As Filed with the Securities and Exchange Commission on May 26, 2000
Registration No. 333-85755
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM S-1 - Post Effective 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.
Futures Investment Company will use its best efforts to sell the partnership
interests. No one has the obligation to purchase or support the price of the
partnership interests. You must purchase at least $25,000 in partnership
interests, 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 partnership interests to you is completed.
All subscriptions received before the minimum of 700 units of partnership
interests 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 partnership interests 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,
partnership interests 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 below and the complete
description beginning on page 4 of this prospectus.
* Our business is the speculative trading in futures, commodity options and
unregulated currency 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 24.37%.
* Transfer of your partnership interests will be restricted and there are
limitations on your right of redemption to surrender your partnership
interests in return for their value. No public market for the partnership
interests 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.
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.
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.
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
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.
[The balance of this page has been intentionally left blank]
Table of Contents
Commodity Futures Trading Commission - risk disclosure statement i
Table of contents ii
Notice to all purchasers v
Specific notices vi
Notice to California investors vi
Notice to Michigan investors vi
Notice to Oregon investors vi
Notice to foreign investors vi
Summary of the offering 1
The partnership 1
Description of securities offered for sale 1
Plan for sale of partnership interests 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 Bromwell Financial Fund,
Limited Partnership 2
The risks you face 4
The individual general partner has only 3 years of prior operation
experience, and the corporate general partner has none. 4
We must pay substantial charges, which may limit your ability to receive a
return on your investment. 4
You may not transfer your partnership interests 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 partnership
interests may be insufficient to trade profitably. 6
Failure of commodity brokers or banks could result in loss of assets. 6
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 the partnership interests 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. 7
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
The general partner may raise the incentive fee to 30% without prior notice
to you. 9
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 partnership interests 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
Explanatory notes: 12
Securities offered 13
You, the investor: 13
Your subscription agreement and check: 13
Management's discussion 13
Description of intended operations 14
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 16
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 17
The commodity trading advisor will trade for other accounts 17
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 21
Access to the commodity trading advisor 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 24
Ansbacher Investment Management, Inc. - Composite 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 of partnership interests 33
Management of partnership affairs 33
Additional offerings 34
Partnership accounting, reports, and distributions 34
Federal tax allocations 34
Transfer of partnership interests only with consent of the general partner
34
Termination of the partnership 34
Meetings 35
Redemptions 35
Plan for sale of partnership interests 35
The selling agent 35
Escrow and commencement of business 36
Subscription procedure 36
Subscription amounts 36
Revocation 37
Net worth tests 37
Investor warranties 37
Legal matters 37
Litigation and claims 37
Legal opinion 37
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
Unaudited Financial Statements as of November 30, 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
Unaudited Financial Statements as of November 30, 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
and the information supplied by the general partner to the investor in this
prospectus.
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 to select trades for the partnership
Description of Securities Offered for Sale
We are offering $7,000,000 in 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 Partnership Interests And Use of Escrow
All sales will be made using our best efforts, which means we will try, but
not guarantee, to sell all the partnership interests.
Subscription Procedure
To purchase partnership interests, 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 amount of partnership interests 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, LP"
* pay for at least $25,000 in partnership interests, 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 your 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, both exclusive of your home, home furnishings and automobiles.
The State where you live may impose higher net worth and income requirements
regarding your purchase of partnership interests.
Who Will Benefit From An Investment In The Partnership
You are likely to benefit from an investment in the partnership if you want
to diversify your portfolio and if you have investment money available that
you can afford to lose without adverse consequences to your lifestyle. 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 of partnership interest after one year, we must earn a profit
of 24.37%, or $235.70 per Unit, assuming the minimum amount of partnership
interests 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 partnership interests is speculative, illiquid, and highly
risky. You should purchase partnership interests 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 partnership interests will be restricted and there are
limitations on your right of redemption to surrender your partnership
interests in return for their value. No public market for the partnership
interests 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. [$750*]
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. [$250*]
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 the assets on deposit
partnership to the futures with the futures commission
commission merchant merchant. [$2,750*]
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 with the
futures commission merchant to
cover the brokerage commissions,
or the costs of entering trades.
[Included in the 11% to the
introducing broker.]
The selling agent Solicits and maintains investment Paid by introducing broker - 0%
(Futures Investment Company) in the partnership selling commissions , 6% annual
trailing commissions after
commencement of business. 1/2% on
the assets on deposit with the
futures commission merchant are
paid monthly by the introducing
broker as trailing commissions.
[Included in the 11% to the
Introducing Broker.]
Lawyers and Accountants Continuing legal and accounting After the first year, annual
(The Scott Law Firm, P.A., work accounting costs of $18,000 and
Frank L. Sassetti & Co., annual legal costs of $5,000.
James D. Hepner & Co.) [$821*]
</TABLE>
* Each $25,000 investment pays this amount per year for this particular
charge. When the charge is not based on a percentage, but rather a fixed
amount, we have computed that expense upon the assumption that the minimum
amount of partnership interests has been sold.
Use Of Proceeds
After we commence business, the partnership will pay $47,000 for offering
expenses and $5,000 for organizational expenses. Upon the sale of additional
partnership interests, 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 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 have to pay income
taxes on profits and interest, if any.
Redemptions
You may request the general partner to accept the surrender of your
partnership interests 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 partnership interests' 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
[Diagram omitted]
Please see the previous table under Charges to the Partnership for a
description of the below parties.
The Risks You Face
Investment in the partnership interests is speculative, illiquid, and highly
risky. You should purchase partnership interests 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 amount of partnership
interests sold.
The individual general partner has only 3 years of prior operation
experience, and the corporate general partner has none.
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. Mrs.
Pacult also currently manages the corporate general partners of two other
public 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 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 on deposit with
the futures commission merchant
* 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, of which $18,000 is paid for
accounting and audit services and $5,000 is paid for legal services
* offering expenses estimated to be $47,000 to be paid upon commencement of
business
* organizational expenses of $5,000 to be paid upon commencement of business
* variable operating expenses such as incentive fees to the commodity trading
advisor, 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 partnership interests and must rely on our
redemption procedures to receive your investment back.
You can assign or transfer your partnership interests only with the consent
of the general partner, which will be granted only to immediate members of
the family, upon death of the owner or other limited circumstances. See 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 twenty days after the last day of the month in
which the redemption request was received. You may be prevented from
redeeming your partnership interests 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 is 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. Thus, they may use 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, who is 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 terms which are as favorable. 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 deemed
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 partnership
interests may be insufficient to trade profitably.
We will commence business after selling the minimum $700,000 of partnership
interests. The general partner has used its best judgment to set this
minimum high enough for us to trade profitably. However, after we pay 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.
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, or 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 the partnership interests necessary to commence
business will be sold.
The selling agent(s) will sell the partnership interests on a best efforts
basis only, and will not be obligated to purchase partnership interests or
otherwise support their price. See Subscription Procedure and Plan For Sale
of Partnership Interests.
We may not commence business at an optimal time for maximizing profits.
After we sell the minimum amount of partnership interests, 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 could result in significant 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 has 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. Belmont presently has
insufficient capital to meet this guideline and, therefore, the loss of Mrs.
Pacult as an individual general partner could result in the suspension of
sales in states which follow the guidelines.
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. To be taxed as a partnership requires
that two or more of the following tests be met:
* decentralized management
* unlimited liability
* limited transferability of shares, and
* limited continuation of existence.
If we were not taxed as a partnership, the partnership income would be taxed
at corporate rates and would be distributed to the partners as dividends.
The partnership has an individual general partner and, therefore, these
limits are not applicable. In the event Mrs. Pacult would resign or
otherwise not serve as a general partner, the partnership is structured to
satisfy all but the decentralized management test and, therefore, in the
opinion of the tax counsel, would be taxed as a partnership.
