Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Alternative Asset Growth Fund, L.P.
Commission File #0-18500
Dear Sirs:
This filing contains Form 10-Q for the quarter ended June 30, 2004.
Very truly yours,
Gary D. Halbert, President
ProFutures, Inc., General Partner
Alternative Asset Growth Fund, L.P.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
X Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended June 30, 2004
------------
Commission File Number 0-18500
------------
Alternative Asset Growth Fund, L.P.
-----------------------------------
(Exact name of Partnership)
Delaware 74-2546493
- ----------------------- ------------------------------------
(State of Organization) (I.R.S. Employer Identification No.)
ProFutures, Inc.
11612 Bee Cave Road, Suite 100
Austin, Texas 78738
------------------------------
(Address of principal executive office)
Partnership's telephone number
(800) 348-3601
--------------
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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes
No X
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
ALTERNATIVE ASSET GROWTH FUND, L.P.
STATEMENTS OF FINANCIAL CONDITION
June 30, 2004 (Unaudited) and December 31, 2003 (Audited)
-----------
June 30, December 31,
2004 2003
---- ----
ASSETS
Equity in broker trading accounts
Cash $ 4,547,055 $ 5,199,101
Unrealized gain (loss) on open
contracts (27,050) 372,991
----------- -----------
Deposits with broker 4,520,005 5,572,092
Cash 3,546 3,339
Cash deposits in forward trading
collateral accounts 770,096 787,636
Unrealized gain (loss) on open
forward contracts (40,724) 22,416
----------- -----------
Total assets $ 5,252,923 $ 6,385,483
=========== ===========
LIABILITIES
Accounts payable $ 13,258 $ 14,206
Commissions and other trading fees
on open contracts 5,435 7,187
Incentive fees payable 0 47,603
Management fees payable 49,131 55,583
Redemptions payable 62,281 221,241
----------- -----------
Total liabilities 130,105 345,820
----------- -----------
PARTNERS' CAPITAL (Net Asset Value)
General Partner - 101 units outstanding
at June 30, 2004 and December 31, 2003 125,659 137,933
Limited Partners - 4,034 and 4,340 units
outstanding at June 30, 2004 and
December 31, 2003 4,997,159 5,901,730
----------- -----------
Total partners' capital
(Net Asset Value) 5,122,818 6,039,663
----------- -----------
$ 5,252,923 $ 6,385,483
=========== ===========
See accompanying notes.
ALTERNATIVE ASSET GROWTH FUND, L.P.
CONDENSED SCHEDULE OF INVESTMENTS
June 30, 2004 (Unaudited) and December 31, 2003 (Audited)
-----------
June 30, 2004 December 31, 2003
------------------ -------------------
% of % of
Net Asset Net Asset
Description Value Value Value Value
----------- ----- --------- ----- ---------
LONG FUTURES CONTRACTS
- ----------------------
Agricultural $(11,122) (0.21)% $ 7,743 0.13 %
Currency (1,000) (0.02)% 99,904 1.66 %
Energy (6,600) (0.13)% 36,223 0.60 %
Interest rate 2,803 0.05 % 29,036 0.48 %
Metal (22,482) (0.44)% 100,416 1.66 %
Stock index 45,602 0.89 % 107,513 1.78 %
-------- ------- -------- -------
Total long futures contracts $ 7,201 0.14 % $380,835 6.31 %
-------- ------- -------- -------
SHORT FUTURES CONTRACTS
- -----------------------
Agricultural $ 14,391 0.28 % $ 2,672 0.04 %
Currency (8,806) (0.17)% (8,313) (0.13)%
Energy (250) (0.01)% 0 0.00 %
Interest rate (36,939) (0.72)% (3,673) (0.06)%
Metal (2,543) (0.05)% 0 0.00 %
Stock index (104) 0.00 % 1,470 0.02 %
-------- ------- -------- -------
Total short futures contracts $(34,251) (0.67)% $ (7,844) (0.13)%
-------- ------- -------- -------
Total futures contracts $(27,050) (0.53)% $372,991 6.18 %
======== ======= ======== =======
FORWARD CURRENCY CONTRACTS
- --------------------------
Long forward currency
contracts $(32,731) (0.64)% $(52,165) (0.86)%
Short forward currency
contracts (7,993) (0.15)% 74,581 1.23 %
-------- ------- -------- -------
Total forward currency
contracts $(40,724) (0.79)% $ 22,416 0.37 %
======== ======= ======== =======
See accompanying notes.
