SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission file number ____333-85755______
Bromwell Financial Fund, Limited Partnership
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(Exact Name of Registrant as Specified in Its Charter)
Delaware 51-0387638
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
6916 N. 300 West, Fremont, IN 46737
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (219) 833-1505
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Former Name, Address and Fiscal Year, if Changed, Since Last Report
No such changes occurred
Indicate by check [X] whether the registrant (1)has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
Part 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
The reviewed financial statements for the Registrant for the second quarter
ended June 30, 2002, and audited results for the calendar year 2001 are
attached hereto and made a part hereof.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
During the past quarter and in the future, Registrant, did and will, pursuant
to the terms of the Limited Partnership Agreement, engage in the business of
speculative trading of commodity futures and options markets through the
services of its commodity trading advisors, Ansbacher Management, Inc. and
Mangin Capital Management, Inc.
The Units are sold through the broker dealer selected by the General Partner,
Futures Investment Company, at the Net Asset Value per Unit as of the close
of business on the last day of the month in which subscriptions are received
by the General Partner.
The Registrant will continue to offer Units for sale to the public via its
prospectus dated August 2, 2002 until the total amount of registered
securities, $7,000,000, is sold or the offering terminates.
To obtain a return of invested capital or appreciation, if any, purchasers of
Units must look solely to the redemption feature of the Partnership or to the
General Partner, in its sole judgment, to elect to make distributions. There
is no current market for the Units sold and none is expected to develop nor
is the General Partner expected to make distributions.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
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
(a) None
(b) A Form 8-K was filed on August 7, 2002 to report the following:
Item 5. Other Events and Regulation FD Disclosure.
SUBSEQUENT EVENTS TO JUNE 30, 2002 FINANCIAL STATEMENTS
On July 30, 2002, management discovered that certain expenses and
fees for the period from inception of the Fund to June 30, 2002,
including introducing broker commissions to an Affiliated Broker
of the Fund General Partner and to Non-Affiliated Commodity
Trading Advisors management fees were underpaid because of a
calculation error by an independent accountant responsible for
the preparation of the Fund original book entries. The Fund will
pay the additional amount, estimated by management to be
approximately two percent of Fund assets, to the Affiliated
Broker and Non-Affiliated Commodity Trading Advisors in a lump
sum during the third quarter of 2002. No interest will be paid
by the Fund on the underpayment.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Form 10-Q for the
period ended June 30, 2002, to be signed on its behalf by the undersigned,
thereunto duly authorized.
Registrant: Bromwell Financial Fund, Limited
Partnership
By Belmont Capital Management,
Incorporated
Its General Partner
By: /s/ Shira Del Pacult
Ms. Shira Del Pacult
Sole Director, Sole Shareholder,
President, and Treasurer of the
General Partner
Date: August 14, 2002
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BROMWELL FINANCIAL FUND,
LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
FOR THE THREE MONTHS AND SIX MONTHS ENDED
JUNE 30, 2002 AND 2001
( A Review)
GENERAL PARTNER:
Belmont Capital Management, Inc.
% Corporate Systems, Inc.
101 North Fairfield Drive
Dover, Kent County, Delaware 19901
Frank L. Sassetti & Co.
To The Partners
Bromwell Financial Fund, Limited Partnership
Dover, Kent County, Delaware
We have reviewed the balance sheet, including the schedule of
investments, of BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP as of June 30,
2002 and the related statements of operations, partners' equity and cash
flows for the three months and six months ended June 30, 2002 and 2001.
These financial statements are the responsibility of the Partnership's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquires of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with auditing standards generally accepted in the
United States, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review we are not aware of any material modifications that
should be made to the financial statements referred to above for them to be
in conformity with accounting principles generally accepted in the United
States.
We have previously audited, in accordance with auditing standards
generally accepted in the United States, the balance sheet, including the
schedule of investments, of BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP as
of December 31, 2001 and the related statements of operations, partner's
equity and cash flows for the year then ended (not presented herein); and in
our report dated February 13, 2002, we expressed an unqualified opinion on
these financial statements. In our opinion, the information set forth in the
accompanying balance sheet as of December 31, 2001 is fairly stated, in all
material respects, in relation to the balance sheet from which it has been
derived.
/s/ Frank L. Sassetti & Co.
