances, including
bankruptcy of this partnership, which will subject your personal assets to
our debts, provided:
* the partnership's structure is maintained by the general partner, and
* no limited partner is affiliated with any phase of our management.
See the Limited Partnership Agreement (Exhibit A).
Administrative Convenience
We are structured to provide you with services which alleviate the
administrative details involved in trading commodities contracts directly,
including:
* providing monthly and annual financial reports showing, among other things:
* the per Unit value
* trading profits or losses, and
* expenses; and
* preparing all tax information relating to your investment in this
partnership.
Access To The CTA
The commodity trading advisor selected by the general partner requires a
minimum account size substantially greater than the $25,000 minimum
investment required by us (e.g., Ansbacher requires a minimum investment of
$250,000). Accordingly, you have access to the trading advisor for a smaller
investment than is available by a direct investment in a managed account with
the trading advisor.
Use Of Proceeds
After commencement of trading, we will reimburse the corporate general
partner, Belmont Capital Management, Inc., for the $47,000 in offering
expenses it advanced. The $5,000 in organizational expenses it also advanced
will be amortized on a straight line method over 5 years. The general
partner will then allocate trading equity to the commodity trading advisor.
The futures commission merchant will charge our account a monthly fee of 1/3%
(4% annually) of the equity in our account to cover the brokerage commissions
and other trading costs.
At the end of each month, the actual management fees and fixed commissions
identified under Charges to the Partnership will be paid by the Partnership.
The general partner has sole authority to determine the percentage of our
assets that will be:
* held on deposit with the futures commission merchant
* used for other investments, and
* held in bank accounts to pay current obligations.
The general partner expects to deposit substantially all of our net assets
with the futures commission merchant for trading by the trading advisor.
However, 3% of the previous month's net assets will be retained in our bank
accounts as a reserve to pay expenses and redemptions.
We will use only cash and cash equivalents, such as United States Treasury
Bills, to satisfy margin requirements. All entities that will hold or trade
our assets will be based in the United States and will be subject to United
States regulations.
The general partner believes that between 20% to 40% of our assets will
normally be committed as margin for commodity futures contracts. However,
from time to time, the percentage of assets committed as margin may be
substantially more, or less, than such range. All interest income will be
used for the partnership's benefit. To estimate interest income earned upon
our deposits, the general partner has assumed that:
* between 20% and 40% of our net assets will be used for margin upon trades,
and
* we will receive approximately 6% interest on our available balances.
Note that the futures commission merchant may increase margins applicable to
us at any time.
Determination Of The Offering Price
We are currently offering the Units for sale at $l,000 per Unit. This
amount:
* was arbitrarily set by the general partner without regard to expected
earnings
* does not represent their present or future market value, and
* is not necessarily their redemption value, or the price at which you may
receive your investment back.
After we have commenced business, any remaining Units that we wish to sell
will be offered at the net Unit value, or the price per Unit equal to our net
assets divided by the number of outstanding Units. This amount will be
calculated as of the close of business on the effective date of such
purchase. This effective date will be the last business day of the month in
which the general partner accepts a duly executed subscription agreement and
subscription amount from you.
The General Partner
Identification
We are managed by two general partners, Belmont Capital Management, Inc. and
Mrs. Shira Del Pacult. See Management's Discussion and Analysis of Financial
Condition, The General Partners.
The balance sheet of Belmont as of August 4, 1999, an income statement,
statement of cash flows and statement of changes in stockholders' equity are
included in this prospectus. Also, see Experts.
The general partner has caused this partnership to be formed and available
for this offering, but has not yet managed trading on our behalf or performed
any other business activities.
You will not acquire or otherwise have any interest in Belmont, the corporate
general partner, by purchasing Units in this partnership.
Shira Del Pacult
Mrs. Pacult, age 43, is:
* one of the general partners
* the sole shareholder, director, principal, and officer of the corporate
general partner, and
* a principal, officer, director and 50% shareholder of Futures Investment
Company, the selling agent and introducing broker, of which her husband is
also a principal.
She graduated Phi Beta Kappa from the University of California, at Berkeley,
in 1979. From 1980 to 1981, she was employed by a real estate developer in
Sonoma County, California, as an administrative assistant. From 1981 - 1983
she was employed by Heinold Commodities, Inc., Chicago, IL, to assist in the
development of the Commodities Options Department. She became a senior
account executive at Heinold and was a member of the President's Council, a
select group appointed to advise the firm on all matters of business
practice.
In 1983, Mrs. Pacult and her husband established Futures Investment Company,
an Illinois corporation, to sell futures investments managed by independent
commodity trading advisors to retail clients. Presently, Futures Investment
Company is located at 5916 N. 300 West, P.O. Box C, Fremont, Indiana, 46737,
and maintains clearing agreements with Refco, Inc., Vision Limited
Partnership, and ABN AMRO Incorporated.
In addition to the Units offered pursuant to this prospectus, Futures
Investment Company offers for sale, on a best efforts basis, securities of
other issuers and engages in other broker-dealer activities.
Mrs. Pacult is a member of the National Association of Introducing Brokers,
and is an affiliated person and registered representative of Futures
Investment Company, which is a member of the National Futures Association and
the National Association of Securities Dealers, Inc.
Mrs. Pacult also manages several other commodity pools. Though Mrs. Pacult
will provide less than her full time to the business affairs of the
partnership, she will devote what time is necessary to properly handle her
responsibilities as a general partner and as the principal of the corporate
general partner. Mrs. Pacult and her husband, Michael, are featured as
interviewees in the book Master Brokers: Interviews with Top Futures Brokers
by John Walsh, ISBN 0-915513-61-7. See Management's Discussion and Analysis
of Financial Condition, The General Partners.
Ownership In Commodity Trading Advisor And Futures Commission Merchant
Mrs. Pacult has no ownership in the commodity trading advisor or the futures
commission merchant. Mr. Michael Pacult, Mrs. Pacult's husband, will have
no ownership or role in the management of Belmont Capital Management, Inc.
However, he will be an associated person, officer and fifty percent
shareholder in Futures Investment Company. Mr. Pacult is also expected to
sell Units in the partnership in jurisdictions where he is licensed to sell
securities..
Trading By The General Partner; Interest In The Pool
Belmont Capital Management, Inc. and Mrs. Pacult, may, from time to time,
trade commodity interests for their own accounts. The records of any such
trading activities will not be made available to you. As stated earlier, the
general partner will not knowingly take positions on its own behalf which
would be ahead of identical positions taken on behalf of the partnership.
No Prior Performance And Regulatory Notice
We have not begun trading and do not have any performance history.
The regulations of the Commodity Futures Trading Commission and the National
Futures Association prohibit any representation by a person registered with
the Commodity Futures Trading Commission or by any member of the National
Futures Association, respectively, that such registration or membership in
any respect indicates that the Commodity Futures Trading Commission or the
National Futures Association, as the case may be, has approved or endorsed
such person or such person's trading programs or objectives. The
registrations and memberships described in this prospectus must not be
considered as constituting any such approval or endorsement. Likewise, no
commodity exchange has given or will give any such approval or endorsement.
Trading Management
Advisory Agreement And Power Of Attorney
We have entered an Advisory Agreement and Power of Attorney, attached as
Exhibit F, with the trading advisor, which gives it sole discretion to trade
the equity the general partner assigns to it. The general partner intends to
allocate substantially all our net assets as trading equity to the trading
advisor.
We are bound by the directions the trading advisor gives to the futures
commission merchant under the Power of Attorney. The Power of Attorney may
be terminated by either the general partner or the trading advisor upon
written notice to the other and to the futures commission merchant. If the
Power of Attorney is terminated, the general partner will seek and retain one
or more other trading advisors.
No Affiliation With Commodity Trading Advisor
The trading advisor is not affiliated with either general partner.
Additionally, the general partner will not serve as a trading advisor or
select any other trading advisors to trade which are affiliated with either
general partner. See The Commodity Trading Advisor for a summary of the
trading advisor's performance information.
Rights of the General Partner With Respect To Commodity Trading Advisor
Selection And Allocation Of Equity
The general partner doesn't intend to add any other trading advisors once we
commence business. The general partner believes that a trading advisor should
be retained on a medium to long-term basis and should be allowed to fully
implement its trading strategy. However, the general partner may, in its
sole discretion and without notice to you:
* terminate the current or any future trading advisor
* select additional trading advisors, or
* change the allocation of equity to any trading advisor.
The general partner will periodically review our performance to determine if
a current trading advisor should be changed or if others should be added. In
doing so, the general partner may use computer generated correlation analysis
or other types of automated review procedures to evaluate trading advisors.
If a trading advisor is replaced, the new trading advisor will receive
incentive fees independent of the previous trading advisor's performance.
If the general partner engages more than one trading advisor to trade at a
time, the following may possibly occur:
* we may pay an incentive fee to one trading advisor which is trading
profitably while the other trading advisor(s) produce(s) losses which cause
us to be unprofitable overall
* as the trading advisors trade independently, they may compete for similar
positions or take positions opposite each other, which may limit our
profitability.
The Commodity Trading Advisor
Ansbacher Investment Management, Inc., a New York corporation, is the
commodity trading advisor, and its Main Business Office and main business
telephone are: 45 Rockefeller Plaza, 20th Floor, New York, New York 10111;
telephone (212) 332-3280. The trading advisor's books and records will be kept
and made available for inspection at the main business office.
Business Background
The trading advisor's business background for at least five (5) years is as
follows:
Ansbacher Investment Management, Inc. became registered as a commodity
trading advisor and as a commodity pool operator with the Commodity Futures
Trading Commission on December 14, 1995, and is also a member in good
standing of the National Futures Association in each such capacity. The
trading advisor's registration with the Commodity Futures Trading Commission
and its membership in the National Futures Association must not be taken as
an indication that any such agency or self-regulatory body has recommended or
approved it or the program offered hereby.
Max G. Ansbacher is the president and principal of Ansbacher Investment
Management, Inc. and is also the sole shareholder. Mr. Ansbacher is directly
responsible for all its trading and money management decisions. From 1975
through January 1996, Mr. Ansbacher was employed by Bear, Stearns & Co.,
Inc., a stock brokerage and registered futures commission merchant, where at
the time of his departure, he was an associate director and an associated
person who regularly managed futures accounts for a number of his clients on
a discretionary basis.
Mr. Ansbacher is the author of The New Options Market, Revised Edition
(Walker & Co., 1975). Mr. Ansbacher is also the author of How to Profit from
the Coming Bull Market published by Prentice-Hall in 1981, and The Stock
Index Market published by Walker & Co. in 1983. Mr. Ansbacher is the creator
of The Ansbacher Index, which is broadcast weekly on CNBC. This index was
created to determine stock market sentiment by analyzing the ratio of the
prices of puts and calls on a stock market index. Mr. Ansbacher has given
lectures on options at over 24 investment conferences throughout the United
States and overseas.
Mr. Ansbacher was graduated from the University of Vermont in 1957, from Yale
University Law School in 1960, and received an advanced law degree from New
York University Law School in 1963.
Mr. Ansbacher is a member of the Board of Directors of The Burden Center for
the Aging, a social services organization for the aged, and is the Chairman
of its Finance Committee. He is also a member of the Board of Directors of
The Fortune Society, an organization which assists ex-offenders in becoming
gainfully employed citizens, and he serves as both its Treasurer and its
Secretary.
Erin Tower is the Executive Vice President of Ansbacher Investment
Management, Inc. She is responsible for macro economic research, for liaison
with brokerage firms, and for client relationships. Before coming to
Ansbacher Investment Management, Inc. in November 1995, Ms. Tower was
employed by Bear, Stearns & Co., Inc. for nearly sixteen years (from June
1981 to September 30, 1995) as a registered representative and an associated
person who handled both stock and futures accounts for a large number of
clients, including individual investors and small institutional investors.
Ms. Tower graduated cum laude from Columbia University and was elected to Phi
Beta Kappa. After graduation she worked for Nikko Securities in New York City
before joining Bear, Stearns & Co., Inc. She is currently an investment
advisor to the community Church of New York City.
The past performance record of Ansbacher Investment Management, Inc. and its
principal, Mr. Ansbacher, is set forth below under Performance Record Of The
Commodity Trading Advisor.
Ansbacher Investment Management, Inc. and its principal may trade commodity
interests for their own accounts, and the records of such trading, and any
written policies relating to such trading, will not be made available to you
for inspection.
Description Of Trading Program
The following description of Ansbacher Investment Management, Inc. and its
trading methods and strategies is general and is not intended to be
exhaustive. Commodity trading methods are proprietary and complex, so only
the most general descriptions are possible; no attempt has been or could be
made to provide a precise description of Ansbacher Investment Management,
Inc.'s strategy. While it believes that the description of its methods and
strategies included herein may be of interest to you, you must be aware of
the inherent limitations of such description.
The objective of Ansbacher Investment Management, Inc.'s strategy is to
achieve substantial capital appreciation through the speculative trading of
futures contracts, options on futures contracts and potentially forward
contracts, and other futures-related interests, which objective entails a
comparatively high level of risk. Ansbacher Investment Management, Inc.
currently engages in a program of selling or writing options, consisting of
both puts and calls, on stock index futures. However, in the future,
Ansbacher Investment Management, Inc. may trade a broader portfolio of
options, futures and cash markets and potentially forward markets, including
agricultural products, metals, currencies, financial instruments, and stock,
financial and economic indices. Ansbacher Investment Management, Inc. may
trade these commodity interests on any U.S. exchange.
Ansbacher Investment Management, Inc. uses a systematic approach to trading
in that it relies heavily on a program of selling or writing options on stock
index futures. Ansbacher Investment Management, Inc. may also, from time to
time, purchase options. The program depends upon both technical and
fundamental considerations and is implemented by selecting how many puts and
how many calls, and which prices and maturities of each. The technical
indicators will include the prices of various options, both in absolute terms
in relation to their historic price levels, and in relative terms comparing
the prices of puts to the prices of similar calls. In this respect, Ansbacher
Investment Management, Inc. may rely upon the current reading of The
Ansbacher Index. The fundamental considerations include the condition of the
stock market, its trend and its volatility as well as business, political and
economic forces which can influence the stock market.
In addition, Ansbacher Investment Management, Inc. may take positions in the
futures markets, including stock index and bond futures, based upon
fundamental considerations such as historical price patterns, or technical
considerations such as trend following. Ansbacher Investment Management, Inc.
may in the future trade a broader portfolio of commodity interests.
Ansbacher Investment Management, Inc. from time to time may change or refine
the trading systems employed.
Performance Record Of The Commodity Trading Advisor
The following summary performance information and chart reflects the
composite performance results of all customer accounts which, from May 1994
through present, granted Ansbacher Investment Management, Inc. and Mr.
Ansbacher discretion to utilize the trading strategy described herein.
Ansbacher Investment Management, Inc. and/or Mr. Ansbacher have traded for
five accounts, one of which was a proprietary commodity pool account.
Ansbacher Investment Management, Inc. does not currently offer any trading
strategy or program to clients other than the strategy described herein.
In reviewing the performance of Ansbacher Investment Management, Inc. and its
principal, you should understand that such performance is calculated on the
accrual basis and in accordance with generally accepted accounting principles
and is net of all fees and charges and includes interest income applicable to
the accounts comprising the composite performance record. Furthermore, prior
to January 1, 1995 (i.e. following the incorporation of Ansbacher Investment
Management, Inc.), the accounts described below were charged brokerage
commissions, but not management or incentive fees. Therefore, the performance
figures below have been adjusted on a pro forma basis in order to take into
account the fees and charges which will apply to client accounts - a 2%
management fee, a 20% incentive fee, estimated brokerage commissions at $13
per round-turn, and a 4.5% interest rate. In the commodities industry, the
commission charged for trades can be allocated for each trade, which includes
the entry of the trade and the close of the trade. This method of allocating
the cost to trade is commonly called "per round turn." While the pro forma
adjustments described above have been made in order to more accurately
reflect the fee structure applicable to client accounts, the brokerage
commission rate applicable to the accounts described below prior to January
1, 1996 was substantially higher (up to $85 per round-turn) than either the
pro forma brokerage commission rate or the brokerage commission rate ($13 per
round-turn) estimated to be charged to client accounts. Composite performance
records are not necessarily indicative of the performance experienced by any
individual client account. The notes following the performance information
below are integral part of such performance and must be reviewed together
with such performance information. Past performance is not necessarily
indicative of future results.
Mr. Ansbacher has implemented the trading strategy described herein utilizing
his proprietary funds since September 1990.
Ansbacher Investment Management, Inc. - Composite
The following capsule shows the past performance of Ansbacher Investment
Management, Inc. - Composite since the inception of trading of the first
account (in May 1994) and year-to-date (through February 28, 1999). Past
performance is not necessarily indicative of future results.
Ansbacher Investment Management, Inc. - Composite
Percentage Rate of Return
(Computed on a compounded monthly basis)*
Month 1999 1998 1997 1996 1995 1994
January 1.55 1.51 20.80 2.22 3.25 N/A
February 3.14 13.60 (0.75) (3.54) (0.42) N/A
March 7.19 8.09 5.02 2.88 1.27 N/A
April (3.55) 1.87 5.89 1.99 2.93 N/A
May (0.65) (3.14) 14.17 3.21 0.60 1.70
June 8.16 6.42 4.23 6.16 1.81 (2.90)
July (3.64) 11.18 (12.76) 2.28 6.31
August (2.23) (5.89) 5.81 2.75 0.49
September (5.65) 4.16 7.88 (0.22) (1.80)
October (5.91) (13.60) 0.27 3.00 4.33
November 7.57 20.26 12.97 3.19 2.27
December 8.80 7.90 (6.52) 2.06 3.76
Year 16.34 27.96 94.93 19.52 24.85 14.69
Name of Commodity Trading Advisor: Ansbacher Investment Management, Inc.
Name of Trader: Max G. Ansbacher
Name of Trading Program: Composite
Inception of Client Account Trading: May, 1994
Inception of Trading Pursuant to Offered Program: May, 1994
Accounts Under Management: 315
Total Assets Managed by CTA: $229,552,000
Total Assets Traded Pursuant to Offered Program: $29,552,000
Worst Monthly Percentage Draw-down**: 10-97/33.4%****
Worst Peak-to-Valley % Draw-down***: 10-97/33.4%****
Number of Accounts Closed with Profit: 22
Number of Accounts Closed with Loss: 11
* Rate of Return is computed by dividing net performance by beginning net asset
value for the period. For those months when additions or withdrawals exceed
ten percent of beginning net assets, the Time-Weighting of Additions and
Withdrawals method is used to compute rates of return.
** "Draw-down" is defined by applicable CFTC regulations to mean losses
experienced by an account over the specified period.
*** Worst Peak-to-Valley Draw-Down means the greatest cumulative percentage
decline in month-end net asset value due to losses sustained by a pool, account
or trading program during any period in which the initial month-end net asset
value is not equaled or exceeded by a subsequent month-end net asset value.
**** These largest one month and peak-to-valley draw-downs occurred in one
account which was traded in a particularly aggressive manner at client
request. The average largest one month and peak-to-valley draw-down for all
managed accounts was (13.53%).
Performance Record Of Other Programs Sponsored By The General Partner
The following is a summary of the prior performance of the other programs
sponsored by the general partner and its affiliates.
Mrs. Shira Del Pacult has sponsored two other public commodity pools, Fremont
Fund, LP and Atlas Futures Fund, LP. She is also the principal of the
corporate general partner of Auburn Fund, LP, a privately placed commodity
pool.
Atlas Futures Fund, LP was declared effective by the Securities and Exchange
Commission on September 3, 1999. It recently commenced business on October
15, 1999, but it does not yet have a track record.
Fremont Fund, LP was declared effective August 12, 1996 and has been trading
since November, 1996. The fund was originally traded by a single commodity
trading advisor who suffered a long trading slump that coincided with the
fund's inception of trading. Since that time, several other trading advisors
have been employed, but haven't traded profitably. The fund is now traded by
two trading advisors, Bell Fundamental Futures, LLP and Hanseatic
Corporation.
Fremont Fund, Limited Partnership
Mrs. Pacult serves as an individual general partner and as the principal of a
corporate general partner, Pacult Asset Management, Inc., both of which
manage another commodity pool called Fremont Fund, Limited Partnership.
Fremont Fund Limited Partnership is traded by Bell Fundamental Futures, LLC
and Hanseatic Corporation.
Fremont Fund pays various expenses in relation its operation including:
* a monthly management fee of 1/3 of 1% (4% annually) to its trading advisors
* a monthly management fee of 1/6 of 1% (2% annually) to its corporate
general partner
* a quarterly incentive fee of 15% of all new net profits to its trading
advisors
* a monthly trading fee of 1% (12% annually) to its introducing broker.
Fremont Fund, Limited Partnership
The following capsule shows the past performance of Fremont Fund, LP for the
period from inception of trading in November, 1996, through February 28, 1999.
Past Performance Is Not Necessarily Indicative Of Future Results.
Fremont Fund, Limited Partnership
Percentage Rate of Return
(Computed on a compounded monthly basis)*
Month 1999 1998 1997 1996
January (1.48) (1.48) (1.79) N/A
February 6.72 (0.92) 0.71 N/A
March (13.29) 0.74 (0.91) N/A
April (0.62) (3.46) (2.13) N/A
May 6.58 (2.30) (0.66) N/A
June (3.43) (5.39) (0.39) N/A
July 4.21 (0.65) N/A
August 1.78 (2.57) N/A
September 0.07 (0.53) N/A
October 0.26 (0.76) N/A
November (3.52) (1.09) (8.83)
December (1.38) (2.13) 2.34
Year (6.75) (11.15) (12.21) (6.69)
Name of Pool: Fremont Fund, LP
How Offered: Publicly offered pursuant to Form S-1 Registration Statement
Names of CTAs: Bell Fundamental Futures, L.L.C., Hanseatic Corporation
Principal Protected: No
Date of Inception of trading: November, 1996
Net Asset Value of the pool: $441,403 on total Units outstanding: 692
NAV Per Unit: $638
Largest Monthly Draw-Down**: 12-96/8.83%
Worst Peak-to-Valley Draw-Down***: 11-96 to 6-98/32.5%
* Rate of Return is computed by dividing net performance by beginning net
asset value for the period. For those months when additions or withdrawals
exceed ten percent of beginning net assets, the Time-Weighting of Additions and
Withdrawals method is used to compute rates of return.
** "Draw-down" is defined by applicable CFTC regulations to mean losses
experienced by an account over the specified period.
*** Worst Peak-to-Valley Draw-Down means the greatest cumulative percentage
decline in month-end net asset value due to losses sustained by a pool, account
or trading program during any period in which the initial month-end net asset
value is not equaled or exceeded by a subsequent month-end net asset value.
Performance Record Of Atlas Futures Fund, Limited Partnership
Mrs. Pacult serves as an individual general partner and as the principal of a
corporate general partner, Ashley Capital Management, Inc., both of which
manage another commodity pool called Atlas Futures Fund, Limited Partnership.
Atlas Futures Fund, Limited Partnership will be traded by Clarke Capital
Management, Inc. It recently commenced business on October 15, 1999, but it
has not yet established a track record.
Atlas Futures Fund pays various expenses in relation its operation including:
* a monthly management fee of 1/4 of 1% (3% annually) to its trading advisor
* a monthly management fee of 1/12 of 1% (1% annually) to its corporate
general partner
* a quarterly incentive fee of 20% of all new net profits to its trading
advisor
* a monthly trading fee of 3/4% (9% annually) to its introducing broker.
The Futures Commission Merchant
The general partner has selected Vision Limited Partnership located at One
Whitehall Street, 15th floor, New York, New York, 10004 to serve as our
futures commission merchant. It will hold, supervise and control all our
equity on deposit to be used for trading by the commodity trading advisor.
Vision Limited Partnership is registered as a futures commission merchant
pursuant to the Commodity Exchange Act and is a member of the National
Futures Association. As required by law, the general partner will provide
notice to you within 21 days of any change in the futures commission
merchant.
Regulations of the Commodity Futures Trading Commission require disclosure of
any material administrative, civil, or criminal actions against the futures
commission merchant, or any of its principals, within five years of the date
of this prospectus.
The following disclosures are provided regarding Vision Limited Partnership.
