TUDOR FUND FOR EMPLOYEES LP - 10-Q Quarterly Report

FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTER ENDED: 9/30/02

COMMISSION FILE NUMBER: 333-52543

TUDOR FUND FOR EMPLOYEES L.P.
(Exact name of registrant as specified in its charter)

Delaware		13-3543779
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1275 King Street, Greenwich, Connecticut		06831
(Address of principal executive offices)		(Zip Code)

(203) 863-6700
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

YES

PART I – FINANCIAL INFORMATION
Item 1. – Financial Statements
TUDOR FUND FOR EMPLOYEES L.P.
STATEMENTS OF FINANCIAL CONDITION

		SEPTEMBER 30, 2002		DECEMBER 31, 2001

		(UNAUDITED)		(AUDITED)
ASSETS
Cash and cash equivalents		$	39,935,789	$	29,804,258
Due from brokers			3,941,760		3,865,128

	Total assets	$	43,877,549	$	33,669,386

LIABILITIES AND PARTNERS’ CAPITAL
LIABILITIES:
Pending partner additions		$	674,000	$	1,525,056
Redemptions payable			533,660		187,808
Management fee payable			172,607		85,100
Accrued professional fees and other			161,500		81,038

	Total liabilities		1,541,767		1,879,002

PARTNERS’ CAPITAL:
Limited Partners, 20,000 units authorized and 3,901.341 and 3,363.810 outstanding at September 30, 2002 and December 31, 2001			40,304,900		30,035,126
General Partner, 196.580 units outstanding at September 30, 2002 and December 31, 2001			2,030,882		1,755,258

	Total partners’ capital		42,335,782		31,790,384

Total liabilities and partners’ capital		$	43,877,549	$	33,669,386

The accompanying notes are an integral part of these statements.

TUDOR FUND FOR EMPLOYEES L.P.
CONDENSED SCHEDULES OF INVESTMENTS

							North America			Asia			Europe			Total			Percent of Partners’ Capital

September 30, 2002 (UNAUDITED)
OPTIONS, at market value:
					Equity indexes		$	—		$	(185,461	)	$	—		$	(185,461	)		(.44	)%
					Interest rate swaptions			—			—			227,094			227,094			.54

						Total options, at market value		—			(185,461	)		227,094			41,633			.10

FUTURES, at market value:
					Equity indexes			—			(65,092	)		(335	)		(65,427	)		(.15	)
					Interest rates			36,399			(89,434	)		—			(53,035	)		(.13	)
					Foreign exchange			(257,920	)		—			—			(257,920	)		(.61	)

						Total futures, at market value		(221,521	)		(154,526	)		(335	)		(376,382	)		(.89	)

FOREIGN EXCHANGE FORWARDS, at market value:								—			3,441			(25,352	)		(21,911	)		(.05	)

TOTAL INVESTMENTS, at market value (1)							$	(221,521	)	$	(336,546	)	$	201,407		$	(356,660	)		(.84	)%


							North America			Asia			Europe			Total			Percent of Partners’ Capital

December 31, 2001 (AUDITED)
OPTIONS, at market value:
					Foreign exchange		$	—		$	352,710		$	—		$	352,710			1.11	%

					Total options, at market value			—			352,710			—			352,710			1.11

FUTURES, at market value:
				Equity indexes				(24,950	)		(5,300	)		—			(30,250	)		(.10	)
			Interest rates					—			101,645			—			101,645			.33
		Foreign exchange						220			—			—			220			.00
	Commodities							(30,894	)		—			—			(30,894	)		(.10	)

						Total futures, at market value		(55,624	)		96,345			—			40,721			.13

FOREIGN EXCHANGE FORWARDS, at market value								—			97,393			215,973			313,366			.99

EQUITY SWAPS, at market value:								643,367			—			—			643,367			2.02

TOTAL INVESTMENTS, at market value (1)							$	587,743		$	546,448		$	215,973		$	1,350,164			4.25	%

The accompanying notes are an integral part of these schedules.

(1) All such amounts are included in due from brokers on the statements of financial condition.

