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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, 2000
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 ( )
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CERES FUND, L.P.
CONTENTS
PAGE
PART I. Financial Information
ITEM 1 Financial Statements (unaudited)
Statements of Financial Condition
March 31, 2000, and December 31, 1999................... 4
Statements of Operations
Three Months Ended March 31, 2000 and 1999.............. 5
Statements of Cash Flows
Three Months Ended March 31, 2000 and 1999.............. 6
Notes to Financial Statements........................... 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........... 10
PART II. Other Information .................................................. 11
FORWARD-LOOKING STATEMENTS
Statements contained in this Report, which are not historical in nature,
are forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements include
statements in the "Management's Discussion and Analysis of Financial Conditional
and Results of Operations" regarding liquidity and capital resources. Such
forward-looking statements involve certain risks and uncertainties that could
cause actual results to differ materially from anticipated results. These risks
and uncertainties include regulatory constraints, competition from other
companies, changes in the Partnership's operation or expansion strategy, the
general economy of the United States and the specific markets in which the
Company operates and other factors as may be identified from time to time in the
Partnership's filings with the Securities and Exchange Commission or in the
Partnership's press releases.
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CERES FUND, L.P.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying interim financial statements have been prepared in accordance
with the accounting policies in effect as of December 31, 1999, as set forth in
the annual 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
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, 2000 are not necessarily indicative of the results to be
expected for the full year.
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CERES FUND, L.P.
(A Tennessee Limited Partnership)
Statements of Financial Condition
March 31, 2000 and December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
-------------- -----------------
<S> <C> <C>
Assets:
Cash $ 120,178 $ 31,505
Equity in commodity
trading account:
U. S. Treasury obligations at
fair value 4,864,387 4,965,968
Cash 32,160 71,304
Unrealized gains (losses) on
open futures contracts 40,380 37,320
Market Value of open option
contracts -- 14,610
Other assets 241 502
---------- ----------
$5,057,346 $5,121,209
========== ==========
Liabilities and Partners' Capital
Liabilities:
Accrued management fees $ 15,611 $ 15,966
Other accrued expenses 46,515 31,774
Amounts Received for Future Subscriptions 25,000 --
Redemptions payable 885,526 151,165
---------- ----------
972,652 198,905
---------- ----------
Partners' capital:
General partners 302,475 299,618
Limited partners 3,782,219 4,622,686
---------- ----------
Total partners' capital 4,084,694 4,922,304
---------- ----------
$5,057,346 $5,121,209
========== ==========
</TABLE>
See accompanying notes to financial statements.
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CERES FUND, L.P.
(A Tennessee Limited Partnership)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
--------- --------
<S> <C> <C>
Income
Net gains on trading
of commodity futures and
option contracts:
Realized gains on closed
positions $ 41,465 $ 37,337
Change in unrealized gains on
open futures contracts 3,060 483,384
Change in unrealized gains (losses)
on open option contracts 10,860 30,313
Interest 66,583 58,879
--------- --------
Income From Operations 121,968 609,913
--------- --------
Expenses
Brokerage commissions, exchange,
clearing fees and NFA charges 54,503 92,553
Management fee allocations 46,626 53,952
Professional and administrative
expenses 21,000 18,000
--------- --------
122,129 164,505
--------- --------
Net Income $ (161) $445,408
========= ========
Aggregate Income
Allocated to General Partners $ 2,857 $ 26,806
Aggregate Income
Allocated to Limited Partners $ (3,018) $418,602
Net Income per Limited
Partnership Unit $ (.11) $ 12.32
</TABLE>
See accompanying notes to financial statements.
5
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CERES FUND, L.P.
(A Tennessee Limited Partnership)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
2000 1999
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net Income (Loss) $ (161) $ 445,408
Adjustments to reconcile net Income (Loss)
to net cash provided by operating activities:
Increase in change in net unrealized losses (gains)
on open futures contracts (3,060) (483,384)
Decrease in market value of open option contracts 14,610 51,875
(Increase) decrease in operating assets:
U. S. Treasury obligation 101,581 (296,178)
Cash in commodities trading account 39,144 329,397
Other Assets 261 2,191
Increase (decrease) in operating liabilities:
Accrued management fees (355) 967
Other accrued expenses 14,741 (31,624)
Amounts received for future subscriptions 25,000 11,000
Redemptions payable 734,361 (53,099)
--------- ---------
Total Adjustments 926,283 (468,855)
--------- ---------
Net Cash from (used in) in operating activities 926,122 (23,447)
Cash Flows from (used in) financing activities:
Net proceeds from sale of limited partnership units 48,077 8,400
Redemption of limited partnership units (885,526) (84,785)
--------- ---------
Net increase (decrease) in cash 88,673 (99,832)
Cash at the beginning of the year 31,505 140,972
--------- ---------
Cash at the end of the quarter $ 120,178 $ 41,140
========= =========
</TABLE>
See accompanying notes to financial statements.
