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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, 2000
--------------
Commission File number: 0-18500
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Alternative Asset Growth Fund, L.P.
-----------------------------------
(Exact name of Partnership as specified in charter)
Delaware 74-2546493
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
c/o ProFutures, Inc.,
11612 Bee Cave Road, Suite 100,
Austin, Texas 78738
-------------------------------
(Address of principal executive offices)
Partnership's telephone number
(800) 348-3601
--------------
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
State the aggregate market value of the voting stock held by non-affiliates
of the Partnership. The aggregate market value shall be computed by reference
to the price at which the stock was sold, or the average bid and asked prices
of such stock, as of a specified date within 60 days prior to the date of
filing.
Not applicable
DOCUMENTS INCORPORATED BY REFERENCE
Partnership's Prospectus dated August 31, 1990 and Supplement
thereto dated March 1, 1991
PART I
Item 1. Business.
(a) General Development of Business
-------------------------------
Alternative Asset Growth Fund, L.P. (the "Partnership") was organized on
April 28, 1989 under the Delaware Revised Uniform Limited Partnership
Act. The General Partner and Commodity Pool Operator of the
Partnership is ProFutures, Inc., a Texas corporation. The General
Partner's address is 11612 Bee Cave Road, Suite 100, Austin, Texas 78738
and its telephone numbers are 1-800-348-3601 and (512) 263-3800.
The Partnership filed a registration statement with the U.S. Securities
and Exchange commission for the sale of a minimum of $4,000,000 and
maximum of $50,000,000 in Units of Limited Partnership Interest at
$1,000 each, which registration statement was effective on
September 26, 1989. On March 6, 1990 the requisite $4,000,000 level
of subscriptions was exceeded and the subscription funds were transferred
to the Partnership's account. On March 7, 1990 the Partnership commenced
trading activity and continued the offering of Units until the expiration
of the offering period.
The Unit selling price during the initial offering period was $1,000.
After the commencement of trading, Unit purchasers acquired Units at
the month-end Net Asset Value per Unit (as defined in the limited
partnership agreement) plus a pro rata portion of unamortized
organization and offering expenses.
The Partnership later continued the offering and sale of Units on
August 31, 1990, pursuant to a post-effective amendment dated July 16,
1990 and Prospectus dated August 31, 1990. This offering terminated on
May 30, 1991. The Partnership issued an aggregate of 32,516.437 Units
of Limited Partnership Interest for total contributions of $36,976,906
exclusive of account opening fees.
(b) General Description of the Business
-----------------------------------
ProFutures, Inc. a Texas corporation, is the General Partner of the
Partnership which administers the business and affairs of the
Partnership exclusive of its trading operations. Trading decisions are
made by independent Commodity Trading Advisors chosen by the General
Partner. As of December 31, 2000 there were four Commodity Trading
Advisors: Campbell & Co., Inc., Crabel Capital Management, LLC, Gamma
Capital Management, LLC and Grinham Managed Funds Pty. Ltd.
ProFutures, Inc. 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.
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 a profit depends largely on the
success of the Advisors in identifying market trends and price movements
and buying or selling accordingly.
The Partnership's Trading Policies are set forth on pages 77-78 of the
Prospectus, dated August 31, 1990, which is incorporated herein by
reference. Material changes in the Trading Policies as described in
the Prospectus must be approved by a vote of a majority of the
outstanding Units of Limited Partnership Interest. A change in
contracts traded will not be deemed to be a material change in the
Trading Policies.
(c) Trading Methods and Advisors
----------------------------
Futures traders basically rely on either or both of two types of
analysis for their trading decisions, "technical" or "fundamental".
Technical analysis uses the theory that a study of the markets will
provide a means of anticipating price changes. Technical analysis
generally will include a study of actual daily, weekly and monthly price
fluctuations, volume variations and changes in open interest, utilizing
charts and/or computers for analysis of these items. Fundamental
analysis, on the other hand, relies on a study and evaluation of
external factors which affect the price of a futures contract in order
to predict prices. These include political and economic events,
weather, supply and demand and changes in interest rates.
