10-K 1 jun03-10q.txt 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, 2003. 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, 2003 ------------ 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, 2003 (Unaudited) and December 31, 2002 (Audited) ----------- June 30, December 31, 2003 2002 ---- ---- ASSETS Equity in broker trading accounts Cash $ 6,892,731 $ 6,052,289 Unrealized gain (loss) on open contracts (228,062) 450,588 ----------- ----------- Deposits with broker 6,664,669 6,502,877 Cash 2,509 2,919 ----------- ----------- Total assets $ 6,667,178 $ 6,505,796 =========== =========== LIABILITIES Accounts payable $ 12,553 $ 22,383 Commissions and other trading fees on open contracts 6,377 8,471 Incentive fees payable 11,952 28,982 Management fees payable 52,141 70,135 Redemptions payable 55,575 16,372 ----------- ----------- Total liabilities 138,598 146,343 ----------- ----------- PARTNERS' CAPITAL (Net Asset Value) General Partner - 101 units outstanding at June 30, 2003 and December 31, 2002 139,549 133,611 Limited Partners - 4,644 and 4,726 units outstanding at June 30, 2003 and December 31, 2002 6,389,031 6,225,842 ----------- ----------- Total partners' capital (Net Asset Value) 6,528,580 6,359,453 ----------- ----------- $ 6,667,178 $ 6,505,796 =========== =========== See accompanying notes. ALTERNATIVE ASSET GROWTH FUND, L.P. CONDENSED SCHEDULE OF INVESTMENTS June 30, 2003 (Unaudited) ----------- LONG FUTURES CONTRACTS ---------------------- % of Net Description Value Asset Value ----------- ----- ----------- Agricultural $ (7,119) (0.11)% Currency (55,143) (0.85)% Energy 29,180 0.45 % Interest rate (122,090) (1.87)% Metal (45,196) (0.69)% Stock index (35,816) (0.55)% --------- ------ Total long futures contracts $(236,184) (3.62)% --------- ------ SHORT FUTURES CONTRACTS ----------------------- Agricultural $ 3,416 0.05 % Currency 5,562 0.09 % Energy 80 0.00 % Interest rate (2,061) (0.03)% Metal 1,125 0.02 % --------- ------ Total short futures contracts $ 8,122 0.13 % --------- ------ Total futures contracts $(228,062) (3.49)% ========= ====== See accompanying notes. ALTERNATIVE ASSET GROWTH FUND, L.P. STATEMENTS OF OPERATIONS For the Three Months Ended June 30, 2003 and 2002 (Unaudited) ----------- Three Months Ended June 30, 2003 2002 --------- --------- INCOME Trading gains (losses) Realized $ 302,996 $ 398,532 Change in unrealized (192,899) 59,044 ----------- ----------- Gain from trading 110,097 457,576 Interest income 18,711 23,209 ----------- ----------- Total income 128,808 480,785 ----------- ----------- EXPENSES Brokerage commissions 35,092 66,358 Incentive fees 11,952 293 Management fees 109,246 104,268 Operating expenses 26,544 23,598 ----------- ----------- Total expenses 182,834 194,517 ----------- ----------- NET INCOME (LOSS) $ (54,026) $ 286,268 =========== =========== NET INCOME (LOSS) PER GENERAL AND LIMITED PARTNER UNIT (based on weighted average number of units outstanding during the period of 4,801 and 5,104, respectively) $ (11.25) $ 56.09 =========== =========== INCREASE (DECREASE) IN NET ASSET VALUE PER GENERAL AND LIMITED PARTNER UNIT $ (11.40) $ 59.74 =========== =========== See accompanying notes. ALTERNATIVE ASSET GROWTH FUND, L.P. STATEMENTS OF OPERATIONS For the Six Months Ended June 30, 2003 and 2002 (Unaudited) ----------- Six Months Ended June 30, 2003 2002 --------- --------- INCOME Trading gains (losses) Realized $ 1,427,519 $ (22,467) Change in unrealized (678,650) 187,438 ----------- ----------- Gain from trading 748,869 164,971 Interest income 39,777 48,683 ----------- ----------- Total income 788,646 213,654 ----------- ----------- EXPENSES Brokerage commissions 79,033 126,229 Incentive fees 138,083 293 Management fees 231,620 216,129 Operating expenses 56,271 50,351 ----------- ----------- Total expenses 505,007 393,002 ----------- ----------- NET INCOME (LOSS) $ 283,639 $ (179,348) =========== =========== NET INCOME (LOSS) PER GENERAL AND LIMITED PARTNER UNIT (based on weighted average number of units outstanding during the period of 4,813 and 5,247, respectively) $ 58.93 $ (34.18) =========== =========== INCREASE (DECREASE) IN NET ASSET VALUE PER GENERAL AND LIMITED PARTNER UNIT $ 58.55 $ (25.06) =========== =========== 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, 2003 and 2002 (Unaudited) ----------- Total Partners' Capital Number of ---------------------------------- Units General Limited Total ----------- -------- ----------- ----------- 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 ====== ======== =========== =========== Balances at December 31, 2001 5,438 $106,803 $ 6,225,137 $ 6,331,940 Net (loss) for the six months ended June 30, 2002 (1,254) (178,094) (179,348) Additions 10 10,000 0 10,000 Redemptions (493) 0 (517,578) (517,578) ------ -------- ----------- ----------- Balances at June 30, 2002 4,955 $115,549 $ 5,529,465 $ 5,645,014 ====== ======== =========== =========== Net asset value per unit at December 31, 2001 $ 1,164.33 =========== June 30, 2002 $ 1,139.27 =========== December 31, 2002 $ 1,317.35 =========== June 30, 2003 $ 1,375.90 =========== 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 contracts and other financial instruments. 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 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 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 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. 