<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
Commission file number 33-94050
CERES FUND, L. P.
(Name of small business issuer in its charter)
TENNESSEE
(State or other jurisdiction of incorporation or organization)
62-1154702
(I.R.S. Employer Identification No.)
c/o Randell Commodity Corporation
889 Ridge Lake Boulevard
Memphis, Tennessee 38120
(Address of principal executive offices and Zip Code)
Registrant's telephone number (901) 766-4590
Securities registered under Section 12(b) of the Exchange Act: None Securities
registered under Section 12(g) of the Exchange Act: None
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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[ ]
The registrant is a limited partnership and, accordingly, has no voting
stock held by non-affiliates or otherwise.
Incorporation by Reference: Registrant's Registration Statement
effective March 9, 1991 and the Prospectus contained therein into Part IV, Item
14 (a)(3) and Supplement No. 1 dated October 1, 1992, thereto, post effective
Amendment No. 1 dated April 26, 1991, effective April 30, 1991, post effective
Amendment No. 2 dated November 12, 1991, effective November 15, 1992, post
effective Amendment No. 3 dated March 31, 1992, effective April 7, 1992,
Supplement No. 3 dated June 30, 1992, Supplement No. 4 dated November 30, 1992,
post effective Amendment No. 4 dated April 30, 1993, effective May 19, 1993,
post effective Amendment No. 5 dated October 16, 1996, effective October 31,
1996, post effective Amendment dated August 25, 1997, effective September 2,
1997, post effective amendment dated May 30, 1998, effective June 8, 1998, post
effective amendment dated May 30, 1999, effective June 15, 1999, and post
effective amendment dated December 9, 1999.
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<PAGE> 2
PART I
ITEM 1.
(a) Business
Ceres Fund, L.P. (the "Partnership") is a limited partnership organized
on September 19, 1990, pursuant to a Limited Partnership Agreement (the "Limited
Partnership Agreement") under the Uniform Limited Partnership Act of the State
of Tennessee and funded through an offering of limited partnership units (the
"Units"). The Partnership engages in speculative trading of commodity futures
contracts, forward contracts, commodity options and other interests in
commodities including, without limitation futures contracts and options on
financial instruments, physical commodities and stock indices on organized
exchanges in the U.S. and abroad.
The initial offering to the public of 100,000 Units was closed on
November 29, 1991, and trading began December 1, 1991. Following the
commencement of trading, the Partnership continued the offering of Units,
issuing Units and fractions thereof at the Average Net Asset Value as of the
last business day of the month during which the purchaser's subscription was
received. As of December 31, 1999, a total of 61,784.6129 units had been sold of
which a total of 31,103.0777 were outstanding. The Prospectus is regularly
updated and Units continue to be offered to the public.
The offering was registered under the Securities Act of 1933, as
amended, and members of the National Association of Securities Dealers, Inc. act
as selling agents on a best efforts basis. Effective July 1, 1995, and
continuing during the continuous offering period, the selling commission is 4%
of the issue price of each unit sold, all of which is retained by the selling
agent.
Randell Commodity Corporation, a Tennessee corporation, is the Managing
General Partner of the Partnership (the "Managing General Partner") and RanDelta
Capital Partners, L.P. is the Financial General Partner of the Partnership.
Pursuant to a Customer Agreement (the "Customer Agreement"), Refco, Inc.
("Refco") acts as the commodity broker for the Partnership and performs various
administrative services for it. Services performed for the Partnership by Refco
or the Managing General Partner under the terms of the Customer and the Limited
Partnership Agreements, include the following:
(1) Executing all trades on behalf of the Partnership in conjunction
with the Partnership's Advisor.
(2) Maintaining the Partnership books and records, which limited
partners or their duly authorized representatives may inspect during normal
business hours for any proper purpose upon reasonable written notice to the
Managing General Partner.
(3) Furnishing each limited partner with a monthly statement describing
the performance of the Partnership, which sets forth aggregate management fees,
incentive fees, brokerage commissions and other expenses incurred or accrued by
the Partnership during the month.
(4) Forwarding annual certified financial statements (including a
balance sheet and statement of income) to each limited partner.
(5) Providing each limited partner with tax information necessary for
the preparation of his annual federal income tax return and such other
information as the CFTC may by regulation require.
(6) Performing secretarial and other clerical responsibilities and
furnishing office space and equipment as may be necessary for supervising the
affairs of the Partnership.
(7) Administering the purchase, redemption and transfer of Units and
distribution of profits, if any.
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<PAGE> 3
The Customer Agreement under which Refco, Inc. acts as the futures
broker for the Partnership may be terminated by the Partnership or Refco upon 5
days' notice.
Under the terms of the Customer Agreement, the Partnership pays
commodity brokerage commissions to Refco on a round-turn basis in an amount
equal to $32.50 per round-turn. A round-turn is the opening and closing of a
commodity futures position consisting of one contract. Effective June 1, 1997,
1/2 of the round-turn commission is charged on the opening of a position and
1/2 is charged on the close. The Partnership assets earn interest from Refco
on 100% of the average daily equity maintained in cash in the Partnership's
trading account at a rate equal to 80% of the average yield on thirteen week
U.S. Treasury Bills issued during each month.
(b) Regulation
Under the Commodity Exchange Act, as amended (the "Act"), commodity
exchanges and commodity futures trading are subject to regulation by the
Commodity Futures Trading Commission (the "CFTC"). The Act requires "commodity
pool operators," and "commodity trading advisors," to be registered and to
comply with various reporting and record keeping requirements. The CFTC may
suspend a commodity pool operator's or advisor's registration if it finds that
its trading practices tend to disrupt orderly market conditions or in certain
other situations. In the event that the registration of the Managing General
Partner as a commodity pool operator or as a commodity trading advisor is
terminated or suspended, the Managing General Partner would be unable to
continue to manage the business of the Partnership. Should the Managing General
Partner's registration be suspended, termination of the Partnership might
result. The act also requires Refco to be registered as a "futures commission
merchant."
In addition to such registration requirements, the CFTC and certain
commodity exchanges have established limits on the maximum net long or net short
position which any person may hold or control in particular commodities. The
CFTC has adopted a rule requiring all domestic commodity exchanges to submit for
approval speculative position limits for all futures contracts traded on such
exchanges. Most exchanges also limit the changes in commodity futures contract
prices that may occur during a single trading day. The Partnership will not
trade on any commodity exchanges which are not subject to regulation by any
United States government agency.
(c) Financial information about industry segments
The Partnership's business constitutes only one segment, speculative
trading of commodity futures contracts, for financial reporting purposes. The
Partnership does not engage in sales of goods or services. The Partnership began
trading activities December 1, 1991, at which time Partnership capital was
$1,392,168.
(d) Narrative description of business
(1) See Items 1(a), (b) and (c) above.
