<PAGE>
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: 9/30/96 COMMISSION FILE NUMBER: 033-33982
------- ---------
TUDOR FUND FOR EMPLOYEES L.P.
- ----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3543779
- ----------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
06830
600 Steamboat Rd. Greenwich, CT
- ----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(203) 863-6700
- ----------------------------------------------------------------------------
(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
-----
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. - Financial Statements
TUDOR FUND FOR EMPLOYEES L.P.
STATEMENTS OF FINANCIAL CONDITION
SEPTEMBER 30, DECEMBER 31,
1996 1995
(UNAUDITED) (AUDITED)
------------------------------
ASSETS
- ------
Cash $ 2,119,805 $2,986,405
Equity in commodity trading accounts:
Due from broker 606,795 1,349,843
U.S. Government obligations 8,836,438 4,845,289
Net unrealized gain (loss) on open (4,791) 142,353
commodity interests
------------------------------
Total equity 9,438,442 6,337,485
------------------------------
Total assets $11,558,247 $9,323,890
==============================
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
LIABILITIES:
Pending partner additions $ 417,398 $ 718,024
Redemptions payable 337,672 392,382
Incentive fees payable ---- 42,095
Management fees payable 52,708 13,636
Accrued professional fees and other 75,798 44,360
Total liabilities 883,576 1,210,497
------------------------------
PARTNERS' CAPITAL
- -----------------
Limited Partners, 10,000 units
authorized and 2,686.306 and
2,190.191 outstanding at September 30, 8,613,182 6,272,162
1996 and
December 31, 1995
General Partner, 642.943 units
outstanding at
September 30, 1996 and December 31, 2,061,489 1,841,231
1995
------------------------------
Total partners' capital 10,674,671 8,113,393
------------------------------
Total liabilities and partners' $11,558,247 $9,323,890
capital
==============================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
<PAGE>
TUDOR FUND FOR EMPLOYEES L.P.
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
1996 1995 1996 1995
-------------------------- ---------------------------
<S> <C> <C> <C> <C>
REVENUES:
Net realized trading gain (loss) $ (515,298) $513,482 $1,292,628 $ 1,590,415
Unrealized trading gain (loss) 545 (10,118) (150,700) 49,884
Interest income 142,524 94,724 403,671 283,149
Total revenues (372,228) 598,088 1,545,599 1,923,448
----------------------------------------------------------
EXPENSES:
Brokerage commissions and fees 22,774 21,019 92,380 138,107
Incentive fees ---- ---- 166,073 152,508
Management fees 52,708 37,080 155,037 114,108
Professional fees and other 23,729 18,000 72,959 54,000
Amortization expense ---- ---- ---- 5,000
----------------------------------------------------------
Total expenses 99,211 76,099 486,449 463,725
----------------------------------------------------------
Net income $ (471,439) $521,989 $1,059,150 $ 1,459,725
==========================================================
Limited Partners' Net Income (383,091) 405,947 838,892 1,159,214
General Partner's Net Income (88,348) 116,042 220,258 300,511
----------------------------------------------------------
$ (471,439) $521,989 $1,059,150 $ 1,459,725
==========================================================
Change in Net Asset Value Per Unit $ (137.41) $ 180.49 $342.58 $467.40
==========================================================
Average Net Income Per Unit $ (139.31) $ 181.21 $321.53 $486.48
==========================================================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
<PAGE>
TUDOR FUND FOR EMPLOYEES L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIOD ENDED SEPTEMBER 30, 1996 AND THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
LIMITED PARTNERS GENERAL PARTNER TOTAL NET ASSET VALUE
UNITS CAPITAL UNITS CAPITAL CAPITAL PER UNIT
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Partners' Capital, January 1, 1995 2,409.778 $ 5,297,977 642.943 $1,413,533 $ 6,711,510 $2,198.53
Net income --- 1,621,026 --- 427,698 2,048,724
TIC 401(k) Plan unit adjustment (a) 0.674 --- --- --- ---
Capital Contributions 489.296 1,197,007 --- --- 1,197,007
Redemptions (709.557) (1,843,848) --- --- (1,843,848)
---------------------------------------------------------------------
Partners' Capital, December 31, 1995 2,190.191 6,272,162 642.943 1,841,231 8,113,393 $2,863.75
---------------------------------------------------------------------
Net income --- 838,892 --- 220,258 1,059,150
TIC 401(k) Plan unit adjustment (a) 4.409 --- --- --- ---
Capital Contributions 801.458 2,509,151 --- --- 2,509,151
Redemptions (309.752) (1,007,023) --- --- (1,007,023)
