10-Q 1 c88135e10vq.txt QUARTERLY REPORT FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JULY 31, 2004 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-9202 THE FUTURE FUND (Exact name of registrant as specified in its charter) State of jurisdiction or incorporation (Illinois) IRS EMPLOYER ID NO. #36-3033727 C/0 HEINOLD ASSET MANAGEMENT INC. ONE FINANCIAL PLACE 440 S. LASALLE ST-20 FLOOR CHICAGO ILLINOIS 60605 PHONE NUMBER (312) 663-7500 SAME (Former name, former address and former fiscal year, if changed) 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 shortened 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 1 PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS THE FUTURE FUND (An Illinois Limited Partnership) STATEMENTS OF FINANCIAL CONDITION

7/31/~~2003~~04 10/31/~~2002~~2003 (UNAUDITED) ASSETS Investments in affiliated general partnerships $5,~~620~~155,~~906~~499 $64,~~323~~912,~~951~~003 Due from affiliated broker 32,~~198~~151,~~462~~588 23,~~653~~618,~~611~~402 Other assets 7-- 5,~~480~~658 - ---------- ---------- Total assets $87,~~826~~307,~~848~~087 $8,~~977~~536,~~562~~063 ========== ========== LIABILITIES & PARTNERS' EQUITY Brokerage commissions payable to Affiliate $ 5142,~~425~~332 $ 5249,~~230~~703 Redemptions payable ~~198~~30,~~382~~139 1124,~~346~~789 Management fees payable to Trading Manager 2523,~~485~~816 2928,~~486~~045 Other 11liabilities 50,~~200~~241 2315,~~832~~523 ---------- ---------- Total liabilities ~~286~~146,~~492~~528 ~~116~~118,~~894~~060 ========== ========== Partners' equity: ~~General~~Limited ~~Partner~~Partners (~~220~~6,520 and 7,057 units outstanding at July 31, ~~2003~~2004 and October 31, ~~2002~~2003) ~~256~~7,~~728~~079,131 ~~250~~8,~~617~~163,518 ~~Limited~~General ~~Partners~~Partner (~~7,099~~75 and ~~7,558~~220 units outstanding at July 31, ~~2003~~2004 and October 31, ~~2002~~2003) 881,~~283,628~~428 8254,~~610,051~~485 ---------- ---------- Total partners' equity 87,~~540~~160,~~356~~559 8,~~860~~418,~~668~~003 ---------- ---------- Total liabilities and partners' equity $87,~~826~~307,~~848~~087 $8,~~977~~536,~~562~~063 ========== ========== Net asset value per outstanding unit of partnership interest $ 1,~~166~~085.9570 $ 1,~~139~~156.1775 ========== ==========

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS 2 THE FUTURE FUND (An Illinois Limited Partnership) STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED JULY 31, 2004 and 2003 (UNAUDITED)

2004 2003 ~~2002~~ Equity in income (loss) of affiliated general partnerships: Net realized trading gains (losses) on closed contracts $ ~~346~~(450,~~039~~727) $ 1346,~~180,877~~039 Change in net unrealized gains or (losses) on open contracts 16,430 (104,491) ~~244,177~~ ----------- ----------- (434,297) 241,548 ~~1,425,054~~ Interest income 16,224 15,524 ~~24,457~~ ----------- ----------- (418,073) 257,072 ~~1,449,511~~--------- --------- Expenses: Brokerage commissions paid to Affiliate 133,683 159,141 ~~154,786~~ Management fees paid to Trading Manager 75,267 86,233 ~~87,436~~ Incentive fee paid to Trading Manager -- 10,415 ~~27,677~~ Other administrative expenses 19,500 12,000 ~~4,200~~ ----------- ----------- Total expenses 228,450 267,789 ~~274,099~~ ----------- ----------- Net ~~income~~loss $(~~loss~~646,523) $ (10,717) ~~$ 1,175,412~~ =========== =========== Net ~~income (~~loss) allocated to General Partner $ (~~329~~17,799) $ ~~31,999~~(329) Net ~~income (~~loss) allocated to Limited Partners $ (10628,~~388~~724) $ 1(10,~~143,413~~388) Net ~~income (~~loss) for a unit of partnership interest (for a unit outstanding throughout the period) $ (195.4903) $ ~~145~~(1.4549)

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS 3 THE FUTURE FUND (An Illinois Limited Partnership) STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED JULY 31, 2004 and 2003 (UNAUDITED)

