SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
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 ____________
Fremont Fund, Limited Partnership
---------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Indiana 35-1949364
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2990 W. 120, Fremont, IN 46737
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (219) 833-1505
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Former Name, Address and Fiscal Year, if Changed, Since Last Report
No such changes occurred
Indicate by check [X] 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 [ ]
<PAGE>
Part 1 - FINANCIAL INFORMATION
Item 1. Financial Statements.
The unaudited financial statements for the Registrant for the second quarter
from March 31, 1997, and the six months, year to date, ended June 30, 1997,
are attached hereto and made a part hereof.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Registrant sold Units of Limited Partnership interests from the end of the
last reporting period on March 31, through May 7, 1997. On May 7, 1997,
Registrant received notice from World Invest Corporation that for business
reasons unrelated to the offering of Units in the Fund it had elected to cease
operations as an National Association of Securities Dealers, Inc. ("NASD")
registered broker dealer. The General Partner of the Registrant elected to
suspend sales of the Units until such time as Futures Investment Company
("FIC"), its Affiliated, Commodity Futures Trading Commission registered
Introducing Broker became registered as a NASD registered broker dealer.
FIC's registration with the NASD became effective on June 28, 1997, and sales
of Units are expected to resume as quickly as other regulatory requirements
have been completed.
As of June 30, 1997, Registrant had sold 1,266.46 Units for a total sales
proceeds of $ 1,054,325.93. As provided in the Form S-1 filing at Securities
and Exchange Commission registration no. 33-96292, as Amended by Post
Effective Amendment Number 1 filed on June 30, 1997, Registrant currently
intends to sell at total of $5,000,000 in Units. The Units, when sales are
resumed, will be sold at the Net Asset Value per Unit as of the end of the
month in which subscriptions are received by the General Partner. Purchasers
of Units must look solely to the redemption feature of the Partnership or for
the General Partner, in its sole judgment, to elect to make distributions to
obtain a return of invested capital or appreciation, if any. There is no
current market for the Units sold and none is expected to develop nor is the
General Partner expected to make distributions.
During the past quarter and, in the future, Registrant, did and will, pursuant
to the terms of the Partnership Agreement, engage in the business of
speculative trading of the commodity futures and options markets through the
services of its sole commodity trading advisor, Mr. Michael Frischmeyer.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
1
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Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) None (b) No reports on Form 8-K
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Form 10-Q for the
period ended June 30, 1997, to be signed on its behalf by the undersigned,
thereunto duly authorized.
Registrant: Fremont Fund, Limited Partnership
By Pacult Asset Management, Incorporated
Its General Partner
By:_s/_Shira_Del_Pacult____________
Ms. Shira Del Pacult
Sole Director, Sole Shareholder,
President and Treasurer
Date: August 13, 1997
2
<PAGE>
<F1>**************************************************************************
Fremont Fund, Ltd. Partnership
(An Indiana Limited Partnership)
Balance Sheet as of June 30, 1997
(unaudited)
ASSETS
6/30/97
Cash (Note 7) 28,104.75
United States Treasury Obligations (Note 6) 910,910.97
Accrued Interest Receivable 6,210.83
Equity in Commodity Futures Trading Accounts -
Cash (Note 6) 144,233.30
Net Unrealized Gain on Open Commodity
Futures Contracts (Note 8) 6,153.06
Organization Costs, Net of Amortization (Note 1) 1,341.70
Total Assets 1,096,954.61
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accrued Commissions Payable 3,024.00
Accrued Management and Incentive Fees 13,439.35
Accrued Accounting Fees 6,580.55
Due to General Partner 19,584.78
Total Liabilities 42,628.68
Partners' Capital :
Limited Partners - (1236.33 Units) 1,029,242.09
General Partner - ( 30.13 Units ) 25,083.84
Total Partners' Capital 1,054,325.93
Total Liabilities And Partners' Capital 1,096,954.61
The accompanying notes are an integral part of the financial statements.