---------------------------------------------------------------------
Partners' Capital, September 30, 1996(b) 2,686.306 $ 8,613,182 642.943 $2,061,489 $10,674,671 $3,206.33
=====================================================================
</TABLE>
(a) (See Note 3 - Capital Accounts)
(b) (See Note 4 - Redemption of Units)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(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"), is the
general partner of the Partnership and owned approximately 643 units of
general partnership interest as of September 30, 1996. Ownership of limited
partnership units is restricted to employees of Tudor Investment
Corporation ("TIC"), its affiliates and certain employee benefit plans.
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 Limited Partnership Agreement.
DUTIES OF THE GENERAL PARTNER
-------------------------------
The General Partner is 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.
<PAGE>
INCENTIVE FEE
-------------
The Partnership pays TIC, as trading advisor, an incentive fee equal to 12%
of the Trading Profits (as defined by the Limited Partnership Agreement)
earned as of the end of each fiscal quarter of the Partnership. Effective
August 1, 1995, TIC waived its right to receive incentive fees attributable
to units held 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 as trading
advisor, a monthly management fee equal to 1/6 of 1% (2% per annum) of the
Partnership's net assets. Effective August 1, 1995, TIC waived its right to
receive management fees attributable to units held 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 initial margin requirements. U.S. Treasury bills, with
varying maturities through July 1997, are valued in the statements of
financial condition at original cost plus accrued discount which
approxmates the market value. These bills had a face value of $9,000,000
and $5,000,000 (cost $8,599,446 and $4,782,246) at September 30, 1996 and
December 31, 1995.
(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 partners based on the ratio that each capital
account bears to all capital accounts as of the beginning of the month. The
number of units of limited partnership interests 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.
<PAGE>
(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 terminations. 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 and receives commissions on foreign exchange forward
and commodity forward contracts. The Partnership 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 forward contracts.
Bellwether Futures LLC, a Delaware limited liability company and an
affiliate of the General Partner, receives give-up fees 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 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.
<PAGE>
Exchange traded futures contracts are marked to market daily, with
variations in value settled on a daily basis with both the exchange upon
which they are traded and 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, 1996 and December 31, 1995, the Partnership held financial
instruments with the following approximate aggregate notional value (in
millions):
September December
1996 1995
---------------------
Exchange Traded Contracts:
- --------------------------
Interest Rate Contracts
- -----------------------
Domestic $ --- $ 2.4
Foreign 3.7 5.2
Foreign Exchange Contracts
- --------------------------
Financial Futures Contracts 1.7 .4
Forward Currency Contracts 1.3 4.8
Equity Index Futures
- --------------------
Domestic --- 6.2
Foreign .8 1.9
Over-the-Counter Contracts:
- ---------------------------
Forward Currency Contracts --- 4.9
---------------------
Total $ 7.5 $25.8
=====================
As of September 30, 1996 and December 31, 1995, 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, 1996 and December
31, 1995 mature through, or matured on, the following dates:
September 1996 December 1995
---------------------------------
Interest Rate Contracts March 1997 March 1996
Foreign Exchange Contracts March 1997 March 1996
Equity Index Futures December 1996 March 1996
Over-the-Counter Contracts ----- January 5, 1996
<PAGE>
The following table summarizes the quarter-end and the average assets and
liabilities resulting from unrealized gains and losses on derivative instruments
included in the statements of financial condition based on month-end balances
(in thousands):
<TABLE>
<CAPTION>
Assets Liabilities
Sept 30, 1996 Average Sept 30, 1996 Average
---------------------------- ---------------------------
<S> <C> <C> <C> <C>
Exchange Traded Contracts:
- --------------------------
Interest Rate Contracts
- -----------------------
Domestic $ --- $ 27 $ --- $ 4
Foreign 2 6 --- 7
Foreign Exchange Contracts
- --------------------------
Financial Futures Contracts 1 11 8