In addition, Vision is a non-clearing futures commission merchant, meaning
the trading advisor's trades are placed through another futures commission
merchant with the power to execute trades directly with the commodity
exchange. To do this, Vision has established a clearing arrangement with
Lind-Waldock & Company which allows Vision to be responsible for trades made
by the advisor on all U.S. commodity exchanges.
Lind-Waldock is located at 1030 West Van Buren Street, Chicago, IL 60607.
Lind-Waldock is a clearing member of all principal futures exchanges in the
United States.
See disclosures as to litigation during the past 5 years regarding Vision and
Lind-Waldock & Company under Legal Matters.
Federal Income Tax Aspects
Scope Of Tax Presentation
This presentation is based on:
* the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder (hereinafter collectively called the
"Code") which were in effect as of July 31, 1999, and
* the express intention of the general partner to cause us to invest only our
equity capital and not to borrow funds from any source, and
* the belief that all of the income generated by us will be qualifying income
and, therefore, we will not be a publicly-traded entity.
Any change in the Code or deviation from the intent to invest equity capital
only could alter this presentation and also have adverse tax consequences on
this partnership and you.. For instance, if we were taxed as a corporation,
we would pay tax and you would have to pay a second tax, which you would not
have to pay if we are taxed as a partnership. In addition, if we were taxed
as a corporation, none of the deductions for expenses would pass through to
your tax return.
Under current IRS guidelines, there is a substantial possibility that our
return will be examined. If we are audited, significant factual questions
may arise which, if challenged by the IRS, might only be resolved at
considerable legal and accounting expense to both you and us. Any adjustment
made to our return will flow through to your return and could result in a
separate audit of your individual return. We will report our income for tax
and book purposes under the accrual method of accounting and our tax year
will be the calendar year, or such other period as is required under section
706(b) of the Code. During taxable years in which little or no profit is
generated from trading activities, you may still have interest income which
will be taxed as ordinary income.
This discussion assumes you are an individual and is not intended as a
substitute for careful planning; particularly, since the income tax
consequences of an investment in the partnership will not be the same for all
taxpayers. All matters upon which we have obtained an opinion of tax counsel
are discussed under the caption Tax Opinion below. Accordingly, you are
urged to consult your tax advisors with specific reference to your tax
situation.
No Legal Opinion As To Certain Material Tax Aspects
We will not request a legal opinion in regard to any State income tax issue.
In addition, our tax counsel can not opine upon:
* any Federal income tax issue which involves a determination by the IRS of
the facts related to our operation, or
* any other matter which may be subject to IRS interpretation or adjustment
upon audit.
For example, commodity trading advisor fees are aggregated with employee
business expenses and other expenses of producing income, and the aggregate
of such expenses is deductible only to the extent such amount exceeds 2% of
the your adjusted gross income. The Federal income tax deductibility of
these expenses depends upon factual determinations related to our operation
by the general partner.
Partnership Tax Status And Net Worth Of The General Partner
If we were treated as an association or publicly traded partnership, taxable
as a corporation, in any taxable year,
* we would pay taxes at the corporate rates upon our income and gains
* items of deduction and losses would be deductible only by us and not by you
* tax credits would be available only to us and not to you, and
* all or a part of any distributions we make to you could be taxable as
dividend income to you and would not be deductible by us in computing our
taxable income.
This would substantially increase the total amount of taxes both we and you
would pay each year.
The Code, at Section 7701, provides the characteristics of a corporation
which should not be present if a partnership is to be taxed as a partnership.
Among those characteristics is a test for net capital which all entities
serving as general partner to a partnership must meet. Among those
requirements are that:
the general partner, as such, will maintain a capital contribution in the
partnership in an amount not less than the greater of
* $25,000 or
* one percent (1%) of the aggregate capital contributions from time to time,
of all limited partners, measured at the time of each respective investment,
and
* sufficient net worth to enable our creditors to have a viable entity to
hold responsible for our debts.
These tests are contained in Code Section 7701 to maintain our partnership
taxation status. When or if Belmont Capital Management, Inc. becomes the
sole general partner, it will use its best efforts to satisfy the safe harbor
requirements or otherwise satisfy the IRS requirements necessary to cause us
to be taxed as a partnership and not as a corporation.
The IRS Code Section 7701 specifically provides a safe harbor which permits
limited partnerships to meet the net worth test when a sole corporate general
partner has a net worth equal to 15% of the first $2,500,000 of its net
assets or $250,000, whichever is less, and 10% of all net assets above
$2,500,000, exclusive of the amount invested by such general partner in any
partnership. Mrs. Pacult intends to resign as a general partner once
* she is no longer a necessary element to maintain our tax status as a
partnership and not as a corporation, and
* Belmont has sufficient net assets to meet the North American Securities
Administrators Association Guidelines to continue to offer our Units.
Although we cannot guarantee that Belmont, as the sole corporate general
partner, will satisfy the IRS safe harbor test to permit us to continue to be
taxed as a partnership, before Mrs. Pacult resigns, Belmont will secure an
opinion of counsel to the effect that sufficient other IRS elements exist to
allow us to continue to be taxed as a partnership and not as a corporation.
Historically, the right of redemption, similar to your right to redeem your
Units, renders a pool, such as us, a publicly traded partnership, taxed as a
corporation. However, the Revenue Act of 1987 provides an exception. The
exception requires 90% or more of our gross income to be qualifying income.
If the principal activity of the partnership is buying and selling
commodities, qualifying income includes interest, dividends, and income from
futures, options or forward contracts on commodities. The general partner
intends to limit the sources of income so that the exception will apply to
us. In addition, the general partner has placed restrictions upon the right
of redemption. See The Limited Partnership Agreement, Redemptions and
Exhibit A, Right of Redemption.
No IRS Ruling
We have not applied for a ruling from the Internal Revenue Service regarding
our status as a partnership or with regard to any other tax aspect, nor do we
intend to seek a ruling. In the absence of a ruling, there can be no
assurance that the IRS will not attempt to take a position adverse to the
partnership.
Tax Opinion
We have obtained an opinion, which is not binding upon the IRS or the courts,
from The Scott Law Firm, P.A., that we will be taxable as a partnership and
not as a corporation. The firm has opined with respect to all material
federal tax consequences as follows:
* we will be treated as a partnership for federal income tax purposes
(assuming that substantially all our gross income will be qualifying income
within the meaning of section 7704(d) of the Internal Revenue Code of 1986,
as amended)
* the allocations of profits and losses made when partners redeem their Units
should be upheld for federal income tax purposes;
* based upon our contemplated trading activities, the IRS should consider us
as conducting a trade or business; and, as a result, the ordinary and
necessary business expenses we incur while conducting our commodity futures
trading business should not be subject to limitation under section 67 or
section 68 of the IRS Code;
* the profit share should be respected as a distributive share of our income
allocable to Bromwell Financial Fund, Limited Partnership; and
* the contracts we trade, as described in this prospectus, should satisfy the
commodities trading safe harbor as described in section 864(b) of the IRS
Code.
Such opinion is based on the Code as of July 31, 1999 and a review of the
Limited Partnership Agreement, and is conditioned upon the following
representations of facts by the general partner:
* at all times, we will be operated in accordance with the Delaware Uniform
Limited Partnership Act and the Limited Partnership Agreement attached hereto
as Exhibit A
* the general partner will, at all times maintain not less than a 1% interest
in our income, losses, gains, deductions and credits
* for our first two years of operation, the aggregate deductions claimed by
the partners as their distributive shares of our net losses will not exceed
the equity capital invested in the partnership
* no creditor who makes us a loan, including margin accounts, will have or
acquire, as a result of making the loan, any direct or indirect interest in
our capital, profits or property, other than as a secured creditor
* the general partner will at all times actively direct the affairs of the
Partnership
* the general partner:
* will possess substantial assets, exclusive of its interest in us or any
other limited partnership, which can be reached by our general creditors
within the meaning of Treasury Regulation Section 301.7701 2(d)(2) or
* will otherwise comply with the tax code general partner requirements
imposed upon sole corporate general partners of limited partnerships
* interests in the partnership:
* will be transferable only upon approval of the general partner
* will not be traded on an established securities market, and
* will not be readily tradable on a secondary market or the substantial
equivalent thereof
* we will not be registered under the Investment Advisor's Act of 1940; and
* over 90% of our earned income will be qualifying income as that term is
defined in the IRS Act of 1987.
The Scott Law Firm, P.A. is not able to opine upon the tax treatment of
expenses as that determination depends upon questions of fact to be resolved
by the general partner on our behalf. In addition, commodity trading advisor
fees are aggregated with employee business expenses and other expenses of
producing income, and the aggregate of such expenses is deductible only to
the extent such amount exceeds 2% of your adjusted gross income. It is the
general partner's position that our intended operations will qualify as a
trade or business. If this position is sustained, the brokerage commissions
and performance fees will be deductible as ordinary and necessary business
expenses. Syndication costs to organize the partnership and offering
expenses will not be deductible or amortizable by us or you.
Any change in these representations or the operative facts will prevent us
and you from relying upon the legal opinion from The Scott Law Firm, P.A.
Passive Loss And Unrelated Business Income Taxes Rules
In addition to the imposition of a corporate level tax on publicly traded
partnerships, special rules apply to partnerships in regard to the
application of the passive loss and unrelated business income tax rules. In
Notice 88-75 issued on June 17, 1988, the IRS provided guidance as to
partnership operation. The general partner intends to cause us to comply
with the applicable provisions of these guidelines. In the event our
expenses were deemed not to qualify as deductions from trading profits, your
total taxes would increase while your distributions would remain the same.
Basis Loss Limitation
Generally, the basis of your interest in the partnership for tax purposes is
equal to the cost
* decreased, but not below zero, by your share of any partnership losses and
distributions, and
* increased by your share of any partnership income.
You may not deduct losses in excess of the adjusted basis for your interest
in the partnership at the end of the partnership year in which such losses
occurred. However, you may carry forward any excess to such time, if ever,
as the basis for the interest in the partnership is sufficient to absorb the
loss. Upon the sale or liquidation of your interest in the partnership, you
will recognize a gain or loss for Federal income tax purposes equal to the
difference between the amount you realize in the transaction and the basis
for your interest in the partnership at the time of such sale. For
individuals, capital losses would offset capital gains on a dollar for dollar
basis, with any excess capital losses subject to a $3,000 annual limitation.
Accordingly, it is possible for you to sustain a loss from our operation
which will not be allowed as a deduction for tax purposes or will be limited
to a $3,000 annual limitation.
At-Risk Limitation
If you borrow money to invest in the partnership, there are at risk
limitations that will apply to you. Section 465 of the IRS Code provides
that the amount of any loss allowable for any year to be included in your
personal tax return is limited to the amount paid for the Units (tax basis)
of the amount at risk. Losses already claimed may be subject to recapture if
the amount at risk is reduced as a result of:
* cash distributions from the activity
* deduction of losses from the activity
* changes in the status of indebtedness from recourse to non-recourse
* the commencement of a guarantee, or
* other events that affect your risk of loss.
You should consider the at risk provisions in arranging debt financing for
purchasing a partnership interest.
Income And Losses From Passive Activities
IRS Code Section 469 limits the deductibility of what are called passive
losses from business activities in which the taxpayer does not materially
participate. Under temporary Treasury regulations,
* the trading of personal property, such as futures contracts, will not be
treated as a passive activity,
* partnership gains allocable to you will not be available to offset passive
losses from sources outside the partnership, and
* partnership losses will not be subject to limitation under the passive loss
rules.
Allocation Of Profits And Losses
The allocation of profits, losses, deductions and credits contained in the
Limited Partnership Agreement will be recognized for tax purposes only if the
allocations have substantial economic effect. While the general partner
believes that the Limited Partnership Agreement either meets the requirements
or satisfies a substitute capital account equivalency test, the Limited
Partnership Agreement does not meet a third requirement, that a partner must
make a capital contribution to the partnership equal to any deficit in its
capital account. Accordingly, under the regulations and the Limited
Partnership Agreement, losses would not be allocable to you in excess of your
capital contribution plus properly allocated profits less any prior
distributions. The general partner intends to allocate income and losses in
accordance with the Limited Partnership Agreement which it believes complies
with applicable IRS Code Section 704. However, no assurances can be given
that the IRS will not attempt to change any allocation that is made among
partners admitted on different dates, which could adversely affect the amount
of taxable income to one partner as opposed to another partner.
Taxation Of Futures And Forward Transactions
The commodity trading advisors selected to trade for us are expected to trade
primarily in Section 1256 Contracts, which is any:
* regulated futures contract
* foreign currency contract
* non-equity option, or
* dealer equity option.
A regulated futures contract is a futures contract:
* if it is traded on or subject to the rules of:
* a national securities exchange which is registered with the Securities and
Exchange Commission,
* a domestic board of trade designated as a contract market by the Commodity
Futures Trading Commission or any other board of trade, exchange or other
market designated by the Secretary of Treasury, and
* which is marked-to-market to determine the amount of margin which must be
deposited or may be withdrawn. Marked-to-market means that the position is
taken in the account on day one at that price. Each day the position is
held, it is valued for account purposes at the price of the contract on the
close of that day.
A foreign currency contract is negotiated between banks and accepted for
trade among banks and private investors. The partnership is expected to
purchase or sell these contracts to speculate on the value of foreign
currency as contrasted with the U. S. dollar. These contracts are exempt
from the Commodity Exchange Act and are excluded from marked-to-market
treatment.
A non-equity option means an option which is treated on a qualified board or
exchange and the value of which is not determined directly or indirectly by
reference to any stock, group of stocks, or stock index unless there is in
effect a designation by the Commodity Futures Trading Commission of a
contract market for a contract bond or such group of stocks or stock index.
A dealer equity option means, with respect to an options dealer, only a
listed option which is an equity option, is purchased or granted by such
options dealer in the normal course of his activity of dealing in options,
and is listed on the qualified board or exchange on which such options dealer
is registered.
All Section 1256 contracts will be marked-to-market upon the closing of every
contract (including closing by taking an offsetting position or by making or
taking delivery, by exercise or being exercised, by assignment or being
assigned; or by lapse or otherwise) and all open Section 1256 contracts held
by us at our fiscal year-end will be treated as sold for their fair market
value on the last business day of such taxable year. This will result in all
unrealized gains and losses being recognized for Federal income tax purposes
for the taxable year. As a consequence, you may have tax liability relating
to unrealized partnership profits in open positions at year-end. Sixty
percent (60%) of any gain or loss from a Section 1256 contract will be
treated as long-term capital gain or loss, and 40% as short-term capital gain
or loss (referred to as the 60/40 Rule), regardless of the actual holding
period of the individual contracts. The character of a your distributive
share of profits or losses of the partnership from Section 1256 contracts
will thus be 60% long-term capital gain or loss and 40% short-term capital
gain or loss. Your distributive share of such gain or loss for a taxable
year will be combined with your other items of capital gain or loss for such
year in computing your Federal income tax liability. The IRS Code contains
rules designed to eliminate the tax benefits flowing to high-income taxpayers
from the graduated tax rate schedule and from the personal and dependency
exemptions. The effect of these rules is to tax a portion of a high-income
taxpayer's income at a marginal tax rate of 39.6%. However, long-term
capital gains are now subject to a maximum tax rate of 28%. A limited
partner, other than a corporation, estate or trust, may elect to carry-back
any net Section 1256 contract losses to each of the three preceding years.
However, the marked-to-market rules do not apply to interests in personal
property of a nature which are actively traded other than Section 1256
contracts.
Section 988 Foreign Currency Transactions
A Section 988 transaction is defined as the entering or acquiring of any
forward contract, futures contract, option or similar financial instrument if
the amount to be received or to be paid by reason of a transaction is
denominated in a nonfunctional currency (i.e., other than the dollar) or is
determined by reference to one or more nonfunctional currencies. If the
Section 988 transaction results in a gain or loss, it is considered to be a
foreign currency gain or loss to the extent it does not exceed gain or loss
realized by reason of changes in exchange rates.
Capital Gain And Loss Provisions
If long-term capital gains exceed short-term capital losses, the net capital
gain will be taxed at the same rates as ordinary income. Subject to an
annual limitation of $3,000, you may deduct the excess of capital losses over
capital gains against ordinary income. Excess capital losses which are not
used to reduce ordinary income in a particular taxable year may be carried
forward to, and treated as capital losses incurred in, future years.
Business For Profit
Code Section 183 sets forth the general rule that no deduction is allowable
to an individual for an activity not engaged in for profit. These are
activities other than those constituting a trade or business or engaged in
for the production or collection of income or for the management,
conservation, or maintenance of property held for the production of income.
The determination of whether an activity is engaged in for profit is based on
all facts and circumstances, and no single factor is determinative. The
general partner believes that by employing independent commodity trading
advisors with strong track records of production of profits, it is more
likely than not, that our activity will be considered an activity engaged for
profit.
Self-Employment Income And Tax
Section 1402 of the IRS Code provides that an individual's net earnings from
self-employment shall not include the distributive share of income or loss
from any trade or business carried on by a partnership of which he is a
limited partner. Therefore, you should not consider that the ordinary income
from the partnership constitutes net earnings from self-employment for
purposes of either the Social Security Act or the IRS Code.
Individual Alternative Minimum Tax
Non-corporate taxpayers are subject to the alternative minimum tax to the
extent it exceeds their regular tax. For an entity taxable as an estate or
trust, the first $22,500 of alternative minimum taxable income is exempt from
the alternative minimum tax, while for an individual it is the first $33,750
of such income, $45,000 for a joint return, or $22,500 for married taxpayers
filing separately. The exemption amounts will be phased out at the rate of
$.25 for each dollar of alternative minimum taxable income in excess of
$150,000 for married taxpayers filing jointly, $112,500 for single taxpayers,
and $75,000 for married taxpayers filing separately, estates and trusts.
Alternative minimum taxable income in excess of the exemption amount, after
any applicable phase-out, will be subject to a two-tiered rate schedule.
Alternative minimum taxable income, net of exemption, up to and including
$175,000 will be taxed at a rate of 26% and alternative minimum taxable
income over $175,000 will be taxed at a 28% rate. Taxpayers liable for the
alternative minimum tax are required to make estimated tax payments.
Interest Related To Tax Exempt Obligations
Section 265(a)(2) of the IRS Code will disallow any deduction for interest on
indebtedness of a taxpayer incurred or continued to purchase or carry
obligations the interest on which is wholly exempt from tax. The IRS
announced in Revenue Procedure 72-18 that the proscribed purpose will be
deemed to exist with respect to indebtedness incurred to finance a portfolio
investment. The Revenue Procedure further states that a limited partnership
interest will be regarded as a portfolio investment, unless rebutted by other
evidence. Therefore, if you own tax-exempt obligations, the IRS might take
the position that any interest expense incurred by you to purchase or carry
Units should be viewed as incurred by you to continue carrying tax exempt
obligations, and that you should not be allowed to deduct all or a portion of
the interest on any such loans.
Not A Tax Shelter
In the opinion of tax counsel, we do not constitute a tax shelter, as defined
in IRS Code Section 6111(c), since the general partner intends to operate the
partnership so that the tax shelter ratio will not exceed two-to-one at the
close of any of the first five years. Accordingly, the general partner does
not plan to register us as a tax shelter with the IRS.
Taxation Of Foreign Partners
An investment in the partnership should not, by itself, cause a foreign
partner to be engaged in a trade or business within the United States. A
foreign person is subject to a 30% withholding tax, unless reduced or
exempted by treaty, on United States source income which is not effectively
connected with the conduct of a United States trade or business. This tax
must be withheld by the person having control over the payment of such
income. Accordingly, we may be required to withhold tax on items of such
income which are included in the distributive share of a foreign partner,
whether or not the income was actually distributed. If we are required to
withhold tax on such income of a foreign partner, the general partner may pay
such tax out of its own funds and then be reimbursed out of the proceeds of
any distribution to or redemption of Units by the foreign partner.
Partnership Entity-Audit Provisions-Penalties
The IRS Code provides that the tax treatment of items of partnership income,
gain, loss, deduction and credit will be determined at the partnership level
in a single partnership proceeding. The Limited Partnership Agreement has
appointed Belmont Capital Management, Inc. as the tax matters partner to
settle any issue involving any partner with less than a 1% profits interest
unless such a partner, upon notice, properly elects not to give such
authority to the tax matters partner. The tax matters partner may seek
judicial review for any adjustment to partnership income, but there will be
only one such action for judicial review to which all partners will be bound.
The IRS Code provides that a partner must report a partnership item
consistently with its treatment on the partnership return, unless the partner
specifically identifies the inconsistency or can show that its treatment of
the partnership item on its return is consistent with a schedule furnished to
the partner by the partnership. Failure to comply with this requirement may
result in penalties for underpayment of tax and could result in an extended
statute of limitations. The statute of limitations for adjustment of tax
with respect to partnership items will generally be three years from the date
of filing the partnership return.
IRS Code Section 6662 imposes a penalty for a substantial understatement of
income tax equal to 20% of the amount of any underpayment attributable to
that understatement. Understatement is defined as meaning the excess of the
correct amount of tax required to be shown on the return over the amount of
tax which is actually shown on the return. A substantial understatement
exists for any taxable year if the amount of the understatement for the
taxable year exceeds the greater of:
* 10% of the correct tax, or
* $5,000, or $10,000, in the case of a corporation other than an S
corporation or a personal holding company.
Employee Benefit, Retirement Plans And IRA's
The Employee Retirement Income Security Act of 1974 governs:
* employee benefit plans, such as:
* a qualified pension, profit-sharing or stock bonus plan, or
* a qualified health and welfare plan; and
* individual retirement accounts, commonly called IRAs.
Before you invest in us through one of these qualified plans, you should
consult your own legal and financial advisors, and the fiduciary of your plan
should take into account the facts and circumstances of your plan, and
consider applicable fiduciary standards under the above act.
Acceptance of subscriptions on behalf of employee benefit plans is not a
representation by the general partner or any other party that this investment
meets all legal requirements or is appropriate with respect to investments by
any particular plan. The person with investment discretion should consult
the attorney for the plan as to the propriety of an investment in this
partnership.
The Limited Partnership Agreement
This prospectus explains all material terms of the Limited Partnership
Agreement; however, you are urged to read the entire agreement. See Exhibit
A.
Formation Of The Partnership
Our Certificate of Limited Partnership is dated and was filed on January 12,
1999 pursuant to the Delaware Uniform Limited Partnership Act.
You are not liable for our losses, debts and obligations beyond your
investment amount and your share of any of our undistributed assets, so long
as you do not take part in the management of the business of the partnership or
transact any business for the partnership.
According to the Limited Partnership Agreement, this partnership will not
terminate or dissolve upon any limited partner's death, incompetence,
withdrawal, insolvency, bankruptcy, termination, liquidation, dissolution or
other legal incapacity. Also, legal representatives of such limited partner
may redeem their Units, but will not have the right to withdraw their
interest or become a substituted limited partner solely by reason of such
incapacity.
Units
The number of Units you hold will determine your percentage interest in our
net assets. The percentage interest will be calculated from time to time by
dividing the number of Units you hold by the aggregate number of outstanding
Units.
Management Of Partnership Affairs
Only the general partner may manage this partnership. You will not take part
in our business or affairs nor will you have any voice in our management or
operations.
The limited partners who collectively hold a majority of the Units must give
written approval of any material change in either the Limited Partnership
Agreement or the partnership structure.
These material changes do not include the right of the general partner to:
* change trading advisors
* change the commodity contracts traded, or
* change the diversification of our assets among the various types of or in
the positions held in commodity contracts.
To the extent the law permits, such limited partners who hold a majority of
the Units may vote to amend any term in the Limited Partnership Agreement
and, if necessary, the Certificate of Limited Partnership without the
agreement of the general partner. This includes removing the general partner
and electing a new general partner.
The general partner may not make trades on our behalf. Trading must be done
by independent commodity trading advisors selected by the general partner.
Additional Offerings
The general partner may has sole discretion to:
* end any offering of Units
* register additional Units, and
* make additional public or private offerings of Units.
You will not have any preemptive, preferential or other rights with respect
to the issuance or sale of any additional Units. We have not limited the
amount of capital contributions or the maximum number of Units which may be
issued, offered or sold.
Partnership Accounting, Reports, And Distributions
You will have a capital account, and its initial balance will be the amount
you paid for your Units. The net assets of this partnership will be
determined monthly, and any change from the previous month will be passed on
to your account in the ratio that your account bears to all accounts.