The tax rules contain a significant net worth test, also called a safe
harbor, which is applicable when a corporation serves as the sole corporate
general partner. To meet the test, the corporate general partner must
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.
When Belmont becomes the sole general partner, it will use its best efforts
to meet the above financial obligations or otherwise satisfy the requirements
necessary to permit us to be taxed as a partnership.
The general partner will not advise you, and you must rely upon your own
investment counsel before investing in the partnership.
Purchasing partnership interests does not 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 matters of
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.
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.
The general partner may raise the incentive fee to 30% without prior notice
to you.
The general partner has reserved the right to raise, without prior notice to
you, the incentive fee to a maximum of 30% while lowering the total
management fees between the commodity trading advisor and general partner to
0%. The general partner will notify you of any change in fees within seven
business days.
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 confirmations from all third parties with which we have
a material relationship that those parties have taken the same actions.
Specifically, Vision Limited Partnership, the futures commission merchant,
and Star Financial Bank, the escrow agent, have provided written
confirmations and all other parties have provided oral confirmations. 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, constitutes 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 partnership interests.
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 amount of partnership interests. 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 partnership interests 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 is paid a 3% management fee and Mrs. Pacult serves
as both a general partner and the sole 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 is a principal and 50% owner of Futures Investment Company, the
introducing broker and selling agent. As such, Mrs. Pacult has a conflict of
interest between her obligation to manage this partnership and her financial
interest in receiving both the management fee as principal of the corporate
general partner and the trailing commissions as a registered representative
of the selling agent. Futures Investment Company, as the introducing broker,
pays itself as the selling agent 1/11 of the 11% allocated to it annually.
From the 11%, it must also pay 4/11 to the futures commission merchant and
6/11 to the associated persons, which will include Mrs. Pacult, for the
partnership interests they sell.
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 partnership interests 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 twenty 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
partnership interests. 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 corporate 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 advisors, 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 partnership
interests 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 the value of each unit of partnership
interest remains at $1,000 during the first 12 months of operations.
Expenses Per Unit of Partnership Interest
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) 74.29 7.43
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) 48.72 32.07
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) $ 243.73 $ 161.09
Percentage of Initial Selling Price per Unit 24.37% 16.11%
Explanatory Notes:
(1) Investors will initially purchase partnership interests at $1,000 per
unit of partnership interest. After the commencement of business,
partnership interests will be purchased at the net unit value, determined
monthly.
(2) Offering and organizational expenses include offering expenses of $47,000
and organizational expenses of $5,000, all of which will be paid by the
partnership upon the commencement of business. Our actual accounting,
auditing, legal and other operating expenses for the first year will be
advanced 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 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
$48.72 of incentive fees shown above is the amount the trading advisor would
earn if it produced enough profits to allow you to redeem your partnership
interests at the original price of $1,000 per unit of partnership interest at
the end of the first year.
(5) Brokerage commissions and trading fees are fixed by the general partner
at 11/12% monthly of our assets on deposit with the futures commission
merchant. For purposes of this calculation, we assumed all our assets will
be deposited with the futures commission merchant.
(6) The redemption fee of 3% is computed upon the assumed $1,000 value of the
redeemed partnership interest.
(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 limited
partnership interests in this partnership at $l,000 per unit of partnership
interest. See Determination Of The Offering Price.
You, the Investor:
* will have:
* pro rata rights to profit and losses which will vary with your investment
amount
* the right to vote on partnership matters such as the replacement of the
general partner. See The Limited Partnership agreement attached as Exhibit
A.
* will not:
* be responsible for our debts in excess of your investment amount; 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
* acquire any interest in the corporate general partner, Belmont Capital
Management, Inc., and
* manage this partnership
See Plan For Sale of Partnership Interests and Subscription Requirements.
Your subscription agreement and check:
* must be approved by the general partner before you will become a 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 amount of partnership
interests or any additional partnership interests will be sold. The general
partner is authorized, in its sole discretion, to terminate this or any
future offering of partnership interests.
Management's Discussion
This is the first offering of our partnership interests. We:
* may conduct future offerings after the close of this offering
* will not commence business until we sell the minimum 700 units of
partnership interests, or $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 partnership interests 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 of partnership interests. 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 partnership interests 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
partnership interests 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.
The following table summarizes your rights as an investor in this partnership
with regard to instituting legal proceedings.
<TABLE>
<S> <C> <C> <C> <C>
Who May Under What Against Whom To Recover Under What
Bring Action Jurisdiction What Circumstances
You, on behalf of Delaware law Third party Damages General partner has failed or
the partnership refused to institute
proceedings
You, individually, Federal or state General partner Damages Violations of fiduciary duties
or on behalf of all court by the general partner
similarly situated
limited partners
You, individually, Federal or state The general partner and Losses suffered Violations of the Federal or
as part of a class court others under the in connection state securities laws
action jurisdiction of the Federal with the
securities laws or the purchase or sale
Commodity Exchange of your partnership
Act interests
You Commodity The general partner, the Damages Violations of the Commodity
Futures Trading commodity trading Exchange Act or any rule,
Commission advisor, the introducing regulation or order of the
reparations broker or the futures Commodity Futures Trading
proceedings commission merchant Commission
</TABLE>
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. 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 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 partnership
interests.
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 partnership interests.
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 partnership interests 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 continue to act
for other commodity pools that have retained either or both of the general
partners of this partnership. The general partner and any other commodity
pool 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% annually of the equity we have on deposit
paid, pro rata 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 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 6% per year, at its sole discretion, provided the incentive fee is
appropriately reduced. 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%, or 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 partnership interests
* 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 partnership interests 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%. However, the general partner will
notify you of any change in fees within seven business days.
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%, or 11% annually, upon the assets on deposit with the
futures commission merchant. 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 for other pools, and
* the value of similar services provided by other clearing firms for 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%, or 4% annually, to cover all clearing costs, including
the pit brokerage fees, which include, floor brokerage fees, National Futures
Association fees, and exchange fees.
Trailing Commissions Paid To Others
The introducing broker will pay monthly 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 trailing commissions will be charged monthly upon 1/2% of the assets on
deposit with the futures commission merchant, and will be paid from the
11/12% monthly 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
* 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 partnership interests as compensation for:
* maintaining this continuous contact and awareness during the time the
investors hold the partnership interests
* 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 parties who performed legal, accounting and other services to form the
partnership and qualify it to conduct this offering have done so contingent
upon the sale of $700,000 in partnership interests. These services amount to
$47,000 in offering expenses and $5,000 in organizational expenses. Upon the
sale of this minimum and the commencement of business, these parties will be
paid directly by the partnership.
After the first year, we must pay yearly legal and accounting costs of
approximately $23,000, which includes $18,000 for accounting and audit and
$5,000 for legal services. We must also pay 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. [$750*]
Inc., Shira Del Pacult)
Selling Agent Trailing Commission 6% annual trailing commissions, paid monthly,
(Futures Investment Company) from the 11% fixed commissions paid to the
introducing broker. [Inlcuded in the 11% to
the Introducing Broker.]
Introducing Broker affiliated Fixed Commissions 11% annual charge, paid monthly, upon the
with the General Partner assets on deposit with the futures commission
(Futures Investment Company) merchant, less 4% brokerage fees paid to
futures commission merchant and less 6%
trailing commissions paid to selling agents,
including affiliates of the general partner.
[$2,750*]
Futures Commission Merchant Round-turn commissions paid from the 4% annual charge, paid monthly, upon the
(Vision Limited Partnership) fixed commissions paid by the Partnership assetson deposit with the futures commission
merchant paid by introducing broker.
