10-Q 1 sep03-10q.txt Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: ProFutures Long/Short Growth Fund, L.P. Commission File Number 0-25585 Dear Sirs: This filing contains Form 10-Q for the quarter ended September 30, 2003. Very truly yours, PROFUTURES LONG/SHORT 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 September 30, 2003 -------------- Commission File Number 0-25585 ------- PROFUTURES LONG/SHORT GROWTH FUND, L.P. --------------------------------------- (Exact name of registrant) Delaware 74-2849862 ----------------------- ------------------------------------ (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) Registrant's telephone number (800) 348-3601 -------------- Indicate by check mark 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 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. PROFUTURES LONG/SHORT GROWTH FUND, L.P. STATEMENTS OF FINANCIAL CONDITION September 30, 2003 (Unaudited) and December 31, 2002 (Audited) ------------- September 30, December 31, 2003 2002 ---- ---- ASSETS Equity in broker trading accounts Cash $ 9,430,773 $10,788,323 Net option premiums (received) (87,600) (199,000) Unrealized gain on open contracts 154,805 701,173 ----------- ----------- Deposits with broker 9,497,978 11,290,496 Cash 2,481 12,710 ----------- ----------- Total assets $ 9,500,459 $11,303,206 =========== =========== LIABILITIES Accounts payable $ 17,682 $ 17,609 Commissions and other trading fees on open contracts 2,456 10,743 Incentive fees payable 19,813 153,011 Management fees payable 34,578 46,257 Redemptions payable 251,137 38,563 ----------- ----------- Total liabilities 325,666 266,183 ----------- ----------- PARTNERS' CAPITAL (Net Asset Value) General Partner - 61 units outstanding at September 30, 2003 and December 31, 2002 63,173 63,353 Limited Partners - 8,862 and 10,643 units outstanding at September 30, 2003 and December 31, 2002 9,111,620 10,973,670 ----------- ----------- Total partners' capital (Net Asset Value) 9,174,793 11,037,023 ----------- ----------- $ 9,500,459 $11,303,206 =========== =========== See accompanying notes. PROFUTURES LONG/SHORT GROWTH FUND, L.P. CONDENSED SCHEDULE OF INVESTMENTS September 30, 2003 (Unaudited) ----------- LONG FUTURES CONTRACTS ---------------------- % of Net Description Value Asset Value ----------- ----- ----------- Agricultural $ 84,211 0.92 % Currency 30,213 0.33 % Interest rate 22,011 0.24 % Metal 1,285 0.01 % ---------- ------ Total long futures contracts $ 137,720 1.50 % ---------- ------ SHORT FUTURES CONTRACTS ----------------------- % of Net Description Value Asset Value ----------- ----- ----------- Agricultural $ (3,915) (0.04)% Energy (12,600) (0.14)% ---------- ------ Total short futures contracts $ (16,515) (0.18)% ---------- ------ Total futures contracts $ 121,205 1.32 % ========== ====== WRITTEN OPTIONS ON FUTURES CONTRACTS ------------------------------------ % of Net Description Value Asset Value ----------- ----- ----------- Stock index options (premiums received - $87,600) $ (54,000) (0.59)% ========== ====== See accompanying notes. PROFUTURES LONG/SHORT GROWTH FUND, L.P. STATEMENTS OF OPERATIONS For the Three Months Ended September 30, 2003 and 2002 (Unaudited) ------------- Three months ended September 30, 2003 2002 ---- ---- INCOME Trading gains (losses) Realized $ (400,216) $ 320,099 Change in unrealized 376,419 287,106 ------------ ------------ Gain (loss) from trading (23,797) 607,205 Interest income 21,134 46,942 ------------ ------------ Total income (loss) (2,663) 654,147 ------------ ------------ EXPENSES Brokerage commissions 54,217 73,252 Incentive fees 19,813 31,201 Management fees 66,471 86,676 Operating expenses 29,331 28,917 ------------ ------------ Total expenses 169,832 220,046 ------------ ------------ NET INCOME (LOSS) $ (172,495) $ 434,101 ============ ============ NET INCOME (LOSS) PER GENERAL AND LIMITED PARTNER UNIT (based on weighted average number of units outstanding during the period of 9,383 and 11,069, respectively) $ (18.38) $ 39.22 ============ ============ INCREASE (DECREASE) IN NET ASSET VALUE PER GENERAL AND LIMITED PARTNER UNIT $ (16.51) $ 39.56 ============ ============ See accompanying notes. PROFUTURES LONG/SHORT GROWTH FUND, L.P. STATEMENTS OF OPERATIONS For the Nine Months Ended September 30, 2003 and 2002 (Unaudited) ----------- Nine months ended September 30, 2003 2002 ---- ---- INCOME Trading gains (losses) Realized $ 1,014,843 $ 1,957,721 Change in unrealized (546,368) 496,566 ------------ ------------ Gain from trading 468,475 2,454,287 Interest income 78,974 148,308 ------------ ------------ Total income 547,449 2,602,595 ------------ ------------ EXPENSES Brokerage commissions 207,824 220,406 Incentive fees 19,813 314,585 Management fees 233,046 265,865 Operating expenses 80,368 85,290 ------------ ------------ Total expenses 541,051 886,146 ------------ ------------ NET INCOME $ 6,398 $ 1,716,449 ============ ============ NET INCOME PER GENERAL AND LIMITED PARTNER UNIT (based on weighted average number of units outstanding during the period of 10,017 and 11,873, respectively) $ 0.64 $ 144.57 ============ ============ INCREASE IN NET ASSET VALUE PER GENERAL AND LIMITED PARTNER UNIT $ (2.94) $ 145.42 ============ ============ See accompanying notes. PROFUTURES LONG/SHORT GROWTH FUND, L.P. STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (NET ASSET VALUE) For the Nine Months Ended September 30, 2003 and 2002 (Unaudited) ------------- Total Partners' Capital Number of ---------------------------------- Units General Limited Total --------- -------- ----------- ----------- Balances at December 31, 2002 10,704 $ 63,353 $10,973,670 $11,037,023 Net income (loss) for the nine months ended September 30, 2003 (180) 6,578 6,398 Redemptions (1,781) 0 (1,868,628) (1,868,628) ------ -------- ----------- ----------- Balances at September 30, 2003 8,923 $ 63,173 $ 9,111,620 $ 9,174,793 ====== ======== =========== =========== Balances at December 31, 2001 12,974 $ 56,537 $11,882,135 $11,938,672 Net income for the nine months ended September 30, 2002 8,935 1,707,514 1,716,449 Redemptions (2,017) 0 (1,979,461) (1,979,461) ------ -------- ----------- ----------- Balances at September 30, 2002 10,957 $ 65,472 $11,610,188 $11,675,660 ====== ======== =========== =========== Net asset value per unit at December 31, 2001 $ 920.18 =========== September 30, 2002 $ 1,065.60 =========== December 31, 2002 $ 1,031.12 =========== September 30, 2003 $ 1,028.18 =========== See accompanying notes. PROFUTURES LONG/SHORT GROWTH FUND, L.P. NOTES TO FINANCIAL STATEMENTS (Unaudited) ------------- Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ----------------------------------------------------------- A. General Description of the Partnership ProFutures Long/Short 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 option 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 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. PROFUTURES LONG/SHORT GROWTH FUND, L.P. NOTES TO FINANCIAL STATEMENTS (CONTINUED) (Unaudited) ------------- Note 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ----------- 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. F. Organizational Charge The General Partner pays all organizational and offering costs of the Partnership. As reimbursement for such costs, the General Partner (or the Distributor, ProFutures Financial Group, Inc., a broker/dealer affiliate of the General Partner) receives an organizational charge of 1% of the subscription amount of each subscriber to the Partnership. There were no such organizational charges received by the General Partner during the nine months ended September 30, 2003 and 2002. G. 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. H. 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." I. 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 September 30, 2003, and the results of operations for the three and nine months ended September 30, 2003 and 2002. PROFUTURES LONG/SHORT GROWTH FUND, L.P. NOTES TO FINANCIAL STATEMENTS (CONTINUED) (Unaudited) ------------- Note 2. GENERAL PARTNER --------------- The General Partner of the Partnership is ProFutures, Inc., which conducts and manages the business of the Partnership. The Limited Partnership Agreement requires the General Partner and/or its principals and affiliates to maintain capital accounts equal to at least 1% of the total capital of the Partnership. At September 30, 2003 and December 31, 2002, the capital accounts of the General Partner and/or its principals and affiliates totaled $550,401 and $551,975. The Limited Partnership Agreement was amended effective February 16, 1999 and generally requires that the General Partner maintain a net worth of up to $1,000,000. 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 the 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 net worth requirements. The Partnership pays the General Partner a monthly management fee equal to 1/6 of 1% (2% annually) of month-end Net Assets (as defined in the Limited Partnership Agreement). Total management fees earned by ProFutures, Inc. for the nine months ended September 30, 2003 and 2002 were $158,669 and $176,988, respectively. Such management fees earned for the three months ended September 30, 2003 and 2002 were $47,629 and $57,750, respectively. Management fees payable to ProFutures, Inc. as of September 30, 2003 and December 31, 2002 were $15,736 and $18,490, respectively. Note 3. COMMODITY TRADING ADVISORS -------------------------- The Partnership has trading advisory contracts with several trading advisors to furnish investment management services to the Partnership. Certain advisors receive a monthly management fee of 1/12 of 1% (1% annually) of Allocated Net Asset Value (as defined in each respective advisory agreement). 