SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended: December 31, 2004
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Commission File number: 0-25585
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ProFutures Long/Short Growth Fund, L.P.
--------------------------
(Exact name of Partnership as specified in charter)
Delaware 74-2849862
- ---------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
c/o ProFutures, Inc.,
11719 Bee Cave Road, Suite 200,
Austin, Texas 78738
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(Address of principal executive offices)
Partnership's telephone number
(800) 348-3601
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class. Name of each exchange on which registered.
- -------------------- -----------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
-------------------------------------
(Title of Class)
Indicate by check mark whether the Partnership (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Partnership was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporation by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
[X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes [ ] No [X]
State the aggregate market value of the voting and non-voting stock held by
non-affiliates computed by reference to the price at which the stock was last
sold, or the average bid and asked prices of such stock, as of the last
business day of the registrant's most recently completed second fiscal
quarter. (See definition of affiliate in Rule 405, 17 CFR 230.405.)
2
Not applicable
DOCUMENTS INCORPORATED BY REFERENCE
Not applicable
Partnership's Registration Statement on Form S-1 effective August 18, 2000 is
incorporated herein by reference.
Registrant's Financial Statements for the Years ended December 31, 2004, 2003
and 2002 with Report of Independent Registered Public Accounting firm, the
annual report to securities holders for the fiscal year ended December 31,
2004, is also incorporated by reference into Part II Item 8 and Part IV hereof
and filed as an exhibit herewith.
3
PART I
Item 1. Business.
(a) General Development of Business
-------------------------------
ProFutures Long/Short Growth Fund, L.P. (the "Partnership") is a commodity
investment pool which was organized in August 1997 under the Delaware
Revised Uniform Limited Partnership Act under the name ProFutures Bull &
Bear Fund, L.P. and commenced trading on November 20, 1997. On December 8,
1998, the Partnership changed its name from ProFutures Bull & Bear Fund,
L.P. to ProFutures Long/Short Growth Fund, L.P.
The General Partner and Commodity Pool Operator of the Partnership is
ProFutures, Inc., a Texas corporation. The General Partner's address is
11719 Bee Cave Road, Suite 200, Austin, Texas 78738 and its telephone
numbers are (800) 348-3601 and (512) 263-3800.
The Partnership filed a registration statement with the U.S. Securities
and Exchange Commission under the Securities Act of 1933 for the public
offering of $60,000,000 of additional Limited Partnership Units which
became effective February 16, 1999. The General Partner later registered
$40,000,000 of additional Limited Partnership Units with the Securities
and Exchange Commission under the Securities Act of 1933 which was
effective November 17, 1999. This registration carried forward $35,218,153
of unsold units from the previous registration. Therefore, unsold Limited
Partnership Units totaled $75,218,153 as of the effective date of the
registration. A post-effective amendment to the registration was effective
August 18, 2000 at which time $71,744,551 unsold units were available.
Effective November 2000, the Partnership is closed to new investment;
however, the General Partner may reopen the Partnership to new investments
in the future.
From inception through October 2000, the Partnership engaged in the
speculative trading of United States (U.S.) stock index futures contracts
pursuant to an advisory contract with Hampton Capital Management, Inc.
(Hampton). During October 2000, as a result of extreme stock market
volatility and trading losses, the advisory contract with Hampton was
terminated and trading was halted. Several new commodity trading advisors
were subsequently selected and trading resumed in December 2000. The
Partnership remains focused on trading stock index futures and options,
but the new advisors also trade a diversified group of commodity,
currency, and other futures and option contracts.
(b) General Description of the Business
-----------------------------------
ProFutures, Inc., a Texas corporation, is the General Partner which
administers the business and affairs of the Partnership.
It is registered with the Commodity Futures Trading Commission (CFTC) as a
commodity trading advisor and commodity pool operator and is a member of
the National Futures Association (NFA). Gary D. Halbert is the Chairman,
President and principal stockholder of ProFutures, Inc., which was
incorporated and began operation in December 1984 and specializes in
speculative managed futures accounts.
Trading decisions are made by three independent commodity trading
advisors, Ansbacher Investment Management, Inc., Clarke Capital
Management, Inc. and Meyer Capital Management, Inc., collectively the
"Advisors".
The Partnership's Selling Agent is ProFutures Financial Group, Inc. which
is an affiliate of ProFutures, Inc.
The Partnership operates as a commodity investment pool, whose objective
is to achieve appreciation of its assets through the speculative trading
in futures and option contracts and other commodity interests. It
ordinarily maintains open positions for a relatively short period of time.
The Partnership's ability to make
4
a profit depends largely on the success of the Advisors in identifying
market trends and price movements and buying or selling accordingly.
(c) Trading Methods and Advisors
----------------------------
The General Partner, on behalf of the Partnership, has entered into
advisory contracts which provide that the portion of the Partnership's
assets allocated to each Advisor will be traded in accordance with the
Advisor's instructions unless the General Partner determines that the
Partnership's trading policies have been violated. The General Partner has
the authority to allocate or reallocate assets to or from its current
Advisors.
The Advisors do not own any Units of the Partnership. The Advisors are
independent commodity trading advisors and are not affiliated with the
General Partner. The Advisors are registered with the CFTC as commodity
trading advisors and are members in such capacity with the NFA. Because of
their confidential nature, proprietary trading records of the Advisors and
their respective principals are not available for inspection by the
Limited Partners of the Partnership.
