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 September
30, 1997.
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 033-37802
CERES FUND, L.P.
-------------------------------------
(State of incorporation) - Tennessee
(I.R.S. Employer Identification No.) - 62-1444129
889 Ridge Lake Blvd., Memphis, Tennessee 38120
(901)543-8076
-----------------------------------------
(Registrant's telephone number, including area code)
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 ( )
Commission File No. 033-37802
CERES FUND, L.P.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying interim consolidated financial statements are unaudited, but
include all adjustments which management considers necessary for the fair
presentation of results at September 30, 1997.
Moreover, these financial statements do not purport to contain complete
disclosures in conformity with generally accepted accounting principles and
should be read in conjunction with the Registrant's audited consolidated
financial statements at and for the period ended December 31, 1996.
The results reflected for the nine month period ended September 30,1997, and the
period ended December 31, 1996, are not necessarily indicative of the results
for the entire fiscal year which will end December 31, 1997.
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Statements of Financial Condition
September 30, 1997 and December 31, 1996
(UNAUDITED)
Assets Assets
September 30, 1997 December 31, 1996
Cash $ 378,928 $ 108,554
U. S. Treasury obligations at
cost plus accrued interest 6,160,288 3,077,250
Equity in commodity trading account:
Cash 268,118 1,514,594
Unrealized gain (loss) of
open futures contracts ( 81,927) 186,032
Market Value of open option
contracts ( 320,375) -0-
Other assets 3,944 8,657
------------ ------------
$ 6,408,976 $ 4,895,087
============ ===========
Liabilities and Partners' Capital
Liabilities:
Accrued management fees $ 19,744 $ 10,033
Accrued incentive fees 1,429 32,849
Other accrued expenses 57,439 36,006
Payments received for
future subscriptions 110,000 6,538
Redemptions payable 16,369 32,572
---------- ---------
204,981 117,998
---------- ---------
Partners' capital:
General partners 345,641 374,741
Limited partners 5,858,354 4,402,348
---------- ---------
Total partners' capital 6,203,995 4,777,089
---------- ---------
$ 6,408,976 $ 4,895,087
========= =========
See accompanying notes to financial statements.
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Statement of Operations
Nine Months Ended Three Months Ended
September 30, September 30,
1997 1996 1997 1996
--------------- ------------ ------------ ----------
Income
Net gains (losses) on trading of commodity
futures and option contracts:
Realized gain (losses) on closed
positions $ 435,129 $ 3,237,643 $ 82,658 $ 943,456
Change in unrealized gain (losses) on
open positions (391,934) (275,045) 390,490 ( 277,015)
Interest 214,686 131,997 78,062 52,449
Income (Loss) From Operations $ 257,881 $3,094,595 $ 551,210 $ 718,890
Expenses
Brokerage commissions, exchange,
clearing fees and NFA charges 690,085 371,587 153,645 120,199
Management fee allocations 162,207 107,938 57,844 41,674
Incentive fee allocations 1,429 351,268 1,429 73,650
Professional and administrative
expenses 70,403 58,119 18,000 22,575
924,124 888,912 230,918 258,098
Net Income (Loss) $ ( 666,243) $2,205,683 $ 320,292 $ 460,792
Aggregate Income (Loss)
Allocated to General Partners $ ( 29,100) $ 186,150 $ 21,260 $ 43,438
Aggregate Income (Loss)
Allocated to Limited Partners $ ( 637,143) $ 2,019,533 $ 299,032 $ 417,354
Net Income (Loss) per Limited
Partnership Unit (Average) $ ( 25.95) $ 106.24 $ 9.82 $ 23.42
See accompanying notes to financial statements.
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Statement of Cash Flows
Nine Months Ended September 30,
1997 1996
Cash flows from operating activities:
Net Income (Loss) $ (666,243) $ 2,205,683
Adjustments to reconcile net Income (Loss) to net
cash provided by operating activities:
Net unrealized gain (loss) on open contracts (391,934) (275,045)
(Increase) decrease in operating assets:
U. S. Treasury obligation (3,083,038) (100,151)
Investments in commodities fund 1,246,476 (1,565,681)
Unrealized gain (loss) on open futures and
options contracts 659,893 557,726
Market Value of open option contracts 320,375 (85,035)
Other Assets 4,713 (4,765)
Increase (decrease) in operating liabilities:
Accrued management fees 9,711 4,350
Accrued incentive fees (31,420) (24,310)
Other accrued expenses 21,433 7,345
Amounts received for future subscriptions 103,462 --
Redemptions payable (16,203) (17,796)
Total Adjustments (1,156,532) (1,503,362)
Net Cash from (used in) in operating activities (1,822,775) 702,321
Cash Flows from (used in) Financing Activities:
Net proceeds from sale of limited partnership units 2,556,006 --
Redemption of limited partnership units (218,629) (409,550)
Distribution to limited partners (244,228) (288,507)
Contributions received from general partners -- --
Net increase (decrease) in cash 270,374 4,264
Cash at the beginning of the year 108,554 15,538
Cash at the end of the quarter 378,928 19,802
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Notes to Financial Statements
September 30, 1997
(1) Summary of Significant Accounting Policies
Organization
Ceres Fund, L.P. (the Partnership) is a Tennessee limited partnership organized
on September 19, 1990 to engage in the speculative trading of commodities
futures contracts and other commodity interests. Randell Commodity Corporation
("Randell") and RanDelta Capital Partners, L.P. ("RanDelta") are the general
partners. Randell serves as the managing general partner and RanDelta serves as
the financial general partner. Randell will act as commodity trading advisor
with respect to the Partnership.
