FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED: 9/30/97 COMMISSION FILE NUMBER: 33-33982
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TUDOR FUND FOR EMPLOYEES L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3543779
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 Steamboat Road, Greenwich, Connecticut 06830
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(Address of principal executive offices) (Zip Code)
(203) 863-6700
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(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 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.
X YES NO
- -
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
TUDOR FUND FOR EMPLOYEES L.P.
STATEMENTS OF FINANCIAL CONDITION
SEPTEMBER 30, DECEMBER 31,
1997 1996
(UNAUDITED) (AUDITED)
------------ -----------
ASSETS
------
Cash $ 3,087,056 $ 2,220,395
Equity in commodity trading accounts:
Due from broker 2,011,733 1,005,276
U.S. Government obligations 7,475,729 8,773,008
Net unrealized gain on open commodity interests 14,765 114,755
----------- -----------
Total equity 9,502,227 9,893,039
Other assets -- 25,272
----------- -----------
Total assets $12,589,283 $12,138,706
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
LIABILITIES:
Redemptions payable $ 207,951 $ 1,218,064
Pending partner additions 175,139 2,327,305
Incentive fees payable 19,229 --
Management fees payable 56,236 17,014
Accrued professional fees and other 67,724 49,957
----------- -----------
Total liabilities 526,279 3,612,340
----------- -----------
PARTNERS' CAPITAL:
Limited Partners, 10,000 units authorized and 2,966.542 and
2,521.886 outstanding at September 30, 1997 and December 31, 1996 11,313,316 7,909,798
General Partner, 196.580 units outstanding at September 30, 1997
and December 31, 1996 749,688 616,568
----------- -----------
Total partners' capital 12,063,004 8,526,366
----------- -----------
Total liabilities and partners' capital $12,589,283 $12,138,706
=========== ===========
The accompanying notes are an integral part of these statements.
TUDOR FUND FOR EMPLOYEES L.P.
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
------------ ----------- ----------- -----------
REVENUES:
Net realized trading gain (loss) $ 240,896 $ (515,298) $ 2,304,744 $ 1,292,628
Change in net unrealized trading (loss) (11,735) 545 (92,711) (150,700)
Interest income 152,327 142,524 423,166 403,671
----------- ----------- ----------- -----------
Total revenues 381,488 (372,229) 2,635,199 1,545,599
----------- ----------- ----------- -----------
EXPENSES:
Brokerage commissions and fees 39,272 22,773 151,574 92,380
Incentive fee 11,355 -- 105,098 166,073
Management fees 56,236 52,709 162,484 155,037
Professional fees and other 21,603 23,728 67,351 72,959
----------- ----------- ----------- -----------
Total expenses 128,466 99,210 486,507 486,449
----------- ----------- ----------- -----------
Net income (loss) $ 253,022 $ (471,439) $ 2,148,692 $ 1,059,150
=========== =========== =========== ===========
Limited Partners' Net Income 237,958 (383,091) 2,015,572 838,892
General Partner's Net Income 15,064 (88,348) 133,120 220,258
----------- ----------- ----------- -----------
$ 253,022 $ (471,439) $ 2,148,692 $ 1,059,150
=========== =========== =========== ===========
Change in Net Asset Value Per Unit $ 76.63 $ (137.41) $ 677.18 $ 342.58
=========== =========== =========== ===========
Net Income (Loss) Per Unit $ 78.85 $ (139.31) $ 670.12 $ 321.53
=========== =========== =========== ===========
The accompanying notes are an integral part of these statements.