[Included in the 11% to the 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.) [$250*]
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 Upon commencement of business, $52,000 will
(The Scott Law Firm, P.A., expenses necessary to the operation of the be paid for organizational and offering for
Frank L. Sassetti & Co., Partnership, and all claims and other expenses. For each year after the first,
& James D. Hepner, CPA) extraordinary expenses of the Partnership. $23,000 will be paid, with $18,000 for
accounting and $5,000 for legal. Claims and
other costs can not be estimated and will be
paid as incurred. [$1,857 for initial
organizational and offering expenses; $821*
for each subsequent year's expenses]
</TABLE>
* Each $25,000 investment pays this amount per year for this particular
charge. When the charge is not based on a percentage, but rather a fixed
amount, we have computed the expense upon the assumption that only the
minimum amount of partnership interests has been sold.
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 your 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 a $25,000
investment in the partnership, 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 value of each unit of partnership interest
* trading profits or losses, and
* expenses; and
* preparing all tax information relating to your investment in this
partnership.
Access To The Commodity Trading Advisor
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. For instance, 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 business, the partnership will pay the $47,000 in
offering expenses and $5,000 in organizational expenses. All partners admitted
after the commencement of business, up until the termination of the partnership,
must reimburse the previously admitted partners such that all partners have
contributed equally to the offering and organizational expenses. Before the
newly admitted partner's subscription amount is used to purchase units, a
deduction will be made for their share of such expenses and paid to the
partnership, meaning the previously admitted partners will be reimbursed in
the form of a higher per unit value.
After paying the offering and organizational expenses, 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, 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 may 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 partnership interests for sale at $l,000 per
unit of partnership interest. 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 partnership interests 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 of
partnership interests. 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 November 30, 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 partnership interests.
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 partnership interests 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.
As of August 4, 1999, Mrs. Pacult had a net worth of $1,323,300, which
consists of real estate that is not readily marketable.
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. 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 partnership interests 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 information describes the composite actual performance of all
customer accounts managed by AIM and by Max G. Ansbacher, the principal of
AIM, as an Associated Person of a registered futures commission merchant. As
of March 31, 2000, AIM and Mr. Ansbacher were managing approximately
$30,425,000 of client funds in the futures markets pursuant to the trading
strategy described above. All performance information is current as of March
31, 2000. Ansbacher Investment Management, Inc. does not currently offer any
trading strategy or program to clients other than the strategy described
herein.
Accounts maintained at Vision Limited Partnership, an FCM, are separately
presented and pay fees which may be materially different rates from those
accounts presented as the "general program." 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. 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. - General Program
The following capsule shows the past performance of Ansbacher Investment
Management, Inc. - General Program since the inception of trading of the
first account (in May, 1994) and year-to-date (through March, 1999).
Past performance is not necessarily indicative of future results.
Ansbacher Investment Management, Inc. - General Program
Percentage Rate of Return
(Computed on a compounded monthly basis)*
Month 2000 1999 1998 1997 1996 1995 1994
January (5.16) (1.20) 1.51 20.84 2.23 3.26 N/A
February 1.86 3.83 13.60 (0.72) (3.51) (0.41) N/A
March (6.12) 8.45 8.01 5.08 2.90 1.27 N/A
April (1.99) 1.83 5.98 1.99 2.93 N/A
May (1.95) (3.14) 14.25 3.22 0.61 1.70
June 8.58 6.42 4.28 6.17 1.82 (2.90)
July (5.22) (3.64) 11.22 (12.72) 2.28 6.31
August (3.12) (2.23) (5.84) 5.86 2.76 0.49
September 4.49 (6.47) 4.21 7.90 (0.22) (1.80)
October (7.69) (7.01) (13.53) 0.29 3.00 4.33
November 6.40 7.20 20.26 12.94 3.20 2.27
December 8.62 9.44 7.90 (6.47) 2.06 3.76
Year (9.32) 23.54 25.68 94.93 19.81 24.95 14.69
Name of Commodity Trading Advisor: Ansbacher Investment Management, Inc.
Name of the Trading Program: vGeneral Program
Date of Commencement of Program Trading: May, 1994
Number Of Accounts In Trading Program: 15
Total Assets Under Management: $30,425,000
Total Asses Traded Pursuant to Program: $10,848,586
Largest Monthly Draw-Down**: 10-97/33.4%****
Worst Peak-to-Valley Draw-Down***: 10-97/33.4%****
* 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. For all managed accounts, the average largest one month draw-down
was (13.53%) and the largest peak-to-valley draw-down was (16.37)%.
Ansbacher Investment Management, Inc. - Retail Accounts
The following capsule shows the past performance of Ansbacher Investment
Management, Inc. - Retail Accounts since the inception of trading of the first
account (in September, 1988) and year-to-date (through March 31, 2000). Past
performance is not necessarily indicative of future results.
Ansbacher Investment Management, Inc. - Retail Accounts
Percentage Rate of Return
(Computed on a compounded monthly basis)*
Month 2000 1999 1998
January 1.94 3.70 N/A
February (3.32) 2.24 N/A
March 1.78 4.85 N/A
April (5.03) N/A
May (2.92) N/A
June 7.49 N/A
July (9.36) N/A
August (5.30) N/A
September 4.84 0.44
October (10.54) (1.56)
November 3.15 5.11
December 4.51 5.06
Year 0.31 (4.39) 9.18
Name of CTA: Ansbacher Investment Management, Inc.
Name of the Trading Program: Retail Accounts
Date of Commencement of Program Trading: September, 1998
Number Of Accounts In Trading Program: 387
Total Assets Under Management: $30,425,000
Total Asses Traded Pursuant to Program: $19,579,091
Largest Monthly Draw-Down**: 10-99/19.0%****
Worst Peak-to-Valley Draw-Down***: 4-99 to 3-00/20.4%****
* 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 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 commenced trading on October 15, 1999;
however.
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
one trading advisor, Bell Fundamental Futures.
Performance Record of 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.
Fremont Fund pays various expenses in relation its operation including:
* a monthly management fee of 1/3 of 1%, or 4% annually, to its trading
advisors
* a monthly management fee of 1/6 of 1%, or 2% annually, to its corporate
general partner
* a quarterly incentive fee of 15% on all new net profits to its trading
advisors
* a monthly trading fee of 1%, or 12% annually, to its introducing broker.
The following capsule shows the past performance of Fremont Fund, LP for the
period from inception of trading in November, 1996, through March, 2000.
Past Performance Is Not Necessarily Indicative Of Future Results.
Fremont Fund, Limited Partnership
Percentage Rate of Return
(Computed on a compounded monthly basis)*
Month 2000 1999 1998 1997 1996
January (0.94) (1.48) (1.48) (1.79) N/A
February (0.65) 6.72 (0.92) 0.71 N/A
March (5.06) (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 6.91 4.21 (0.65) N/A
August (5.07) 1.78 (2.57) N/A
September 1.82 0.07 (0.53) N/A
October 0.37 0.26 (0.76) N/A
November (1.20) (3.52) (1.09) (8.83)
December (1.49) (1.38) (2.13) 2.34
Year (6.56) (5.87) (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.
Principal Protected: No
Date of Inception of trading: November, 1996
Net Asset Value of the pool: $521,110 on total Units outstanding: 866
NAV Per Unit: $601.76
Largest Monthly Draw-Down**: 3-99/13.29%
Worst Peak-to-Valley Draw-Down***: 11-96 to 3-00/39.9%
* 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 is traded by Clarke Capital
Management, Inc.