Forward Currency Contracts 2 32 --- 1
Equity Index Futures
- --------------------
Domestic --- 17 --- ---
Foreign --- 72 6 1
Over-the-Counter Contracts:
- ---------------------------
Forward Currency Contracts --- 19 --- 4
-----------------------------------------------------------
Total $ 5 $184 $ 6 $ 25
===========================================================
</TABLE>
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, 1996 and 1995
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
1996 1995 1996 1995
---------------------------------------
Interest Rate Contracts
- -----------------------
Domestic $ 58 $ 122 $ 730 $ (255)
Foreign (167) 64 (414) (64)
Foreign Exchange Contracts (198) 630 630 1,106
- --------------------------
Equity Index Futures
- --------------------
Domestic (147) (60) (456) (432)
Foreign (76) (279) 526 891
Over-the-Counter Contracts 22 24 128 216
- --------------------------
Non-Financial Instruments (30) (19) (94) 40
- -------------------------
---------------------------------------
Total $(538) $ 482 $1,050 $1,502
=======================================
<PAGE>
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 FCMs to
segregate client funds to insure ample customer protection in the event of an
FCM's default. The Partnership monitors the creditworthiness of its FCMs and
counterparties and, when deemed necessary, reduces its exposure to these FCMs
and counterparties. The Partnership's exposure to credit risk associated with
the non-performance of these FCMs 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 are
transacted with major United States FCMs and foreign brokers and dealers. 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 FCMs 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 closeout of
positions.
<PAGE>
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 additions of $506,387 and redemptions of $337,672 during the
quarter ended September 30, 1996 (the "Current Quarter"). From its inception
through October 1, 1996, the Partnership had total Limited Partner contributions
of $12,492,556 and had total withdrawals of $8,535,472. In addition, the
General Partner has contributed $1.9 million since inception. The General
Partner redeemed $2 million on March 31, 1994. The General Partner continues to
maintain the largest equity interest in the Partnership. The General Partner's
equity in the Partnership as of September 30, 1996 was approximately $2.06
million, representing approximately 19% of the Partnership's equity. At October
1, 1996, the Partnership had a total of 100 Limited Partners.
As specified in the Second Amended and Restated 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 its
first 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, 1996, the Partnership has received a total of
$608,758 in contributions from the TIC 401(k) Plan. The TIC 401(k) Plan's equity
in the Partnership as of October 1, 1996 was approximately $673,000,
representing approximately 6.1% of Partnership equity or about 10.3%,
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.
In addition, BPL ceased charging commissions for transacting the Partnership's
foreign exchange spot, forward and options 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, 1996 and December 31, 1995, U.S. Government obligations with
varying maturities through July 1997 represented approximately 76% and 52% 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. 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 $142,524, compared to
$94,724 during the quarter ended September 30, 1995. This increase was due to an
increase in the Partnership's assets as well as investing in U.S. Treasury Bills
with varying maturities yielding higher rates than overnight deposits.
<PAGE>
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
and brokers represents approximately 18% and 32% of the Partnership's assets as
of September 30, 1996 and December 31, 1995. The General Partner believes that
the cash and U.S. Government obligations held at clearing brokers and banks at
quarter-end are sufficient to 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 contract 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 speculative trading 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, 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, 1996 and 1995, the Net Asset Value per unit was $3,206.33
and $2,665.93. For the nine months ended September 30, 1996, the Partnership had
a gain of 11.96% or $342.58 per unit, compared to a gain of 21.26% or $467.40
per unit for the nine months ended September 30, 1995. For the Current Quarter,
the Partnership had a loss of (4.11%) or ($137.41) per unit, compared to a gain
of 7.26% or $180.49 per unit for the three months ended September 30, 1995.