(i) through (xii) - Not applicable.
(xiii) - the Partnership has no employees.
(e) Financial information about foreign and domestic operations and export sales
Not applicable because the Partnership does not engage in sales of
goods or services.
Item 2. Properties
The Partnership does not own or lease any properties. The Managing
General Partner operates out of facilities provided by its parent, Randell
Corporation.
Item 3. Legal Proceedings
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<PAGE> 4
The Managing General Partner is not aware of any pending legal
proceedings to which the Partnership is a party or to which any of its assets
are subject.
Item 4. Submission of Matters to a Vote of Security Holders.
N/A - No security holders.
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<PAGE> 5
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters
There is no trading market for the Units, and none is likely to
develop. Units are transferable only after written notice has been given to the
Managing General Partner. Units may be redeemed as of the last day of any
calendar quarter upon 10 days written notice to the Managing General Partner at
the Redemption Net Asset Value (as defined in the Limited Partnership
Agreement).
Item 6. Selected Financial Data
The following is a summary of the total assets of the Partnership as of
December 31, 1999, 1998, 1997, 1996, 1995, and the results of operations for
each of the years in the five-year period ended December 31, 1999.
Net increase (decrease) in components of Partnership capital from
operations are as follows:
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Realized & unrealized trading
gains(losses) net of brokerage
commission and clearing fees
of $346,157, $770,081, $838,772,
$565,229, and $333,677, respectively $ 155,301 $(1,711,609) $ (514,269) $ 2,844,850 $ 1,710,300
Income (Loss) from continuing
operations ......................... 114,234 (1,724,922) (504,535) 2,413,944 1,584,106
Cash dividends per unit ............ -- -- 13.61 14.18 --
Interest income .................... 247,544 332,240 294,507 187,206 112,821
Management fee ..................... 208,611 259,437 223,279 151,969 85,331
Administrative expenses ............ 80,000 72,000 58,403 82,026 44,869
Incentive fee ...................... -- 14,116 3,091 384,117 108,815
Net Gain (Loss) per unit* .......... 2.94 (50.01) (19.61) 115.23 69.57
Total Assets ....................... $ 5,121,209 $ 5,504,092 $ 6,647,645 $ 4,895,087 $ 3,205,072
</TABLE>
* Calculated as net earnings(loss) allocated to limited partners divided by
average units outstanding during the year.
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<PAGE> 6
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations.
(a) Results of Operations
Trading results were profitable for the fiscal year ended December 31,
1999. Trading during the fiscal year resulted in an increase in net asset value
per Unit from $146.24 to $148.62, an increase of 1.63% attributable primarily to
gains in soybeans and cotton.
Trading results were unprofitable for the fiscal year ended December
31, 1998. Trading during the fiscal year resulted in a decrease in net asset
value per Unit from $192.66 to $146.24, a decrease of 24.09% attributable
primarily to losses in soybeans and cotton.
Trading results were unprofitable for the fiscal year ended December
31, 1997. Trading during the fiscal year resulted in a decrease in net asset
value per Unit from $245.41 (after payments of distributions of $244,228) to
$192.66, a decrease of 21.49% attributable primarily to losses in grains and
livestock.
(b) Liquidity.
The Partnership does not engage in sales of goods or services. Its only
assets are its capital in its commodity futures trading account, consisting of
cash and net unrealized appreciation on open futures contracts, and interest
receivable. Because of the low margin deposits normally required in commodity
futures trading, relatively small price movements may result in substantial
losses to the Partnership. Such substantial losses could lead to a material
decrease in liquidity. To minimize this risk the Partnership follows certain
policies including:
(1) Partnership funds will be invested only in futures contracts which
are traded in sufficient volume to permit, in the opinion of the Advisor, ease
of taking and liquidating positions.
(2) The Partnership will diversify its positions among various
commodities. The Partnership will not initiate additional positions in a single
commodity if such additional positions would result in a net single long or
short position in such commodity requiring as margin more than 15% of the net
assets of the Partnership.
(3) The Partnership will not establish commodity positions if such
positions would result in required margins in excess of 80% of its net asset
value for all commodities combined.
(4) The Partnership may occasionally accept delivery of a commodity.
Unless such delivery is disposed of promptly by retendering the warehouse
receipt representing the delivery to the appropriate clearing house, the
Partnership's position in the physical commodity will be fully hedged.
(5) The Partnership will not employ the trading technique commonly
known as "pyramiding", in which the speculator uses unrealized profits on
existing positions as margin for the purchase or sale of additional positions in
the same or related commodities.
(6) The Partnership may from time to time employ trading strategies
such as spreads or straddles on behalf of the Partnership. The term "spread"
describes a commodity futures trading strategy involving the simultaneous buying
and selling of futures contracts on the same commodity but involving different
delivery dates or markets and in which the trader expects to earn a profit from
a widening or narrowing of the difference between the prices of the two
contracts.
Other than the risks inherent in commodity futures trading, the
Partnership knows of no trends, demands, commitments, events or uncertainties
which will result in or which are reasonably likely to result in the
Partnership's liquidity increasing or decreasing in any material way. The
Limited Partnership Agreement requires dissolution of the Partnership under
certain circumstances as defined in the Limited Partnership Agreement including
a decrease in the net asset value of a Unit at the close of business on any
business day to less than 50% of the highest average net asset value at which
Units have been sold.
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<PAGE> 7
In order to limit credit risks, the Partnership does not enter into
counterparty transactions such as currency or other swaps and it limits its
trading activities to futures and options traded on U.S. commodity exchanges.
(c) Capital Resources
The Partnership does not intend to raise any additional capital through
borrowing. Due to the nature of the Partnership's business, it will make no
significant capital expenditures, and substantially all of its assets are and
will be represented by cash, United States Treasury securities and commodity
futures investments.
The Partnership's capital consists of the capital contributions of the
partners as increased or decreased by gains or losses on commodity futures
trading and by expenses, interest income, redemptions of Units and distributions
of profits, if any. Gains or losses on commodity futures trading cannot be
predicted. Market moves in commodities are dependent upon fundamental and
technical factors which the Partnership may or may not be able to identify.
Partnership expenses consist of, among other things, commissions, management
fees and incentive fees. The level of these expenses is dependent upon the level
of trading and the ability of the Advisors to identify and take advantage of
price movements in the commodity markets, in addition to the level of net assets
maintained. Furthermore, interest income is dependent upon interest rates over
which the Partnership has no control. A forecast cannot be made as to the level
of redemptions in any given period.
(d) Inflation
Inflation does have an effect on commodity prices and the volatility of
commodity markets; however, continued inflation is not expected to have a
material adverse effect on the Partnership's operations or assets. Because the
Partnership conducts business as a Partnership, and, as such does not pay
federal income taxes, neither the Taxpayer Relief Act of 1997 nor the Tax Reform
Act of 1986 had an effect on its operations or on its tax liability. However,
some expenses may be limited as to deductibility by individual partners.