2004 2003 ~~2002~~ Equity in income (loss) of affiliated general partnerships: Net realized trading gains on closed contracts $ 750,602 $ 1,031,378 ~~$ 420,023~~ Change in net unrealized losses on open contracts (87390,~~647~~643) (~~377~~87,~~815~~647) ----------- ----------- 359,959 943,731 ~~42,208~~ Interest income 44,497 54,273 ~~76,980~~ ----------- ----------- 404,456 998,004 ~~119,188~~----------- ----------- Expenses: Brokerage commissions paid to Affiliate 440,008 473,648 ~~459,468~~ Management fees paid to Trading Manager 247,711 263,450 ~~258,739~~ Incentive fee paid to Trading Manager 123,627 27,335 ~~(64,042)~~ Other administrative expenses 64,500 37,000 ~~22,494~~ ----------- ----------- Total expenses 875,846 801,433 ~~676,659~~ ----------- ----------- Net income (loss) $ ~~196~~(471,~~571~~390) $ ~~(557~~196,~~471)~~571 =========== =========== Net income (loss) allocated to General Partner $ 6(12,~~111~~523) $ ~~(13~~6,~~606)~~111 Net income (loss) allocated to Limited Partners $ ~~190~~(458,~~460~~867) $ ~~(543~~190,~~865)~~460 Net income (loss) for a unit of partnership interest (for a unit outstanding throughout the period) $ 27(71.7805) $ ~~(61~~27.~~84)~~78

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS 4 THE FUTURE FUND (An Illinois Limited Partnership) STATEMENTS OF CHANGES IN PARTNERS' EQUITY FOR THE NINE MONTHS ENDED JULY 31, 2004 (UNAUDITED)

Limited General Partners Partner Total --------------- -------------- ----------- Partners' equity at October 31, ~~2002~~2003 $ 8,~~610~~163,~~051~~518 $ ~~250~~254,~~617~~485 $ 8,~~860~~418,~~668~~003 Redemption of ~~459~~537 units of limited partnership interest (~~516~~625,~~883~~520) -- (~~516~~625,~~883~~520) Redemption of 145 units of general partnership interest -- (160,534) (160,534) Net ~~income~~loss ~~190~~(458,~~460~~867) 6(12,~~111~~523) ~~196~~(471,~~571~~390) ----------- ----------- ----------- Partners' equity at July 31, ~~2003~~2004 $ 87,~~283~~079,~~628~~131 $ ~~256~~81,~~728~~428 $ 87,~~540~~160,~~356~~559 =========== =========== ===========

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS 5 THE FUTURE FUND (An Illinois Limited Partnership) STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED JULY 31, 2004 and 2003 (UNAUDITED)

2004 2003 ~~2002~~ Cash flows from operating activities: Net income (loss) $ ~~196~~(471,~~571~~390) $ ~~(557~~196,~~471)~~571 Adjustments to reconcile net income ~~(loss)~~ to net cash provided by operating activities: Change in assets and liabilities: ~~Due~~Investment ~~from~~in affiliated ~~broker~~general partnerships (~~544~~243,~~851~~496) (~~550~~544,~~246~~851) ~~Investment~~Due infrom affiliated ~~general~~broker ~~partnerships~~1,466,814 703,045 ~~1,598,889~~ Other assets 5,658 (7,480) ~~14,506~~ Brokerage commissions payable to Affiliate (~~805~~7,371) (~~6,222~~805) Management fees payable to Trading Manager (4,~~001~~229) (34,~~546~~001) ~~Incentive fees payable to Trading Manager - (64,042)~~ Other liabilities 34,718 (12,632) ~~3,340~~ ----------- ----------- Net cash provided by operating activities 780,704 329,847 ~~435,208~~ Cash flows from financing activities: Redemption of limited partnership interests (620,170) (329,847) Redemption of general partnership interests (~~435~~160,~~208~~534) -- ----------- ----------- Net cash used by financing activities (780,704) (329,847) Net change in cash -- -- Cash at beginning of period -- -- ----------- ----------- Cash at end of period $ -- $ -- =========== ===========

