SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
X Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended June 30, 1996
------------
Commission File Number 0-18500
------------
Alternative Asset Growth Fund, L.P.
-----------------------------------
(Exact name of registrant)
Delaware 74-2546493
- ----------------------- ------------------------------------
(State of Organization) (I.R.S. Employer Identification No.)
ProFutures, Inc.
1310 Highway 620, Suite 200
Austin, Texas 78734
---------------------------
(Address of principal executive office)
Registrant's telephone number, including area code (512) 264-1100.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X
No
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
ALTERNATIVE ASSET GROWTH FUND, L.P.
STATEMENTS OF FINANCIAL CONDITION
June 30, 1996 (Unaudited) and December 31, 1995 (Audited)
-----------
1996 1995
---- ----
ASSETS
Equity in broker trading accounts
Cash $ 6,366,543 $ 6,212,851
Net option premiums (received) (62,190) (114,576)
Unrealized gain on open contracts 684,630 1,263,292
----------- -----------
Deposits with brokers 6,988,983 7,361,567
Cash and cash equivalents 13,424,249 15,220,226
----------- -----------
Total assets $20,413,232 $22,581,793
=========== ===========
LIABILITIES
Accounts payable $ 5,665 $ 13,010
Advisor incentive fees payable 86,797 190,408
Advisor management fees payable 63,217 53,752
Consultant fee payable 33,717 37,157
General Partner fee payable 33,717 37,157
Trading Manager fee payable 16,858 18,578
Commissions and other trading fees
on open contracts 27,477 30,677
Redemptions payable 434,376 173,994
----------- -----------
Total liabilities 701,824 554,733
----------- -----------
PARTNERS' CAPITAL (Net Asset Value)
General Partner - 323.451 units outstanding at
June 30, 1996 and December 31, 1995 379,447 386,084
Limited Partners - 16,479.102 and 18,130.272
units outstanding at June 30, 1996 and
December 31, 1995 19,331,961 21,640,976
----------- -----------
Total partners' capital
(Net Asset Value) 19,711,408 22,027,060
----------- -----------
$20,413,232 $22,581,793
=========== ===========
See accompanying notes.
ALTERNATIVE ASSET GROWTH FUND, L.P.
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
-----------
Six Months Ended
June 30,
1996 1995
--------- ---------
INCOME
Trading gains (losses)
Realized $ 892,240 $ 2,170,330
Change in unrealized (578,662) (1,037,476)
----------- -----------
Gain from trading 313,578 1,132,854
Interest income 523,302 684,889
----------- -----------
Total income 836,880 1,817,743
----------- -----------
EXPENSES
Brokerage commissions 323,551 1,016,252
Advisor incentive fees 153,614 405,924
Advisor management fees 119,706 196,045
Consultant fee 209,442 248,682
General Partner fee 209,442 248,682
Trading Manager fee 104,721 124,341
Operating expenses 114,903 138,520
----------- -----------
Total expenses 1,235,379 2,378,446
----------- -----------
NET (LOSS) $ (398,499) $ (560,703)
=========== ===========
NET (LOSS) PER GENERAL AND LIMITED PARTNER UNIT
(based on weighted average number
of units outstanding during the period) $ (22.23) $ (27.25)
=========== ===========
(DECREASE) IN NET ASSET
VALUE PER GENERAL AND LIMITED PARTNER UNIT $ (20.52) $ (25.94)
=========== ===========
See accompanying notes.
ALTERNATIVE ASSET GROWTH FUND, L.P.
STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 1996 and 1995
(Unaudited)
-----------
Three Months Ended
June 30,
1996 1995
--------- ---------
INCOME
Trading gains (losses)
Realized $ 982,718 $ 2,087,904
Change in unrealized (4,166) (1,270,215)
----------- -----------
Gain from trading 978,552 817,689
Interest income 258,099 350,612
----------- -----------
Total income 1,236,651 1,168,301
----------- -----------
EXPENSES
Brokerage commissions 146,715 493,000
Advisor incentive fees 86,797 159,945
Advisor management fees 63,216 102,984
Consultant fee 103,224 123,062
General Partner fee 103,224 123,062
Trading Manager fee 51,612 61,531
Operating expenses 47,487 58,793
----------- -----------
Total expenses 602,275 1,122,377
----------- -----------
NET INCOME $ 634,376 $ 45,924
=========== ===========
NET INCOME PER GENERAL AND LIMITED PARTNER UNIT
(based on weighted average number
of units outstanding during the period) $ 36.25 $ 2.27
=========== ===========
INCREASE IN NET ASSET
VALUE PER GENERAL AND LIMITED PARTNER UNIT $ 35.57 $ 2.08
=========== ===========
See accompanying notes.
