UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31,June 30, 2014
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: 000-52599
AIS FUTURES FUND IV L.P.
(Exact name of registrant as specified in its charter)
| Delaware | 13-3909977 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
c/o AIS CAPITAL MANAGEMENT, L.P. 187 Danbury Road, Suite 201 Wilton, Connecticut 06897 | ||
| (Address of principal executive offices) (zip code) | ||
c/o AIS CAPITAL MANAGEMENT, L.P.
187 Danbury Road, Suite 201
Wilton, Connecticut 06897
(Address of principal executive offices) (zip code)
(203) 563-1180
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Limited Partnership Interests
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 xNo ¨ |
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
| Yes xNo ¨ |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ¨ | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
| Yes ¨No x |
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION
STATEMENTS OF FINANCIAL CONDITION
March 31,June 30, 2014 (Unaudited) and December 31, 2013 (Audited)
_______________
| March 31, | December 31, | |||||||
| 2014 | 2013 | |||||||
| ASSETS | ||||||||
| Equity in futures broker trading accounts | ||||||||
| Cash | $ | 6,114,670 | $ | 3,840,242 | ||||
| United States government securities | 6,999,025 | 8,499,181 | ||||||
| Unrealized gain on open futures contracts, net | 2,642,959 | 0 | ||||||
| Unrealized (loss) on open futures contracts, net | (891,185 | ) | (591,732 | ) | ||||
| Interest receivable | 543 | 236 | ||||||
| Deposits with futures brokers | 14,866,012 | 11,747,927 | ||||||
| Cash | 89,093 | 86,602 | ||||||
| United States government securities | 27,497,208 | 31,994,040 | ||||||
| Total assets | $ | 42,452,313 | $ | 43,828,569 | ||||
| LIABILITIES | ||||||||
| Accounts payable | $ | 97,446 | $ | 87,728 | ||||
| Commissions and other trading fees on open contracts payable | 10,644 | 7,974 | ||||||
| Management fee payable | 70,267 | 72,608 | ||||||
| Selling agent administrative and service fee payable | 1,462 | 0 | ||||||
| Subscriptions received in advance | 96,196 | 100,423 | ||||||
| Redemptions payable | 1,095,596 | 3,818,060 | ||||||
| Total liabilities | 1,371,611 | 4,086,793 | ||||||
| PARTNERS’ CAPITAL (Net Asset Value) | ||||||||
| Limited Partners - Series A | 40,654,509 | 39,218,336 | ||||||
| Limited Partners - Series B | 273,362 | 249,046 | ||||||
| Limited Partners - Series C | 152,831 | 274,394 | ||||||
| Total partners’ capital (Net Asset Value) | 41,080,702 | 39,741,776 | ||||||
| $ | 42,452,313 | $ | 43,828,569 | |||||
| June 30, | December 31, | |||||||
| 2014 | 2013 | |||||||
| ASSETS | ||||||||
| Equity in futures broker trading accounts | ||||||||
| Cash | $ | 8,950,470 | $ | 3,840,242 | ||||
| United States government securities | 4,499,748 | 8,499,181 | ||||||
| Unrealized gain on open futures contracts, net | 1,356,702 | 0 | ||||||
| Unrealized (loss) on open futures contracts, net | (1,105,984 | ) | (591,732 | ) | ||||
| Interest receivable | 612 | 236 | ||||||
| Deposits with futures brokers | 13,701,548 | 11,747,927 | ||||||
| Cash | 8,590,244 | 86,602 | ||||||
| United States government securities | 16,999,154 | 31,994,040 | ||||||
| Total assets | $ | 39,290,946 | $ | 43,828,569 | ||||
| LIABILITIES | ||||||||
| Accounts payable | $ | 80,733 | $ | 87,728 | ||||
| Commissions and other trading fees on open contracts payable | 10,506 | 7,974 | ||||||
| Management fee payable | 64,940 | 72,608 | ||||||
| Accrued General Partner profit share allocation | 1,242 | 0 | ||||||
| Selling agent administrative and service fee payable | 90,907 | 100,423 | ||||||
| Redemptions payable | 918,433 | 3,818,060 | ||||||
| Total liabilities | 1,166,761 | 4,086,793 | ||||||
| PARTNERS’ CAPITAL (Net Asset Value) | ||||||||
| Limited Partners - Series A | 37,739,767 | 39,218,336 | ||||||
| Limited Partners - Series B | 232,882 | 249,046 | ||||||
| Limited Partners - Series C | 151,536 | 274,394 | ||||||
| Total partners' capital (Net Asset Value) | 38,124,185 | 39,741,776 | ||||||
| $ | 39,290,946 | $ | 43,828,569 | |||||
See accompanying notes.
CONDENSED SCHEDULE OF INVESTMENTS
March 31,June 30, 2014 (Unaudited)
_______________
UNITED STATES GOVERNMENT SECURITIES*
| Face Value | Maturity Date | Description | Fair Value | % of Net Asset Value | ||||||||||
| $ | 1,500,000 | 04/03/14 | U.S. Treasury Bills | $ | 1,499,997 | 3.65 | % | |||||||
| 7,500,000 | 04/10/14 | U.S. Treasury Bills | 7,499,825 | 18.26 | % | |||||||||
| 1,500,000 | 05/15/14 | U.S. Treasury Bills | 1,499,840 | 3.65 | % | |||||||||
| 12,500,000 | 06/19/14 | U.S. Treasury Bills | 12,498,162 | 30.42 | % | |||||||||
| 9,500,000 | 07/10/14 | U.S. Treasury Bills | 9,498,963 | 23.12 | % | |||||||||
| 2,000,000 | 09/04/14 | U.S. Treasury Bills | 1,999,446 | 4.87 | % | |||||||||
| Total United States government securities | ||||||||||||||
| (cost - $34,489,419) | $ | 34,496,233 | 83.97 | % | ||||||||||
| Face Value | Maturity Date | Description | Fair Value | % of Net Asset Value | ||||||||||
| $ | 9,500,000 | 07/10/14 | U.S. Treasury Bills | $ | 9,499,897 | 24.92 | % | |||||||
| 1,000,000 | 09/04/14 | U.S. Treasury Bills | 999,881 | 2.62 | % | |||||||||
| 8,500,000 | 10/09/14 | U.S. Treasury Bills | 8,499,166 | 22.29 | % | |||||||||
| 2,500,000 | 11/28/14 | U.S. Treasury Bills | 2,499,958 | 6.56 | % | |||||||||
| Total United States government securities | ||||||||||||||
| (cost - $21,495,812) | $ | 21,498,902 | 56.39 | % | ||||||||||
LONG FUTURES CONTRACTS**
| Description | Fair Value | % of Net Asset Value | ||||||
| Agricultural | $ | 2,642,959 | 6.43 | % | ||||
| Currencies | 551,875 | 1.34 | % | |||||
| Energy | 597,860 | 1.46 | % | |||||
| Metals | (1,640,788 | ) | (3.99 | )% | ||||
| Total long futures contracts | $ | 2,151,906 | 5.24 | % | ||||
| Description | Fair Value | % of Net Asset Value | ||||||
| Agricultural | $ | (1,105,984 | ) | (2.90 | )% | |||
| Currencies | 327,782 | 0.86 | % | |||||
| Energy | 518,468 | 1.36 | % | |||||
| Metals | 922,622 | 2.42 | % | |||||
| Total long futures contracts | $ | 662,888 | 1.74 | % | ||||
SHORT FUTURES CONTRACTS**
| No. of Contracts | Description | |||||||||||
| 52 | Interest Rates (U.S. Treasury Bond, expires 6/2014) | $ | (60,125 | ) | (0.15 | )% | ||||||
| Stock Index | (340,007 | ) | (0.83 | )% | ||||||||
| Total short futures contracts | $ | (400,132 | ) | (0.98 | )% | |||||||
| Total futures contracts | $ | 1,751,774 | 4.26 | % | ||||||||
| No. of Contracts | Description | Fair Value | % of Net Asset Value | |||||||||
| 97 | Interest Rates (U.S. Treasury Bond, expires 9/2014) | $ | (50,095 | ) | (0.13 | )% | ||||||
| Stock Index | (362,075 | ) | (0.95 | )% | ||||||||
| Total short futures contracts | $ | (412,170 | ) | (1.08 | )% | |||||||
| Total futures contracts | $ | 250,718 | 0.66 | % | ||||||||
| * | Includes | |
| ** | No individual futures contract position constituted greater than 5 percent of Net Asset Value. Accordingly, except for the short interest rate futures contracts, the number of contracts and expiration dates are not presented. |
See accompanying notes.