The general partner has sole discretion to make distributions from profits or
net assets. On a monthly basis the you will receive a report containing:
* the net Unit value as of the end of both the current and previous month
* the percentage change in net Unit value between the two months
* the amount of distributions during the month
* the aggregate fixed commission in lieu of round-turn brokerage commissions,
other fees, administrative expenses, and reserves for claims and other extra-
ordinary expenses incurred or accrued by us during the month, and
* any other information required by the rules of the Commodity Futures
Trading Commission.
You or your duly authorized representative may inspect our books and records
and any records related to your account, provided:
* you give adequate notice
* you do so at a reasonable time, and
* you make copies at your expense.
Federal Tax Allocations
At the end of each fiscal year, our capital gain or loss and ordinary income
or loss will be allocated among the partners, while compensating for our fees
and expenses. You must include your share of such items in your personal
income tax return.
Transfer Of Units Only With Consent Of The General Partner
You are admitted to this partnership and are registered on the partnership
records as the owner of the Units you purchase. As a registered Unit holder,
you may:
* receive all distributions, allocations of losses and withdrawals, and
reductions of capital contributions, and
* vote on any matters submitted to the limited partners for voting.
You may transfer your Units only with the written consent of the general
partner. The general partner may not approve the transfer if it:
* is requested before two years from the date of purchase
* is not made for all of your Units or, if you are not assigning all of your
Units, you will not retain more than five Units
* will violate any applicable laws or governmental rules or regulations,
including without limitation:
* any applicable Federal or state securities laws, or
* the Delaware limited partnership laws
* will jeopardize our ability to be taxed as a partnership (and not as a
corporation), or
* will affect characterizations or treatment of income or loss.
Termination Of The Partnership
This partnership will terminate:
* at 11:59 p.m. twenty-one years from the date of the Limited Partnership
Agreement
* by election of the general partner, in its sole discretion, to terminate
and dissolve this partnership
* upon the dissolution, death, resignation, withdrawal, bankruptcy or
insolvency of the general partner (unless the limited partners unanimously
elect to carry on the business and a new general partner has been
substituted)
* if it does not pay its annual franchise fee and file its annual report with
the State of Delaware, which will cause it to be dissolved under Delaware law
* upon any event which makes the continued existence of the partnership
unlawful, or
* upon the unanimous vote of the Limited Partners.
Meetings
We are not required to hold regular meetings, however, partners may call
meetings to vote on certain issues, including:
* amendment of the limited partnership agreement; provided, however, any
amendment which modifies the compensation or distributions to the general
partner or which affects the duties of the general partner requires its
consent
* removal of the general partner and election of a new general partner
* cancellation of any contract for services with the general partner, without
penalty, upon 60 days written notice; provided, however, the maximum period
of any contract between the general partner and the partnership is one year;
and, provided further, should any amendment to this partnership agreement
attempt to modify the compensation or distributions to which the general
partner is entitled or which affects the duties of the general partner, such
amendment will become effective only upon the consent of the general partner.
the right to approve, prior to sale, the sale or distribution, outside the
ordinary course of business, of all or substantially all of the assets of the
partnership.
* dissolution of the partnership.
* change of any of the partnership's basic investment policies or in the
structure of the partnership.
See Management of Partnership Affairs.
The general partner must receive in person or by certified mail a written
request with a check to cover the cost of sending notice of the meeting to
all partners. The written request must be signed by one or more partners who
collectively own 10% or more of the outstanding Units. The general partner
then has 15 days to call the meeting
Redemptions
Redemption allows you to receive your share of the net assets of this
partnership. You may not redeem or liquidate any Units until six months
after we have commenced business. The general partner must receive written
notice no later than 12:00 noon on the tenth calendar day immediately
preceding the desired effective date of redemption. The effective date of
redemption must be the last day of the then current or a future month.
The general partner will try its best to comply with the redemption request
within ten days following the effective date. However, you should be aware
that the general partner may be unable to timely comply with the request if
there is not enough cash. This may be because the trading advisor cannot
liquidate the positions it has taken, or because there are contingent claims
on partnership assets.
If the general partner notifies you in writing, it may declare additional
redemption dates or cause the partnership to redeem fractions of Units. If
the general partner notifies you in writing prior to registering Units for
public sale, it may redeem your Units if you don't hold the required minimum
amount of Units which it has established.
We will charge a redemption fee of 4% of the value of the redemption request if
it is received prior to the nineteenth day of the sixth month after the
commencement of business. Thereafter, we will reduce the redemption fee by 1%
every 6 months as follows:
Redemption Request Received Redemption Fee
Before 19th day of 6th
month of investment 4%
Thereafter until 12 months 3%
Thereafter until 18 months 2%
Thereafter until 24 months 1%
Thereafter None
Plan For Sale Of Units
The Selling Agent
We are offering and selling the Units through Futures Investment Company,
5916 N. 300 West, P.O. Box C, Fremont, Indiana 46737, a broker/dealer
registered with the National Association of Securities Dealers. The general
partner or Futures Investment Company may also select other broker dealers to
sell the Units. All Units will be sold on a best efforts basis, which means
the selling agent(s) will try, but not guarantee, to sell all the Units.
Although we are offering a maximum of $7,000,000 of Units, the Limited
Partnership Agreement authorizes the general partner to sell additional
Units. Accordingly, the partnership may sell an unlimited number of Units.
Futures Investment Company is owned solely by Mr. Michael Pacult and his
wife, Mrs. Pacult, who is also one of the general partners and the sole
shareholder, director, and officer of the corporate general partner. Mr. and
Ms. Pacult are also registered with the National Futures Association as
associated persons and with the National Association of Securities Dealers,
Inc. as registered representatives of Futures Investment Company. In those
capacities, they will earn sales and trailing commissions on the Units they
sell and service.
Futures Investment Company is an Illinois corporation which was incorporated
on December 6, 1983. It was officially registered as a fully disclosed
broker dealer with the National Association of Securities Dealers on July 24,
1997. Currently, Futures Investment Company principally offers and trades
securities and commodities as a Commodity Futures Trading Commission
registered introducing broker. It has and will continue to participate in
offerings of other commodity pools sponsored by the general partner or other
persons or entities in competition with us.
Escrow and Commencement of Business
To commence business, the general partner must sell the minimum $700,000 of
Units, excluding Units purchased by the general partner, within one year of
the date of this prospectus, or within a longer time established by the
general partner.
During this time, all cash and subscription documents will be held in a
separate escrow account in the name of this partnership at the escrow agent,
Star Financial Bank, 2004 N. Wayne St., Angola, IN 46703. After the minimum
is sold:
* all cash and subscription documents will be delivered to us within 1
business day
* the interest earned on your subscription during the escrow period will be
deposited in our account, and you will receive a corresponding number of
additional Units at the rate of $1,000 per Unit taking into account both the
length of time and amount deposited into the escrow account
* we will commence trading operations
* we will continue to sell up to $7,000,000 of Units until they are either
all sold or the general partner terminates this offering; in which case:
* no escrow will be used and we will receive subscription checks directly
* the Units' price will be based upon the profitability of the partnership,
the net Unit value, which will be determined monthly.
If we cannot sell the minimum Units in this time, this offering will
terminate and your subscription documents and entire investment, plus
interest, will be returned within 10 days.
Cash from subscriptions held in the escrow account will be invested in short-
term investments which meet applicable regulatory requirements. These
include United States Treasury Bills or other comparable interest-bearing
instruments which are expected to be liquid, substantially risk-less
instruments, with correspondingly low yields.
Belmont Capital Management, Inc. will pay the escrow agent a fee for its
services and will not be reimbursed for this by the partnership.
There cannot be any assurance that the minimum Units or any additional Units
will be sold. The general partner is authorized, in its sole discretion, to
terminate this or any future offering of Units.
Subscription Procedure
To purchase Units, you must:
* complete and execute a suitability questionnaire and a subscription
agreement (Exhibit D), and
* deliver the executed subscription documents and check to the sales agent.
If this minimum number of Units to commence business has not been sold, you
should make out the check to "Star Financial Bank-Escrow Agent for Bromwell
Financial Fund, LP". Your check will then be delivered to the escrow agent
within 24 hours of receipt.
After the minimum Units have been sold, no escrow will be used and you should
make your check out to "Bromwell Financial Fund, Limited Partnership". The
sales agent will then send your subscription documents to the general partner
with your check, which will be invested in the partnership on the next
admission date.
Under no circumstances should you:
* make payment in cash, or
* make any checks payable to the general partner the selling agent or any of
their registered representatives or affiliates.
Subscription Amounts
You must purchase at least $25,000 in Units; however, the general partner
may reduce this to not less than the regulatory minimum of $5,000. You may
make additional investments above $25,000 in $1,000 increments. However, you
may not invest more than 10% of your net worth in the partnership. If you
have not provided collectible funds, whether in the form of a bad check or
draft, or otherwise, any Units recorded in our books in your favor shall be
cancelled.
Revocation
Once you have purchased Units, you may not revoke them unless there are
Federal or state securities laws which allow you to. The general partner has
sole discretion to reject any subscription, in whole or in part, within 5
days.
Net Worth Tests
To purchase Units, you must have at least:
* a minimum net worth of $150,000, exclusive of home, home furnishings and
automobiles, or
* a minimum annual gross income of $45,000 and a minimum net worth of
$45,000, exclusive of home, home furnishings and automobiles.
You may have to satisfy higher amounts if you live in certain states. See
Exhibit D.
In the case of sales to fiduciary accounts, the net worth and income
standards may be met by the beneficiary, the fiduciary account, or the donor
or grantor who supplies the funds to purchase the Units, if the donor or
grantor is the fiduciary.
Investor Warranties
When you execute and deliver your Subscription Agreement and Power of
Attorney, you are making representations and warranties to the general
partner, the futures commission merchant and the selling agent.
Specifically:
* you are of legal age to execute the Subscription Agreement and Power of
Attorney and are legally competent to do so
* you acknowledge that you have received a copy of the prospectus, including
the Limited Partnership Agreement, prior to subscribing for Units
* all information you have given to the general partner or that is set forth
in the Subscription Agreement and Power of Attorney submitted by you is
correct and complete as of the date of the agreement. Also, if there are any
change in such information prior to acceptance of your subscription, you will
immediately furnish the revised or corrected information to the general
partner
* unless (e) or (f) below apply to you, your subscription is made with your
own funds for your own account and not as trustee, custodian or nominee for
another.
* the subscription, if made as custodian for a minor, is a gift you have made
to the minor and is not made with the minor's funds; or, if not a gift, the
representations as to net worth and annual income apply only to such minor.
* if you are subscribing in a representative capacity:
* you have full power and authority to purchase the Units and enter and be
bound by the Subscription Agreement and Power of Attorney on behalf of the
entity for which you are purchasing the Units, and
* such entity has full right and power to purchase the Units and enter and be
bound by the Subscription Agreement and Power of Attorney and become a
limited partner pursuant to the Limited Partnership Agreement attached as
Exhibit A.
The general partner, the futures commission merchant or the selling agent may
rely upon any of the above representations and warranties as a defense to any
claim made against it.
Legal Matters
Litigation And Claims
Within the past 5 years as of the date of this prospectus, there have been no
material administrative, civil or criminal actions against either general
partner, the commodity trading advisor, the introducing broker, the selling
agent or any principal or affiliate of any of them. This includes any
actions pending, on appeal, concluded, threatened, or otherwise known to
them. The futures commission merchant, Vision Limited Partnership, does have
litigation which is unrelated to us; however, its effect would be too small
to affect its service to us.
On December 31, 1996, the Business Conduct Committee of the National Futures
Association issued a two count complaint against Vision Limited Partnership.
Count I alleges failure to supervise and Count II alleges improper handling
of one block order. Vision denies the allegations and intends to vigorously
defend the matter.
There is currently no litigation pending or on appeal which, if successfully
pursued by a plaintiff or appellant would have a material effect on the
ability of the futures commission to serve us.
Legal Opinion
The Scott Law Firm, P.A., 5121 Sarazen Drive, Hollywood, FL 33021, serves as
special counsel to us and the general partner with respect to:
* the offering of Units
* the preparation of this prospectus the legality of the Units offered, and
* the classification of the partnership as a partnership for tax purposes.
From time to time, the firm will also advise us and the general partner
regarding the maintenance of our tax status, the legality of any subsequent
offers, and the legality of any transfers by partners.
The general partner has granted the firm the right to employ other law firms to
help in matters which relate to the sale of Units or our operation.
The Scott Law Firm, P.A. will not give you or any other partner legal advice,
except for the general partner. You should seek investment, legal, and tax
advice from your own attorney.
Experts
We rely on various experts to perform services for us.
Frank L. Sassetti, & Co., 6611 West North Avenue, Oak Park, IL 60302 is our
accounting and auditing expert, and is responsible for auditing the books and
records of both us and Belmont Capital Management, Inc. It has also prepared
the audited financial statements in this prospectus and will prepare our tax
returns.
Mr. James Hepner, certified public accountant, 1824 N. Normandy, Chicago, IL
60635 is another accounting expert who will:
* establish our original books and records
* handle the journal entries prepare the monthly and annual financial
statements and statements of account, and
* prepare our K-1s, once trading commences.
The general partner will serve as our tax partner. The general partner is
required by the rules and regulations of the Commodity Futures Trading
Commission to send you unaudited monthly and annual account statements, and
financial statements audited by an independent certified public accountant.
We will send you the unaudited monthly statements as soon as practicable
after the end of each month, and will send you the audited annual financial
statements within 90 days after the end of each calendar year.
Additional Information
By our general partner, we have filed a registration statement on Form S-1
with the Securities and Exchange Commission under the Securities Act of 1933
to allow us to issue and sell our limited partnership interests.
This prospectus does not contain all of the information in the Form S-1
filing, for example, the Selling Agreement, the Escrow Agreement, and the
Customer Agreement. The description in this prospectus of these exhibits are
summaries. For further information regarding the partnership and the Units
offered, you may inspect and copy, without charge, our complete filings
(including this prospectus, the exhibits and periodic reports) at the public
reference facilities of the Securities and Exchange Commission at:
* 450 Fifth Street, NW, Washington, D.C. 20549
* its Northeast Regional Office, 7 World Trade Center, Suite 1300, New York,
New York 10048, and
* its Midwest Regional Office, Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661
Also, the Securities and Exchange Commission offices will send you copies of
all or any part of this filing by mail, upon payment of the prescribed rates.
This prospectus and other electronic filings made through the Electronic Data
Gathering, Analysis and Retrieval (EDGAR) system are publicly available
through the Commission's Web site, http://www.sec.gov.
In addition, our books and records will be maintained for six years at c/o
Corporate Systems, Inc. 101 North Fairfield Drive, Dover, DE 19901, (302)
697-2139, with a duplicate set maintained at the offices of Mr. James Hepner,
Certified Public Accountant, at 1824 N. Normandy, Chicago, IL 60635, (773)
804-0074.
You are invited to review any materials available to the general partner
relating to:
* this partnership
* our operations
* this offering
* the commodity experience and trading history of:
* the commodity trading advisor
* the general partner
* the commodity brokers, and
* their respective officers, directors and affiliates
* the Advisory Agreement between us and the commodity trading advisor
* the Customer Agreements between us and our Commodity Brokers
* the commodity trading advisor's disclosure document
* the forms filed with the NFA for any registered entity or person related to
this partnership, and
* any other matters relating to the laws applicable to this offering or this
partnership.
The officer and staff of the general partner will answer all reasonable
inquiries you may have. All the above materials will be made available at
any mutually convenient location at any reasonable hour after reasonable
prior notice.
The general partner will allow you to obtain any additional information
necessary to verify any representations or information in this prospectus and
its exhibits, assuming we or the general partner possess such information or
can acquire it with reasonable effort and expense. However, your review is
limited by the proprietary and confidential nature of the commodity trading
advisor's trading systems and by the confidentiality of personal information
relating to other investors.
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APPENDIX I
Commodity Terms And Definitions
Identification of the parties and knowledge of various terms and concepts
relating to trading in futures and forward contracts and this offering are
necessary for a potential investor to identify the risks of investment in the
Fund.
1256 Contract. See Taxation - Section 1256 Contract.
Additional Sellers. See definition of Selling Agent.
Affiliated Introducing Broker. The introducing broker is affiliated with
Mrs. Shira Del Pacult, one of the general partners and the sole principal of
Belmont Capital Management, Inc., the other general partner. The introducing
broker has no affiliation with the partnership. Also see definition of
Introducing Broker.
Associated Persons. The persons registered pursuant to the Commodity
Exchange Act with the futures commission merchant, the selling agent,
additional sellers, or the introducing broker who are eligible to service the
partnership, the partners and to receive trailing commissions.
Average Price System. The method approved by the Commodity Futures Trading
Commission to permit the commodity trading advisor to place positions sold or
purchased in a block to the numerous accounts managed by the advisor. See
The Commodity Trading Advisor in the main body of the prospectus.
Best Efforts. The term to describe that the party is liable only in the
event they intentionally fail or are grossly negligent in the performance of
the task described.
Capital means cash invested in the partnership by any partner and placed at
risk for the business of the partnership.
Commodity Futures trading Commission (CFTC). Commodity Futures Trading
Commission, 2033 K Street, Washington, D.C., 20581. An independent
regulatory commission of the United States government empowered to regulate
commodity futures transactions under the Commodity Exchange Act.
Commodity. Goods, wares, merchandise, produce, currencies, and stock indices
and in general everything that is bought and sold in commerce. Traded
commodities on U. S. Exchanges are sold according to uniform established
grade standards, in convenient predetermined lots and quantities such as
bushels, pounds or bales, are fungible and, with a few exceptions, are
storable over periods of time.
Commodity Broker. See definitions of Futures Commission Merchant and
Introducing Broker.
Commodity Exchange Act. The statute providing the regulatory scheme for
trading in commodity futures and options contracts in the United States under
the administration of the Commodity Futures Trading Commission which will
provide the opportunity for reparations and other redress for claims.
Commodity Pool Operator (CPO). Belmont Capital Management, Inc., c/o
Corporate Systems, Inc., 101 N. Fairfield Dr., Dover, DE 19901; and, Mrs.
Shira Del Pacult, 5916 N. 300 West, P.O. Box C, Fremont, IN 46737. A person
that raises capital through the sale of interests in an investment trust,
partnership, corporation, syndicate or similar form of enterprise, and uses
that capital to invest either entirely or partially in futures contracts.
Commodity Trading Advisor (CTA). Ansbacher Investment Management, Inc., 45
Rockefeller Plaza, 20th Floor, New York, New York 10111. A person or entity
which renders advice about commodities or about the trading of commodities,
as part of a regular business, for profit. Particularly, those who will be
responsible for the analysis and placement of trades for the partnership.
Daily Price Limit. The maximum permitted movement in a single direction
(imposed by an exchange and approved by the CFTC) in the price of a commodity
futures contract for a given commodity that can occur on a commodity exchange
on a given day in relation to the previous day's settlement price, which is
subject to change, from time to time, by the exchange (with CFTC approval).
Escrow Agent and Escrow Account. Star Financial Bank, 2004 N. Wayne St.,
Angola, IN 46703 which was selected by the general partner and the account
which will hold all the subscription documents and proceeds until such time
as either the minimum is sold or the offering is terminated prior to the sale
of such minimum.
Exchange for Physicals (EFP). EFP is a practice whereby positions in futures
contracts may be initiated or liquidated by first executing the transaction
in the appropriate cash market and then arbitraging the position into the
futures market (simultaneously buying the cash position and selling the
futures position, or vice versa).
Form K-1. The section of the Federal Income Tax Return filed by the
partnership which identifies the amount of investment in the partnership, the
gains and losses for the tax year, and the amount of such gains and losses
reportable by a partner on the partner's tax return.
Fully-Committed Position. Each commodity trading advisor has an objective
percentage of equity to be placed at risk. In addition, the CFTC places
limits upon the number of positions a single commodity trading advisor may
have in commodities. When either the objective percentage of equity is
placed at risk or the commodity trading advisor reaches the limit in number
of positions, the account or accounts have a fully-committed position.
Futures Commission Merchant (FCM). The person that solicits or accepts
orders for the purchase or sale of any commodity for future delivery subject
to the rules of any contract market and in connection with such solicitation
or acceptance of orders, accepts money or other assets to margin, guarantee,
or secure any trades or contracts that result from such orders for a
commission. The introducing broker will be responsible for the negotiation
and payment of the commission to the futures commission merchant.
Futures Contract. A contract providing for (1) the delivery or receipt at a
future date of a specified amount and grade of a traded Commodity at a
specified price and delivery point, or (2) cash settlement of the change in
the value of the contract. The terms of these contracts are standardized for
each commodity traded on each exchange and vary only with respect to price
and delivery months. A futures contract should be distinguished from the
actual physical commodity, which is termed a cash commodity. Trading in
futures contracts involves trading in contracts for future delivery of
commodities and not the buying and selling of particular physical lots of
commodities. A contract to buy or sell may be satisfied either by making or
taking delivery of the commodity and payment or acceptance of the entire
purchase price therefor, or by offsetting the contractual obligation with a
countervailing contract on the same exchange prior to delivery.
Futures Investment Company. The selling agent and introducing broker, 5916
N. 300 West, P.O. Box C, Fremont, IN 46737 which will introduce the trades to
the futures commission merchant for a fixed commission of 11% of equity on
deposit at the futures commission merchant allocated by the general partner
to trade. Mrs. Shira Del Pacult, one of the general partners and the
principal of Belmont Capital Management, Inc., the other general partner, is
also one of the principals of Futures Investment Company, with her husband.
General Partner. Belmont Capital Management, Inc., c/o Corporate Systems,
Inc., 101 N. Fairfield Dr., Dover, DE 19901; and, Mrs. Shira Del Pacult, 5916
N. 300 West, P.O. Box C, Fremont, IN 46737. The manager of the fund.
Gross Profits. The income or loss from all sources, including interest income
and profit and loss from non-trading activities, if any.
Initial Closing. When the minimum offering amount has been raised and escrow
funds are released to the partnership for commencement of trading.
Introducing Broker (IB). The introducing broker, Futures Investment Company,
5916 N. 300 West, P.O. Box C, Fremont, IN 46737, which will introduce the
trades to the futures commission merchant for a fixed commission of 11% of
equity on deposit at the futures commission merchant allocated by the general
partner to trade. Mrs. Shira Del Pacult, one of the general partners and the
principal of Belmont Capital Management, Inc., the other general partner, is
also one of the principals of the introducing broker, with her husband.
Introduction of Trades. The term used to describe the function performed by
the broker which handles the relationship between the partnership and the
futures commission merchant. See Introducing Broker.
Limited Partner. Persons admitted without management authority pursuant to
the partnership agreement.
Margin. A good faith deposit with a broker to assure fulfillment of the
terms of a futures contract.
Margin Call. A demand for additional monies to hold positions taken to
maintain a customer's account in compliance with the requirements of a
particular commodity exchange or of an futures commission merchant.
Minimum Offering/Maximum Offering. The amount required to be invested before
trading will commence, $700,000 and the amount which will terminate this
offering, $7,000,000.
National Association of Securities Dealers (NASD). National Association of
Security Dealers, Inc., the self regulatory organization responsible for the
legal and fair operation of broker dealers, such as the selling agent.
Net Assets or Net Asset Value means the total assets, including all cash and
cash equivalents (valued at cost plus accrued interest and earned discount),
less total liabilities, of the partnership (each determined on the basis of
generally accepted accounting principles, consistently applied under the
accrual method of accounting or as required by applicable laws, regulations
and rules including those of any authorized self regulatory organization).
See Exhibit A, The Limited Partnership Agreement, 1.2(e).
Net Unit Value. The net assets of the partnership divided by the total
number of Units outstanding.
Net Gains. The net profit from all sources.
New Net Profit. The amount of income earned from trading, less the trading
losses and brokerage commissions and fees paid to clear the trades which are
incurred or accrued during the then current accounting period. See Charges to
the Partnership.
Net Worth. The excess of total assets over total liabilities as determined
by generally accepted accounting principles. Net worth for a prospective
investor shall be exclusive of home, home furnishings and automobiles.