The respective Advisors' trading strategies attempt to detect trends in
price movements for the commodities monitored by them. They normally
seek to establish positions and maintain such positions while the
particular market moves in favor of the position and to exit the
particular market and/or establish reverse positions when the favorable
trend either reverses or does not materialize. These trading strategies
are not normally successful if a particular market is moving in an
erratic and non-trending manner.
Because of the nature of the commodities markets, prices frequently
appear to be trending when a particular market is, in fact, without a
trend. In addition, the trading strategies may identify a particular
market as trending favorably to a position even though actual market
performance thereafter is the reverse of the trend identified.
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 instruction unless the General Partner determines that the
Partnership's trading policies have been violated. The General Partner
allocates or reallocates assets among its current Advisors or any others
it may select in the future.
Notional Funding Note: As of December 31, 2000, the Partnership has
allocated notional funds to Advisors equal to approximately 19.8% of the
Partnership's cash and/or other margin - qualified assets. Of course,
this percentage may be higher or lower over any given 12 month period.
The management fees paid to an Advisor, if any, are a percentage of the
nominal account size of the account if an account had been notionally
funded. The nominal account size is equal to a specific amount of funds
initially allocated to an Advisor which increases by profits and
decreases by losses in the account, but not by additions to or
withdrawals of actual funds from the account. Some, but not all,
Advisors are expected to be allocated notional funds, and not all of the
Advisors allocated notional funds are expected to be paid management
fees. Further, the amount of cash and/or other margin-qualified assets
in an account managed by an Advisor will vary greatly at various times
in the course of the Partnership's business, depending on the General
Partner's general allocation strategy and pertinent margin requirements
for the trading strategies undertaken by an Advisor.
None of the Advisors or their respective principals own any Units of the
Partnership. The Partnership's Advisors are independent Commodity Trading
Advisors and are not affiliated with the General Partner; however, all
are also Advisors to other commodity pools with which the General
Partner is currently associated. Each Advisor is registered with the CFTC
and is a member 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.
(d) Fees, Compensation and Expenses
-------------------------------
The descriptions and definitions contained in "Fees, Compensation and
Expenses" on Pages 36- 38 of the Prospectus dated August 31, 1990 are
incorporated herein by reference.
The General Partner, for its services, receives a monthly administrative
fee equal to 1/6 of 1% of month-end Net Asset Value (approximately 2%
annually).
Effective June 1, 2000, ATA Research, Inc. resigned as the Partnership's
Trading Manager and Kenmar Global Strategies Inc. (Kenmar) was engaged to
serve as a consultant and perform similar functions as those previously
performed by the Trading Manager. Kenmar assists the General Partner in
making decisions about which commodity trading advisors to hire, the
allocations among the Advisors and the day-to-day monitoring and risk
management of the Partnership's trading activities. Kenmar receives the
same fee as previously paid to the Trading Manager, a monthly management
fee equal to 1/12 of 1% of the month-end Net Asset Value (approximately 1%
annually).
A Consultant, for its administrative services to the Partnership, receives
a monthly consulting fee equal to 1/6 of 1% of the month-end Net Asset
Value (approximately 2% annually).
The current Trading Advisors receive management fees ranging from 1% to
2% annually of Allocated Net Asset Value (as defined in the trading
advisory contracts). In addition, the Advisors receive quarterly
incentive fees ranging from 20% to 23% of Trading Profits (as defined).
The quarterly incentive fees are payable only on cumulative profits
achieved by the respective Advisor. For example, if one of the Advisors
to the Partnership experiences a loss after an incentive fee payment is
made, that Advisor will retain such payments but will receive no further
incentive fees until such Advisor has recovered the loss and then
generated subsequent Trading Profits (as defined). Consequently, an
incentive fee may be paid to one Advisor but the Partnership may
experience no change or a decline in its Net Asset Value because of the
performance of other Advisors. The General Partner may allocate or
reallocate the Partnership's assets at any time among the current
Advisors or any others that may be selected. Upon termination of the
present Advisors' contracts or at any other time in the discretion of
the General Partner, the Partnership may employ other advisors whose
compensation may be calculated without regard to the losses which may be
incurred by the present Advisors. Similarly, the Partnership may renew
its relationship with each Advisor on the same or different terms.
