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 June 30, 2015

 

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)

 

(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  x No  ¨

 

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  x No  ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, 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

 

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements
	Statements of Financial Condition	2
	Condensed Schedules of Investments	3-4
	Statements of Operations	5
	Statements of Changes in Partners’ Capital (Net Asset Value)	6
	Notes to Financial Statements	7-17
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18-20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	20-21
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Mine Safety Disclosures	22
Item 5.	Other Information	22
Item 6.	Exhibits	23
Signature		24
Rule 13a–14(a)/15d–14(a) Certification
Section 1350 Certification

 

 

PART I – FINANCIAL INFORMATION

 

Item 1: Financial Statements

 

AIS FUTURES FUND IV L.P.

STATEMENTS OF FINANCIAL CONDITION

June 30, 2015 (Unaudited) and December 31, 2014 (Audited)

 

 

		June 30,				December 31,
		2015				2014
ASSETS
Equity in futures broker trading accounts
Cash		$	980,867			$	451,333
United States government securities			3,499,366				1,499,965
Unrealized (loss) on open futures contracts, net			(22,873	)			(79,850	)
Interest receivable (payable)			(176	)			127
Deposits with futures brokers		$	4,457,184			$	1,871,575
Cash and cash equivalents			853,669				1,853,597
Interest receivable			633				0
United States government securities			4,998,522				15,999,450
Total assets		$	10,310,008			$	19,724,622
LIABILITIES
Accounts payable		$	71,654			$	92,533
Commissions and other trading fees on open contracts payable			1,776				864
Management fee payable			16,863				31,532
Selling agent administrative and service fee payable			26,385				48,468
Redemptions payable			246,038				700,728
Total liabilities			362,716				874,125
PARTNERS’ CAPITAL (Net Asset Value)
Limited Partners - Series A		$	9,737,209			$	18,597,512
Limited Partners - Series B			136,573				138,271
Limited Partners - Series C			73,510				114,714
Total partners’ capital (Net Asset Value)			9,947,292				18,850,497
Total liabilities and partners’ capital (Net Asset Value)		$	10,310,008			$	19,724,622

 

See accompanying notes.

 

 

AIS FUTURES FUND IV L.P.

CONDENSED SCHEDULE OF INVESTMENTS

June 30, 2015 (Unaudited)

 

 

UNITED STATES GOVERNMENT SECURITIES*

 

Face Value				Maturity Date		Description		Fair Value				% of Net Asset Value
$	500,000			07/09/15		U.S. Treasury Bills		$	499,991				5.03	%
	5,000,000			10/15/15		U.S. Treasury Bills			4,998,959				50.26	%
	3,000,000			12/17/15		U.S. Treasury Bills			2,998,938				30.15	%
						Total United States government securities (cost - $8,496,910)		$	8,497,888				85.44	%

 

LONG FUTURES CONTRACTS**

 

Description		Fair Value				% of Net Asset Value
Currencies		$	(7,191	)			(0.07	)%
Energy			(75,804	)			(0.76	)%
Metals			(96,624	)			(0.97	)%
Total long futures contracts		$	(179,619	)			(1.80	)%

 

SHORT FUTURES CONTRACTS**

 

No. of Contracts				Description		Fair Value				% of Net Asset Value
	35			Interest Rates (U.S. Treasury Bond, expires 9/2015)		$	82,610				0.83	%
				Stock Index			74,136				0.74	%
				Total short futures contracts		$	156,746				1.57	%
				Total futures contracts		$	(22,873	)			(0.23	)%

 

*

Includes $3,500,000 face value with a fair value of $3,499,366 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.

 

  

AIS FUTURES FUND IV L.P.

CONDENSED SCHEDULE OF INVESTMENTS

December 31, 2014 (Audited)

 

 

UNITED STATES GOVERNMENT SECURITIES*

 

Face Value				Maturity Date		Description		Fair Value				% of Net Asset Value
$	11,000,000			01/08/15		U.S. Treasury Bills		$	10,999,911				58.35	%
	1,000,000			03/05/15		U.S. Treasury Bills			999,946				5.31	%
	500,000			04/09/15		U.S. Treasury Bills			499,973				2.65	%
	5,000,000			04/16/15		U.S. Treasury Bills			4,999,585				26.52	%
						Total United States government securities (cost - $17,497,084)		$	17,499,415				92.83	%

 

LONG FUTURES CONTRACTS**

 

Description		Fair Value				% of Net Asset Value
Metals		$	(102,725	)			(0.54	)%

 

SHORT FUTURES CONTRACTS**

   

Description		Fair Value				% of Net Asset Value
Stock Index		$	22,875				0.12	%
Total futures contracts		$	(79,850	)			(0.42	)%

 

 

*

Includes $1,500,000 face value with a fair value of $1,499,965 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, the number of contracts and expiration dates are not presented.