Offering Expenses. The partnership will reimburse Belmont Capital
Management, Inc., one of the general partners, for offering expenses,
estimated to be $47,000, from the gross proceeds of the offering at the time
of the break of escrow for the initial closing. For purposes of limitation,
the total expenses can not exceed 15% of capital raised pursuant to the
offering. Specifically, these expenses include the Securities and Exchange
Commission registration fee of $1,946, the National Association of Securities
Dealers filing fee of $1,200, legal fees of $33,700, accounting fees of
$1,500, Blue Sky expenses of $4,500, printing costs of $3,000, miscellaneous
expenses of $154 and escrow fees of $1,000. The $47,000 in offering expenses
includes the first year operating costs. Additionally, there are $5,000 in
organizational expenses which will be paid to Belmont Capital Management,
Inc., amortized on a straight line method over 60 months.
Organizational Expenses. Belmont Capital Management, Inc., one of the
general partners, will be reimbursed for organizational expense in the amount
of $5,000, to be amortized on a straight line method over the first 60 months
of partnership operation. Specifically, these include $500 in accounting
fees, and $4500 in legal fees.
Option Contract. An option contract gives the purchaser the right (as
opposed to the obligation) to acquire (call) or sell (put) a given quantity
of a commodity or a futures contract for a specified period of time at a
specified price to the seller of the option contract. The seller has
unlimited risk of loss while the loss to a buyer of an option is limited to
the amount paid (premium) for the option.
Partners. The general partners and all limited partners in the partnership.
Partnership or Limited Partnership or Commodity Pool or Pool or Fund. The
Belmont Financial Fund, Limited Partnership, evidenced by Exhibit A to this
Prospectus, c/o Corporate Systems, Inc. 101 North Fairfield Drive, Dover, DE
19901, (302) 697-2139.
Position Limits. The Commodity Futures Trading Commission has established
maximum positions which can be taken in some, but not in all commodity
markets, to prevent the corner or control of the price or supply of those
commodities. These maximum number of positions are called position limits.
Principal. Mrs. Shira Del Pacult, one of the general partners and the
principal of the corporate general partner. Mrs. Pacult is also a principal
of the introducing broker.
Round-turn Trade. The initial purchase or sale of a futures or forward
contract and the subsequent offsetting sale or purchase of such contract.
Redemption. The right of a partner to tender the Units to the partnership
for surrender at the net Unit value. See the Limited Partnership Agreement
attached as Exhibit A.
Selling Agent. The National Association of Securities Dealers member broker
dealer, Futures Investment Company, 5916 N. 300 West, P.O. Box C, Fremont, IN
46737, selected by the general partner to offer the Units for sale. The
general partner and the selling agent may select additional selling agents to
also offer Units for sale. See Plan of Distribution.
Scale in Positions. The commodity trading advisor selected by the general
partner presently has a large amount of equity under management. In some
situations, the positions desired to be taken on behalf of the partnership
and other accounts under management will be too large too be executed at one
time. The trading advisor intends to take positions at different prices, at
different times and allocate those positions on a ratable basis in accordance
with rules established by the Commodity Futures Trading Commission. This
procedure is defined as to scale in positions. The same definition and rules
apply when the trading advisor elects to exit a position.
Taxation - Section 1256 Contract is defined to mean: (1) any regulated
futures contract (RFC); (2) any foreign currency contract; (3) any non-equity
option; and (4) any dealer equity option.
The term RFC means a futures contract whether it is traded on or subject to
the rules of a national securities exchange which is registered with the
Securities and Exchange Commission, a domestic board of trade designated as a
contract market by the Commodity Futures Trading Commission or any other
board of trade, exchange or other market designated by the Secretary of
Treasury (a qualified board of exchange) and which is market-to-market to
determine the amount of margin which must be deposited or may be withdrawn.
A "foreign currency contract" is a contract which requires delivery of, or
the settlement of, which depends upon the value of foreign currency which is
currency in which positions are also entered at arm's length at a price
determined by reference to the price in the interbank market. (The Secretary
of Treasury is authorized to issue regulations excluding certain currency
forward contracts from marked-to-market treatment.) A non-equity option means
an option which is treated on a qualified board or exchange and the value of
which is not determined directly or indirectly by reference to any stock (or
group of stocks) or stock index unless there is in effect a designation by
the Commodity Futures Trading Commission of a contract market for a contract
bond or such group of stocks or stock index. A dealer equity option means,
with respect to an options dealer, only a listed option which is an equity
option, is purchased or granted by such options dealer in the normal course
of his activity of dealing in options, and is listed on the qualified board
or exchange on which such options dealer is registered. See Federal Income
Tax Aspects.
Trading Advisor. See Commodity Trading Advisor.
Trailing Commissions. The share of the fixed commissions to be paid to the
individual associated persons who work for the National Association of
Securities Dealers member broker dealers or the introducing broker who have
either sold the Units to the partners or are providing services to the
general partner or the other partners.
Taking Positions Ahead of the Partnership. The allocation of trades by other
than legally accepted methods by the commodity trading advisor or other
trader which favors parties who took the position unfairly.
Trading Matrix. The dollar value used by a commodity trading advisor to
define the number of positions to be taken by the accounts under management.
Some commodity trading advisors have different trading matrices for different
sized accounts. For example, they may trade all accounts over one million in
size differently than accounts under one million.
Unit. The term used to describe the ownership of both the general and
limited partner interests in the partnership.
Unrealized Profit Or Loss. The profit or loss which would be realized on an
open position if it were closed at the current settlement price or the most
recent appropriate quotation as supplied by the broker or bank through which
the transaction is effected.
Underwriter. See Selling Agent.
State Regulatory Glossary
The following definitions are supplied by the state securities
administrators responsible for the review of public futures fund (commodity
pool) offerings made to residents of their respective states. They belong to
the North American Securities Administrators Association, Inc. which publish
"Guidelines for the Registration of Commodity Pool Programs", such as the
Fund, which contain these definitions. The following definitions are
published from the Guidelines, however, the general partner has made
additions to, but no deletions from, some of these definitions to make them
more relevant to an investment in the Fund.
Administrator-The official or agency administering the security laws of
a state. This will usually be the State of residence of the Fund or the
domicile of the broker or brokerage firm which makes the offer or the
residence of the potential investor.
Advisor-Any person who, for any consideration, engages in the business
of advising others, either directly or indirectly, as to the value, purchase,
or sale of commodity contracts or commodity options. This definition applies
to the commodity trading advisors and, when it provides such advice, to the
general partner.
Affiliate-An Affiliate of a Person means: (a) any Person directly or
indirectly owning, controlling or holding with power to vote 10% or more of
the outstanding voting securities of such Person; (b) any Person 10% or more
of whose outstanding voting securities are directly or indirectly owned,
controlled or held with power to vote, by such Person; (c) any Person,
directly or indirectly, controlling, controlled by, or under common control
of such Person; (d) any officer, director or partner of such Person; or (e)
if such Person is an officer, director or partner, any Person for which such
Person acts in any such capacity. See "Conflicts". This applies to the fact
that Mrs. Shira Del Pacult one of the general partners, is the sole
shareholder and principal of the other general partner and also owns 50% of
the outstanding voting shares and is a principal in the affiliated
introducing broker.
Capital Contributions-The total investment in a Program by a
Participant or by all Participants, as the case may be. The purchase price,
less sales commissions, for the Units.
Commodity Broker-Any Person who engages in the business of effecting
transactions in commodity contracts for the account of others or for his own
account. See Futures Commission Merchant and Introducing Broker.
Commodity Contract-A contract or option thereon providing for the
delivery or receipt at a future date of a specified amount and grade of a
traded commodity at a specified price and delivery point.
Cross Reference Sheet-A compilation of the Guideline sections,
referenced to the page of the prospectus, Program agreement, or other
exhibits, and justification of any deviation from the Guidelines. This sheet
is used by the State Administrator to review this prospectus.
Net Assets-The total assets, less total liabilities, of the Program
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 Program.
Net Asset Value Per Program Interest-The Net Assets divided by the
number of Program Interests outstanding.
Net Worth-The excess of total assets over total liabilities are
determined by generally accepted accounting principles. Net Worth shall be
determined exclusive of home, home furnishings and automobiles.
New Trading Profits-The excess, if any, of Net Assets at the end of the
period over Net Assets at the end of the highest previous period or Net
Assets at the date trading commences, whichever is higher, and as further
adjusted to eliminate the effect on Net Assets resulting from new Capital
Contributions, redemptions, or capital distributions, if any, made during the
period decreased by interest or other income, not directly related to trading
activity, earned on Program assets during the period, whether the assets are
held separately or in a margin account. See New Net Profit.
Organizational and Offering Expenses-All expenses incurred by the
Program in connection with and in preparing a Program for registration and
subsequently offering and distributing it to the public, including, but not
limited to, total underwriting and brokerage discounts and commissions
(including fees of the underwriter's attorneys), expenses for printing,
engraving, mailing, salaries of employees while engaged in sales activity,
charges of transfer agents, registrars, trustees, escrow holders,
depositories, experts, expenses of qualification of the sale of its Program
Interest under Federal and state law, including taxes and fees, accountants'
and attorneys' fees.
Participant-The holder of a Program Interest. A Partner in the Fund.
Person-Any natural Person, partnership, corporation, association or
other legal entity.
Pit Brokerage Fee-Pit Brokerage Fee shall include floor brokerage,
clearing fees, National Futures Association fees, and exchange fees. These
fees will be paid by the Introducing Broker from the fixed commissions.
Program-A limited partnership, joint venture, corporation, trust or
other entity formed and operated for the purpose of investing in Commodity
Contracts. The Fund.
Program Broker-A Commodity Broker that effects trades in Commodity
Contracts for the account of a Program. See the Futures Commission Merchant
and Introducing Broker.
Program Interest-A limited partnership interest or other security
representing ownership in a program. The Units in the Fund. See Exhibit A,
the Limited Partnership Agreement.
Pyramiding-A method of using all or a part of an unrealized profit in a
Commodity Contract position to provide margin for any additional Commodity
Contracts of the same or related commodities.
Sponsor-Any Person directly or indirectly instrumental in organizing a
Program or any Person who will manage or participate in the management of a
Program, including a Commodity Broker who pays any portion of the
Organizational Expenses of the Program, and the general partner(s) and any
other Person who regularly performs or selects the Persons who perform
services for the Program. Sponsor does not include wholly independent third
parties such as attorneys, accountants, and underwriters whose only
compensation is for professional services rendered in connection with the
offering of the Units. The term Sponsor shall be deemed to include its
Affiliates.
Valuation Date-The date as of which the Net Assets of the Program are
determined. For the Fund, this will be after the close of business on the
last business day of each month.
Valuation Period-A regular period of time between Valuation Dates. For
the Fund, this will be the close of business for each calendar month and each
calendar year.
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EXHIBIT A TO BROMWELL FINANCIAL FUND DISCLOSURE DOCUMENT
AGREEMENT OF LIMITED PARTNERSHIP OF
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
THIS LIMITED PARTNERSHIP AGREEMENT, (the "Agreement") dated the 1st day of
August, 1999, by and among Belmont Capital Management, Incorporated, a
Delaware corporation ("Belmont") as managing general partner, and Shira Del
Pacult as managing general partner (hereinafter referred to collectively with
Belmont as the "General Partner"), and those who are admitted as partners,
(hereinafter referred to as either "Limited Partners" or "Other General
Partners"), pursuant to the terms of this Agreement, (the General Partner, any
Other General Partners, and the Limited Partners are hereinafter collectively
referred to as the "Partners").
WITNESSETH:
IN CONSIDERATION of good and valuable consideration, the receipt of which is
hereby acknowledged, the General Partner and the sole Limited Partner entered
and formed a limited partnership (hereinafter called either the "Partnership"
or the "Fund") pursuant and subject to the Delaware Uniform Limited Partnership
Act (the "Act"), which is stated as follows:
ARTICLE I
Definitions and Risk Disclosure Statement
Certain terms used in this Agreement shall have the special meaning designated
below:
1.1 The term AFFILIATE means (1) any person controlled by or under common
control with another person, (2) a person owning or controlling 10% or more
of the outstanding voting securities of such other person, (3) any officer
or director of such other person, and (4) if such other person is an
officer or director, any other company for which such person acts as an
officer or director.
1.2 When referring to the capital of the Partnership:
(a) the term CAPITAL shall mean cash invested in the Partnership by any
Partner and placed at risk for the business of the Partnership;
(b) the term CAPITAL CONTRIBUTION shall mean, with respect to any Partner,
the sum of all Capital contributed to the Partnership pursuant to
Article I;
(c) the term CAPITAL SUBSCRIPTION shall mean the amount set forth opposite
the name of such Partner in the schedule of Partners, which amount shall
be the purchase price, less sales commissions, if any, to be paid or
paid by such Partner for the Unit or Units in the Partnership purchased
by such Partner;
(d) the term INITIAL CAPITAL shall mean the sum of all Capital
Subscriptions received by the General Partner prior to commencement of
trading;
(e) the term INTEREST INCOME shall mean the interest earned on the equity
the Partnership places on deposit with the Futures Commission Merchant.
All such Interest Income will be paid to the Partnership and used for
its benefit.
(f) the term NET ASSETS OR NET ASSET VALUE means the total assets,
including all cash and cash equivalents (valued at cost plus accrued
interest and earned discount), less total liabilities, of the
Partnership (each determined on the basis of generally accepted
accounting principles, consistently applied under the accrual method
of accounting or as required by applicable laws, regulations and rules
including those of any authorized self regulatory organization),
specifically:
(i) Net Asset Value includes any unrealized profit or loss on open
security and commodity positions subject to reserves for loss
established, from time to time, by the General Partner;
(ii) All open stock, option, and commodity positions are calculated on
the then current market value, which shall be based upon the
settlement price for that particular position on the date with
respect to which Net Asset Value is being determined; provided,
however, that if a position could not be liquidated on such day
due to the operation of the daily limits or other rules of the
exchange upon which that position is traded or otherwise, the
settlement price on the first subsequent day on which the position
could be liquidated shall be the basis for determining the market
value of such position for such day. As used herein, "settlement
price" includes, but is not limited to: (1) in the case of a
futures contract, the settlement price on the commodity exchange
on which such futures contract is traded; and (2) in the case of a
foreign currency forward contract which is not traded on a
commodity exchange, the average between the lowest offered price
and the highest bid price, at the close of business on the day Net
Asset Value is being determined, established by the bank or broker
through which such forward contract was acquired or is then
currently traded;
(iii) Brokerage commissions to close security and commodity positions,
if charged on a round-turn basis, are accrued in full at the time
the position is initiated (i.e., on a round-turn basis) as a
liability of the Partnership;
(iv) Interest earned on all Partnership accounts is accrued at least
monthly;
(v) The amount of any distribution made by the Partnership is a
liability of the Partnership from the day when the distribution is
declared by the General Partner or as provided in this Agreement
and the amount of any redemption is a liability of the Partnership
as of the valuation date; and
(vi) Syndication Costs incurred in organizing and all present and
future costs to increase or maintain the qualification of the
Units available for sale and the cost to present the initial and
future offering of Units for sale shall be capitalized when
incurred and amortized and paid from Capital or Monthly Profit as
required by applicable law.
(g) the term PROFIT (LOSS) ATTRIBUTABLE TO UNITS means the product of A) the
number of Units divided into B) an amount equal to the Net Profit (Loss)
determined as follows: (1) the net of profits and losses realized on all
trades closed out, plus (2) the net of any unrealized profits and losses
an open positions as of the end of the period, less (3) the net of any
unrealized profits and losses on open positions as of the end of the
preceding period, minus, (4) the Expenses attributable to Units. Profit
(Loss) shall include interest earned on Partnership assets, realized and
unrealized capital gains or losses on U.S. Treasury bills, and other
securities;
(h) the term MANAGEMENT FEE shall mean up to six percent (6%) annually of
the Net Assets of the Partnership computed on the close of business on
the last day of each month and payable to the General Partner or
independent Commodity Trading Advisor, or both, without regard to the
income or loss of the Partnership for that period; presently, Belmont,
one of the general partners, and the Commodity Trading Advisor receive
one half (1/2) and one sixth (1/6), respectively, of the maximum
Management Fee (3% to Belmont and 1% to the CTA of the Net Assets of the
Partnership);
(i) the term INCENTIVE FEE means a percentage of the profits accrued and
paid to the General Partner, or its Affiliates, of up to fifteen percent
(15%) annually of New Net Profit earned from inception of trading,
through the date of the computation, based upon total Capital of the
Partnership. The General Partner has reserved the right to both reduce
the Incentive Fee below fifteen percent (15%) and increase the Incentive
Fee to a maximum of thirty percent (30%), provided that in such case the
Management Fee is correspondingly lowered to 0%; presently, the
Incentive Fee paid to Belmont is twenty percent (20%), which is paid by
Belmont to the CTA;
(j) the term GROSS PROFIT OR LOSS means the income or loss from all sources,
including interest income and profit and loss from non-trading
activities, if any.
(k) the term NEW NET PROFIT OR LOSS means the amount of income earned from
trading, less the trading losses and brokerage commissions and fees paid
to clear the trades which are incurred or accrued during the then
current accounting period; and,
(l) the term NET GAINS means net profit from all sources.
(m) the term UNIT shall mean a partnership interest in the Partnership
requiring an initial Capital Contribution of one thousand dollars
($1,000), less a sales commission, if any, or the Net Asset Value of the
initial Unit, as adjusted to reflect increases and decreases caused by
receipt, accrual, and payment of profit, Expenses, losses, bonuses, and
fees, from time to time.
1.3 When referring to costs and expenses of the Partnership to be allocated
and charged pursuant to this Agreement:
(a) the term EXPENSES shall mean costs allocated, incurred, paid, accrued,
or reserved, including the fixed commissions payable to the Introducing
Broker of eleven percent (11%) of the total equity placed under
management with the Commodity Trading Advisor, which are, in the opinion
of the General Partner, required, necessary or desirable to establish,
manage, continue and promote the business of the Partnership including,
but not limited to, all deferred organization costs, brokerage
commissions, and all management and incentive fees payable to the
General Partner or to independent investment and Commodity Trading
Advisor by the Partnership as negotiated and determined by the General
Partner on behalf of the Partnership on a basis consistently applied in
accordance with generally accepted accounting principals under the
accrual method of accounting or as required by applicable laws,
regulations and rules including those of any authorized self regulatory
organization with proper jurisdiction over the business of the
Partnership; provided, however, Expenses shall not include salaries,
rent, travel, expenses and other items of General Partner overhead and,
provided, further, management fees, advisory fees and all other fees,
except for incentive fees and commodity brokerage commissions, the
actual cost of legal and audit services and extraordinary expenses,
shall not exceed one half of one percent of Net Assets per month (not
to exceed six percent annually). If necessary, the General Partner
shall reimburse the Partnership no less frequently than quarterly, for
the amount by which such aggregate fees and expenses exceed the
limitations provided by NASAA Guideline IVC.1. During the period for
which reimbursement is made up to an amount not exceeding the
aggregate compensation received by the General Partner, including
direct or indirect participations in commodity brokerage commissions
charged to the Partnership. In addition, if reimbursement is required
or ordinary expenses are incurred, the General Partner shall include
in the Partnership's next regular report to the auditors a discussion
of the circumstances or events which resulted in the reimbursement or
extraordinary expenses;
(b) the term NET UNIT VALUE shall mean the Net Asset Value divided, from
time to time, by the total number of Units outstanding;
(c) the term OFFERING PERIOD means the period of time established by the
General Partner after the Partnership begins to offer to sell Units at
the Net Unit Value ; and,
(d) the term SYNDICATION COSTS shall mean the promotion and syndication
costs of the Partnership and the costs of the offering of Units, and to
establish the initial business relationships on behalf of the
Partnership, including all legal and printing costs to prepare the
Disclosure Documents, registrations and filing fees, contract
negotiation, and travel incurred which are deemed necessary or desirable
by the General Partner to form the Partnership, be ready to engage in
business, and to sell the Units.
1.4 The terms DISCLOSURE DOCUMENT, MEMORANDUM, OFFERING CIRCULAR, PROSPECTUS
and REGISTRATION STATEMENT shall mean the document or documents, together
with the exhibits and any subsequent continuations thereof, which describes
this Partnership to persons selected by the General Partner including, but
not limited to, potential purchasers of Units, or the Partners or to any
government or self regulatory agency or to persons selected by the General
Partner to participate in the affairs or provide services to the
Partnership.
1.5 When referring to this Agreement and the Partners of the Partnership:
(a) the term ACT shall refer to the partnership act of Delaware.
(b) the term AGREEMENT refers to this Partnership agreement;
(c) the term GENERAL PARTNER shall refer to both Belmont Capital
Management, Incorporated, c/o Corporate Systems, Inc., 101 North
Fairfield Drive, Dover, DE 19901 (302) 697-2139 ("Belmont") and Shira
Del Pacult, 5916 N. 300 West, P.O. Box C, Fremont, IN 46737 (219) 833-
1306 ("Ms. Pacult");
(d) the term LIMITED PARTNER shall refer to any party listed on the Schedule
of Limited Partners attached to this Agreement as Attachment I, as
amended, from time to time, pursuant to Article VI hereof;
(e) the term MAJORITY IN INTEREST shall refer to that number of Partners who
collectively hold over 50% of all of the outstanding Units held by all
Partners in the Partnership; provided, however, the Units held by the
General Partner cannot be considered to determine a MAJORITY IN
INTEREST or otherwise vote or consent regarding the question of removal
of the General Partner or other matters specifically expressed in
Article V, Section 5.3. In addition, see the rights and duties of the
General Partner in Article IV and of the Limited Partners in Articles V;
(f) the term OTHER GENERAL PARTNER refers to any General Partner other than
Belmont Capital Management, Incorporated and Shira Del Pacult; and
(g) the term PARTNERS refers to the General Partner, any Other General
Partner, and the Limited Partners, collectively.
1.6 RISK DISCLOSURE STATEMENT.
YOU SHOULD CAREFULLY CONSIDER WHETHER YOUR FINANCIAL CONDITION PERMITS YOU TO
PARTICIPATE IN A COMMODITY POOL. IN SO DOING, YOU SHOULD BE AWARE THAT
FUTURES AND OPTIONS TRADING CAN QUICKLY LEAD TO LARGE LOSSES AS WELL AS
GAINS. SUCH TRADING LOSSES CAN SHARPLY REDUCE THE NET ASSET VALUE OF THE
POOL AND CONSEQUENTLY THE VALUE OF YOUR INTEREST IN THE POOL. IN ADDITION,
RESTRICTIONS ON REDEMPTIONS MAY AFFECT YOUR ABILITY TO WITHDRAW YOUR
PARTICIPATION IN THE POOL.
FURTHER, COMMODITY POOLS MAY BE SUBJECT TO SUBSTANTIAL CHARGES FOR
MANAGEMENT, AND ADVISORY AND BROKERAGE FEES. IT MAY BE NECESSARY FOR THOSE
POOLS THAT ARE SUBJECT TO THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS
TO AVOID DEPLETION OR EXHAUSTION OF THEIR ASSETS. THE PARTNERSHIP'S
DISCLOSURE DOCUMENT CONTAINS A COMPLETE DESCRIPTION OF EACH EXPENSE TO BE
CHARGED THIS POOL AT PAGE 5 AND A STATEMENT OF THE PERCENTAGE RETURN
NECESSARY TO BREAK EVEN, THAT IS, TO RECOVER THE AMOUNT OF YOUR INITIAL
INVESTMENT, AT PAGE 14.
THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER FACTORS
NECESSARY TO EVALUATE YOUR PARTICIPATION IN THIS COMMODITY POOL.
THEREFORE, BEFORE YOU DECIDE TO PARTICIPATE IN THIS COMMODITY POOL, YOU
SHOULD CAREFULLY STUDY THIS AGREEMENT AS WELL AS THE PARTNERSHIP'S
DISCLOSURE DOCUMENT, INCLUDING A DESCRIPTION OF THE PRINCIPAL RISK FACTORS
OF THIS INVESTMENT, AT PAGE 5.
YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY POOL MAY TRADE FOREIGN FUTURES
OR OPTIONS CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE UNITED
STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED STATES MARKET, MAY BE
SUBJECT TO REGULATIONS WHICH OFFER DIFFERENT OR DIMINISHED PROTECTION TO
THE POOL AND ITS PARTICIPANTS. FURTHER, UNITED STATES REGULATORY
AUTHORITIES MAY BE UNABLE TO COMPEL THE ENFORCEMENT OF THE RULES OF
REGULATORY AUTHORITIES OR MARKETS IN NON-UNITED STATES JURISDICTIONS WHERE
TRANSACTIONS FOR THE POOL MAY BE EFFECTED.