(e) Brokerage Arrangements
----------------------
The General Partner, among other responsibilities, has the duty to select
the brokerage firms through which the Partnership's trading will be
executed. The General Partner has selected ING (U.S.) Securities, Futures
& Options Inc. (ING) as the Partnership's primary clearing broker. ING is
registered with the CFTC as a Futures Commission Merchant. It is a member
of the NFA and a clearing member of the Chicago Board of Trade and the
International Monetary Market of the Chicago Mercantile Exchange.
(f) Financial Information About Industry Segments
---------------------------------------------
The Partnership operates in only one industry segment, that of the
speculative trading of futures, options and forward contracts and other
commodity interests. See also "Description of Futures Trading", pages 81
to 84 of the Prospectus dated August 31, 1990, 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 with the CFTC as a commodity pool operator and each Advisor is
registered as a commodity trading advisor. 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
respective Advisors as a commodity trading advisor, 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 82-83 of the
Prospectus dated August 31, 1990, 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 some of
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.
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 Units of Limited
Partnership Interest ("Units") during the fiscal year ended December 31,
2000.
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 Units
of Limited Partnership Interest.
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 within 15 business days after the month end, provided that all
liabilities, contingent or otherwise, of the Partnership, except any
liability to partners on account of their capital contributions, 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 Interest as of
December 31, 2000 was:
General Partner's Capital 1
Limited Partners' Capital 577
At the commencement of trading on March 7, 1990 there were 290 Limited
Partners holding 4,338.536 Units of Limited Partner Interest and one
General Partner holding 46 Units of General Partner Interest. At
December 31, 2000, there were 577 Limited Partners holding 6,575.752
Units and 91.729 Units held by the General Partner.
(c) Distributions
-------------
The Partnership does not anticipate making any distributions to
investors.
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 2000, 1999, 1998, 1997 and 1996.
2000
----
Realized Gains (Losses) $ (1,534,607)
Change in Unrealized Gains (Losses)
on Open Contracts (173,707)
Interest Income 573,187
Management Fees 648,717
Incentive Fees 248,648
Net Income (Loss) (2,558,071)
General Partner Capital 109,373
Limited Partner Capital 7,840,545
Partnership Capital 7,949,918
Net Income (Loss) Per Limited and
General Partner Unit* (320.22)
Net Asset Value Per Unit At
End of Year 1,192.34
1999
----
Realized Gains (Losses) $ 270,179
Change in Unrealized Gains (Losses)
on Open Contracts 496,473
Interest Income 666,712
Management Fees 934,591
Incentive Fees 348,829
Net Income (Loss) (469,685)
General Partner Capital 479,238
Limited Partner Capital 12,824,661
Partnership Capital 13,303,899
Net Income (Loss) Per Limited and
General Partner Unit* (47.22)
Net Asset Value Per Unit At
End of Year 1,481.64
1998
----
Realized Gains (Losses) $ 4,228,116
Change in Unrealized Gains (Losses)
on Open Contracts (559,093)
Interest Income 810,610
Management Fees 986,596
Incentive Fees 979,982
Net Income (Loss) 1,756,068
General Partner Capital 495,271
Limited Partner Capital 16,233,207
Partnership Capital 16,728,478
Net Income (Loss) Per Limited and
General Partner Unit* 150.78
Net Asset Value Per Unit At
End of Year 1,531.21
1997
----
Realized Gains (Losses) $ 2,996,442
Change in Unrealized Gains (Losses)
on Open Contracts 515,373
Interest Income 984,111
Management Fees 1,135,594
Incentive Fees 768,675
Net Income (Loss) 1,716,744
General Partner Capital 442,903
Limited Partner Capital 16,850,663
Partnership Capital 17,293,566
Net Income (Loss) Per Limited and
General Partner Unit* 121.38
Net Asset Value Per Unit At
End of Year 1,369.31
1996
----
Realized Gains (Losses) $ 3,478,456
Change in Unrealized Gains (Losses)
on Open Contracts (1,019,712)
Interest Income 1,020,487
Management Fees 1,257,031
Incentive Fees 542,057
Net Income (Loss) 833,088
General Partner Capital 404,722
Limited Partner Capital 18,465,411
Partnership Capital 18,870,133
Net Income (Loss) Per Limited and
General Partner Unit* 49.25
Net Asset Value Per Unit At
End of Year 1,251.26
----------------
* Based on weighted average units outstanding
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
(a) Liquidity
---------
Substantially all of the Partnership's assets are held in cash or cash
equivalents. 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.
