<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 033-37802
CERES FUND, L.P.
-------------------------------------
(State of incorporation) - Tennessee
(I.R.S. Employer Identification No.) - 62-1444129
889 Ridge Lake Blvd., Memphis, Tennessee 38120
(901)577-2229
-----------------------------------------
(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 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> 2
CERES FUND, L.P.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying interim consolidated financial statements have been prepared in
accordance with the accounting policies in effect as of December 31, 1997, as
set forth in the annual consolidated financial statements of Ceres Fund, L.P. as
of such date. In the opinion of management, all adjustments necessary for a fair
presentation of the consolidated condensed financial statements have been
included and all such adjustments were of a normal recurring nature. The results
of operations for the three-month period ended March 31, 1998 are not
necessarily indicative of the results to be expected for the full year.
<PAGE> 3
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Statements of Financial Condition
March 31, 1998 and December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
<S> <C> <C>
Assets:
Cash $ 55,939 $ 155,155
U. S. Treasury obligations at
cost plus accrued interest 6,555,356 6,308,524
Equity in commodity trading account:
Cash 585,372 141,589
Unrealized gain (loss) of
open futures contracts 240,397 27,202
Market Value of open option
contracts 9,110 10,780
Other assets 4,082 4,395
---------- ----------
$7,450,256 $6,647,645
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accrued management fees $ 23,516 $ 20,855
Accrued incentive fees 13,932 1,662
Other accrued expenses 31,540 60,387
Redemptions payable 124,849 80,700
---------- ----------
193,837 163,604
---------- ----------
Partners' capital:
General partners 391,253 357,891
Limited partners 6,865,166 6,126,150
---------- ----------
Total partners' capital 7,256,419 6,484,041
---------- ----------
$7,450,256 $6,647,645
========== ==========
</TABLE>
See accompanying notes to financial statements
<PAGE> 4
CERES FUND, L.P.
(A Tennessee Limited Partnership)
<TABLE>
<CAPTION>
Statements of Operations
(Unaudited)
Three Months Ended March 31,
1998 1997
-------- ---------
<S> <C> <C>
Income
Net gains (losses) on trading of commodity
futures and option contracts:
Realized gain (losses) on closed
positions $554,172 $ 783,692
Change in unrealized gain (losses) on
open positions 207,576 (687,918)
Interest 83,131 59,498
-------- ---------
Income (Loss) From Operations $844,879 $ 155,272
-------- ---------
Expenses
Brokerage commissions, exchange,
clearing fees and NFA charges 193,052 197,418
Management fee allocations 64,352 46,918
Incentive fee allocations 13,932 --
Professional and administrative
expenses 18,000 25,377
-------- ---------
289,336 269,713
-------- ---------
Net Income (Loss) $555,543 $(114,441)
======== =========
Aggregate Income (Loss)
Allocated to General Partners $ 33,362 $ (4,356)
Aggregate Income (Loss)
Allocated to Limited Partners $522,181 $(110,085)
Net Income (Loss) per Limited
Partnership Unit (Average) $ 16.12 $ (5.24)
</TABLE>
See accompanying notes to financial statements.
<PAGE> 5
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
--------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net Income (Loss) $ 555,543 $ (114,441)
Adjustments to reconcile net Income (Loss) to net cash
provided by operating activities:
Net unrealized gain (loss) on open contracts 207,576 (687,918)
(Increase) decrease in operating assets:
U. S. Treasury obligation (246,832) (1,482,484)
Investments in commodities fund (443,783) (312,974)
Unrealized gain (loss) on open futures and
options contracts (420,771) 1,326,860
Market Value of open option contracts 1,670 499,100
Other Assets 313 (156)
Increase (decrease) in operating liabilities:
Accrued management fees 2,661 7,031
Accrued incentive fees 12,270 (32,849)
Other accrued expenses (28,853) 22,850
Amounts received for future subscriptions 6 202,435
Redemptions payable 44,149 96,957
--------- -----------
Total Adjustments (871,594) (361,148)
--------- -----------
Net Cash from (used in) in operating activities (316,051) (475,589)
Cash Flows from (used in) financing activities:
Net proceeds from sale of limited partnership units 341,684 1,026,809
Redemption of limited partnership units (124,849) (129,529)
Distribution to limited partners -- (244,228)
Contributions received from general partners -- --
--------- -----------
Net increase (decrease) in cash (99,216) 177,463
Cash at the beginning of the year 155,155 108,554
--------- -----------
Cash at the end of the quarter $ 55,939 $ 286,017
========= ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 6
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Notes to Financial Statements
March 31, 1998
(1) Summary of Significant Accounting Policies
Organization
Ceres Fund, L.P. (the Partnership) is a Tennessee limited partnership organized
on September 19, 1990 to engage in the speculative trading of commodities
futures contracts and other commodity interests. Randell Commodity Corporation
("Randell") and RanDelta Capital Partners, L.P. ("RanDelta") are the general
partners. Randell serves as the managing general partner and RanDelta serves as
the financial general partner. Randell will act as commodity trading advisor
with respect to the Partnership.