Ansbacher Investment Management, Inc. (Ansbacher)
-------------------------------------------------
The objective of Ansbacher'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 currently engages in a program of selling or
"writing" options (puts and calls) on stock index futures. However, in the
future, Ansbacher 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 (collectively, "Commodity Interests"). Ansbacher may
trade Commodity Interests on any U.S. exchange.
Ansbacher uses a systematic approach to trading in that it relies heavily
on a program of selling or "writing" options on stock index futures.
Ansbacher may also, from time to time, purchase options. The
implementation of this program, i.e., selecting how many puts and how many
calls, and which prices and maturities of each, in turn depends upon both
technical and fundamental considerations. 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 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 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 generally utilizes up to 30% to 40% of account assets for
margin; however such amount could be substantially higher (up to 65%) or
lower at times depending on trading conditions. These margin levels are
very high even for a speculative trading program.
Clarke Capital Management, Inc. (Clarke)
----------------------------------------
Clarke is a diversified, systematic (trend-following) Advisor trading in
several programs. The Partnership selected Clarke's "Millennium" program.
The Millennium program currently trades approximately 83 domestic and
international commodity interests. 24 of these are either long or short
interest rate contracts reflecting interest rates in Europe, the U.S.,
Canada, Japan and Australia. The balance of the commodity interests
followed are currencies, grains, softs, metals, meats and fuels both
foreign and domestic. The number of models used in this program is 27.
Unlike any of Clarke's other programs, the Millennium Program uses several
very long term models among the 27 in its portfolio. These very long term
models
5
generally produce larger profits per trade, but lower profits per day than
shorter models. When used in a portfolio with shorter time frame models,
as is the case here, they can produce smoother overall equity curves even
though these models generally give much more room to a position before
exiting. Clients of the Millennium Program should be aware that there will
be times when there is significant correlation among global interest
rates; possibly in an adverse direction to positions held in a client's
account. Clients of the Millennium Program should be aware that this
factor alone, although there are others, will lead to periods of extreme
volatility and possibly very large drawdowns in a client's equity.
Meyer Capital Management, Inc. (Meyer)
--------------------------------------
Meyer's money management program is designed primarily for sophisticated
investors. Their primary objective is the capital appreciation of its
client's assets through the speculation in financial and commodity futures
contracts.
Meyer uses multiple non-correlated technical strategies to manage customer
accounts. Meyer believes that futures price movements in all markets may
be more accurately anticipated by historical price movements within a
quantitative or technical analysis than by fundamental economic analysis.
Since non-directional and limited price directional trading strategies are
employed, major long-term price movements are not necessarily needed for
the program to be successful. Rather, diverse models that have yielded
good risk/reward characteristics in the past are combined with other
uncorrelated models to form a robust trading program that is less
dependent on any one particular market characteristic.
The trading strategies and systems utilized by Meyer may be revised from
time to time by Meyer as a result of ongoing research and development,
which seeks to devise new trading strategies and systems as well as test
methods currently employed. The trading strategies and systems used by
Meyer in the future may differ significantly from those presently used,
due to the changes, which may result from this research. Clients will not
be informed of these changes as they may occur.
Exchanges on which transactions will take place will include, but are not
limited to, all exchanges in the United States, as well as non-US
exchanges which include the London International Financial Futures and
Options Exchange Ltd (LIFFE), the Marche a Terme International de France
(France), the Eurex Deutschland (EUREX), the Montreal Exchange (ME), the
Tokyo Stock Exchange (TSE), the Singapore International Monetary Exchange
(SIMEX), and the Sydney Futures Exchange Ltd (SFE).
(d) Fees, Compensation and Expenses
-------------------------------
The Partnership pays the General Partner a monthly management fee equal to
1/6 of 1% (2% annually) of month-end Net Assets (as defined in the Limited
Partnership Agreement).
The Partnership has advisory contracts with several trading advisors.
Certain Advisors are paid a monthly management fee of 1/12 of 1% (1%
annually) of Allocated Net Asset Value (as defined in each respective
advisory contract). In addition, the Advisors receive quarterly incentive
fees ranging from 20% to 25% of Trading Profits (as defined).
A one-time organizational charge of 1% of the subscription amount is paid
to the General Partner (or the Selling Agent, its affiliated broker-
dealer) by each subscriber. The General Partner has paid for all actual
costs of organizing the Partnership and conducting the public offering of
Units.
To the extent that the aggregate 1% organizational charge collected is
less than these actual costs, the General Partner will pay the costs. To
the extent that the aggregate 1% organizational charge collected exceeds
these actual costs, the excess amount will be paid to the Selling Agent.
Such payment could be deemed to be a selling commission.
6
(e) Brokerage Arrangements
----------------------
The Partnership deposits funds with Man Financial Inc. to act as broker,
subject to Commodity Futures Trading Commission regulations and various
exchange and broker requirements. Margin requirements are satisfied by the
deposit of cash with such broker. The Partnership earns interest income on
its assets deposited with the broker.
(f) Financial Information About Industry Segments
---------------------------------------------
The Partnership operates in only one industry segment, that of the
speculative trading of futures and options on futures contracts. See also
"The Stock Index Futures Markets", pages II-3 to II-5 of Part II of the
Prospectus dated August 18, 2000 which is incorporated herein by
reference.