Most United States exchanges (but generally not foreign exchanges,
or banks or broker-dealer firms in the case of foreign currency
forward contracts) limit by regulations the amount of fluctuation
in commodity futures contract prices during a single trading day.
The regulations specify what are referred to as "daily price
fluctuation limits". The daily limits establish the maximum amount
the price of a futures contract may vary either up or down from the
previous day's settlement price at the end of the trading session.
Once the "daily limit" has been reached in a particular commodity, no
trades may be made at a price beyond the limit. Positions in the
commodity could then be taken or liquidated only if traders are willing
to effect trades at or within the limit during the period for trading.
Because the "daily limit" rule only governs price movement for a
particular trading day, it does not limit losses and may in fact
substantially increase losses because it may prevent the liquidation
of unfavorable positions. Commodity futures prices have occasionally
moved the daily limit for several consecutive trading days and thereby
prevented prompt liquidation of futures positions on one side of the
market, subjecting those commodity futures traders to substantial
losses.
(b) Capital Resources
-----------------
The Partnership is currently not offering its Units for sale (See Item 1
above.) Since the Partnership'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 Partnership's profitability.
(c) Results of Operations
---------------------
The General Partner, directly and/or indirectly through its Consultant,
has established procedures to actively monitor market risk and minimize
credit risk, although there can be no assurance that it will, in fact,
succeed in doing so. The General Partner's basic market risk control
procedures consist of continuously monitoring the trading activity of the
various trading advisors, with the actual market risk controls being
applied by the advisors themselves. The General Partner seeks to minimize
credit risk primarily by depositing and maintaining the Partnership's
assets at financial institutions and brokers which the General Partner
believes to be creditworthy. 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.
Due to the speculative nature of trading commodity interests, 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, 2000
----------------------------
2000 had a net loss of $(2,588,071) or $(320.22) per Unit. At
December 31, 2000, partners' capital totaled $7,949,918, a net decrease
of $5,353,981 from December 31, 1999. Net Asset Value per Unit at
December 31, 2000 amounted to $1,192.34, as compared to $1,481.64 at
December 31, 1999, a decrease of 19.53%.
The net loss for 2000 resulted from trading losses in all market sectors
except the energy markets. The interest rates and metals market sectors
incurred the largest trading losses. Partners' capital was further
reduced by redemptions in the amount of $2,800,910 during 2000.
Year Ended December 31, 1999
----------------------------
1999 had a net loss of $(469,685) or $(47.22) per Unit. At December 31,
1999, partners' capital totaled $13,303,899, a net decrease of
$3,424,579 from December 31, 1998. Net Asset Value per Unit at
December 31, 1999 amounted to $1,481.64, as compared to $1,531.21 at
December 31, 1998, a decrease of 3.24%.
The net loss for 1999 resulted primarily from losses in the foreign
currencies and agricultural commodities markets and were only slightly
offset by gains in the energy, equities and metals markets. Partners'
capital was further reduced by $2,954,894 of redemptions during 1999.