6
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CERES FUND, L.P.
(A Tennessee Limited Partnership)
Notes to Financial Statements
March 31, 2000
(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, 2000 a total of 62,104.3662 units
have been sold, 1,861.9400 units have been distributed in lieu of a cash
distribution, and 38,509.6717 units have been redeemed, leaving an outstanding
balance at March 31, 2000, of 25,456.6345 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 at the close of the initial offering and have made
additional capital contributions to date 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 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.
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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, 2000, management fees totaled
$46,626 and incentive fees totaled $0.
(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 2000, 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 the
first quarter of 2000 were $52,228. 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 $66,583.
(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, the Partnership's commodity broker.
(5) Calculation of Net Income (Loss) per Limited Partnership Unit
The Net Income (Loss) per Limited Partnership Unit for the period from January
1, 2000, through March 31, 2000 of $(.11) was calculated by dividing the
Aggregate Income (Loss) Allocated to Limited Partners of $(3,018) by the Average
Units outstanding between December 31, 1999 and March 31, 2000 (28,279.8561
Units).
The Net Income (Loss) per Limited Partnership Unit for the period from January
1, 1999 through March 31, 1999 of $12.32 was calculated by dividing the
Aggregate Income (Loss) Allocated to Limited Partners of
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$418,602 by the Average Units outstanding between December 31, 1998 and March
31, 1999 (33,964.7808 Units).
(6) Recent Pronouncements
In June 1998, SFAS No. 133, as amended by SFAS No. 137, "Accounting for
Derivative instruments and Hedging Activities" was issued. This statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. This statement is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. The partnership intends to comply
with this statement in 2001.
(7) Year 2000
The Partnership relies on the General Partners to provide the Partnership with
certain calculations and reports, so if the Year 2000 Issue is material to the
General Partners, then it may impact the Partnership. However, the Year 2000
issue is not material for the General Partners since the administration software
is generally "off-the-shelf" and the General Partners have been advised by the
vendors of such software that it is Year 2000 compliant. In addition, the
Partnership utilizes computer systems and applications maintained by its
commodity broker for trading activities and recordkeeping. The General Partners
have been advised by the operators of these systems that conversion and
implementation activities for mission critical systems are in process of being
implemented and tested. Neither the software replacement nor the compliance
review is expected to be material or to yield noncompliance issues that are
material.
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CERES FUND, L.P.
(a Tennessee Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Management's discussion should be read in conjunction with the Financial
Statements and the discussion of Ceres Fund, L.P.'s (the "Partnership") business
and other detailed information appearing elsewhere herein. All information is
based on the Partnership's fiscal quarter ended March 31, 2000.
RESULTS OF OPERATIONS
The Three Months Ended March 31, 2000, compared to the Three Months Ended March
31, 1999.
Trading results were less profitable during the three months ended March 31,
2000, as compared to the same period in 1999. The Partnership had income from
trading activities of $121,968 for the three months ended March 31, 2000, as
compared to income from trading activities of $609,913 for the three months
ended March 31, 1999. 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 loss of $161 for the
three months ended March 31, 2000, compared to net income of $445,408 for the
same period in 1999; and a net loss per limited partnership Unit of $.11 for the
three months ended March 31, 2000, compared to a net income per limited
partnership Unit of $12.32 for the same period in 1999.
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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, 2000, through March 31, 2000, 319.7433
additional Units were sold and 5,966.1865 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, 2000 - 31,103.0777
(2) Units of Limited Partnership interest outstanding at
February 29, 2000 - 31,103.0777
(3) Units of Limited Partnership interest outstanding at
March 31, 2000 - 25,456.6345
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E. Issuance of Limited Partnership Units for cash in the following amounts and
on the following dates:
Dates Units Amount
January 1, 2000 -- --
February 1, 2000 -- --
March 1, 2000 319.7433 $ 48,077
F. Redemption of Limited Partnership Units for cash in the following amounts and
on the following dates:
Dates Units Amount
March 31, 2000 5,966.1865 $885,526
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
(27) Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K.
None.
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, 2000
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
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 120,178
<SECURITIES> 4,936,927
<RECEIVABLES> 241
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,057,346
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,057,346
<CURRENT-LIABILITIES> 972,652
<BONDS> 0
0
0
<COMMON> 4,084,694
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,057,346
<SALES> 55,385
<TOTAL-REVENUES> 121,968
<CGS> 0
<TOTAL-COSTS> 122,129
<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> (161)
<EPS-BASIC> (.11)
<EPS-DILUTED> 0
</TABLE>