(g) Regulation
----------
The U.S. futures markets are regulated under the Commodity Exchange Act,
which is administered by the Commodity Futures Trading Commission (CFTC),
a federal agency created in 1974. The CFTC licenses and regulates
commodity exchanges, commodity brokerage firms (referred to in the
industry as "futures commission merchants"), commodity pool operators,
commodity trading advisors and others. The General Partner is registered
by the CFTC as a commodity pool operator and the Advisors are registered
as commodity trading advisors. Futures professionals such as the General
Partner and the Advisors are also regulated by the National Futures
Association, a self-regulatory organization for the futures industry that
supervises the dealings between futures professionals and their customers.
If the pertinent CFTC registrations or NFA memberships were to lapse, be
suspended or be revoked, the General Partner would be unable to act as the
Partnership's commodity pool operator, and the Advisors as commodity
trading advisors, to the Partnership.
The CFTC has adopted disclosure, reporting and recordkeeping requirements
for commodity pool operators (such as the General Partner) and disclosure
and recordkeeping requirements for commodity trading advisors. The
reporting rules require pool operators to furnish to the participants in
their pools a monthly statement of account, showing the pool's income or
loss and change in Net Asset Value and an annual financial report, audited
by an independent certified public accountant.
The CFTC and the exchanges have pervasive powers over the futures markets,
including the emergency power to suspend trading and order trading for
liquidation only (i.e., traders may liquidate existing positions but not
establish new positions). The exercise of such powers could adversely
affect the Partnership's trading.
For additional information refer to "Regulation", Pages II-4 to II-5 of
Part II of the Prospectus dated August 18, 2000, which is incorporated
herein by reference.
(h) Competition
-----------
The Partnership may experience increased competition for the same
commodity futures contracts. The Advisors may recommend similar or
identical trades to other accounts they manage. Thus the Partnership may
be in competition with such accounts for the same or similar positions.
Competition may also increase due to widespread utilization of
computerized trading methods similar to the methods used by the Advisors.
The Partnership may also compete with other funds organized by the General
Partner.
(i) Financial Information About Foreign and Domestic Operations
-----------------------------------------------------------
The Partnership does not expect to engage in any operations in foreign
countries nor does it expect to earn any portion of the Partnership's
revenue from customers in foreign countries.
7
(j) Available Information
---------------------
The Partnership is an electronic filer with the Securities and Exchange
Commission (SEC). The SEC maintains an Internet Site that contains
reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC
(http://www.sec.gov). The General Partner will voluntarily provide
electronic or paper copies of this filing free of charge upon request.
Item 2. Properties.
The Partnership does not own and does not expect to own any physical
properties.
Item 3. Legal Proceedings.
The Partnership is not aware of any pending legal proceedings to which the
Partnership is a party or to which any of its assets are subject.
Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted to a vote of holders of Limited
Partnership Units ("Units") during the fourth quarter of the fiscal year
ended December 31, 2004 through the solicitation of proxies or otherwise.
PART II
Item 5. Market for Partnership's Securities and Related Security
Holder Matters.
(a) Market Information
------------------
There is no established public trading market for the Partnership's
Limited Partnership Units. Effective November 2000, the Partnership is
closed to new investment; however, the General Partner may reopen the
Partnership to new investments in the future.
The Partnership's Limited Partnership Units are no longer being offered
for sale.
A Limited Partner (or any assignee of units) may withdraw some or all of
his capital contribution and undistributed profits, if any, by requiring
the Partnership to redeem any or all of his Units at Net Asset Value per
Unit. Redemptions shall be effective as of the end of any month after 10
days written notice to the General Partner. Redemptions shall be paid as
promptly as practicable after the effective date of redemption, but in no
event more than 30 days thereafter, provided that all liabilities,
contingent or otherwise, of the Partnership, have been paid and there
remains property of the Partnership sufficient to pay them.
(b) Holders
-------
The number of holders of record of Units of Partnership as of December 31,
2004 was:
General Partner's Capital 3
Limited Partners' Capital 359
At the commencement of trading on November 20, 1997 there were 38 Partners
holding 3,044 Units. At December 31, 2004 there were 359 Limited Partners
holding 5,865 Units, and 535 Units held by the General Partner and its
principals.
(c) Distributions
-------------
The Partnership does not anticipate making any distributions to investors.
8
Distributions of profits to partners are made at the discretion of the
General Partner and will depend, among other factors, on earnings and the
financial condition of the Partnership. No such distributions have been
made to date.
Item 6. Selected Financial Data.
Following is a summary of certain financial information for the
Partnership for the calendar years 2004, 2003, 2002, 2001 and 2000.