ALTERNATIVE ASSET GROWTH FUND, L.P.
STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 2004 and 2003
(Unaudited)
-----------
Three Months Ended
June 30,
2004 2003
--------- ---------
TRADING GAINS (LOSSES)
Gain (loss) from futures trading
Realized $ (650,470) $ 302,996
Change in unrealized (231,706) (192,899)
Brokerage commissions (45,130) (35,092)
----------- -----------
Gain (loss) from futures trading (927,306) 75,005
----------- -----------
Gain (loss) from forward trading
Realized (41,482) 0
Change in unrealized (45,769) 0
----------- -----------
Gain (loss) from forward trading (87,251) 0
----------- -----------
Total trading gains (losses) (1,014,557) 75,005
----------- -----------
NET INVESTMENT INCOME (LOSS)
Income
Interest income 15,218 18,711
----------- -----------
Expenses
Incentive fees 0 11,952
Management fees 96,277 109,246
Operating expenses 31,881 26,544
----------- -----------
Total expenses 128,158 147,742
----------- -----------
Net investment (loss) (112,940) (129,031)
----------- -----------
NET (LOSS) $(1,127,497) $ (54,026)
=========== ===========
NET (LOSS) PER GENERAL AND
LIMITED PARTNER UNIT
(based on weighted average number of
units outstanding during the period
of 4,198 and 4,801, respectively) $ (268.60) $ (11.25)
=========== ===========
(DECREASE) IN NET ASSET VALUE PER
GENERAL AND LIMITED PARTNER UNIT $ (268.28) $ (11.40)
=========== ===========
See accompanying notes.
ALTERNATIVE ASSET GROWTH FUND, L.P.
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 2004 and 2003
(Unaudited)
-----------
Six Months Ended
June 30,
2004 2003
--------- ---------
TRADING GAINS (LOSSES)
Gain (loss) from futures trading
Realized $ 532,859 $ 1,427,519
Change in unrealized (400,041) (678,650)
Brokerage commissions (90,945) (79,033)
----------- -----------
Gain from futures trading 41,873 669,836
----------- -----------
Gain (loss) from forward trading
Realized (14,340) 0
Change in unrealized (63,140) 0
----------- -----------
Gain (loss) from forward trading (77,480) 0
----------- -----------
Total trading gains (losses) (35,607) 669,836
----------- -----------
NET INVESTMENT INCOME (LOSS)
Income
Interest income 29,254 39,777
----------- -----------
Expenses
Incentive fees 196,654 138,083
Management fees 208,953 231,620
Operating expenses 72,113 56,271
----------- -----------
Total expenses 477,720 425,974
----------- -----------
Net investment (loss) (448,466) (386,197)
----------- -----------
NET INCOME (LOSS) $ (484,073) $ 283,639
=========== ===========
NET INCOME (LOSS) PER GENERAL
AND LIMITED PARTNER UNIT
(based on weighted average number of
units outstanding during the period
of 4,286 and 4,813, respectively) $ (112.94) $ 58.93
=========== ===========
INCREASE (DECREASE) IN NET ASSET VALUE
PER GENERAL AND LIMITED PARTNER UNIT $ (121.01) $ 58.55
=========== ===========
See accompanying notes.