TUDOR FUND FOR EMPLOYEES L.P.
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
(UNAUDITED)

	THREE MONTHS ENDED SEPTEMBER 30,						NINE MONTHS ENDED SEPTEMBER 30,

	2002			2001			2002			2001

Investment income
Interest	$	189,599		$	279,248		$	507,309		$	1,010,310
Dividends		—			1,016			—			1,016

Total investment income		189,599			280,264			507,309			1,011,326

Investment expense
Interest		3,471			32,505			10,733			87,095
Brokerage commissions		75,480			47,086			254,882			146,247

Total investment expenses		78,951			79,591			265,615			233,342

Operating expenses
Management fee		172,607			133,708			479,255			382,810
Incentive fee		—			434,116			621,857			702,994
Professional fees and other		121,398			34,382			213,513			103,514

Total operating expenses		294,005			602,206			1,314,625			1,189,318

Net investment loss		(183,357	)		(401,533	)		(1,072,931	)		(411,334	)

Net realized and unrealized gains/losses on trading activities
Net realized gain		242,353			5,047,176			8,416,584			8,657,922
Change in net unrealized appreciation (depreciation)		(819,403	)		(78,726	)		(1,454,048	)		(704,645	)

Net realized and unrealized gain (loss)		(577,050	)		4,968,450			6,962,536			7,953,277

Net increase (decrease) in net assets resulting from operations	$	(760,407	)	$	4,566,917		$	5,889,605		$	7,541,943

Limited Partners’ net increase (decrease) in net assets resulting from operations	$	(722,495	)	$	4,335,006		$	5,613,981		$	7,166,394
General Partner’s net increase (decrease) in net assets resulting from operations		(37,912	)		231,911			275,624			375,549

	$	(760,407	)	$	4,566,917		$	5,889,605		$	7,541,943

Change in Net Asset Value Per Unit	$	(192.85	)	$	1,179.72		$	1,402.14		$	1,910.41

Net increase (decrease) in Net Assets Per Unit	$	(183.17	)	$	1,211.65		$	1,467.81		$	1,917.71

The accompanying notes are an integral part of these statements.

TUDOR FUND FOR EMPLOYEES L.P.
STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL
FOR THE PERIOD ENDED SEPTEMBER 30, 2002 (UNAUDITED)
AND THE YEAR ENDED DECEMBER 31, 2001 (AUDITED)

		Limited Partners						General Partner				Total Capital			Net Asset Value Per Unit

		Units			Capital			Units		Capital

Partners’ Capital, January 1, 2001			2,926.555		$	20,766,179			196.580	$	1,394,893	$	22,161,072		$	7,095.78
	Net increase in net assets resulting from operations		—			6,935,785			—		360,365		7,296,150
	TIC 401(k) Plan unit adjustment (a)		32.780			—			—		—		—
	Capital contributions		1,295.726			9,626,183			—		—		9,626,183
	Redemptions		(891.251	)		(7,293,021	)		—		—		(7,293,021	)

Partners’ Capital, December 31, 2001(b)			3,363.810			30,035,126			196.580		1,755,258		31,790,384		$	8,928.90
	Net increase in net assets resulting from operations		—			5,613,981			—		275,624		5,889,605
	TIC 401(k) Plan unit adjustment (a)		26.628			—			—		—		—
	Capital contributions		692.909			6,440,015			—		—		6,440,015
	Redemptions		(182.006	)		(1,784,222	)		—		—		(1,784,222	)

Partners’ Capital, September 30, 2002 (b)			3,901.341		$	40,304,900			196.580	$	2,030,882	$	42,335,782		$	10,331.04

(a) See Note 3 – Capital Accounts
(b) See Note 4 – Redemption of Units

The accompanying notes are an integral part of these statements.

NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2002
(UNAUDITED)

(1)	ORGANIZATION

	Tudor Fund For Employees L.P. (the “Partnership”) was organized under the Delaware Revised Uniform Limited Partnership Act (the “Act”) on November 22, 1989, and commenced trading operations on July 2, 1990. Second Management LLC (the “General Partner”) is the general partner of the Partnership. Tudor Investment Corporation (“TIC”), an affiliate of the General Partner, acts as the trading advisor of the Partnership. The General Partner is registered with the Commodity Futures Trading Commission as a Commodity Pool Operator and a Commodity Trading Advisor and is a member of the National Futures Association in such capacities. Ownership of limited partnership units is restricted to employees of TIC and its principals or its affiliates.

	The objective of the Partnership is to realize capital appreciation through speculative trading of futures, forwards, option contracts and other derivative instruments, including commodity interests (collectively, “derivative instruments”). The Partnership will terminate on December 31, 2010 or at an earlier date if certain conditions occur as outlined in the Second Amended and Restated Partnership Agreement dated as of May 22, 1996 (the “Limited Partnership Agreement”).