Atlas Futures Fund pays various expenses in relation its operation including:
* a monthly management fee of 1/4 of 1%, or 3% annually, to its trading
advisor
* a monthly management fee of 1/12 of 1%, or 1% annually, to its corporate
general partner
* a quarterly incentive fee of 20% on all new net profits to its trading
advisor
* a monthly trading fee of 3/4%, or 9% annually, to its introducing broker.
The following capsule shows the past performance of Atlas Futures Fund, LP
for the period from inception of trading in October, 1999 through March,
2000. Past Performance Is Not Necessarily Indicative Of Future Results.
Atlas Futures Fund, Limited Partnership
Percentage Rate of Return
(Computed on a compounded monthly basis)*
Month 2000 1999
January (2.88)
February (1.04)
March (4.46)
April
May
June
July
August
September
October (0.66)
November 2.36
December (6.45)
Year (8.17) (4.88)
Name of Pool: Atlas Futures Fund, LP
How Offered: Publicly offered pursuant to Form S-1 Registration Statement
Names of CTAs: Ansbacher Investment Management, Inc.
Principal Protected: No
Date of Inception of trading: October, 1999
Net Asset Value of the pool: $1,988,711 on total Units outstanding: 2,277
NAV Per Unit: $873.39
Largest Monthly Draw-Down**: 12-99/6.45%
Worst Peak-to-Valley Draw-Down***: 12-99 to 3-00/14.10%
* 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.
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.
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 which were in effect on November 30, 1999,
and
* the express intent of the general partner to:
* operate the partnership as authorized and limited by the limited
partnership agreement, and
* cause us to invest only our equity capital and not to borrow money to
operate the partnership , and
* the belief by the general partner that no less than ninety percent of the
income generated by us will be from interest income and the trade of
commodities.
Any change in the Internal Revenue Code or deviation from the above
intentions 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. In
addition, if we were taxed as a corporation, none of the deductions for
expenses would pass through to your tax return.
If we are audited by the IRS, 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 Internal
Revenue 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 to you 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. Accordingly, you are urged to consult your tax advisors with
specific reference to your tax situation.
All matters upon which we have obtained an opinion of tax counsel are
discussed under the caption Tax Opinion below.
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
The Internal Revenue Code, at Section 7701, provides the criteria used to
identify a corporation which cannot be present if a partnership is to be
taxed as a partnership. A partnership must have two or more of the
following:
* decentralized management
* unlimited liability
* limited transferability of shares, and
* limited continuation of existence.
The limited partnership agreement obligates the general partner to operate
the partnership in a manner which meets this test.
When the sole general partner of a partnership is a corporation, it must
maintain:
* a capital contribution in the partnership in an amount not less than the
greater of
* $25,000 or
* 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
to permit the partnership to be taxed as a partnership.
When Belmont Capital Management, Inc. becomes the sole general partner, it
will use its best efforts to meet the above financial obligations or
otherwise satisfy the requirements necessary to permit us to be taxed as a
partnership.
If we were taxed as a corporation:
* 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 and would not be deductible by us in computing our taxable
income.
This would substantially increase the total amount of taxes paid on your
investment income and potentially limit your expense deductions.
The Internal Revenue 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 necessary to maintain our tax status as a partnership, and
* Belmont has sufficient net assets to meet the North American Securities
Administrators Association Guidelines to continue to offer our partnership
interests.
Before Mrs. Pacult resigns, Belmont will secure an opinion of counsel to the
effect that sufficient other criteria 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
partnership interests, renders a pool, such as ours, to be deemed 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 derived from interest and the trade of commodities. 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 this 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
This prospectus accurately summarizes all material Federal matters and tax
consequences to you. In the opinion of The Scott Law Firm, P.A.:
* we will be treated as a partnership for Federal income tax purposes;
* the allocations of profits and losses made when partners redeem their
partnership interests 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 Internal Revenue 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
Internal Revenue Code.
Such opinion is based on the Internal Revenue Code as of November 30, 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 Internal Revenue 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 partnership
interests, or 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
Internal Revenue 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 Internal Revenue 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. Also, 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 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, 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 Internal Revenue 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 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
Internal Revenue 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 Internal Revenue 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 Internal
Revenue 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 Internal Revenue 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
partnership interests 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 Internal Revenue 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 partnership interests by the foreign
partner.
Partnership Entity-Audit Provisions-Penalties
The Internal Revenue 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 Internal Revenue 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.
Internal Revenue 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 partnership interests, but will not have the right to
withdraw their interest or become a substituted limited partner solely by
reason of such incapacity.
Units of Partnership Interests
The amount of partnership interests 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 of partnership interests you
hold by the aggregate number of outstanding units of partnership interests.
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 partnership
interests 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 partnership interests 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 partnership interests
* register additional partnership interests, and
* make additional public or private offerings of partnership interests.
You will not have any preemptive, preferential or other rights with respect
to the issuance or sale of any additional partnership interests. We have not
limited the amount of capital contributions or the maximum amount of
partnership interests 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 partnership interests. 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 Partnership Interests 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 partnership interests you purchase. As a
registered investor in this partnership, 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 partnership interests 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 partnership interests or, if you are not
assigning all of your partnership interests, you will not retain more than
five units of partnership interests
* 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 partnership interests. 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 partnership interests 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 twenty 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 of
partnership interests. If the general partner notifies you in writing prior
to registering partnership interests for public sale, it may redeem your
partnership interests if you don't hold the required minimum amount of
partnership interests 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 Partnership Interests
The Selling Agent
We are offering and selling the partnership interests 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 partnership interests. All partnership interests
will be sold on a best efforts basis, which means the selling agent(s) will
try, but not guarantee, to sell all the partnership interests.
Although we are offering a maximum of $7,000,000 in partnership interests,
the Limited Partnership Agreement authorizes the general partner to sell
additional partnership interests. Accordingly, the partnership may sell an
unlimited amount of partnership interests.
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 partnership
interests 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
partnership interests, excluding partnership interests 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 amount of
additional partnership interests at the rate of $1,000 per unit of
partnership interest 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 partnership interests 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 price of the partnership interests will be based upon the profitability
of the partnership, the net unit value, which will be determined monthly.
If we cannot sell the minimum amount of partnership interests 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 amount partnership interests
or any additional partnership interests will be sold. The general partner is
authorized, in its sole discretion, to terminate this or any future offering
of partnership interests.
Subscription Procedure
To purchase partnership interests, 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 amount of partnership interests 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 amount of partnership interests 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 partnership interests; 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 partnership interests
recorded in our books in your favor shall be cancelled.
Revocation
Once you have purchased partnership interests, 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 partnership interests, 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 partnership interests, 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:
(a) you are of legal age to execute the Subscription Agreement and Power of
Attorney and are legally competent to do so
(b) you acknowledge that you have received a copy of the prospectus,
including the Limited Partnership Agreement, prior to subscribing for
partnership interests
(c) 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
(d) 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.
(e) 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.
(f) if you are subscribing in a representative capacity:
* you have full power and authority to purchase the partnership interests and
enter and be bound by the Subscription Agreement and Power of Attorney on
behalf of the entity for which you are purchasing the partnership interests,
and
* such entity has full right and power to purchase the partnership interests
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 partnership interests
* the preparation of this prospectus
* the legality of the partnership interests 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 partnership interests or our
operation.
The Scott Law Firm, P.A. will not give you or any other partner legal advice.
You should seek investment, legal, and tax advice from your own legal counsel
and other professionals of your choice.
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
partnership interests 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 the
affiliate of the partnership, Futures Investment Company, 5916 N. 300 west,
P.O. Box C, Fremont, IN 46737, (219) 833-1306, 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 National Futures Association 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.