Year Ended December 31, 1998
----------------------------
Net income for 1998 amounted to $1,756,068 or $150.78 per Unit. At
December 31, 1998, partners' capital totaled $16,728,478, a net decrease
of $565,088 from December 31, 1997. Net Asset Value per Unit at
December 31, 1998 amounted to $1,531.21, as compared to $1,369.31 at
December 31, 1997, an increase of 11.82%.
Net income for 1998 resulted primarily from gains in the interest rate
and equity markets, partially offset by losses in agricultural
commodities and metals markets. Net income was offset by redemptions
of Units, resulting in a net decrease in partners' capital.
(d) Possible Changes
----------------
The General Partner reserves the right to terminate Commodity Trading
Advisors (see Prospectus) and/or engage additional Commodity Trading
Advisors in the future. Furthermore, the General Partner reserves the
right to change any of the Partnership's clearing arrangements to
accommodate any new Commodity Trading Advisors.
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 not applicable.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures.
None.
PART III
Item 10. Directors and Executive Officers of the Partnership.
The Partnership has no directors or executive officers. The General
Partner of the Partnership is ProFutures, Inc., which administers and
manages the Partnership's affairs.
Gary D. Halbert, born 1952, is the Chairman, President, Director and the
principal shareholder of ProFutures, Inc. Debi Halbert, born 1955, is
the Chief Financial Officer, Director and a minority shareholder of
ProFutures, Inc.
Patrick W. Watson, born 1964, is Vice President of the General Partner.
He is involved in research, investment strategy, business development
and investor relations.
John M. (Mike) Posey, born 1955, is Vice President of Marketing of the
General Partner.
Jon P. Meyer, born 1964, is Vice President of Operations of the General
Partner.
There have been no administrative, civil or criminal proceedings
against Gary D. Halbert, Debi Halbert, Patrick Watson, Mike Posey,
Jon Meyer or ProFutures, Inc. material to the Partnership.
Item 11. Executive Compensation.
The General Partner receives, as compensation for its services, monthly
Administration Management Fees equal to 1/6 of 1% of month-end Net Asset
Value (approximately 2% annually), which aggregated $194,879 for 2000.
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,
2000 the General Partner and its principals owned 91.729 Units of
General Partnership Interest.
(c) Changes in Control
------------------
None.
Item 13. Certain Relationships and Related Transactions.
See Prospectus dated August 31, 1990, pages 24-27, which is incorporated
herein by reference, for information concerning relationships and
transactions between the General Partner, the Trading Manager and/or
Consultant, the Commodity Broker and the Partnership.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) 1. Financial Statements
See Index to Financial Statements on Page F-1.
The Financial Statements begin on Page F-3.
(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 September 26, 1989 and exhibits
thereto.
Post-effective amendment No.1 dated July 19, 1990.
Prospectus dated August 31, 1990.
March 1, 1991 Supplement to Prospectus dated August 31, 1990.
*1.1 Form of Selling Agreement between the Registrant and
ProFutures Financial Group, Inc.
*1.2 Form of Additional Selling Agents Agreement between
ProFutures Financial Group, Inc. and certain
Additional Selling Agents.
*3.1 Agreement of Limited Partnership (attached to the
Prospectus as Exhibit A).
*3.2 Subscription Agreement and Power of Attorney
(attached to the Prospectus as Exhibit B).
*3.3 Request for Redemption Form (attached to the
Prospectus as Exhibit C).
*5.1 Opinion of Counsel as to the legality of the Units.
*8.1 Tax Opinion of Counsel
*10.1 Form of Escrow Agreement among the Registrant, the
General Partner and First National Bank of Chicago,
the Escrow Agent.
*10.2(c) Form of Brokerage Agreement dated August 15, 1990
between the Registrant and Virginia Trading division
of Quantum Financial Services, Inc.
*10.4(a) Form of Trading Manager Agreement between the
Registrant and ATA Research, Inc.
*10.4(b) Form of Consulting Agreement between Registrant and
Business Marketing Group, Inc.
*10.4(c) Form of Stock Subscription Agreement by and between
ING (U.S.) Securities, Futures & Options Inc. and
ProFutures, Inc.