AIS FUTURES FUND IV L.P.
CONDENSED SCHEDULE OF INVESTMENTS
December 31, 2013 (Audited)
_______________
UNITED STATES GOVERNMENT SECURITIES*
| Face Value | Maturity Date | Description | Fair Value | % of Net Asset Value | ||||||||||
| $ | 9,500,000 | 01/09/14 | U.S. Treasury Bills | $ | 9,499,888 | 23.91 | % | |||||||
| 4,500,000 | 02/06/14 | U.S. Treasury Bills | 4,499,841 | 11.32 | % | |||||||||
| 2,500,000 | 02/27/14 | U.S. Treasury Bills | 2,499,819 | 6.29 | % | |||||||||
| 1,000,000 | 03/06/14 | U.S. Treasury Bills | 999,913 | 2.52 | % | |||||||||
| 1,500,000 | 04/03/14 | U.S. Treasury Bills | 1,499,899 | 3.77 | % | |||||||||
| 7,500,000 | 04/10/14 | U.S. Treasury Bills | 7,498,246 | 18.87 | % | |||||||||
| 1,500,000 | 05/15/14 | U.S. Treasury Bills | 1,499,521 | 3.77 | % | |||||||||
| 12,500,000 | 06/19/14 | U.S. Treasury Bills | 12,496,094 | 31.44 | % | |||||||||
| Total United States government securities | ||||||||||||||
| (cost - $40,488,057) | $ | 40,493,221 | 101.89 | % | ||||||||||
LONG FUTURES CONTRACTS**
| Description | Fair Value | % of Net Asset Value | ||||||
| Agricultural | $ | (56,090 | ) | (0.14 | )% | |||
| Currencies | (331,125 | ) | (0.83 | )% | ||||
| Energy | (99,519 | ) | (0.25 | )% | ||||
| Metals | (595,609 | ) | (1.50 | )% | ||||
| Total long futures contracts | $ | (1,082,343 | ) | (2.72 | )% | |||
SHORT FUTURES CONTRACTS**
| No. of Contracts | Description | |||||||||||
| 208 | Interest Rates (U.S. Treasury Bond, expires 3/2014) | $ | 490,611 | 1.23 | % | |||||||
| Total futures contracts | $ | (591,732 | ) | (1.49 | )% | |||||||
| No. of Contracts | Description | Fair Value | % of Net Asset Value | |||||||||
| 208 | Interest Rates (U.S. Treasury Bond, expires 3/2014) | $ | 490,611 | 1.23 | % | |||||||
| Total futures contracts | $ | (591,732 | ) | (1.49 | )% | |||||||
* Includes $8,500,000 face value with a fair value of $8,499,181 pledged as collateral for the trading of futures and options on futures contracts.
** No individual futures contract position constituted greater than 5 percent of Net Asset Value. Accordingly, except for the short interest rate futures contracts, the number of contracts and expiration dates are not presented.
| * | Includes $8,500,000 face value with a fair value of $8,499,181 pledged as collateral for the trading of futures and options on futures contracts. |
| ** | No individual futures contract position constituted greater than 5 percent of Net Asset Value. Accordingly, except for the short interest rate futures contracts, the number of contracts and expiration dates are not presented. |
See accompanying notes.
STATEMENTS OF OPERATIONS
For the Three Months and Six Months Ended March 31,June 30, 2014 and 2013 (Unaudited)
_______________
| Three Months Ended | Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| March 31, | June 30, | June 30, | ||||||||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
| TRADING GAINS (LOSSES) | ||||||||||||||||||||||||
| Realized | $ | 1,498,564 | $ | (5,401,143 | ) | $ | 1,460,527 | $ | (8,020,154 | ) | $ | 2,959,091 | $ | (13,421,297 | ) | |||||||||
| Change in unrealized | 2,343,506 | 2,336,014 | (1,501,056 | ) | (2,546,470 | ) | 842,450 | (210,456 | ) | |||||||||||||||
| Brokerage commissions | (25,370 | ) | (21,838 | ) | (18,417 | ) | (23,164 | ) | (43,787 | ) | (45,002 | ) | ||||||||||||
| Total gain (loss) from trading | 3,816,700 | (3,086,967 | ) | (58,946 | ) | (10,589,788 | ) | 3,757,754 | (13,676,755 | ) | ||||||||||||||
| NET INVESTMENT (LOSS) | ||||||||||||||||||||||||
| Income | ||||||||||||||||||||||||
| Interest income | 5,767 | 16,705 | 4,551 | 12,669 | 10,318 | 29,374 | ||||||||||||||||||
| Expenses | ||||||||||||||||||||||||
| Selling agent administrative and service fee | 237,859 | 408,044 | 233,805 | 339,902 | 471,664 | 747,946 | ||||||||||||||||||
| Management fee | 203,513 | 327,869 | 199,717 | 277,421 | 403,230 | 605,290 | ||||||||||||||||||
| Operating expenses | 50,124 | 49,375 | 40,191 | 38,919 | 90,315 | 88,294 | ||||||||||||||||||
| Total expenses | 491,496 | 785,288 | 473,713 | 656,242 | 965,209 | 1,441,530 | ||||||||||||||||||
| Net investment (loss) | (485,729 | ) | (768,583 | ) | (469,162 | ) | (643,573 | ) | (954,891 | ) | (1,412,156 | ) | ||||||||||||
| NET INCOME (LOSS) | 3,330,971 | (3,855,550 | ) | (528,108 | ) | (11,233,361 | ) | 2,802,863 | (15,088,911 | ) | ||||||||||||||
| Less: General Partner Profit Share allocation | 1,462 | 1,192 | (220 | ) | 0 | 1,242 | 1,192 | |||||||||||||||||
| Net income (loss) for pro rata allocation to all partners | $ | 3,329,509 | $ | (3,856,742 | ) | $ | (527,888 | ) | $ | (11,233,361 | ) | $ | 2,801,621 | $ | (15,090,103 | ) | ||||||||
See accompanying notes.