TUDOR FUND FOR EMPLOYEES L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIOD ENDED SEPTEMBER 30, 1997 AND THE YEAR ENDED DECEMBER 31, 1996
LIMITED PARTNERS
UNITS CAPITAL
------------------- -------------------
Partners' Capital, January 1, 1996 2,190.191 $ 6,272,162
Net income -- 645,415
TIC 401(k) Plan unit adjustment (a) 5.462 --
Capital Contributions 931.637 2,926,549
Redemptions (605.404) (1,934,328)
------------------- -------------------
Partners' Capital, December 31, 1996 (b) 2,521.886 7,909,798
------------------- -------------------
Net income -- 2,015,572
TIC 401(k) Plan unit adjustment (a) 6.567 --
Capital Contributions 692.080 2,338,415
Redemptions (253.991) (950,469)
------------------- -------------------
Partners' Capital, September 30, 1997 (b) 2,966.542 $ 11,313,316
=================== ===================
GENERAL PARTNER TOTAL NET ASSET VALUE
UNITS CAPITAL CAPITAL PER UNIT
--------------- ------------------- ----------------- --------------------
Partners' Capital, January 1, 1996 642.943 $ 1,841,231 $ 8,113,393 $ 2,863.75
Net income -- 175,337 2,048,724
TIC 401(k) Plan unit adjustment (a) -- -- --
Capital Contributions -- -- 1,197,007
Redemptions (446.363) (1,400,000) (1,843,848)
---------------- -------------------- -----------------
Partners' Capital, December 31, 1996 (b) 196.580 616,568 8,526,366 3,136.46
---------------- -------------------- -----------------
Net income -- 133,120 2,148,692
TIC 401(k) Plan unit adjustment (a) -- -- --
Capital Contributions -- -- 2,338,415
Redemptions -- -- (950,469)
---------------- ------------------ -----------------
Partners' Capital, September 30, 1997 (b) 196.580 $ 749,688 $ 12,063,004 $ 3,813.64
================ ================== =================
(a) See Note 3 - Capital Accounts
(b) See Note 4 - Redemption of Units
The accompanying notes are an integral part of these statements.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
(1) ORGANIZATION
------------
Tudor Fund For Employees L.P. (the "Partnership") was organized under
the Delaware Revised Uniform Limited Partnership Act (the "Act") on
November 22, 1989, and commenced trading operations on July 2, 1990.
Second Management LLC, a Delaware limited liability company ("SML" or
the "General Partner"), was the general partner for the Partnership
during the quarter ended September 30, 1997 and owned approximately 197
units of general partnership interest. Ownership of limited partnership
units is restricted to employees of Tudor Investment Corporation ("TIC"
or the "Trading Advisor") and its affiliates and certain employee
benefit plans. Prior to April 4, 1996, Second Management Company, Inc.,
a Delaware Corporation ("SMCI") was the general partner of the
Partnership. SML is the successor-in-interest to SMCI by virtue of
merger with SMCI.
The objective of the Partnership is to realize capital appreciation
through speculative trading of commodity futures, forward, and option
contracts and other commodity interests ("commodity interests"). The
Partnership will terminate on December 31, 2010 or at an earlier date
if certain conditions occur as outlined in its Second Amended and
Restated Limited Partnership Agreement, (the "Limited Partnership
Agreement"), dated May 22, 1996.
DUTIES OF THE GENERAL PARTNER
-----------------------------
The General Partner acts as the commodity pool operator for the
Partnership and is responsible for the selection and monitoring of the
commodity trading advisor and the commodity brokers used by the
Partnership. The General Partner is also responsible for the
performance of all administrative services necessary to the
Partnership's operations.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
ACCOUNTING POLICY
-----------------
The financial statements presented have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission ("SEC")
and, in the opinion of management of the General Partner, include all
adjustments necessary for a fair statement of each period presented.
REVENUE RECOGNITION
-------------------
Commodity interests are recorded on the trade date at the transacted
contract price and valued at market.
BROKERAGE COMMISSIONS AND FEES
------------------------------
These expenses represent all brokerage commissions, exchange, National
Futures Association and other fees incurred in connection with the
execution of commodity interest trades. Commissions and fees associated
with open commodity interests at the end of the period are accrued on a
round-turn basis.
INCENTIVE FEE
-------------
The Partnership pays TIC, as trading advisor, an incentive fee equal to
12% of the Trading Profits (as defined in the Limited Partnership
Agreement) earned as of the end of each fiscal quarter of the
Partnership. Effective August 1, 1995, TIC has waived its right to
receive incentive fees attributable to units held at the beginning of
each month by the Tudor Investment Corporation 401(k) Savings and
Profit Sharing Plan (the "TIC 401(k) Plan").
MANAGEMENT FEE
--------------
The Partnership also pays TIC, for the performance of its duties, a
monthly management fee equal to 1/6 of 1% (2% per annum) of the
Partnership's net assets. Effective August 1, 1995, TIC has waived its
right to receive management fees attributable to units held at the
beginning of each month by the TIC 401(k) Plan.
ORGANIZATIONAL AND OFFERING COSTS
---------------------------------
The General Partner paid all of the offering and organizational costs
incurred in connection with the start up of the Partnership and the
initial offering of units. The General Partner was reimbursed by the
Partnership for offering expenses of $106,728 over the first 12 months
of its operations and was reimbursed for organizational expenses of
$48,200 from commencement of trading operations (July 1990) through
June 1995.