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, 2003, and the results of operations for the three and six months ended June 30, 2003 and 2002. 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. Total management fees earned by ProFutures, Inc. for the six months ended June 30, 2003 and 2002 were $68,266 and $56,214, respectively. Such management fees earned for the three months ended June 30, 2003 and 2002 were $33,861 and $27,187, respectively. Management fees payable to ProFutures, Inc. as of June 30, 2003 and December 31, 2002 were $11,020 and $10,671, respectively. ALTERNATIVE ASSET GROWTH FUND, L.P. NOTES TO FINANCIAL STATEMENTS (CONTINUED) (Unaudited) ----------- 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 23% 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, 2003 and 2002 were $68,266 and $56,214, respectively. Such fees earned for the three months ended June 30, 2003 and 2002 were $33,861 and $27,187, 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 $34,133 and $28,107 for the six months ended June 30, 2003 and 2002, respectively. Such fees earned by Kenmar for the three months ended June 30, 2003 and 2002 totaled $16,931 and $13,594, 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 (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 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 contracts purchased and unlimited liability on such contracts sold short. 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. 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, 2003 and 2002. This information has been derived from information presented in the financial statements. Three months ended June 30, 2003 2002 (Unaudited) (Unaudited) ----------- ----------- Per Unit Performance (for a unit outstanding throughout the entire period) ----------------------------------------------------- Net asset value per unit at beginning of period $1,387.30 $1,079.53 --------- --------- Income (loss) from operations: Net investment (loss) (1), (3) (26.88) (20.56) Net realized and change in unrealized gain from trading (2), (3) 15.48 80.30 --------- --------- Total income (loss) from operations (11.40) 59.74 --------- --------- Net asset value per unit at end of period $1,375.90 $1,139.27 ========= ========= Total Return (5) (0.82)% 5.53 % ======= ====== Supplemental Data Ratios to average net asset value: (6) Expenses prior to incentive fees (4) 8.10 % 9.47 % Incentive fees 0.71 % 0.02 % ------ ------- Total expenses (1) 8.81 % 9.49 % ======= ======= Net investment (loss) (4) (6.98)% (7.75)% ======= ======= Six months ended June 30, 2003 2002 (Unaudited) (Unaudited) ----------- ----------- Per Unit Performance (for a unit outstanding throughout the entire period) ----------------------------------------------------- Net asset value per unit at beginning of period $1,317.35 $1,164.33 --------- --------- Income (loss) from operations: Net investment (loss) (1), (3) (80.23) (41.56) Net realized and change in unrealized gain from trading (2), (3) 138.78 16.50 --------- --------- Total (loss) from operations 58.55 (25.06) --------- --------- Net asset value per unit at end of period $1,375.90 $1,139.27 ========= ========= Total Return (5) 4.44 % (2.15)% ======= ======= Supplemental Data Ratios to average net asset value: (6) Expenses prior to incentive fees (4) 8.49 % 9.47 % Incentive fees 4.07 % 0.01 % ------- ------- Total expenses (1) 12.56 % 9.48 % ======= ======= Net investment (loss) (4) (7.32)% (7.74)% ======= ======= 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 additions and redemptions. -------------------- (1) Excludes brokerage commissions and other trading fees. (2) Includes brokerage commissions and other trading fees. (3) The net investment (loss) per unit is calculated by dividing the net investment (loss) by the average number of units outstanding during the period. The net realized and change in unrealized gain from trading is a balancing amount necessary to reconcile the change in net asset value per unit with the other per unit information. (4) Excludes brokerage commissions, other trading fees and incentive fees. (5) Not annualized. (6) Annualized. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 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, 2003 and 2002 totaled: 2003 2002 ---- ---- Three months ended March 31 $ 337,665 $ (465,616) Three months ended June 30 (54,026) 286,268 ---------- ---------- Six months ended June 30 $ 283,639 $ (179,348) ========== ========== 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. As of June 30, 2002, 4,955 Units are outstanding, including 101 General Partner Units, with an aggregate Net Asset Value of $5,645,014 ($1,139.27 per Unit). This represents a decrease in Net Asset Value of $(686,926) compared with December 31, 2001. The decrease is caused by redemptions of limited partner units and a net loss for the six months ended June 30, 2002. 