F-1
<PAGE>
Fremont Fund, Ltd. Partnership
(An Indiana Limited Partnership)
Statement of Operations
for the Quarter Ended June 30, 1997 and Year to Date 1997
(unaudited)
ASSETS
2nd YTD
Qtr, 1997 1997
REVENUES:
Realized Gain From Trading on Futures (3,350.39) 13,616.49
Changes in Value of Open Commodity Futures Positions 8,381.16 (11,735.54)
Interest Income 13,035.81 23,032.63
Redistribution of O&O Costs 2,544.91 19,752.88
Realized Gain from Exchange Fluctuations 5.73 26.71
Total Revenues 20,617.22 44,693.17
EXPENSES:
Commissions 29,698.30 51,885.74
Management and Incentive Fees 15,177.46 26,971.60
Professional Accounting and Legal Fees 8,655.95 15,837.46
Amortization of Organization Costs 498.08 792.86
Total Expenses 54,029.79 95,487.66
Net Loss (33,412.57) (50,794.49)
Net Loss :
Per Limited Partnership Unit (26.38) (40.11)
Per General Partnership Unit (26.38) (40.11)
Value Per Unit at June 30, 1997 $835.73
Total Partnership Units at June 30, 1997 1,266.46
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
Fremont Fund, Ltd. Partnership
(An Indiana Limited Partnership)
Statement of Cash Flows
for the Quarter Ended June 30, 1997 and Year to Date 1997
(unaudited)
ASSETS
2nd YTD
Qtr, 1997 1997
Cash Flows From Operating Activities:
Net Loss (33,412.57) (50,794.49)
Adjustments to Reconcile Net Loss to Cash:
Amortization of Organization Costs 498.08 792.86
Changes in Operating Assets and Liabilities:
Increase in Futures Trading Accounts 311,504.84 143,917.56
Increase in Accrued Interest Receivable 2,066.10 (3,831.91)
Increase in U.S. Treasury Obligations (390,279.16) (548,259.16)
Increase in Mngt. & Incentive Fees Payable 5,136.56 8,803.89
Decrease in Accounting Fees Payable (371.88) (153.24)
Increase in Accrued Commissions Payable 4,900.71 14,313.08
Decrease in Sales Commissions Payable 0.00 (5,766.00)
Increase in Audit Fees Payable 3,000.00 6,000.00
Decrease in Due to General Partner (11,097.78) 0.01
Net Cash Used in Operating Activities (108,055.10) (434,977.40)
Cash Flows From Investing Activities:
Decrease in Organization Costs Payable 0.00 (9,774.49)
Cash Flows From Financing Activities:
Gross Proceeds From Sale of Units 50,400.00 352,363.14
Less Front End Load (5,568.91) (40,894.67)
Net Cash Provided by
Financing Activities 44,831.09 311,468.47
Net Decrease in Cash (63,224.01) (133,283.42)
Cash:
Beginning of Period 91,328.76 161,388.17
End of Period 28,104.75 28,104.75
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
Fremont Fund, Ltd. Partnership
(An Indiana Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
for the Period Ended June 30, 1997
(unaudited)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Fremont Fund, Limited Partnership (the Fund) was formed January
12, 1995. The Fund is engaged in speculative trading of futures contracts in
commodities. Pacult Asset Management, Inc. is the General Partner and the
commodity pool operator (CPO) of Fremont Fund, Limited Partnership. The
commodity trading advisor (CTA) is Michael J. Frischmeyer, who has the
authority to trade so much of the Fund's equity as is allocated to him by the
General Partner.
Income Taxes - In accordance with the generally accepted method of
presenting partnership financial statements, the financial statements do not
include assets and liabilities of the partners, including their obligation for
income taxes on their distributive shares of the net income of the Fund or
their rights to refunds on its net loss.
Organizational Costs - Organizational costs are capitalized and
amortized over twenty-four months on a straight line method starting when
operations began, payable from profits or capital subject to a 2% annual
capital limitation. All organizational costs paid to date have been
capitalized. Amortization expense of $305 was recorded for the year ended
December 31, 1996.
Registration Costs - Costs incurred for the initial registration with
the Securities and Exchange Commission, National Association of Securities
Dealers, Inc., Commodity Futures Trading Commission, National Futures
Association (the "NFA") and the states where the offering was made were
accumulated, deferred and charged against the gross proceeds of offering at
the initial closing. Recurring registration costs, if any, will be charged to
expense as incurred.
Revenue Recognition - Commodity futures contracts are recorded on the
trade date and are reflected in the accompanying Balance Sheet at the
difference between the original contract amount and the market value on the
last business day of the reporting period.
Market value of commodity futures contracts is based upon exchange
or other applicable market best available closing quotations.
F-4
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Fremont Fund, Ltd. Partnership
(An Indiana Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
for the Period Ended June 30, 1997
(unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Use of Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these
estimates.
Statement of Cash Flows - Net cash provided by operating activities
includes no cash payments for interest or income taxes for the year ended
December 31, 1996 since the Fund has no debt nor pays federal income taxes.
For purposes of the Statement of Cash Flows, the Fund considers only cash and
money market funds to be cash equivalents.
2. GENERAL PARTNER DUTIES
The responsibilities of the General Partner, in addition to
directing the trading and investment activity of the Fund, include executing
and filing all necessary legal documents, statements and certificates of the
Fund, retaining independent public accountants to audit the Fund, employing
attorneys to represent the Fund, reviewing the brokerage commission rates to
determine reasonableness, maintaining the tax status of the Fund as a limited
partnership, maintaining a current list of the names, addresses and numbers of
units owned by each Limited Partner and taking such other actions as deemed
necessary or desirable to manage the business of the Partnership.