	*DUTIES OF THE GENERAL PARTNER*

	The General Partner acts as the commodity pool operator of the Partnership and is responsible for the selection and monitoring of the commodity trading advisors used by the Partnership. The General Partner is also responsible for the performance of all administrative services necessary to the Partnership’s operations.

(2)	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

	The financial statements presented have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management of the General Partner, reflect all adjustments necessary for a fair presentation of the results for the periods presented in conformity with accounting principles generally accepted in the United States. These financial statements should be read in conjunction with the Partnership’s audited financial statements included in the Partnership’s Annual Report on Form 10-K filed with the SEC on March 28, 2002. Results of the interim periods are not necessarily indicative of results to be obtained for a full fiscal year.

	*CASH AND CASH EQUIVALENTS*

	Cash and cash equivalents include cash held at banks and overnight time deposits.

	*DUE FROM BROKERS*

	Due from brokers primarily consists of cash balances carried as margin deposits with clearing brokers for the purpose of trading derivative instruments. Also included in due from brokers are total investments at market value, including unrealized gains and losses on derivative instruments, as reflected on the condensed schedules of investments.

	*PENDING PARTNER ADDITIONS*

	Pending partner additions is comprised of cash received prior to the end of the fiscal period indicated, for which units were issued on October 1, 2002 and January 1, 2002. Pending partner additions did not participate in the earnings of the Partnership until the related units were issued.

	*REVENUE RECOGNITION AND VALUATION METHODOLOGIES*

	Trading activities, including related revenues and expenses, are recorded on a trade date basis. Interest income and expense are recorded on an accrual basis.

	For derivative instruments, market value is generally based upon independent market values when available from major exchanges or, if none are available, from independent broker quotations. Additionally, in determining market value, management utilizes pricing models with market quoted inputs and also considers closing exchange prices of related instruments, time value of money, volatility factors of the underlying instruments, and other market conditions.

	*BROKERAGE COMMISSIONS AND FEES*

	These expenses represent all brokerage commissions, exchange, National Futures Association and other fees incurred in connection with the execution and clearance of derivative instruments.

	*SERVICE AGREEMENT*

	The Partnership has entered into an agreement with CITCO Fund Services USA, Inc. (the “Service Company”), under which the Service Company provides necessary accounting services to the Partnership, including maintenance of the financial books and records.

	*INCENTIVE FEE*

	The Partnership pays TIC, as trading advisor, an incentive fee equal to 12% of the Net Trading Profits (as defined in the Limited Partnership Agreement), earned as of the end of each fiscal quarter of the Partnership. Since inception of the TIC 401(k) Savings and Profit-Sharing Plan (the “TIC 401(k) Plan”), TIC has waived its right to receive an incentive fee attributable to units of limited partnership interest held at the beginning of each month by the TIC 401(k) Plan (Note 3).

	*MANAGEMENT FEE*

	The Partnership also pays TIC, for the performance of its duties, a monthly management fee equal to 1/12 of 2% (2% per annum) of the Partnership’s net assets (as defined in the Limited Partnership Agreement). Since inception of the TIC 401(k) Plan, TIC has waived its right to receive a management fee attributable to units of limited partnership interest held at the beginning of each month by the TIC 401(k) Plan (Note 3).

	*FOREIGN CURRENCY TRANSLATION*

	Assets and liabilities denominated in foreign currencies are translated at month-end exchange rates. Gains and losses resulting from foreign currency transactions are calculated using daily exchange rates and are included in the accompanying statements of operations.

	*USE OF ESTIMATES*

	The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management believes that the estimates utilized in preparing the financial statements are reasonable and prudent; however, actual results could differ from these estimates.

	*NET INCREASE (DECREASE) IN NET ASSETS PER UNIT*

	Net increase (decrease) in net assets per unit is computed by dividing net increase (decrease) in net assets by the monthly average of units outstanding at the beginning of each month.

	*RECLASSIFICATIONS*

	Certain reclassifications have been made to prior year balances to conform with the current year presentation.

(3)	CAPITAL ACCOUNTS

	The minimum subscription amount is $1,000 for new Limited Partners. Additional contributions may be made in increments of $1,000. Both subscriptions and contributions may be made quarterly, at the beginning of the respective quarter.

