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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d)
--- of the Securities Exchange Act of 1934
For the Quarterly Period Ended: January 31, 2003
--- Transition Report Pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934
Commission File Number: 0-9202
THE FUTURE FUND
---------------
(Exact name of registrant as specified in its charter)
Illinois 36-3033727
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o HEINOLD ASSET MANAGEMENT, INC.
440 South LaSalle
20th Floor
Chicago, Illinois 60605
-------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code:
(312) 663-7500
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act)
Yes No X
---- ------
1
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
THE FUTURE FUND
(An Illinois Limited Partnership)
STATEMENTS OF FINANCIAL CONDITION
1/31/2003 10/31/2002
(UNAUDITED)
ASSETS
Investments in affiliated general partnerships $7,000,095 $6,323,951
Due from affiliated broker 2,194,584 2,653,611
---------- ----------
Total assets $9,194,679 $8,977,562
========== ==========
LIABILITIES & PARTNERS' EQUITY
Brokerage commissions $ 53,524 $ 52,230
Redemptions payable 4,803 11,346
Management fees 30,335 29,486
Incentive fees 23,352 --
Other 19,165 23,832
---------- ----------
Total liabilities 131,179 116,894
========== ==========
Partners' equity:
General Partner (220 units equivalents outstanding
at January 31, 2003 and October 31, 2002) 265,472 250,617
Limited Partners (7,291 and 7,558 units outstanding
at January 31, 2003 and October 31, 2002) 8,798,028 8,610,051
---------- ----------
Total partners' equity 9,063,500 8,860,668
---------- ----------
Total liabilities and partner's equity $9,194,679 $8,977,562
========== ==========
Net asset value per outstanding unit of partnership interest $ 1,206.69 $ 1,139.17
========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE FINANCIAL STATEMENTS
2
THE FUTURE FUND
(An Illinois Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JANUARY 31, 2003 and 2002 (UNAUDITED)
2003 2002
----------- -----------
Equity in income (loss) of affiliated general partnerships:
Net realized trading gains (losses) on closed contracts $ 263,912 $ (376,481)
Change in net unrealized gains or losses on open contracts 496,095 (766,380)
Interest income 19,826 30,697
----------- -----------
779,833 (1,112,164)
Expenses:
Brokerage commissions 154,771 158,723
Management fee 87,476 88,954
Incentive fee 30,471 (91,719)
Other administrative expenses 13,000 12,094
----------- -----------
Total expenses 285,718 168,052
Net income (loss) $ 494,115 $(1,280,216)
=========== ===========
Net income (loss) allocated to General Partner $ 14,855 $ (33,547)
Net income (loss) allocated to Limited Partner $ 479,260 $(1,246,669)
Net income (loss) for a unit of partnership interest (for a unit
outstanding throughout the period) $ 67.52 $ (152.48)
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE FINANCIAL STATEMENTS
3
THE FUTURE FUND
(An Illinois Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED JANUARY 31, 2003 and 2002 (UNAUDITED)
Limited General
Partners Partner Total
----------- ----------- -----------
Partners' equity at October 31, 2002 $ 8,610,051 $ 250,617 $ 8,860,668
Redemption of 267 units of limited partnership interest (291,283) -- (291,283)
Net income 479,260 14,855 494,115
----------- ----------- -----------
Partners' Equity at January 31, 2003 $ 8,798,028 $ 265,472 $ 9,063,500
=========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE FINANCIAL STATEMENTS
4
THE FUTURE FUND
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JANUARY 31, 2003 and 2002 (UNAUDITED)
2003 2002
----------- -----------
Cash flows from operating activities:
Net income (loss) $ 494,115 $(1,280,216)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Change in assets and liabilities:
Due from affiliated broker (676,144) 914,287
Investment in affiliated general partnerships 459,027 553,465
Other assets -- 24,567
Brokerage commissions 1,294 (8,845)
Redemptions (6,543) 19,705
Management fees 849 (5,047)
Incentive fees 23,352 (91,719)
Other liabilities (4,667) 23,872
----------- -----------
Net cash provided by operating activities 291,283 150,069
Cash flows from financing activities:
Redemption of limited partnership interests (291,283) (150,069)
Net change in cash $ -- $ --
=========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE FINANCIAL STATEMENTS
5
THE FUTURE FUND
(An Illinois Limited Partnership)
NOTES TO FORM 10-Q FINANCIAL STATEMENTS
NOTE 1: BASIS OF PRESENTATION
The unaudited interim condensed financial statements of the Future Fund ("the
Partnership") included herein have been prepared in conformity with accounting
principles generally accepted in the United States for interim financial
information and rule 10-01 of Regulation S-X. Accordingly, they do not include
all the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, the
unaudited interim condensed financial statements reflect all adjustments, which
are of a normal recurring nature, necessary for fair presentation of financial
position, results of operations, changes in partner's equity and cash flows of
the Fund for the interim periods presented and are not necessarily indicative of
a full year's results.