July 26, 2002
Oak Park, Illinois
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
BALANCE SHEETS
JUNE 30, 2002 AND DECEMBER 31, 2001
ASSETS
June 30
2002 December 31
(A Review) 2001
Cash $ 30,699 $ 39,135
Accrued interest receivable 450 1,122
Prepaid commissions 19,587
Equity in Commodity Futures Trading Accounts -
Cash 1,825,003 1,825,664
Net unrealized gains on open commodity
futures contracts (Note 7) 84,872 21,810
Due from limited partners 21,628
$1,982,239 $1,887,731
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Open options, short positions, at market value
(cost $0 and $62,400) $ $ 35,625
Accrued trading commissions payable 1,384 3,872
Accrued management fees payable 2,633 6,845
Accrued incentive fees payable 52,196
Accrued accounting fees payable 1,800
Accrued auditing fees payable 3,000 3,950
Sales commissions payable 1,297
Total Liabilities 60,510 52,092
PARTNERS' CAPITAL
Limited partners -
(1,767.08 and 1,931.43 units) 1,921,729 1,835,639
General partner - (0 and 0 units)
Total Partners' Capital 1,921,729 1,835,639
$1,982,239 $1,887,731
The accompanying notes are an integral part
of the financial statements
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(A Review)
Three Six Three Six
Months Months Months Months
Ended June Ended June Ended June Ended June
30, 2002 30, 2002 30, 2001 30, 2001
REVENUES
Realized gain on trading
futures $ 65,457 $ 62,707 $ 6,870 $ 66,683
Change in unrealized gain
(loss) on open commodity
futures contracts 81,876 63,062 (30,535) (48,242)
Realized gain (loss) from
trading options 181,621 353,448 (151,196) (16,599)
Change in unrealized gain
(loss) on open options (65,888) (26,775) 800 (19,200)
Interest income 1,292 2,781 3,890 12,958
Redemption penalty 102 4,554 267 267
Total Revenues 264,460 459,777 (169,904) (4,133)
EXPENSES
Registration costs 6,295
Commissions 42,672 87,583 43,681 90,519
Management fees 17,318 34,711 17,037 34,775
Incentive fees 52,197 71,398 5,956
Professional accounting and
legal fees 14,846 27,347 11,636 20,151
Other operating and
administrative expenses 219 575 168 381
Total Expenses 127,252 227,909 72,522 151,782
NET INCOME (LOSS) $137,208 $231,868 $(242,426) $(155,915)
NET INCOME (LOSS)
Limited partnership unit $ 79.47 $ 131.97 $ (128.24) $ (84.80)
General partnership unit $ $ $ $
The accompanying notes are an integral part
of the financial statements
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(A Review)
2002 2001
Amount Units Amount Units
December 31 $1,835,639 1,931.43 $1,718,208 1,766.04
Partner additions 81,902 74.74 165,880 164.05
Partner withdrawals (227,680) (239.09) (70,267) (78.90)
Syndication costs paid (4,943)
Net income (loss) 231,868 (155,915)
June 30 $1,921,729 1,767.08 $1,652,963 1,851.19
2002 2001
Value per unit $1,087.52 $ 892.92
Total partnership units 1,767.08 1,851.19
The accompanying notes are an integral part
of the financial statements
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY
FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001
(A Review)
2002 2001
Amount Units Amount Units
March 31 $1,726,119 1,715.07 $1,921,845 1,877.98
Partner additions 58,402 52.01 46,566 52.11
Partner withdrawals (70,267) (78.90)
Syndication costs paid (2,755)
Net income(loss) 137,208 (242,426)
June 30 $1,921,729 1,767.08 $1,652,963 1,851.19
2002 2001
Value per unit $1,087.52 $ 892.92
Total partnership units 1,767.08 1,851.19
The accompanying notes are an integral part
of the financial statements
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS AND SIX MONTHS ENDED
JUNE 30, 2002 AND 2001
(A Review)
Three Six Three Six
Months Months Months Months
Ended Ended Ended Ended
June 30, 2002 June 30, 2001
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss) $137,208 $231,868 $(242,426) $(155,915)
Adjustments to reconcile net
Income (loss) to net cash
provided by(used in) operating
activities -
Changes in operating assets and
liabilities -
Equity in Commodity Futures
Trading Accounts (223,070) (98,026) 191,538 7,710
Accrued interest receivable 16,049 672 4,764 (1,976)
Prepaid/accrued commissions (18,263) (20,778) (7,375) 1,118
Management and incentive fees
payable 29,382 47,984 (6,724) (3,863)
Accounting and auditing fees
payable 3,000 (2,750) (2,064) (1,453)
Net Cash Provided By (Used
In) Operating Activities (55,694) 158,970 (62,287) (154,379)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from sale of units, net
of sales commissions 36,774 60,274 137,600 215,880
Syndication and registration costs (2,755) (4,943)
Partner cash redemptions (5,079) (227,680) (31,953) (31,953)
Net Cash Provided By (Used
In) Financing Activities 31,695 (167,406) 102,892 178,984
NET INCREASE (DECREASE) IN CASH (23,999) (8,436) 40,605 24,605
CASH
Beginning of period 54,698 39,135 80 16,080
End of period $ 30,699 $ 30,699 $ 40,685 $ 40,685
The accompanying notes are an integral part
of the financial statements
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
BALANCE SHEETS
JUNE 30, 2002 AND DECEMBER 31, 2001
ASSETS
June 30
2002 June 30
(A Review) 2001
Cash $ 30,699 $ 40,685
Accrued interest receivable 20,037 3,526 (16,511)
Equity in Commodity Futures Trading
Accounts -