(e) Year 2000 Issue
During 1999, the Partnership completed all phases of an action plan
designed to minimize the impact of Year 2000 ("Y2K") issue. Currently the
Partnership has experienced no internal or external business disruptions
associated with the Y2K issue. There can be, however, no assurance that future
unforeseen Y2K problems will not cause disruptions to our internal business
systems, or those of our vendors. In the event that these disruptions are
significant, they could have a material impact on the Partnership.
Item 7(A). Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
Item 8. Financial Statements and Supplementary Data
Financial statements meeting the requirements of Regulation S-X are
indexed and included beginning on page F-1 of this report.
The supplementary financial information specified by Item 302 of
Regulation S-K is not applicable.
Item 9. Change in and Disagreements with Accountants on Accounting and Financial
Disclosure
None.
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<PAGE> 8
PART III
Item 10. Directors and Executive Officers of the Registrant
The Partnership has no directors or executive officers. The Partnership
is managed by its Managing General Partner. Trading decisions for the
Partnership are made by the Managing General Partner.
Item 11. Executive Compensation
The Partnership has no directors or officers. The Managing General
Partner and Refco perform the services described in "Item 1. Business" herein.
, For the fiscal year ended December 31, 1999, incentive fees expensed
totaled $0. Management fees expensed totaled $208,611. A total of $331,112 in
brokerage commissions were paid to Refco.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security ownership of certain beneficial owners
None.
(b) Security ownership of management
Under the terms of the Limited Partnership Agreement, the Partnership's
affairs are managed by the Managing General Partner, and it has discretionary
authority over the Partnership's investments. As of December 31, 1999, the
General Partners' investment in the Partnership was $299,618.
(c) Changes in control
None.
Item 13. Certain Relationships and Related Transactions
(a) Accounts of Affiliates of the Commodity Broker
The officers, directors and employees and associated persons of Refco
trade in commodity futures contracts for their own accounts. In addition, Refco
is a registered futures commission merchant and executes transactions in
commodity futures contracts for its customers. Thus, it is possible that Refco
could execute transactions for the Partnership in which the other parties to the
transactions are its officers, directors, employees or customers. Such persons
might also compete with the Partnership in making purchases or sales of
contracts without knowing that the Partnership is also bidding on such
contracts.
(b) Other Activities and Accounts of the General Partner
The Managing General Partner trades in commodity futures contracts for
its own accounts and for the accounts of other customers. It is possible that
the Managing General Partner may engage in transactions on its own behalf or on
behalf of others having an effect on transactions involving the Partnership.
(c) Other Relationships
The sole shareholder of the parent of the Managing General Partner is a
partner in the law firm which is counsel to the Partnership, the Managing
General Partner and the Memphis branch of Refco.
-8-
<PAGE> 9
PART IV
Item 14. Exhibits and Financial Statement Schedules and Reports
(a)(1) Financial Statements
See Index to Financial Statements; infra.
(a)(2) Financial Statement Schedules
Schedules are omitted for the reason that they are not required or are
not applicable or that equivalent information has been included in the financial
statements or the notes thereto.
(a)(3) Exhibits
(3) Articles of Incorporation and By-Laws
i) Limited Partnership Agreement dated as of September 19, 1990.*
ii) Certificate of Limited Partnership of the Partnership as filed with the
Shelby County Recorder of Deeds on September 19, 1990.*
(a)(3)(2) Material Contracts
i) Form of Selling Agreement among the Partnership and National Association of
Securities Dealers, Inc. member.*
ii) Form of Customer Agreement between the Partnership and Refco, Inc.*
iii) Form of Subscription Agreement to be executed by each purchaser of Units.*
iv) Form of Escrow of Funds Agreement among the Partnership and National Bank of
Commerce.*
Exhibit 27 Financial Data Schedule (For SEC use only).
- ------------
*Incorporated herein by reference to the Partnership's Registration Statement on
Form S-1, Commission File No. 33-37802.
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<PAGE> 10
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, in the City of
Memphis, and State of Tennessee on the 29th day of March 2000.
CERES FUND, L.P.
By: RANDELL COMMODITY CORPORATION
Managing General Partner
/s/ Frank L. Watson, Jr.
-------------------------------------
By: Frank L. Watson, Jr.
Chairman
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following person on behalf of the
Managing General Partner of the Registrant in the capacities and on the date
indicated.
RANDELL COMMODITY CORPORATION
Managing General Partner of the Registrant
/s/ Frank L. Watson, Jr.
--------------------------------------
By: Frank L. Watson, Jr., Principal
Executive Officer & Sole Director
March 29, 2000
<PAGE> 11
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.
None.
<PAGE> 12
CERES FUND, L.P.
INDEX TO FINANCIAL STATEMENTS
--------------------------
<TABLE>
<CAPTION>
Pages(s)
--------
<S> <C>
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
Financial Statements:
Statements of Financial Condition as of December 31, 1999 and 1998 . . . . . . . . . . . . . . . . . . . . . . . . F-2
Statements of Operations for the years ended December 31, 1999, 1998 and 1997 . . . . . . . . . . . . . . . . . . . F-3
Statements of Changes in Partners' Capital for the years ended December 31, 1999,
1998 and 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Statements of Cash Flows for the years ended December 31, 1999,
1998 and 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Summary of Net Asset Values at December 31, 1999, 1998 and 1997 . . . . . . . . . . . . . . . . . . . . . . . . . F-6
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-9
Schedule of Investments at December 31, 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-18
Affirmation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-19
</TABLE>
<PAGE> 13
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Financial Statements and Schedule
December 31, 1999 and 1998
(With Independent Auditors' Report Thereon)
To the best of my knowledge and belief, the information contained herein is
accurate and complete.
Frank L. Watson Jr., Chairman
Randell Commodity Corporation
General Partner and Commodity Pool Operator
Ceres Fund, L.P.