STATEMENTS OF CHANGES IN PARTNERS’PARTNERS' CAPITAL (NET ASSET VALUE)
For the ThreeSix Months Ended March 31,June 30, 2014 and 2013 (Unaudited)
_______________
| Partners’ Capital | ||||||||||||||||||||
| Series B - | Series A - | Series B - | Series C - | |||||||||||||||||
| General | Limited | Limited | Limited | |||||||||||||||||
| Partner | Partners | Partners | Partners | Total | ||||||||||||||||
| Balances at December 31, 2013 | $ | 0 | $ | 39,218,336 | $ | 249,046 | $ | 274,394 | $ | 39,741,776 | ||||||||||
| Net income for the three months ended March 31, 2014: General Partner Profit Share allocation | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
| Pro rata allocation to all partners | 0 | 3,280,430 | 24,316 | 24,763 | 3,329,509 | |||||||||||||||
| Subscriptions | 0 | 50,000 | 0 | 0 | 50,000 | |||||||||||||||
| Redemptions | 0 | (1,894,257 | ) | 0 | (146,326 | ) | (2,040,583 | ) | ||||||||||||
| Balances at March 31, 2014 | $ | 0 | $ | 40,654,509 | $ | 273,362 | $ | 152,831 | $ | 41,080,702 | ||||||||||
| Balances at December 31, 2012 | $ | 410,873 | $ | 69,117,753 | $ | 0 | $ | 0 | $ | 69,528,626 | ||||||||||
| Transfers | 0 | (62,591 | ) | 0 | 62,591 | 0 | ||||||||||||||
| Net income (loss) for the three months ended March 31, 2013: General Partner Profit Share allocation | 1,192 | 0 | 0 | 0 | 1,192 | |||||||||||||||
| Pro rata allocation to all partners | (19,240 | ) | (3,834,241 | ) | 0 | (3,261 | ) | (3,856,742 | ) | |||||||||||
| Subscriptions | 0 | 30,000 | 0 | 0 | 30,000 | |||||||||||||||
| Redemptions | (1,192 | ) | (1,770,744 | ) | 0 | 0 | (1,771,936 | ) | ||||||||||||
| Balances at March 31, 2013 | $ | 391,633 | $ | 63,480,177 | $ | 0 | $ | 59,330 | $ | 63,931,140 | ||||||||||
| Partners’ Capital | ||||||||||||||||||||
| Series B - | Series A - | Series B - | Series C - | |||||||||||||||||
| General | Limited | Limited | Limited | |||||||||||||||||
| Partner | Partners | Partners | Partners | Total | ||||||||||||||||
| Balances at December 31, 2013 | $ | 0 | $ | 39,218,336 | $ | 249,046 | $ | 274,394 | $ | 39,741,776 | ||||||||||
| Transfers | 0 | (90,822 | ) | 0 | 90,822 | 0 | ||||||||||||||
| Net income for the six months ended June 30, 2014: | ||||||||||||||||||||
| General Partner Profit Share allocation | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
| Pro rata allocation to all partners | 0 | 2,756,739 | 23,836 | 21,046 | 2,801,621 | |||||||||||||||
| Subscriptions | 0 | 50,000 | 0 | 0 | 50,000 | |||||||||||||||
| Redemptions | 0 | (4,194,486 | ) | (40,000 | ) | (234,726 | ) | (4,469,212 | ) | |||||||||||
| Balances at June 30, 2014 | $ | 0 | $ | 37,739,767 | $ | 232,882 | $ | 151,536 | $ | 38,124,185 | ||||||||||
| Balances at December 31, 2012 | $ | 410,873 | $ | 69,117,753 | $ | 0 | $ | 0 | $ | 69,528,626 | ||||||||||
| Transfers | 0 | (88,895 | ) | 0 | 88,895 | 0 | ||||||||||||||
| Net income (loss) for the six months ended June 30, 2013: | ||||||||||||||||||||
| General Partner Profit Share allocation | 1,192 | 0 | 0 | 0 | 1,192 | |||||||||||||||
| Pro rata allocation to all partners | (85,012 | ) | (14,988,185 | ) | 0 | (16,906 | ) | (15,090,103 | ) | |||||||||||
| Subscriptions | 0 | 263,000 | 0 | 0 | 263,000 | |||||||||||||||
| Redemptions | (1,192 | ) | (3,855,312 | ) | 0 | 0 | (3,856,504 | ) | ||||||||||||
| Balances at June 30, 2013 | $ | 325,861 | $ | 50,448,361 | $ | 0 | $ | 71,989 | $ | 50,846,211 | ||||||||||
See accompanying notes.
| 6 |
NOTES TO FINANCIAL STATEMENTS
_______________
| Note 1. | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
| A. | General Description of the Partnership | |
| AIS Futures Fund IV 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 options on futures contracts. The Partnership is an Investment Company that follows the accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (the Codification)Topic 946 – Financial Services – Investment |
| The Fourth Amended and Restated Limited Partnership Agreement (the Limited Partnership Agreement) provides, among other things, that the Partnership shall dissolve no later than December 31, 2026. |
| B. | Method of Reporting and Use of Estimates |
| The Partnership’s financial statements are presented in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) which require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The FASB Codification is the single source of U.S. GAAP. |
| Pursuant to theCash Flows Topic of the Codification, the Partnership qualifies for an exemption from the requirement to provide a statement of cash flows and has elected not to provide a statement of cash flows. |
| C. | Futures Contracts and Options on Futures Contracts |
| Futures contracts and options on futures contracts transactions are recorded on the trade date and open contracts are reflected at fair value, based on the primary exchange’s closing price. Gains or losses are realized when contracts are liquidated. As each broker has the individual right of offset, the Partnership presents the aggregate net unrealized gains with such brokers as net unrealized gain and the aggregate net unrealized (losses) with such brokers as net unrealized (loss) (i.e., net unrealized gains from one broker are not off-set against net unrealized (losses) from another broker) in the statements of financial condition. The unrealized gains or losses on open futures contracts is the difference between contract trade price and quoted market price. Any change in net unrealized gain or loss from the preceding period is reported in the statements of operations. Brokerage commissions on futures contracts and options on futures contracts include other trading fees and are charged to expense when contracts are opened. |
| D. | United States Government Securities |
| United States government securities are stated at cost plus accrued interest, which approximates fair value based on quoted market prices. Any change in value of these securities is reported as interest income in the statements of operations. |
| 7 |
AIS FUTURES FUND IV L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
_______________
| Note 1. | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
| E. | Income Taxes |
| The Partnership prepares and files 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. No provision for income taxes has been made in these financial statements as each partner is individually responsible for reporting income or loss based on its respective share of the Partnership’s income and expenses as reported for income tax purposes. The 2010 through 2013 tax years generally remain subject to examination by U.S. federal and most state tax authorities. |
| The Partnership applies the provisions of Codification Topic 740,Income Taxes, which prescribe the minimum recognition threshold a tax position must meet in connection with accounting for uncertainties in income tax positions taken or expected to be taken by an entity before being measured and recognized in the financial statements. This accounting standard requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Partnership’s financial statements to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions with respect to tax at the Partnership level not deemed to meet the “more-likely-than-not” threshold would be recorded as a tax expense in the current year. The Partnership has elected an accounting policy to classify interest and penalties, if any, as interest expense. The General Partner has concluded there is no tax expense or interest expense related to uncertainties in income tax positions for either of the three or six months ended |
| 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 statements 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. | Capital Accounts |
| The Partnership offers three Series of Interests. The Series A Interests are available to all qualified investors, subject to applicable conditions and restrictions. Series A Interests pay a management fee and Selling Agent Administrative and Service Fee (“Service Fee”) and are subject to the General Partner Profit Share allocation. The Series B Interests are available for sale to the General Partner and its principals. Series B Interests are not charged a management fee and Service Fee and are not subject to the General Partner Profit Share allocation. The Series C Interests are available to eligible investors that are not solicited by Selling Agents, subject to applicable conditions and restrictions. The Series C Interests have the same rights and obligations as Series A Interests, except Series C Interests are not subject to the Service Fee and are charged a monthly Management Fee as described in Note 2. |
AIS FUTURES FUND IV L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
_______________
| The Partnership accounts for subscriptions, allocations and redemptions on a per partner capital account basis. Income or loss, prior to the Management Fee, Service Fee and General Partner Profit Share allocation, is allocated pro rata to the capital accounts of all partners. Each Limited Partner is then charged their applicable Management Fee and Service Fee. |
| 8 |
AIS FUTURES FUND IV L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
| Note 1. | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
| G. |
The General Partner Profit Share allocation applicable to each Limited Partner is then allocated to the General Partner’s capital account from the Limited Partner’s capital account at the end of each calendar year or upon redemption by a Limited Partner. The Partnership accrues as a liability the General Partner Profit Share allocation for interim periods during which the General Partner Profit Share allocation is not yet allocable to the General Partner’s capital account in accordance with the terms of the Limited Partnership Agreement. Such accrual is subject to partial or complete reversal until a condition for allocation to the General Partner’s capital account is met, at which time the applicable amount of the accrual is reversed and allocated to the General Partner’s capital account.
| H. | Redemptions |
Limited Partners may require the Partnership to redeem some or all of their capital upon ten days prior written notice. The ten days prior written notice may be waived at the discretion of the General Partner. Partner redemptions are recorded on their effective date, which is generally the last day of the month.
| I. | Recently Issued Accounting Pronouncement |
In June 2013, the FASB issued Accounting Standards Update No. 2013-08 (ASU 2013-08), entitledFinancial Services – Investment Companies (Topic 946) – Amendments to the Scope, Measurement, and Disclosure Requirements. ASU 2013-08 changes the approach to assessing whether an entity is an investment company, clarifies the characteristics of an investment company and provides comprehensive guidance for assessing whether an entity is an investment company. In addition, ASU 2013-08 requires non-controlling ownership interests in other investment companies to be measured at fair value and requires additional disclosures about the investment company’s status as an investment company. ASU 2013-08 is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2013.
The Partnership’s adoption of ASU 2013-08 had no material impact on the Partnership’s financial statements.
| J. | Interim Financial Statements |
The financial statements included herein were prepared by us without audit according to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP may be omitted pursuant to such rules and regulations. The financial statements reflect, in the opinion of management, all adjustments necessary that were of a normal and recurring nature and adequate disclosures to present fairly the financial position and results of operations as of and for the periods indicated. The results of operations for the three and six months ended June 30, 2014 and 2013 are not necessarily indicative of the results to be expected for the full year or for any other period.