2004
----
Realized Gains (Losses) $ 1,183,028
Change in Unrealized Gains (Losses)
on Open Contracts (30,372)
Interest Income 108,254
General Partner Management Fee 160,027
Advisor Management Fees 51,473
Advisor Incentive Fees 268,067
Net Income (Loss) 439,590
General Partner Capital 71,243
Limited Partner Capital 7,338,344
Partnership Capital 7,409,587
Net Income (Loss) Per Limited and
General Partner Unit* 59.26
Net Asset Value Per Unit At
End of Year 1,159.53
2003
----
Realized Gains (Losses) $ 1,655,884
Change in Unrealized Gains (Losses)
on Open Contracts (375,278)
Interest Income 99,408
General Partner Management Fee 205,740
Advisor Management Fees 90,002
Advisor Incentive Fees 178,562
Net Income (Loss) 550,457
General Partner Capital 66,976
Limited Partner Capital 8,882,156
Partnership Capital 8,949,132
Net Income (Loss) Per Limited and
General Partner Unit* 56.67
Net Asset Value Per Unit At
End of Year 1,090.08
2002
----
Realized Gains (Losses) $ 2,049,049
Change in Unrealized Gains (Losses)
on Open Contracts 327,418
Interest Income 183,974
General Partner Management Fee 232,242
Advisor Management Fees 116,644
Advisor Incentive Fees 467,596
9
Net Income (Loss) 1,336,037
General Partner Capital 63,353
Limited Partner Capital 10,973,670
Partnership Capital 11,037,023
Net Income (Loss) Per Limited and
General Partner Unit* 115.07
Net Asset Value Per Unit At
End of Year 1,031.12
2001
----
Realized Gains (Losses) $ 2,155,466
Change in Unrealized Gains (Losses)
on Open Contracts (463,346)
Interest Income 438,669
General Partner Management Fee 251,199
Advisor Management Fees 126,070
Advisor Incentive Fees 514,558
Net Income (Loss) 865,071
General Partner Capital 56,537
Limited Partner Capital 11,882,135
Partnership Capital 11,938,672
Net Income (Loss) Per Limited and
General Partner Unit* 62.43
Net Asset Value Per Unit At
End of Year 920.18
2000
----
Realized Gains (Losses) $ (24,145,559)
Change in Unrealized Gains (Losses)
on Open Contracts 6,842,576
Interest Income 1,455,997
General Partner Management Fee 706,890
Advisor Management Fees 10,816
Advisor Incentive Fees 111,774
Net Income (Loss) (16,805,240)
General Partner Capital 52,762
Limited Partner Capital 12,633,367
Partnership Capital 12,686,129
Net Income (Loss) Per Limited and
General Partner Unit* (834.14)
Net Asset Value Per Unit At
End of Year 858.74
10
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements and the reported amounts of income
and expense during the reporting period. Management believes that the
estimates utilized in preparing the financial statements are reasonable
and prudent; however, actual results could differ from those estimates.
The Partnership's significant accounting policies are described in detail
in Note 1 to the Financial Statements.
The Partnership records all investments at fair value in its financial
statements, with changes in fair value reported as a component of realized
and change in unrealized trading gain (loss) in the Statements of
Operations. Generally, fair values are based on market prices; however, in
certain circumstances, estimates are involved in determining fair value in
the absence of an active market closing price (e.g. swap and forward
contracts which are traded in the inter-bank market).
(a) Liquidity and Capital Resources
-------------------------------
Substantially all of the Partnership's assets at December 31, 2004 were in
cash. There are no restrictions on the liquidity of these assets except
for amounts on deposit with the broker needed to meet margin requirements
on open futures contracts.
The amount of assets invested in the Partnership generally does not affect
its performance, as typically this amount is not a limiting factor on the
positions acquired by the Advisors, and the Partnership's expenses are
primarily charged as a fixed percentage of its asset base, however large.
The Partnership raises additional capital only through the sale of Units
and trading profits (if any) and does not engage in borrowing. The
Partnership sells no securities other than the Units.
The value of the Partnership's cash and financial instruments is not
materially affected by inflation. Changes in interest rates, which are
often associated with inflation, could cause periods of strong up or down
stock market price trends, during which the Partnership's profit potential
generally increases.
Substantially all of the Partnership's assets are held in cash deposited
with its broker. Accordingly, except in very unusual circumstances, the
Partnership should be able to close out any or all of its open trading
positions and liquidate any cash management investments quickly and at
market prices. This permits the Advisors to limit losses as well as reduce
market exposure on short notice should their programs direct them to do so
in order to reduce market exposure. In addition, because there is a
readily available market value for the Partnership's positions and assets,
the Partnership's monthly Net Asset Value calculations are precise.
(b) Results of Operations
---------------------
The Partnership's net income (loss) for each quarter of the years ended
December 31, 2004 and 2003 consisted of the following:
1st Qtr 2004 2nd Qtr 2004 3rd Qtr 2004 4th Qtr 2004
-----------------------------------------------------------------
Gain (loss) from trading 320,785 (532,048) 476,699 664,992
Net investment (loss) (166,571) (100,493) (106,097) (117,677)
Net Income (Loss) 154,214 (632,541) 370,602 547,315
Net income (loss) per Unit 19.22 (83.29) 50.88 88.24
11
Increase (decrease) in 20.09 (82.80) 52.14 80.02
Net Asset Value per Unit
Net Asset Value per Unit 1,110.17 1,027.37 1,079.51 1,159.53
at end of period
1st Qtr 2003 2nd Qtr 2003 3rd Qtr 2003 4th Qtr 2003
-----------------------------------------------------------------
Gain (loss) from trading 345,035 (6,370) (78,014) 769,477
Net investment (loss) (80,153) (79,619) (94,481) (225,418)
Net Income (Loss) 264,882 (85,989) (172,495) 544,059
Net income (loss) per Unit 25.09 (8.50) (18.38) 61.81
Increase (decrease) in 23.10 (9.53) (16.51) 61.90
Net Asset Value per Unit
Net Asset Value per Unit 1,054.22 1,044.69 1,028.18 1,090.08
at end of period
Due to the speculative nature of trading derivatives, the Partnership's
income or loss from operations may vary widely from period to period.