FOREIGN CURRENCY TRANSLATION
----------------------------
Assets and liabilities denominated in foreign currencies are translated
at month-end exchange rates. Gains and losses resulting from foreign
currency transactions are calculated using daily exchange rates and are
included in the accompanying statements of operations.
U.S. GOVERNMENT OBLIGATIONS
---------------------------
The Partnership invests a varying amount of its assets in U.S. Treasury
bills. A portion of such bills is held in commodity trading accounts
and used to fulfill margin requirements. U.S. Treasury bills, with
varying maturities through December 1997, are valued in the statements
of financial condition at original cost plus accrued discount which
approximates the market value. These bills had a face
value of $7,500,000 and $9,000,000 (cost $7,268,344.71 and $8,548,403)
at September 30, 1997 and December 31, 1996.
(3) CAPITAL ACCOUNTS
----------------
Each partner, including the General Partner, has a capital account with
an initial balance equal to the amount such partner paid for its units.
The Partnership's net assets are determined monthly, and any increase
or decrease from the end of the preceding month is added to or
subtracted from the capital accounts of the partner based on the ratio
that each capital account bears to all capital accounts as of the
beginning of the month. The number of units held by the TIC 401(k) Plan
will be restated as necessary for management and incentive fees
attributable to units held at the beginning of each month by the TIC
401(k) Plan to equate the per unit value of the TIC 401(k) Plan's
capital account with the Partnership's per unit value.
(4) REDEMPTION OF UNITS
-------------------
At each quarter-end, units are redeemable at the discretion of each
limited partner. Redemption of units in $1,000 increments or a full
redemption of all units are made at 100% of the net asset value per
unit effective as of the last business day of any quarter as defined in
the Limited Partnership Agreement. However, monthly redemptions have
been required in the case of employee resignations. Partial redemptions
of units which would reduce the net asset value of a limited partner's
unredeemed units to less than the minimum investment then required of
new limited partners or such partner's initial investment, whichever is
less, will be honored only to the extent of such limitation.
(5) INCOME TAXES
------------
No provision for income taxes has been made in the accompanying
financial statements. Partners are responsible for reporting income or
loss based upon their respective shares of revenue and expenses of the
Partnership.
(6) RELATED PARTY TRANSACTIONS
--------------------------
The General Partner, due to its relationship with its affiliates and
certain other parties, may enter into certain related party
transactions.
Bellwether Partners LLC ("BPL"), a Delaware limited liability company
and an affiliate of the General Partner, is the Partnership's spot and
forward contract counterparty. The Partnership typically has on deposit
with BPL, as collateral for forward contract transactions, no more than
20% of the Partnership's net assets. Effective August 1, 1995, BPL
ceased receiving commissions for transacting the Partnership's foreign
exchange forward and commodity contracts.
Bellwether Futures LLC ("BFL"), a Delaware limited liability company,
formerly Bellwether Futures Corporation is an affiliate of the General
Partner and is qualified to do business in Illinois. Effective January
1, 1996, BFL ceased collecting give-up
fees from the Partnership as compensation for managing the execution of
treasury bond futures by floor brokers on the Chicago Board of Trade.
TIC, an affiliate of the General Partner, receives incentive and
management fees as compensation for acting as the Partnership's trading
advisor (see Note 2).
(7) FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK AND CONCENTRATION OF
----------------------------------------------------------------------
CREDIT RISK
-----------
The Partnership is a party to financial instruments with elements of
off-balance sheet credit and market risk in excess of the amount
recognized in the statements of financial condition through its trading
of financial futures, forwards, swaps and exchange traded and
negotiated over-the-counter option contracts.
Exchange traded futures contracts are marked to market daily, with
variations in value settled on a daily basis with the exchange upon
which they are traded and with the futures commission merchant through
which the commodity futures and options are executed. The Partnership
has not taken or made physical delivery on futures contracts. The
forward contracts are generally settled with the counterparty at least
two business days after the trade.
At September 30, 1997 and December 31, 1996, the Partnership held
financial instruments with the following approximate aggregate notional
value (000's omitted):
September 30, December 31,
1997 1996
------------- -----------
Exchange Traded Contracts:
- --------------------------
Interest Rate Futures and Option Contracts
- ------------------------------------------
Domestic $ 52,723 $ 565
Foreign 157,732 28,977
Foreign Exchange Contracts
- --------------------------
Financial Futures Contracts 6,793 1,673
Forward Currency Contracts 15,587 3,399
Equity Index Futures
- --------------------
Domestic 5,763 --
Foreign 467 505
-------- --------
Total $239,065 $ 35,119
======== ========
At September 30, 1997 and December 31, 1996, there were no swaps outstanding.