- -----------------------
* Previously filed in the June 13, 1989 Registration Statement; the
September 1, 1989 Pre-effective amendment No.1 thereto; the July 16,
1990 post-effective amendment thereto; and/or Form 10-Q for the quarter
ended September 30, 1991; and/or Forms 10-Q for the quarters ended
March 31, 1992 and September 30, 1992; and/or Forms 10-Q for the
quarters ended March 31, June 30 and September 30, 1993; and/or
Form 10-K for the year 1994; and/or Forms 10-Q for the quarters ended
March 31, June 30 and September 30, 1994; and/or Form 10-Q for the
quarter ended March 31, 1995. Exhibit 10.4(c) was filed with the 1998
Form 10-K.
(b) Reports on Form 8-K
-------------------
None.
(c) Exhibits
--------
None.
(d) Financial Statement Schedules
-----------------------------
Not Applicable, not required, or information included in financial
statements.
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.
ALTERNATIVE ASSET GROWTH FUND, L.P.
(Partnership)
By /s/ GARY D. HALBERT
- ---------------------------- -----------------------------------------
Date Gary D. Halbert, President and Director
ProFutures, Inc.
General Partner
By /s/ DEBI B. HALBERT
- ---------------------------- -----------------------------------------
Date Debi B. Halbert, Chief Financial Officer,
Treasurer and Director
ProFutures, Inc.
General Partner
ALTERNATIVE ASSET GROWTH FUND, L.P.
-----------------
TABLE OF CONTENTS
-----------------
Independent Auditor's Report F-2
Financial Statements
Statements of Financial Condition
December 31, 2000 and 1999 F-3
Statements of Operations for the Years
Ended December 31, 2000, 1999 and 1998 F-4
Statements of Changes in Partners' Capital (Net Asset Value)
For the Years Ended December 31, 2000, 1999 and 1998 F-5
Notes to Financial Statements F-6 - F-10
F-1
FINANCIAL STATEMENTS AND
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ALTERNATIVE ASSET GROWTH FUND, L.P
INDEPENDENT AUDITOR'S REPORT
----------------------------
To the Partners
Alternative Asset Growth Fund, L.P.
We have audited the accompanying statements of financial condition of
Alternative Asset Growth Fund, L.P. as of December 31, 2000 and 1999, and
the related statements of operations and changes in partners' capital (net
asset value) for the years ended December 31, 2000, 1999 and 1998. 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 audits.
We conducted our audits 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 audits provide 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 Alternative Asset Growth
Fund, L.P. as of December 31, 2000 and 1999, and the results of its operations
and the changes in its net asset values for the years ended December 31, 2000,
1999 and 1998, in conformity with generally accepted accounting principles.
/s/ ARTHUR F. BELL, JR. & ASSOCIATES, L.L.C.
Hunt Valley, Maryland
February 6, 2001
F-2
ALTERNATIVE ASSET GROWTH FUND, L.P.
STATEMENTS OF FINANCIAL CONDITION
December 31, 2000 and 1999
------------
2000 1999
---- ----
ASSETS
Equity in broker trading accounts
Cash $ 8,028,861 $13,029,093
Net option premiums paid (received) 0 35,507
Unrealized gain on open contracts 522,626 696,333
----------- -----------
Deposits with brokers 8,551,487 13,760,933
Cash 16,583 338
----------- -----------
Total assets $ 8,568,070 $13,761,271
=========== ===========
LIABILITIES
Accounts payable $ 12,961 $ 2,348
Commissions and other trading fees
on open contracts 4,548 8,985
Incentive fees payable 102,171 127,961
Management fees payable 89,245 103,330
Redemptions payable 409,227 214,748
----------- -----------
Total liabilities 618,152 457,372
----------- -----------
PARTNERS' CAPITAL (Net Asset Value)
General Partner - 92 and 323 units outstanding
at December 31, 2000 and 1999 109,373 479,238
Limited Partners - 6,575 and 8,656 units
outstanding at December 31, 2000 and 1999 7,840,545 12,824,661
----------- -----------
Total partners' capital
(Net Asset Value) 7,949,918 13,303,899
----------- -----------
$ 8,568,070 $13,761,271
=========== ===========
See accompanying notes.