<PAGE> 14
INDEPENDENT AUDITORS' REPORT
The Partners
Ceres Fund, L.P.:
We have audited the accompanying statements of financial condition of Ceres
Fund, L.P. (a Tennessee Limited Partnership) as of December 31, 1999 and 1998
and summary of net asset values as of December 31, 1999, 1998 and 1997, and the
related statements of operations, changes in partners' capital and cash flows
for each of the years in the three-year period ended December 31, 1999. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ceres Fund, L.P. (a Tennessee
Limited Partnership) as of December 31, 1999 and 1998, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1999, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included in
Schedule 1 is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
Memphis, Tennessee
February 15, 2000
F-1
<PAGE> 15
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Statements of Financial Condition
December 31, 1999 and 1998
<TABLE>
<CAPTION>
ASSETS 1999 1998
---------- ----------
<S> <C> <C>
Cash $ 31,505 140,972
Equity in commodity futures trading account:
U.S. government obligations at fair value (cost of
$4,936,270 and $5,293,365 at December 31, 1999
and 1998, respectively) 4,965,968 5,322,469
Cash 71,304 452,502
Unrealized gains (losses) on open futures contracts 37,320 (466,699)
Open option contracts, at market 14,610 51,875
Interest receivable 502 2,973
========== ==========
Total assets $5,121,209 5,504,092
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued management fees $ 15,966 17,191
Other accrued expenses 31,774 63,429
Redemptions payable 151,165 137,884
---------- ----------
Total liabilities 198,905 218,504
---------- ----------
Partners' capital:
General partners 299,618 283,263
Limited partners 4,622,686 5,002,325
---------- ----------
Total partners' capital 4,922,304 5,285,588
---------- ----------
$5,121,209 5,504,092
========== ==========
</TABLE>
See accompanying notes to financial statements
F-2
<PAGE> 16
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Statements of Operations
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net gains (losses) on trading of commodity
futures and options contracts:
Realized (losses) gains on closed positions . $ (22,015) (424,683) 490,711
Change in unrealized gains (losses) on open
futures contracts 504,019 (493,901) (158,830)
Change in unrealized gains (losses)
on open options contracts 19,454 (22,944) (7,378)
----------- ----------- -----------
Net gains (losses) on investments 501,458 (941,528) 324,503
Investment income - interest (note 3) 247,544 332,240 294,507
----------- ----------- -----------
Income (loss) from operations 749,002 (609,288) 619,010
----------- ----------- -----------
Brokerage commissions (note 3) 331,112 737,296 797,000
Exchange, clearing fees and NFA charges 15,045 32,785 41,772
Management fee allocations (note 2) 208,611 259,437 223,279
Incentive fee allocations (note 2) -- 14,116 3,091
Professional and administrative expenses 80,000 72,000 58,403
----------- ----------- -----------
634,768 1,115,634 1,123,545
=========== =========== ===========
Net earnings (loss) $ 114,234 (1,724,922) (504,535)
=========== =========== ===========
Net earnings (loss) allocated to
general partner $ 16,355 (74,628) (16,850)
=========== =========== ===========
Net earnings (loss) allocated to
limited partners $ 97,879 (1,650,294) (487,685)
=========== =========== ===========
Average net earnings (loss) per
unit $ 2.94 (50.01) (19.61)
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE> 17
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Statements of Changes in Partners' Capital
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
---------- ---------- ----------
<S> <C> <C> <C>
Partners' capital at December 31, 1996 $ 374,741 4,402,348 4,777,089
Capital contributions (13,552 units) -- 2,755,044 2,755,044
Redemption of units (1,555 units) -- (299,329) (299,329)
Distributions (1,862 units) -- (244,228) (244,228)
Net loss (16,850) (487,685) (504,535)
---------- ---------- ----------
Partners' capital at December 31, 1997 357,891 6,126,150 6,484,041
Capital contributions (4,353 units) -- 866,406 866,406
Redemption of units (1,944 units) -- (339,937) (339,937)
Net loss (74,628) (1,650,294) (1,724,922)
---------- ---------- ----------
Partners' capital at December 31, 1998 283,263 5,002,325 5,285,588
Capital contributions (228 units) -- 36,742 36,742
Redemption of units (3,332 units) -- (514,260) (514,260)
Net earnings 16,355 97,879 114,234
========== ========== ==========
Partners' capital at December 31, 1999 $ 299,618 4,622,686 4,922,304
========== ========== ==========
Average net asset value per limited partnership unit at:
December 31, 1999; 31,103.0777 units outstanding $ 148.62
==========
December 31, 1998; 34,206.8517 units outstanding $ 146.24
==========
December 31, 1997; 31,797.3173 units outstanding $ 192.66
==========
</TABLE>
See accompanying notes to financial statements
F-4
<PAGE> 18
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Statements of Cash Flows
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 114,234 (1,724,922) (504,535)
Adjustments to reconcile net earnings (loss) to
net cash provided by (used in) operating activities:
(Increase) decrease in change in net
unrealized losses (gains) on open
futures contracts (504,019) 493,901 158,830
Decrease (increase) in market value of open
option contracts 37,265 (41,095) (10,780)
(Increase) decrease in operating assets:
Investments in commodities futures
trading account 737,699 675,142 (1,858,269)
Interest receivable 2,471 1,422 4,262
Increase (decrease) in operating liabilities:
Accrued management fees (1,225) (3,664) 10,822
Accrued incentive fees -- (1,662) (31,187)
Other accrued expenses (31,655) 3,042 17,843
---------- ---------- ----------
Net cash provided by (used in)
operating activities 354,770 (597,836) (2,213,014)
Cash flows from financing activities:
Net proceeds from sale of limited partnership units 36,742 866,406 2,755,044
Redemptions of limited partnership units (500,979) (282,753) (251,201)
Distributions to limited partners -- -- (244,228)
---------- ---------- ----------
Net cash (used in) provided by
financing activities (464,237) 583,653 2,259,615
---------- ---------- ----------
Net (decrease) increase in cash (109,467) (14,183) 46,601
Cash at beginning of year 140,972 155,155 108,554
========== ========== ==========
Cash at end of year $ 31,505 140,972 155,155
========== ========== ==========
</TABLE>
See accompanying notes to financial statements
F-5
<PAGE> 19
CERES FUND, L.P.