ARTICLE II
Partnership Organization and Purpose
2.1 PARTNERSHIP NAME AND LOCATION OF BOOKS AND RECORDS. The name of the
Partnership, as filed with the state of Delaware, shall be Bromwell
Financial Fund, Limited Partnership. The address where the books and
records of the Partnership will be maintained for inspection by the
Partners is c/o Corporate Systems, Inc., 101 North Fairfield Drive, Dover,
DE 19901 (302) 697-2139 or such other address as the General Partner shall,
from time to time, determine.
2.2 PARTNERSHIP AFFILIATES.
(a) POOL OPERATOR NAME AND PRINCIPALS. The General Partner shall serve as
the commodity pool operator for the Partnership. In addition to being
one of the general partners, Shira Del Pacult is the sole principal,
shareholder, director and officer of Belmont Capital Management, Inc.,
the other general partner and is solely responsible for the business
decisions of the Partnership, including, but not limited to, selection
of the Commodity Trading Advisors (the "CTAs"). The signature of either
Ms. Pacult or Belmont may bind the Partnership.
THIS POOL HAS NOT BEGUN TRADING AND DOES NOT HAVE ANY PERFORMANCE
HISTORY.
THE REGULATIONS OF THE CFTC AND NFA PROHIBIT ANY REPRESENTATION BY A
PERSON REGISTERED WITH THE CFTC OR BY ANY MEMBER OF THE NFA,
RESPECTIVELY, THAT SUCH REGISTRATION OR MEMBERSHIP IN ANY RESPECT
INDICATES THAT THE CFTC OR THE NFA, AS THE CASE MAY BE, HAS APPROVED OR
ENDORSED SUCH PERSON OR SUCH PERSON'S TRADING PROGRAMS OR OBJECTIVES.
THE REGISTRATIONS AND MEMBERSHIPS DESCRIBED IN THIS PROSPECTUS MUST NOT
BE CONSIDERED AS CONSTITUTING ANY SUCH APPROVAL OR ENDORSEMENT.
LIKEWISE, NO COMMODITY EXCHANGE HAS GIVEN OR WILL GIVE ANY SUCH APPROVAL
OR ENDORSEMENT.
The General Partner has limited experience in the management of
commodity pools; however, Ms. Pacult, has been supervising individual
managed commodity accounts for over 18 years and serves as the principal
of the corporate general partner for three other funds and as an
individual general partner for one of those funds. See "Performance of
Fremont Fund, Limited Partnership" in the Partnership's Prospectus.
(b) COMMODITY TRADING ADVISOR NAMES AND PRINCIPALS. The General Partner has
initially selected one independent CTA to trade the assets of the
Partnership, Ansbacher Investment Management, Inc. The CTA's
performance record and business background are disclosed in the
Partnership's Prospectus under "Trading Management". The CTA will have
no ownership in the Partnership and its compensation is described in
4.6(f). The CTA will enter trades on behalf of the Partnership directly
with the FCM without the prior knowledge or approval of the General
Partner of the methods used by the CTA to select the trades, the number
of contracts, or the margin required. From 5% to 40% of the Net Asset
Value on deposit with the FCM is expected to be committed to margin to
hold positions taken by the CTA for the account of the Partnership.
(c) INTRODUCING BROKER AND FUTURES COMMISSION MERCHANT NAMES AND PRINCIPALS.
Futures Investment Company, 5916 N. 300 West, P.O. Box C, Fremont, IN
46737 (219) 833-1306 will server as the Introducing Broker ("IB") for
the Partnership and will be paid a fixed amount for brokerage
commissions of eleven percent (11%) per year, payable monthly by the
Partnership, for introducing trades through Vision Limited Partnership,
the futures commission merchant (the "FCM"). The IB will pay the round-
turn brokerage commissions, pit brokerage and other clearing expenses to
the FCM, which will act in the normal capacity as a futures commission
merchant and will hold the equity assigned by the General Partner for
trading and will clear the trades entered by the CTA pursuant to the
power of attorney granted by the General Partner to the CTA to trade on
behalf of the Partnership.
2.3 CHARACTER OF THE BUSINESS. The Partnership's business purpose is to
increase Capital through the speculative and hedge trading of futures and
options on futures. The General Partner is authorized to do any and all
things on behalf of the Partnership incident thereto or connected therewith
including, but not limited to:
(a) trade, buy, sell or otherwise acquire, hold or dispose of all forms of
investments (including tangibles and intangibles, foreign currencies,
mortgage-backed securities, money market instruments, stock and futures
options, and any other securities or items which are now, or may
hereafter be, the subject of barter or stock or futures trading),
commodity futures, and forward contracts and any rights pertaining
thereto. The Partnership shall carry on the foregoing activities
through the exercise of judgment by its General Partner and/or the
Investment and/or Commodity Trading Advisors and consultants and brokers
selected by the General Partner. The General Partner may serve as an
investment or trading advisor to the Partnership for management fees,
reimbursement of costs and other remuneration, but not incentive fees,
at the lesser of (i) the rates charged either by independent third
parties for similar services to other partnerships, or (ii) the rates
charged by the General Partner to others for the same service.
(b) invest and trade, on margin or otherwise, in capital stocks, bonds,
debentures, trust receipts and other obligations, instruments or
evidences of indebtedness, gold, silver, cattle, corn, wheat, soybeans,
or any other asset for which a trading market is maintained or otherwise
paid for by cash or otherwise including, but not limited to, the right
to sell short and to cover such short sales.
(c) possess, sell, exchange, discount, transfer, mortgage, pledge, deal in,
maintain multiple accounts for, and to exercise all rights, powers,
privileges and other rights, incidental to ownership of the assets held
by the Partnership.
(d) borrow or raise monies and, from time to time without limit as to
amount, to issue, accept, endorse and execute promissory notes, draft
bills of exchange, warrants, bonds, debentures and other negotiable or
non-negotiable instruments and evidences of indebtedness, and to secure
the payment of any thereof and the interest thereon by mortgage or
pledge, conveyance or assignment in trust of the whole or any part of
the property of the Partnership, whether at the time owned or thereafter
acquired, and to sell, pledge of otherwise dispose of such instruments
issued by the Partnership for its purposes; form and own one or more
corporations to engage in such businesses as the General Partner shall
deem advisable.
(e) lend any of its properties or funds, either with or without security in
furtherance of the objects and purposes of the Partnership as the
General Partner shall deem advisable and consent.
(f) rent or own and maintain one or more offices staffed as the General
Partner shall determine and to do such other acts attendant thereto as
may be necessary or desirable.
(g) waive the sales commission to acquire investment Capital as the General
Partner, in its sole discretion, may determine.
(h) enter, make and perform all contracts, surety and guarantees as may be
necessary or advisable or incidental to the carrying out of the
foregoing objects and purposes.
2.4 ADDRESS OF PARTNERS. The General Partner's address is listed in paragraph
1.5(a) hereof and the Limited Partners' addresses are on record at the
office of the General Partner to the Partnership.
2.5 TERM OF PARTNERSHIP. The term of the Partnership shall commence on the
date of this Agreement and shall continue until dissolved or terminated
pursuant to Article IX.
2.6 REGISTRATION. The General Partner, on behalf of the Partnership, shall
have the authority, but not the obligation, to cause a Registration
statement to be filed, and such amendments thereto as the General Partner
deems advisable, with the appropriate Federal and state regulatory
agencies, including the United States Securities and Exchange Commission
and the commission of securities for registration under the securities laws
of the various states and any other jurisdiction desirable or proper to the
sale of Units to qualify for public offerings. Each of the Limited
Partners hereby confirm and ratify all action taken and things done by the
General Partner with respect to such filings and public offerings. The
General Partner may make such other arrangements for the sale of Units,
including the private placement of Units, as it deems appropriate.
ARTICLE III
Capital Contributions and Allocation of Profits and Losses
3.1 CAPITAL CONTRIBUTIONS OF LIMITED PARTNERS.
(a) Each Limited Partner has delivered to the Partnership an executed
Subscription which has been accepted by the General Partner on behalf of
the Partnership, an Amended Certificate of Limited Partnership, and a
check for his subscription amount. The Partnership shall use the funds
thus contributed to pay, sales commissions, if any, Expenses,
Organization Costs, other expenses of the Partnership, and to provide
capital to engage in trading and to pay the management fees, if any,
and, from profits, the incentive fees and distributions to Partners
Capital Accounts.
(b) Until such time as the General Partner elects to qualify the Partnership
Units for public sale, the General Partner will establish, from time to
time, the minimum amount which each Limited Partner will be required to
contribute to Capital of the Partnership. Upon receipt of notice from
the General Partner of such minimum (which will be equally applicable to
all Limited Partners), each Limited Partner will be required to
contribute sufficient Capital to equal or exceed such minimum or will
withdraw and have his Units redeemed as a Limited Partner pursuant to
Article IX, Section 9.4. The failure to contribute such Capital within
ten days after receipt of said notice from the General Partner shall be
a request for redemption by the Limited Partner. Upon election by the
General Partner and qualification of the Partnership Units for public
sale, there will be no further right of the General Partner to give
notice of an increase in the minimum amount which all Limited Partners
will be required to contribute to Capital of the Partnership other than
as provided in Article VIII. Except for the increase in the minimum
amount which all Limited Partners, in the sole discretion of the General
Partner, shall be required to contribute to Capital or suffer redemption
and amendments required by Article VIII, there will be no required
contribution or assessments of the Limited Partners.
3.2 CAPITAL CONTRIBUTIONS OF GENERAL PARTNER.
(a) The General Partner has not made and shall not be required to make any
capital contribution to the Partnership except for purchases which are
required by law. Currently, the General Partner is required by the
applicable securities and tax laws to purchase (i) one percent (1%) or
(ii) $25,000 of the total Capital paid in by the Limited Partners, which
ever is greater.
(b) The General Partner and the initial Limited Partner have contributed in
excess of $1,000 to the Partnership. Immediately prior to the time the
Partnership commences trading and as may be required, thereafter, as the
result of the admission of additional Limited Partners, the General
Partner shall make such additional contribution to its capital or to the
Partnership so as to be certain that the General Partner has sufficient
Capital at risk to prevent the Partnership from loss of that element of
the Partnership test imposed by the Federal Internal Revenue Code and
the Regulations promulgated thereunder to permit the Partnership to be
taxed as a partnership and not as a corporation. The General Partner
shall not reduce its Capital nor shall it make any assignment or
transfer of its interest or withdrawal of its contribution while it is
the General Partner which would reduce its percentage interest in the
Partnership to less than its percentage interest at the time the
Partnership commences trading. The General Partner may withdraw any
excess above the required percentage without notice to the Limited
Partners.
(c) Partnership interests shall be evidenced by Units. The General Partner,
on behalf of the Partnership, may, in accordance with applicable law and
the Offering Memorandum of the Partnership, issue Units to persons
desiring to become Limited Partners. For each Unit purchased during the
initial Offering Period, a Partner shall contribute one thousand dollars
($1,000), less the sales commission, if any, to the Capital of the
Partnership. After the initial Offering Period and commencement of
trading, a Partner shall contribute an amount equal to the Net Asset
Value of a Unit, plus the sales commission, if any, on the valuation
date following receipt of the subscription agreements. The General
Partner and Affiliates of the General Partner may purchase Limited
Partnership Units with the same rights as other Limited Partners.
(d) All subscriptions for Units made pursuant to the offering of the Units
must be on the form provided with the Prospectus. No more than 7,000
Units (the "Maximum") will be sold and a minimum number of Units must be
sold as follows:
(i) If subscriptions for at least 700 Units at an initial Net Unit Value
of $1,000 have been accepted (the "Minimum") by the General Partner
within the initial Offering Period of up to one year from the
commencement of the offering of sale of Units, including the Units
subscribed for by the General Partner, the General Partner may,
pursuant to Paragraph 12, execute, acknowledge, swear to, file and
record on behalf of the Partnership and each Limited Partner an
amended Limited Partnership Agreement, cause such subscriptions to
be transferred from the escrow agent, Star Financial Bank, 2004 N.
Wayne St., Angola, IN 46703, to the Partnership's trading account
and cause the Partnership to pay its organization costs pursuant to
the agreements negotiated by the General Partner and, thereafter,
the aggregate of all contributions to the Partnership shall be
available to the Partnership to carry on its business; or
(ii) If the General Partner has not received and accepted subscriptions
for the Minimum Units prior to the close of the Minimum Units
Offering Period, the offering of the Units shall terminate and all
amounts paid by subscribers for Units shall be returned in the
manner provided in the Prospectus. All Units subscribed for shall
be issued to the collection of good funds, and any Units issued to a
Subscriber who has not provided collectible funds (whether in the
form of a bad check or draft, or otherwise) shall be canceled.
3.3 ALLOCATION OF PROFITS AND LOSSES
(a) A distribution account shall be established for each Partner which shall
include, as the initial balance thereof, each Partners' initial
contribution to the Partnership expressed in total dollars and Units
purchased. As of the close of business each month, allocations shall be
made as follows:
(i) The Incentive Fee. The incentive fee upon New Net Profit at the
rate of twenty percent (20%), or such other rate as may be
established pursuant to 1.2(h), shall be paid quarterly to the CTA
but allocated to the Partners monthly.
(ii) The Profit (Loss) Attributable to Units shall be added to
(subtracted from) the distribution accounts of the Partners. Items
of income, gain or loss, accrued and paid Expenses shall be added to
(subtracted from) the distribution account of each Partner in
accordance with the ratio that such distribution account bears to
the sum of all of the Partners' distribution accounts.
(iii) The amount of any cash distributions to a Partner during such month
and any amount paid upon Redemption of Units as of the end of such
month shall be subtracted from the distribution account of such
Partner.
(iv) The distribution account of any Unit which was redeemed shall be
reduced by the Redemption Charge per Unit multiplied by the number
of Units which were redeemed by the Partner represented by such
distribution account. The Redemption Charge, if any, shall be first
used to defray expenses and any excess treated as interest earned by
the Fund.
ARTICLE IV
Rights and Obligations of the General Partner
4.1 GENERAL. The General Partner shall have full, exclusive and complete
discretion in the management and control of the affairs of the Partnership
to the best of its ability and shall use its best efforts to carry out the
purposes of the Partnership set forth in Article II. In connection
therewith, it shall have all powers of a general partner under the Act,
including, without limitation, the power to:
(a) enter, execute and maintain contracts, agreements and any or all other
instruments, and to do and perform all such things, as may be required
or desirable in furtherance of Partnership purposes or necessary or
appropriate to the conduct of Partnership activities including, but not
limited to, contracts with third parties for:
(i) brokerage services on behalf of the Partnership (which brokerage
services may be performed by the General Partner or an Affiliate of
the General Partner), specifically, Futures Investment Company, or
any successor to its business, an Affiliated introducing broker of
the General Partner may clear the trades and pay trailing
commissions to its associated persons, including Affiliates of the
General Partner and the General Partner, in consideration of the
payment of nine percent (9%) of the total equity placed with the
Commodity Trading Advisor or advisors it selects, will cause and pay
for the trades to be cleared through one or more futures commission
merchants selected by the General Partner;
(ii) trading advisory services relating to the purchase and sale of all
stocks, options, commodity futures contracts, commodity options and
contracts for forward delivery of foreign currencies on behalf of
the Partnership (which advisory services may be performed by the
General Partner or an Affiliate of the General Partner); and
(iii) rent, salaries, computer, accounting, legal and other services
attendant to the maintenance of the Fund.
(b) open and maintain bank accounts on behalf of the Partnership with
banks and money market funds.
(c) deposit, withdraw, pay, retain and distribute the Partnership's funds
in any manner consistent with the provisions of this Agreement.
(d) supervise the preparation and filing of all documentation required by
law including, but not limited to, Registration Statements to be filed
with Federal and state agencies.
(e) pay or authorize the payment of distributions to the Partners and pay
Expenses of the Partnership.
(f) invest or direct the investment of funds of the Partnership not
involving the purchases or sale of stocks, futures contracts, options,
and contracts for forward delivery of foreign currencies.
(g) purchase, at the expense of the Partnership, liability and other
insurance to protect the Partnership's proprieties and business.
(h) borrow money from banks and other lenders for Partnership purposes,
and may pledge any or all of the Partnership's assets for such loans.
No bank or other lender to which application is made for a loan by the
lender to which application is made for a loan by the General Partner
shall be required to inquire as to the purposes for which such loan is
sought and, as between the Partnership and such bank or other lender,
it shall be conclusively presumed that the proceeds of such loan are
to be and will be used for the purposes authorized under this
Agreement.
(i) confess judgment for and against the Partnership and control any
matters affecting the rights and obligations of the Partnership,
including the employment of attorneys, in the conduct of litigation
and otherwise incur legal expenses and costs of consultation,
settlement of claims, and litigation against or on behalf of the
Partnership.
4.2 LOANS BY GENERAL PARTNER. The General Partner or its Affiliates will be
not be required to advance or loan funds to the Partnership. In the event
the General Partner makes any advance or loan to the Partnership, the
General Partner will not receive interest in excess of its interest
costs, nor will the General Partner receive interest in excess of the
amounts which would be charged the Partnership (without reference to the
General Partner's financial abilities or guarantees) by unrelated banks
on comparable loans for the same purpose and the General Partner shall
not receive points or other financing charges or fees regardless of the
amount.
4.3 TRANSACTION WITH PARTNERSHIP. Notwithstanding anything to the contrary
which may be contained herein, the General Partner shall not:
(a) sell, or otherwise dispose of, any of the Partnership's assets to the
General Partner or its Affiliates.
(b) subject to the provisions regarding and without diminishment of the
right of the General Partner or any Affiliate to compensation for
services provided to the Partnership as set forth in this Agreement,
cause or permit the Partnership to enter any agreement with the General
Partner or an Affiliate which is not in the best interest of and for the
benefit of the Partnership or which would be in contravention of the
General Partner's fiduciary obligations to the Partnership or pursuant
to which the General Partner or any Affiliate;
(i) would provide or sell any services, equipment, or supplies at other
than rates charged to others; or
(ii) would receive from the Partnership, Units of Partnership interest in
consideration for services rendered.
4.4 OBLIGATIONS OF GENERAL PARTNER. In addition to the obligations provided
by law or this Agreement, the General Partner shall:
(a) Devote such of its time to the business and affairs of the Partnership
as it shall, in its discretion exercised in good faith, determine to be
necessary to conduct the business and affairs of the Partnership for the
benefit of the Partnership and the Limited Partners.
(b) Execute, file, record and/or publish all certificates, statements and
other documents and do any and all other things as may be appropriate
for the formation , qualification and operation of the Partnership and
for the conduct of its business in all appropriate jurisdictions
including, but not limited to, the compliance, at its expense, with all
laws related to its qualification to serve as the commodity pool
operator of the Fund.
(c) Retain independent public accountants to audit the accounts of the
Partnership.
(d) Employ attorneys to represent the Partnership.
(e) Use its best efforts to maintain the status of the Partnership as a
partnership for United States Federal income tax purposes.
(f) Employ only independent CTAs which are registered pursuant to the
Commodity Exchange Act to conduct trading and to otherwise establish and
monitor the trading policies of the Partnership; and the activities of
the partnership's trading advisor(s) in carrying out those policies.
(g) Review, not less often than annually, the brokerage commission rates
charged to comparable funds to determine that the commission rates paid
by the Partnership are comparable with such other rates.
(h) Have fiduciary responsibility for the safekeeping and use of all funds
and assets of the Partnership, whether or not in the General Partner's
immediate possession or control, and the General Partner will not employ
or permit others to employ such funds or assets in any manner except for
the benefit of the Partnership. Additionally, no contract shall permit the
General Partner to contract away its fiduciary obligation under common law.
(i) Agree that if it becomes the sole General Partner of the Partnership, it
will use its best efforts to maintain the Partnership as a limited
partnership as required by all applicable laws including, but not
limited to the requirement of the United States Department of the
Treasury, Internal Revenue Service, for a sole corporate general partner
of a limited partnership to maintain its "Net Worth" (as defined below)
to establish the sufficient assets test for a sole corporate general
partner to be liable for the debts of the Partnership. Ms. Pacult
intends to resign as a general partner once Belmont has sufficient net
assets to meet the NASAA Guidelines to continue to offer Units in the
Partnership. Although there can be no assurance that Belmont, as the
sole corporate General Partner, will satisfy the IRS "safe harbor"
test to permit the Partnership to continue to be taxed as a
partnership, before Ms. Pacult resigns, Belmont will secure an opinion
of counsel to the effect that sufficient other IRS elements exist to
permit the Partnership to continue to be taxed as a partnership and
not as a corporation. Belmont, as the sole corporate general partner
may reach the safe harbor for one of those tests with a Net Worth of an
amount equal to no less than (i) the lesser of $250,000 or 15% of the
aggregate capital contributions of any limited partnerships (including
the Partnership, if applicable,) for which it shall act 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
(including the Partnership, if applicable) for which it shall act as
general partner and which are capitalized at greater than or equal to
$2,500,000 by use of promissory notes (valued at their fair market
value) issued to the General Partner by one or more of its principals.
For the purposes of this subparagraph, "Net Worth" shall be calculated
in accordance with generally accepted accounting principles,
consistently applied, provided that all current assets shall be based on
the lower of cost or the then current market value. The Units owned by
either general partner in the Partnership and in other partnerships in
which they act as a general partner shall not be included in calculating
their Net Worth. A letter of credit may be included. The requirements
of this subparagraph (i) may be modified if the General Partner obtains
an opinion of counsel for the Partnership to effect that a proposed
modification will not (1) adversely affect the classification of the
Partnership as a partnership for Federal income tax purposes; (2) will
not adversely affect the status of the Limited Partners as limited
partners under the Act; (3) will not violate any applicable state
securities or Blue Sky law or any rules, regulations, guidelines or
statements of policy promulgated or applied thereunder including, but
not limited to, the net worth required by Section II.B of the Guidelines
for Registration of Commodity Pool Programs, as adopted in revised form
by the North American Securities Administrators Association, Inc. as are
in effect on the date of such proposed modification. (4) or otherwise
adversely affect the Limited Partners.
(j) Maintain a current list of the name, address, and number of Units owned
by each Limited Partner at the General Partner's principal office. Such
list shall be disclosed to any Partner or their representative at
reasonable times, upon request, either in person or by mail, upon
payment, in advance, of the reasonable cost of reproduction and mailing.
The Partners and their representatives shall be permitted access to
all other records of the Partnership, after adequate notice, at any
reasonable time, at the offices of the Partnership. The General
Partner shall maintain and preserve such records for a period of not
less than six (6)years.
4.5 GENERAL PROHIBITIONS. The Partnership shall not:
(a) borrow from or loan to any person, except that the foregoing is not
intended to prohibit the incurring of any indebtedness to a Partner or
an Affiliate with respect to the offering of Units for sale,
Registration, or initiation and maintenance of the Partnership's trading
positions.
(b) commingle its assets with those of any other person, except to the
extent permitted under the Securities and Exchange Act or the Commodity
Exchange Act and the regulations promulgated under each.
(c) permit rebates or give-ups to be received by the General Partner or any
Affiliate of the General Partner, or permit the General Partner or any
Affiliate of the General Partner to engage in reciprocal business
arrangements which would circumvent the foregoing prohibition; provided,
however, that an Affiliate or the General Partner may provide goods or
services, including brokerage, at a competitive cost to the Partnership.
(d) engage in the pyramiding of its positions (i.e., the use of unrealized
profits on existing positions to provide margins for additional
positions in the same or a related stock or commodity); provided,
however, that there may be taken into account the Partnership's open
trade equity on existing positions in determining whether to acquire
additional unrelated stock or commodity positions.
(e) margins of all open positions in all stocks and commodities combined
would exceed 250% of the partnership's Net Asset Value at the time such
position would otherwise be initiated.
(f) permit churning of the Partnership's trading account for the purpose of
generating brokerage commissions to any person.
(g) directly or indirectly pay or award any finder's fees, commissions or
other compensation to any persons engaged by a potential limited partner
for independent investment advice as an inducement to such advisor to
advise the potential limited partner to purchase Units in the
Partnership without the knowledge of such potential limited partner.