	Each partner, including the General Partner, has a capital account with an initial balance equal to the amount such partner paid for its units of partnership interest. The Partnership’s net assets are determined monthly, and any increase or decrease from the end of the preceding month is added to or subtracted from the capital accounts of the partners based on the ratio that the balance of each capital account bears in relation to the balance of all capital accounts as of the beginning of the month. The number of units held by the TIC 401(k) Plan will be restated as necessary for management and incentive fees attributable to units held at the beginning of each month by the TIC 401(k) Plan to equate the per unit value of the TIC 401(k) Plan’s capital account with the Partnership’s per unit value.

(4)	REDEMPTION OF UNITS

	Units are redeemable at the discretion of each Limited Partner, within limits and subject to the terms of the Limited Partnership Agreement. Effective July 31, 2002, by way of a general waiver of the quarterly redemption provisions set forth in the Limited Partnership Agreement, redemptions of units may be made as of the last business day of any month subject to the following restrictions: for redemptions occurring on any month-end which is also a calendar quarter-end, written notice of redemption must be received by the General Partner at least five business days in advance of such redemption. For redemptions occurring on any month-end which is not a calendar quarter-end, written notice of redemption must be received by the General Partner at least 15 calendar days in advance of such redemption. Prior to July 31, 2002, redemptions could be made only as of the last business day of any quarter upon five business days advance notice. Redemption of units in $1,000 increments and full redemption of all units are made at 100% of the net asset value per unit effective as of the last business day of any month as defined in the Limited Partnership Agreement. Partial redemptions of units which would reduce the net asset value of a Limited Partner’s unredeemed units to less than the minimum investment then required of new Limited Partners or such Limited Partner’s initial investment, whichever is less, will be honored only to the extent of such limitation.

(5)	INCOME TAXES

	The Partnership has not made any provisions for U.S. Federal, state and local income taxes since the partners are responsible for reporting income or loss based upon their respective share of revenue and expense.

(6)	RELATED PARTY TRANSACTIONS

	The General Partner, due to its relationship with its affiliates and certain other parties, may enter into certain related party transactions.

	Bellwether Partners LLC (“BPL”), a Delaware limited liability company and an affiliate of the General Partner, is the Partnership’s primary forward contract counterparty. BPL does not charge commissions for transacting the Partnership’s foreign exchange and commodity forward contracts. The Partnership typically has on deposit with BPL, as collateral for forward contracts, up to 4% of the Partnership’s net assets.

	At September 30, 2002 and December 31, 2001, the amounts on deposit with BPL were $1,730,502 (including $21,911 in unrealized losses) and $1,187,258 (including $313,366 in unrealized gains). These amounts are included in due from brokers in the statements of financial condition. The Partnership earned interest income of $6,780 and $17,529 during the three and nine month periods ended September 30, 2002 and $10,977 and $33,661 during the three and nine month periods ended September 30, 2001, from deposits of collateral with BPL.

	Prior to March 2001, Bellwether Futures LLC (“BFL”), a Delaware limited liability company and an affiliate of the General Partner, provided assistance to the Partnership in the execution of treasury bond futures by floor brokers on the Chicago Board of Trade. BFL did not charge the Partnership for such services.

	TIC receives incentive and management fees as compensation for acting as trading advisor (Note 2).

(7)	FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND CONCENTRATION OF CREDIT RISK

	The Partnership is subject to changes in value resulting from the market and credit risk associated with the financial instruments which are traded. TIC takes an active role in managing the Partnership’s market and counterparty risks and has established formal procedures which are reviewed on an ongoing basis.

	TIC has developed a set of guidelines and policies which are designed to maintain risk within parameters which are appropriate and necessary to achieve targeted rates of return. These guidelines and policies include quantitative and qualitative criteria for individual risk factors as well as for aggregate risk. TIC’s Risk Management Department, in conjunction with various senior personnel from different disciplines throughout TIC and its affiliates, regularly assesses and evaluates the Partnership’s potential exposures to market risk based on analyses performed by the department.

	The Risk Management Department’s responsibilities include: evaluating the positions taken by traders in various instruments and markets globally and assessing the market risk associated with all of those positions. TIC’s Risk Management Department uses a statistical technique known as Value at Risk (“VaR”) to assist in measuring market risk. The VaR model is a proprietary system, and is one of several tools used to monitor and review the Partnership’s trading portfolios. The VaR model projects potential losses of the portfolio based on a historical simulation methodology which uses two years of historical data, a one-day holding period, and a 99% confidence level.