These financial statements should be read in conjunction with the audited financial statements and the notes thereto included in the Form 10-K previously filed with the Securities and Exchange Commission.
AIS FUTURES FUND IV L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
_______________
| Note 2. | GENERAL PARTNER |
| Effective September |
| On August 31, 2013, AIS Futures Management LLC withdrew its entire interest in the Partnership. In lieu of distributing cash proceeds, capital subscriptions were made, effective August 31, 2013, to the accounts of certain Series B limited partners who are principals of the General Partner. This full withdrawal by AIS Futures Management LLC did not affect its role as the General Partner of the Partnership, as set forth in the Limited Partnership Agreement. |
| The Limited Partnership Agreement provides for the General Partner to receive a monthly Management Fee equal to 1/12 of 2% (2% annually) of each Series A Limited Partner’s month-end Net Assets, as defined and 1/12 of 2.7% (2.7% annually) of each Series C Limited Partner’s month-end Net Assets, as defined. The General Partner also receives a Profit Share allocation equal to 20% of any New Trading Profit, as defined, attributable to each Series A and C Limited Partner’s Interest achieved as of each calendar year-end or upon |
| During the three and six months ended |
| Note 3. | SELLING AGENT ADMINISTRATIVE AND SERVICE FEES |
| Certain Series A Limited Partners that were solicited by Selling Agents are charged a Service Fee equal to 1/12 of 2.5% (2.5% annually) of each Series A Limited Partner’s month-end Net Assets, as defined, sold by them which remain outstanding as of each month-end. The Selling Agents may pass on a portion of the Service Fee to its investment executives. The Service Fee is accrued and expensed as incurred. |
| In the event the Service Fee is no longer payable to a Selling Agent, the relevant Series A Limited Partner who was solicited by such Selling Agent will no longer be charged the Service Fee and such Series A Interests may be transferred to Series C Interests. During the six months ended June 30, 2014 and 2013, there were $90,822 and $88,895, respectively, in transfers to Series C Interests from Series A Interests which occurred in relation to Series A Limited Partners that were no longer subject to a Service Fee. For the three and six months ended June 30, 2014 and 2013, certain Series A Limited Partners were not subject to the Service Fee. |
| 10 |
AIS FUTURES FUND IV L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
_______________
| Note 3. | SELLING AGENT ADMINISTRATIVE AND SERVICE FEES (CONTINUED) |
InFor investment executives associated with the eventsale of Series A Limited Partnership Interests in excess of $500,000, the investment executive’s firm will receive an additional 1.5% per annum Service Fee with respect to such Series A Limited Partnership Interests in excess of $500,000, for the first twelve months following the sale of such Series A Limited Partnership Interests. The additional Service Fee is no longer payablepaid by the Partnership, however, the General Partner reduces its Management Fee (see Note 2.) related to a Selling Agent, the relevant Series A Limited Partner who was solicited by such Selling Agent will no longer be charged thePartner’s Interest. Accordingly, this additional Service Fee and such Series A Interests may be transferreddoes not affect the total fees charged to Series C Interests. During the three months ended March 31, 2013, there was a transfer of $62,591 to Series C Interests from Series A Interests related to a Series A Limited Partners that were no longer subject to a Service Fee. For the three months ended March 31, 2014 and 2013, certain Series A Limited Partners were not subject to the Service Fee.Partner.
| Note 4. | SUBSCRIPTIONS, DISTRIBUTIONS AND REDEMPTIONS |
| Investments in the Partnership are made by subscription agreement, subject to acceptance by the General Partner. A selling commission of up to 2% of the subscription amount may be deducted from the subscription proceeds and paid to the applicable Selling Agent, if any. For the three and six months ended |
| 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 partial or full redemption of their capital account as of the close of business on the last business day of any month, subject to restrictions in the Limited Partnership Agreement. |
| Note 5. | DEPOSITS WITH FUTURES BROKERS |
| The Partnership deposits funds with Newedge USA, LLC and ADM Investor Services, Inc. subject to Commodity Futures Trading Commission regulations and various exchange and futures broker requirements. Margin requirements are satisfied by the deposit of U.S. government securities and cash with such futures brokers. Accordingly, assets used to meet margin and other futures broker or regulatory requirements are partially restricted. The Partnership earns interest income on its assets deposited with the futures brokers. |
| Note 6. | DEPOSITS WITH SECURITIES BROKER |
| The Partnership deposits cash and U.S. government securities with Wells Fargo Advisors, LLC, subject to Securities and Exchange Commission regulations and securities broker requirements. Margin requirements are satisfied by the deposit of cash and securities with such securities broker. Accordingly, assets used to meet margin and other securities broker or regulatory requirements are partially restricted. The Partnership earns interest income on its assets deposited with the securities broker. The fair value of the Partnership’s U.S. Treasury Bills held at the securities broker totaled |
| 11 |
AIS FUTURES FUND IV L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
| Note 7. | FAIR VALUE |
| Fair value, as defined in theFair Value MeasurementTopic of the Codification, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy, as set forth in theFair Value Measurement Topic of the Codification, prioritizes the inputs to valuation techniques used to measure fair value into three broad levels: quoted market prices in active markets for identical assets or liabilities (Level 1); inputs other than quoted market prices that are observable for the asset or liability, either directly or indirectly (Level 2); and unobservable inputs for an asset or liability (Level 3). If the inputs used to measure a financial instrument fall within different levels of the fair value hierarchy, the categorization is based on the lowest level input that is significant to the measurement of that financial instrument. The Partnership recognizes transfers between fair value hierarchy levels, if any, at the beginning of the reporting period. There were no transfers between levels during the |
| For U.S. government securities, which are categorized as Level 2 fair value measurements at |
AIS FUTURES FUND IV L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
_______________
| The following tables summarize the Partnership’s assets and liabilities accounted for at fair value at |
| March 31, 2014 | ||||||||||||||||
| Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Assets | ||||||||||||||||
| Futures contracts | ||||||||||||||||
| Agricultural | $ | 2,642,959 | $ | 0 | $ | 0 | $ | 2,642,959 | ||||||||
| Currencies | 551,875 | 0 | 0 | 551,875 | ||||||||||||
| Energy | 602,159 | 0 | 0 | 602,159 | ||||||||||||
| Metals | 4,375 | 0 | 0 | 4,375 | ||||||||||||
| Stock indices | 1,680 | 0 | 0 | 1,680 | ||||||||||||
| Total futures contracts | 3,803,048 | 0 | 0 | 3,803,048 | ||||||||||||
| U.S. Treasury bills | 0 | 34,496,233 | 0 | 34,496,233 | ||||||||||||
| Total assets | $ | 3,803,048 | $ | 34,496,233 | $ | 0 | $ | 38,299,281 | ||||||||
| Liabilities | ||||||||||||||||
| Futures contracts | ||||||||||||||||
| Energy | $ | (4,299 | ) | $ | 0 | $ | 0 | $ | (4,299 | ) | ||||||
| Interest rate | (60,125 | ) | 0 | 0 | (60,125 | ) | ||||||||||
| Metal | (1,645,163 | ) | 0 | 0 | (1,645,163 | ) | ||||||||||
| Stock indices | (341,687 | ) | 0 | 0 | (341,687 | ) | ||||||||||
| Total liabilities | $ | (2,051,274 | ) | $ | 0 | $ | 0 | $ | (2,051,274 | ) | ||||||
| December 31, 2013 | ||||||||||||||||
| Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Assets | ||||||||||||||||
| Futures contracts | ||||||||||||||||
| Agricultural | $ | 150,603 | $ | 0 | $ | 0 | $ | 150,603 | ||||||||
| Energy | 63,435 | 0 | 0 | 63,435 | ||||||||||||
| Interest rate | 490,611 | 0 | 0 | 490,611 | ||||||||||||
| Metals | 212,254 | 0 | 0 | 212,254 | ||||||||||||
| Total futures contracts | 916,903 | 0 | 0 | 916,903 | ||||||||||||
| U.S. Treasury bills | 0 | 40,493,221 | 0 | 40,493,221 | ||||||||||||
| Total assets | $ | 916,903 | $ | 40,493,221 | $ | 0 | $ | 41,410,124 | ||||||||
| Liabilities | ||||||||||||||||
| Futures contracts | ||||||||||||||||
| Agricultural | $ | (206,693 | ) | $ | 0 | $ | 0 | $ | (206,693 | ) | ||||||
| Currencies | (331,125 | ) | 0 | 0 | (331,125 | ) | ||||||||||
| Energy | (162,954 | ) | 0 | 0 | (162,954 | ) | ||||||||||
| Metals | (807,863 | ) | 0 | 0 | (807,863 | ) | ||||||||||
| Total liabilities | $ | (1,508,635 | ) | $ | 0 | $ | 0 | $ | (1,508,635 | ) | ||||||
AIS FUTURES FUND IV L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
_______________
| Note 7. | FAIR VALUE (CONTINUED) |
| June 30, 2014 | ||||||||||||||||
| Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Assets | ||||||||||||||||
| Futures contracts | ||||||||||||||||
| Currencies | $ | 327,782 | $ | 0 | $ | 0 | $ | 327,782 | ||||||||
| Energy | 593,438 | 0 | 0 | 593,438 | ||||||||||||
| Interest rates | 6,436 | 0 | 0 | 6,436 | ||||||||||||
| Metals | 922,622 | 0 | 0 | 922,622 | ||||||||||||
| Total futures contracts | 1,850,278 | 0 | 0 | 1,850,278 | ||||||||||||
| U.S. Treasury bills | 0 | 21,498,902 | 0 | 21,498,902 | ||||||||||||
| Total assets | $ | 1,850,278 | $ | 21,498,902 | $ | 0 | $ | 23,349,180 | ||||||||
| Liabilities | ||||||||||||||||
| Futures contracts | ||||||||||||||||
| Agriculture | $ | (1,105,984 | ) | $ | 0 | $ | 0 | $ | (1,105,984 | ) | ||||||
| Energy | (74,970 | ) | 0 | 0 | (74,970 | ) | ||||||||||
| Interest rates | (56,531 | ) | 0 | 0 | (56,531 | ) | ||||||||||
| Stock indices | (362,075 | ) | 0 | 0 | (362,075 | ) | ||||||||||
| Total liabilities | $ | (1,599,560 | ) | $ | 0 | $ | 0 | $ | (1,599,560 | ) | ||||||
| December 31, 2013 | ||||||||||||||||
| Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Assets | ||||||||||||||||
| Futures contracts | ||||||||||||||||
| Agricultural | $ | 150,603 | $ | 0 | $ | 0 | $ | 150,603 | ||||||||
| Energy | 63,435 | 0 | 0 | 63,435 | ||||||||||||
| Interest rates | 490,611 | 0 | 0 | 490,611 | ||||||||||||
| Metals | 212,254 | 0 | 0 | 212,254 | ||||||||||||
| Total futures contracts | 916,903 | 0 | 0 | 916,903 | ||||||||||||
| U.S. Treasury bills | 0 | 40,493,221 | 0 | 40,493,221 | ||||||||||||
| Total assets | $ | 916,903 | $ | 40,493,221 | $ | 0 | $ | 41,410,124 | ||||||||
| Liabilities | ||||||||||||||||
| Futures contracts | ||||||||||||||||
| Agricultural | $ | (206,693 | ) | $ | 0 | $ | 0 | $ | (206,693 | ) | ||||||
| Currencies | (331,125 | ) | 0 | 0 | (331,125 | ) | ||||||||||
| Energy | (162,954 | ) | 0 | 0 | (162,954 | ) | ||||||||||
| Metals | (807,863 | ) | 0 | 0 | (807,863 | ) | ||||||||||
| Total liabilities | $ | (1,508,635 | ) | $ | 0 | $ | 0 | $ | (1,508,635 | ) | ||||||
| Note 8. | DERIVATIVES |
The Partnership engages in the speculative trading of futures contracts and options on futures contracts (collectively, derivatives) for the purpose of achieving capital appreciation. None of the Partnership’s derivative instruments are designated as hedging instruments, as defined in theDerivatives and Hedging Topic of the Codification, nor are they used for other risk management purposes. The General Partner actively assesses, manages and monitors risk exposure on derivatives on a contract basis, a sector basis (e.g., agricultural, currencies, metals, etc.), and on an overall basis in accordance with established risk parameters. Due to the speculative nature of the Partnership’s derivative trading activity, the Partnership is subject to the risk of substantial losses from derivatives trading.
AIS FUTURES FUND IV L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
| Note 8. |
| Offsetting of Derivative Assets and Liabilities | ||||||||||||
| at March 31, 2014 | ||||||||||||
| Gross Amounts | Net Amounts | |||||||||||
| Offset in the | Presented in the | |||||||||||
Gross Amounts | Statement of | Statement of | ||||||||||
of Recognized | Financial | Financial | ||||||||||
Assets | Condition | Condition | ||||||||||
| Assets | ||||||||||||
| Futures Contracts(1) | ||||||||||||
| Newedge USA, LLC | $ | 1,160,089 | $ | (1,160,089 | ) | $ | 0 | |||||
| ADM Investor Services, Inc. | 2,642,959 | 0 | 2,642,959 | |||||||||
| Total assets | $ | 3,803,048 | $ | (1,160,089 | ) | $ | 2,642,959 | |||||
The Partnership’s derivatives held at June 30, 2014 and December 31, 2013 are subject to agreements similar to master netting agreements with the Partnership’s futures brokers which grant the futures brokers the right to set off recognized assets and liabilities if certain conditions exist. The following tables present gross amounts of assets and liabilities which are offset in the statements of financial condition.
| Gross Amounts | Net Amounts | |||||||||||
| Offset in the | Presented in the | |||||||||||
| Gross Amounts | Statement of | Statement of | ||||||||||
| of Recognized | Financial | Financial | ||||||||||
| Liabilities | Condition | Condition | ||||||||||
| Liabilities | ||||||||||||
| Futures Contracts(1) | ||||||||||||
| Newedge USA, LLC | $ | (2,051,274 | ) | $ | 1,160,089 | $ | (891,185 | ) | ||||
| ADM Investor Services, Inc. | 0 | 0 | 0 | |||||||||
| Total liabilities | $ | (2,051,274 | ) | $ | 1,160,089 | $ | (891,185 | ) | ||||
| Offsetting of Derivative Assets and Liabilities | ||||||||||||
| At June 30, 2014 | ||||||||||||
| Gross Amounts | Net Amounts | |||||||||||
| Offset in the | Presented in the | |||||||||||
| Gross Amounts of | Statement of | Statement of | ||||||||||
| Assets | Recognized Assets | Financial Condition | Financial Condition | |||||||||
| Futures contracts(1) | ||||||||||||
| Newedge USA, LLC | $ | 1,850,278 | $ | (493,576 | ) | $ | 1,356,702 | |||||
| ADM Investor Services, Inc. | 0 | 0 | 0 | |||||||||
| Total assets | $ | 1,850,278 | $ | (493,576 | ) | $ | 1,356,702 | |||||
| Gross Amounts | Net Amounts | |||||||||||
| Gross Amounts of | Offset in the | Presented in the | ||||||||||
| Recognized | Statement of | Statement of | ||||||||||
| Liabilities | Liabilities | Financial Condition | Financial Condition | |||||||||
| Futures contracts(1) | ||||||||||||
| Newedge USA, LLC | $ | (493,576 | ) | $ | 493,576 | $ | 0 | |||||
| ADM Investor Services, Inc. | (1,105,984 | ) | 0 | (1,105,984 | ) | |||||||
| Total liabilities | $ | (1,599,560 | ) | $ | 493,576 | $ | (1,105,984 | ) | ||||
| Offsetting of Derivative Assets and Liabilities | ||||||||||||
| At December 31, 2013 | ||||||||||||
| Gross Amounts | Net Amounts | |||||||||||
| Offset in the | Presented in the | |||||||||||
| Gross Amounts of | Statement of | Statement of | ||||||||||
| Assets | Recognized Assets | Financial Condition | Financial Condition | |||||||||
| Futures contracts(1) | ||||||||||||
| Newedge USA, LLC | $ | 766,300 | $ | (766,300 | ) | 0 | ||||||
| ADM Investor Services, Inc. | 150,603 | (150,603 | ) | 0 | ||||||||
| Total assets | $ | 916,903 | $ | (916,903 | ) | $ | 0 | |||||
| Gross Amounts | Net Amounts | |||||||||||
| Gross Amounts of | Offset in the | Presented in the | ||||||||||
| Recognized | Statement of | Statement of | ||||||||||
| Liabilities | Liabilities | Financial Condition | Financial Condition | |||||||||
| Futures contracts(1) | ||||||||||||
| Newedge USA, LLC | $ | (1,301,942 | ) | $ | 766,300 | (535,642 | ) | |||||
| ADM Investor Services, Inc. | (206,693 | ) | 150,603 | (56,090 | ) | |||||||
| Total liabilities | $ | (1,508,635 | ) | $ | 916,903 | $ | (591,732 | ) | ||||
Within the statements of financial condition, the fair value of futures contracts is included in net unrealized gain (loss) on open futures contracts. The cash and other property (for example, U.S. Treasury bills) held by each counterparty at June 30, 2014 and December 31, 2013 exceeds the net derivatives liability at such counterparty.