(h) No Partnership funds will be held outside the United States. The
Partnership funds committed to trading will be on deposit with and
under the control of a futures commission merchant regulated pursuant
to the Commodity Exchange Act, as may be amended, from time to time.
The funds not committed to trading will be in investments which are
properly registered under the United States securities or other
financial institution regulations.
4.6 FEES AND EXPENSES.
(a) The Partnership shall pay all Organization Costs and offering Expenses
incurred in the creation of the Partnership and sale of Units. The
foregoing expenses may be paid directly by the Partnership or may be
reimbursed by the Partnership to the General Partner or an Affiliate of
the General Partner. Notwithstanding the foregoing, in no event will
reimbursement by the Partnership to the General Partner for Organization
Costs and offering Expenses charged to the Partnership exceed an amount
equal to 15% of the gross proceeds from the sale of Units. Organization
Costs and Offering Expenses shall mean those Expenses incurred in
connection with the formation, qualification and Registration of the
Partnership and in distributing and processing the Units under
applicable Federal and state law, sales commissions, if any, and any
other expenses such as: (i) registration fees, filing fees and taxes;
(ii) the costs of qualifying, printing, amending, supplementing, mailing
and distributing the Registration Statement and Prospectus; (iii) the
costs of qualifying, printing, amending, supplementing, mailing and
distributing sales materials used in connection with the issuance of the
Units; (iv) salaries of officers and employees of the General Partner
and any Affiliate of the General Partner while directly engaged in
distributing and processing the Units and establishing records therefor;
(v) rent, travel, remuneration of personnel, telegraph, telephone and
other expenses in connection with the offering of the Units; (vi)
accounting, auditing, and legal fees incurred in connection therewith;
and (vii) any extraordinary expenses related thereto. Organization Costs
and Offering Expenses do not include salaries, rent, travel, expenses
and other items of General Partner overhead.
(b) All operating expenses of the Partnership shall be billed directly to
and paid by the Partnership.
(c) The General Partner or any Affiliate of the General Partner may be
reimbursed for the actual costs of any Expense including, but not
limited to, legal, accounting and auditing services used for or by the
Partnership, as well as printing and filing fees and extraordinary
expenses incurred for or by the Partnership; provided, however, the
limitations of contained in Article X - Exoneration and Indemnification
contained in this Agreement will apply to restrict the purchase of
certain insurance coverage and the assumption of the defense of certain
claims.
(d) The General Partner may establish compensation to be paid to it or any
of its Affiliates, from time to time; provided, however, such charges
shall be no more than:
(i) A sales commission of up to six percent (6%) to be established, from
time to time, by the General Partner, for sales of Units;
(ii) A management fee of one half of one percent (1/2 of 1%) per month
(6% per year) of the Net Asset Value of the Partnership, computed
and paid to the General Partner and/or non-affiliated independent
investment or trading advisor on the close of business on the last
day of each month;
(iii) An incentive fee, paid quarterly, of up to fifteen percent (15%) of
the first one hundred percent (100%) of New Net Profit, or less
earned upon Capital, and prorated to consider the date of deposit of
such Capital to the Partnership each year. The incentive fee may be
increased up to 30%, provided that the management fee is
correspondingly reduced to 0%. Each trading subaccount established
by the General Partner shall be considered separately for purposes
of incentive fee. The incentive fee will be non-refundable; i.e., in
the event that the Partnership earns substantial New Net Profit
during the first month of any year and, thereafter, suffers losses,
the General Partner will not refund any of the profit incentive fee
paid for the prior month or months. However, the Partnership will
not pay or accrue to the General Partner any further incentive fee
during that year until such time as the New Net Profit, when added
to Net Asset Value, after additions, deductions of Redemptions and
distributions, exceeds the highest Net Asset Value, computed for
that year; i.e., incentive fees will only be earned and paid or
accrued upon New Net Profit for that year; and
(iv) A share of the brokerage commissions paid for trades made by the
Partnership. Such commissions shall not be more than the average
published fixed rate per month or per round-turn charged, from time
to time, to public commodity pools by national brokerage firms for
similar trading size, frequency, and style.
(e) The General Partner is hereby authorized to employ brokers, attorneys,
accountants, consultants, and administrative personnel, who may be
Affiliated with the General partner, to perform Partnership business at
the expense of the Partnership. Belmont has advanced the initial
offering and organizational expenses, estimated to be $47,000 and
$5,000, respectively. The offering expenses will be reimbursed by the
Partnership immediately upon the Initial Closing and the organizational
expenses will be repaid monthly over the first sixty months of operation
by the Partnership at the rate of $1000 per year, until paid in full.
After the first year, the Partnership will be subject to yearly legal
and accounting fees of $18,000 and $5,000, respectively.
(f) The General Partner is hereby authorized, individually or through an
Affiliate, to employ non-affiliated independent investment and trading
advisors to trade the assets of all or a portion of the Fund to be paid
(i) an annual management fee not to exceed six percent (6%) of the
assigned trading equity when combined with the General Partner's
management fee as described in 1.2(g); and, (ii) an incentive fee of up
to fifteen percent (15%) on New Net Profit earned by such advisor, which
may be increased or decreased as described in 1.2(h). All incentive fees
may be prorated and paid quarterly.
4.7 ACTIVITIES OF PARTNERS.
(a) The General Partner and its Affiliates shall devote to the Partnership
only such time as shall be reasonably required to fulfill their
responsibilities hereunder.
(b) Any Partner may, notwithstanding the existence of this Agreement, engage
in whatever other activities they may choose, whether the same be
competitive with the Partnership or otherwise, without having or
incurring any obligation or conflict of interest in such activities with
the Partnership or to any party hereto. The Partners are specifically
authorized to deal with other partnerships and to acquire interests in
positions and trading without having to offer participation therein to
the Partnership or the other Partners. Neither this Agreement nor any
activities undertaken pursuant hereto shall prevent any Partner,
including the General Partner and its Affiliates and their officers,
directors and employees, from engaging in the trading contemplated by
this Partnership individually, jointly with others, or as a part of any
other association to which any of them are or may become parties, in the
same trades as the Partnership, or require any of them to permit the
Partnership, the General Partner or any other Partner to participate in
any of the foregoing. As a material part of the consideration for each
party's execution hereof, each Partner hereby waives, relinquishes and
renounces any such right or claim of conflict of interest and
participation from any other Partner.
(c) Belmont is a corporation which was formed on January 12, 1999, and it
does not have any prior experience in the management of a partnership
which trades commodity futures or options, or any other securities;
however, Ms. Pacult, has been engaged in supervision of individual
managed commodity accounts for over 18 years and serves as the
principal of a corporate general partner for three other funds and as an
individual general partner for one of those funds. The past and future
results of trading by Ms. Pacult or any future principal of Belmont,
will be confidential and not disclosed to the other Partners. Such
positions taken may be the same as or different from any positions taken
by the Partnership or any advisor to the Fund. Nothing in this Section,
or elsewhere in the Partnership Agreement, shall permit the General
Partner to violate its fiduciary or legal obligations to the
Partnership.
4.8 CONFLICTS OF INTEREST. Significant actual and potential conflicts of
interest exist in the structure and operation of the Partnership. The
General Partner has used its best efforts to identify and describe all
potential conflicts of interest which may be present under this heading and
elsewhere in the Partnership's Prospectus and the Exhibits attached
thereto. Prospective investors should consider that the General Partner
intends to assert that Partners have, by subscribing to the Partnership,
consented to the existence of such potential conflicts of interest as are
described in this Agreement and the Prospectus and its Exhibits, in the
event of any claim or other proceeding against the General Partner, any
principal of the General Partner, the CTA, any Principal of the CTA, the
Partnership's FCM, or any principal of the FCM, the Partnership's IB or any
principal or any Affiliate of any of them alleging that such conflicts
violated any duty owed by any of them to said subscriber. Specifically,
the Selling Agent is Affiliated with Ms. Pacult and, therefore, no
independent due diligence of the Partnership or the General Partner will be
made by a National Association of Securities Dealers, Inc. member.
4.9 LIMITATION OF POWERS. Without concurrence of a Majority in Interest, the
General Partner may not:
(a) Amend this Agreement except for those amendments which do not
adversely affect the rights of the Limited Partners.
(b) Voluntarily withdraw as a General Partner.
(c) Appoint a new General Partner or additional general partners;
provided, however, additional general partners may be appointed
without obtaining the consent of a Majority in Interest if the
addition of such person is necessary to preserve the tax status of the
Partnership as a partnership and not as a corporation; and such
additional general partner has no authority to manage or control the
Partnership and the admission of such additional general partner does
not materially adversely affect the Limited Partners.
(d) Sell all or substantially all of the Partnership assets other than in
the ordinary course of business.
(e) Cause the merger or other reorganization of the Partnership.
(f) Dissolve the Partnership other than because of an event, which by law,
requires such dissolution.
ARTICLE V
Rights and Obligations of Limited Partners
5.1 LIMITATION OF LIABILITY. No Limited Partner shall be personally liable
for any of the debts of the Partnership or any of the losses thereof.
However, the amount committed by him to the Capital of the Partnership and
his interest in Partnership assets shall be subject to liability for
Partnership debts and obligations. Limited Partners may be liable to repay
any wrongful distribution of profits to them and may be liable for
distributions (with interest thereon) considered to be a return of Capital
if necessary to satisfy creditors of the Partnership.
5.2 NO MANAGEMENT RIGHTS. No Limited Partner shall take part in the
management of the business of the Partnership or transact any business for
the Partnership. No Limited Partner, as such, shall have the power to sign
for or to bind the Partnership.
5.3 CERTAIN RIGHTS. Provided the following, does not either (i) subject the
Limited Partners to unlimited liability or (ii) subject the Partnership to
be taxable as a Corporation for purposes of Federal Income tax laws, the
Partners, by a vote of a Majority in Interest, without the necessity for
concurrence by the General Partner, shall have the following rights in
addition to those granted elsewhere in this Agreement:
(a) Amend the Partnership Agreement; provided, however, any amendment which
modifies the compensation or distributions to the General Partner or
which affects the duties of the General Partner requires the consent of
the General Partner.
(b) The General Partner may be removed and a new General Partner elected in
accordance with the terms of this Agreement.
(c) Cancel any contract for services with the General Partner, without
penalty, upon 60 days written notice; provided, however, the maximum
period of any contract between the General Partner and the Partnership
is one year; and, provided further, should any amendment to this
Partnership Agreement attempt to modify the compensation or
distributions to which the General Partner is entitled or which
affects the duties of the General Partner, such amendment will become
effective only upon the consent of the General Partner.
(d) The right to approve, prior to sale, the sale or distribution, outside
the ordinary course of business, of all or substantially all of the
assets of the Partnership.
(e) Dissolve the Partnership.
(f) Any material changes in the Partnership's basic investment policies
identified in Article III including, but not limited to, the
speculation and trade in commodity futures, forward futures contracts,
and options upon those contracts both within and without the United
States or the structure of the Partnership as a limited partnership
requires prior written notification of a meetings which identifies the
purpose of the meeting and the approval by a vote of the Majority in
Interest of the Partners.
5.4 GENERAL PARTNER ACTION WITHOUT LIMITED PARTNER APPROVAL.
Notwithstanding anything in this Agreement, particularly section 5.3, to the
contrary, the General Partner may amend this Agreement without any vote,
consent, approval, authorization or other action of any other Partner and
without notice to any other Partner to:
(a) add to the representations, duties or obligations of the General
Partner or its Affiliates or surrender any right or power granted to
the General Partner or its Affiliates in this Agreement for the
benefit of the Limited Partners;
(b) cure any ambiguity, correct or supplement any provision in this
Agreement which may be inconsistent with any other provision in this
Agreement, or make any other provisions with respect to matters or
questions arising under this Agreement which will not be inconsistent
with the intent of this Agreement;
(c) delete or add any provision of this Agreement required to be so
deleted or added by the staff of the Securities and Exchange
Commission, or by a state securities law administrator or similar such
official, which addition or deletion is deemed by such official to be
for the benefit or protection of the Limited Partner or does not have
a material adverse effect on the Limited Partners generally or the
Partnership;
(d) reflect the withdrawal, expulsion, addition or substitution of
Partners;
(e) reflect the proposal, promulgation or amendment of Regulations under
Code section 704, or otherwise, to preserve the uniformity of interest
in the Partnership issued or sold from time to time, if, in the
opinion of the General Partner, the amendment does not have a material
adverse effect on the Limited Partners generally;
(f) elect for the Partnership to be bound by any successor statute to the
Act, if, in the opinion of the General Partner, the amendment does not
have a material adverse effect on the Limited Partners generally;
(g) conform this Agreement to changes in the Act or interpretations
thereof which, in the exclusive desecration of the General Partner, it
believe appropriate, necessary or desirable, if, in the General
Partner's reasonable opinion, such amendment does not have a
materially adverse effect on the Limited Partners generally or the
Partnership;
(h) change the name of the Partnership;
(i) conform the provisions of this Agreement to any applicable
requirements of Federal of state law which, in the exclusive
discretion of the General Partner, it believes appropriate, necessary
or desirable, if, in the General Partner's reasonable opinion, such
amendment does not have a material adverse effect on the Limited
Partners generally or the Partnership; and
(j) make any change which, in the exclusive discretion of the General
Partner, is advisable to qualify or to continue the qualification of
the Partnership as a limited partnership or a partnership in which the
Limited Partners have limited liability under the laws of any state or
that is necessary or advisable, in the exclusive discretion of the
General Partner, so that the Partnership will not be treated as an
association taxable as a corporation for Federal income tax purposes.
5.5 EXPULSION OF LIMITED PARTNERS. Anything herein to the contrary
notwithstanding,
(a) no Partner, including any corporation, partnership, trust or other
entity may, at any time, have an ownership percentage of ten percent
or more of the aggregate ownership percentages of the Limited
Partners. If, at any time, the General Partner determines that any
Limited Partner has an ownership percentage of ten percent or more,
the Partnership may, in the General Partner's exclusive discretion,
cause a Redemption by that Limited Partner of the number of Units
necessary or advisable to reduce that Limited Partner's ownership
percentage to less than ten percent. The Redemption shall be
effective as of the next Redemption date or such other Redemption
date, at the discretion of the General Partner.
(b) the General Partner has the right, in its sole discretion, to raise
or lower the minimum investment in the Partnership required for the
admission or retention of Units in the Partnership by a Partner. In
the event the General Partner does raise the minimum investment in the
Partnership to an amount in excess of any Partners Capital account,
the Partnership shall provide notice to the Partner of such event and
allow the Partner 30 days to raise the Capital account for that
Partner to such raised amount, or more. In the event the Partner does
not so raise his Capital account to such minimum amount, the Partner
shall be deemed to have elected to withdraw from the Partnership and
all of his Units shall be redeemed at the next redemption date as
provided in this Agreement.
5.6 NOTIFICATION. Notice shall be sent to each Partner within seven business
days from the date of:
(a) any decline in the Net Unit Value to less than 50% of the Net Asset
Value on the last Valuation Date;
(b) any material change in contracts with the FCM or CTA including, but not
limited to, any change in CTAs or any modification in connection with
the method of calculating the incentive fee;
(c) any other material change affecting the compensation of the General
Partner, FCM, CTA or any Affiliated party;
5.7 NOTIFICATION CONTENTS.
(a) a material change related to brokerage commissions shall not be made
until notice is given and the Partners, after such notice, have the
opportunity to Redeem pursuant to Article IX;
(b) in addition, in regard to all other changes, the required notification
shall describe the change in detail, include a description of the
Partners' Redemption rights pursuant to Article IX and voting rights
pursuant to this Article V and a description of any material effect such
changes may have on the interests of the Partners.
5.8 EXERCISE OF RIGHTS. Upon receipt of a written request, executed by the
holders of Units aggregating ten percent (10%) or more of the Units, for a
vote upon and to take action with respect to any rights of the Partners
under this Agreement, together with a check for the costs to distribute the
request to all of the Partners, the General Partner shall call a meeting of
all Partners of the Partnership in the time and manner as provided in
Section 8.7 hereof.
5.9 EXAMINATION OF BOOKS AND RECORDS. A Limited Partner shall have the right
to examine the books and records of the Partnership at all reasonable
times, including the right to have such examination conducted at his sole
expense by any reasonable number of representatives. Notwithstanding the
foregoing, the General Partner may keep and withhold the names of the other
Partners, specific trading and other designed information confidential from
the Partners.
ARTICLE VI
Assignment of Limited Partnership Units;
Admission of Limited Partners
6.1 RESTRICTION ON ASSIGNMENT. A Partner may not assign or transfer some or
all of his Units in the Partnership without the written consent of the
General Partner; provided, however, that in no event may an assignment be
made or permitted until after two years from the date of purchase of such
assigned or transferred Units(s) by said Partner; and, provided, further,
that full Units must be assigned and the assignor, if he is not assigning
all of his Units, will retain more than five Units. Any such assignment
shall be subject to all applicable securities, commodity, and tax laws and
the regulations promulgated under each such law. The General Partner shall
review any proposed assignment and shall withhold its consent in the event
it determines, in its sole discretion, that such assignment could have an
adverse effect on the business activities or the legal or tax status of the
Partnership.
6.2 QUALIFIED PLAN RESTRICTIONS. In no event shall a Partner be entitled to
transfer all or part of a Partnership interest if, under applicable
United States Department of Labor regulations, such transfer would result
in Partnership interests, excluding the interests of the General Partner,
valued at or in excess of twenty-five percent of the value of all
outstanding Partnership interests, excluding the interests of the General
Partner, being held by the following persons or entities:
(a) employee benefit plans (as defined in section 3(3) of the Federal
Employee Treatment Income Security Act of 1974, as amended ("ERISA"),
whether or not such plans are subject to the provisions of Title I of
ERISA,
(b) plans described in section 4975 (e)(1) of the Code, and
(c) entities (such as a common or collective trust funds of a bank) whose
underlying assets include plan assets by reason of a plan's investment
in the entity.
6.3 DOCUMENTATION OF ASSIGNMENT. The General Partner shall furnish to the
assigning Limited partner a proper form to duly effect such assignment.
The General Partner shall not be required to recognize any assignment and
shall not be liable to the assignee for any distributions made to the
assigning Limited Partner until the General Partner has received such form
of assignment, properly executed with signature guaranteed, together with
the Certificate of Ownership originally issued to the Limited Partner (or
an indemnity bond in lieu therefor) and such evidence of authority as the
General Partner may reasonably request and the General Partner shall have
accepted such assignment.
ARTICLE VII
Accounting Records, Reports and Distributions
7.1 DISTRIBUTIONS. Each Partner will have a Capital account, and its initial
balance will be the amount the Partner paid for the Partner's Units. The
Net Assets of the Partnership will be determined monthly, and any increase
or decrease from the end of the preceding month will be added to or
subtracted from the accounts of the Partners in the ratio that each account
bears to all accounts. Distributions from profits or Capital will be made
solely at the discretion of the General Partner.
7.2 BOOKS OF ACCOUNT. Proper books of account shall be kept and there shall
be entered therein all transactions, matters and things relating to the
Partnership's business as required by applicable law and the regulations
promulgated thereunder and as are usually entered into books of account
kept by persons engaged in business of like character. The books of
account shall be kept at the principal office of the General Partner and
each Limited Partner (or any duly constituted agent of a Limited Partner)
shall have, at all times during reasonable business hours, free access,
subject to rules of confidentiality established by the General Partner, the
right to inspect and copy the same. Such books of account shall be kept on
an accrual basis. A Capital account shall be established and maintained
from each Partner, as set forth above.
(a) Each Partner shall be furnished as of the end of each Fiscal Year with
(1) annual financial statements, audited by a certified public
accountant, within 90 days from the end of such year; together with
such other reports (in such detail) as are required to be given to
Partners by applicable law, specifically, annual and periodic reports
will be supplied by the General Partner to the other Partners in
conformance with the provisions of CFTC regulations for Reporting to
Pool Participants, 17 C.F.R. Section 4.22, as amended, from time to
time, and, (2) any other reports or information which the General
Partner, in its sole discretion, determines to be necessary or
appropriate.
(b) Appropriate tax information (adequate to enable each Partner to complete
and file his Federal tax return) shall be delivered to such Partner no
later than January 31 following the end of each Calendar Year.
7.3 CALCULATION OF NET ASSET VALUE. Net Asset Value shall be calculated daily
and reports delivered to Partners as of the last day of each month by the
20th of the following month. Upon request, the General Partner shall make
available to any Partner the Net Unit Value.
7.4 MAINTENANCE OF RECORDS. The General Partner shall maintain all records as
required by law including, but not limited to, (1) all books of account
required by paragraph 7.1 of this Article VII; and, (2) a record of the
information obtained to indicate that a Partner meets the applicable
investor suitability standards.
7.5 TAX RETURNS The General Partner shall cause tax returns for the
Partnership to be prepared and timely filed with the appropriate
authorities. The General Partner shall cause the Partnership to pay any
taxes payable by the Partnership; provided, however, that the General
Partner shall not be required to cause the Partnership to pay any tax so
long as the General Partner or the Partnership shall be in good faith and
by appropriate means contesting the applicability, validity or amount
thereof and such contest shall not materially endanger any right or
interest of the Partnership.
7.6 TAX ELECTIONS The General Partner shall from time to time, make such tax
elections or allocations deemed necessary or desirable to carry out the
business of the Partnership or the purposes of this Agreement. Belmont
shall be authorized to perform all duties imposed by Sections 6221 through
6232 of the Internal Revenue Code on the General Partner as "tax matters
partner" of the Partnership, including, but not limited to, the following:
(i) the power to conduct all audits and other administrative proceedings
with respect to Partnership tax items; (ii) the power to extend the statute
of limitations for all Limited Partners with respect to Partnership tax
items; (iii) the power to file a petition with an appropriate federal court
for a review of a final Partnership administrative adjustment; and, (iv) a
power of attorney on behalf of each Limited Partner having less than a 1%
interest in the Partnership to enter a settlement with the Internal Revenue
Service on behalf of, and binding upon, those Limited Partners unless any
said Limited Partner shall have notified the Internal Revenue Service and
the General Partner, within 30 days of service of the notice of claim up
said Limited Partner, that the General Partner may not act on such Limited
Partner's behalf.
ARTICLE VIII
Amendments of Partnership Agreement
8.1 RESTRICTION ON AMENDMENTS. No amendment to this Agreement shall be
effective or binding upon the partners unless the same shall have been
approved by a Majority in Interest of the Partners; provided, however, the
General Partner may adopt amendments without such approval which are, in
the sole judgment of the General Partner, deemed necessary or desirable to
maintain the business or limited partnership or other favorable tax status
of the Partnership, or permit a Public Offering of the Units, or to
maintain the Partnership and the General Partner and its principals in
compliance with the laws which govern the business, including the
requirements of any self regulatory organization, or to substitute or add
persons as Limited Partners.
8.2 ADMISSION OF ADDITIONAL PARTNERS. At any time, the General Partner may,
in its sole discretion and subject to applicable law, admit additional
Partners. Each newly admitted Partner shall contribute cash equal to the
Net Unit Value of the Partnership for each Unit to be acquired. The terms
of any additional offering may be different from the terms of the initial
offering. All expenses of any such additional offering shall be borne by
the either the Partnership or the subscribers thereto, as determined in the
sole discretion of the General Partner. Pursuant to Article VI, the
General Partner may consent to and admit any assignee of Units as a
substituted Partner. There is no maximum aggregate amount of Units which
may be offered and sold by the Partnership or on the amount of
contributions which may be received by the Partnership.
8.3 TERMINATION OF OFFERINGS; ADDITIONAL OFFERINGS. Notwithstanding anything
stated herein to the contrary, the General Partner may from time to time,
in its sole discretion, limit the number of Units to be offered, terminate
any offering of Units, or register additional Units and/or make additional
public or private offerings of Units. No Limited Partner shall have any
preemptive, preferential or other rights with respect to the issuance or
sale of any additional Units. No Limited Partner shall have the right to
consent to the admission of any additional Limited Partners.