The Partnership solicited subscriptions for a maximum of 100,000 units of
limited partnership interest at $105 per unit. During the initial offering
period 13,471.6805 units were sold and the Partnership commenced trading
commodity futures contracts on December 1, 1991. The Partnership continues to
sell units as of the end of each month at the then average net asset value per
unit plus a selling commission of 4% in accordance with the terms of the Limited
Partnership Agreement, and can continue selling units until the maximum number
of units offered have been sold. At September 30, 1997, a total of 56,441.2849
units have been sold, 1,861.9400 units have been distributed in lieu of a cash
distribution, and 27,139.0448 units have been redeemed, leaving an outstanding
balance at September 30, 1997, of 31,164.1801 units.
The general partners agreed to make a capital contribution of the lesser of
$100,000 or 3% of total partnership capitalization and made an initial capital
contribution of $45,000 and has made additional capital contributions during the
period of $55,000 to meet its investment commitment in the Partnership. In no
event will the general partners' interest in the Partnership be less than 1% of
total partnership capitalization.
Income and expenses of the Partnership (excluding the Management Allocation and
Incentive Allocation) will be allocated pro rata among the partners based on
their respective capital accounts as of the beginning of the month in which the
items of income and expense accrue, except that limited partners have no
liability for partnership obligations in excess of his or her capital account,
including earnings. The Management Allocation and Incentive Allocation are
allocated to the Limited Partners only in accordance with the terms of the
Limited Partnership Agreement.
The Partnership is not liable for any organizational and offering expenses in
connection with the issuance and distribution of the units. Refco, Inc., the
Partnership's commodity broker, paid the organizational expenses of the
Partnership and the expenses of offering the units to the public. The
Partnership will not reimburse Refco, Inc. for any portion of the costs so
incurred and will not be liable for any such costs at any time.
Units may not be redeemed during the first six months after they are purchased.
Thereafter, limited partners may redeem their units at the redemption net asset
value per unit as of the end of any calendar quarter upon ten days written
notice to the managing general partner. The redemption charge will be based on
the redemption net asset value on all units redeemed as more fully described in
the offering prospectus.
Under the terms of the partnership agreement, the Partnership will terminate on
the earlier of December 31, 2020, or the occurrence of certain events as more
fully described in the Limited Partnership Agreement.
Valuation of Futures Contracts
Open commodity futures contracts are valued at market daily and unrealized gains
and losses are reflected in income.
Income Taxes
No provision for income taxes has been made in the accompanying financial
statements since, as a partnership, income and losses for tax purposes are
allocated to the partners for inclusion in their respective tax returns.
(2) Management Agreement
The Partnership has entered into a Management Agreement in consideration of and
as compensation for the services to be rendered by the General Partners and
trading advisors. The Partnership will pay to the general partners a monthly
Management Allocation equal to 1/3 of 1% (4% per annum) of the adjusted net
asset value of units at month end, plus a quarterly Incentive Allocation of 15%
of any net new appreciation in the adjusted net asset value of units for the
quarter. During the nine months ended September 30, 1997, management fees
totalled $162,207 and incentive fees totalled $1,429.
(3) Customer Agreement with Refco, Inc.
The Partnership entered into a customer agreement with Refco, Inc. (Refco),
pursuant to which the Partnership deposits its assets in a commodity trading
account with Refco who executes trades on behalf of the Partnership. The
Partnership agrees to pay such brokerage and commission charges and fees as
Refco may establish and charge from time to time. During 1997, Refco charged the
Partnership commissions on commodity trades at the rate of $32.50 per
round-turn. Total commissions charged to the Partnership by Refco during this
nine month period were $654,259. The Partnership earns interest on 80% of the
average daily equity maintained as cash in the Partnership's trading account at
a rate equal to the average yield on 13-week United States Treasury Bills. Total
interest earned by the Partnership from this source during this nine month
period amounted to $214,686.
(4) Related Parties
The sole shareholder of the parent of the managing General Partner is an active
partner in the law firm which is the counsel to the Partnership, the General
Partners, the Memphis branch of Refco and the Partnership's commodity broker.
(5) Distribution to Limited Partners.
On January 16, 1997, the General Partner declared a distribution to the limited
partners equal to the difference between the December 31, 1996 net asset value
per unit and $210 per unit. This distribution, totaling $244,228
in cash and 1,861.94 in units, resulted in each unit holder having a net asset
value of $210 per unit on January 1, 1997.
On January 15, 1996, the General Partner declared a distribution ot the limited
partners equal to the difference between the December 31, 1995, net asset value
per unit and $125 per unit. This distribution, totaling $288,507 resulted in
each unit holder having a net asset value of $125 per unit on January 1, 1996.