( A Tennessee Limited
Partnership)
Summary of Net Asset
Values
December 31, 1999
<TABLE>
<CAPTION>
NUMBER NUMBER NUMBER NUMBER NET ASSET TOTAL LIMITED
SUBSCRIBER OF UNITS OF UNITS OF UNITS OF UNITS VALUE PARTNER NET
ADMISSION DATE SUBSCRIBED WITHDRAWN DISTRIBUTED OUTSTANDING PER UNIT ASSET VALUE
-------------- ---------- --------- ----------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
January 1, 1996 43,256.2273 (29,128.3907) 1,793.0394 15,920.8760 $ 149.029 $ 2,372,672
November 1, 1996 239.4689 (158.6871) 41.3760 122.1578 149.029 18,205
December 1, 1996 155.2598 (73.6832) 27.5246 109.1012 149.029 16,259
January 1, 1997 708.7734 (389.1942) -- 319.5792 149.029 47,627
February 1, 1997 1,555.9517 (315.7003) -- 1,240.2514 149.029 184,833
March 1, 1997 2,630.9876 (652.3322) -- 1,978.6554 148.932 294,685
April 1, 1997 3,704.4494 (500.5439) -- 3,203.9055 148.710 476,453
May 1, 1997 1,381.6388 (519.2827) -- 862.3561 148.490 128,051
June 1, 1997 988.1934 (113.8472) -- 874.3462 149.028 130,302
July 1, 1997 826.3808 (6.8935) -- 819.4873 145.625 119,338
August 1, 1997 493.4459 -- -- 493.4459 146.645 72,361
September 1, 1997 209.0262 -- -- 209.0262 146.308 30,582
October 1, 1997 496.1560 (20.4600) -- 475.6960 146.746 69,806
November 1, 1997 229.6653 -- -- 229.6653 146.796 33,714
December 1, 1997 327.4226 (75.5590) -- 251.8636 147.083 37,045
January 1, 1998 103.8085 -- -- 103.8085 147.252 15,286
February 1, 1998 509.8596 (50.8031) -- 459.0565 146.889 67,430
March 1, 1998 1,177.3329 (88.4793) -- 1,088.8536 147.123 160,195
April 1, 1998 717.5374 (154.4626) -- 563.0748 148.651 83,702
May 1, 1998 422.0476 (47.9973) -- 374.0503 148.651 55,603
June 1, 1998 669.0029 (230.3615) -- 438.6414 148.651 65,204
August 1, 1998 506.3963 (16.8074) -- 489.5889 148.369 72,640
September 1, 1998 29.1615 -- -- 29.1615 148.650 4,335
October 1, 1998 217.9573 -- -- 217.9573 148.645 32,398
March 1, 1999 51.6151 -- -- 51.6151 148.640 7,672
April 1, 1999 66.7377 -- -- 66.7377 148.636 9,920
May 1, 1999 60.1015 -- -- 60.1015 148.628 8,933
June 1, 1999 28.6521 -- -- 28.6521 148.644 4,259
September 1, 1999 21.3654 -- -- 21.3654 148.633 3,176
----------- ------------- ---------- ----------- --------------- ---------------
61,784.6229 (32,543.4852) 1,861.9400 31,103.0777 $ 148.6247 $ 4,622,686
=========== ============= ========== =========== =============== ===============
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE> 20
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Summary of Net Asset Values
December 31, 1998
<TABLE>
<CAPTION>
NUMBER NUMBER NUMBER NUMBER NET ASSET TOTAL LIMITED
SUBSCRIBER OF UNITS OF UNITS OF UNITS OF UNITS VALUE PARTNER NET
ADMISSION DATE SUBSCRIBED WITHDRAWN DISTRIBUTED OUTSTANDING PER UNIT ASSET VALUE
<S> <C> <C> <C> <C> <C> <C>
January 1, 1996 43,256.2273 (27,527.1643) 1,793.0394 17,522.1024 $ 146.6195 $ 2,569,082
November 1, 1996 239.4689 (65.0721) 41.3760 215.7728 146.6195 31,636
December 1, 1996 155.2598 (73.6830) 27.5246 109.1014 146.6195 15,996
January 1, 1997 708.7734 (251.8320) -- 456.9414 146.6195 66,997
February 1, 1997 1,555.9517 (225.5000) -- 1,330.4517 146.6194 195,070
March 1, 1997 2,630.9876 (463.1330) -- 2,167.8546 146.5239 317,642
April 1, 1997 3,704.4494 (163.7290) -- 3,540.7204 146.3058 518,028
May 1, 1997 1,381.6388 (259.8730) -- 1,121.7658 146.0901 163,878
June 1, 1997 988.1934 (113.8470) -- 874.3464 146.6194 128,196
July 1, 1997 826.3808 (6.8940) -- 819.4868 143.2701 117,408
August 1, 1997 493.4459 -- -- 493.4459 144.2740 71,191
September 1, 1997 209.0262 -- -- 209.0262 143.9424 30,088
October 1, 1997 496.1560 -- -- 496.1560 144.3731 71,631
November 1, 1997 229.6653 -- -- 229.6653 144.4227 33,169
December 1, 1997 327.4226 -- -- 327.4226 144.7055 47,380
January 1, 1998 103.8085 -- -- 103.8085 144.8718 15,039
February 1, 1998 509.8596 (50.8030) -- 459.0566 144.5137 66,340
March 1, 1998 1,177.3329 -- -- 1,177.3329 144.7433 170,411
April 1, 1998 717.5374 -- -- 717.5374 146.2485 104,939
May 1, 1998 422.0476 -- -- 422.0476 146.2485 61,724
June 1, 1998 669.0029 -- -- 669.0029 146.2485 97,840
August 1, 1998 506.3963 (9.7090) -- 496.6873 145.9705 72,501
September 1, 1998 29.1615 -- -- 29.1615 146.2467 4,265
October 1, 1998 217.9573 -- -- 217.9573 146.2418 31,874
----------- ------------- ---------- ----------- ------------- -------------
61,556.1511 (29,211.2394) 1,861.9400 34,206.8517 $ 146.2376 $ 5,002,325
=========== ============= ========== =========== ============= =============
</TABLE>
See accompanying notes to financial statements.
F-7
<PAGE> 21
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Summary of Net Asset Values
December 31, 1997
<TABLE>
<CAPTION>
NUMBER NUMBER NUMBER NUMBER NET ASSET TOTAL LIMITED
SUBSCRIBER OF UNITS OF UNITS OF UNITS OF UNITS VALUE PARTNER NET
ADMISSION DATE SUBSCRIBED WITHDRAWN DISTRIBUTED OUTSTANDING PER UNIT ASSET VALUE
<S> <C> <C> <C> <C> <C> <C>
January 1, 1996 43,256.2273 (27,202.5977) 1,793.0394 17,846.6690 $ 192.7624 $ 3,440,167
November 1, 1996 239.4689 (65.0721) 41.3760 215.7728 192.7624 41,593
December 1, 1996 155.2598 -- 27.5246 182.7844 192.7624 35,234
January 1, 1997 708.7734 -- -- 708.7734 192.7624 136,625
February 1, 1997 1,555.9517 -- -- 1,555.9517 192.7623 299,929
March 1, 1997 2,630.9876 -- -- 2,630.9876 192.7625 507,155
April 1, 1997 3,704.4494 -- -- 3,704.4494 192.7624 714,078
May 1, 1997 1,381.6388 -- -- 1,381.6388 192.7624 266,328
June 1, 1997 988.1934 -- -- 988.1934 192.7624 190,486
July 1, 1997 826.3808 -- -- 826.3808 190.5557 157,472
August 1, 1997 493.4459 -- -- 493.4459 191.8761 94,680
September 1, 1997 209.0262 -- -- 209.0262 191.4386 40,016
October 1, 1997 496.1560 -- -- 496.1560 192.0056 95,265
November 1, 1997 229.6653 -- -- 229.6653 192.0699 44,112
December 1, 1997 327.4226 -- -- 327.4226 192.4436 63,010
----------- ------------- ---------- ----------- -------------- ------------
57,203.0471 (27,267.6698) 1,861.9400 31,797.3173 $ 192.6625 $ 6,126,150
=========== ============= ========== =========== ============== ============
</TABLE>
See accompanying notes to financial statements.