 

See accompanying notes.

 

 

 

 

 

AIS FUTURES FUND IV L.P.

STATEMENTS OF OPERATIONS

For the Three Months and Six Months Ended June 30, 2015 and 2014 (Unaudited)

 

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2015				2014				2015				2014
TRADING GAINS (LOSSES)
Realized		$	324,221			$	1,460,527			$	(236,684	)		$	2,959,091
Change in unrealized			22,120				(1,501,056	)			56,977				842,450
Brokerage commissions			(4,330	)			(18,417	)			(8,184	)			(43,787	)
Total gain (loss) from trading		$	342,011			$	(58,946	)		$	(187,891	)		$	3,757,754
NET INVESTMENT (LOSS)
Income
Interest income		$	1,831			$	4,551			$	3,328			$	10,318
Expenses
Selling agent administrative and service fee		$	76,857			$	233,805			$	187,579			$	471,664
Management fee			64,144				199,717				153,781				403,230
Operating expenses			27,250				40,191				64,250				90,315
Total expenses		$	168,251			$	473,713			$	405,610			$	965,209
Net investment (loss)		$	(166,420	)		$	(469,162	)		$	(402,282	)		$	(954,891	)
NET INCOME (LOSS)		$	175,591			$	(528,108	)		$	(590,173	)		$	2,802,863
Less: General Partner  Profit Share allocation		$	0			$	(220	)		$	0			$	1,242
Net income (loss) for pro rata  allocation to all partners		$	175,591			$	(527,888	)		$	(590,173	)		$	2,801,621

 

See accompanying notes.

 

  

AIS FUTURES FUND IV L.P.

STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL (NET ASSET VALUE)

For the Six Months Ended June 30, 2015 and 2014 (Unaudited)

  

 

		Partners’ Capital
		Series B -				Series A -				Series B -				Series C -
		General				Limited				Limited				Limited
		Partner				Partners				Partners				Partners				Total
Balances at December 31, 2014		$	0			$	18,597,512			$	138,271			$	114,714			$	18,850,497
Transfers			0				(40,209	)			0				40,209				0
Net income (loss) for the six months ended June 30, 2015:
General Partner Profit Share allocation			0				0				0				0				0
Pro rata allocation to all partners			0				(589,936	)			(1,698	)			1,461				(590,173	)
Subscriptions			0				2,000				0				0				2,000
Redemptions			0				(8,232,158	)			0				(82,874	)			(8,315,032	)
Balances at June 30, 2015		$	0			$	9,737,209			$	136,573			$	73,510			$	9,947,292
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

 

See accompanying notes.

 

  

AIS FUTURES FUND IV L.P.

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 Companies. The Partnership is subject to the regulations of the Commodity Futures Trading Commission, an agency of the United States (U.S.) government which regulates most aspects of the commodity futures industry; rules of the National Futures Association, an industry self-regulatory organization; and the requirements of commodity exchanges and Futures Commission Merchants (brokers) through which the Partnership trades. The Partnership is also subject to the applicable reporting requirements of the Securities Exchange Act of 1934.

 

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 the Cash 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.

Cash and Cash Equivalents

 

Cash and cash equivalents includes cash and an investment held in a money market mutual fund at Wells Fargo Bank, N.A. and affiliates. Interest income includes interest-equivalent dividends on the money market mutual fund. There were no investments in the money market mutual fund as of December 31, 2014.

 

D.

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. The Partnership presents unrealized gains and unrealized losses on open futures contacts (the difference between contract trade price and quoted market price) as a net amount in the statement of financial condition, as there exists a right of offset of unrealized gains and losses. 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.

 

  

AIS FUTURES FUND IV L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

 

Note 1.

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

E.

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.

 

F.

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 2011 through 2014 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 the three or six months ended June 30, 2015 and 2014.

 

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 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.

 

H.

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)

 

 

Note 1.

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

H.

Capital Accounts (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.

 

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.

 

I.

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.

 

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, 2015 and 2014 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

 

AIS Capital Management, L.P. is the General Partner and commodity trading advisor of the Partnership, which conducts and manages the business and trading activities of the Partnership.

 

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 redemption. The Management Fees charged to Series A  Limited Partners were $63,639 and $152,793 for the three and six months ended June 30, 2015, respectively, and $198,286 and $399,867 for the three and six months ended June 30, 2014, respectively. The Management Fees charged to Series C Limited Partners were $505 and $988 for the three and six months ended June 30, 2015, respectively, and $1,431 and $3,363 for the three and six months ended June 30, 2014, respectively.