The following presents the Partnership’s derivative trading results and information related to the volume of the Partnership’s derivative activity for the three and six months ended June 30, 2014 and 2013. The below captions of “Realized” and “Change in Unrealized” correspond to the captions in the statements of operations.
| (1) | See Note 7. for the fair value of each type of contract within this category |
AIS FUTURES FUND IV L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
_______________
| Note 8. | DERIVATIVES (CONTINUED) |
| Offsetting of Derivative Assets and Liabilities | ||||||||||||
| at December 31, 2013 | ||||||||||||
| Gross Amounts | Net Amounts | |||||||||||
| Offset in the | Presented in the | |||||||||||
| Gross Amounts | Statement of | Statement of | ||||||||||
| of Recognized | Financial | Financial | ||||||||||
| Assets | Condition | Condition | ||||||||||
| Assets | ||||||||||||
| Futures Contracts(1) | ||||||||||||
| Newedge USA, LLC | $ | 766,300 | $ | (766,300 | ) | $ | 0 | |||||
| ADM Investor Services, Inc. | 150,603 | (150,603 | ) | 0 | ||||||||
| Total assets | $ | 916,903 | $ | (916,903 | ) | $ | 0 | |||||
| Gross Amounts | Net Amounts | |||||||||||
| Offset in the | Presented in the | |||||||||||
| Gross Amounts | Statement of | Statement of | ||||||||||
| of Recognized | Financial | Financial | ||||||||||
| Liabilities | Condition | Condition | ||||||||||
| Liabilities | ||||||||||||
| Futures Contracts(1) | ||||||||||||
| Newedge USA, LLC | $ | (1,301,942 | ) | $ | 766,300 | $ | (535,642 | ) | ||||
| ADM Investor Services, Inc. | (206,693 | ) | 150,603 | (56,090 | ) | |||||||
| Total liabilities | $ | (1,508,635 | ) | $ | 916,903 | $ | (591,732 | ) | ||||
| Three Months Ended March 31, 2014 | Three Months Ended March 31, 2013 | |||||||||||||||||||||||
| Trading Gains (Losses) | Trading Gains (Losses) | |||||||||||||||||||||||
| Change in | Number of | Change in | Number of | |||||||||||||||||||||
| Futures Contracts | Realized | Unrealized | Contracts Closed | Realized | Unrealized | Contracts Closed | ||||||||||||||||||
| Agricultural | $ | 809,756 | $ | 2,699,049 | 702 | $ | (3,488,309 | ) | $ | 1,169,734 | 1,254 | |||||||||||||
| Currencies | (746,666 | ) | 883,000 | 313 | 1,461,344 | (412,345 | ) | 436 | ||||||||||||||||
| Energy | 552,982 | 697,379 | 1,142 | 462,201 | 483,979 | 1,446 | ||||||||||||||||||
| Interest rates | (440,263 | ) | (550,736 | ) | 208 | 0 | 0 | 0 | ||||||||||||||||
| Metals | 1,844,409 | (1,045,179 | ) | 372 | (3,835,454 | ) | 1,139,746 | 505 | ||||||||||||||||
| Stock index | (521,654 | ) | (340,007 | ) | 544 | (925 | ) | (45,100 | ) | 2 | ||||||||||||||
| Total futures contracts | $ | 1,498,564 | $ | 2,343,506 | $ | (5,401,143 | ) | $ | 2,336,014 | |||||||||||||||
| Three Months Ended June 30, 2014 | Three Months Ended June 30, 2013 | |||||||||||||||||||||||
| Trading Gains (Losses) | Trading Gains (Losses) | |||||||||||||||||||||||
| Change in | Number of | Change in | Number of | |||||||||||||||||||||
| Futures Contracts | Realized | Unrealized | Contracts Closed | Realized | Unrealized | Contracts Closed | ||||||||||||||||||
| Agricultural | $ | 1,789,133 | $ | (3,748,943 | ) | 925 | $ | (1,699,911 | ) | $ | 1,080,432 | 1,024 | ||||||||||||
| Currencies | 1,012,025 | (224,093 | ) | 303 | (354,509 | ) | (1,158,905 | ) | 508 | |||||||||||||||
| Energy | 1,683,261 | (79,392 | ) | 802 | 1,383,132 | (1,763,900 | ) | 992 | ||||||||||||||||
| Interest rates | (313,623 | ) | 10,030 | 70 | 0 | 0 | 0 | |||||||||||||||||
| Metals | (1,414,760 | ) | 2,563,410 | 378 | (6,609,472 | ) | (979,352 | ) | 513 | |||||||||||||||
| Stock index | (1,333,900 | ) | (22,068 | ) | 305 | (739,394 | ) | 275,255 | 430 | |||||||||||||||
| Total futures contracts | 1,422,136 | (1,501,056 | ) | (8,020,154 | ) | (2,546,470 | ) | |||||||||||||||||
| Options on Futures Contracts | ||||||||||||||||||||||||
| Interest rates | 38,391 | 0 | 27 | 0 | 0 | 0 | ||||||||||||||||||
| Total | $ | 1,460,527 | $ | (1,501,056 | ) | $ | (8,020,154 | ) | $ | (2,546,470 | ) | |||||||||||||
AIS FUTURES FUND IV L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
_______________
| Six Months Ended June 30, 2014 | Six Months Ended June 30, 2013 | |||||||||||||||||||||||
| Trading Gains (Losses) | Trading Gains (Losses) | |||||||||||||||||||||||
| Change in | Number of | Change in | Number of | |||||||||||||||||||||
| Futures Contracts | Realized | Unrealized | Contracts Closed | Realized | Unrealized | Contracts Closed | ||||||||||||||||||
| Agricultural | $ | 2,598,889 | $ | (1,049,894 | ) | 1,627 | $ | (5,188,220 | ) | $ | 2,250,166 | 2,278 | ||||||||||||
| Currencies | 265,359 | 658,907 | 616 | 1,106,835 | (1,571,250 | ) | 944 | |||||||||||||||||
| Energy | 2,236,243 | 617,987 | 1,944 | 1,845,333 | (1,279,921 | ) | 2,438 | |||||||||||||||||
| Interest rates | (753,886 | ) | (540,706 | ) | 278 | 0 | 0 | 0 | ||||||||||||||||
| Metals | 429,649 | 1,518,231 | 750 | (10,444,926 | ) | 160,394 | 1,018 | |||||||||||||||||
| Stock index | (1,855,554 | ) | (362,075 | ) | 849 | (740,319 | ) | 230,155 | 432 | |||||||||||||||
| Total futures contracts | 2,920,700 | 842,450 | (13,421,297 | ) | (210,456 | ) | ||||||||||||||||||
| Options on Futures Contracts | ||||||||||||||||||||||||
| Interest rates | 38,391 | 0 | 27 | 0 | 0 | 0 | ||||||||||||||||||
| Total | $ | 2,959,091 | $ | 842,450 | $ | (13,421,297 | ) | $ | (210,456 | ) | ||||||||||||||
The number of contracts closed represents the number of contracts closed during the three and six months ended June 30, 2014 and 2013 in the applicable category.
| Note 9. | MARKET AND CREDIT RISKS |
The Partnership engages in the speculative trading of futures contracts and options on futures contracts. The Partnership is exposed to both market risk, the risk arising from changes in the fair value of the contracts, and credit risk, the risk of failure by another party to perform according to the terms of a contract.