Cash 1,825,003 1,670,109 (154,894)
Undeposited new partner capital 21,627 (21,627)
Net unrealized gains on open commodity
futures contracts (Note 7) 84,872 4,791 (80,081)
Open options, short positions, at market
value (cost $129,500 and $62,400) (15,800) (15,800)
$1,982,238 $1,703,311
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES
Open options, short positions, at market
value (cost $129,500 and $62,400) $- $-
Accrued management fees payable to
the GP (2) (2)
Accrued trading commissions payable 1,384 2,047 (663)
Accrued management fees payable 2,635 8,105 (5,470)
Accrued incentive fees payable 52,197 52,197
Accrued accounting fees payable 1,882 (1,882)
Accrued auditing fees payable 3,000 3,000
Partner redemptions 38,314 (38,314)
Front end load payable 1,297 1,297
Total Liabilities 60,511 50,348
PARTNERS' CAPITAL
Limited partners -
(1,775.74 and 1,877.98 units) 1,921,727 1,652,963 268,764
General partner - (0 and 0 units)
Total Partners' Capital 1,921,727 1,652,963
$1,982,238 $1,703,311 $ (9,986)
The accompanying notes are an integral part
of the financial statements
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
SCHEDULE OF INVESTMENTS
June 30, 2002
(A Review)
Contracts (All securities are from U.S. markets) Value
Commodity Futures Positions, Held Long
5 Sept '02 Treasury Bonds $ 2,969
3 Sept '02 Treasury Notes 3,453
1 Sept '02 Hi - Grade Copper 237
2 Sept '02 British Pounds 6,638
2 Sept '02 Canadian Dollars 1,920
10 Dec '02 Eurodollars 9,150
4 Sept '02 Swiss Francs 14,450
5 Sept '02 Japanese Yen 19,300
2 Sept '02 European Currency Unit 9,475
2 Dec '02 Cotton 5,100
3 Aug '02 New York Crude Oil 780
Total Commodity Futures Positions, Held Long 73,472
Commodity Futures Positions Sold Short
2 Sept '02 US Dollar Index 7,850
2 Aug '02 Natural Gas 3,550
Total Commodity Futures Sold Short 11,400
Net Commodity Futures Positions 84,872
Cash in Trading Accounts 1,825,003
Total Investments $1,909,875
The accompanying notes are an integral part
of the financial statements
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002 AND 2001
(A Review)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Bromwell Financial Fund, Limited Partnership (the Fund) was formed
January 12, 1999 under the laws of the State of Delaware. The Fund is
engaged in the speculative trading of futures contracts in commodities, which
commenced in July, 2000. Belmont Capital Management, Inc. and Shira Pacult
are the general partners and commodity pool operators of Bromwell Financial
Fund, Limited Partnership. The commodity trading advisors (CTAs) are
Ansbacher Investment Management, Inc. and Mangin, which have the authority to
trade so much of the Fund's equity as is allocated to it by the General
Partners.
Income Taxes - In accordance with the generally accepted method of
presenting partnership financial statements, the financial statements do not
include assets and liabilities of the partners, including their obligation
for income taxes on their distributive shares of the net income of the Fund
or their rights to refunds on its net loss.
Registration Costs - Costs incurred for the initial filings with the
Securities and Exchange Commission, Commodity Futures Trading Commission,
National Futures Association (the "NFA") and the states where the offering
was made were accumulated, deferred and charged against the gross proceeds of
offering at the initial closing as part of the offering expenses. Recurring
registration costs are charged to expense as incurred.
Revenue Recognition - Commodity futures contracts are recorded on the
trade date and are reflected in the balance sheet at the difference between
the original contract amount and the market value on the last business day of
the reporting period.
Market value of commodity futures contracts is based upon exchange or
other applicable market best available closing quotations.
Use of Accounting Estimates - The preparation of financial statements
in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002 AND 2001
(A Review)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Statement of Cash Flows - For purposes of the Statement of Cash Flows,
the Fund considers only cash and money market funds to be cash equivalents.
As of the balance sheet dates, the Fund has no cash equivalents. Net cash
used in operating activities includes no cash payments for interest or income
taxes for the three months or six months ended June 30, 2002 and 2001.
2. GENERAL PARTNER DUTIES
The responsibilities of the General Partner, in addition to directing
the trading and investment activity of the Fund, including suspending all
trading, includes executing and filing all necessary legal documents,
statements and certificates of the Fund, retaining independent public
accountants to audit the Fund, employing attorneys to represent the Fund,
reviewing the brokerage commission rates to determine reasonableness,
maintaining the tax status of the Fund as a limited partnership, maintaining
a current list of the names, addresses and numbers of units owned by each
Limited Partner and taking such other actions as deemed necessary or
desirable to manage the business of the Partnership.