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS 6 THE FUTURE FUND (An Illinois Limited Partnership) NOTES TO JULY 31, 2004 FORM 10-Q FINANCIAL STATEMENTS (UNAUDITED) The unaudited interim financial statements of the Future Fund (the "Partnership") included herein have been prepared in conformity with accounting principles generally accepted in the United States for interim financial information and rule 10-01 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the unaudited interim financial statements reflect all adjustments, which are of a normal recurring nature, necessary for the fair presentation of financial position, results of operations, changes in partners' equity and cash flows of the Partnership for the interim periods presented and are not necessarily indicative of a full year's results. In preparing the unaudited interim financial statements, management is required to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. The financial statements should be read in conjunction with the Partnership's audited financial statements for the year ended October 31, 2003. RECENT ACCOUNTING PRONOUNCEMENT In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 46, Consolidation of Variable Interest Entities ("FIN 46"). FIN 46 addresses consolidation by business enterprises of variable interest entities. In August 2003, the FASB delayed the effective date of FIN 46 for non-registered investment companies that currently account for their investments in accordance with the specialized accounting guidance in the AICPA Audit and Accounting Guide, Audits of Investment Companies (the "Audit Guide"). The Partnership accounts for its investments in this manner and thus is subject to the deferral. The FASB delayed the effective date while the AICPA finalizes its Statement of Position ("SOP") on the clarification of the scope of the Audit Guide and accounting by the parent companies and equity method investors for investments in investment companies. When the AICPA issues the final SOP, the FASB will consider modifying paragraph 4(e) of Interpretation 46 to provide an exception for companies that apply the Audit Guide as revised by the SOP. As General Partner of the Partnership, Heinold Asset Management, Inc. has not yet determined if the Partnership would be required to consolidate certain affiliated General Partnerships if FIN 46 becomes effective for the Partnership. The General Partner estimates that the Partnership's maximum exposure to loss as a result of its involvement with these affiliated General Partnerships is limited to their carrying value as recorded in the Statement of Financial Condition. 7 THE FUTURE FUND (An Illinois Limited Partnership) NOTES TO FORM 10-Q FINANCIAL STATEMENTS (CONTINUED) INVESTMENTS IN AFFILIATED GENERAL PARTNERSHIPS At July 31, 2004, investments in and capital committed to Account Partnerships were as follows:

~~Due~~ALLOCATED ~~From~~ASSETS ~~Net Unrealized Partnership Heinold General Affiliated Gain (Loss) on Total Ownership Partnership Partnership Broker Open Contracts Assets Percentage Investment~~ ------------------------------~~------------------------------------------------------------------------------~~ TOTAL TRADING ACCOUNT PARTNERSHIP INVESTMENT CAPITAL Heinold General Partnership Account III $51,~~929~~894,~~278~~832 $302,~~816~~038,075 $Heinold ~~5,960,094~~General ~~45.55%~~Partnership ~~$2,714,633~~Account IV 21,~~743~~265,~~353~~961 ~~55,574~~ 2,~~798~~513,~~927~~623 ~~45.55%~~Heinold ~~1,274,822~~General XIPartnership ~~3,605,615~~Account ~~(23,692)~~XI 31,~~581~~994,~~923~~707 ~~45.55% 1~~2,~~631~~593,~~451~~060 ---------- ----------~~-------------------------------------------------------------------~~ ~~Total~~ $125,~~278~~155,~~246~~499 $627,~~698 $12~~144,~~340,944~~758 ~~45.55% $5,620,906~~ ========== ==========~~===================================================================~~

At October 31, 2003, investments in and capital committed to Account Partnerships were as follows:

~~Due~~ALLOCATED ~~From~~ASSETS ~~Net Unrealized Partnership Heinold General Affiliated Gain (Loss) on Total Ownership Partnership Partnership Broker Open Contracts Assets Percentage Investment~~ ------------------------------~~------------------------------------------------------------------------------~~ ~~III~~TOTAL $TRADING ~~5,312,318~~ACCOUNT $PARTNERSHIP ~~29,820~~INVESTMENT $CAPITAL ~~5,342,138~~Heinold ~~45.86%~~General Partnership Account III $21,~~450~~945,~~064~~630 IV $2,~~164~~518,~~778~~838 ~~(70,429)~~Heinold ~~2,094,349~~General ~~45.86%~~Partnership ~~960,532~~Account VIV 31,~~057~~292,~~122~~829 ~~78,539~~ 3,~~135~~100,~~661~~418 ~~45.86%~~Heinold ~~1,438,108~~General XIPartnership ~~2,992,885~~Account ~~223,754~~XI 31,~~216~~673,~~639~~544 ~~45.86% 1~~2,~~475~~794,~~247~~316 ---------- ----------~~-------------------------------------------------------------------~~ ~~Total~~ $134,~~527~~912,~~103~~003 $~~261~~8,~~684 $13~~413,~~788,787~~572 ~~45.86% $6,323,951~~ ========== ==========~~===================================================================~~