Notional amounts of these financial instruments are indicative only of the
volume of activity and should not be used as a measure of market and credit
risk. The various financial instruments held at September 30, 1997 and December
31, 1996 mature through, or matured on, the following dates:
September 30, December 31,
1997 1996
------------- ------------
Interest Rate Futures and Option Contracts June 1999 March 1997
Foreign Exchange Contracts March 1998 June 1997
Equity Index Futures December 1997 March 1997
The following table summarizes the quarter-end and the average assets and
liabilities during the quarter resulting from unrealized gains and losses on
derivative instruments included in the statement of financial condition based on
month-end balances (in thousands):
Assets Liabilities
---------------------- ----------------------
September 30, September 30,
1997 Average 1997 Average
------------- ------- ------------- -------
Exchange Traded Contracts:
- --------------------------
Interest Rate Contracts
- -----------------------
Domestic 95 26 -- 14
Foreign 3 69 1 30
Foreign Exchange Contracts 5 27 73 27
- --------------------------
Equity Index Futures
- --------------------
Domestic -- 57 9 10
Foreign 3 47 5 2
Over-the-Counter Contracts:
- ---------------------------
Forward Currency Contracts -- 17 -- 9
------------- ------- ------------- -------
Total 106 243 88 92
============= ======= ============= =======
Net trading gains and losses from strategies that use a variety of derivative
financial instruments are recorded in the statements of operations. The
following table summarizes the components (in thousands) of trading gains and
losses, net of commissions and fees, for the three and nine months ended
September 30, 1997 and 1996.
Three Months Ended Nine Months Ended
September 30, September 30,
----------------- ----------------
1997 1996 1997 1996
----------- ------------- ------------ ------------
Interest Rate Futures and Option Contracts
- ------------------------------------------
Domestic $ 346 $ 58 $ 745 $ 730
Foreign 23 (167) 314 (414)
Foreign Exchange Contracts (148) (198) 254 630
- --------------------------
Equity Index Futures
- --------------------
Domestic (203) (147) (126) (456)
Foreign 155 (76) 190 526
Over-the-Counter Contracts 183 22 344 128
- --------------------------
Non-Derivative Financial Instruments (166) (30) 339 (94)
- ------------------------------------
Total $ 190 $ (538) $ 2,060 $ 1,050
=========== ============= ============ =============
In general, exchange traded futures and option contracts possess low credit risk
as most exchanges act as principal to a futures commission merchant ("FCM") on
all commodity transactions. Furthermore, most global exchanges require FCM's to
segregate client funds to insure ample customer protection in the event of an
FCM's default. The Partnership monitors the creditworthiness of its FCM's and
counterparties and, when deemed necessary, reduces its exposure to these FCM's
and counterparties. The Partnership's exposure to credit risk associated with
the non-performance of these FCM's and counterparties in fulfilling contractual
obligations can be directly impacted by volatile financial markets. A
substantial portion of the Partnership's open financial futures positions were
transacted with major international FCM's. BPL is the Partnership's spot and
forward contract counterparty (see Note (6) above). Notwithstanding the risk
monitoring and credit review performed by the Partnership with respect to its
FCM's and counterparties, including BPL, there always is a risk of
non-performance.
The Partnership's exposure to credit risk associated with the non-performance of
these counterparties in fulfilling contractual obligations can be directly
impacted by volatile financial markets.
Generally, financial contracts can be closed out at the discretion of the
trading advisor. However, an illiquid market could prevent the close-out of
positions.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF
- ------- -------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
The Partnership commenced operations on July 2, 1990. Following the
closing of the initial offering period, the Partnership had 37 Limited
Partners who subscribed for 421 units for $421,000. In addition, the
General Partner purchased 400 units of general partnership interest for
$400,000. The Partnership had additional subscriptions of $276,034 and
redemptions of $175,139 during the quarter ended September 30, 1997
(the "Current Quarter"). From its inception through October 1, 1997,
the Partnership received total Limited Partner contributions of
$15,038,923 and had total withdrawals of $10,413,246. In addition, the
General Partner contributed $1,900,000 since inception. The General
Partner redeemed $2,000,000 on March 31, 1994 and $1,400,000 on
December 31, 1996. The General Partner's equity in the Partnership as
of September 30, 1997 was approximately $750,000, representing
approximately 6% of the Partnership's equity. At October 1, 1997, the
Partnership had a total of 100 Limited Partners.