The Partnership solicited subscriptions for a maximum of 100,000 units of
limited partnership interest at $105 per unit. During the initial offering
period 13,471.6805 units were sold and the Partnership commenced trading
commodity futures contracts on December 1, 1991. The Partnership continues to
sell units as of the end of each month at the then average net asset value per
unit plus a selling commission of 4% in accordance with the terms of the Limited
Partnership Agreement, and can continue selling units until the maximum number
of units offered have been sold. At March 31, 1998, a total of 59,285.5298 units
have been sold, 1,861.9400 units have been distributed in lieu of a cash
distribution, and 28,162.1240 units have been redeemed, leaving an outstanding
balance at March 31, 1998, of 32,985.3458 units.
The general partners agreed to make a capital contribution of the lesser of
$100,000 or 3% of total partnership capitalization and made an initial capital
contribution of $45,000 and has made additional capital contributions during the
period of $55,000 to meet its investment commitment in the Partnership. In no
event will the general partners' interest in the Partnership be less than 1% of
total partnership capitalization.
Income and expenses of the Partnership (excluding the Management Allocation and
Incentive Allocation) will be allocated pro rata among the partners based on
their respective capital accounts as of the beginning of the month in which the
items of income and expense accrue, except that limited partners have no
liability for partnership obligations in excess of his or her capital account,
including earnings. The Management Allocation and Incentive Allocation are
allocated to the Limited Partners only in accordance with the terms of the
Limited Partnership Agreement.
The Partnership is not liable for any organizational and offering expenses in
connection with the issuance and distribution of the units. Refco, Inc., the
Partnership's commodity broker, paid the organizational expenses of the
Partnership and the expenses of offering the units to the public. The
Partnership will not reimburse Refco, Inc. for any portion of the costs so
incurred and will not be liable for any such costs at any time.
Units may not be redeemed during the first six months after they are purchased.
Thereafter, limited partners
<PAGE> 7
may redeem their units at the redemption net asset value per unit as of the end
of any calendar quarter upon ten days written notice to the managing general
partner. The redemption charge will be based on the redemption net asset value
on all units redeemed as more fully described in the offering prospectus.
Under the terms of the partnership agreement, the Partnership will terminate on
the earlier of December 31, 2020, or the occurrence of certain events as more
fully described in the Limited Partnership Agreement.
Valuation of Futures Contracts
Open commodity futures contracts are valued at market daily and unrealized gains
and losses are reflected in income.
Income Taxes
No provision for income taxes has been made in the accompanying financial
statements since, as a partnership, income and losses for tax purposes are
allocated to the partners for inclusion in their respective tax returns.
(2) Management Agreement
The Partnership has entered into a Management Agreement in consideration of and
as compensation for the services to be rendered by the General Partners and
trading advisors. The Partnership will pay to the general partners a monthly
Management Allocation equal to 1/3 of 1% (4% per annum) of the adjusted net
asset value of units at month end, plus a quarterly Incentive Allocation of 15%
of any net new appreciation in the adjusted net asset value of units for the
quarter. During the three months ended March 31, 1998, management fees totaled
$64,352 and incentive fees totaled $13,932.
(3) Customer Agreement with Refco, Inc.
The Partnership entered into a customer agreement with Refco, Inc. (Refco),
pursuant to which the Partnership deposits its assets in a commodity trading
account with Refco who executes trades on behalf of the Partnership. The
Partnership agrees to pay such brokerage and commission charges and fees as
Refco may establish and charge from time to time. During 1998, Refco charged the
Partnership commissions on commodity trades at the rate of $32.50 per
round-turn. Total commissions charged to the Partnership by Refco during this
three month period were $184,649. The Partnership earns interest on 80% of the
average daily equity maintained as cash in the Partnership's trading account at
a rate equal to the average yield on 13-week United States Treasury Bills. Total
interest earned by the Partnership from this source during this three month
period amounted to $83,131.
(4) Related Parties
The sole shareholder of the parent of the managing General Partner is an active
partner in the law firm which is the counsel to the Partnership, the General
Partners, the Memphis branch of Refco and the Partnership's commodity broker.
(5) Distribution to Limited Partners.
On January 16, 1997, the General Partner declared a distribution to the limited
partners equal to the difference between the December 31, 1996 net asset value
per unit and $210 per unit. This distribution, totaling $244,228 in cash and
1,861.94 in units, resulted in each unit holder having a net asset value of $210
per unit on January 1, 1997.