ALTERNATIVE ASSET GROWTH FUND, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (NET ASSET VALUE)
For the Six Months Ended June 30, 2004 and 2003
(Unaudited)
-----------
Total Partners' Capital
Number of ----------------------------------
Units General Limited Total
----------- -------- ----------- -----------
Balances at
December 31, 2003 4,441 $137,933 $ 5,901,730 $ 6,039,663
Net income for the
six months ended
June 30, 2004 (12,274) (471,799) (484,073)
Redemptions (306) 0 (432,772) (432,772)
------ -------- ----------- -----------
Balances at
June 30, 2004 4,135 $125,659 $ 4,997,159 $ 5,122,818
====== ======== =========== ===========
Balances at
December 31, 2002 4,827 $133,611 $ 6,225,842 $ 6,359,453
Net income for the
six months ended
June 30, 2003 5,938 277,701 283,639
Redemptions (82) 0 (114,512) (114,512)
------ -------- ----------- -----------
Balances at
June 30, 2003 4,745 $139,549 $ 6,389,031 $ 6,528,580
====== ======== =========== ===========
Net asset value
per unit at
December 31, 2002 $ 1,317.35
===========
June 30, 2003 $ 1,375.90
===========
December 31, 2003 $ 1,359.96
===========
June 30, 2004 $ 1,238.95
===========
See accompanying notes.
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
-----------
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
-----------------------------------------------------------
A. General Description of the Partnership
Alternative Asset Growth Fund, L.P. (the Partnership) is a
Delaware limited partnership which operates as a commodity
investment pool. The Partnership engages in the speculative
trading of futures and options on futures contracts and interbank
forward currency 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, Futures Commission
Merchants (brokers) and interbank market makers through which the
Partnership trades.
C. Method of Reporting
The Partnership's financial statements are presented in accordance
with accounting principles generally accepted in the United States
of America, 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 trade price and 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 total number of units outstanding.
D. Brokerage Commissions
Brokerage commissions include other trading fees and are charged
to expense when contracts are opened.
E. Income Taxes
The Partnership prepares calendar year U.S. and applicable state
information tax returns and reports to the partners their
allocable shares of the Partnership's income, expenses and trading
gains or losses.
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
-----------
Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
-----------------------------------------------------------
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. Statements of Cash Flows
The Partnership has elected not to provide statements of cash
flows as permitted by Statement of Financial Accounting Standards
No. 102 - "Statement of Cash Flows - Exemption of Certain
Enterprises and Classification of Cash Flows from Certain
Securities Acquired for Resale."
H. Interim Financial Statements
In the opinion of management, the unaudited interim financial
statements reflect all adjustments, which were of a normal and
recurring nature, necessary for a fair presentation of financial
position as of June 30, 2004, and the results of operations for
the three and six months ended June 30, 2004 and 2003.
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 ABN AMRO
Incorporated (ABN), the Partnership's broker, whereby ABN has
subscribed to purchase (up to $7,000,000 subject to conditions set
forth in the subscription agreement as amended effective May 20, 2002)
the number of shares of common stock of ProFutures, Inc. necessary to
maintain the General Partner's net worth requirements.
The Partnership pays the General Partner a monthly management fee of
1/6 of 1% (2% annually) of month-end Net Asset Value.
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
-----------
Note 2. GENERAL PARTNER (CONTINUED)
---------------------------
Total management fees earned by ProFutures, Inc. for the six months
ended June 30, 2004 and 2003 were $59,638 and $68,266, respectively.
Such management fees earned for the three months ended June 30, 2004
and 2003 were $27,536 and $33,861, respectively. Management fees
payable to ProFutures, Inc. as of June 30, 2004 and December 31, 2003
were $8,678 and $10,478, 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 25% of
Trading Profits (as defined).
Note 4. DEPOSITS WITH BROKER
--------------------
The Partnership deposits funds with ABN 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.
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 six months ended June 30, 2004 and 2003 were
$59,638 and $68,266, respectively. Such fees earned for the three
months ended June 30, 2004 and 2003 were $27,536 and $33,861,
respectively.
Kenmar Global Strategies Inc. (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 a
monthly management fee of 1/12 of 1% (1% annually) of month-end Net
Asset Value. Fees earned by Kenmar totaled $29,819 and $34,133 for
the six months ended June 30, 2004 and 2003, respectively. Such fees
earned by Kenmar for the three months ended June 30, 2004 and 2003
totaled $13,768 and $16,931, respectively.