[The balance of this page has been intentionally left blank]
*******************************************************************************
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
FOR THE PERIOD JANUARY 12, 1999
(DATE OF INCEPTION)
TO DECEMBER 31, 1999
GENERAL PARTNER:
Belmont Capital Management, Inc.
% Corporate Systems, Inc.
101 North Fairfield Drive
Dover, Kent County, Delaware 19901
<PAGE>
To The Partners
Bromwell Financial Fund, Limited Partnership
(a development stage enterprise)
Dover, Kent County, Delaware
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of BROMWELL FINANCIAL
FUND, LIMITED PARTNERSHIP (a development stage enterprise) as of December 31,
1999, and the related statements of operations, partners' equity and cash
flows for the period from January 12, 1999 (inception) to December 31, 1999.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of BROMWELL
FINANCIAL FUND, LIMITED PARTNERSHIP (a development stage enterprise) as of
December 31, 1999, and the results of its operations and its cash flows for
the period from January 12, 1999 (inception) to December 31, 1999, in
conformity with generally accepted accounting principles.
/s/ Frank L. Sassetti & Co.
February 22, 2000
Oak Park, Illinois
<PAGE>
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
BALANCE SHEET
December 31, 1999
ASSETS
Cash $1,554
======
LIABILITIES AND PARTNERS' EQUITY
Liabilities -
Due to affiliate (Note 2)
Partners' Capital -
Limited partners (1 unit)
Initial capital contribution 1,000
Deficit accumulated during development stage (223)
General partner (1 unit)
Initial capital contribution 1,000
Deficit accumulated during development stage (233)
Total Partners' Capital 1,554
------
$1,554
======
The accompanying notes are an integral part
Of the financial statements.
<PAGE>
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
JANUARY 12, 1999 (INCEPTION)
TO December 31, 1999
Initial Period
January 12, 1999 to
December 31, 1999
REVENUES $_____
Total Revenues _______
EXPENSES
Organizational costs (Note 1)
Shipping expense 320
Bank charges 126
-------
Total Expenses 446
-------
NET LOSS $ (446)
=======
NET LOSS -
Limited partnership unit $ (223)
=======
General partnership unit $ (223)
=======
The accompanying notes are an integral part
Of the financial statements.
<PAGE>
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
JANUARY 12, 1999 (INCEPTION)
TO December 31, 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (446)
Adjustments to reconcile net loss to net
cash used in operating activities _______
Net Cash Used In
Operating Activities (446)
CASH FLOWS FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Initial partner contributions 2,000
-------
NET INCREASE IN CASH 1,554
CASH -
Beginning of period _______
End of period $1,554
=======
The accompanying notes are an integral part
Of the financial statements.
<PAGE>
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Bromwell Financial Fund, Limited Partnership (the Fund) was
formed January 12, 1999 under the laws of the State of Delaware. The Fund
expects to engage in the speculative trading of futures contracts in
commodities, however, the Fund will not commence business until at least
$700,000 worth of partnership interests are sold. Belmont Capital
Management, Inc. and Shira Pacult are the general partners and commodity pool
operators of Bromwell Financial Fund, Limited Partnership. The commodity
trading advisor (CTA) is expected to be Ansbacher Investment Management,
Inc., which has the authority to trade so much of the Fund's equity as is
allocated to it by the General Partners.
The Partnership is in the development stage and its efforts
through December 31, 1999 have been principally devoted to organizational
activities.
Income Taxes - In accordance with the generally accepted method of
presenting partnership financial statements, the financial statements do not
include assets and liabilities of the partners, including their obligation
for income taxes on their distributive shares of the net income of the Fund
or their rights to refunds on its net loss.
Offering Expenses and Organizational Costs - Contingent upon the sale
of at least $700,000 of partnership interests, offering costs of $47,000 will
be paid from the gross proceeds contributed and charged to the partners'
capital accounts. Subject to the above contingency, organizational costs are
charged to expense as incurred. Through December 31, 1999, the sum of $2,399
in organization costs and $8,331 in offering costs has been paid to date by
an affiliate. These costs have not been reflected in the financial statements
since they will not be reimbursed until the minimum offering amount is raised
and the total amount of these costs has yet to be determined.
Registering Costs - Costs incurred for the initial filings with
Securities and Exchange Commission, Commodity Futures Trading Commission,
National Futures Association (the "NFA") and the states where the offering is
expected to be made are accumulated, deferred and charged against the gross
proceeds of offering at the initial closing as part of the offering expenses.
Recurring registration costs, if any, will be charged to expense as incurred.
<PAGE>
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Revenue Recognition - Commodity futures contracts are recorded on the
trade date and will be reflected in the balance sheet at the difference
between the original contract amount and the market value on the last
business day of the reporting period.
Market value of commodity futures contracts is based upon
exchange or other applicable market best available closing quotations.
Use of Accounting Estimates - The preparation of financial statements
in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
Statement of Cash Flows - For purposes of the Statement of Cash Flows,
the Fund will consider only money market funds to be cash equivalents. As of
the balance sheet date, the Fund has no cash equivalents. Net cash provided
by operating activities include no cash payments for interest or income taxes
as of December 31, 1999.
2. DUE TO AFFILIATE
The Fund's individual general partner is a joint owner of Futures
Investment Company and this Company has funded the organizational and
offering costs incurred by the Fund to date.
3. GENERAL PARTNER DUTIES
The responsibilities of the General Partner, in addition to
directing the trading and investment activity of the Fund, including
suspending all trading, includes executing and filing all necessary legal
documents, statements and certificates of the Fund, retaining independent
public accountants to audit the Fund, employing attorneys to represent the
Fund, reviewing the brokerage commission rates to determine reasonableness,
maintaining the tax status of the Fund as a limited partnership, maintaining
a current list of the names, addresses and numbers of units owned by each
Limited Partner and taking such other actions as deemed necessary or
desirable to manage the business of the Partnership.
<PAGE>
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
3. GENERAL PARTNER DUTIES - CONTINUED
If the net unit value of the partnership falls to less than 50%
of the greater of the original $1,000 selling price, less commissions and
other charges or such higher value earned through trading, then the General
Partner will immediately suspend all trading, provide all limited partners
with notice of the reduction and give all limited partners the opportunity,
for fifteen days after such notice, to redeem partnership interests.
4. THE LIMITED PARTNERSHIP AGREEMENT
The Limited Partnership Agreement provides, among other things,
that
Capital Account - A capital account shall be established for each
partner. The initial balance of each partner's capital account shall be the
amount of the initial contributions to the partnership.
Monthly Allocations - Any increase or decrease in the Partnership's net
asset value as of the end of a month shall be credited or charged to the
capital account of each Partner in the ratio that the balance of each account
bears to the total balance of all accounts.
Any distribution from profits or partners' capital will be made
solely at the discretion of the General Partners.
Allocation of Profit and Loss for Federal Income Tax Purposes - As of
the end of each fiscal year, the Partnership's realized capital gain or loss
and ordinary income or loss shall be allocated among the Partners, after
having given effect to the fees of the General Partner and the Commodity
Trading Advisors and each Partner's share of such items are includable in the
Partner's personal income tax return.
Redemption - No partner may redeem or liquidate any units until after
the lapse of six months from the date of the investment. Thereafter, a
Limited Partner may withdraw, subject to certain restrictions, any part or
all of his units from the partnership at the net asset value per unit on the
last day of any month on ten days prior written request to the General
Partner. A redemption fee payable to the partnership of a percentage of the
value of the redemption request is charged pursuant to the following
schedule:
4% if such request is received ten days prior to the last trading
day of the month in which the redemption is to be effective from the sixth
month to the twelfth month after the date of the investment in the Fund.
<PAGE>
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
4. THE LIMITED PARTNERSHIP AGREEMENT - CONTINUED
3% if such request is received during the next six month period.