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. The Partnership earns interest income on its assets deposited with the broker. At September 30, 2003 and December 31, 2002, the initial margin requirement of $1,359,132 and $2,393,246, respectively, is satisfied by the deposit of cash with such broker. PROFUTURES LONG/SHORT GROWTH FUND, L.P. NOTES TO FINANCIAL STATEMENTS (CONTINUED) (Unaudited) ------------- Note 5. SUBSCRIPTIONS, DISTRIBUTIONS AND REDEMPTIONS -------------------------------------------- Investments in the Partnership were made by subscription agreement, subject to acceptance by the General Partner. Effective November 2000, the Partnership is closed to new investment; however, the General Partner may reopen the Partnership to new investments in the future. The Partnership is not required to make distributions, but may do so at the sole discretion of the General Partner. A Limited Partner may require the Partnership to redeem any or all of such Limited Partner's units at Net Asset Value as of the close of business on the last day of any month upon advance written notice to the General Partner. The Limited Partnership Agreement contains a complete description of the Partnership's redemption policies and procedures. Note 6. TRADING ACTIVITIES AND RELATED RISKS ------------------------------------ The Partnership engages in the speculative trading of U.S. and foreign futures contracts and options on futures contracts (collectively "derivatives"). The Partnership is exposed to both market risk, the risk arising from changes in the market value of the contracts, and credit risk, the risk of failure by another party to perform according to the terms of a contract. Purchase and sale of futures and options on futures contracts requires margin deposits with the 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. Open contracts generally mature within three months, however, the Partnership intends to close all contracts prior to maturity. At September 30, 2003 and at December 31, 2002, the latest maturity date for open contracts is March 2004. 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. 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. PROFUTURES LONG/SHORT GROWTH FUND, L.P. NOTES TO FINANCIAL STATEMENTS (CONTINUED) (Unaudited) ------------- Note 6. TRADING ACTIVITIES AND RELATED RISKS (CONTINUED) ------------------------------------------------ The Partnership has 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 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. PROFUTURES LONG/SHORT GROWTH FUND, L.P. NOTES TO FINANCIAL STATEMENTS (CONTINUED) (Unaudited) ------------- Note 7. FINANCIAL HIGHLIGHTS -------------------- The following information presents per unit operating performance data and other supplemental financial data for the three months and nine months ended September 30, 2003 and 2002. This information has been derived from information presented in the financial statements. Three months ended September 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 $1,044.69 $1,026.04 --------- --------- Income (loss) from operations: Net investment (loss) (1), (3) (10.07) (9.02) Net realized and change in unrealized gain (loss) from trading (2), (3) (6.44) 48.58 --------- --------- Total income (loss) from operations (16.51) 39.56 --------- --------- Net asset value per unit at end of period $1,028.18 $1,065.60 ========= ========= Total Return (5) (1.58)% 3.86 % ======= ======= Supplemental Data Ratios to average net asset value: (6) Expenses prior to incentive fees (4) 4.14 % 4.03 % Incentive fees 0.86 % 1.09 % ------- ------- Total expenses (1) 5.00 % 5.12 % ======= ======= Net investment (loss) (4) (3.23)% (2.40)% ======= ======= Nine months ended September 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 $1,031.12 $ 920.18 --------- --------- Income (loss) from operations: Net investment (loss) (1), (3) (25.38) (43.58) Net realized and change in unrealized gain from trading (2), (3) 22.44 189.00 --------- --------- Total income (loss) from operations (2.94) 145.42 --------- --------- Net asset value per unit at end of period $1,028.18 $1,065.60 ========= ========= Total Return (5) (0.29)% 15.80 % ======= ======= Supplemental Data Ratios to average net asset value: (6) Expenses prior to incentive fees (4) 4.04 % 4.04 % Incentive fees 0.25 % 3.61 % ------- ------- Total expenses (1) 4.29 % 7.65 % ======= ======= Net investment (loss) (4) (3.02)% (2.33)% ======= ======= 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) 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 (loss) from trading 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 net trading gain (loss) per unit due to the timing of trading gains and losses during the period relative to the number of units outstanding. (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 