3. THE LIMITED PARTNERSHIP AGREEMENT
The Limited Partnership Agreement provides, among other things, that -
Capital Account - A capital account shall be established for each
partner. The initial balance of each partner's capital account shall be the
amount of the initial contributions to the partnership.
F-5
<PAGE>
Fremont Fund, Ltd. Partnership
(An Indiana Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
for the Period Ended June 30, 1997
(unaudited)
3. THE LIMITED PARTNERSHIP AGREEMENT - CONTINUED
Monthly Allocations - Any increase or decrease in the Partnership's net
asset value as of the end of a month shall be credited or charged to the
capital account of each Partner in the ratio that the balance of each account
bears to the total balance of all accounts.
Any distribution from profits or partners' capital will be made
solely at the discretion of the General Partner.
Allocation of Profit and Loss for Federal Income Tax Purposes - As of
the end of each fiscal year, the Partnership's realized capital gain or loss
and ordinary income or loss shall be allocated among the Partners, after
having given effect to the fees of the General partner and the Commodity
Trading Advisor and each Partner's share of such items are includable in the
Partner's personal income tax return.
Redemption - No partner may redeem or liquidate any Units until after
the lapse of six months from the date of the investment. Thereafter, a
Limited Partner may withdraw, subject to certain restrictions, any part or all
of his Units from the Partnership at the Net Asset Value per Unit on the last
day of any month on ten days prior written request to the General Partner. A
redemption fee payable to the Partnership of a percentage of the value of the
redemption request is charged during the first 24 months of investment
pursuant to the following schedule:
4% if such request is received ten days prior to the last
trading day of the month in which the redemption is to be effective the sixth
month after the date of the investment in the Fund.
3% if such request is received during the next seven to
twelve months after the investment.
2% if such request is received during the next thirteen to
eighteen months.
1% if such request is received during the next nineteen to
twenty-four months.
0%, thereafter.
F-6
<PAGE>
Fremont Fund, Ltd. Partnership
(An Indiana Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
for the Period Ended June 30, 1997
(unaudited)
4. FEES
The Fund is charged the following fees on a monthly basis
since the commencement of trading on November 14, 1996.
A management fee of 4% (annual rate) of the Fund's net
assets allocated to the CTA to trade will be paid to the CTA and 2% of equity
to the Fund's General Partner.
An incentive fee of 15% of "new trading profits" will be
paid to the CTA. "New trading profits" includes all income earned by the CTA
and expense allocated to his activity. In the event that trading produces a
loss, no incentive fees will be paid and all losses will be carried over to
the following months until profits from trading exceed the loss.
The Fund will pay fixed commissions of 12% (annual rate) of
net assets, payable monthly, to the Introducing Broker affiliated with the
General Partner. The Affiliated Introducing Broker will pay the costs to
clear the trades to the futures commission merchant and all PIT Brokerage
costs which shall include the NFA and exchange fees.
5. REALIZED GAIN ON EXCHANGE RATE FLUCTUATIONS
The Fund is investing in certain foreign currency
futures contracts. The difference in the exchange rates from the trade date
to the end of the fiscal year is being recorded as a realized gain or loss on
exchange rate fluctuation. The valuations are at published or best available
contract market prices as of the close on the last trading day of the period.
6. PLEDGED ASSETS
The U. S. Treasury Obligations and cash in trading
accounts are pledged as collateral for commodities trading on margin.
F-7
<PAGE>
Fremont Fund, Ltd. Partnership
(An Indiana Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
for the Period Ended June 30, 1997
(unaudited)
7. CONCENTRATIONS OF CREDIT RISK
The Fund maintains a substantial portion of its cash
balances at The Chicago Corporation, the futures commission merchant where the
commodity trading advisor places trades pursuant to the terms of the account
documents and the power of attorney granted to the commodity trading advisor.
These balances may, at times, exceed federally insured credit limits and also
be subject to unilateral retention by the futures commission merchant in the
event of a dispute.
8. OFF BALANCE SHEET RISK
As discussed in Note 1, the Fund is engaged in
speculative trading of futures an option contracts in commodities. The
carrying amounts of the Fund's financial instruments and commodity contracts
generally approximate their fair values at the end of the reporting period.
On June 30, 1997, open commodity contracts had a gross contract value of
$______________ on long positions and $________________ on short positions.
Although the gross contract values of open commodity
contracts represent market risk, they do not represent exposure to credit
risk, which is limited to the current cost of replacing those contracts in a
gain position. The unrealized gain on open commodity future contracts at June
30, 1997, was $______________.
F-8
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 28,105
<SECURITIES> 910,911
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,096,955
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,096,955
<CURRENT-LIABILITIES> 42,629
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 42,629
<SALES> 0
<TOTAL-REVENUES> 20,617
<CGS> 0
<TOTAL-COSTS> 54,030
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (33,413)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