As further specified in the Limited Partnership Agreement, dated May
22, 1996, the Partnership may accept investments from certain employee
benefit plans to the extent that such investment does not exceed 25% of
the aggregate value of outstanding units, excluding units held by the
General Partner and its affiliates. On August 1, 1995, the Partnership
accepted an investment of $99,306 from the Tudor Investment Corporation
401(k) Savings & Profit-Sharing Plan (the "TIC 401(k) Plan"), a
qualified plan organized for the benefit of employees of TIC and
certain of its affiliates. From its inception through October 1, 1997,
the Partnership has received a total of $1,061,125 in contributions
from the TIC 401(k) Plan. The TIC 401(k) Plan's equity in the
Partnership as of October 1, 1997 was approximately $1,300,000,
representing approximately 10.6% of Partnership equity or approximately
13.2% excluding units held by the General Partner and its affiliates.
TIC has waived its right to receive management and incentive fees
attributable to units held by the TIC 401(k) Plan. The number of units
of limited partnership interest held by the TIC 401(k) Plan will be
restated as necessary to equate the per unit value of the TIC 401(k)
Plan's capital account with the Partnership's per unit value.
Furthermore, BPL ceased charging commissions for transacting the
Partnership's foreign exchange spot and forward and commodity forward
contracts.
(1) LIQUIDITY
---------
The Partnership's assets are deposited and maintained with BPL, banks
or in trading accounts with clearing brokers, and are used by the
Partnership as margin and collateral to engage in futures, option, and
forward contract trading. The Partnership invests in U.S. Government
obligations approved by the various contract markets to fulfill initial
margin requirements. As of September 30, 1997 and December 31, 1996,
U.S. Government obligations with varying maturities through December
1997 represented approximately 59% and 72% of the total assets of the
Partnership. The percentage that U.S. Government obligations bear to
the total assets varies daily and monthly, as the market value of
commodity interest contracts changes, as Government obligations are
purchased or mature, and as the Partnership sells or redeems units of
Partnership interest. Since the Partnership's sole purpose is to trade
in futures, option, and forward contracts, and other commodity
interest contracts, it is anticipated that the Partnership will
continue to maintain substantial liquid assets for margin purposes.
Interest income for the Current Quarter was $152,327, compared to
$142,524 during the quarter ended September 30, 1996. This increase was
due to an increase in the Partnership's assets.
In the context of the commodity or futures trading industry, cash and
cash equivalents are part of the Partnership's inventory. Cash
deposited with banks represents approximately 25% and 18% of the
Partnership's assets as of September 30, 1997 and December 31, 1996.
The cash and U.S. Government obligations held at clearing brokers and
banks at quarter-end satisfy the Partnership's need for cash on both a
short term and long term basis.
Since futures contract trading generates a significant percentage of
the Partnership's income, any restriction or limit on that trading may
render the Partnership's investment in futures contracts illiquid. Most
U.S. commodity exchanges limit fluctuations in certain commodity
futures and options contract prices during a single day by regulations
referred to as a "daily price fluctuation limit" or "daily limit."
Pursuant to such regulations, during a single trading day, no trade may
be executed at a price beyond the daily limits. If the price for a
contract has increased or decreased by an amount equal to the "daily
limit," positions in such contracts can neither be taken nor liquidated
unless traders are willing to effect trades at or within the limit.
Commodity interest contract prices have occasionally moved the daily
limit for several consecutive days with little or no trading. Such
market conditions could prevent the Partnership from promptly
liquidating its commodity interest contract positions and impose
restrictions on redemptions.
(2) CAPITAL RESOURCES
-----------------
The Partnership does not have, nor does it expect to have, any fixed
assets. Redemptions and additional sales of units in the future will
affect the amount of funds available for investments in commodity
interest contracts in subsequent periods.
The Partnership is currently open to new investments which can be made
on a quarterly basis. Such investments are limited to existing and
future employees of TIC and certain of its affiliates and certain
employee benefit plans, including, but not limited to, the TIC 401(k)
Plan.
(3) RESULTS OF OPERATIONS
---------------------
As of September 30, 1997 and 1996, the Net Asset Value per unit was
$3,813.64 and $3,206.33 For the nine months ended September 30, 1997,
the Partnership had a gain of 21.59% or $677.18 per unit, compared to a
gain of 11.96% or $342.58 per unit for the nine months ended September
30, 1996. For the Current Quarter, the partnership had a gain of 2.05%
or $76.63 per unit, compared to a loss of (4.11%) or ($137.41) per unit
for the three months ended September 30, 1996.