In the tables above, Investment represents the corresponding amount the Partnership has invested in each Account Partnership as of the date of the Statements of Financial Condition. Total Trading Capital represents the capital committed by the Partnership to the respective Account Partnership's Trading Advisor to manage. Total Trading Capital for the Partnership as a whole represents an allocation of substantially all the Partnership's assets, less amounts withheld to cover current expenses. The difference between the total capital committed and the amount invested is additional capital committed from Partnership assets classified as Due from Affiliated Broker in the Statements of Financial Condition. 8 THE FUTURE FUND (An Illinois Limited Partnership) NOTES TO FORM 10-Q FINANCIAL STATEMENTS (CONTINUED) Each of the General Partnerships had total assets (no liabilities) consisting of the following at July 31, 2004:

NET UNREALIZED DUE FROM GAIN ON ACCOUNT PARTNERSHIP AFFILIATED BROKER CONTRACTS TOTAL Heinold General Partnership ~~2003~~Account ~~2002~~III ~~------------------------------------------------------------------------~~$ ~~III~~4,193,347 $~~200~~ 36,~~913~~849 $ ~~717~~4,~~735~~230,196 Heinold General Partnership Account IV 952,~~454 853~~836,~~444~~956 ~~V 218~~(10,~~098~~709) ~~688~~2,~~532~~826,247 XIHeinold ~~15,222~~General ~~828,734~~Partnership ~~-------------------------------------------~~Account ~~Total~~XI ~~$529~~4,~~687~~408,989 $344,~~088,445~~177 ~~===========================================~~4,453,166

Each of the General Partnerships had total assets (no liabilities) consisting of the following at October 31, 2003:

NET UNREALIZED DUE FROM GAIN ON ACCOUNT PARTNERSHIP AFFILIATED BROKER CONTRACTS TOTAL Heinold General Partnership ~~2003~~Account ~~2002~~III ~~------------------------------------------------------------------------~~$ ~~III~~4,143,995 $ ~~617~~109,~~956~~420 $ 544,~~915~~253,415 Heinold General Partnership Account IV ~~704~~2,~~578 586~~450,~~963~~898 ~~V 411~~375,~~200~~404 ~~126~~2,~~269~~826,302 XIHeinold ~~365,284~~General ~~(659,291)~~Partnership ~~-------------------------------------------~~Account ~~Total~~XI $23,~~099~~218,~~018~~004 ~~$108~~440,~~856~~590 ~~===========================================~~3,658,594

The Partnership's ownership percentage of the total assets of each Account Partnership as of July 31, 2004 and October 31, 2003, and the proportionate share of Account Partnership income for the months then ended was 44.79% and 45.74%, respectively. Each of the General Partnerships had total income (no expenses) from net realized and unrealized trading gains consisting of the following for the three months ended July 31, 2004 and 2003:

~~Partners'~~ACCOUNT ~~Partners'~~PARTNERSHIP 2004 2003 Heinold General ~~Equity at Net Equity at~~ Partnership ~~October~~Account ~~31, 2002 Income Redemption July 31, 2003 --------------------------------------------------------------------------------------------------------~~ III $ 5(224,~~342,138~~142) $ ~~617~~200,~~956~~913 $Heinold -General $Partnership ~~5,960,094~~Account IV 2(466,~~094,349~~115) ~~704~~95,~~578~~454 -Heinold ~~2,798,927~~General Partnership Account V ~~3,135,661~~-- ~~411~~218,~~200~~098 ~~(3,546,861)~~Heinold -General Partnership Account XI 3(278,~~216,639~~498) ~~365~~15,~~284~~222 - ~~3,581,923~~ --------- ---------~~------------------------------------------------------------~~ ~~Total~~ $~~13,788,787~~ ~~$2,099,018 $~~(3968,~~546,861~~755) $12 529,~~340,944~~687 ========== =========~~===========================================================~~

The Partnership was allocated $(434,297) and $241,548 for the three months ended July 31, 2004 and 2003, respectively. 9 THE FUTURE FUND (An Illinois Limited Partnership) NOTES TO FORM 10-Q FINANCIAL STATEMENTS (CONTINUED) Each of the General Partnerships had total income (no expenses) from net realized and unrealized trading gains consisting of the following for the nine months ended July 31, 2004 and 2003:

~~Note~~ACCOUNT A:PARTNERSHIP ~~July~~2004 ~~31,~~ 2003 ~~October~~Heinold 31General Partnership Account III $ (23,219) ~~2002~~$ 617,956 Heinold General Partnership Account IV (~~Unaudited~~53) 704,578 Heinold General Partnership Account V -- 411,200 Heinold General Partnership Account XI 794,572 365,284 ----------~~-------~~ -----------~~--------~~ ~~Partners' equity~~ $ 8771,~~540,356~~300 $8 2,~~860~~099,~~668~~018 ========== ===========

The Partnership was allocated $359,959 and $943,731 for the nine months ended July 31, 2004 and 2003, respectively. 10 THE FUTURE FUND (An Illinois Limited Partnership) Item 2. Management's Discussion and Analysis of Financial Condition as of July 31, 2004 and Operating Results for the Three and Nine Months Ended July 31, 2004 and July 31, 2003

Note BA: ~~Nine~~July ~~months~~31, ~~Nine~~2004 ~~months~~October ~~ended 7/~~31/, 2003 ~~ended 7/31/2002~~ (Unaudited) ~~(Unaudited)~~ --------------- ---------------- ~~Net~~Partners' ~~Realized~~equity ~~and Change in Net Unrealized Trading Gains~~ $ ~~943~~7,~~731~~160,559 $ 428,~~208~~418,003

Partners' equity at July 31, 2004 decreased by $1,257,444 from Partners' equity at October 31, 2003 due to a net loss of $471,390 and redemptions of $786,054. For the nine-month period ending July 31 2004, the Partnership's Net Asset Value per Unit decreased from $1,156.75 at October 31, 2003 to $1,085.70, representing a 6.1% loss. Included in the aforementioned total redemption amount is $160,534, which represents 145 units of general partnership interest redeemed on June 30, 2004. The General Partner continues to maintain its required investment under the terms of the Limited Partnership Agreement of the Partnership.

Note CB: Three months Three months ended 7/31/~~2003~~2004 ended 7/31/~~2002~~2003 (Unaudited) (Unaudited) --------------- --------------- Net Realized and Change in Net Unrealized Trading Gains (Losses) $ ~~241~~(434,~~548~~297) $ 1241,~~425,054~~548

Net Realized and Unrealized Trading Losses for the three months ended July 31, 2004 came from unprofitable trading throughout the period. In May, losses came from negative returns in the stock index and currency sectors. Long positions in Asian indices showed losses amid concerns that rising interest rates could weaken US demand for Asian goods. Long US Dollar positions against other major currencies also proved unprofitable, as the Dollar lost ground against various currencies, particularly the Euro and Yen. In June, trading in energy and metals had negative returns, with long crude oil positions causing considerable losses as the price of oil declined. Long copper positions also created losses as prices dropped due to demand concerns. In July, losses were less significant compared to earlier in the period. Shortfalls were again posted in the currency sector due to significant intra-month price fluctuations, however these were partially offset by gains on long oil positions, as oil prices climbed back to record highs. Net Realized and Change in Net Unrealized Trading Gains for the three months ended July 31, 2003 came from varied results throughout the period, netting out to a moderate gain for the period as a whole. The quarter started out strong with substantial returns in May, but fell off with losses in June and July, netting to a modest gain for the period. May gains came principally form the currency and interest rate sectors, as the continued downtrend of the US Dollar caused the Euro to hit four-year highs. The Partnership recognized considerable profits in short US Dollar positions against the Euro, as well as long Euro positions against the Yen. In June, performance turned towards the negative, as unfavorable conditions in other market sectors such as agricultural futures, metals, and equity indices posted losses for the month. Long gold positions performed poorly, while the energy and bond sectors also recorded losses. In July, losses were posted in part due to highly volatile currency markets. The US dollar started to rise, causing the short US Dollar positions that were extremely profitable earlier in the period to decline. 11 THE FUTURE FUND (An Illinois Limited Partnership) Item 2. Management's Discussion and Analysis of Financial Condition as of July 31, 2004 and Operating Results for the Three and Nine Months Ended July 31, 2004 and July 31, 2003 (Cont.)