2% if such request is received during the next six month period.
1% if such request is received during the next six month period.
0% thereafter.
5. FEES
The Fund will be charged the following fees on a
monthly basis as of the commencement of trading.
A management fee of 1% (annual rate) of the Fund's net
assets allocated to each CTA to trade will be paid to each CTA and 3% of the
Fund's net assets allocated to all CTA's will be paid to the Fund's Corporate
General Partners.
An incentive fee of 20% of "new trading profits" will be
paid to each CTA. "New trading profits" includes all income earned by a CTA
and expense allocated to his activity. In the event that trading produces a
loss, no incentive fees will be paid and all losses will be carried over to
the following months until profits from trading exceed the loss. It is
possible for one CTA to be paid an incentive fee during a quarter or a year
when the Fund experienced a loss.
The Fund will pay fixed commissions of 11% (annual rate) of
assets assigned to be traded, payable monthly, to the introducing broker
affiliated with the General Partners. The Affiliated Introducing Broker will
pay the costs to clear the trades to the futures commission merchant and all
PIT Brokerage costs which shall include the NFA and exchange fees.
The General Partner has reserved the right to change the
management fee and the incentive fee at its sole discretion.
<PAGE>
*******************************************************************************
BROMWELL FINANCIAL FUND,
LIMITED PARTNERSHIP
(A Development Stage Enterprise)
FOR THE PERIOD JANUARY 12, 1999
(DATE OF INCEPTION)
TO MARCH 31, 2000
The accompanying notes are an integral part
of the financial statements.
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
BALANCE SHEET
MARCH 31, 2000
(Unaudited)
ASSETS
Cash $ 79
LIABILITIES AND PARTNERS' EQUITY
Liabilities -
Accounts payable $ 950
Due to affiliate (Note 2)
Total Liabilities 950
Partners' Capital -
Limited partners (1 unit) $(435)
General partner (1 unit) (436)
Total Partners' Capital (871)
$ 79
======
The accompanying notes are an integral part
of the financial statements.
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
THE THREE MONTHS ENDED MARCH 31, 2000 AND
THE PERIOD JANUARY 12, 1999 (INCEPTION)
TO MARCH 31, 2000
(Unaudited)
Three Months Initial Period
Ended January 12, 1999 to
March 31, 2000 March 31, 2000
REVENUES $ $
Total Revenues _________ _________
EXPENSES
Organizational costs (Note 1)
Shipping expense 320
Dues and subscriptions 250 250
Other administrative expenses 148 274
Total Expenses 398 844
NET LOSS $(398) $(844)
NET LOSS -
Limited partnership unit $(199) $(422)
General partnership unit $(199) $(422)
The accompanying notes are an integral part
of the financial statements.
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
THE THREE MONTHS ENDED MARCH 31, 2000 AND
THE PERIOD JANUARY 12, 1999 (INCEPTION)
TO MARCH 31, 2000
(Unaudited)
Three Months Initial Period
Ended January 12, 1999 to
March 31, 2000 March 31, 2000
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $ (398) $ (844)
Adjustments to reconcile
net loss to net cash
provided by operating
activities
Increase in
accounts payable 950 950
Net Cash Provided By
Operating Activities 552 106
CASH FLOWS FROM
INVESTING ACTIVITIES
CASH FLOWS FROM
FINANCING ACTIVITIES
Initial partner
contributions 2,000
Syndication costs (2,027) (2,027)
Net Cash Used In
Financing Activities (2,027) (27)
NET INCREASE (DECREASE) IN CASH (1,475) 79
CASH -
Beginning of period 1,554 _______
End of period $ 79 $ 79
The accompanying notes are an integral part
of the financial statements.
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Bromwell Financial Fund, Limited Partnership (the Fund) was formed January
12, 1999 under the laws of the State of Delaware. The Fund expects to engage
in the speculative trading of futures contracts in commodities, however, the
Fund will not commence business until at least $700,000 worth of partnership
interests are sold. Belmont Capital Management, Inc. and Shira Pacult are
the general partners and commodity pool operators of Bromwell Financial Fund,
Limited Partnership. The commodity trading advisor (CTA) is expected to be
Ansbacher Investment Management, Inc., which has the authority to trade so
much of the Fund's equity as is allocated to it by the General Partners.
The Partnership is in the development stage and its efforts through March
31, 2000 have been principally devoted to organizational activities.
Income Taxes - In accordance with the generally accepted method of
presenting partnership financial statements, the financial statements do not
include assets and liabilities of the partners, including their obligation
for income taxes on their distributive shares of the net income of the Fund
or their rights to refunds on its net loss.
Offering Expenses and Organizational Costs - Contingent upon the sale of at
least $700,000 of partnership interests, offering costs of $47,000 will be
paid from the gross proceeds contributed and charged to the partners' capital
accounts. Subject to the above contingency, organizational costs are charged
to expense as incurred. Through March 31, 2000, the sum of $2,399 in
organization costs and $11,641 in offering costs has been paid to date by an
affiliate. These costs have not been reflected in the financial statements
since they will not be reimbursed until the minimum offering amount is raised
and the total amount of these costs has yet to be determined. In addition,
the partnership has incurred and paid an additional $2,027 in syndication
costs representing fees for preparation of financial statements and shipping
expenses for various documents prepared. Since these costs were paid from
the Partnership's funds, they were reflected in the financial statements.
Registering Costs - Costs incurred for the initial filings with Securities
and Exchange Commission, Commodity Futures Trading Commission, National
Futures Association (the "NFA") and the states where the offering is expected
to be made are accumulated, deferred and charged against the gross proceeds
of offering at the initial closing as part of the offering expenses.
Recurring registration costs, if any, will be charged to expense as incurred.
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Revenue Recognition - Commodity futures contracts are recorded on the trade
date and will be reflected in the balance sheet at the difference between the
original contract amount and the market value on the last business day of the
reporting period. Market value of commodity futures contracts is based upon
exchange or other applicable market best available closing quotations.
Use of Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
Statement of Cash Flows - For purposes of the Statement of Cash Flows, the
Fund will consider only money market funds to be cash equivalents. As of the
balance sheet date, the Fund has no cash equivalents. Net cash provided by
operating activities include no cash payments for interest or income taxes as
of March 31, 2000.
2. DUE TO AFFILIATE
The Fund's individual general partner is a joint owner of Futures
Investment Company and this Company has funded most of the organizational and
offering costs incurred by the Fund to date.
3. GENERAL PARTNER DUTIES
The responsibilities of the General Partner, in addition to directing the
trading and investment activity of the Fund, including suspending all
trading, includes executing and filing all necessary legal documents,
statements and certificates of the Fund, retaining independent public
accountants to audit the Fund, employing attorneys to represent the Fund,
reviewing the brokerage commission rates to determine reasonableness,
maintaining the tax status of the Fund as a limited partnership, maintaining
a current list of the names, addresses and numbers of units owned by each
Limited Partner and taking such other actions as deemed necessary or
desirable to manage the business of the Partnership.
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
3. GENERAL PARTNER DUTIES - CONTINUED
If the net unit value of the partnership falls to less than 50% of the
greater of the original $1,000 selling price, less commissions and other
charges or such higher value earned through trading, then the General Partner
will immediately suspend all trading, provide all limited partners with
notice of the reduction and give all limited partners the opportunity, for
fifteen days after such notice, to redeem partnership interests.
4. THE LIMITED PARTNERSHIP AGREEMENT
The Limited Partnership Agreement provides, among other things, that
Capital Account - A capital account shall be established for each partner.
The initial balance of each partner's capital account shall be the amount of
the initial contributions to the partnership.