F-8
<PAGE> 22
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Notes to Financial Statements
December 31, 1999 and 1998
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) 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 acts 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 ($100 net
of commission). 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.
Income and expenses of the Partnership (excluding the Management
Allocation and Incentive Allocation) are 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.
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.
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.
(b) EQUITY IN COMMODITY FUTURES TRADING ACCOUNT
U.S. government obligations represent investments in U.S. Treasury
Bills with a maturity of 90 days or less and are carried at fair
value and any unrealized gains and losses are reflected in income.
Cash represents deposits at brokers and funds temporarily held in
interest bearing accounts.
F-9
<PAGE> 23
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Notes to Financial Statements
December 31, 1999 and 1998
(c) FUTURES CONTRACTS AND OPTIONS CONTRACTS
Futures contracts are required to be made on a commodity exchange
and call for the future delivery of various agricultural and
nonagricultural commodities, currencies or financial instruments
at a specified time and place. These contractual obligations,
depending on whether one is a buyer or a seller, may be satisfied
either by taking or making physical delivery of an approved grade
of the particular commodity (or, in the case of some contracts, by
cash settlement) or by making an offsetting sale or purchase of an
equivalent commodity futures contract on the same (or a linked)
exchange prior to the designated date of delivery. In market
terminology, a trader who purchases a futures contract is "long"
in the futures market, and a trader who sells a futures contract
is "short" in the futures market. Outstanding futures contracts
(those that have not been closed out by an offsetting purchase or
sale or by delivery) are known as "open trades" or "open
positions."
Among the agricultural commodities for which there are futures
contracts are corn, oats, wheat, soybeans, soybean oil, soybean
meal, live cattle, live hogs, pork bellies, coffee, sugar, cocoa
and cotton. Nonagricultural commodities for which there are
futures contracts include copper, silver, gold, platinum, lumber,
currency, Treasury bonds and bills, mortgage-backed securities,
Eurodollar deposits, certain petroleum products and stock,
inflation and interest rate related indices.
An option on a futures contract gives the purchaser of the option
the right (but not the obligation) to take a position at a
specified price (the "striking", "strike" or "exercise" price) in
the underlying futures contract. Options have limited life spans,
usually tied to the delivery or settlement date of the underlying
futures contract. Some options, however, expire significantly in
advance of such date. The value of an option at any given point in
time is a function of market volatility and the price level of the
underlying futures contract.
Open futures contracts are valued at the settlement price on the
date of valuation as determined by the exchange on which the
contract was traded. Changes in the market value of open futures
contracts, entered into for speculative investing, are recorded as
unrealized gains or losses in the accompanying statement of
operations. Realized gains and losses (excluding commissions and
other exchange related fees) are recognized when such contracts
are closed.
(d) 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.
During 1999 the Tennessee General Assembly passed the Tennessee
Franchise/Excise Tax of 1999 (the Act). Beginning January 1, 2000
the Partnership will be subject to corporate tax in Tennessee
pursuant to the provisions of the Act.
F-10
<PAGE> 24
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Notes to Financial Statements
December 31, 1999 and 1998
(e) MANAGEMENT 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 the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
(f) RECLASSIFICATIONS
Certain 1998 and 1997 amounts have been reclassified to conform to
their 1999 presentation.
(g) AVERAGE NET EARNINGS (LOSS) PER UNIT
The average net earnings (loss) per unit as reported on the
statement of operations was calculated as earnings (loss)
allocated to the limited partners divided by average outstanding
units during the year.
(h) RECENT ACCOUNTING PRONOUNCEMENT
In June 1998, SFAS No. 133, " Accounting for Derivative
Instruments and Hedging Activity," was issued. This statement
establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. As amended by SFAS
No. 137, this statement is effective for fiscal years, and
quarters of fiscal years beginning after June 15, 2000. The
Partnership intends to comply with this statement in 2001.
(i) YEAR 2000
During 1999, the Partnership completed all phases of an action
plan designed to minimize the impact of Year 2000 ("Y2K") issue.
Currently the Partnership has experienced no internal or external
business disruptions associated with the Y2K issue. There can be,
however, no assurance that future unforeseen Y2K problems will not
cause disruptions to our internal business systems, or those of
our vendors. In the event that these disruptions are significant,
they could have a material impact on the Partnership.
F-11
<PAGE> 25
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Notes to Financial Statements
December 31, 1999 and 1998
(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 advisor. The Partnership pays 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. Such fees were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----------------- ----------------- -----------------
<S> <C> <C> <C>
Management fees $ 208,611 $ 259,437 $ 223,279
Incentive fees -- 14,116 3,091
</TABLE>
(3) CUSTOMER AGREEMENT WITH REFCO, INC.
The Partnership entered into a customer agreement with 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. Refco charges the
Partnership commissions on commodity trades at the rate of $32.50 per
round-turn. Total commissions charged to the Partnership by Refco in
1999, 1998 and 1997 were $331,112, $737,296 and $797,000, respectively.
The Partnership earns interest on Treasury Bills held in its account, on
interest-bearing accounts and on 80% of the average daily equity
maintained as cash in the Partnership's trading account at a rate that
approximated the average yield on 13-week United States Treasury Bills.
Total interest earned by the Partnership in 1999, 1998 and 1997 was
$247,544, $332,240 and $294,507, respectively.
(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 and the Memphis branch of Refco, the Partnership's
commodity broker.
F-12
<PAGE> 26
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Notes to Financial Statements
December 31, 1999 and 1998
(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 (approximately $13.61 per unit) and 1,861.94 in units,
resulted in each unit holder having a net asset value of $210 per unit on
January 1, 1997. No distributions were declared in 1998 or 1999.
(6) OFF-BALANCE-SHEET RISK
In the normal course of business, the Partnership enters into
transactions in financial instruments with off-balance-sheet risk. These
financial instruments include financial futures contracts and option
contracts. Futures contracts provide for the delayed delivery of
commodities, whereby the seller agrees to make delivery at a specified
future date, at a specified price. Futures contracts and options on such
contracts are held for trading and arbitrage purposes. The notional value
of these contracts reflect the extent of involvement the Partnership has
in particular types of contracts. Risk arises from movements in
commodities' values. At December 31, 1999, the underlying notional value
of open contract commitments were long $1,031,069 and short $(4,537,500).