8.4 NOTICE OF RESTRICTED TRANSFER. Each certificate of Limited Partnership,
if any are issued, shall be subject to and contain the following notice:
THE LIMITED PARTNER MUST DETERMINE IF THE PARTNERSHIP INTERESTS
REPRESENTED BY THIS LIMITED PARTNERSHIP AGREEMENT MAY BE
TRANSFERRED IN ACCORDANCE WITH APPLICABLE FEDERAL AND STATE LAWS
AND REFERENCE MUST BE MADE TO THE OFFERING DOCUMENTATION AND
LEGAL COUNSEL CHOSEN BY THE INVESTOR TO DETERMINE THE RIGHT OF THE
INVESTOR TO RESELL THE UNITS EVIDENCED HEREBY. THESE LIMITED
PARTNERSHIP INTERESTS SHALL NOT BE TRANSFERABLE BY THE REGISTERED
HOLDER EXCEPT BY CONSENT OF THE GENERAL PARTNER AND AS OTHERWISE
PROVIDED IN THE PARTNERSHIP AGREEMENT AND UPON THE ISSUANCE OF A
FAVORABLE OPINION OF COUNSEL FOR THE LIMITED PARTNERSHIP, AND/OR
SUBMISSION TO THE LIMITED PARTNERSHIP OF SUCH OTHER EVIDENCE AS MAY
BE SATISFACTORY TO THE LIMITED PARTNERSHIP, THAT SUCH TRANSFER WILL
NOT BE IN VIOLATION OF THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED, OR ANY RULE OR REGULATION PROMULGATED THEREUNDER, AND
APPLICABLE STATE SECURITIES LAWS.
8.5 MEETINGS OF PARTNERS. Upon receipt of a written request, together with
the costs to distribute such request to all Partners, executed by Partners
holding ten percent (10%) or more of the Units, for the calling of a
meeting of the Partners or should the General Partner desire a meeting for
any purpose, the General Partner shall, within fifteen (15) days
thereafter, provide written notice, either in person or by certified
mail, after the date of receipt of said notice. Such written notice shall
state the purpose of the meeting, specify a reasonable time, place, and
date, which shall be not less than thirty (30) or more than sixty (60) days
thereafter. An Amendment shall be adopted and binding upon all parties
hereto if a Majority in Interest of the Partners vote for the adoption of
such amendment. Partners may vote in person or by written proxy delivered
to any such meeting. Meetings of Partners may also be held by conference
telephone where all Partners can hear one another.
8.6 RIGHT OF GENERAL PARTNER TO RESIGN. The individual General Partner, Ms.
Pacult, may resign upon 120 days notice to all other Partners. The
corporate General Partner, Belmont, may resign or assign any portion of its
interest in the Partnership at anytime to a third party and become a
Limited Partner with respect to the balance of its interest in the
Partnership, if any, if it provides one hundred twenty (120) days prior
written notice to all other Partners of its intention to resign and states
in such notice the name of the intended assignee who is to become
substitute corporate General Partner and the information reasonably
appropriate to enable the Partners to decide whether or not to approve the
substitution or, in the alternative, provide that the partners must elect a
successor general partner. In the event of the voluntary withdrawal by the
corporate General Partner, the corporate General Partner shall pay the
legal fees, recording fees and all other expenses incurred as a result of
its withdrawal. Upon resignation, the corporate General Partner shall be
paid the items identified in Section 8.7 below.
8.7 AMENDMENT INVOLVING SUCCESSOR CORPORATE GENERAL PARTNER. Should a
resignation or an amendment to the Agreement provide for a change in the
general partner upon the conditions provided in this Agreement, the
election and admission of a person or persons as a successor or successors
to the corporate General Partner, shall require the following conditions:
the General Partner shall retire and withdraw as General Partner and the
Partnership business shall be continued by the successor general partner or
general partners, and such amendment shall expressly provide that on or
before the effective date of removal.
(a) The corporate General Partner shall be permitted to Redeem 100% of its
Units ten (10) days prior to the effective date of its removal in cash
equal to the Net Asset Value of such corporate General Partner's
interest in the Partnership.
(b) The Partnership shall pay to the removed corporate General Partner an
amount equal to the Appraised Value of such General Partner's assets to
be transferred to the successor General Partner to enable the successor
to continue the business of the Partnership. The Appraised Value of the
withdrawing corporate General Partner's interest in the Partnership
shall equal such General Partner's interest in the sum of (1) the
Expenses advanced by the corporate General Partner to the Partnership,
(2) all cash items, (3) all prepaid expenses and accounts receivable
less a reasonable discount for doubtful accounts, and (4) the net book
value of all other assets, unless the withdrawing General Partner of the
successor corporate General Partner believes that the net book value of
an asset does not fairly represent its fair market value in which event
such corporate General Partner shall cause, at the expense of the
Partnership, an independent appraisal to be made by a person selected by
the General Partner with approval of a Majority in Interest of the
Partners to determine its value.
(c) The successor General Partner or Partners shall indemnify the former
General Partner for all future activities of the Fund.
ARTICLE IX
Dissolution, Liquidation and Redemption
9.1 DISSOLUTION. The Partnership shall be dissolved, and shall terminate and
wind-up its affairs, upon the first to occur of the following:
(a) the affirmative vote of a Majority in Interest of the Partners adopting
an amendment to this Agreement providing for the dissolution of the
Partnership;
(b) the sale, exchange, forfeiture or other disposition of all or
substantially all the properties of the Partnership out of the ordinary
course of business;
(c) the resignation of the General Partner after one hundred twenty days
notice to the Partners, of the bankruptcy, insolvency or dissolution, or
failure of the General Partner to maintain sufficient Net Worth to
qualify the Partnership as a partnership for Federal Income Tax purposes
or as required by the NASAA Guidelines in effect at the time the Units
were sold, without a successor, promptly after any such event, but in no
event beyond one hundred twenty (120) days after the effective date of
such event;
(d) at 11:59 p.m. on the day which is twenty-one (21) years from the date of
this Agreement; or
(e) any event which legally dissolves the Partnership.
9.2 EFFECT OF LIMITED PARTNER STATUS. The death, legal disability,
bankruptcy, insolvency, dissolution, or withdrawal of any Limited Partner
shall not result in the dissolution or termination of the Partnership,
and such Limited Partner, his estate, custodian or personal
representative shall have no right to withdraw or value such Limited
Partner's interest in the Partnership except as provided in Paragraph
9.3. Each Limited Partner (any assignee thereof) expressly agrees that
the provisions of the Act, as amended, titled "Powers of Legal
Representative or Successor of Deceased, Incompetent, Dissolved or
Terminated Partner", shall not apply to his interest in the Partnership
and expressly waives any rights and benefits thereunder. Each Limited
Partner (and any assignee of such Partner's interest) expressly agrees
that in the event of his death, that he waives on behalf of himself and
his estate, and he directs the legal representative of his estate and any
person interested therein to waive the furnishing of any inventory,
accounting or appraisal of the assets and any right to an audit or
examination of the books of the Partnership. The General Partner may
assign, sell, or otherwise dispose of all or any portion of its shares of
common stock without any legal effect upon the operation of the
Partnership and no Limited Partner may object to any such transfer.
9.3 LIQUIDATION. Upon the termination and dissolution of the Partnership,
the General Partner (or in the event the dissolution is caused by the
dissolution or the cessation to exist as a legal entity of the General
Partner, voluntary withdrawal, bankruptcy or insolvency, such person as
the Majority in Interest of the Partners may select) shall act as
liquidating trustee and shall take full charge of the Partnership assets
and liabilities. Thereafter, the business and affairs of the Partnership
shall be wound up and all assets shall be liquidated as promptly as is
consistent with obtaining the fair value thereof, and the proceeds
therefrom shall be applied and distributed in the following order: (i)
to the expenses of liquidation and termination and to creditors,
including the General Partner, in order or priority as provided by law,
and (ii) to the Partners pro rata in accordance with his or its Capital
account, less any amount owed by such Partner to the Partnership.
9.4 RETURN OF CAPITAL CONTRIBUTION SOLELY OUT OF ASSETS. A Partner shall look
solely to the properties and assets of the Partnership for the return of
his Capital Contribution, and if the properties and assets of the
Partnership remaining after the payment or discharge of the debts and
liabilities of the Partnership are insufficient to return his Capital
Contribution, he shall have no recourse against the General Partner or any
other Limited Partner for that purpose.
9.5 REDEMPTION. A Partner (including any approved assignee who becomes a
Limited Partner) may withdraw any part or all of his Capital Contribution
and undistributed profits, if any, by requiring the Partnership to redeem
any or all of his Units at the Net Asset Value thereof (such withdrawal
being herein referred to as "Redemption"). Redemption shall be effective
as of the last day of the period established, from time to time, by the
General Partner for Redemptions. Such Redemptions shall be no less often
than quarterly; provided, however, Redemption may be deferred until after
the lapse of six months from the date of purchase of the Units.
9.6 REDEMPTION PROCEDURES. Redemption shall be after all liabilities,
contingent, accrued, reserved in amounts determined by the General Partner
have been deducted and there remains property of the Partnership sufficient
to pay the Net Unit Value as defined in Paragraph 1.3(b). As used herein,
"request for Redemption: shall mean a letter mailed or delivered by a
Partner and received by the General Partner at least 10 days in advance of
the effective date for which Redemption is requested. Upon Redemption, a
Partner shall receive, on or before the last day of the following month,
an amount equal to the Net Unit Value redeemed as of the date for which the
request for Redemption was received, less accrued expenses and any amount
owed by such Partner to the Partnership. Redemption is subject to a
Redemption fee to be paid by the Partners as provided below; provided,
however, no Partner other than the initial Limited Partner, may redeem any
Units until the last day of the sixth month after the commencement of
trading. All Redemption requests shall be subject to the following:
(a) Under special circumstances including, but not limited to, the inability
to liquidate positions as of such Redemption date or default or delay in
payments due the Partnership from banks, brokers, or other persons, the
Partnership may in turn delay payment to Partners requesting Redemption
of Units of the proportionate part of the Net Unit Value represented by
the sums which are the subject of such delay or default.
(b) The General Partner in its sole discretion may, upon notice to the
Partners, declare additional Redemption dates and may cause the
Partnership to redeem fractions of Units and, prior to registration of
Units for public sale, redeem Units held by Partners who do not hold the
required minimum amount of Units established, from time to time, by the
General Partner.
(c) Redemption of Units shall be charged a redemption fee, payable to the
Partnership, to be applied first to pay organization costs and,
thereafter, to the benefit of the other Partners in proportion to their
Capital accounts, equal to four percent (4%) for all Redemptions
effective during the first six (6) months after commencement of trading.
Thereafter, there will be a reduction of one percent (1%) for each six
(6) months the investment in the Units remained invested in the Fund
after the initial six months; i.e., 7-12 months a Redemption fee of 3%,
12-18 months 2%, 18-24 months 1%, and, thereafter, no redemption fee.
The initial Limited Partner may withdraw from the Partnership at the
time the Minimum number of Units are sold without payment of a
Redemption fee.
9.7 SPECIAL REDEMPTION. In the event the Net Unit Value falls to less than
fifty percent (50%) of the Net Asset Value established by the greater of
the initial offering price of one thousand dollars ($1,000), less
commissions and other charges, or such higher value earned after payment of
the incentive fee for the addition of profits, the General Partner shall
immediately suspend all trading, provide immediate notice, in accordance
with the terms of this Agreement, to all Partners of the reduction in Net
Asset Value, and afford all Partners the opportunity for fifteen (15) days
after the date of such notice to Redeem their Units in accordance with the
provisions of Section 9.5 and 9.6, above. No trading shall commence until
after such fifteen day period.
ARTICLE X
Nature of Partner's Liabilities for Claims
10.1 PROSECUTION OF CLAIMS. The General Partner shall arrange to prosecute,
defend, settle or compromise actions at law or in equity or with any self
regulatory organizations at the expense of the Partnership as such may be
necessary or desirable to enforce, protect, or maintain Partnership
interests.
10.2 SATISFACTION OF CLAIMS. The General Partner shall satisfy any claims
against, errors asserted, or other liability of the Partnership and any
judgment, decree, decision or settlement, first out of any insurance
proceeds available therefor, next, out of Partnership assets and income,
and finally out of the assets and income of the General Partner.
10.3 GENERAL PARTNER DECISION. The decisions made by the General Partner in
regard to the prosecution or settlement of claims, errors, and other
liabilities, will be final and binding without right of appeal or other
legal action by the other Partners or the Partnership.
10.4 EXONERATION, INDEMNIFICATION, AND NO ANTICIPATION OF PAYMENTS. The
General Partner shall not be liable to the Partnership or the Partners for
any failure to comply with its obligations hereunder except for breach of
fiduciary obligation owed to the partnership or negligence on its part in
the management of Partnership affairs or violation of Federal and state
securities laws in connection with the offering of Units for sale. In
addition:
(a) The General Partner will be indemnified for liabilities and expenses
arising from any threatened, pending or completed action or suit in
which it or any affiliate is a party or is threatened to be made a party
by reason of the fact that it is or was the General Partner of the
Partnership (other than an action by the Partnership or a Partner
against the General Partner which is finally resolved in favor of the
Partnership or Partner). The Partnership will indemnify the General
Partner and its affiliates against expenses, including attorney's fees,
judgments and amounts paid in settlement of an action, suit or
proceeding if it has acted in good faith and in a manner it reasonably
believed to be in or not opposed to the best interest of the
Partnership, and provided that its conduct did not constitute
negligence, misconduct or a breach of fiduciary
obligations in the performance of its duty to the Partnership or a
violation of the securities laws. The termination of any action, suit
or proceeding by judgment, order or settlement against the Partnership
shall not of itself create a presumption that the General Partner or any
affiliate did not act in good faith and not in the best interest of the
Partnership; provided, however, any advance of funds to the General
Partner to pay such costs and expenses must be preceded by all of the
following: (i) a determination by the General Partner that, in good
faith, the course of conduct which caused the loss or liability was in
the best interests of the Partnership; and, (ii) the General Partner was
acting on behalf of or performing services for the Partnership; and,
(iii) such asserted claim or liability or loss to the claimant was not
the result of negligence or misconduct by the General Partner; and, (iv)
such indemnification or agreement to hold harmless is recoverable only
out of the assets of the Partnership and not from the Partners.
In any threatened, pending or completed action or suit by or in the
right of the Partnership, to which the General Partner or an Affiliate
was or is a party or is threatened to be made a party, involving an
alleged cause of action by a Partner for damages arising from the
activities of the General Partner in the performance of the sale of
Units or management of the internal affairs of the partnership as
proscribed by this Agreement or by Federal or the State of Delaware or
any other state laws, the Partnership shall indemnify such General
Partner against expenses, including attorneys' fees and costs, actually
and reasonably incurred by such General Partner or Affiliate in
connection with the defense or settlement of such action or suit if it
acted in good faith and in a manner it reasonably believed to be in or
not opposed to the best interests of the Partnership, except that no
indemnification shall be made in respect of any claim, issue or matter
as to which the General Partner shall have been adjudged to be liable
for intentional misconduct, or breach of fiduciary obligations or
violation of securities laws in the performance of its duty to the
Partnership unless and only to the extent that the court or
administrative proceeding in which such action or suit was brought shall
determine upon application, that, despite the adjudication of liability,
in view of all circumstances of the case, the General Partner or
Affiliate is reasonably entitled to indemnification for such expenses as
such court shall deem proper; provided, however, notwithstanding any
other provisions of this Agreement, the Partnership shall advance or pay
the General Partner or any of its Affiliates for legal expenses and
other costs incurred as a result of any legal action which alleges a
breach of the Federal or state securities laws only if the following
conditions are satisfied: (i) the legal action relates to acts or
omissions with respect to the performance of duties or services on
behalf of the Partnership; (ii) the legal action is initiated by a third
party who is not a Limited Partner, or the legal action is initiated by
a Limited Partner and an independent arbitration panel, administrative
law judge, or court of competent jurisdiction specifically approves such
advancement; and, (iii) the General Partner or its Affiliates undertake
to repay the advanced funds to the Partnership, together with the
applicable legal rate of interest thereon, in cases which such party is
not entitled to indemnification under NASAA Guideline II.F.
To the extent that a General Partner or an Affiliate has been successful
on the merits or otherwise in defense of any action, suit or proceeding
referred to above or in defense of any claim, issue or other matter
related to the Partnership or any other Partner or person who applied to
be a Partner, the Partnership shall indemnify such General Partner
against the expenses, including attorneys' fees and costs, actually and
reasonably incurred by it in connection therewith.
(a) The indemnification of a General Partner shall be limited to and
recoverable only out of the assets of the Partnership. Notwithstanding
the foregoing, the Partnership's indemnification of the General Partner
shall be limited to the amount of such loss, liability or damage which
is not otherwise compensated for by insurance carried for the benefit of
the Partnership.
(b) Notwithstanding any provision in this Agreement to the contrary, the
Partnership shall not advance the expenses or pay for any insurance to
pay for the costs of the defense or any liability which is prohibited
from being indemnified pursuant to NASAA Guideline II.F. Specifically,
no indemnification which is the result of negligence or misconduct by
the General Partner or for any allegation of a violation of the Federal
or state securities laws by or against the General Partner, any
broker/dealer or any other party unless there has been a successful
adjudication on the merits of each count involving alleged securities
law violation as to the General Partner or broker/dealer or such other
party; or a court of competent jurisdiction approves a settlement of the
claims against the General Partner or any broker/dealer or any other
party and finds, specifically, that the indemnification of the
settlement and related costs should be made after the court of law has
been made aware that the Securities and Exchange Commission opposes such
indemnification and the position of any applicable state securities
regulatory authority where the Partnership Interests were offered or
sold without the compliance with specific conditions upon such
indemnification and the action covered satisfies the provisions of
Section 10.4 (a) of this Agreement. Any change in the requirements
imposed by the Securities and Exchange Commission and the state
securities administrators in regard to indemnification shall cause a
corresponding change in the right of the General Partner to
indemnification.
(b) The indemnification of the General Partner provided in this Article
shall extend to any employee, agent, attorney, certified public
accountant, or Affiliate of the Partnership and the General Partner.
(c) The Partnership shall indemnify, to the extent of the Partnership
assets, each Partner against any claims of liability asserted against a
Partner solely because he is a Partner in the Partnership.
(d) In the event the Partnership or any Partner is made a party to any
claim, dispute or litigation or otherwise incurs any loss or expense, as
a result of or in connection with any Partner's activities unrelated to
the Partnership business or as a result of an unfounded claim against
the Partnership or any other Partner brought as a result of alleged
actions by said Partner, the Partner which was responsible for the
allegations which caused such loss or expense shall indemnify and
reimburse the Partnership and all other Partners for all loss and
expense incurred, including attorneys' fees and costs.
(e) No creditor of a Partner shall have a right to vote Units. Nor may any
Partner or creditor of a Partner anticipate any principal or income from
the Fund prior to the approval of a Redemption Request or the payment of
a distribution from the Fund.
ARTICLE XI
Power of Attorney
11.1 POWER OF ATTORNEY EXECUTED CONCURRENTLY. Concurrent with the written
acceptance and adoption of the provisions of this Agreement, each Partner
shall execute and deliver to the General Partner, a Power of Attorney
(paragraph 5 of the Subscription Agreement). Said Power of Attorney
irrevocably constitutes and appoints the General Partner as a true and
lawful attorney-in-fact and agent for such Partner with full power and
authority to act in his name and on his behalf in the execution,
acknowledgment and filing of documents, which will include, but shall not
be limited to, the following:
(a) Any certificates and other instruments, including but not limited to, a
Certificate of Limited partnership and amendments thereto and a
certificate of doing business under an assumed name, which the General
Partner deems appropriate to qualify or continue the Partnership as a
limited partnership in the jurisdictions in which the Partnership may
conduct business, so long as such qualifications and continuations are
in accordance with the terms of this Agreement or any amendment hereto,
or which may be required to be filed by the Partnership or the Partners
under the laws of any jurisdiction;
(b) Any other instrument which may be required to be filed by the
Partnership under Federal or any state laws or by any governmental
agency or which the General Partner deems advisable to file; and
(c) Any documents required to effect the continuation of the Partnership,
the admission of the signer of the Power as a Limited Partner or of
others as additional or substituted Partners or Limited Partners, or the
dissolution and termination of the Partnership, provided such
continuation, admission, dissolution or termination is pursuant to the
terms of this Agreement.
11.2 EFFECT OF POWER OF ATTORNEY. The Power of Attorney concurrently granted
by each Partner to the General Partner is a special Power of Attorney
coupled with an interest, is irrevocable, and shall survive the death or
legal incapacity of the Partner; and may be exercised by the General
Partner for each Partner by a facsimile signature of one of its officers or
by listing all of the Partners executing any instrument with a single
signature of one of its officers acting as attorney-in-fact for all of
them; and shall survive the delivery of an assignment by a Partner of the
whole or any portion of his interest in the Partnership; except that where
the assignee thereof has been approved by the General Partner for admission
to the Partnership as a substituted partner, the Power of Attorney shall
survive the delivery of such assignment for the sole purpose of enabling
the General Partner to execute, acknowledge and file an instrument
necessary to effect such substitution.
11.3 FURTHER ASSURANCES. Upon request, each Limited Partner agrees to execute
and deliver to the Partnership, within thirty (30) days after receipt of a
written request from the General Partner, a separate form of power of
attorney granting the same powers described above; and such other further
statements of interest, holdings, designations, powers of attorney and
other instruments as the General Partner deems necessary or desirable.
ARTICLE XII
Miscellaneous Provisions
12.1 NOTICES. Notices, requests, reports, payments or other communications
required to be given or made hereunder shall be in writing and shall be
deemed to be delivered when properly addressed and posted by United States
registered or certified mail or delivered by independent courier which
provides an record of receipt, postage or delivery fees prepaid, properly
addressed to the party being given such notice at its last known address.
Addresses shown on the Schedule of Limited Partners records of the
Partnership shall be considered the last known address of each said party
unless the General Partner is otherwise notified in writing.
12.2 NATURE OF INTEREST OF PARTNERS. The interest of each Partner in the
Partnership is personal property. No Partner may anticipate the
distribution or redemption of principal or income from the Partnership and
no assignment to secure the position of a lender to a Partner shall be
valid without the express written consent of the General Partner.
12.3 GOVERNING LAW. This Agreement shall be construed in accordance with and
governed in all respects by the laws of the State of Delaware. All
Partners agree to consent to the jurisdiction and to bring all actions for
claims related to the Partnership and the sale of the Units in the State
and County of the principal office of the Partnership as it is established,
from time to time, by the General Partner. Currently, the principal office
of the Partnership is located in Kent County, Delaware.
12.4 SUCCESSORS IN INTEREST. This Agreement shall be binding on and inure to
the benefit of he parties hereto and, to the extent permitted by this
Agreement, their respective heirs, executors, administrators, personal
representatives, successors and assigns.
12.5 INTEGRATION. This Agreement constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all prior
and contemporaneous agreements and understandings of such parties in
connection herewith. Any amendment or supplement made hereto must be in
writing.
12.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts. In such event, each counterpart shall constitute an original
and all such counterparts shall constitute one agreement. The addition of
Limited Partners pursuant to the power of attorney granted to the General
Partner shall not be deemed amendments to alter the rights of the other
Partners under this Agreement.
12.7 SEVERABILITY. Any provision of this Agreement which is invalid, illegal,
or unenforceable in any respect in any jurisdiction shall be, as to such
jurisdiction, ineffective to the extent of such invalidity, illegality or
unenforceability. The remaining provisions hereof in such jurisdiction
shall be and remain effective. Any such invalidity, illegality or
unenforceability in any jurisdiction shall not invalidate or in any way
effect the validity, legality or enforceability of such provision or the
remainder of this Agreement in any other jurisdiction.
12.8 WAIVERS. The failure of any Partner to seek redress for violation of or
to insist upon the strict performance of any covenant or condition of this
agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation.
12.9 HEADINGS. The headings in this Agreement are inserted for convenience
and identification only and are in no way intended to describe, interpret,
define or limit the scope, extent or intent of this Agreement or any
provision hereof.
12.10 RIGHTS AND REMEDIES CUMULATIVE. This rights and remedies provided by
this Agreement are cumulative and the use of any one right or remedy by
any Partner shall not preclude or waive his right to use addition to any
other rights such Partner may have by law, statute, ordinance or
otherwise.
12.11 WAIVER OF RIGHT TO PARTITION. Each of the Partners irrevocably waives,
during the term of the Partnership, any right that it may have to maintain
any action for partition with respect to the property and assets of the
Partnership.