and option contracts. It is possible that extreme market conditions or daily price fluctuation limits at 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 broker 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 raises additional capital only through the sale of Units and trading profits (if any) and does not engage in borrowing. The Partnership sells no securities other than the Units. Effective November 2000, the Partnership is closed to new investment; however, the General Partner may reopen the Partnership to new investments in the future. C. RESULTS OF OPERATIONS: The Partnership's net income for the nine months ended September 30, 2003 and 2002 consisted of the following: 2003 2002 ---- ---- Three months ended March 31 $ 264,882 $ 326,772 Three months ended June 30 (85,989) 955,576 Three months ended September 30 (172,495) 434,101 ---------- ---------- Nine months ended September 30 $ 6,398 $1,716,449 ========== ========== At September 30, 2003, partners' capital totaled $9,174,793, a net decrease of $1,862,230 from December 31, 2002, due to redemptions of limited partner units exceeding net income for the nine months ended September 30, 2003. At September 30, 2002, partners' capital totaled $11,675,660, a net decrease of $263,012 from December 31, 2001, due to redemptions of limited partner units exceeding net income for the nine months ended September 30, 2002. Third Quarter 2003 ------------------ The economy continued to improve in the third quarter. The equity markets were mostly up. Most analysts expect the economy to continue to improve for the remainder of the year. In July 2003, the Partnership had a loss of 4.03%. There were losses in bonds and other interest rates, and foreign currencies. There were gains in agricultural commodities and energy. In August 2003, the Partnership had a gain of 0.80%. The gain was related to stock indexes as no other types of contracts were traded during the month. In September 2003, the Partnership had a gain of 1.74%. There were gains in stock indexes, agricultural commodities, foreign currencies and interest rates. There were losses in energy and metals. Overall, the Partnership had a total return of (1.58)% for the quarter and (0.29)% for the nine months ended September 30, 2003. The majority of the Partnership's trading gains for the third quarter 2003 were in stock indexes and the largest loss occurred in interest rate futures. In September 2003, a new trader, Clarke Capital Management, was added to the Partnership. 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 0.11%. There were gains in grains and currencies. However, these were mostly offset by losses in other sectors, including stock indexes. In May 2003, the Partnership had a gain of 1.47%. There were gains in currencies and interest rates, especially bonds and stock indexes. There were losses in agricultural commodities, metals and energy. In June 2003, the Partnership had a loss of 2.23%. There were losses in agricultural commodities, bonds, metals, energy and currencies. There were gains in stock indexes and short-term interest rates. Overall, the Partnership's rate of return was (0.90)% for the quarter and 1.32% for the six months ended June 30, 2003. The majority of the Partnership's trading gains for the second quarter were in foreign currencies and equities and the largest loss was in agricultural commodities. First Quarter 2003 ------------------ The futures markets were 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 had a gain of 7.02%. There were very large gains in the energy, foreign currencies, stock indexes, precious and base metals, and certain agricultural commodities. The losses were primarily limited to grains and short-term interest rates. In February 2003, the Partnership had a gain of .45%. There were large gains in energy, with smaller gains in currencies and interest rates. These gains were primarily offset by losses in stock indexes and metals. In March 2003, the Partnership had a loss of 4.90%. There were some small gains in stock indexes and short-term interest rates. However, the losses in other sectors, especially energy, were far greater. Overall, the Partnership had a total return of 2.24% for the quarter. The majority of the Partnership's trading gains were in energy and foreign currencies and the largest loss was in metal futures. Third Quarter 2002 ------------------ The futures markets continued to be volatile in the third quarter of 2002. The equity markets suffered losses during the quarter, which impacted the commodities markets. The looming threat of war with Iraq also had a big impact on the markets, especially oil and gas futures. The Partnership started the quarter with a loss in July of (2.58)%. There were losses in stock indexes along with losses in metals, foreign currencies and certain of the agricultural commodities. These