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, 1998
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
---------------------------------
(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.)
5916 N. 300 West, 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
ended September 30, 1998, are attached hereto and made a part hereof.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
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 commodity trading advisors, Mr. Michael Frischmeyer and EPIC
Trading. The Units, when sales are resumed upon the effective date of the
Issuer's Post Effective Amendment, 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. To obtain a return of invested capital or appreciation, if
any, 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. There is no current market for the Units sold and none
is expected to develop nor is the General Partner expected to make
distributions.
In June, 1998, the General Partner selected an additional commodity trading
advisor, EPIC Trading to trade on behalf of the Fund. Forty percent (40%) of
the Registrant's trading equity has been allocated to EPIC, with 60%
remaining with heretofore sole trading advisor, Michael J. Frischmeyer. When
sales are resumed, all additional trading equity raised through the sale of
Units will be initially allocated to Bell Fundamental Futures, L.L.C.,
commodity trading advisors, until a total of $300,000 has been so allocated.
Thereafter, the General Partner intends to assign 40% of the equity to
Frischmeyer, 30% to Bell, and 30% to EPIC. Such composition of trading
advisors and allocation of equity are subject to change in the sole
discretion of the General Partner.
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
The Partnership tax return is in progress and is expected to be filed within
the time permitted by the current extension.
1
<PAGE>
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, 1998, 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: November 5, 1998
2
<PAGE>
Fremont Fund, Ltd. Partnership
(An Indiana Limited Partnership)
Balance Sheet
as of September 30, 1998
ASSETS
9/30/98 9/30/98
Cash (Note 7) 4,688.99 4,688.99
United States Treasury Obligations (Note 6) 592,878.34 592,878.34
Accrued Interest Receivable 2,098.33 2,098.33
Equity in Commodity Futures Trading Accounts -
Cash (Note 6) 59,078.62 59,078.62
Net Unrealized Gain on Open Commodity
Futures & Options Contracts (Note 8) 76,771.65 76,771.65
Premium Recvd. On Short Options (40,158.54) (40,158.54)
Interest Due From Broker 378.11 378.11
Organization Costs, Net of Amortization (Note 1) 1,423.25 1,423.25
Total Assets 697,158.75 697,158.75
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accrued Commissions Payable 3,764.75 3,764.75
Accrued Management and Incentive Fees 9,564.75 9,564.75
Accrued Accounting Fees 4,892.56 4,892.56
Due to General Partner 0.01 0.01
Partner Redemptions Payable 1,138.00 1,138.00
Total Liabilities 19,360.07 19,360.07
Partners' Capital:
Limited Partners - (916.53) Units) 656,189.20 656,189.20
General Partner - ( 30.13 Units ) 21,609.48 21,609.48
Total Partners' Capital 677,798.68 677,798.68
Total Liabilities And Partners' Capital 697,158.75 697,158.75
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
for the Quarter Ended September 30, 1998 and
Year to Date 1998
3rd YTD
Qtr, 1998 1998
REVENUES:
Realized Gain From Trading on Futures & Options (9,022.86) (41,518.61)
Changes in Value of Open Commodity Futures Positions 75,521.65 79,651.65
Interest Income 8,564.96 30,311.72
Redistribution of O&O Costs 2,373.50 4,276.21
Realized Gain from Exchange Fluctuations (73.08) (369.12)
Total Revenues 77,364.17 72,351.85
EXPENSES:
Commissions 16,791.60 71,693.04
Management and Incentive Fees 14,115.92 40,965.90
Professional Accounting and Legal Fees 7,161.61 19,952.27
Amortization of Organization Costs 81.30 (444.57)
Total Expenses 38,150.43 132,166.64
Net Gain 39,213.74 (59,814.79)
Net Loss :
Per Limited Partnership Unit (41.42) (63.18)
Per General Partnership Unit (41.42) (63.18)
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, 1998
(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. During
the period from January 1 through May 31, 1998, Michael J. Frischmeyer was
the sole commodity trading advisor (CTA) to the Fund. Effective, June 1,
1998 Epic Trading was appointed to serve as co-CTA and was allocated 40% of
the equity to trade and the percent assigned to Frischmeyer was adjusted to
60%. The General Partner may delete or add a CTA and change the allocation
of equity among the CTA's at anytime, for any reason, without prior notice to
the limited partners.
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 $1,115 was recorded for the year ended
December 31, 1997, and ($444) during the first three quarters of 1998 after
adjustments.
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
<PAGE>
FREMONT FUND, LIMITED PARTNERSHIP
(An Indiana Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
for the Period Ended September 30, 1998
(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
<PAGE>
FREMONT FUND, LIMITED PARTNERSHIP
(An Indiana Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
for the Period Ended September 30, 1998
(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, LIMITED PARTNERSHIP
(An Indiana Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
for the Period Ended September 30, 1998
(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, from time to time, as collateral for commodities
trading on margin.
F-6
<PAGE>
FREMONT FUND, LIMITED PARTNERSHIP
(An Indiana Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
for the Period Ended September 30, 1998
(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
the end of each month 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 the end of each month.
F-7
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 4,689
<SECURITIES> 592,878
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 697,159
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 697,159
<CURRENT-LIABILITIES> 19,360
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 697,159
<SALES> 0
<TOTAL-REVENUES> 77,364
<CGS> 0
<TOTAL-COSTS> 38,150
<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> 39,213
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