  

During the three and six months ended June 30, 2015, certain Series A Limited Partners were charged Management Fees at a rate lower than described above, to offset the effect of the additional 1.5% per annum Selling Agent Administrative and Service Fee described in Note 3. Accordingly, for the three and six months ended June 30, 2015, Management Fees were reduced by approximately $1,491 and $4,495, respectively. For the three and six months ended June 30, 2014, there were no Series A Limited Partners that were charged the additional 1.5% per annum Service Fee. Accordingly, there was no reduction in Management Fees that occurred during the three or six months ended June 30, 2014.

 

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, 2015 and 2014, there were $40,209 and $90,822, 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, 2015 and 2014, certain Series A Limited Partners were not subject to the Service Fee.

 

AIS FUTURES FUND IV L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

 

Note 3.

SELLING AGENT ADMINISTRATIVE AND SERVICE FEES (CONTINUED)

 

For investment executives associated with the sale 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 paid by the Partnership, however, the General Partner reduces its Management Fee (see Note 2.) related to the Series A Limited Partner’s Interest. Accordingly, this additional Service Fee does not affect the total fees charged to the Series A Limited 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 June 30, 2015 and 2014, there were no selling commissions charged to Series A Limited Partners. Series A Limited Partner subscriptions, as presented in the statements of changes in partners’ capital (net asset value), are net of such selling commissions, if any.

 

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 Interactive Brokers, LLC, Jefferies 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 credit balances and pays interest on debit balances 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 credit balances and pays interest on debit balances with the securities broker. The fair value of the Partnership’s U.S. Treasury Bills held at the securities broker totaled $0 and $15,999,450 at June 30, 2015 and December 31, 2014, respectively. The fair value of the Partnership’s cash held at the securities broker totaled $0 and $1,759,117 at June 30, 2015 and December 31, 2014, respectively.

 

 

AIS FUTURES FUND IV L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

 

Note 7.

FAIR VALUE

 

Fair value, as defined in the Fair Value Measurement Topic 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 the Fair 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 six months ended June 30, 2015 and during the year ended December 31, 2014.

 

For U.S. government securities, which are categorized as Level 2 fair value measurements at June 30, 2015 and December 31, 2014, fair value is determined as cost plus accrued interest, which represents an income approach to fair value measurement.

 

The following tables summarize the Partnership’s assets and liabilities accounted for at fair value at June 30, 2015 and December 31, 2014 using the fair value hierarchy. Fair value is presented on a gross basis even though certain assets and liabilities qualify for net presentation in the statements of financial condition.

 

 

AIS FUTURES FUND IV L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

 

Note 7.

FAIR VALUE (CONTINUED)

 

		June 30, 2015
Description		Level 1				Level 2				Level 3				Total
Assets
Futures contracts
Currencies		$	14,477			$	0			$	0			$	14,477
Energy			13,587				0				0				13,587
Interest rates			82,610				0				0				82,610
Stock indices			74,136				0				0				74,136
Total futures contracts			184,810				0				0				184,810
U.S. Treasury bills			0				8,497,888				0				8,497,888
Total assets		$	184,810			$	8,497,888			$	0			$	8,682,698
Liabilities
Futures contracts
Currencies		$	(21,668	)		$	0			$	0			$	(21,668	)
Energy			(89,391	)			0				0				(89,391	)
Metals			(96,624	)			0				0				(96,624	)
Total liabilities		$	(207,683	)		$	0			$	0			$	(207,683	)

 

		December 31, 2014
Description		Level 1				Level 2				Level 3				Total
Assets
Futures contracts
Stock Index		$	22,875			$	0			$	0			$	22,875
U.S. Treasury bills			0				17,499,415				0				17,499,415
Total assets		$	22,875			$	17,499,415			$	0			$	17,522,290
Liabilities
Futures contracts
Metals		$	(102,725	)		$	0			$	0			$	(102,725	)

 

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 the Derivatives 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.

DERIVATIVES (CONTINUED)

 

The Partnership’s derivatives held at June 30, 2015 and December 31, 2014 are subject to netting agreements with the Partnership’s futures brokers which permit the Partnership 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.