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, options on futures contracts and forward 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.
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
-----------
Note 7. TRADING ACTIVITIES AND RELATED RISKS (CONTINUED)
------------------------------------------------
Purchase and sale of futures and options on futures contracts requires
margin deposits with the broker. 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 notional contract value of futures and forward 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 trading of forward
contracts and 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. Since these forward contracts are traded in
unregulated markets between principals, the Partnership also assumes
the risk of loss from counterparty nonperformance.
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 commodity trading
advisors, with the actual market risk controls being applied by
Kenmar, as a consultant, and 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.
ALTERNATIVE ASSET GROWTH FUND, L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
-----------
Note 8. FINANCIAL HIGHLIGHTS
--------------------
The following information presents per unit operating performance data
and other supplemental financial data for the three months and six
months ended June 30, 2004 and 2003. This information has been
derived from information presented in the financial statements.
Three months ended
June 30,
2004 2003
(Unaudited) (Unaudited)
----------- -----------
Per Unit Performance
(for a unit outstanding throughout the entire period)
-----------------------------------------------------
Net asset value per unit at
beginning of period $1,507.23 $1,387.30
--------- ---------
Income (loss) from operations:
Total trading gains (losses) (1) (241.37) 15.48
Net investment (loss) (1) (26.91) (26.88)
--------- ---------
Total (loss) from operations (268.28) (11.40)
--------- ---------
Net asset value per unit at
end of period $1,238.95 $1,375.90
========= =========
Total Return (3) (17.80)% (0.82)%
======= =======
Supplemental Data
Ratios to average net asset value:
Expenses prior to incentive fees (4) 9.41 % 8.10 %
Incentive fees (3) 0.00 % 0.18 %
------ -------
Total expenses 9.41 % 8.28 %
======= =======
Net investment (loss) (2), (4) (8.29)% (6.98)%
======= =======
Six months ended
June 30,
2004 2003
(Unaudited) (Unaudited)
----------- -----------
Per Unit Performance
(for a unit outstanding throughout the entire period)
-----------------------------------------------------
Net asset value per unit at
beginning of period $1,359.96 $1,317.35
--------- ---------
Income (loss) from operations:
Total trading gains (losses) (1) (16.38) 138.78
Net investment (loss) (1) (104.63) (80.23)
--------- ---------
Total income (loss) from operations (121.01) 58.55
--------- ---------
Net asset value per unit at
end of period $1,238.95 $1,375.90
========= =========
Total Return (3) (8.90)% 4.44 %
======= =======
Supplemental Data
Ratios to average net asset value:
Expenses prior to incentive fees (4) 9.58 % 8.49 %
Incentive fees (3) 3.35 % 2.04 %
------ -------
Total expenses 12.93 % 10.53 %
======= =======
Net investment (loss) (2), (4) (8.58)% (7.32)%
======= =======
Total returns are calculated based on the change in value of a unit
during the period. An individual partner's total returns and ratios
may vary from the above total returns and ratios based on the timing
of redemptions.
--------------------
(1) The net investment (loss) per unit is calculated by dividing the
net investment (loss) by the average number of units outstanding
during the period. Total trading gains (losses) is a balancing
amount necessary to reconcile the change in net asset value per
unit with the other per unit information. Such balancing amount
may differ from the calculation of total trading gains (losses)
per unit due to the timing of trading gains and losses during
the period relative to the number of units outstanding.
(2) Excludes incentive fees.
(3) Not annualized.
(4) Annualized.
Item 2. 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: Substantially all of the Partnership's assets are
highly liquid, such as cash and open futures contracts. It is
possible that extreme market conditions or daily price fluctuation
limits at certain exchanges could adversely affect the liquidity
of open futures contracts. There are no restrictions on the
liquidity of these assets except for amounts on deposit with the
brokers needed to meet margin requirements on open futures
contracts.