AIS FUTURES FUND IV L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
| Note 9. |
Purchase and sale of futures and options on futures contracts requires margin deposits with the futures brokers. Additional deposits may be necessary for any loss on contract fair value. The Commodity Exchange Act requires a futures 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 futures broker are considered commingled with all other customer funds subject to the futures broker’s segregation requirements. In the event of a futures 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. The net fair value of the Partnership’s assets deposited with Newedge USA, LLC and ADM Investor Services, Inc. is $8,630,356 and $5,071,192, respectively, at June 30, 2014, and $8,210,562 and $3,537,365, respectively, at December 31, 2013.
For futures contracts and options on futures contracts, risks arise from changes in the fair 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.
The Partnership has a substantial portion of its assets on deposit with the securities broker in connection with its trading of U.S. government securities and its cash management activities. In the event of the securities broker’s insolvency, recovery of Partnership assets on deposit may be limited to account insurance or other protection afforded such deposits.
The Partnership maintains its cash in bank deposit accounts at Wells Fargo Bank, N.A. and affiliates. Such accounts may, at times, exceed federally insured limits. In the event of a financial institution’s insolvency, recovery of cash 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 Limited Partners bear the risk of loss only to the extent of the fair value of their respective investments and, in certain specific circumstances, distributions and redemptions received.
| Note 10. | INDEMNIFICATIONS |
In the normal course of business, the Partnership enters into contracts and agreements that contain a variety of representations and warranties and which provide general indemnifications. The Partnership’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Partnership that have not yet occurred. The Partnership expects the risk of any future obligation under these indemnifications to be remote. |
AIS FUTURES FUND IV L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
_______________
| Note 11. | FINANCIAL HIGHLIGHTS |
The following information presents the financial highlights for Series A and C Limited Partners of the Partnership for the three and six months ended June 30, 2014 and 2013. This information has been derived from information presented in the financial statements.
AIS FUTURES FUND IV L.P.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
| Three Months Ended | Three Months Ended | |||||||||||||||
| March 31, 2014 | March 31, 2013 | |||||||||||||||
| Series A | Series C | Series A | Series C | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Total Return for Limited Partners(1) | ||||||||||||||||
| Total return before General Partner Profit Share allocation | 8.57 | % | 9.02 | % | (5.72 | )% | (5.32 | )% | ||||||||
| General Partner Profit Share allocation(2) | 0.00 | % | 0.00 | % | 0.11 | % | 0.11 | % | ||||||||
| Total return after General Partner Profit Share allocation | 8.57 | % | 9.02 | % | (5.61 | )% | (5.21 | )% | ||||||||
| Supplemental Data | ||||||||||||||||
| Ratios to average net asset value:(3) | ||||||||||||||||
| Expenses, excluding General Partner Profit Share allocation(4) | 5.00 | % | 3.29 | % | 4.58 | % | 2.95 | % | ||||||||
| General Partner Profit Share allocation(1) | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||||||
| Total expenses | 5.00 | % | 3.29 | % | 4.58 | % | 2.95 | % | ||||||||
| Net investment (loss)(4), (5) | (4.95 | )% | (3.23 | )% | (4.48 | )% | (2.85 | )% | ||||||||
| Note 11. |
| Three months ended | Three months ended | |||||||||||||||
| June 30, 2014 | June 30, 2013 | |||||||||||||||
| Series A | Series C | Series A | Series C | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Total return for Limited Partners(1) | ||||||||||||||||
| Total return before General Partner Profit Share allocation | (1.26 | )% | (0.85 | )% | (17.70 | )% | (17.35 | )% | ||||||||
| General Partner Profit Share allocation | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||||||
| Total return after General Partner Profit Share allocation | (1.26 | )% | (0.85 | )% | (17.70 | )% | (17.35 | )% | ||||||||
| Supplemental Data for Limited Partners | ||||||||||||||||
| Ratios to average net asset value:(3) | ||||||||||||||||
| Expenses, excluding General Partner Profit Share allocation(4) | 4.76 | % | 3.09 | % | 4.36 | % | 2.79 | % | ||||||||
| General Partner Profit Share allocation(1) | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||||||
| Total expenses | 4.76 | % | 3.09 | % | 4.36 | % | 2.79 | % | ||||||||
| Net investment (loss)(4), (5) | (4.71 | )% | (3.04 | )% | (4.28 | )% | (2.71 | )% | ||||||||
| Six months ended | Six months ended | |||||||||||||||
| June 30, 2014 | June 30, 2013 | |||||||||||||||
| Series A | Series C | Series A | Series C | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Total return for Limited Partners(1) | ||||||||||||||||
| Total return before General Partner Profit Share allocation | 7.20 | % | 8.10 | % | (22.40 | )% | (21.76 | )% | ||||||||
| General Partner Profit Share allocation(2) | 0.00 | % | 0.00 | % | 0.09 | % | 0.10 | % | ||||||||
| Total return after General Partner Profit Share allocation | 7.20 | % | 8.10 | % | (22.31 | )% | (21.66 | )% | ||||||||
| Supplemental Data for Limited Partners | ||||||||||||||||
| Ratios to average net asset value:(3) | ||||||||||||||||
| Expenses, excluding General Partner Profit Share allocation(4) | 4.88 | % | 3.20 | % | 4.48 | % | 2.86 | % | ||||||||
| General Partner Profit Share allocation(1) | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | ||||||||
| Total expenses | 4.88 | % | 3.20 | % | 4.48 | % | 2.86 | % | ||||||||
| Net investment (loss)(4), (5) | (4.83 | )% | (3.15 | )% | (4.39 | )% | (2.77 | )% | ||||||||
The total returns and ratios are presented for Series A and C Limited Partners taken as a whole. An individual Limited Partner’s total returns and ratios may vary from the above total returns and ratios based on the timing of their subscriptions and redemptions and different fee arrangements for certain Limited Partners.
The total returns and ratios exclude the effects of any 2% upfront selling commissions charged by Selling Agents.
| (1) | Not annualized. |
| (2) | The positive effect on total return by the General Partner Profit Share allocation for the |
| (3) | The ratios of expenses and net investment (loss) to average net asset value do not include brokerage commissions. |
| (4) | Annualized. |
| (5) | The net investment (loss) is comprised of interest income less total expenses, excluding brokerage commissions and the General Partner Profit Share allocation. |
PART I – FINANCIAL INFORMATION (CONTINUED)
Item 2:Management’s Discussion and Analysis of Financial Condition and Results of Operations
Reference is made to “Item 1: Financial Statements.” The information contained therein is essential to, and should be read in conjunction with, the following analysis.
Operational Overview
Due to the nature of the Partnership’s business, its results of operations depend on the occurrence of major price moves in at least some of the markets traded and the General Partner’s ability to recognize and capitalize on such trends and other profit opportunities. The General Partner’s trading methods are confidential, so that the only information that can be furnished regarding the Partnership’s results of operations is its performance record. The Partnership engagesmay engage in speculative trading of futures contracts and options on futures contracts and physical commodities and other commodity-related contracts and the Partnership may enter into long, short or neutral positions in the markets in which it trades. Because the Partnership’s trading strategies depend heavily on global price trends (both positive and negative), and these price trends may be affected by global economic conditions and may at times be seasonal, the Partnership will be affected by such conditions and trends. The past performance of the Partnership is not necessarily indicative of future results. The General Partner believes, however, that there are certain market conditions – for example, markets with strong price trends – in which the Partnership has a better opportunity of being profitable than in others.
Liquidity and Capital Resources
The Partnership raises additional capital only through the sale of limited partnership interests and capital is increased through trading profits (if any) and interest income. The Partnership does not engage in borrowing. The Partnership may offer limited partnership interests for sale as of the close of business at the end of each month.
The Partnership trades futures contracts and/or options on futures contracts, both long and short, in each of the following six asset classes: equities, fixed income, currencies, metals, agriculture products and energy products. Due to the nature of the Partnership’s business, substantially all its assets are represented by cash and U.S. government obligations, while the Partnership maintains its market exposure through open futures contracts and open options on futures contracts.
The Partnership’s assets, which are generally held as cash, cash equivalents or U.S. government obligations, are generally used to margin the Partnership’s futures and options on futures positions and are withdrawn, as necessary, to pay redemptions and expenses. Other than potential market-imposed limitations on liquidity, due, for example, to daily price fluctuation limits, which are inherent in the Partnership’s futures and options on futures trading, the Partnership’s assets are highly liquid and are expected to remain so.