 

		Offsetting of Derivative Assets and Liabilities
		At June 30, 2015
						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)
Interactive Brokers, LLC		$	184,810			$	(184,810	)		$	-
Total assets		$	184,810			$	(184,810	)		$	-

 

						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)
Interactive Brokers, LLC		$	(207,683	)		$	184,810			$	(22,873	)
Total liabilities		$	(207,683	)		$	184,810			$	(22,873	)

 

		Offsetting of Derivative Assets and Liabilities
		At December 31, 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)
Jefferies LLC		$	22,875			$	(22,875	)		$	-
Total assets		$	22,875			$	(22,875	)		$	-

 

						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)
Jefferies LLC		$	(102,725	)		$	22,875			$	(79,850	)
Total liabilities		$	(102,725	)		$	22,875			$	(79,850	)

 

Within the statements of financial condition, the fair value of futures contracts is included in unrealized (loss) on open futures contracts, net. The cash and other property (for example, U.S. Treasury bills) held by each counterparty at June 30, 2015 and December 31, 2014 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, 2015 and 2014. 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)

 

		Three Months Ended June 30, 2015												Three Months Ended June 30, 2014
		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		$	0			$	0				0			$	1,789,133			$	(3,748,943	)			925
Currencies			(131,034	)			41,340				252				1,012,025				(224,093	)			303
Energy			748,706				(55,292	)			322				1,683,261				(79,392	)			802
Interest rates			(108,740	)			82,610				77				(313,623	)			10,030				70
Metals			(68,289	)			(120,674	)			294				(1,414,760	)			2,563,410				378
Stock index			(116,422	)			74,136				142				(1,333,900	)			(22,068	)			305
Total futures contracts		$	324,221			$	22,120							$	1,422,136			$	(1,501,056	)
Options on Futures Contracts
Interest rates			0				0				0				38,391				0				27
Total		$	324,221			$	22,120							$	1,460,527			$	(1,501,056	)

 

		Six Months Ended June 30, 2015												Six Months Ended June 30, 2014
		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		$	0			$	0				0			$	2,598,889			$	(1,049,894	)			1,627
Currencies			(141,107	)			(7,191	)			259				265,359				658,907				616
Energy			718,230				(75,804	)			375				2,236,243				617,987				1,944
Interest rates			(182,959	)			82,610				96				(753,886	)			(540,706	)			278
Metals			(165,002	)			6,101				488				429,649				1,518,231				750
Stock index			(465,846	)			51,261				329				(1,855,554	)			(362,075	)			849
Total futures contracts			(236,684	)			56,977								2,920,700				842,450
Options on Futures Contracts
Interest rates			0				0				0				38,391				0				27
Total		$	(236,684	)		$	56,977							$	2,959,091			$	842,450

 

The number of contracts closed represents the number of contracts closed for the three and six months ended June 30, 2015 and 2014 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.

MARKET AND CREDIT RISKS (CONTINUED)

 

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 Interactive Brokers, LLC, Jefferies LLC and ADM Investor Services, Inc. is $4,452,231, $0 and $4,953, respectively, at June 30, 2015, and $0, $1,866,575 and $5,000, respectively, at December 31, 2014.

 

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.

 

In addition to the cash at the securities broker, the Partnership maintains its cash and cash equivalents in bank deposit and safekeeping 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 Partnership also may maintain U.S. Treasury Bills in the safekeeping account. The fair value of the U.S. Treasury Bills held in such account was $4,998,522 and $0 at June 30, 2015 and December 31, 2014, respectively.

 

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.

 

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, 2015 and 2014. This information has been derived from information presented in the financial statements.

 

  

AIS FUTURES FUND IV L.P.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

 

Note 11.

FINANCIAL HIGHLIGHTS (CONTINUED)

 

		Three months ended								Three months ended
		June 30, 2015								June 30, 2014
		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			0.87	%			1.27	%			(1.26	)%			(0.85	)%
General Partner Profit Share allocation			0.00	%			0.00	%			0.00	%			0.00	%
Total return after General Partner Profit Share allocation			0.87	%			1.27	%			(1.26	)%			(0.85	)%
Supplemental Data for Limited Partners
Ratios to average net asset value:(2)
Expenses, excluding General Partner Profit Share allocation(3)			5.14	%			3.55	%			4.76	%			3.09	%
General Partner Profit Share allocation(1)			0.00	%			0.00	%			0.00	%			0.00	%
Total expenses			5.14	%			3.55	%			4.76	%			3.09	%
Net investment (loss)(3), (4)			(5.08	)%			(3.49	)%			(4.71	)%			(3.04	)%

 

		Six months ended								Six months ended
		June 30, 2015								June 30, 2014
		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			(3.34	)%			(2.55	)%			7.20	%			8.10	%
General Partner Profit Share allocation			0.00	%			0.00	%			0.00	%			0.00	%
Total return after General Partner Profit Share allocation			(3.34	)%			(2.55	)%			7.20	%			8.10	%
Supplemental Data for Limited Partners
Ratios to average net asset value:(2)
Expenses, excluding General Partner Profit Share allocation(3)			5.10	%			3.53	%			4.88	%			3.20	%
General Partner Profit Share allocation(1)			0.00	%			0.00	%			0.00	%			0.00	%
Total expenses			5.10	%			3.53	%			4.88	%			3.20	%
Net investment (loss)(3), (4)			(5.06	)%			(3.48	)%			(4.83	)%			(3.15	)%

 

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 ratios of expenses and net investment (loss) to average net asset value do not include brokerage commissions.