	As a writer of options, the Partnership receives a premium upon initial settlement and then bears the risk of changes in the price of the financial instrument underlying the option. Swaps, forward currency contracts and OTC foreign currency options are traded in unregulated markets.

	Derivative instruments are bilateral agreements which result in credit exposure between counterparties. Exchange traded derivatives settle through clearing houses backed by multiple members and present relatively low credit risk. OTC derivatives are settled with individual counterparties and, therefore, present potential concentrated credit risk exposure. TIC attempts to minimize credit risk exposure to trading counterparties and brokers through the use of bilateral collateral agreements (“Collateral Agreements”) with OTC derivative counterparties and through formal credit policies and monitoring procedures. TIC has a formal Credit Committee, comprised of senior professionals from different disciplines throughout TIC and its affiliates, that meets regularly to analyze the credit risks associated with the Partnership’s counterparties, intermediaries and service providers. A significant portion of the Partnership’s positions, including cash and due from brokers, are invested with or held at high credit quality banks and securities dealers. TIC establishes counterparty exposure limits and specifically designates which product types are approved for trading. The Partnership attempts to reduce its credit risk by establishing stringent credit terms in its legal trade documentation (i.e. ISDA agreements, master netting agreements, etc.) with its counterparties. In addition, TIC monitors exposure levels and actively moves collateral with counterparties to reduce exposure.

	Futures and forwards are typically liquidated by entering into offsetting contracts with the same counterparty. Swaps are either liquidated or held to maturity. For these instruments the unrealized gain or loss, rather than the contract or notional amounts, represents the present value of future net cash requirements.

	Collateral Agreements require the Partnership and its counterparties to monitor the fair value of its derivative transactions on a daily basis and pledge or receive additional collateral, as necessary. As of September 30, 2002, the Partnership pledged no cash collateral and no cash collateral had been received. As of December 31, 2001, the Partnership had pledged $703,791 of cash collateral and no cash collateral had been received. Under these Collateral Agreements, there was no securities collateral pledged or received as of September 30, 2002 and December 31, 2001. The Partnership records cash collateral pledged as due from brokers.

	The following table summarizes September 30, 2002 and December 31, 2001 assets and liabilities resulting from unrealized gains and losses on derivative instruments included in due from brokers in the statements of financial condition (000’s omitted):

			September 30, 2002				December 31, 2001

			Assets		Liabilities		Assets		Liabilities

Exchange traded:
	Interest rate futures		$	—	$	53	$	102	$	—
	Foreign exchange futures			—		258		—		—
	Equity index futures and options			—		83		—		30
Over-the-counter:
	Foreign exchange forwards			—		22		555		—
	Equity swaps			—		—		643		—
	Interest rate swaps			150		—		—		—
Non-financial derivative instruments				—		—		—		31

		Total	$	150	$	416	$	1,300	$	61

(8) FINANCIAL HIGHLIGHTS

The following represents financial highlights of the Partnership for the three and nine months ended September 30, 2002:

					Three Months Ended September 30, 2002			Nine Months Ended September 30, 2002

Per unit operating performance:

Net asset value per unit, beginning of the period					$	10,523.89		$	8,928.90
	Net investment loss per unit					(53.97	)		(332.29	)
	Net realized and unrealized gain (loss) per unit on trading activities					(138.88	)		1,734.43

						(192.85	)		1,402.14

Net asset value per unit, September 30, 2002					$	10,331.04		$	10,331.04

Total return:
	Total return before incentive fee					(1.83	)%		17.92	%
		Incentive fee				—			(2.22	)

				Total return after incentive fee		(1.83	)%		15.70	%

Ratios to average net assets:
	Net investment loss before incentive fee					(0.52	)%		(1.44	)%
		Incentive fee				—			(1.97	)

				Net investment loss after incentive fee		(0.52	)%		(3.41	)%

	Expenses before incentive fee					0.97	%		2.74	%
		Incentive fee				—			1.97

			Total expenses and incentive fee			0.97	%		4.71	%

The per unit operating performance and ratios are computed based upon the average units outstanding and average net assets for the Limited Partner interests, (excluding TIC 401(K) plan net assets, units and related income and expenses - see Note 2) respectively, for the three and nine months ended September 30, 2002. Total return is calculated as the change in the net asset value of the Limited Partner interests for the three and nine months ended September 30, 2002. The total return and ratios calculated for an individual Limited Partner may vary based on the timing of capital transactions; the total return and ratios for the TIC 401(k) Plan will vary due to the timing of capital transactions and due to the fact that it is not charged management or incentive fees (Note 2).