Monthly Allocations - Any increase or decrease in the Partnership's net
asset value as of the end of a month shall be credited or charged to the
capital account of each Partner in the ratio that the balance of each account
bears to the total balance of all accounts.
Any distribution from profits or partners' capital will be made solely at
the discretion of the General Partners.
Allocation of Profit and Loss for Federal Income Tax Purposes - As of the
end of each fiscal year, the Partnership's realized capital gain or loss and
ordinary income or loss shall be allocated among the Partners, after having
given effect to the fees of the General Partner and the Commodity Trading
Advisors and each Partner's share of such items are includable in the
Partner's personal income tax return.
Redemption - No partner may redeem or liquidate any units until after the
lapse of six months from the date of the investment. Thereafter, a Limited
Partner may withdraw, subject to certain restrictions, any part or all of his
units from the partnership at the net asset value per unit on the last day of
any month on ten days prior written request to the General Partner. A
redemption fee payable to the partnership of a percentage of the value of the
redemption request is charged pursuant to the following schedule:
4% if such request is received ten days prior to the last trading day of
the month in which the redemption is to be effective from the sixth month to
the twelfth month after the date of the investment in the Fund.
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(Unaudited)
4. THE LIMITED PARTNERSHIP AGREEMENT - CONTINUED
3% if such request is received during the next six month period.
2% if such request is received during the next six month period.
1% if such request is received during the next six month period.
0% thereafter.
5. FEES
The Fund will be charged the following fees on a monthly basis as of the
commencement of trading.
A management fee of 1% (annual rate) of the Fund's net assets allocated to
each CTA to trade will be paid to each CTA and 3% of the Fund's net assets
allocated to all CTA's will be paid to the Fund's Corporate General Partners.
An incentive fee of 20% of "new trading profits" will be paid to each CTA.
"New trading profits" includes all income earned by a CTA and expense
allocated to his activity. In the event that trading produces a loss, no
incentive fees will be paid and all losses will be carried over to the
following months until profits from trading exceed the loss. It is possible
for one CTA to be paid an incentive fee during a quarter or a year when the
Fund experienced a loss.
The Fund will pay fixed commissions of 11% (annual rate) of assets assigned
to be traded, payable monthly, to the introducing broker affiliated with the
General Partners. The Affiliated Introducing Broker will pay the costs to
clear the trades to the futures commission merchant and all PIT Brokerage
costs which shall include the NFA and exchange fees.
The General Partner has reserved the right to change the management fee and
the incentive fee at its sole discretion.
*******************************************************************************
BELMONT CAPITAL MANAGEMENT, INC.
FINANCIAL STATEMENTS
FOR THE PERIOD JANUARY 12, 1999
(DATE OF INCORPORATION)
TO DECEMBER 31, 1999
Purchase of units in the partnership will not
acquire or otherwise have any interest
in this Company.
<PAGE>
BELMONT CAPITAL MANAGEMENT, INC.
FOR THE PERIOD JANUARY 12, 1999
(DATE OF INCORPORATION)
TO DECEMBER 31, 1999
TABLE OF CONTENTS
Page
Independent Auditors' Report 1
Financial Statements -
Balance Sheet 2
Statement of Income and Accumulated Deficit 3
Statement of Cash Flows 4
Notes to Financial Statements 5 - 6
Purchase of units in the partnership will not
acquire or otherwise have any interest
in this Company.
<PAGE>
To The Shareholders
Belmont Capital Management, Inc.
Dover, Kent County, Delaware
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of BELMONT CAPITAL
MANAGEMENT, INC. as of December 31, 1999, and the related statements of
income and accumulated deficit and cash flows for the period from January 12,
1999 (date of incorporation) to December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of BELMONT CAPITAL
MANAGEMENT, INC. as of December 31, 1999, and the results of its operations
and its cash flows for the period from January 12, 1999 (date of
incorporation) to December 31, 1999, in conformity with generally accepted
accounting principles.
/s/ Frank L. Sassetti & Co.
February 22, 2000
Oak Park, Illinois
Purchase of units in the partnership will not
acquire or otherwise have any interest
in this Company.
<PAGE>
BELMONT CAPITAL MANAGEMENT, INC.
BALANCE SHEET
December 31, 1999
ASSETS
CURRENT ASSETS
Cash $ 838
------
INVESTMENTS (Note 3) 777
------
$1,615
======
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES
Due to Futures Investment Co. $2,202
Advance from stockholder 1,000
------
3,202
------
STOCKHOLDER'S EQUITY
Capital stock (common 1,500 shares authorized,
no par value; 1,000 issued and outstanding) 1,000
Accumulated deficit (2,587)
------
Total Stockholder's Equity (Deficit) (1,587)
------
$1,615
======
Purchasers of units in the partnership will not
acquire or otherwise have any interest
in this Company
The accompanying notes are an integral part
Of the financial statements.
<PAGE>
BELMONT CAPITAL MANAGEMENT, INC.
STATEMENT OF INCOME AND ACCUMULATED DEFICIT
JANUARY 12, 1999 (DATE OF INCORPORATION)
TO DECEMBER 31, 1999
REVENUES $_______
EXPENSES
Organizational costs 2,202
Office 162
--------
(LOSS) BEFORE EQUITY IN LIMITED PARTNERSHIP (2,364)
EQUITY (LOSS) IN LIMITED PARTNERSHIP 223
--------
NET INCOME (2,587)
ACCUMULATED DEFICIT
Beginning of period ________
End of period $(2,587)
========
Purchasers of units in the partnership will not
acquire or otherwise have any interest
in this Company
The accompanying notes are an integral part
Of the financial statements.
<PAGE>
BELMONT CAPITAL MANAGEMENT, INC.
STATEMENT OF CASH FLOWS
JANUARY 12, 1999 (DATE OF INCORPORATION)
TO DECEMBER 31, 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 2,587
Adjustments to reconcile net loss to net cash
used in by operating activities -
(Equity) loss in limited partnership 223
Changes in operating assets and liabilities
Costs advanced by affiliate 2,202
--------
Net Cash Used in
Operating Activities (162)
--------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment interest in limited partnership (1,000)
--------
Net Cash Used in
Investing Activities (1,000)
--------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of capital stock 1,000
Advance from stockholder 1,000
--------
Net Cash Provided by
Financing Activities 2,000
--------
NET INCREASE IN CASH 838
CASH -
Beginning of period ________
End of period $ 838
========
Purchasers of units in the partnership will not
acquire or otherwise have any interest
in this Company
The accompanying notes are an integral part
Of the financial statements.
<PAGE>
BELMONT CAPITAL MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Belmont Capital Management, Inc. (the Company) was formed on
January 12, 1999 under the laws of the State of Delaware to act as a general
partner and commodity pool operator of the Bromwell Financial Fund, Limited
Partnership (the Fund). It became registered as a commodity pool operator
and a member of the National Futures Association on August 5, 1999.
The responsibilities of the General Partner, in addition to the
selection of trading advisors and other activity of the Fund, include
executing and filing all necessary legal documents, statements and
certificates of the Fund, retaining independent public accountants to audit
the Fund, employing attorneys to represent the Fund, reviewing the brokerage
commission rates to determine reasonableness, maintaining the tax status of
the Fund as a limited partnership, maintaining a current list of the names,
addresses and numbers of units owned by each Limited Partner and taking such
other actions as deemed necessary or desirable to manage the business of the
Partnership.
Organizational Costs - Organizational costs are charged to expense as
incurred.
Use of Accounting Estimates - The preparation of financial statements
in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
Statement of Cash Flows - For purposes of the Statement of cash flows,
the Company will consider only money market funds to be cash equivalents. As
of the balance sheet date, the Company has no cash equivalents. Net cash
provided by operating activities includes no cash payment for interest nor
income taxes for the initial period January 12, 1999 (date of incorporation)
to December 31, 1999.