Net trading gains and losses from strategies that use a variety of
derivative financial instruments are recorded in the statements of
operations. The following table summarizes the components (in
thousands) of trading gains and losses, net of commissions, for the
three and six months ended September 30, 1997 and 1996.
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1997 1996 1997 1996
---- ---- ---- ----
Interest Rate Futures and Option Contracts
- ------------------------------------------
Domestic $ 346 $ 55 $ 745 $ 730
Foreign 23 (167) 314 (414)
Foreign Exchange Contracts (148) (198) 254 630
- --------------------------
Equity Index Futures
- --------------------
Domestic (203) (147) (126) (456)
Foreign 155 (76) 190 526
Over-the-Counter Contracts 183 22 344 128
- --------------------------
Non-Financial Derivative Instruments (166) (30) 339 (94)
- ------------------------------------
------- ------- ------- -------
Total $ 190 $ (538) $ 2,060 $ 1,050
======= ======= ======= =======
Since the Partnership is a speculative trader in the commodities
markets, current year results are not comparable to previous year's
results. The Partnership's net trading gains and losses represent a
positive return on average net assets of 1.52% for the Current Quarter
compared to a negative return of 4.87% for the three months ended
September 30, 1996. The Partnership's net trading gains represent a
positive return on average net assets of 17.51% for the nine months
ended September 30, 1997 compared to a positive return of 9.76% for the
nine months ended September 30, 1996. Brokerage commissions and fees
were .3% and .2% of average net assets for the quarters ended September
30, 1997 and 1996 and 1.3% and .9% for the nine months ended September
30, 1997 and 1996.
Professional fees and other expenses during the Current Quarter ended
September 30, 1997 remained stable as compared to the quarter ended
September 30, 1996.
Incentive fees are paid quarterly based on Net Trading Profits as
described further in the Limited Partnership Agreement. For the nine
months ended September 30, 1997 and 1996, incentive fees were 7.9% and
14.8% of trading gains, net of commissions and fees. Trading losses of
$866,300 which were incurred during the last six months of 1996
resulted in lower incentive fees as a percentage of Trading Profits
during the first six months of 1997 because trading losses need to be
recouped by the Partnership prior to the Partnership's payment of
incentive fees to the Trading Advisor.
Inflation is not expected to be a major factor in the Partnership's
operations, except that traditionally the commodities markets have
tended to be more active, and thus potentially more profitable during
times of high inflation. Since the commencement of the Partnership's
trading operations in July 1990, inflation has not been a major factor
in the Partnership's operations.
PART II OTHER INFORMATION
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
- ------ -----------------------------------------
The effective date of the registration statement of the Partnership was
June 22, 1990. 10,000 units of Limited Partnership interest ("Units")
were offered at a price of $1,000 per Unit and 421 Units were sold on
July 2, 1990 in the initial offering. The remaining Units are being
offered on a continuous basis (the "Continuing Offering") at quarterly
closings (each a "Closing"). Cargill Investor Services, Inc. acts as
the managing underwriter. All of the net proceeds from the Continuing
Offering are used by the Partnership for working capital purposes.
During the Continuing Offering, Units are sold at 100% of the "Net
Asset Value" of a Unit (as defined in the Partnership's Limited
Partnership Agreement) as of the opening of business on the date of the
applicable Closing. Through October 1, 1997, an aggregate of
$15,038,923 of Units had been sold.
The General Partner initially paid all of the organizational costs of
the Partnership which included all expenses incurred in connection with
and directly and indirectly relating to the formation, qualification
and registration of the Partnership and the Units, the preparation of
the initial registration statement and prospectus relating to the
Partnership and the Units and the initial offering, distribution and
processing of the Units under applicable federal and state law. Such
costs aggregated $183,220 ($55,000 of organizational costs and $128,220
of initial offering costs). Of such amounts, the Partnership reimbursed
the General Partner for $48,200 of organizational costs and $106,728 of
initial offering costs.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
TUDOR FUND FOR EMPLOYEES L.P.
By: Second Management LLC,
General Partner
By: /s/ Mark F. Dalton
------------------
Mark F. Dalton,
President and Chief
Operating Officer of the
General Partner
By: /s/ Mark Pickard
----------------
Mark Pickard,
Vice President and
Chief Financial Officer of the
General Partner
November 14, 1997