Management cannot predict whether the Partnership's future Net Asset Value
per Unit will increase or experience a decline.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Year Ended December 31, 2004
----------------------------
2004 had net income of $439,590 or $59.26 per Unit. At December 31, 2004,
partners' capital totaled $7,409,587, a net decrease of $1,539,545 from
December 31, 2003 including capital redemptions of $1,979,135. Net Asset
Value per Unit at December 31, 2004 amounted to $1,159.53, as compared to
$1,090.08 at December 31, 2003, an increase of 6.37%.
The net income for 2004 resulted primarily from trading gains in the
energy, equities and foreign currencies market sectors, offset by losses
in the agricultural and metals market sectors.
Fourth Quarter 2004
-------------------
The fourth quarter continued to be volatile for the markets, especially
the commodity markets. Oil and currencies were especially volatile. Many
believe the commodity markets will continue to be volatile due in part to
increasing demands on commodities from rapidly growing economies in China
and India.
The Partnership recognized a loss of 0.46% in October. For the month, the
Partnership achieved gains in interest rates, foreign currencies, energy
and stock indices. These gains were mostly offset by losses in base metals
with smaller losses in certain agricultural commodities.
The Partnership had a gain of 9.31% in November. The Partnership's largest
gains were in foreign currencies (the dollar significantly depreciated),
stock indices, metals, interest rates and certain agricultural
commodities. The Partnership experienced small losses in energy and
certain agricultural commodities.
12
The Partnership experienced loss of 1.28% in December. For the month, the
Partnership achieved significant gains in equities, with smaller gains in
energy. There were losses in metals, interest rates, foreign currencies
and certain agricultural commodities.
The Partnership ended the year with a significant gain from the previous
year.
Third Quarter 2004
-----------------
The economy continued to grow in the third quarter of 2004, though at a
slower pace. The economic news was a little more mixed, with both good
news and not-so-good news. Overall though, the growth is continuing,
though rising oil prices, trading above $50 a barrel, could put a damper
on things in the coming months.
The Partnership had a gain of 1.14% in July 2004. It was once again a very
difficult month in the markets, especially for trend followers, though the
Partnership did manage a small gain. The Partnership had large gains in
energy, with smaller gains in agricultural commodities and metals. There
were losses in equities, foreign currencies and interest rates.
The Partnership had a loss of 3.98% for August 2004. The Partnership had
gains in bonds, interest rates and equities. There were losses mainly in
foreign currencies, energy, metals and agricultural commodities.
The Partnership had a gain of 8.20% in September 2004. The Partnership had
large gains in energy, capitalizing on surging oil prices. There were also
large gains in base metals, with smaller gains in equities and foreign
currencies. There were some losses in agricultural commodities, interest
rates and precious metals.
The Partnership ended the third quarter of 2004 with a gain of 5.08% and a
loss of (0.97)% for the nine months ended September 30, 2004. The majority
of the Partnership's trading gains were in the energy, equity and metals
market sectors, offset by losses in the agricultural, interest rates and
foreign currencies market sectors.
Second Quarter 2004
-------------------
The economic recovery continued in the second quarter of 2004, and most
economic news was positive, though there was a little slowdown in June.
The futures markets were again volatile, especially in energy, interest
rates and currencies.
The Partnership had a loss of 5.63% in April 2004. There were gains in
interest rates, equities and energy. However, these were offset by losses
in metals, foreign currencies and agriculture.
The Partnership had a gain of 1.80% in May 2004. There were gains in
energy, interest rates and metals. There were losses in agriculture,
equities and foreign currencies. Clarke Capital had a stellar month, up
nearly 9%, which was partially offset by losses from Meyer Capital.
The Partnership had a loss of 3.67% in June 2004. There were losses in all
sectors except equities. The largest losses were in foreign currencies and
energy.
Overall, the Partnership's total return was (7.46)% for the quarter and
(5.75)% for the six months ended June 30, 2004. The majority of the
Partnership's trading gains were in the energy sector and the largest loss
was in agricultural commodities.
First Quarter 2004
------------------
The economy continued to improve in the first quarter of 2004, and most
economic news was positive. The futures markets continued to be volatile,
especially energy and currencies.
13
The Partnership had a loss of 1.79% in January 2004. There were gains in
stock indices, metals and energy. These were offset by losses in
agricultural commodities, foreign currencies and interest rates.
The Partnership had a gain of 1.92% in February 2004. There were large
gains in stock indices, with smaller gains in interest rates, metals,
energy and grains. There were some losses in agricultural commodities and
foreign currencies.
The Partnership had a gain of 1.75% in March 2004. There were gains in
metals, interest rates and equities, with smaller gains in certain
agricultural commodities. There were some losses in energy and foreign
currencies.
Overall, the Partnership ended the quarter with a total return of 1.84%.
The majority of the trading gains were in equities and metals and the
largest loss was in foreign currencies.
Year Ended December 31, 2003
----------------------------
2003 had net income of $550,457 or $56.67 per Unit. At December 31, 2003,
partners' capital totaled $8,949,132, a net decrease of $2,087,891 from
December 31, 2002 including capital redemptions of $2,638,348. Net Asset
Value per Unit at December 31, 2003 amounted to $1,090.08 as compared to
$1,031.12 at December 31, 2002, an increase of $58.96 or 5.72%.