Purchase of units in the partnership will not
acquire or otherwise have any interest
in this Company.
<PAGE>
BELMONT CAPITAL MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
2. CORPORATE AFFILIATION
The Company's sole shareholder is also a joint owner of
Futures Investment Company. In addition, the Company is a general partner of
Bromwell Financial Fund, a limited partnership (the Fund).
3. INVESTMENTS
The Company purchased an interest as the general partner in a
limited partnership (a development stage enterprise) with an initial investment
of $1,000. The investment is being accounted for under the equity method and
to date has incurred losses of $223. The Company has no legal obligations as a
guarantor or general partner of the Fund nor is it committed to provide
additional financial support for the Fund.
Purchase of units in the partnership will not
acquire or otherwise have any interest
in this Company.
<PAGE>
*******************************************************************************
BELMONT CAPITAL MANAGEMENT, INC.
FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
AND THE PERIOD JANUARY 12, 1999 (DATE OF INCORPORATION)
TO MARCH 31, 1999
(UNAUDITED)
Purchases of units in the partnership will not acquire or
Otherwise have any interest in this Company
BELMONT CAPITAL MANAGEMENT, INC.
BALANCE SHEET
MARCH 31, 2000 AND 1999
(UNAUDITED)
ASSETS
2000 1999 (Note 4)
CURRENT ASSETS
Cash $ 168 $
INVESTMENTS (Note 3) __________ ___________
$ 168 $
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
LIABILITIES
Accounts payable 350
Due to Futures Investment Co. (Note 2) 2,202
Advance from stockholder 1,500 ___________
4,052 ___________
STOCKHOLDER'S EQUITY (DEFICIT)
Capital stock (common 1,500 shares authorized,
no par value; 1,000 issued and outstanding) 1,000
Accumulated deficit (4,884) ___________
Total Stockholder's Equity (Deficit) (3,884) ___________
$ 168 $
Purchases of units in the partnership will not acquire or
Otherwise have any interest in this Company
The accompanying notes are an integral part of
the financial statements
BELMONT CAPITAL MANAGEMENT, INC.
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
THREE MONTHS ENDED MARCH 31, 2000 AND
JANUARY 12, 1999 (DATE OF INCORPORATION)
TO MARCH 31, 1999
(UNAUDITED)
2000 1999 (Note 4)
REVENUES $ $
EXPENSES
Professional fees 1,380
Licenses 115
Office 25 ___________
(LOSS) BEFORE EQUITY IN LIMITED PARTNERSHIP (1,520)
EQUITY (LOSS) IN LIMITED PARTNERSHIP (777) ___________
NET INCOME (LOSS) (2,297) ___________
ACCUMULATED DEFICIT
Beginning of period (2,587) ___________
End of period $ (4,884) $
Purchases of units in the partnership will not acquire or
Otherwise have any interest in this Company
The accompanying notes are an integral part of
the financial statements
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2000 AND
JANUARY 12, 1999 (DATE OF INCORPORATION)
TO MARCH 31, 1999
(UNAUDITED)
2000 1999 (Note 4)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (2,297) $
Adjustments to reconcile net loss to net cash
used in operating activities -
(Equity) loss in limited partnership 777
Changes in operating assets and liabilities
Increase in accounts payable 350 ___________
Net Cash Used In Operating Activities (1,170) ___________
CASH FLOWS FROM INVESTING ACTIVITIES
Net Cash Used In Investing Activities ___________ ___________
CASH FLOWS FROM FINANCING ACTIVITIES
Advance from stockholder 500 ___________
Net Cash Provided by Financing Activities 500 ___________
NET DECREASE IN CASH (670)
CASH
Beginning of period 838 ___________
End of period $ 168 $
Purchases of units in the partnership will not acquire or
Otherwise have any interest in this Company
The accompanying notes are an integral part of
the financial statements
BELMONT CAPITAL MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 2000 and 1999
(UNAUDITED)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Belmont Capital Management, Inc. (the Company) was formed on January 12,
1999 under the laws of the State of Delaware to act as a general partner and
commodity pool operator of the Bromwell Financial Fund, Limited Partnership
(the Fund). It became registered as a commodity pool operator and a member
of the National Futures Association on August 5, 1999.
The responsibilities of the General Partner, in addition to the
selection of trading advisors and other activity of the Fund, include
executing and filing all necessary legal documents, statements and
certificates of the Fund, retaining independent public accountants to audit
the Fund, employing attorneys to represent the Fund, reviewing the brokerage
commission rates to determine reasonableness, maintaining the tax status of
the Fund as a limited partnership, maintaining a current list of the names,
addresses and numbers of units owned by each Limited Partner and taking such
other actions as deemed necessary or desirable to manage the business of the
Partnership.
Organizational Costs - Organizational costs are charged to expense as
incurred.
Use of Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
Statement of Cash Flows - For purposes of the statement of cash flows,
the Company will consider only money market funds to be cash equivalents. As
of the balance sheet date, the Company has no cash equivalents. Net cash
provided by operating activities includes no cash payment for interest nor
income taxes for the three months ended March 31, 2000 or the initial period
January 12, 1999 (date of incorporation) to March 31, 1999.
Purchases of units in the partnership will not acquire or
Otherwise have any interest in this Company
BELMONT CAPITAL MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 2000 and 1999
(UNAUDITED)
2. CORPORATE AFFILIATIONS
The Company's sole shareholder is also a joint owner of Futures
Investment Company. In addition, the Company is a general partner of
Bromwell Financial Fund, a limited partnership (the Fund).
3. INVESTMENTS
The Company purchased an interest as the general partner in a limited
partnership (a development stage enterprise) with an initial investment of
$1,000. The investment is being accounted for under the equity method and to
date has incurred losses of $1,436. The Company has no legal obligations as
a guarantor or general partner of the Fund nor is it committed to provide
additional financial support for the Fund. In accordance with generally
accepted accounting principles, accounting for the losses of the investments
are limited to the initial investment of $1,000.
4. FINANCIAL STATEMENT PRESENTATION FOR 1999
No information on the balance sheet, statements of operations and
accumulated deficit or cash flows has been presented for 1999 because, as of
March 31, 1999, there had been no income, expenses, stock issuance or cash
transactions.
Purchases of units in the partnership will not acquire or
Otherwise have any interest in this Company
*******************************************************************************
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, guaran-tee,
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 of partnership interests 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. Upon the commencement of business, the partnership will
pay 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.
Organizational Expenses. Upon the commencement of business, the partnership
will pay for $5,000 in organizational expense. 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 its partnership interests 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 partnership interests for
sale. The general partner and the selling agent may select additional
selling agents to also offer partnership interests 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 partnership interests 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 partnership interests.
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 partnership interests. 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.
[The balance of this page has been intentionally left blank]
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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 24th day of May, 2000, 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: May 24, 2000
(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)
CONSENT FRANK L. SASSETTI & CO.
The undersigned, Frank L. Sassetti & Co., Certified Public Accountants, hereby
consents to the use of the audit reports for the year ended December 31, 1999
and the updated unaudited financial statements for the period ended March 31,
2000 for Bromwell Financial Fund, Limited Partnership and Belmont Capital
Management, Inc.
The undersigned hereby further consents to inclusion of our names and the other
information under the section "Experts" in the Form S-1 Registration Statement
to be filed with the Securities and Exchange Commission and the states to be
selected by the General Partner.
/s/ Frank L. Sassetti & Co.
Frank L. Sassetti & Co.
6611 West North Avenue
Oak Park, Illinois 60302
(708) 386-1433
Date: May 25, 2000