<TABLE>
ALTERNATIVE ASSET GROWTH FUND, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (NET ASSET VALUE)
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
-----------
<CAPTION>
General Limited
Partner Partners Total
---------------- ------------------ ------------------
Units Amount Units Amount Units Amount
<S> <C> <C> <C> <C> <C> <C>
Balances
at
December 31,
1995 323.451 $386,084 18,130.272 $21,640,976 18,453.723 $22,027,060
Net (loss)
for the
six months
ended
June 30,
1996 (6,637) (391,862) (398,499)
Redemptions 0 0 (1,651.170) (1,917,153) (1,651.170) (1,917,153)
------- -------- ---------- ----------- ---------- -----------
Balances
at
June 30,
1996 323.451 $379,447 16,479.102 $19,331,961 16,802.553 $19,711,408
======= ======== ========== =========== ========== ===========
Balances
at
December 31,
1994 323.451 $400,028 20,897.226 $25,844,617 21,220.677 $26,244,645
Net (loss)
for the
six months
ended
June 30,
1995 (8,391) (552,312) (560,703)
Redemptions 0 0 (1,491.762) (1,796,015) (1,491.762) (1,796,015)
------- -------- ---------- ----------- ---------- -----------
Balances
at
June 30,
1995 323.451 $391,637 19,405.464 $23,496,290 19,728.915 $23,887,927
======= ======== ========== =========== ========== ===========
Net asset value
per unit at
December 31, 1995 $ 1,193.64
===========
June 30, 1996 $ 1,173.12
===========
December 31, 1994 $ 1,236.75
===========
June 30, 1995 $ 1,210.81
===========
See accompanying notes.
</TABLE>
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
-----------
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. General Description of the Partnership
Alternative Asset Growth Fund, L.P. (the Partnership) is a Delaware
limited partnership which operates as a commodity investment pool.
B. Regulation
As a registrant with the Securities and Exchange Commission, the
Partnership is subject to the regulatory requirements under the
Securities Acts of 1933 and 1934. As a commodity investment pool,
the Partnership is subject to the regulations of the Commodity
Futures Trading Commission, an agency of the United States (U.S.)
government which regulates most aspects of the commodity futures
industry, rules of the National Futures Association, an industry
self-regulatory organization, and the requirements of commodity
exchanges and Futures Commission Merchants (brokers) through which
the Partnership trades.
C. Method of Reporting
The Partnership's financial statements are presented in accordance
with generally accepted accounting principles, which require the use
of certain estimates made by the Partnership's management. Gains or
losses are realized when contracts are liquidated. Net unrealized gain
or loss on open contracts (the difference between contract purchase
price and market price) is reported in the statement of financial
condition in accordance with Financial Accounting Standards Board
Interpretation No. 39. Any change in net unrealized gain or loss from
the preceding period is reported in the statement of operations.
D. Cash and Cash Equivalents
Cash and cash equivalents includes cash and short-term investments in
fixed income securities.
E. Brokerage Commissions
Brokerage commissions include other trading fees and are charged to
expense when contracts are opened.
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
-----------
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
F. Income Taxes
The Partnership prepares calendar year U.S. and state information
tax returns and reports to the partners their allocable shares of the
Partnership's income, expenses and trading gains or losses.
G. Foreign Currency Transactions
The Partnership's functional currency is the U.S. dollar; however, it
transacts business in currencies other than the U.S. dollar. Assets
and liabilities denominated in currencies other than the U.S. dollar
are translated into U.S. dollars at the rates in effect at the date of
the statement of financial condition. Income and expense items
denominated in currencies other than the U.S. dollar are translated
into U.S. dollars at the rates in effect during the period. Gains and
losses resulting from the translation to U.S. dollars are reported in
income currently.
Note 2. GENERAL PARTNER
The General Partner of the Partnership is ProFutures, Inc., which
conducts and manages the business of the Partnership. The General
Partner is required by the Agreement of Limited Partnership to
contribute to the Partnership an amount equal to at least 1% of the
aggregate capital contributions of all partners, but not less than
$100,000. As of June 30, 1996, $365,900 has been contributed to the
Partnership by the General Partner and its principals.
The Agreement of Limited Partnership also requires that the General
Partner, at all times after the Partnership commences trading and so
long as it remains General Partner of the Partnership, maintain a net
worth not less than the sum of (i) the lesser of $250,000 or 15% of
the aggregate capital contributions of any limited partnerships for
which it acts as a General Partner if such contributions are equal
to or less than $2,500,000; and (ii) 10% of the aggregate capital
contributions of any limited partnerships for which it shall act
as a General Partner if such contributions exceed $2,500,000.