(6) Calculation of Net Income (Loss) per Limited Partnership Unit
The Net Income (Loss) per Limited Partnership Unit for the period from January
1, 1997 through September 30, 1997 of $(25.95) was calculated by dividing the
Aggregate Income (Loss) Allocated to Limited Partners of $(637,143) by the
Average Units outstanding between December 31, 1996 and September 30, 1997
(24,551.4085 Units).
The Net Income (Loss) per Limited Partnership Unit for the period from January
1, 1996 through September 30, 1996 of $ 106.24 was calculated by dividing the
Aggregate Income (Loss) Allocated to Limited Partners of $2,019,533 by the
Average Units outstanding between December 31, 1995 and September 30, 1996
(19,009.7461Units).
The Net Income (Loss) per Limited Partnership Unit for the period from July 1,
1997 through September 30, 1997 of $9.82 was calculated by dividing the
Aggregate Income (Loss) Allocated to Limited Partners of $299,032 by the Average
Units outstanding between June 30, 1997 and September 30, 1997 (30,443.4384
Units).
The Net Income (Loss) per Limited Partnership Unit for the period from July 1,
1996 through September 30, 1996 of $23.42 was calculated by dividing the
Aggregate Income (Loss) Allocated to Limited Partners of $417,354 by the Average
Units outstanding between June 30, 1996 and September 30, 1996 (17,819.0565
Units).
CERES FUND, L.P.
(A Tennessee Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
for the Quarter Ended September 30, 1997.
RESULTS OF OPERATIONS
The Three and Nine Months Ended September 30, 1997, compared to the Three and
Nine Months Ended September 30, 1996.
Trading results were less profitable during the three months ended September 30,
1997, as compared to the same period in 1996. The Partnership had income from
trading activities of $551,210 for the three months ended September 30, 1997, as
compared to income from trading activitiies of $718,890 for the three months
ended September 30, 1996. The gains during this period are primarily
attributable to gains in connection with the trading of grain contracts. As a
result of such gains from trading activitiies, the Partnership had a net income
of $320,292 for the three months ended September 30, 1997, compared to net
income of $460,792 for the same period in 1996; and a net income per limited
partnership Unit of $9.82 for the three months ended June 30, 1996, compared to
net income per limited partnership Unit of $23.42 for the same period in 1996.
Trading results were also less profitable during the nine months ended September
30, 1997, as compared to the same period in 1996. The Partnership had income
from trading activitiies of $257,881 for the nine months ended September 30,
1997, compared to income from trading activities of $3,094,575 for the nine
months ended September 30, 1996. The gains during this period were primarily
attributable to gains in connection with the trading of grain contracts. As a
result of such gains from trading activities, the Partnership had a net loss of
$666,243 for the nine months ended September 30, 1997, compared to net income of
$2,205,683 for the same period in 1996; and a net loss per limited partnership
Unit of $25.95 for the nine months ended September 30, 1997, compared to net
income per limited partnership Unit of $106.24 for the same period in 1996.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
A. The registration statement became effective on March 9, 1991 at which time
the Partnership began offering the securities for sale. The offering was
extended for 60 days and sales of 13,471.6805 Units for $1,413,296.45 were
consummated by November 30, 1991 at which time the initial offering period ended
and the continuous offering period commenced. The Partnership commenced
operations December 1, 1991. The Partnership continues to offer Units for sale.
During the period of January 1, 1997 through September 30, 1997, 12,498.8472
additional Units were sold,1.861.9400 Units were issued in lieu of a cash
distribution, and 1,135.2440 Units were redeemed.
B. The Units were offered by the Partnership through members of the National
Association of Securities Dealers, Inc. on a best efforts basis.
C. These securities were registered under the Securities Act of 1933.
D. (1) Units of Limited Partnership interest outstanding at
July 31, 1997 - 30,549.0774
(2) Units of Limited Partnership interest outstanding at
August 31, 1997 - 31,042.5233
(3) Units of Limited Partnership interest outstanding at
September 30, 1997 - 31,164,1801
E. Issuance of Limited Partnership Units for cash in the following amounts and
on the following dates:
Dates Units Amount
July 1, 1997 826.3808 $ 147,293
August 1, 1997 493.4459 $ 92,188
September 1, 1997 209.0262 $ 38,462
F. Redemption of Limited Partnership Units for cash in the following amounts and
on the following dates:
Dates Units Amount
September 30, 1997 87.3694 $ 16,369
G. On May 9, 1994, transactions were consummated pursuant to which Delta
International, Inc. terminated its services as trading advisor to the Fund and
withdrew as the co-general partner of RanDelta Capital Partners, L.P., the
financial general partner to the Fund effective March 31, 1994. These
transactions were affected without any cost or expense to the Fund.
Item 6. Exhibits and Reports on Form 8-K.
None.
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 of the
undersigned thereunto duly authorized.
Date: November , 1997
CERES FUND, L.P.
By: Randell Commodity Corporation
Managing General Partner
By: Frank L. Watson, Jr.
/s/ Frank L. Watson, Jr.
---------------------------
Frank L. Watson, Jr.
Chairman