There have been no material changes with respect to the Partnership’s critical accounting policies, off-balance sheet arrangements or contractual obligations, as reported in the Partnership’s most recent Annual Report on Form 10-K and any amendments thereto.
During its operations for the three and six months ended March 31,June 30, 2014, the Partnership experienced no significant periods of illiquidity in any of the numerous markets traded by the General Partner.
PART I – FINANCIAL INFORMATION (CONTINUED)
Results of Operations
Performance Summary
Three Months Ended March 31,June 30, 2014
During the firstsecond quarter of 2014, the Partnership experienced net realized and unrealized gainsgains/(losses) of $3,816,700$(58,946) from its trading operations, which is net of brokerage commissions of $25,370.$18,417. The Partnership incurred total expenses of $491,496,$473,713, including $237,859$233,805 in Selling Agent Administrative and Service Fees, $203,513$199,717 in Management Fees (paid to the General Partner) and $50,124$40,191 in operating expenses. The Partnership earned $5,767$4,551 in interest income and charged areversed $(220) of previously accrued General Partner Profit Share allocation of $1,462.allocation. An analysis of trading gains and losses (not adjusted for any fees or expenses) by market sector is as followsfollows:
| Sector | % Gain (Loss) | |||
| Stock Index | ( | )% | ||
| Bonds | ( | )% | ||
| Currency | % | |||
| Energy | % | |||
| Metals | % | |||
| Grains | )% | |||
The Partnership earnedexperienced a profitloss in the firstsecond quarter of 2014. The largest gainloss came from the long positions in grains, followed by short positions in the grainsS&P 500, and soybean complex. Additional gainsU.S. Treasury bonds. Gains were realized from theachieved in long positions in energy, metals and the currencies (Australian and Canadian dollars). Small losses occurred from the short positions in the U.S. Treasury bonds and the S&P 500.currencies.
Three Months Ended March 31,June 30, 2013
During the firstsecond quarter of 2013, the Partnership experienced net realized and unrealized gains gains/(losses) of $(3,086,967)$(10,589,788) from its trading operations, which is net of brokerage commissions of $21,838.$23,164. The Partnership incurred total expenses of $785,288,$656,242, including $408,044$339,902 in Selling Agent Administrative and Service Fees, $327,869$277,421 in Management Fees (paid to the General Partner) and $49,375$38,919 in operating expenses. The Partnership earned $16,705$12,669 in interest income and charged a General Partner Profit Share allocation of $0. An analysis of trading gains and losses (not adjusted for any fees or expenses) by market sector is as follows:
| Sector | % Gain (Loss) | |||
| Stock Index | (0.72 | )% | ||
| Bonds | 0.00 | % | ||
| Currency | (2.65 | )% | ||
| Energy | (0.49 | )% | ||
| Metals | (12.21 | )% | ||
| Grains | (1.21 | )% | ||
The Partnership experienced a loss in the second quarter of 2013. The largest loss came from long positions in metals, followed by positions in the currencies, with a small loss from long positions in the grain and soybean complex, a short position in the S&P 500, and long position in energy markets.
Six Months Ended June 30, 2014
During the six months ended June 30, 2014, the Partnership experienced net realized and unrealized gains/(losses) of $3,757,754 from its trading operations, which is net of brokerage commissions of $43,787. The Partnership incurred total expenses of $965,209, including $471,664 in Selling Agent Administrative and Service Fees, $403,230 in Management Fees (paid to the General Partner) and $90,315 in operating expenses. The Partnership earned $10,318 in interest income and accrued a General Partner Profit Share allocation of $1,242. An analysis of trading gains and losses (not adjusted for any fees or expenses) by market sector is as follows:
| Sector | % Gain (Loss) | |||
| Stock Index | (5.64 | )% | ||
| Bonds | (3.12 | )% | ||
| Currency | 2.30 | % | ||
| Energy | 7.55 | % | ||
| Metals | 5.40 | % | ||
| Grains | 3.63 | % | ||
The Partnership experienced a gain in the first six months of 2014. The largest gain came from long positions in energy, followed by long positions in metals, grains and currency positions. A loss occurred from short positions in the S&P 500 and U.S. Treasury bonds.
Six Months Ended June 30, 2013
During the six months ended June 30, 2013, the Partnership experienced net realized and unrealized gains/(losses) of $(13,676,755) from its trading operations, which is net of brokerage commissions of $45,002. The Partnership incurred total expenses of $1,441,530, including $747,946 in Selling Agent Administrative and Service Fees, $605,290 in Management Fees (paid to the General Partner) and $88,294 in operating expenses. The Partnership earned $29,374 in interest income and charged a General Partner Profit Share allocation of $1,192. An analysis of trading gains and losses (not adjusted for any fees or expenses) by market sector is as follows:
| Sector | % Gain (Loss) | |||
| Stock Index | ( | )% | ||
| Bonds | 0.00 | % | ||
| Currency | )% | |||
| Energy | % | |||
| Metals | ( | )% | ||
| Grains | ( | )% | ||
The Partnership experienced a loss in the first quartersix months of 2013. The largest loss came from the long positions in the metals, closely followed by long positions in the grains and soybean complex. Acomplex, with a small loss occurred from thecurrency positions, and small loss from a short position in the S&P 500. Gains were achievedA small gain occurred in the currencies (long positions in the Australian and Canadian dollars and a short position in the Japanese yen) and from long positions in the energy complex. The Partnership had no positions in the bond sector.energy.
Item 3:Quantitative and Qualitative Disclosures About Market Risk
Not required.
Item 4:Controls and Procedures
The General Partner, with the participation of the General Partner’s principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of its disclosure controls and procedures with respect to the Partnership as of the end of the period covered by this quarterly report, and, based on their evaluation, has concluded that these disclosure controls and procedures are effective.
There were no changes in the General Partner’s internal controls over financial reporting with respect to the Partnership that occurred during the fiscal quarter covered by this quarterly report that has materially affected, or is reasonably likely to materially affect, the General Partner’s internal controls over financial reporting with respect to the Partnership.
None.
Not required.
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
(a) The requested information has been previously reported on Form 8-K.
(b) Not applicable.
(c) Pursuant to the Partnership’s Limited Partnership Agreement, Limited Partners may withdraw all or part of their capital contributions and undistributed profits, if any, at the end of each calendar month. The withdrawal by a Limited Partner has no impact on the value of the capital accounts of the remaining Limited Partners. The following table summarizes the withdrawals by Limited Partners during the firstsecond calendar quarter of 2014:
| Month | Withdrawal Amounts | |||
| January 31, 2014 | $ | 602,945 | ||
| February 28, 2014 | $ | 342,042 | ||
| March 31, 2014 | $ | 1,095,596 | ||
| Month | Withdrawal Amounts | |||
| April 30, 2014 | $ | (310,437 | ) | |
| May 31, 2014 | $ | (1,199,760 | ) | |
| June 30, 2014 | $ | (918,432 | ) | |
Item 3: Defaults Upon Senior Securities
(a) None.
(b) None.
Item 4: Mine Safety Disclosures
Not applicable.
(a) None.
(b) Not applicable.
The following exhibits are incorporated herein by reference as set forth below.
| Exhibit Number | Description of Document | |
| 3.1* | Certificate of Formation of AIS Futures Fund IV L.P. | |
| 4.2** | Fourth Amended and Restated Limited Partnership Agreement of AIS Futures Fund IV L.P., dated as of March 1, 2008. |
The following exhibits are included herewith.
| Exhibit Number | Description of Document | |
| 31.01 | Rule 13a-14(a)/15d-14(a) Certification | |
| 32.01 | Section 1350 Certification |
* This exhibit is incorporated by reference to the exhibit of the same number and description filed with the Partnership’s Registration Statement (File No. 000-52599) filed on April 30, 2007 on Form 10 under the Securities Exchange Act of 1934.
** This exhibit is incorporated by reference to the exhibit of the same number and description filed with the Partnership’s Current Report (File No. 000-52599) filed on March 5, 2008 on Form 8-K under the Securities Exchange Act of 1934.
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.
Dated: MayAugust 14, 2014
AIS FUTURES FUND IV L.P.
| By: | AIS CAPITAL MANAGEMENT, L.P., |
General Partner
| By: | /s/ John Hummel | |
| Name: John Hummel | ||
| Title: Managing Principal (principal executive and principal financial officer) | ||