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 September 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 ____33-96292______
Fremont Fund, Limited Partnership
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(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 third quarter
from June 30, 1997, and the nine months, year to date, ended September 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 received notice from its certified public accounting firm which
conducts its audits that the growth of its Securities and Exchange Commission
related business had not grown sufficiently to justify the additional expense
of compliance with the industry and insurance imposed requirements.
Registrant has elected to continue the suspension of the sale of Units until
the issue of what accounting firm will conduct its 1997 year end audit is
resolved.
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
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
1
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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 September 30, 1997, to be signed on its behalf by the
undersigned, thereunto duly authorized.
Registrant: Fremont Fund, Limited Partnership
By Pacult Asset Management, Inc.
Its General Partner
By:_s/ Shira Del Pacult__________
Ms. Shira Del Pacult
Sole Director, Sole Shareholder,
President and Treasurer
Date: 11-12-97
2
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<F1>**************************************************************************
Fremont Fund, Ltd. Partnership
(An Indiana Limited Partnership)
Balance Sheet as of September 30, 1997
(unaudited)
ASSETS
9/30/97
Cash (Note 7) 30,419.29
United States Treasury Obligations (Note 6) 897,670.87
Accrued Interest Receivable 14,951.06
Equity in Commodity Futures Trading Accounts -
Cash (Note 6) 103,073.32
Net Unrealized Gain on Open Commodity
Futures Contracts (Note 8) (1,298.52)
Organization Costs, Net of Amortization (Note 1) 1,019.33
Total Assets 1,045,835.35
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accrued Commissions Payable 3,024.00
Accrued Management and Incentive Fees 11,897.35
Accrued Accounting Fees 6,747.66
Due to General Partner 9,043.52
Total Liabilities 30,712.53
Partners' Capital :
Limited Partners - (1236.33 Units) 990,971.67
General Partner - ( 30.13 Units ) 24,151.15
Total Partners' Capital 1,015,122.82
Total Liabilities And Partners' Capital 1,045,835.35
The accompanying notes are an integral part of the financial statements.
F-1
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Fremont Fund, Ltd. Partnership
(An Indiana Limited Partnership)
Statement of Operations
Balance Sheet as of September 30, 1997
(unaudited)
ASSETS
3rd YTD
Qtr, 1997 1997
REVENUES:
Realized Gain From Trading on Futures (6,941.69) 6,674.80
Changes in Value of Open Commodity Futures Positions 9,585.92 (2,149.62)
Interest Income 13,601.85 36,634.78
Redistribution of O&O Costs 0.00 19,752.88
Realized Gain from Exchange Fluctuations 61.18 87.89
Total Revenues 16,307.26 61,000.73
EXPENSES:
Commissions 30,588.85 82,474.59
Management and Incentive Fees 15,400.24 42,371.84
Professional Accounting and Legal Fees 9,198.91 25,036.37
Amortization of Organization Costs 322.37 1,115.23
Total Expenses 55,510.37 150,998.03
Net Loss (39,203.11) (89,997.30)
Net Loss :
Per Limited Partnership Unit (30.95) (71.06)
Per General Partnership Unit (30.95) (71.06)
Value Per Unit at September 30, 1997 $801.00
Total Partnership Units at September 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)
NOTES TO FINANCIAL STATEMENTS
for the Period Ended September 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-3
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Fremont Fund, Ltd. Partnership
(An Indiana Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
for the Period Ended September 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.
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-4
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Fremont Fund, Ltd. Partnership
(An Indiana Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
for the Period Ended September 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-5
<PAGE>
Fremont Fund, Ltd. Partnership
(An Indiana Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
for the Period Ended September 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-6
<PAGE>
Fremont Fund, Ltd. Partnership
(An Indiana Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
for the Period Ended September 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 on 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.
The Fund computes the gross contract values on open commodity contracts as of
December 31 of each year for inclusion in the annual audited reports.
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 Fund also computes unrealized gain on open commodity
future contracts as of December 31 each year.
F-8
<PAGE>
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 30,419
<SECURITIES> 897,671
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,045,835
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,045,835
<CURRENT-LIABILITIES> 30,713
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,045,835
<SALES> 0
<TOTAL-REVENUES> 16,307
<CGS> 0
<TOTAL-COSTS> 55,510
<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> (39,203)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