F-3
ALTERNATIVE ASSET GROWTH FUND, L.P.
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2000, 1999 and 1998
------------
2000 1999 1998
---- ---- ----
INCOME
Trading gains (losses)
Realized $(1,534,607) $ 270,179 $ 4,228,116
Change in unrealized (173,707) 496,473 (559,093)
----------- ----------- -----------
Gain (loss) from trading (1,708,314) 766,652 3,669,023
Interest income 573,187 666,712 810,610
----------- ----------- -----------
Total income (loss) (1,135,127) 1,433,364 4,479,633
----------- ----------- -----------
EXPENSES
Brokerage commissions 380,403 481,516 584,566
Incentive fees 248,648 348,829 979,982
Management fees 648,717 934,591 986,596
Operating expenses 145,176 138,113 172,421
----------- ----------- -----------
Total expenses 1,422,944 1,903,049 2,723,565
----------- ----------- -----------
NET INCOME (LOSS) $(2,558,071) $ (469,685) $ 1,756,068
=========== =========== ===========
NET INCOME (LOSS) PER GENERAL
AND LIMITED PARTNER UNIT
(based on weighted average
number of units outstanding
during the period of 7,989,
9,947 and 11,647, respectively $ (320.22) $ (47.22) $ 150.78
=========== =========== ===========
INCREASE (DECREASE) IN NET ASSET
VALUE PER GENERAL AND LIMITED
PARTNER UNIT $ (289.30) $ (49.57) $ 161.90
=========== =========== ===========
See accompanying notes.
F-4
ALTERNATIVE ASSET GROWTH FUND, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (NET ASSET VALUE)
For the Years Ended December 31, 2000, 1999 and 1998
------------
Total Partners' Capital
Number of ------------------------------------
Units General Limited Total
--------- --------- ----------- -----------
Balances at
December 31,
1997 12,629 $ 442,903 $16,850,663 $17,293,566
Net income for
the year ended
December 31,
1998 52,368 1,703,700 1,756,068
Redemptions (1,704) 0 (2,321,156) (2,321,156)
-------- --------- ----------- -----------
Balances at
December 31,
1998 10,925 495,271 16,233,207 16,728,478
Net (loss) for
the year ended
December 31,
1999 (16,033) (453,652) (469,685)
Redemptions (1,946) 0 (2,954,894) (2,954,894)
-------- --------- ----------- -----------
Balances at
December 31,
1999 8,979 479,238 12,824,661 13,303,899
Net (loss) for
the year ended
December 31,
2000 (88,955) (2,469,116) (2,558,071)
Additions 4 5,000 0 5,000
Redemptions (2,316) (285,910) (2,515,000) (2,800,910)
-------- --------- ----------- -----------
Balances at
December 31,
2000 6,667 $ 109,373 $ 7,840,545 $ 7,949,918
======= ========= =========== ===========
Net Asset Value Per Unit
-------------------------------------
December 31,
2000 1999 1998
---- ---- ----
$1,192.34 $1,481.64 $1,531.21
========= ========= =========
See accompanying notes.
F-5
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
------------
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. The Partnership engages in the speculative
trading of futures contracts and options on futures contracts.
B. Regulation
As a registrant with the Securities and Exchange Commission, the
Partnership is subject to the regulatory requirements under the
Securities Act of 1933 and the Securities Exchange Act of 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.
Transactions are accounted for on the trade date. Gains or losses
are realized when contracts are liquidated. Unrealized gains
or losses on open contracts (the difference between contract
purchase price and quoted market price) are reflected in the
statement of financial condition as a net gain or loss, as there
exists a right of offset of unrealized gains or losses in
accordance with Financial Accounting Standards Board
Interpretation No. 39 - "Offsetting of Amounts Related to Certain
Contracts." Any change in net unrealized gain or loss from the
preceding period is reported in the statement of operations.