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

	The following discussion should be read in conjunction with the financial statements of the Partnership and related notes thereto.

	OVERVIEW AND BUSINESS

	The Partnership commenced operations on July 2, 1990. Following the closing of the initial offering period, the Partnership had 37 Limited Partners who subscribed for 421 units of limited partnership interest for $421,000. In addition, the General Partner purchased 400 units of general partnership interest for $400,000. The Partnership had additions of $905,000 and redemptions of $603,660 during the quarter ended September 30, 2002 (the “Current Quarter”). From its inception through October 1, 2002, the Partnership received total Limited Partner subscriptions and contributions of $48,466,256 and had total withdrawals of $36,338,754. In addition, the General Partner contributed $1,900,000 since inception. The General Partner redeemed $2,000,000 on March 31, 1994 and $1,400,000 on December 31, 1996. The General Partner’s equity in the Partnership as of September 30, 2002 was $2,030,882 representing approximately 5% of the Partnership’s equity. At October 1, 2002, the Partnership had a total of 135 Limited Partners.

	As specified in its Limited Partnership Agreement, the Partnership may accept investments from certain employee benefit plans of affiliates to the extent that such investments do not exceed 25% of the aggregate value of outstanding units, excluding units held by the General Partner and certain of its affiliates. On August 1, 1995, the Partnership accepted an investment of $99,306 from the Tudor Investment Corporation 401(k) Savings and Profit-Sharing Plan (the “TIC 401(k) Plan”), a qualified plan organized for the benefit of employees of TIC and certain of its affiliates. The Partnership has received TIC 401(k) Plan contributions in the aggregate amount from inception through October 1, 2002 of $3,980,828. The TIC 401(k) Plan’s equity in the Partnership as of October 1, 2002 was approximately $8,202,493 representing approximately 18.85% of the Partnership’s equity or approximately 22.16% excluding units held by the General Partner, TIC and certain of their affiliates. TIC has waived its right to receive management and incentive fees attributable to units held by the TIC 401(k) Plan. The number of units of limited partnership interest held by the TIC 401(k) Plan will be restated as necessary to equate the per unit value

	of the TIC 401(k) Plan’s capital account with the Partnership’s per unit value. Furthermore, BPL does not charge commissions for transacting the Partnership’s foreign exchange spot and forward and commodity forward contracts.

	CURRENT MARKET ENVIRONMENT

	The Partnership’s trading results in the third quarter of 2002 were mixed across trading strategies as global markets continued to show weakness due to concerns of corporate profits and the health of the world economy. The Partnership was modestly down on the quarter from positions in U.S. fixed income and global equity indices. Losses were offset somewhat by active trader in currencies.

	The Partnership’s trading results for the nine months ended September 30, 2002 were positive across a range of markets and instruments, with most trading strategies tied to weakness in the U.S. economy and U.S. equity markets. News of corporate failures, profit warnings and accounting irregularities increased volatility and created opportunities for directional trading in various markets. As these events unfolded, the Partnership benefited from positions in U.S. fixed income and U.S. equity indices as well as in positions in currencies.

	RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AS COMPARED TO THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001

	The Partnership reported a net increase (decrease) in net assets resulting from operations of $(760,407) and $5,889,605 for the three and nine month periods ended September 30, 2002 compared to a net increase in net assets resulting from operations of $4,556,917 and $7,541,943 for the three and nine month periods ended September 30, 2001.

	The following table compares Net Asset Value per Unit for the three and nine months ended September 30, 2002 and 2001:

			Change in Net Asset Value Per Unit

	Net Asset Value per Unit		Three Months Ended September 30					Nine Months Ended September 30

September 30, 2002	$	10,331.04	$	(192.85	)	(1.83	)%	$	1,402.14	15.70	%
September 30, 2001	$	9,006.18	$	1,179.72		15.07	%	$	1,910.41	26.92	%

	INVESTMENT INCOME

	Interest income for the three and nine months ended September 30, 2002 was $189,599 and $507,309 compared to the three and nine months ended September 30, 2001 of $279,248 and $1,010,310. The Partnership earns interest income on cash and cash equivalents maintained with banks or in trading accounts held with clearing brokers and counterparties and used by the Partnership as margin and collateral to engage in futures, option and forward contracts and other commodity interest contracts. The decrease in interest income was due primarily to the periodic lowering of interest rates by the Federal Reserve.