ProFutures, Inc. has callable subscription agreements with
Internationale Nederlanden (U.S.) Derivatives Clearing, Inc. (ING),
whereby ING agrees to purchase or subscribe to (up to $19,000,090)
the number of shares of common stock of ProFutures, Inc. necessary
to maintain the General Partner net worth requirements.
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
-----------
Note 2. GENERAL PARTNER (CONTINUED)
The Partnership pays the General Partner a monthly management fee
of 1/6 of 1% (2% annually) of month-end Net Asset Value.
Note 3. COMMODITY TRADING ADVISORS
The Partnership has trading advisory contracts with several unrelated
commodity trading advisors to furnish investment management services
to the Partnership. Certain advisors receive management fees ranging
from .2% to 2.8% annually of allocated Net Asset Value. In addition,
the trading advisors receive quarterly incentive fees ranging from 20%
to 29% of Trading Profits (as defined in the trading advisory
contracts) on that portion of the Partnership's assets which they
direct.
Note 4. DEPOSITS WITH BROKERS
The Partnership deposits funds with brokers subject to Commodity
Futures Trading Commission regulations and various exchange and
broker requirements. Margin requirements are satisfied by the
deposit of cash with such brokers. The Partnership earns interest
income on its cash deposited with the brokers.
Note 5. OTHER FEES
The Partnership employs a Consultant who is paid a monthly fee of
1/6 of 1% (2% annually) of month-end Net Asset Value for
administrative services rendered to the Partnership.
The Partnership's Trading Manager receives a monthly fee of 1/12
of 1% (1% annually) of month-end Net Asset Value for management
services rendered to the Partnership.
Note 6. DISTRIBUTIONS AND REDEMPTIONS
The Partnership is not required to make distributions, but may do
so at the sole discretion of the General Partner. A Limited Partner
may request and receive redemption of units owned, subject to
restrictions in the Agreement of Limited Partnership.
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
-----------
Note 7. TRADING ACTIVITIES AND RELATED RISKS
The Partnership engages in the speculative trading of U.S. and
foreign futures contracts and options on U.S. and foreign futures
contracts (collectively, "derivatives"). These derivatives include
both financial and non-financial contracts held as part of a
diversified trading strategy. The Partnership is exposed to both
market risk, the risk arising from changes in the market value of
the contracts, and credit risk, the risk of failure by another party
to perform according to the terms of a contract.
Purchase and sale of futures and options on futures contracts
requires margin deposits with the brokers. Additional deposits may
be necessary for any loss on contract value. The Commodity Exchange
Act requires a broker to segregate all customer transactions and
assets from such broker's proprietary activities. A customer's cash
and other property (for example, U.S. Treasury bills) deposited with
a broker are considered commingled with all other customer funds
subject to the broker's segregation requirements. In the event of
a broker's insolvency, recovery may be limited to a pro rata share
of segregated funds available. It is possible that the recovered
amount could be less than total cash and other property deposited.
The Partnership deposits cash with various financial institutions
in connection with its cash management activities. In the event of
a financial institution's insolvency, recovery of Partnership assets
on deposit may be limited to account insurance or other protection
afforded such deposits.
For derivatives, risks arise from changes in the market value of the
contracts. Theoretically, the Partnership is exposed to a market risk
equal to the value of futures contracts purchased and unlimited
liability on such contracts sold short. As both a buyer and seller
of options, the Partnership pays or receives a premium at the outset
and then bears the risk of unfavorable changes in the price of the
contract underlying the option. Written options expose the Partnership
to potentially unlimited liability, and purchased options expose the
Partnership to a risk of loss limited to the premiums paid.
The fair value of derivatives represents unrealized gains and losses
on open futures contracts and long and short options at market value.
The average fair value of derivatives during the six months ended
June 30, 1996 and 1995 was approximately $627,000 and $241,000,
respectively, and the fair value as of June 30, 1996 and
December 31, 1995 was approximately $622,000 and $1,149,000,
respectively.
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
-----------
Note 7. TRADING ACTIVITIES AND RELATED RISKS (CONTINUED)
Net trading results from derivatives for the six and three months
ended June 30, 1996 and 1995 are reflected in the statement of
operations and equals gain from trading less brokerage
commissions. Such trading results reflect the net gain (loss)
arising from the Partnership's speculative trading of futures
contracts and options on futures contracts.