<PAGE> 8
(6) Calculation of Net Income (Loss) per Limited Partnership Unit
The Net Income (Loss) per Limited Partnership Unit for the period from January
1, 1998 through March 31, 1998 of $16.12 was calculated by dividing the
Aggregate Income (Loss) Allocated to Limited Partners of $522,181 by the Average
Units outstanding between December 31, 1997 and March 31, 1998 (32,391.3316
Units).
The Net Income (Loss) per Limited Partnership Unit for the period from January
1, 1997 through March 31, 1997 of $(5.24) was calculated by dividing the
Aggregate Income (Loss) Allocated to Limited Partners of $110,085 by the Average
Units outstanding between December 31, 1996 and March 31, 1997 (20,999.0393
Units).
<PAGE> 9
CERES FUND, L.P.
(A Tennessee Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
for the Quarter Ended March 31, 1998.
RESULTS OF OPERATIONS
The Three Months Ended March 31, 1998, compared to the Three Months Ended March
31, 1997.
Trading results were more profitable during the three months ended March 31,
1998, as compared to the same period in 1997. The Partnership had income from
trading activities of $844,879 for the three months ended March 31, 1998, as
compared to income from trading activities of $155,272 for the three months
ended March 31, 1997. The gains during this period are primarily attributable to
gains in connection with the trading of grain contracts. As a result of such
gains from trading activities, the Partnership had a net income of $555,543 for
the three months ended March 31, 1998, compared to net loss of $114,441 for the
same period in 1997; and a net income per limited partnership Unit of $16.12 for
the three months ended March 31, 1998, compared to a net loss per limited
partnership Unit of $5.24 for the same period in 1997.
<PAGE> 10
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.
A. The registration statement became effective on March 9, 1991 at which time
the Partnership began offering the securities for sale. The offering was
extended for 60 days and sales of 13,471.6805 Units for $1,413,296.45 were
consummated by November 30, 1991 at which time the initial offering period ended
and the continuous offering period commenced. The Partnership commenced
operations December 1, 1991. The Partnership continues to offer Units for sale.
During the period of January 1, 1998, through March 31, 1998, 1,791.0010
additional Units were sold and 602.9725 Units were redeemed.
B. The Units were offered by the Partnership through members of the National
Association of Securities Dealers, Inc. on a best efforts basis.
C. These securities were registered under the Securities Act of 1933.
D. (1) Units of Limited Partnership interest outstanding at
January 31, 1998 - 31,901.1258
(2) Units of Limited Partnership interest outstanding at
February 28, 1998 - 32,410.9854
(3) Units of Limited Partnership interest outstanding at
March 31, 1998 - 32,985.3458
<PAGE> 11
E. Issuance of Limited Partnership Units for cash in the following amounts and
on the following dates:
<TABLE>
<CAPTION>
Dates Units Amount
<S> <C> <C>
January 1, 1998 103.8085 $ 20,000
February 1, 1998 509.8596 $ 96,500
March 1, 1998 1,177.3329 $225,184
</TABLE>
F. Redemption of Limited Partnership Units for cash in the following amounts and
on the following dates:
<TABLE>
<CAPTION>
Dates Units Amount
<S> <C> <C>
March 31, 1998 602.9725 $124,849
</TABLE>
G. On May 9, 1994, transactions were consummated pursuant to which Delta
International, Inc. terminated its services as trading advisor to the Fund and
withdrew as the co-general partner of RanDelta Capital Partners, L.P., the
financial general partner to the Fund effective March 31, 1994. These
transactions were affected without any cost or expense to the Fund.
Item 6. Exhibits and Reports on Form 8-K.
27 Financial Data Schedule (for SEC use only)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf of the
undersigned thereunto duly authorized.
Date: May 12, 1998
CERES FUND, L.P.
By: Randell Commodity Corporation
Managing General Partner
By: Frank L. Watson, Jr.
/s/ Frank L. Watson, Jr.
---------------------------
Frank L. Watson, Jr.
Chairman
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CERES FUND LP FOR THE QUARTER ENDED MARCH 31, 1998 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 55,939
<SECURITIES> 7,390,235
<RECEIVABLES> 4,082
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,450,256
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,450,256
<CURRENT-LIABILITIES> 193,837
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 7,256,419
<TOTAL-LIABILITY-AND-EQUITY> 7,450,256
<SALES> 844,879
<TOTAL-REVENUES> 844,879
<CGS> 289,336
<TOTAL-COSTS> 289,336
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 555,543
<INCOME-TAX> 0
<INCOME-CONTINUING> 555,543
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