B. CAPITAL RESOURCES: Since the Partnership's business is the
purchase and sale of various commodity interests, it will make
few, if any, capital expenditures.
The Partnership's offering of Units of Limited Partnership
Interest terminated in 1991.
C. RESULTS OF OPERATIONS: The Partnership's net income (loss) for
the six months ended June 30, 2004 and 2003 totaled:
2004 2003
---- ----
Three months ended March 31 $ 643,424 $ 337,665
Three months ended June 30 (1,127,497) (54,026)
----------- -----------
Six months ended June 30 $ (484,073) $ 283,639
=========== ===========
As of June 30, 2004, 4,135 Units are outstanding, including 101
General Partner Units, with an aggregate Net Asset Value of
$5,122,818 ($1,238.95 per Unit). This represents a decrease
in Net Asset Value of $(916,845) compared with December 31, 2003.
The decrease is caused by redemptions of limited partner
units and a net loss for the six months ended June 30, 2004.
As of June 30, 2003, 4,745 Units are outstanding, including 101
General Partner Units, with an aggregate Net Asset Value of
$6,528,580 ($1,375.90 per Unit). This represents an increase
in Net Asset Value of $169,127 compared with December 31, 2002,
due to year to date net income exceeding redemptions of limited
partner units.
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 10.16% in April. The Partnership had
large losses in metals, interest rates, equities and foreign
currencies, as well as smaller losses in agriculture. The only
bright spot was energy, where there were some modest gains.
The Partnership had a loss of 2.06% in May. The Partnership had
gains in energy, foreign currencies and metals. There were losses in
agriculture, equities and interest rates. Campbell and Winton, our
main trend-followers were essentially flat in May.
The Partnership had a loss of 6.58% in June. The Partnership had
losses in nearly all sectors. Losses were especially large in foreign
currencies and energy.
Overall, the Partnership had a total return of (17.80)% for the
quarter and (8.90)% for the six months ended June 30, 2004. For the
second quarter 2004, the majority of the Partnership's gains were in
the energy sector and the largest loss was in interest rates.
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.
The Partnership had a gain of 0.76% in January 2004. There were
gains in stock indexes, metals and interest rates. There were
small losses in energy, agricultural commodities and foreign
currencies.
The Partnership had a gain of 10.13% in February 2004. The
largest gains were in foreign currencies and interest rates, with
smaller gains in energy, agricultural commodities, metals and
stock indexes.
The Partnership had a loss of 0.12% in March 2004. There
were some gains in interest rates and certain agricultural
commodities. However, these were mostly offset by losses in
foreign currencies, equities and energy.
Overall, the Partnership ended the quarter with a total return of
10.83%. The largest trading gains were in the interest rate and
metals sectors.
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 0.09%. There were gains
in currencies, primarily because of the falling dollar. However,
these gains were mostly offset by losses in nearly all of the other
sectors.
In May 2003, the Partnership gained 4.80%. The Partnership had gains
in interest rates, especially bonds. There were also gains in
currencies, metals and stock indexes. There were some losses in
energy and certain agricultural commodities.
In June 2003, the Partnership had a loss of 5.28%. There were losses
in interest rates, especially bonds. There were also losses in
energy, metals and certain agricultural commodities. Most other
sectors were basically flat.
At the beginning of June 2003, notional funds were added back to
trading, as the leverage was increased back to 150%. This is about
the same level as before the notional funds were temporarily
eliminated several months ago.
The Partnership had a total return of (0.82)% for the quarter and
4.44% for the six months ended June 30, 2003. For the second
quarter 2003, the majority of the Partnership's trading gains were
in foreign currencies and the largest loss was in metals.
First Quarter 2003
------------------
The futures markets were quite 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 gained 6.01%. There were large
gains in foreign currencies and energy, with smaller gains in
interest rates, precious and base metals and stock indexes. There
were small losses in grains.
In February 2003, the Partnership gained 5.66%. There were large
gains in energy, with smaller gains in interest rates and
currencies. These were offset by losses in stock indexes and
metals. Most other sectors were basically flat.