	INVESTMENT EXPENSE

	Interest expense for the three and nine months ended September 30, 2002 was $3,471 and $10,733 compared to the three and nine months ended September 30, 2001 of $32,505 and $87,095. The decrease in interest expense was due primarily to the decrease in trading volume of equity swap transactions.

	Brokerage commissions expense for the three and nine months ended September 30, 2002 was $75,480 and $254,882 compared to the three and nine months ended September 30, 2001 of $47,086 and $146,247. These expenses represent all brokerage commissions, exchange, National Futures Association and other fees incurred in connection with the execution and clearing of commodity interest trades. The increase in brokerage commissions is due to the increase in trade volume driven by the increase in assets under management. The General Partner anticipates that the Partnership will normally pay annually approximately 1% of its average Net Assets in brokerage commissions and other transaction costs and charges.

	OPERATING EXPENSES

	Management fees for the three and nine months ended September 30, 2002 were $172,607 and $479,255 compared to the three and nine months ended September 30, 2001 of $133,708 and $382,810. Because management fees are calculated as a percentage of the Partnership’s net assets, this increase was due to the increase in assets under management.

	Other expenses for the three and nine months ended September 30, 2002 were $121,398 and $213,513, compared to the three and nine months ended September 30, 2001 of $34,382 and $103,514. This increase was due to additional services rendered by the Partnership’s administrative, legal, accounting and audit service providers.

	NET REALIZED AND UNREALIZED GAINS/LOSSES ON TRADING ACTIVITIES

	Net realized and unrealized trading gains and losses, net of brokerage commissions from strategies that use a variety of derivative financial instruments, are recorded in the statements of operations. The following table summarizes the components (in thousands) of net realized and unrealized gains and losses, for the three and nine months ended September 30, 2002 and 2001.

			Three Months Ended September 30,						Nine Months Ended September 30,

			2002			2001			2002			2001

Exchange traded :
	Interest rate futures and options		$	(927	)	$	2,254		$	1,635		$	2,148
	Foreign exchange futures			(3	)		(105	)		159			(12	)
	Equity index futures			(575	)		2,186			992			3,577
Over-the-counter contracts:
	Foreign exchange forwards			793			601			4,202			2,889
	Commodity swaps			62			97			33			(556	)
	Equity index swaps			—			(253	)		(334	)		(468	)
	Interest rate swaps			150			—			150			(112	)
Non-financial derivative instruments				(152	)		141			(129	)		341

		Total	$	(652	)	$	4,921		$	6,708		$	7,807

Since the Partnership is a speculative trader in the commodities markets, current period results are not comparable to prior period’s results. The following table illustrates the Partnership’s net realized and unrealized gains and losses on trading activities as a percentage of average Net Assets, brokerage commissions and fees as a percentage of average Net Assets, and incentive fees as a percentage of net realized and unrealized gains and losses:

	Three Months Ended,						Nine Months Ended,

	September 30, 2002			September 30, 2001			September 30, 2002			September 30, 2001

Net realized and unrealized gain (loss) on trading activities as a percentage of average Net Assets		(1.3	)%		15.4	%		18.0	%		25.7	%
Brokerage commissions and fees as a percentage of average Net Assets		0.2	%		0.2	%		0.7	%		0.5	%
Incentive fees as a percentage of net realized and unrealized gains on trading activities		0.0	%		8.9	%		8.9	%		9.1	%

	Inflation is not expected to be a major factor in the Partnership’s operations, except that traditionally the commodities markets have tended to be more active during inflationary periods. Since the commencement of the Partnership’s trading operations in July 1990, inflation has not been a major factor in the Partnership’s operations.

	LIQUIDITY

	The Partnership’s assets are deposited and maintained with banks or in trading accounts with clearing brokers and counterparties. These assets are used by the Partnership as margin and collateral to engage in derivative instruments trading. Since the Partnership’s sole purpose is to trade in derivative instruments, it is anticipated that the Partnership will continue to maintain substantial liquid assets for margin purposes.