losses were partially offset by gains in interest rates, and some of the agricultural commodities. In August, the Partnership gained 6.11%. There were gains in stock indexes. There were also gains in grains and other agricultural commodities, as well as interest rates. There were losses in foreign currencies and base metals. In September, the Partnership posted another gain of 0.47%. There were gains in interest rates, energy and base metals. These gains were mostly offset by losses in stock indexes, certain of the agricultural commodities, and foreign currencies. The Partnership had a total return of 3.86% for the quarter and 15.80% for the nine months ended September 30, 2002. For the third quarter 2002, the majority of the Partnership's trading gains were in interest rate futures 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. The Partnership had a good second quarter, starting in April with a gain of .56%. There was a gain in S & P 500 options, with gains in lean hogs and corn futures. These were partially offset by losses in the S & P 500 Index, copper futures and coffee futures. In May, the Partnership continued its positive quarter with a gain of 5.66%. There were gains in foreign currencies, stock indexes and precious metals. There were losses in the energy complex and some agricultural commodities. In June, the Partnership posted another gain of 2.16%. There were gains in British Pounds, the S & P 500 Index, Euro futures and EuroDollar futures. These were partially offset by losses in options on the S & P 500, lean hogs and sugar futures. The Partnership had a total return of 8.54% for the quarter and 11.50% 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 gained a modest 0.99%. There were large gains in stock index, along with some smaller gains in energy and foreign currencies. These were mostly offset by losses in interest rates, agricultural commodities and precious metals. In February 2002, there was another gain of 4.34%. This resulted from gains in stock index, once again. There were also gains in interest rates and agricultural commodities. There were some losses incurred in energy and foreign currencies. In March 2002, the Partnership incurred a loss of 2.51%. Again there were profits in the stock indexes. These however were offset by losses in foreign currencies, interest rates and agricultural commodities. Coffee and Eurodollar futures incurred the largest losses. For the first quarter 2002, the majority of the Partnership's gains came from profits in options on S&P 500 Index futures. The largest loss for the quarter was from coffee. Market and Credit Risk ---------------------- 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 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. Due to the speculative nature of trading derivatives, 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 trading advisors or 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 ProFutures Long/Short 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: 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. SIGNATURE Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PROFUTURES LONG/SHORT GROWTH FUND, L.P. (Registrant) By /s/ Gary D. Halbert ------------------------------------- Gary D. Halbert, President 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 ProFutures Long/Short 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: November 10, 2003 ---------------------------------- /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 ProFutures Long/Short 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: November 10, 2003 ---------------------------------- /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 ProFutures Long/Short Growth Fund, L.P., certify that (i) the Form 10-Q for the quarter ended September 30, 2003 of ProFutures Long/Short 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 September 30, 2003 fairly presents, in all material respects, the financial condition and results of operations of ProFutures Long/Short Growth Fund, L.P. PROFUTURES LONG/SHORT GROWTH FUND, L.P. By: ProFutures, Inc., General Partner By: /s/ Gary D. Halbert ---------------------------------- Gary D. Halbert President November 10, 2003 EXHIBIT 32.02 CERTIFICATION ------------- I, Debi B. Halbert, the Chief Financial Officer of ProFutures, Inc. as general partner of ProFutures Long/Short Growth Fund, L.P., certify that (i) the Form 10-Q for the quarter ended September 30, 2003 of ProFutures Long/Short 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 September 30, 2003 fairly presents, in all material respects, the financial condition and results of operations of ProFutures Long/Short Growth Fund, L.P. PROFUTURES LONG/SHORT GROWTH FUND, L.P. By: ProFutures, Inc., General Partner By: /s/ Debi B. Halbert ---------------------------------- Debi B. Halbert Chief Financial Officer November 10, 2003