Net Realized and Unrealized Trading Gains for the nine months ended July 31, 2004 came from gains of $613,310, and $180,946, for the first and second quarters, respectively, combined with third quarter losses of $434,297, resulting in a net gain of $359,959. The three months ended January 31, 2004 showed strong profits overall, after starting out the period with negative results. Losses were posted early in the quarter, most notably due to volatility in crude oil prices. After rising due to terrorist attacks overseas being seen as a potential supply threat, the market plummeted after the US Energy Department reported significant reserves, causing values to decline amidst heavy selling of crude oil futures, forcing long positions to be liquidated at a loss. Later in the quarter, gains were posted in long metals positions due to growing physical demand in industrial metals, particularly copper. Long positions in precious metals such as gold and silver were also profitable, partially driven by the continued decline of the US Dollar. The decreasing power of the dollar against most other major currencies also created opportunities in foreign exchange trading, particularly short US Dollar positions and long positions in the Euro, Japanese Yen and British Pound. S&P 500 Index futures benefited from an upward price trend mid-quarter, as strong retail sales and increasing economic optimism pushed the equity markets higher. Considerable gains continued into the beginning of the three months ended April 30, 2004, however then reversed, netting to gains significantly lower than those seen in the first quarter. Throughout the period long crude oil positions proved profitable, as low supplies and high demand drove up prices. Grains also saw a similar situation as tight inventories pushed corn and soybean prices up. At the beginning of the period, long copper positions benefited as values reached a multi-year high amid positive economic reports that increased industrial demand, which also drove aluminum prices up as well. These trends reversed later, as the global outlook turned less optimistic, causing losses. On the currency side, long British Pound positions proved profitable early, after the Bank of England raised interest rates. These increased rates contrasted with lower interest rates in the US and provided an attractive situation for investment, which led to capital inflows into the country. This trend also reversed later in the period, as the British pound dropped back to prior levels as the US dollar recovered, which also negatively affected long Japanese Yen positions. During the three months ended July 31, 2004, the Partnership showed significant losses. Please see Note B for a more detailed discussion of trading results for the period. 12 THE FUTURE FUND (An Illinois Limited Partnership) Item 2. Management's Discussion and Analysis of Financial Condition as of July 31, 2004 and Operating Results for the Three and Nine Months Ended July 31, 2004 and July 31, 2003 (Cont.) In the previous fiscal period, Net Realized and Change in Net Unrealized Trading Gains for the nine months ended July 31, 2003 came from first and third quarter trading gains of $760,007 and $241,548 respectively, combined with second quarter losses of $57,824, causing a net trading gain of $943,731 for the period. During the first quarter, gains were seen in both agricultural products and metals, most notably long gold positions as the demand for gold increased due to renewed interest as a safe investment. Long positions on crude oil were also profitable, as the price for oil rose due to tensions in the Middle East. As the weakening US dollar continued to decline in light of the anticipated conflict with Iraq and potential problems with North Korea, short US dollar positions against other major currencies such as the Euro and the Swiss Franc created significant profits. During the second quarter, the Partnership netted a slight loss. Volatility due to international tensions and economic worries kept the markets from getting a general sense of direction. As a result, the Partnership showed both gains and losses in various commodities, finishing the period with a slight loss. Gains on long crude oil positions due to oil prices reaching highs in February were turned to losses in March, as prices dropped considerably. Trading in currencies also showed both gains and losses as prolonged anxiety about the war was reflected in narrow price changes in most major currencies. US Treasury positions posted losses, then gains, while long Euro Bond positions posted negative returns after sharp price falls. During the third quarter, the Partnership showed adequate gains. Please see Note B for a more detailed discussion of trading during the period. Item 4. Controls and Procedures Management, including the Partnership's Chief Executive Officer and Chief Financial Officer, has made an evaluation of the effectiveness of the design and operation of the Partnership's disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. During the period covered by the report, there was no change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Partnership's internal control over financial reporting. Based upon the evaluation, the Chief Executive Officer and Chief Financial officer have concluded, as of the end of the period covered by this report, that the Partnership's disclosure controls and procedures are effective to ensure that all material information required to be filed in this report has been known to them, as appropriate to allow timely decisions regarding required disclosure. Item 6. Exhibits 32.1 Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.2 Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 13 SIGNATURES 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 on the 8th day of September, 2004. THE FUTURE FUND By HEINOLD ASSET MANAGEMENT, INC. General Partner By /s/ Thomas M. Harte ----------------------------- Thomas M. Harte President and Chief Executive Officer By /s/ F. Kemper Cagney ----------------------------- F. Kemper Cagney Chief Financial Officer 14

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