12.12 INTEREST OF CERTAIN SECURED CREDITORS. No creditor who makes
nonrecourse loan to the Partnership shall have or acquire at any time as a
result of making the loan, any direct or indirect interest in the profits,
Capital, or property of the Partnership other than as a secured creditor.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement the day and year first above written.
Corporate General Partner:
BELMONT CAPITAL MANAGEMENT, INCORPORATED
By: /s/ Shira Del Pacult
Shira Del Pacult
President
Individual General Partner:
By: /s/ Shira Del Pacult
Shira Del Pacult
Initial Limited Partner:
By: /s/ Shira Del Pacult
Shira Del Pacult
*******************************************************************************
EXHIBIT D TO BROMWELL FINANCIAL FUND DISCLOSURE DOCUMENT
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
UNITS OF LIMITED PARTNERSHIP INTEREST
SUBSCRIPTION INSTRUCTIONS
Any person considering subscribing for Units should carefully read and
review the Prospectus.
The Units are speculative and involve a high degree of risk. No person
may invest more than 10% of his or her liquid net worth (exclusive of home,
furnishings and automobiles) in the Partnership. No entity-and, in
particular, no ERISA plan-may invest more than 10% of its liquid net worth
(readily marketable securities) in the Partnership. If a purchaser is
allowed to purchase less than $25,000 in Units, then the purchaser must have
a minimum annual gross income of $45,000 and a minimum net worth of $45,000
or, in the alternative, a minimum net worth of $150,000.
A Subscription Agreement and Power of Attorney Signature Page (the
"Signature Page") is attached to these Subscription Instructions and the
following Subscription Agreement and Power of Attorney. The Signature Page is
the document which you must execute if you wish to subscribe for Units. One
copy of such Signature Page should be retained by you for your records and
the others delivered to your Registered Representative.
FILL IN ALL OF THE INFORMATION ON THE ATTACHED SIGNATURE PAGE, USING
BLACK INK ONLY, AS FOLLOWS
Item 1 - Enter the dollar amount (no cents) of the purchase.
Items 2 - Enter the Social Security Number or Taxpayer ID
Number and check the appropriate box to indicate the type of individual
ownership desired or of the entity that is subscribing. In the case of joint
ownership, either Social Security Number may be used.
The Signature Page is self-explanatory for most ownership types;
however, the following specific instructions are provided for certain of the
ownership types identified on the Signature Page:
Trusts-Enter the trust's name on Line 3 and the trustee's name on Line
4, followed by "Ttee." If applicable, use Line 7 also for the custodian's
name. Be sure to furnish the Taxpayer ID Number of the trust.
Custodian Under Uniform Gifts to Minors Act-Complete Line 3 with the
name of minor followed by "UGMA." On Line 7, enter the custodian's name
followed by "Custodian." Be sure to furnish the minor's Social Security
Number.
Partnership or Corporation-The partnership's or corporation's name is
required on Line 4. Enter a partner's or officer's name on Line 4. Be sure to
furnish the Taxpayer ID Number of the partnership or corporation. A
subscriber who is not an individual must provide a copy of documents
evidencing the authority of such entity to invest in the Partnership.
Item 8 - The investor(s) must execute the Subscription
Agreement and Power of Attorney Signature Page and review the representations
relating to backup withholding tax or non-resident alien status underneath
the signature and telephone number lines in Item 8.
Item 9 - Registered Representative must complete.
The Selling Agent's copy of the Subscription Agreement and Power of Attorney
Signature Page may be required to be retained in the Branch Office.
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
UNITS OF LIMITED PARTNERSHIP INTEREST
BY EXECUTING THIS SUBSCRIPTION AGREEMENT AND POWER OF ATTORNEY
SUBSCRIBERS ARE NOT WAIVING ANY RIGHTS UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934
SUBSCRIPTION AGREEMENT AND
POWER OF ATTORNEY
Belmont Capital Management, Inc.
General Partner ________________________________
5916 N. 300 West Social Security Number or
P. O. Drawer C Taxpayer ID Number
Fremont, IN 46737
Dear General Partner:
1. Subscription For Units. I hereby subscribe for the number of Limited
Partnership Units ("Units") in Bromwell Financial Fund, Limited Partnership
(the "Fund") set forth below (minimum $25,000) in the Subscription Agreement
and Power of Attorney Signature Page, at $1000 per Unit as set forth in the
Prospectus (the "Prospectus") of the Partnership dated October 27, 1999. I
have completed and executed a Subscription Agreement and Power of Attorney
Signature Page in the form attached hereto as Exhibit "D", and delivered the
executed Subscription Documents to the Sales Agent and executed a check made
payable to "Star Financial Bank-Escrow Agent for Bromwell Financial Fund, LP"
to be delivered by the Sales Agent to the Escrow Agent within 24 hours after
receipt for deposit to the Escrow Account. The General Partner may, in its
sole and absolute discretion, accept or reject this subscription, in whole or
in part. If this subscription is accepted, I understand subscribers will
earn additional Units in lieu of interest earned on the undersigned's
subscription during any period of time, if any, such subscription is held in
escrow. If this subscription is rejected, all funds remitted by the
undersigned will be returned, together with any interest earned from escrow,
if any. All subscriptions once submitted are irrevocable.
2. Representations and Warranties of Subscriber. I have received a copy of
the Prospectus no less than five days prior to the effective date of my
purchase. I understand that by submitting this Subscription Agreement and
Power of Attorney I am making the representations and warranties set forth in
"Exhibit C - Subscription Requirements" contained in the Prospectus,
including, without limitation, representations and warranties relating to my
net worth and annual income.
3. Power of Attorney. In connection with my acceptance of an Interest in the
Partnership, I do hereby irrevocably constitute and appoint the General
Partner, and its successors and assigns, as my true and lawful Attorney-in-
Fact, with full power of substitution, in my name, place and stead, to (i)
file, prosecute, defend, settle or compromise litigation, claims or
arbitration on behalf of the Partnership; and, (ii) make, execute, sign,
acknowledge, swear to, deliver, record and file any documents or instruments
which may be considered necessary or desirable by the General Partner to
carry out fully the provisions of the Limited Partnership Agreement of the
Partnership, which is attached as Exhibit A to the Prospectus, including,
without limitation, the execution of the said Agreement itself and by
effecting all amendments permitted by the terms thereof. The Power of
Attorney granted hereby shall be deemed to be coupled with an interest and
shall be irrevocable and shall survive, and shall not be affected by, my
subsequent death, incapacity, disability, insolvency or dissolution or any
delivery by me of an assignment of the whole or any portion of my interest in
the Partnership.
4. Irrevocability; Governing Law. I hereby acknowledge and agree that I am
not entitled to cancel, terminate or revoke this subscription or any of my
agreements hereunder after the Subscription Agreement and Power of Attorney
have been submitted (and not rejected) and that this subscription and such
agreements shall survive my death or disability. This Subscription Agreement
and Power of Attorney shall be governed by and interpreted in accordance with
the laws of the State of Delaware.
5. Suitability and Acceptance of Risks. In addition to the suitability
requirements set forth in Exhibit C, I represent and warrant to the General
Partner and Selling Agent that (i) I have the capacity of understanding the
fundamental aspects of the Partnership (or, if I do not have such fundamental
understanding, I have so advised the Selling Agent of such fact); and, (ii) I
understand the fundamental risks and possible financial hazards of an
investment in the Partnership (disclosed in the Prospectus under "Risk
Factors" identified on the face page, in the Summary, and described in the
Prospectus at page 3), including, but not limited to, the lack of liquidity
of my investment in the Partnership, the management and control by the
General Partner, and the tax consequences of the investment.
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
Units of Limited Partnership Interests
Subscription Agreement and Power of Attorney
Signature Page
The investor named below, by execution and delivery of this Subscription
Agreement and Power of Attorney, by payment of the purchase price for Limited
Partnership Interests (the "Units") in Bromwell Financial Fund, Limited
Partnership (the "Partnership"), and by enclosing a check payable to "Star
Financial State Bank-Escrow Agent for Bromwell Financial Fund, LP", hereby
subscribes for the purchase of Units, at $1,000 per Unit.
The named investor further, by signature below, acknowledges receipt of the
Prospectus of the Partnership dated October 27, 1999 no less than five (5)
days prior to the acceptance of the subscription by the General Partner or
the purchase of Units in the Partnership and that such Prospectus includes
the Partnership's Limited Partnership Agreement, and the Subscription
Requirements and the Subscription Agreement and Power of Attorney set forth
therein, the terms of which govern the investment in the Units being
subscribed for hereby.
By my signature below, I represent that I satisfy the requirements relating
to net worth and annual income as set forth in Exhibit C to the Prospectus.
1) Total $ Amount __________________ (minimum of $25,000, unless lowered to
less than $25,000 but not less than $5,000 by the General Partner; $1,000
minimum for investors making an additional investment)
2) Social Security Number _____-___-_____
Taxpayer ID # _____-___-_____
Taxable Investors (check one):
O Individual Ownership
O Trust other than a Grantor or Revocable Trust
O Joint Tenants with Right of Survivorship
O Estate
O UGMA/UTMA (Minor)
O Tenants in Common
O Community Property
O Partnership
O Corporation
O Grantor or Other Revocable Trust
Non-Taxable Investors (check one):
O IRA
O Profit Sharing
O IRA Rollover
O Defined Benefit
O Pension
O Other (specify)
O SEP
3) Investor's Name _________________________________________________________
4) _________________________________________________________________________
Additional Information (for Estates, Trusts, Partnerships and Corporations)
5) Resident Address of Investor
_________________________________________________________________________
Street (P.O. Box not acceptable) City State Zip Code
6) Mailing Address(if different)
_________________________________________________________________________
Street City State Zip Code
7) Custodian Name and Mailing Address
_________________________________________________________________________
Name Street (P.O. Box not acceptable) City State Zip Code
SIGNATURE(S) - DO NOT SIGN WITHOUT FAMILIARIZING YOURSELF WITH THE
INFORMATION IN THE PROSPECTUS, INCLUDING: (I) THE FUNDAMENTAL
RISKS AND FINANCIAL HAZARDS OF THIS INVESTMENT, INCLUDING THE RISK OF LOSING
YOUR ENTIRE INVESTMENT; (II) THAT THE PARTNERSHIP IS THE FIRST CLIENT ACCOUNT
TO TRADE IN THE BROMWELL FINANCIAL FUND PORTFOLIO; (III) THE PARTNERSHIP'S
SUBSTANTIAL CHARGES; (IV) THE PARTNERSHIP'S HIGHLY LEVERAGED TRADING
ACTIVITIES; (V) THE LACK OF LIQUIDITY OF THE UNITS; (VI) THE EXISTENCE OF
ACTUAL AND POTENTIAL CONFLICTS OF INTEREST IN THE STRUCTURE AND OPERATION OF
THE PARTNERSHIP; (VII) THAT UNITHOLDERS MAY NOT TAKE PART IN THE MANAGEMENT
OF THE PARTNERSHIP; AND (VIII) THE TAX CONSEQUENCES OF THE PARTNERSHIP.
8) INVESTOR(S) MUST SIGN
X_________________________________________________________
Signature of Investor Date Telephone No.
X_________________________________________________________
Signature of Joint Investor (if any) Date
Executing and delivering this Subscription Agreement and Power of Attorney
shall in no respect be deemed to constitute a waiver of any rights under the
Securities Act of 1933 or under the Securities Exchange Act of 1934.
UNITED STATES INVESTORS ONLY
I have checked the following box if I am subject to backup withholding under
the provisions of Section 3406(a)(1)(C) of the Internal Revenue Code: __.
Under the penalties of perjury, by signature above I hereby certify that the
Social Security Number or Taxpayer ID Number set forth in Item 2 above is my
true, correct and complete Social Security Number of Taxpayer ID Number and
that the information given in the immediately preceding sentence is true,
correct and complete.
NON-UNITED STATES INVESTORS ONLY
Under the penalties of perjury, by signature above, I hereby certify that (a)
I am not a citizen or resident of the United States or (b) (in the case of an
investor which is not an individual) the investor is not a United States
corporation, partnership, estate or trust: __.
9) REGISTERED REPRESENTATIVE MUST SIGN
I hereby certify that I have informed the investor of all pertinent facts
relating to the: risks; tax consequences; liquidity and marketability;
management; and control of the Managing Owner with respect to an investment
in the Units, as set forth in the Prospectus and Amendment. I have also
informed the investor of the unlikelihood of a public trading market
developing for the Units. I do not have discretionary authority over the
account of the investor.
I have reasonable grounds to believe, based on information obtained from the
investor concerning his/her investment objectives, other investments,
financial situation and needs and any other information known by me, that an
investment in the Partnership is suitable for such investor in light of
his/her financial position, net worth and other suitability characteristics.
The Registered Representative MUST sign below in order to substantiate
compliance with Article III, Section 34 of the NASD's Rules of Fair Practice.
X__________________________________________________________
Registered Representative Signature Date
X__________________________________________________________
Office Manager Signature Date
(if required by Selling Agent procedures)
10) REGISTERED REPRESENTATIVE
Name: Shira Del Pacult
Address: 5916 N. 300 West
Fremont, IN 46737
Tel. Number: (219) 833-1306
11) SELLING AGENT
Name: Futures Investment Company
Address: 5916 N. 300 West
Fremont, IN 46737
Tel. Number: (219) 833-1306
*******************************************************************************
FORM S-1 - Amendment No. 1
Registration No. 333-85755
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
(b) The Selling Agreement between Futures Investment Company and the
Registrant contains an indemnification from the General Partner to the effect
that the disclosures in the Prospectus and this Amendment are in compliance
with Rule 10b5 and otherwise true and complete. This indemnification speaks
from the date of the first offering of the Units through the end of the
applicable statute of limitations. The Partnership has assumed no
responsibility for any indemnification to Futures Investment Company and the
General Partner is prohibited by the Partnership Agreement from receiving
indemnification for breach of any securities laws or for reimbursement for
insurance for coverage for any such claims. See Article X, Section 10.4 (b)
and (e).
(d) There are no indemnification agreements which are not contained in the
Limited Partnership Agreement attached as Exhibit A, the Selling Agreement or
the Clearing Agreement.
Item 16. Exhibits and Financial Statement Schedules.
The following documents (unless indicated) are filed herewith and made a part
of this Registration Statement:
(a) Exhibits.
Exhibit
Number Description of Document
(1) - 01 Selling Agreement dated August 1, 1999 among the Partnership, the
General Partner, and Futures Investment Company, the Selling Agent
(2) None
(3) - 01 Articles of Incorporation of the General Partner
(3) - 02 By-Laws of the General Partner
(3) - 03 Board Resolution of General Partner to authorize formation of
Delaware Limited Partnership
(3) - 04 Agreement of Limited Partnership of the Registrant dated
August 1, 1999 (included as Exhibit A to the Prospectus)
(3) - 05 Certificate of Limited Partnership, Designation of Registered Agent,
Certificate of Initial Capital filed with the Delaware Secretary of
State, and Delaware Secretary of State acknowledgment of filing of
Certificate of Limited Partnership
(4) - 01 Agreement of Limited Partnership of the Registrant dated
August 1, 1999 (included as Exhibit A to the Prospectus)
(5) - 01 Opinion of The Scott Law Firm, P.A. relating to the legality of the
Partnership Units.
(6) Not Applicable
(7) Not Applicable
(8) - 01 Opinion of The Scott Law Firm, P.A. with respect to Federal income
tax consequences.
(9) None
(10) - 01 Form of Advisory Agreement between the Partnership and the Commodity
Trading Advisor (included as Exhibit F to the Prospectus)
(10) - 02 Form of New Account Agreement between the Partnership and the
Futures Commission Merchant
(10) - 03 Form of Subscription Agreement and Power of Attorney
(included as Exhibit D to the Prospectus).
(10) - 04 Escrow Agreement among Escrow Agent, Underwriter, and the
Partnership. (included as Exhibit E to the Prospectus).
(10) - 05 Introducing Broker Clearing Agreement by and between Vision Limited
Partnership as Futures Commission Merchant and Futures Investment
Company as Introducing Broker
(11) Not Applicable - start-up business
(12) Not Applicable
(13) Not Required
(14) None
(15) None
(16) Not Applicable
(17) Not Required
(18) Not Required
(19) Not Required
(20) Not Required
(21) None
(22) Not Required
(23) - 01 Consent of Frank L. Sassetti & Co., Certified Public Accountants
(23) - 02 Consent of James Hepner, Certified Public Accountant
(23) - 03 Consent of The Scott Law Firm, P.A.
(23) - 04 Consent of Ansbacher Investment Management, Inc., Commodity Trading
Advisor
(23) - 05 Consent of Futures Investment Company, as Selling Agent
(23) - 06 Consent of Futures Investment Company, as Introducing Broker
(23) - 07 Consent of Star Financial Bank, Angola, Indiana, Escrow Agent
(23) - 08 Consent of Vision Limited Partnership, Futures Commission Merchant
(24) None
(25) None
(26) None
(27) Not Applicable
(28) Not Applicable
(99) - 01 Subordinated Loan Agreement for Equity Capital
(99) - 02 Representative's Agreement between Futures Investment Company and
Shira Del Pacult
(b) Financial Statement Schedules.
No Financial Schedules are required to be filed herewith.
Item 17. Undertakings.
(a) (1) The undersigned registrant hereby undertakes to file, during any
period in which offers or sales are being made, a post-effective amendment to
this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represents a fundamental: change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(b) The undersigned Registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, each post-
effective amendment that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) The General Partner has provided an indemnification to Futures
Investment Company, the best efforts selling agent. The Partnership (issuer)
has not made any indemnification to Futures Investment Company.
Insofar as indemnification for liabilities under the Securities Act of 1933
may be permitted to directors, officers and controlling persons of the
Registrant including, but not limited to, the General Partner pursuant to the
provisions described in Item 14 above, or otherwise, the Registrant had been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any such action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
*******************************************************************************
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, in the City of
Fremont in the State of Indiana on this 27th day of October, 1999, Ms. Shira
Pacult, the individual general partner of the Registrant, signed this
Registration Statement; and Belmont Capital Management, Inc., the corporate
general partner of the Registrant, has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized.
BELMONT CAPITAL MANAGEMENT, INC. BROMWELL FINANCIAL FUND, L.P.
BY BELMONT CAPITAL MANAGEMENT, INC.
GENERAL PARTNER
By: /s/ Shira Del Pacult By: /s/ Shira Del Pacult
MS. SHIRA PACULT MS. SHIRA PACULT
PRESIDENT PRESIDENT
BROMWELL FINANCIAL FUND, L.P.
BY MS. SHIRA PACULT
GENERAL PARTNER
By: /s/ Shira Del Pacult By: /s/ Shira Del Pacult
MS. SHIRA PACULT MS. SHIRA PACULT
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following person on behalf of Belmont
Capital Management, Inc., General Partner of the Registrant in the capacities
and on the date indicated.
/s/ Shira Del Pacult
MS. SHIRA PACULT
PRESIDENT
Date: October 27, 1999
(Being the principal executive officer, the principal financial and accounting
officer and the sole director of Belmont Capital Management, Inc., General
Partner of the Partnership)
THE SCOTT LAW FIRM, P.A.
5121 Sarazen Drive
Hollywood, FL 33021
(954) 964-1546
Facsimile (954) 964-1548
October 20, 1999
To: The Board Of Directors
Belmont Capital Management, Inc.
c/o Corporate Systems, Inc.
101 North Fairfield Drive
Dover, Delaware 19901
Dear Board of Directors,
We have acted as your counsel in connection with the organization of Bromwell
Financial Fund, Limited Partnership, a Delaware limited partnership (the
"Partnership"), wherein your firm serves as the General Partner and the
preparation of a Registration Statement on Form S-1, expected to be filed with
the Securities and Exchange Commission (the "Registration Statement"),
relating to the registration under the Securities Act of 1933, as amended, of
$7,000,000 of Limited Partnership interest (the "Units") in the Partnership.
For purposes of rendering this opinion, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as certified or photostat copies, the authenticity
of the originals of such copies. We also assume that no limited partner will
participate in the management of the Partnership. Based upon the foregoing
and our familiarity with the organization of the Partnership, we are of the
opinion that the Units to be offered for sale as described in the Registration
Statement, when sold in the manner and under the conditions set forth therein,
are already duly authorized and will be legally issued and fully paid and non-
assessable. We are also of the opinion that purchasers of the Units, upon
admission to the Partnership by the General Partner, will become limited
partners in the Partnership and that their liability for the losses and
obligations of the Partnership will be limited to the extent provided by the
Delaware Uniform Limited Partnership Act and the Limited Partnership Agreement
of the Partnership.
Very truly yours,
The Scott Law Firm, P.A.
/s/ William Sumner Scott
William Sumner Scott
For the Firm
WSS:lf
THE SCOTT LAW FIRM, P.A.
5121 Sarazen Drive
Hollywood, FL 33021
(954) 964-1546
Facsimile (954) 964-1548
October 20, 1999
Belmont Capital Management, Inc.
General Partner
Bromwell Financial Fund, Limited Partnership
c/o Corporate Systems, Inc.
101 North Fairfield Drive
Dover, Delaware 19901
Re: REGISTRATION STATEMENT ON FORM S-1
Dear General Partner:
We have acted as your counsel in connection with the preparation and
filing with the Securities and Exchange Commission under the Securities Act of
1933, as amended, of the Registration Statement on Form S-1 filed with the
Securities and Exchange Commission on or about August 23, 1999, (the
"Registration Statement") relating to Units of Limited Partnership Interest
("Units") of Bromwell Financial Fund, Limited Partnership (the "Partnership"),
a limited partnership organized under the laws of the state of Delaware.
We have reviewed such data, documents, questions of law and fact and
other matters as we have deemed pertinent for the purpose of this opinion.
Based upon the foregoing, we hereby confirm our opinion expressed under the
caption "Federal Income Tax Aspects" in the Prospectus (the "Prospectus")
constituting a part of the Registration Statement that: (i) the Partnership
will be treated as a partnership for federal income tax purposes (assuming
that substantially all of the gross income of the Partnership will constitute
"qualifying income" within the meaning of section 7704(d) of the Internal
Revenue Code of 1986, as amended) (the "Code")); and (ii) the allocations of
profits and losses made when Unitholders redeem their Units will be upheld
for federal income tax purposes; (iii) based upon the contemplated trading
activities of the Partnership, the Partnership will be treated as engaged in
the conduct of a trade or business for federal income tax purposes, and, as a
result, the ordinary and necessary business expenses incurred by the
Partnership in conducting its commodity futures trading business will not be
subject to limitation under section 67 or section 68 of the Code; (iv) the
Profit Share will be respected as a distributive share of the Partnership's
income allocable to Bromwell Financial Fund, Limited Partnership; and (v) the
contracts traded by the Partnership, as described in the Prospectus, will
satisfy the commodities trading safe harbor as described in section 864(b) of
the Code.
We also advise you that in our opinion the description set forth
under the caption "Federal Income Tax Aspects" in the Prospectus correctly
describes (subject to the uncertainties referred to therein) all material
aspects of the United States federal income tax treatment to United States
individual investors, as of the date hereof, of an investment in the
Partnership.
This opinion speaks as of the date hereof, and we assume no
obligation to update this opinion as of any future date. This opinion may be
relied upon only by the Partnership and its investors and shall not be relied
upon by any other persons without our written consent. We hereby consent to
the filing of this opinion as an Exhibit to the Registration Statement and to
all references to our firm included in or made a part of the Registration
Statement.
Very truly yours,
/s/ William Sumner Scott
William Sumner Scott
For the Firm
The Scott Law Firm, P.A.
5121 Sarazen Drive
Hollywood, FL 33021
(954) 964-1546
facsimile (954) 964-1548
CONSENT BY LEGAL AND TAX COUNSEL
The Scott Law Firm, P.A., (the "Undersigned"), hereby consents to being named
as legal and tax counsel in a Form S-1 Registration Statement, Amendment No. 1
and the inclusion of the legal opinions rendered by the Undersigned as Exhibits
5 and 8 thereto filed with the Securities and Exchange Commission by Bromwell
Finanical Fund, Limited Partnership, in connection with a proposed offering
of limited partnership interests (the "Units") to the public as described in
said Registration Statement.
/s/ William S. Scott
William S. Scott
The Scott Law Firm, P.A.
5121 Sarazen Drive
Hollywood, FL 33021
(954) 964-1546
Facsimile (954) 964-1548
Florida Bar Number #947822
Dated: October 20, 1999