(3)

Annualized.

(4)

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 may 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 June 30, 2015, 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 June 30, 2015

 

During the second quarter of 2015, the Partnership experienced net realized and unrealized gains/(losses) of $342,011 from its trading operations, which is net of brokerage commissions of $4,330.  The Partnership incurred total expenses of $168,251, including $76,857 in Selling Agent Administrative and Service Fees, $64,144 in Management Fees (paid to the General Partner) and $27,250 in operating expenses.  The Partnership earned $1,831 in interest income and reversed $0 of previously accrued General Partner Profit Share allocation.  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			(0.01	)%
Bonds			0.15	%
Currency			(0.50	)%
Energy			4.61	%
Metals			(2.00	)%
Grains			0.00	%

 

The Partnership was profitable in the second quarter of 2015. The largest gain came from long positions in energy, followed by a long position in the U.S. Treasury bonds. Losses occurred in long positions in gold and silver and to a lesser extent from long positions in Australian and Canadian dollars with a minimal loss from a short positon in the S&P500.

 

Three Months Ended June 30, 2014

 

During the second quarter of 2014, the Partnership experienced net realized and unrealized gains/(losses) of $(58,946) from its trading operations, which is net of brokerage commissions of $18,417.  The Partnership incurred total expenses of $473,713, including $233,805 in Selling Agent Administrative and Service Fees, $199,717 in Management Fees (paid to the General Partner) and $40,191 in operating expenses.  The Partnership earned $4,551 in interest income and reversed $(220) of previously accrued General Partner Profit Share allocation.  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			(3.35	)%
Bonds			(0.65	)%
Currency			2.00	%
Energy			4.09	%
Metals			3.03	%
Grains			(5.10	)%

 

The Partnership experienced a loss in the second quarter of 2014. The largest loss came from long positions in grains, followed by short positions in the S&P 500, and U.S. Treasury bonds. Gains were achieved in long positions in energy, metals and currencies.

 

  

Six Months Ended June 30, 2015

 

During the six months ended June 30, 2015, the Partnership experienced net realized and unrealized gains/(losses) of $(187,891) from its trading operations, which is net of brokerage commissions of $8,184.  The Partnership incurred total expenses of $405,610, including $187,579 in Selling Agent Administrative and Service Fees, $153,781 in Management Fees (paid to the General Partner) and $64,250 in operating expenses.  The Partnership earned $3,328 in interest income and accrued 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			(1.92	)%
Bonds			(0.26	)%
Currency			(0.82	)%
Energy			4.29	%
Metals			(1.91	)%
Grains			0.00	%

 

The Partnership experienced a loss in the first six months of 2015. The largest loss was a result of a short position in the S&P500, followed by long positions in gold and silver, Australian and Canadian dollars, and a short position in U.S. Treasury bonds. Partially offsetting these was a gain in long energy positions.

 

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.

 

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.

 

 

PART II - OTHER INFORMATION

 

Item 1:  Legal Proceedings

 

None.

 

Item 1A:  Risk Factors

 

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 second calendar quarter of 2015:

 

Month		Withdrawal Amounts
April 30, 2015		$	(96,115	)
May 31, 2015		$	(4,279,940	)
June 30, 2015		$	(246,038	)

 

Item 3:  Defaults Upon Senior Securities

 

(a)           None.

 

(b)           None.

 

Item 4:  Mine Safety Disclosures

 

Not applicable.

 

Item 5:  Other Information

 

(a)           None.

 

(b)           Not applicable.

 

  

Item 6: Exhibits

 

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
101 INS		Instance Document
101 SCH		Taxonomy Extension Schema
101 CAL		Taxonomy Extension Calculation Linkbase
101 DEF		Taxonomy Extension Definition Linkbase
101 LAB		Taxonomy Extension Label Linkbase
101 PRE		Taxonomy Extension Presentation Linkbase

 

^* 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.

 

  

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Dated: August 12, 2015

 

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)