The Partnership trades in a variety of futures and options financial
instruments, and all open positions are reported at fair value. Trading
gains, including realized and unrealized gains and losses, from financial
futures contracts and options transactions for the year ended December
31, 1999 was $501,458. The average fair value of open commodity financial
instruments, and the year-end market value of open commodities are as
follows:
<TABLE>
<CAPTION>
AVERAGE FAIR MARKET FAIR
VALUE OF OPEN OF OPEN POSITIONS AT
POSITIONS DURING 1999 DECEMBER 31, 1999
------------------------------ ------------------------------
<S> <C> <C>
Assets (Long Positions) $ 23,220 $ 62,710
Liabilities (Short Positions) (68,836) (10,780)
</TABLE>
MARKET RISK
Derivative instruments involve varying degrees of off-balance sheet
market risks, and changes in the level or volatility of interest rates,
foreign currency exchange rates or market values of the underlying
financial instruments or commodities underlying such derivative
instruments frequently result in changes in the Partnership's unrealized
profit (loss) on such derivative instruments as reflected in the
Statements of Financial Condition. The Partnership's exposure to market
risk is influenced by a number of factors, including the relationships
among the derivative instruments held by the Partnership as well as the
volatility and liquidity in the markets in which the financial
instruments are traded.
F-13
<PAGE> 27
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Notes to Financial Statements
December 31, 1999 and 1998
CREDIT RISK
The risks associated with exchange-traded contracts are typically
perceived to be less than those associated with over-the-counter
transactions (non-exchange-traded), because exchanges typically (but not
universally) provide clearinghouse arrangements in which the collective
credit (in some cases limited in amount, in some cases not) of the
members of the exchange is pledged to support the financial integrity of
the exchange.
The fair value amounts in the tables on the previous page represent the
extent of the Partnership's market exposure in the particular class of
derivative instrument listed, but not the credit risk associated with
counterparty nonperformance. The credit risk associated with these
instruments from counterparty nonperformance is the net unrealized gain,
if any, included on the Statement of Financial Condition.
(7) FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, Disclosure About
Fair Value of Financial Instruments, extends existing fair value
disclosure practices for some instruments by requiring all entities to
disclose the fair value of financial instruments, both assets and
liabilities recognized and not recognized in the statement of financial
condition, for which it is practicable to estimate fair value. If
estimating fair value is not practicable, this Statement requires
disclosures of descriptive information pertinent to estimating the value
of a financial instrument. At December 31, 1999 and 1998, substantially
all of the Partnership's financial instruments, as defined in the
Statement, are carried at fair value.
F-14
<PAGE> 28
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Notes to Financial Statements
December 31, 1999, 1998 and 1997
(8) SEGMENT INFORMATION
The Fund's principal activity is speculative trading of agricultural
commodities futures contracts and other commodity interests.
Management has determined that these activities constitute one
reportable segment. The Fund trades ten different commodities:
soybean, cattle, grain spread, corn, cotton, wheat, coffee, Deutsche
Marks, S&P Futures, and S&P Petroleum. The accounting policies are the
same as those described in the summary of significant accounting
policies.
The results of operations and selected financial information by
commodity for the three years ended December 31, 1999, 1998 and 1997
are presented below:
<TABLE>
<CAPTION>
GRAIN
SOYBEAN CATTLE SPREAD CORN COTTON
--------------- -------------- ------------- -------------- --------------
1999
RESULTS OF OPERATIONS:
<S> <C> <C> <C> <C> <C>
Net gains (losses) from closed positions $ 92,443 (315,869) (16,164) 35,800 75,849
Change in unrealized gains (losses) on 49,120 456,680 -- -- --
open futures contracts
Change in unrealized gains (losses) on
open options contracts (4,063) -- (7,655) -- 34,375
=============== ============== ============= ============== ==============
Net gains (losses) on trading activities $ 137,500 140,811 (23,819) 35,800 110,224
=============== ============== ============= ============== ==============
Investment income - interest
Management fees
Professional and administrative expenses
Net earnings
SELECTED FINANCIAL INFORMATION:
Unrealized gains (losses) on open
futures contracts $ -- 42,320 -- -- --
Open option contracts, at market -- -- 2,344 -- --
=============== ============== ============= ============== ==============
$ -- 42,320 2,344 -- --
=============== ============== ============= ============== ==============
Other unallocated amounts
Total assets
</TABLE>
<TABLE>
<CAPTION>
DEUTSCHE S&P S&P
WHEAT COFFEE MARKS FUTURES PETROLEUM TOTAL
------------- ---------- ----------- ------------- ------------- -------------
1999
RESULTS OF OPERATIONS:
<S> <C> <C> <C> <C> <C> <C>
Net gains (losses) from closed positions (88,553) (31,060) (58,000) (54,067) (8,551) (368,172)
Change in unrealized gains (losses) on -- -- 2,344 (4,125) -- 504,019
open futures contracts
Change in unrealized gains (losses) on
open options contracts -- -- (3,203) -- -- 19,454
-------------
============= ========== =========== ============= =============
Net gains (losses) on trading activities (88,553) (31,060) (58,859) (58,192) (8,551) 155,301
============= ========== =========== ============= =============
Investment income - interest 247,544
Management fees (208,611)
Professional and administrative expenses (80,000)
=============
Net earnings $ 114,234
=============
SELECTED FINANCIAL INFORMATION:
Unrealized gains (losses) on open
futures contracts -- -- (5,000) -- -- 37,320
Open option contracts, at market -- -- 12,266 -- -- 14,610
-------------
============= ========== =========== ============= =============
-- -- 7,266 -- -- 51,930
============= ========== =========== ============= =============
Other unallocated amounts 5,069,279
=============
Total assets $ 5,121,209
</TABLE>
(Continued)
F-15
<PAGE> 29
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Notes to Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
GRAIN
SOYBEAN CATTLE SPREAD CORN COTTON
--------------- -------------- ----------- -------------- -------------
<S> <C> <C> <C> <C> <C>
1998
RESULTS OF OPERATIONS:
Net gains (losses) from closed positions $ (730,690) 121,714 391,865 (328,887) (590,829)
Change in unrealized gains (losses) on
open futures contracts (83,434) (343,915) 1,000 (70,000) (296)
Change in unrealized gains (losses) on
open options contracts 8,381 -- -- 3,050 (34,375)
=============== ============== =========== ============== =============
Net gains (losses) on trading activities $ (805,743) (222,201) 392,865 (395,837) (625,500)