Fourth Quarter 2003
-------------------
The economy continued to grow in the fourth quarter, though at a slower
pace than the third quarter. The futures markets were very volatile, with
many trends underway that the traders were able to capitalize on.
In October 2003, the Partnership had a gain of 2.98%. There were large
gains in stock indices, agricultural commodities and foreign currencies,
with smaller gains in base metals. There were losses in energy and
interest rates.
In November 2003, the Partnership had a small loss of 0.36%. There were
some gains related to stock indices, foreign currencies and precious
metals. However, these were offset by losses in most of the other sectors.
In December 2003, the Partnership had a gain of 3.33%. There were gains in
stock indices and foreign currencies, with smaller gains in metals. There
were some losses in agricultural commodities and energy.
Overall, the Partnership had a total return of 6.02% for the quarter and
5.72% for the year ended December 31, 2003. The majority of the
Partnership's trading gains for the fourth quarter 2003 were in foreign
currencies and the largest loss was in energy.
Third Quarter 2003
------------------
The economy continued to improve in the third quarter. The equity markets
were mostly up. Most analysts expect the economy to continue to improve
for the remainder of the year.
In July 2003, the Partnership had a loss of 4.03%. There were losses in
bonds and other interest rates, and foreign currencies. There were gains
in agricultural commodities and energy.
In August 2003, the Partnership had a gain of 0.80%. The gain was related
to stock indices as no other types of contracts were traded during the
month.
In September 2003, the Partnership had a gain of 1.74%. There were gains
in stock indices, agricultural commodities, foreign currencies and
interest rates. There were losses in energy and metals.
14
Overall, the Partnership had a total return of (1.58)% for the quarter and
(0.29)% for the nine months ended September 30, 2003. The majority of the
Partnership's trading gains for the third quarter 2003 were in stock
indices and the largest loss occurred in interest rate futures. In
September 2003, a new trader, Clarke Capital Management, was added to the
Partnership.
Second Quarter 2003
-------------------
Futures were somewhat more stable in the second quarter as compared to the
first. The war with Iraq ended, and the stock markets began a steady climb
that lasted through the end of the quarter.
In April 2003, the Partnership had a loss of 0.11%. There were gains in
grains and currencies. However, these were mostly offset by losses in
other sectors, including stock indices.
In May 2003, the Partnership had a gain of 1.47%. There were gains in
currencies and interest rates, especially bonds and stock indices. There
were losses in agricultural commodities, metals and energy.
In June 2003, the Partnership had a loss of 2.23%. There were losses in
agricultural commodities, bonds, metals, energy and currencies. There were
gains in stock indices and short-term interest rates.
Overall, the Partnership's rate of return was (0.90)% for the quarter and
1.32% for the six months ended June 30, 2003. The majority of the
Partnership's trading gains for the second quarter were in foreign
currencies and equities and the largest loss was in agricultural
commodities.
First Quarter 2003
------------------
The futures markets were volatile in the first quarter of 2003. The
looming war with Iraq caused energy prices to skyrocket. Many other
markets were choppy due to this uncertainty. Consumer confidence dropped
dramatically. The traders were able to capitalize on the volatility in the
markets.
In January 2003, the Partnership had a gain of 7.02%. There were very
large gains in the energy, foreign currencies, stock indices, precious and
base metals, and certain agricultural commodities. The losses were
primarily limited to grains and short-term interest rates.
In February 2003, the Partnership had a gain of .45%. There were large
gains in energy, with smaller gains in currencies and interest rates.
These gains were primarily offset by losses in stock indices and metals.
In March 2003, the Partnership had a loss of 4.90%. There were some small
gains in stock indices and short-term interest rates. However, the losses
in other sectors, especially energy, were far greater.
Overall, the Partnership had a total return of 2.24% for the quarter. The
majority of the Partnership's trading gains were in energy and foreign
currencies and the largest loss was in metal futures.
Year Ended December 31, 2002
----------------------------
2002 had net income of $1,336,037 or $115.07 per Unit. At December 31,
2002, partners' capital totaled $11,037,023, a net decrease of $901,649
from December 31, 2001 including capital redemptions of $2,237,686. Net
Asset Value per Unit at December 31, 2002 amounted to $1,031.12, as
compared to $920.18 at December 31, 2001, an increase of $110.94.
Fourth Quarter 2002
-------------------
The futures markets continued to be very volatile in the fourth quarter of
2002. The ongoing threat of war with Iraq, and its impact on the energy
markets, caused much of the volatility. Gold prices soared in part due to
this uncertainty, as well as uncertainty over economic prospects for the
future. The equity markets were up, for the most part, at the end of the
quarter.
15
The Long/Short Growth Fund started the quarter with a loss in October of
4.05%. There were gains in stock indices and certain agricultural
commodities. These gains were more than offset by losses in interest
rates, metals, foreign currencies and energy.
In November, the Fund lost 1.85%. The Fund had some gains in agricultural
commodities, stock indices and base metals. However, the gains were not
enough to offset the losses in foreign currencies, energy and interest
rates.
In December, the Fund posted a gain of 2.75%. The Fund had gains in
equities, foreign currencies and interest rates. There were some losses in
certain agricultural commodities and base metals.
The Fund finished the year with a gain of 12.06%. The volatility in the
futures markets allowed some traders to capitalize on trends in various
markets.