In February 2003, the Partnership eliminated any notional funding
and traded at 100% of assets, rather than 150% of assets (with
notional funding). One advisor, Campbell & Company, also scaled
back their open positions. These changes were made due to the
uncertainty of the pending war with Iraq.
In March 2003, the Partnership lost 5.98%. There were large
losses in most sectors, especially energy, after oil prices
dropped. Some of the gains from the previous two months were
reversed in March.
Also in March 2003, Quay Capital Management had a change of
its top management, resulting in the departure of one of the
principals responsible for trading the account. As a result,
they were terminated as one of the Advisors in the Partnership.
No replacement Advisor was selected by month-end.
Overall, the Partnership had a total return of 5.31% for the three
months ended March 31, 2003. The majority of the Partnership's
trading gains were in energy and foreign currencies and the
largest loss was in stock index futures.
Market and Credit Risk
----------------------
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.
D. POSSIBLE CHANGES: The General Partner reserves the right to
terminate certain and/or engage additional commodity trading
advisors in the future and reserves the right to change any of
the Partnership's clearing arrangements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
Item 4. Controls and Procedures
ProFutures, Inc., as General Partner of Alternative Asset 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
quarterly 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.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
There were no reports filed on Form 8-K.
Exhibits filed herewith:
Exhibits filed herewith:
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.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALTERNATIVE ASSET GROWTH FUND, L.P.
(Registrant)
August 12, 2004 By /s/ GARY D. HALBERT
- ------------------------ -----------------------------------------
Date Gary D. Halbert, President and Director
ProFutures, Inc.
General Partner
August 12, 2004 By /s/ DEBI B. HALBERT
- ------------------------ -----------------------------------------
Date Debi B. Halbert, Chief Financial Officer,
Treasurer and Director
ProFutures, Inc.
General Partner
EXHIBIT 31.01
CERTIFICATION
-------------
I, Gary D. Halbert, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Alternative Asset
Growth Fund, L.P.;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
Date: August 12, 2004
----------------------------------
/s/ GARY D. HALBERT
- -----------------------------------------
Gary D. Halbert, President
ProFutures, Inc., General Partner
EXHIBIT 31.02
CERTIFICATION
-------------
I, Debi B. Halbert, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Alternative Asset
Growth Fund, L.P.;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
Date: August 12, 2004
----------------------------------
/s/ DEBI B. HALBERT
- -----------------------------------------
Debi B. Halbert, Chief Financial Officer
ProFutures, Inc., General Partner
EXHIBIT 32.01
CERTIFICATION
-------------
I, Gary D. Halbert, the President of ProFutures, Inc., as General Partner of
Alternative Asset Growth Fund, L.P., certify that (i) the Form 10-Q for the
quarter ended June 30, 2004 of Alternative Asset Growth Fund, L.P. fully
complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 and (ii) the information contained in the Form 10-Q for
the quarter ended June 30, 2004 fairly presents, in all material respects,
the financial condition and results of operations of Alternative Asset Growth
Fund, L.P.
ALTERNATIVE ASSET GROWTH FUND, L.P.
By: ProFutures, Inc., General Partner
By: /s/ GARY D. HALBERT
---------------------------------
Gary D. Halbert
President
August 12, 2004
EXHIBIT 32.02
CERTIFICATION
-------------
I, Debi B. Halbert, the Chief Financial Officer of ProFutures, Inc., as General
Partner of Alternative Asset Growth Fund, L.P., certify that (i) the Form 10-Q
for the quarter ended June 30, 2004 of Alternative Asset Growth Fund, L.P.
fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 and (ii) the information contained in the Form
10-Q for the quarter ended June 30, 2004 fairly presents, in all material
respects, the financial condition and results of operations of Alternative
Asset Growth Fund, L.P.
ALTERNATIVE ASSET GROWTH FUND, L.P.
By: ProFutures, Inc., General Partner
By: /s/ DEBI B. HALBERT
---------------------------------
Debi B. Halbert
Chief Financial Officer
August 12, 2004