For purposes of both financial reporting and calculation of
redemption value, Net Asset Value per Unit is calculated by
dividing Net Asset Value by the number of outstanding Units.
D. Brokerage Commissions
Brokerage commissions include other trading fees and are charged
to expense when contracts are opened.
F-6
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
------------
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
-----------------------------------------------------------
E. 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.
F. 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.
G. Reclassification
Certain amounts in the 1999 and 1998 financial statements were
reclassified to conform with the 2000 presentation.
Note 2. GENERAL PARTNER
---------------
The General Partner of the Partnership is ProFutures, Inc., which
conducts and manages the business of the Partnership. The Agreement
of Limited Partnership requires the General Partner to contribute to
the Partnership an amount equal to at least the greater of (i) 3%
of aggregate capital contributions of all partners or $100,000,
whichever is less, or (ii) the lesser of 1% of the aggregate capital
contributions of all partners or $500,000.
The Agreement of Limited Partnership also requires that the General
Partner maintain a net worth at least equal to 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 general partner and
which are capitalized at less than $2,500,000; and (ii) 10% of the
aggregate capital contributions of any limited partnerships for which
it acts as general partner and which are capitalized at greater than
$2,500,000.
ProFutures, Inc. has callable subscription agreements with ING (U.S.)
Securities, Futures & Options, Inc. (ING), the Partnership's primary
broker, whereby ING has subscribed to purchase (up to $14,000,000) the
number of shares of common stock of ProFutures, Inc. necessary to
maintain the General Partner's net worth requirements.
F-7
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
------------
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.
Total management fees earned by ProFutures, Inc. for the years ended
December 31, 2000, 1999 and 1998 were $194,879, $301,463 and $325,002,
respectively. Management fees payable to ProFutures, Inc. as of
December 31, 2000 and 1999 were $13,990 and $22,625, respectively.
Note 3. COMMODITY TRADING ADVISORS
--------------------------
The Partnership has trading advisory contracts with several commodity
trading advisors to furnish investment management services to the
Partnership. Certain advisors receive management fees ranging from
1% to 2% annually of Allocated Net Asset Value (as defined in each
respective trading advisory contract). In addition, the trading
advisors receive quarterly incentive fees ranging from 20% to 27.5%
of Trading Profits (as defined).
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
assets deposited with the brokers.
Note 5. OTHER MANAGEMENT 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. Total fees earned by this
consultant for the years ended December 31, 2000, 1999 and 1998 were
$194,879, $301,463 and $325,002, respectively.
Effective June 1, 2000, ATA Research, Inc. (ATA) resigned as the
Partnership's Trading Manager and Kenmar Global Strategies Inc.
(Kenmar) was engaged to serve as a consultant and perform similar
functions as those previously performed by the Trading Manager.
Kenmar assists the General Partner in making decisions about which
commodity trading advisors to hire, the allocations among the advisors
and the day-to-day monitoring and risk management of the Partnership's
trading activities. Kenmar receives the same fee as previously paid
to the Trading Manager, a monthly management fee of 1/12 of 1% (1%
annually) of month-end Net Asset Value. Fees earned by ATA and Kenmar
totaled $97,440, $150,731 and $162,501 for the years ended December 31,
2000, 1999 and 1998, respectively.
F-8
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
------------
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.
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"). 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.
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 Partnership has a portion of its assets on deposit with a
financial institution 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.
F-9
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
------------
Note 7. TRADING ACTIVITIES AND RELATED RISKS (CONTINUED)
------------------------------------------------
The General Partner has established procedures to actively monitor
market risk and minimize credit risk, although there can be no
assurance that it will, in fact, succeed in doing so. The General
Partner's basic market risk control procedures consist of continuously
monitoring the trading activity of the various trading advisors, with
the actual market risk controls being applied by the advisors
themselves. The General Partner seeks to minimize credit risk
primarily by depositing and maintaining the Partnership's assets at
financial institutions and brokers which the General Partner believes
to be creditworthy. 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.
F-10