Third Quarter 2002
------------------
The futures markets continued to be volatile in the third quarter of 2002.
The equity markets suffered losses during the quarter, which impacted the
commodities markets. The looming threat of war with Iraq also had a big
impact on the markets, especially oil and gas futures.
The Partnership started the quarter with a loss in July of (2.58)%. There
were losses in stock indices along with losses in metals, foreign
currencies and certain of the agricultural commodities. These losses were
partially offset by gains in interest rates, and some of the agricultural
commodities.
In August, the Partnership gained 6.11%. There were gains in stock
indices. There were also gains in grains and other agricultural
commodities, as well as interest rates. There were losses in foreign
currencies and base metals.
In September, the Partnership posted another gain of 0.47%. There were
gains in interest rates, energy and base metals. These gains were mostly
offset by losses in stock indices, certain of the agricultural
commodities, and foreign currencies.
The Partnership had a total return of 3.86% for the quarter and 15.80% for
the nine months ended September 30, 2002. For the third quarter 2002, the
majority of the Partnership's trading gains were in interest rate futures
and the largest loss was in stock index futures.
Second Quarter 2002
-------------------
The futures markets continued to be volatile in the second quarter of
2002, though there was a surge at the end of the quarter. The extreme
volatility of the equity markets, mainly on the downside, had a major
impact on the commodities markets. Many of the US and overseas stock
indices and foreign currencies were very active. Some of this was the
result of the corporate scandals that continue to rock the markets.
The Partnership had a good second quarter, starting in April with a gain
of .56%. There was a gain in S & P 500 options, with gains in lean hogs
and corn futures. These were partially offset by losses in the S & P 500
Index, copper futures and coffee futures.
In May, the Partnership continued its positive quarter with a gain of
5.66%. There were gains in foreign currencies, stock indices and precious
metals. There were losses in the energy complex and some agricultural
commodities.
In June, the Partnership posted another gain of 2.16%. There were gains in
British Pounds, the S & P 500 Index, Euro futures and EuroDollar futures.
These were partially offset by losses in options on the S & P 500, lean
hogs and sugar futures.
16
The Partnership had a total return of 8.54% for the quarter and 11.50% for
the six months ended June 30, 2002. For the second quarter 2002, the
majority of the Partnership's trading gains were in foreign currencies and
the largest loss was in the energy markets.
First Quarter 2002
------------------
The futures markets remained choppy in the first quarter of 2002. While
the economy was showing some signs of improvement, there were also some
negative signs that caused uncertainty. The troubles in the Middle East
lead to large increases in oil and gas prices. Gold prices also moved
higher early in the quarter, but gave back some of their gains at the end
of the quarter.
In January 2002, the Partnership gained a modest 0.99%. There were large
gains in stock index, along with some smaller gains in energy and foreign
currencies. These were mostly offset by losses in interest rates,
agricultural commodities and precious metals.
In February 2002, there was another gain of 4.34%. This resulted from
gains in stock index, once again. There were also gains in interest rates
and agricultural commodities. There were some losses incurred in energy
and foreign currencies.
In March 2002, the Partnership incurred a loss of 2.51%. Again there were
profits in the stock indices. These however were offset by losses in
foreign currencies, interest rates and agricultural commodities. Coffee
and Eurodollar futures incurred the largest losses.
For the first quarter 2002, the majority of the Partnership's gains came
from profits in options on S&P 500 Index futures. The largest loss for the
quarter was from coffee.
(c) Possible Changes
----------------
The General Partner reserves the right to terminate and/or engage
additional Commodity Trading Advisors or change any of the Partnership's
clearing arrangements.
Item 8. Financial Statements and Supplementary Data.
Financial statements meeting the requirements of Regulation S-X are listed
following this report. The Supplementary Financial Information specified
by Item 302 of Regulation S-K is included in Item 7.(b), Results of
Operations.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures.
None.
Item 9A. Controls and Procedures.
ProFutures, Inc., as General Partner of ProFutures Long/Short Growth Fund,
L.P., with the participation of the General Partner's President and Chief
Financial Officer, has evaluated the effectiveness of the design and
operation of its disclosure controls and procedures (as defined in the
Securities Exchange Act of 1934 Rules 13a-15(e) or 15d-15(e)) with respect
to the Partnership as of the end of the period covered by this annual
report. Based on their evaluation, the President and Chief Financial
Officer have concluded that these disclosure controls and procedures are
effective. There were no changes in the General Partner's internal control
over financial reporting applicable to the Partnership identified in
connection with the evaluation required by paragraph (d) of Exchange Act
Rules 13a-15 or 15d-15 that occurred during the last fiscal quarter that
have materially affected, or are reasonably likely to materially affect,
internal control over financial reporting applicable to the Partnership.
17
PART III
Item 10. Directors and Executive Officers of the Partnership.
The Partnership is a limited partnership and therefore does not have any
directors or officers. The Partnership's General Partner, ProFutures,
Inc., administers and manages the affairs of the Partnership.
The Board of Directors of ProFutures, Inc., in its capacity as the audit
committee for the Partnership, has determined that Debi B. Halbert
qualifies a an "audit committee financial expert" in accordance with the
applicable rules and regulations of the Securities and Exchange
Commission. She is not independent of management.
The Partnership has adopted a Code of Ethics that applies to the
Partnership and its affiliates as well as the Executive Officers of
ProFutures, Inc. The Partnership's Code of Ethics is attached hereto as an
Exhibit.