=============== ============== =========== ============== =============
Investment income - interest
Management fees
Incentive fees
Professional and administrative expenses
Net (loss)
SELECTED FINANCIAL INFORMATION:
Unrealized gains (losses) on open
futures contracts $ (49,120) (414,360) -- -- --
Open option contracts, at market 45,000 -- -- -- 6,875
=============== ============== =========== ============== =============
$ (4,120) (414,360) -- -- 6,875
=============== ============== =========== ============== =============
Other unallocated amounts
Total assets
</TABLE>
<TABLE>
<CAPTION>
DEUTSCHE S&P S&P
WHEAT COFFEE MARKS FUTURES PETROLEUM TOTAL
------------- ----------- ----------- ----------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
1998
RESULTS OF OPERATIONS:
Net gains (losses) from closed positions 184 (15,247) 31,500 (75,197) 823 (1,194,764)
Change in unrealized gains (losses) on
open futures contracts -- -- (1,381) 4,125 -- (493,901)
Change in unrealized gains (losses) on
open options contracts -- -- -- -- -- (22,944)
-------------
============= =========== =========== =========== =============
Net gains (losses) on trading activities 184 (15,247) 30,119 (71,072) 823 (1,711,609)
============= =========== =========== =========== =============
Investment income - interest 332,240
Management fees (259,437)
Incentive fees (14,116)
Professional and administrative expenses (72,000)
=============
Net (loss) $ (1,724,922)
=============
SELECTED FINANCIAL INFORMATION:
Unrealized gains (losses) on open
futures contracts -- -- (7,344) 4,125 -- (466,699)
Open option contracts, at market -- -- -- -- -- 51,875
-------------
============= =========== =========== =========== =============
-- -- (7,344) 4,125 -- (414,824)
============= =========== =========== =========== =============
Other unallocated amounts 5,918,916
============
Total assets $ 5,504,092
</TABLE>
(Continued)
F-16
<PAGE> 30
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Notes to Financial Statements
December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
GRAIN
SOYBEAN CATTLE SPREAD CORN COTTON WHEAT
---------- ------------ --------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
1997
RESULTS OF OPERATIONS:
Net gains (losses) from closed positions $ 25,745 (133,558) 266,214 (435,826) (284,781) 138,557
Change in unrealized gains (losses) on
open futures contracts 43,194 (144,975) (1,000) (160,875) 36,696 73,850
Change in unrealized gains (losses) on
open options contracts (4,320) -- -- (3,058) -- --
============ ============ ======== ========== =========== =========
Net gains (losses) on trading activities $ 64,619 (278,533) 265,214 (599,759) (248,085) 212,407
============ ============ ======== ========== =========== =========
Investment income - interest
Management fees
Incentive fees
Professional and administrative expenses
Net (loss)
SELECTED FINANCIAL INFORMATION:
Unrealized gains (losses) on open
futures contracts $ 34,314 (70,445) (1,000) 70,000 296 --
Open option contracts, at market (6,720) -- -- 17,500 -- --
============ ============ ========== =========== ============ =========
$ 27,594 (70,445) (1,000) 87,500 296 --
============ ============ ========== =========== ============ =========
Other unallocated amounts
Total assets
</TABLE>
<TABLE>
<CAPTION>
DEUTSCHE S&P S&P
COFFEE MARKS FUTURES PETROLEUM TOTAL
----------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
1997
RESULTS OF OPERATIONS:
Net gains (losses) from closed positions 1,383 105,406 (22,984) (8,217) (348,061)
Change in unrealized gains (losses) on
open futures contracts 6,230 (11,950) -- -- (158,830)
Change in unrealized gains (losses) on
open options contracts -- -- -- -- (7,378)
------------
============ ============= ============= =============
Net gains (losses) on trading activities 7,613 93,456 (22,984) (8,217) (514,269)
============ ============= ============= =============
Investment income - interest 294,507
Management fees (223,279)
Incentive fees (3,091)
Professional and administrative expenses (58,403)
============
Net (loss) $ (504,535)
============
SELECTED FINANCIAL INFORMATION:
Unrealized gains (losses) on open
futures contracts -- (5,963) -- -- 27,202
Open option contracts, at market -- -- -- -- 10,780
-----------
============ ============= ============= =============
-- (5,963) -- -- 37,982
============ ============= ============= =============
Other unallocated amounts 6,609,663
============
Total assets $6,647,645
============
</TABLE>
(Continued)
F-17
<PAGE> 31
SCHEDULE 1
CERES FUND, L.P.
(A Tennessee Limited Partnership)
Schedule of Investments
December 31, 1999
<TABLE>
<CAPTION>
PAR OR
NUMBER OF FAIR
DESCRIPTION CONTRACTS VALUE
----------------- ------------------
<S> <C> <C>
United States Treasury Bill due January 27, 2000 $ 2,550,000 $ 2,539,739
United States Treasury Bill due February 10, 2000 400,000 397,704
United States Treasury Bill due March 9, 2000 650,000 643,746
United States Treasury Bill due March 16, 2000 1,400,000 1,384,779
------------------
4,965,968
------------------
Net cash balances from futures trading 71,304
------------------
Open options contracts in futures trading accounts:
February 0 Live Cattle 7,460
April 0 Live Cattle (14,210)
June 0 Live Cattle 17,050
February 0 Lean Hogs (16,080)
June 0 Lean Hogs 5,500
July 0 Lean Hogs 42,600
February 0 NYME Crude Oil (5,000)
February 0 T-Bond Option 6,797
February 0 T-Bond Option 5,469
March 0 Wheat Option 2,344
------------------
51,930
------------------
Total equity in futures trading accounts 123,234
==================
Total investments $ 5,089,202
==================
</TABLE>
See accompanying independent accountant's report.
F-18
<PAGE> 32
AFFIRMATION
STATE OF TENNESSEE )
)
CITY OF MEMPHIS )
I, FRANK L. WATSON, JR. being duly sworn, deposes and says:
1. I am President of Randell Commodity Corporation, the commodity pool
operator and the managing general partner of Ceres Fund, L.P., as named
in the attached Annual Report and am duly authorized to execute this
Affirmation.
2. To the best of my knowledge and belief, the information contained in
the attached Annual Report is accurate and complete.
/s/ Frank L. Watson, Jr.
- ------------------------------------
Frank L. Watson, Jr., Chairman
Randell Commodity Corporation
SWORN TO AND SUBSCRIBED before me this 29th day of March 2000.
/s/ Marty Morgan
- ----------------------------------------------
Marty Morgan
NOTARY PUBLIC
My Commission Expires: January 31, 2001
F-19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CERES FUND LP FOR THE YEAR ENDED DECEMBER 31, 1999 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> Year
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 31,505
<SECURITIES> 5,084,202
<RECEIVABLES> 502
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,121,209
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,121,209
<CURRENT-LIABILITIES> 198,905
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,922,304
<TOTAL-LIABILITY-AND-EQUITY> 5,121,209
<SALES> 501,458
<TOTAL-REVENUES> 749,002
<CGS> 0
<TOTAL-COSTS> 634,768
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 00
<CHANGES> 0
<NET-INCOME> 114,234
<EPS-BASIC> 4.99
<EPS-DILUTED> 0
</TABLE>