If the net unit value of the partnership falls to less than 50% of the
greater of the original $1,000 selling price, less commissions and other
charges or such higher value earned through trading, then the General Partner
will immediately suspend all trading, provide all limited partners with
notice of the reduction and give all limited partners the opportunity, for
fifteen days after such notice, to redeem partnership interests.
3. THE LIMITED PARTNERSHIP AGREEMENT
The Limited Partnership Agreement provides, among other things, the
following:
Capital Account - A capital account shall be established for each
partner. The initial balance of each partner's capital account shall be the
amount of the initial contributions to the partnership.
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002 AND 2001
(A Review)
3. THE LIMITED PARTNERSHIP AGREEMENT - CONTINUED
Monthly Allocations - Any increase or decrease in the Partnership's net
asset value as of the end of a month shall be credited or charged to the
capital account of each Partner in the ratio that the balance of each account
bears to the total balance of all accounts.
Any distribution from profits or partners' capital will be made solely
at the discretion of the General Partners.
Allocation of Profit and Loss for Federal Income Tax Purposes - As of
the end of each fiscal year, the Partnership's realized capital gain or loss
and ordinary income or loss shall be allocated among the Partners, after
having given effect to the fees of the General Partner and the Commodity
Trading Advisors and each Partner's share of such items are includable in the
Partner's personal income tax return.
Redemption - No partner may redeem or liquidate any units until after
the lapse of six months from the date of the investment. Thereafter, a
Limited Partner may withdraw, subject to certain restrictions, any part or
all of his units from the partnership at the net asset value per unit on the
last day of any month with ten days prior written request to the General
Partner. A redemption fee payable to the Partnership of a percentage of the
value of the redemption request is charged pursuant to the following
schedule:
4% if such request is received ten days prior to the last trading day
of the month in which the redemption is to be effective from the sixth month
to the twelfth month after the date of the investment in the Fund.
3% if such request is received during the next six month period.
2% if such request is received during the next six month period.
1% if such request is received during the next six month period.
0% thereafter.
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002 AND 2001
(A Review)
4. FEES
The Fund is charged the following fees on a monthly basis since the
commencement of trading.
A management fee of 1% (annual rate) of the Fund's net assets allocated
to each CTA to trade will be paid to each CTA and 3% of the Fund's net assets
allocated to all CTA's will be paid to the Fund's Corporate General Partners.
An incentive fee of 20% of "new trading profits" will be paid to each
CTA. "New trading profits" includes all income earned by a CTA and expense
allocated to his activity. In the event that trading produces a loss, no
incentive fees will be paid and all losses will be carried over to the
following months until profits from trading exceed the loss. It is possible
for one CTA to be paid an incentive fee during a quarter of a year when the
Fund experienced a loss.
The Fund will pay fixed commissions of 11% (annual rate) of assets
assigned to be traded, payable monthly, to the introducing broker affiliated
with the General Partners. The Affiliated Introducing Broker will pay the
costs to clear the trades to the futures commission merchant and all PIT
Brokerage costs which shall include the NFA and exchange fees.
The General Partner has reserved the right to change the management fee
and the incentive fee at its sole discretion.
5. CONCENTRATIONS OF CREDIT RISK
The Fund maintains its cash balances at a high credit quality financial
institution. The balances may, at times, exceed federally insured credit
limits.
6. PLEDGED ASSETS
The cash in trading accounts is pledged as collateral for commodities
trading on margin.
BROMWELL FINANCIAL FUND, LIMITED PARTNERSHIP
(A Delaware Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002 AND 2001
(A Review)
7. OFF BALANCE SHEET RISK
As discussed in Note 1, the Fund is engaged in speculative trading of
futures contracts in commodities. The carrying amounts of the Fund's
financial instruments and commodity contracts generally approximate their
fair values at June 30. Open commodity contracts had gross contract value of
$12,322,184 on long positions and $278,000 on short positions at June 30,
2002. Open commodity contract had a gross contract value of $2,116,456 on
long positions and $822,780 on short positions at June 30, 2001.
Although the gross contract values of open commodity contracts
represent market risk they do not represent exposure to credit risk, which is
limited to the current cost of replacing those contracts in a gain position.
The unrealized gain on open commodity futures contracts at June 30, 2002 and
2001 was $84,872 and $4,791, respectively.
8. SUBSEQUENT EVENTS
On July 30, 2002, it was discovered that certain expenses and fees,
including initiating broker commissions and commodity trading advisor
management fees were underpaid due to a calculation error. The Fund will pay
the additional amount in the third quarter when the actual amount is
determined. No interest will be charged on the underpayment.