Item 11. Executive Compensation.
As discussed above, the Partnership does not have any officers, directors
or employees. The General Partner received monthly management fees which
aggregated $160,027 for 2004.
Item 12. Security Ownership of Certain Beneficial Owners.
(a) Security Ownership of Certain Beneficial Owners
-----------------------------------------------
The Partnership knows of no one person who beneficially owns more than 5%
of the Units of Limited Partnership Interest.
(b) Security Ownership of Management
--------------------------------
Under the terms of the Limited Partnership Agreement, the General Partner
exclusively manages the Partnership's affairs. As of December 31, 2004,
the General Partner owned 61 Units.
(c) Changes in Control
------------------
None.
Item 13. Certain Relationships and Related Transactions.
See prospectus dated August 18, 2000, page ii, Organizational Chart, and
pages 36 - 37, Conflicts of Interest, for information concerning
relationships and transactions between the General Partner, the Advisors,
the Broker and the Partnership.
Item 14. Principal Accounting Fees and Services.
Arthur F. Bell, Jr. & Associates, L.L.C. billed the Partnership aggregate
fees for services rendered to the Partnership for the last two fiscal
years as follows:
2004 2003
----------------- ------------------
Audit Fees (1) $ 41,282 $ 34,487
Audit-Related Fees (2) $ 13,711 $ 11,462
Tax Fees (3) $ 5,620 $ 4,001
All Other Fees (4) $ 3,000 $ 2,600
18
(1) Audit fees relate to the annual audit, quarterly reviews, and
assistance with and review of documents filed with the Securities and
Exchange Commission.
(2) Audit-Related Fees relate to the monthly recalculation of net asset
value and net asset value per unit, from information provided by the
General Partner, and consultation on the preparation of month-end
account statements provided to each partner.
(3) Tax Fees relate to the preparation of the U.S. Partnership and
applicable state information tax returns.
(4) All Other Fees relate to the preparation of performance records and
related footnotes for the Partnership and each Advisor.
The Board of Directors of ProFutures, Inc., in its capacity as the audit
committee for the Partnership, approved all of the services described
above. The audit committee has determined that the payments made to its
independent accountant for non-audit services are compatible with
maintaining such auditor's independence.
The audit committee explicitly pre-approves all audit and non-audit
services and all engagement fees and terms, except as otherwise permitted
by regulation.
PART IV
Item 15. Exhibits and Financial Statement Schedules.
(a) 1. Financial Statements.
The following are included with the 2004 Report of Independent
Registered Public Accounting Firm, a copy of which is filed herewith
as Exhibit 13.01.
Affirmation of ProFutures, Inc.
Report of Independent Registered Public Accounting Firm
Statements of Financial Condition
Condensed Schedules of Investments
Statements of Operations
Statements of Changes in Partners' Capital
Notes to Financial Statements
(a) 2. Financial Statement Schedules.
Not applicable, not required, or information included in financial
statements.
(a) 3. Exhibits.
Incorporated by reference - previously filed:
Form S-1 and Prospectus dated August 18, 2000 and exhibits thereto.
3.1 Amendment to Second Amended and Restated Limited Partnership
Agreement dated November 10, 2000 (filed as an exhibit to the
2000 Form 10-K).
10.7 Form of Amended and Restated Stock Subscription Agreement by and
between ABN AMRO Incorporated and ProFutures, Inc. dated May 20,
2002 (filed as an exhibit to the June 30, 2002 Form 10-Q).
19
(b) Exhibits
--------
13.1 2004 Report of Independent Registered Public Accounting Firm.
14.1 Code of Ethics.
31.01 Certification of Gary D. Halbert, President, pursuant to Rules
13a-14 and 15d-14 of the Securities Exchange Act of 1934.
31.02 Certification of Debi B. Halbert, Chief Financial Officer,
pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange
Act of 1934.
32.01 Certification of Gary D. Halbert, President, pursuant to 18
U.S.C. Section 1350 as enacted by Section 906 of The
Sarbanes-Oxley Act of 2002.
32.02 Certification of Debi B. Halbert, Chief Financial Officer,
pursuant to 18 U.S.C. Section 1350 as enacted by Section 906 of
The Sarbanes-Oxley Act of 2002.
(c) Financial Statement Schedules
-----------------------------
Not Applicable, not required, or information included in financial
statements.
20
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
PROFUTURES LONG/SHORT GROWTH FUND, L.P.
(Partnership)
March 30, 2005 By /s/ GARY D. HALBERT
- --------------------------------------------- ---------------------------------------------------------------
Date Gary D. Halbert, President and Director
ProFutures, Inc.
General Partner
March 30, 2005 By /s/ DEBI B. HALBERT
- --------------------------------------------- ---------------------------------------------------------------
Date Debi B. Halbert, Chief Financial Officer,
Treasurer and Director
ProFutures, Inc.
General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities and on the dates indicated.
March 30, 2005 By /s/ GARY D. HALBERT
- --------------------------------------------- ---------------------------------------------------------------
Date Gary D. Halbert, President and Director
ProFutures, Inc.
General Partner
March 30, 2005 By /s/ DEBI B. HALBERT
- --------------------------------------------- ---------------------------------------------------------------
Date Debi B. Halbert, Chief Financial Officer,
Treasurer and Director
ProFutures, Inc.
General Partner
21