In preparing the unaudited interim condensed financial statements, management is
required to make estimates and assumptions that affect the amounts reported in
the financial statements. Actual results could differ from those estimates.
The financial statements should be read in conjunction with the Partnership's
audited financial statements for the year ended October 31, 2002, from which the
accompanying Statement of Financial Condition as of October 31, 2002 was
derived.
NOTE 2: RECLASSIFICATION
Certain prior year amounts have been reclassified to conform to current year
presentation.
NOTE 3: RECENT ACCOUNTING PRONOUNCEMENT
In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 46, Consolidation of Variable Interest Entities ("FIN 46").
FIN 46 addresses consolidation by business enterprises of variable interest
entities. As General Partner of the Partnership, Heinold Asset Management, Inc.
has not yet determined if the Partnership would be required to consolidate
certain affiliated General Partnerships when FIN 46 becomes effective. Each of
these related party entities are described in further detail in Note 4 of the
Partnership's audited financial statements for the year ended October 31, 2002.
FIN 46 would be immediately effective for any similar affiliated General
Partnership in which the Partnership has a new investment subsequent to February
1, 2003. The General Partner estimates that the Partnership's maximum exposure
to loss as a result of its involvement with these affiliated General
Partnerships is limited to their carrying value as recorded in the Statement of
Financial Condition.
6
THE FUTURE FUND
(An Illinois Limited Partnership)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
NOTE A: January 31, 2003 October 31, 2002
(Unaudited)
--------------------- --------------------
Ending Partners' Equity $9,063,500 $8,860,668
Ending Partners' Equity at Jan 31, 2003 was higher as compared with Ending
Partners' Equity at October 31, 2002 due to profitable trading (see Note B)
which exceeded total redemptions for the period. Net income for the period of
5.6% and total redemptions of 3.3% caused a total increase in partners capital
of 2.3% over the previous quarter. For the three month period ending January
31,2003, the Partnership's Net Asset Value per Unit increased from $1,139.17 at
October 31, 2002 to $1,206.69, representing a 5.9% gain. The slight difference
between the Net income percentage and the percentage gain in Net Asset Value per
Unit is due to the timing of capital transactions.
NOTE B: Three months ended Three months ended
January 31, 2003 January 31, 2002
(Unaudited) (Unaudited)
------------------ -------------------
Net Realized and Unrealized Trading Gains (Losses) $ 760,007 $ (1,142,861)
Net Realized and Unrealized Trading Gains for the three months ended January 31,
2003 came from profitable trading during the period. In general, commodities
have been on an upward trend recently during this time of economic uncertainty
and international turmoil. Gains were seen in both agricultural products and
metals, most notably long gold positions as the demand for gold has increased
due to renewed interest as a safe investment in uncertain times. Long positions
on crude oil were also profitable recently, as the price for oil rose due to
continuing tensions in the Middle East. As the weakening US dollar continued to
decline in light of potential conflicts with Iraq and North Korea, short
positions against other major currencies such as the Euro and the Swiss Franc
created significant profits. The current results of operations proved to be the
opposite of the same period last year, when substantial losses were posted in an
entirely different environment.
ITEM 4: CONTROLS AND PROCEDURES
Within 90 days prior to the filing of this Report (the "Evaluation Date"),
Thomas M. Harte, the Chief Executive Officer of the General Partner, and Ira
Polk, the Chief Financial Officer of the General Partner, evaluated the
effectiveness of the disclosure controls and procedures of the Partnership and
concluded that these disclosure controls and procedures are effective to ensure
that the material information required to be included in this Report has been
made known to them in a timely fashion. There were no significant changes in the
Partnership's internal control or in other factors that could significantly
affect these internal controls subsequent to the Evaluation Date, including any
corrective action with regard to significant deficiencies and material
weaknesses.
7
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 on the 13th day of March, 2003.
THE FUTURE FUND
By HEINOLD ASSET MANAGEMENT, INC.
General Partner
By /s/ THOMAS M. HARTE
---------------------------
Thomas M. Harte
President and Chief Executive Officer
By /s/ IRA POLK
---------------------------
Ira Polk
Chief Financial Officer
8
CERTIFICATION
I, Thomas M. Harte, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The Future Fund;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in the Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and procedures 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 quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, 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 in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
Date: March 13, 2003 /s/ THOMAS M. HARTE
-------------------------
Thomas M. Harte
Chief Executive Officer
9
CERTIFICATION
I, Ira Polk, certify that:
1. I have reviewed this quarterly report on Form 10-Q of The Future Fund;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in the Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and procedures 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 quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, 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 in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 13, 2003 /s/ IRA POLK
-------------------------
Ira Polk
Chief Financial Officer
10