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. Second Quarter 2002 ------------------- The futures markets continued to be volatile in the second quarter of 2002, though there was a surge at the end of the quarter. The extreme volatility of the equity markets, mainly on the downside, had a major impact on the commodities markets. Many of the US and overseas stock indexes and foreign currencies were very active. Some of this was the result of the corporate scandals that continue to rock the markets. In April, the Partnership lost 5.15%. Although there were gains in Swiss Francs, natural gas, and Euros, they were more than offset by losses in the German Stock Index, the Japanese Yen, Euribor futures, the NASDAQ 100, and various bond futures. In May, the Partnership was essentially flat, with a loss of .17%. There were gains in foreign currencies due to the drop of the U.S. dollar. There were also gains in precious metals and agricultural commodities. The gains were offset by losses in the energy complex, interest rates and some metals. In June, the Partnership had a gain of 11.46%. There were gains in Euro futures and the Swiss Franc, and also a gain in EuroDollar futures. There were also gains in various stock and bond indexes. There were losses in British Pounds, the Nikkei Stock Index, and Gold, but these were more than offset by the gains. The Partnership had a total return of 5.53% for the quarter and (2.15)% for the six months ended June 30, 2002. For the second quarter 2002, the majority of the Partnership's trading gains were in foreign currencies and the largest loss was in the energy markets. First Quarter 2002 ------------------ The futures markets remained choppy in the first quarter of 2002. While the economy was showing some signs of improvement, there were also some negative signs that caused uncertainty. The troubles in the Middle East lead to large increases in oil and gas prices. Gold prices also moved higher early in the quarter, but gave back some of their gains at the end of the quarter. In January 2002, the Partnership lost 5.00%. There were large losses in stock indexes and agricultural commodities. Large losses were also incurred in interest rates and metals. Many of the other sectors were essentially flat. In February 2002, the Partnership lost 6.74%. The Partnership once again experienced losses in stock indexes and interest rates. In addition, there were also losses in the energy complex and foreign currencies. There were some gains in agricultural commodities and precious metals. These however, were not enough to offset the losses for the month. In March 2002, the Partnership managed to gain 4.66%. There were gains in the energy complex, including Brent Crude Oil and Unleaded Gas. There were also some gains in bonds and stock indexes. There were losses in currencies, including the Japanese Yen and the Swiss Franc. There were also some small losses in cotton and aluminum. These losses however were not enough to offset the gains. For the first quarter 2002, the Partnership's losses overall were primarily due to currencies and 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 with respect to the Partnership within 90 days of the filing date of this quarterly report, and, based on their evaluation, have concluded that these disclosure controls and procedures are effective. There were no significant changes in the general partner's internal controls with respect to the Partnership or in other factors applicable to the Partnership that could significantly affect these controls subsequent to the date of their evaluation. 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: 99.1 Form of Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code. 99.2 Form of Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code. CERTIFICATIONS -------------- 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 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 officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in 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 officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): 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 officers 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: August 14, 2003 ---------------------------------- /s/ Gary D. Halbert ----------------------------------------- Gary D. Halbert, President ProFutures, Inc., General Partner 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 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 officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in 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 officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): 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 officers 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: August 14, 2003 ---------------------------------- /s/ Debi B. Halbert ----------------------------------------- Debi B. Halbert, Chief Financial Officer ProFutures, Inc., General Partner SIGNATURE 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) /s/ Gary D. Halbert ----------------------------------- Gary D. Halbert, President ProFutures, Inc., General Partner Alternative Asset Growth Fund, L.P. EXHIBIT 99.1 CERTIFICATION PURSUANT TO SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE ------------------------------------------------ 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 30,2003 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, 2003 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 14, 2003 EXHIBIT 99.2 CERTIFICATION PURSUANT TO SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE ------------------------------------------------ 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, 2003 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, 2003 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 14, 2003