Open contracts generally mature within one year, however, the
Partnership intends to close all contracts prior to maturity. At
June 30, 1996 and December 31, 1995, the notional amount of open
contracts is as follows:
June 30, December 31,
1996 1995
-------------------------- --------------------------
Contracts to Contracts to Contracts to Contracts to
Purchase Sell Purchase Sell
------------ ------------ ------------ ------------
Futures contracts
and written options
thereon:
- Agriculture $ 11,800,000 $ 5,500,000 $ 11,900,000 $ 3,600,000
- Currency and
currency
indices 22,000,000 17,400,000 2,100,000 10,300,000
- Energy 2,400,000 0 2,200,000 300,000
- Equity indices 1,100,000 12,100,000 6,200,000 23,300,000
- Interest rates 63,800,000 53,800,000 170,400,000 19,300,000
- Metals 3,100,000 15,500,000 10,300,000 13,800,000
- Other 0 800,000 200,000 900,000
Purchased options on
futures contracts:
- Agriculture 1,500,000 0 1,000,000 0
- Interest rates 800,000 0 0 2,400,000
- Metals 1,300,000 0 2,300,000 0
------------ ------------ ------------ ------------
$107,800,000 $105,100,000 $206,600,000 $ 73,900,000
============ ============ ============ ============
The above amounts do not represent the Partnership's risk of loss due
to market and credit risk, but rather represent the Partnership's
extent of involvement in derivatives at the date of the statement of
financial condition.
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
-----------
Note 7. TRADING ACTIVITIES AND RELATED RISKS (CONTINUED)
The General Partner has established procedures to actively monitor
and minimize market and credit risk. The Limited Partners bear the
risk of loss only to the extent of the market value of their
respective investments and, in certain specific circumstances,
distributions and redemptions received.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
A. LIQUIDITY: The Registrant is very liquid in that it holds its
assets in cash or near cash investments.
B. CAPITAL RESOURCES: Since the Registrant's business is the
purchase and sale of various commodity interests, it will make
few, if any, capital expenditures. Except as it impacts the
commodity markets, inflation is not a significant factor in the
Fund's profitability.
C. RESULTS OF OPERATIONS: On March 7, 1990 the Registrant commenced
trading operations with a beginning equity of $4,384,536. The
Registrant's offering of Units of Limited Partnership Interest
terminated on May 30, 1991.
During 1990 the Registrant earned $911,948. The Registrant lost
$1,846,137 in 1992 as compared to earnings of $1,046,330 for 1991.
For 1993 the Registrant had net income of $2,433,194 as compared
to net income of $98,340 for 1994. The Registrant had a net loss
of $985,673 in 1995. For the three months ended June 30, 1996 the
registrant had net income of $634,376 as compared to net income of
$45,924 for the three months ended June 30, 1995. For the six
months ended June 30, 1996 the Registrant had a net loss of
$398,499 as compared to a net loss of $560,703 for the six months
ended June 30, 1995.
The Fund's income for the quarter ended June 30, 1996 resulted
from large gains in the interest rate, energy and grain markets
in April, which were largely offset by losses in grains, foreign
currencies and interest rates in May, followed by gains in the
bond, energy and foreign currency markets in June.
The Fund's losses for the quarter ended March 31, 1996 resulted
from significant February losses in the bond and interest rate
markets, as well as February losses in the energy, metal and
grain markets. The February losses were slightly offset by
gains in the months of January and March in the interest rate,
currency and precious metals markets.
There were no unusual or infrequent events which materially
affected the Registrant's operations. The Net Asset Value per
Unit as of June 30, 1996 was $1,173.12 and the total Net Asset
Value of the Fund amounted to $19,711,408. Due to the
speculative nature of trading commodity interests, the
Registrant's earnings and Net Asset Value may fluctuate widely
from month to month and year to year.
The General Partners have established procedures to actively
monitor and minimize the market and credit risk of the Fund.
ATA Research, Inc. (ATA), in its capacity as Trading Manager of
the Fund, manages market risk through the monitoring of the
Fund's advisors and their trading in the various commodity
markets. The General Partners seek to minimize credit risk
primarily by keeping only minimal amounts of excess cash at the
brokers, with excess cash being maintained in custodial or other
accounts providing credit protection. Additionally, the General
Partner monitors credit risk based on their current knowledge of
the brokers' credit worthiness.
D. POSSIBLE CHANGES: The General Partner reserves the right to
terminate and/or engage additional commodity trading advisors in
the future and reserves the right to change any of the
Registrant's clearing arrangements to accommodate any new
commodity trading advisors.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
There were no reports filed on Form 8-K.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Alternative Asset Growth Fund, L.P.
(Registrant)
Gary D. Halbert, President
ProFutures, Inc., General Partner
Alternative Asset Growth Fund, L.P.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 13,424,249
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 20,413,232
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 20,413,232
<CURRENT-LIABILITIES> 701,824
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 20,413,232
<SALES> 0
<TOTAL-REVENUES> 836,880
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,235,379
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (398,499)
<INCOME-TAX> 0
<INCOME-CONTINUING> (398,499)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (398,499)
<EPS-PRIMARY> (22.23)
<EPS-DILUTED> (22.23)
</TABLE>