<PAGE>
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 months and nine months ended September
30, 1996 and 1995.
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30 ENDED SEPTEMBER 30
1996 1995 1996 1995
---------------------------------------
Interest Rate Contracts
- -----------------------
Domestic $ 58 $ 122 $ 730 $ (255)
Foreign (167) 64 (414) (64)
Foreign Exchange Contracts (198) 630 630 1,106
- --------------------------
Equity Index Futures
- --------------------
Domestic (147) (60) (456) (432)
Foreign (76) (279) 526 891
Over-the-Counter Contracts 22 24 128 216
- --------------------------
Non-Financial Instruments (30) (19) (94) 40
- -------------------------
---------------------------------------
Total $(538) $ 482 $1,050 $1,502
=======================================
Since the Partnership is a speculative trader in the commodities markets,
current year's results are not comparable to previous years' results. The
Partnership's net trading gains and losses represent a negative return on
average net assets of (4.9%) for the Current Quarter compared to a positive
return of 6.6% for the third quarter of 1995. The Partnership's net trading
gains represent a positive return on average net assets of 9.8% for the nine
months ended September 30,1996 compared to a positive return of 20.2% for the
nine months ended September 30, 1995. Brokerage commissions and fees were .2%
and .3% of average net assets for the quarters ended September 30, 1996 and 1995
and .9% and 1.9% for the nine months ended September 30, 1996 and 1995. In
general, commission rates have remained stable during the past three years.
Professional fees and other expenses increased during the Current Quarter, as
compared to the quarter ended September 30, 1995, due to increases in legal,
audit and bank charges.
Incentive fees are paid quarterly based on Net Trading Profits as described in
the Limited Partnership Agreement. For the quarter ended September 30, 1996,
there was no incentive fee earned due to net trading losses for the quarter.
Likewise, during the third quarter of 1995, there was no incentive fee since the
Partnership did not earn new trading profits (as defined in the Limited
Partnership Agreement). Incentive fees for the nine months ended September 30,
1996 were 15.8% of trading gains, net of commissions, compared to 10.2% for the
nine months ended September 30, 1995. As of September 30, 1996 and 1995, the
Partnership had a net trading loss carry forward of $604,886 and $568,287.
<PAGE>
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 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
A report on Form 8-K, dated September 16, 1996, was filed during the
quarter ended September 30, 1996, reporting that TIC settled a proceeding with
the SEC relating to certain alleged violations of the "uptick rule" in
connection with the certain sales of stock over a two day period in March 1994.
<PAGE>
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: /s/ Mark F. Dalton
------------------
Second Management LLC
General Partner
Mark F. Dalton
President and Chief
Operating Officer
By: /s/ Patrick A. Keenan
---------------------
Second Management LLC
General Partner
Patrick A. Keenan
Vice President and
Chief Financial Officer
November 11, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TUDOR FUND
FOR EMPLOYEES L.P. 9/30/96 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-START> JUL-01-1996 JAN-01-1996
<PERIOD-END> SEP-30-1996 SEP-30-1996
<CASH> 2,119,805 2,119,805
<SECURITIES> 8,636,438 8,636,438
<RECEIVABLES> 602,004 602,004
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 11,558,247 11,558,247
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 11,558,247 11,558,247
<CURRENT-LIABILITIES> 883,576 883,576
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 10,674,671 10,674,671
<TOTAL-LIABILITY-AND-EQUITY> 11,558,247 11,558,247
<SALES> (372,228) 1,545,599
<TOTAL-REVENUES> (372,228) 1,545,599
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 99,211 486,449
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (471,439) 1,059,150
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