	Cash and cash equivalents are part of the Partnership’s inventory. Cash and cash equivalents of $39,935,789 and $29,804,258 represented approximately 91% and 89% of the Partnership’s assets as of September 30, 2002 and December 31, 2001. The cash and cash equivalents satisfy the Partnership’s need for cash on both a short term and long term basis.

	Since futures contract trading generates a significant percentage of the Partnership’s income, any restriction or limit on that trading may render the Partnership’s investment in futures contracts illiquid. Most commodity exchanges limit fluctuations in certain commodity contract prices during a single day by regulations referred to as a “daily price fluctuation limit” or “daily limits”. Pursuant to such regulations, during a single trading day, no trade may be executed at a price beyond the daily limits. If the price for a contract or a particular commodity has increased or decreased by an amount equal to the “daily limit,” positions in such contracts can neither be taken nor liquidated unless traders are willing to effect trades at or within the limit. Commodity interest contract prices have occasionally moved the daily limit for several consecutive days with little or no trading. Such market conditions could prevent the Partnership from promptly liquidating its commodity positions.

	CAPITAL RESOURCES

	The Partnership does not have, nor does it expect to have, any fixed assets. Redemptions and additional sales of units in the future will impact the amount of funds available for investment in commodity interest contracts in subsequent periods. As the amount of capital changes, the size of the positions taken by the Partnership is adjusted.

	The Partnership is currently open to new investments, which can be made quarterly. Such investments are limited to employees of TIC and its principals or its affiliates and certain employee benefit plans, including, but not limited to, the TIC 401(k) Plan.

	CRITICAL ACCOUNTING POLICIES

	The Partnership’s financial statements are prepared in conformity with accounting principles generally accepted in the United States, many of which require the use of management estimates and assumptions. Management believes that the estimates utilized in preparing its financial statements are reasonable and prudent; however, actual results could differ from these estimates.

	*MARKET VALUE*

	The Partnership values its derivative instruments at market value, with the accompanying gains and losses reflected in the statements of operations. The determination of market value is generally based upon independent market values when available from major exchanges or, if none are available, from independent broker quotations. Additionally, in determining market value, management utilizes pricing models with market quoted inputs and also considers closing exchange prices of related instruments, time value of money, volatility factors of the underlying instruments, and other market conditions.

	For additional information on the Partnership’s significant accounting policies, see Note 2 to the financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

	In the normal course of business, the Partnership is a party to a variety of off-balance sheet financial instruments in connection with its trading activities. These activities include the trading of derivative instruments. For derivative instruments, the unrealized gain or loss, rather than the contract notional amounts, represents the approximate future cash requirements. As a writer of options, the Partnership bears the risk of unfavorable changes in the price of the underlying instrument which may be in excess of the premium received.

	The Partnership is subject to market and credit risk associated with changes in the value of underlying financial instruments, as well as the loss of appreciation on certain instruments, if its counterparties fail to perform. Such losses may be in excess of the amounts recognized in the statements of financial condition. TIC takes an active role in managing and controlling the Partnership’s market and credit risk and has established formal control procedures that are reviewed on an ongoing basis.

	In order to control the Partnership’s market exposure, TIC applies risk management guidelines and policies designed to protect the Partnership’s capital. These guidelines and policies include quantitative and qualitative criteria for evaluating the appropriate risk levels for the Partnership. The Tudor Management Committee, together with TIC’s Risk Management Department assesses and evaluates the Partnership’s potential exposures to market risk based on analyses performed by the Risk Management Department. The Department’s responsibilities include: focusing on the positions taken in various instruments and markets globally; ascertaining that all such positions are accurately reflected on the Partnership’s position reports; and evaluating the risk exposure associated with all of those positions. The Risk Management Department uses a statistical technique known as Value at Risk (“VaR”) to assist the Partnership in measuring its exposure to market risk related to its trading positions. The VaR model is a proprietary system and is one of several analytical tools used by TIC to monitor and review the market risk exposure of the Partnership’s trading portfolios. The VaR model projects potential losses of the portfolio based on a historical simulation methodology which uses a two-year observation period of hypothetical daily changes in trading portfolio value and a one-day holding period.

	The following table illustrates the VaR for each component of market risk as of September 30, 2002. The dollar values represent the VaR at the 99% confidence level.

Risk Factors		September 30, 2002

	Interest rate derivatives	$	244,387
	Foreign exchange derivatives		876,528
	Equity index derivatives		199,785

		$	1,320,700

The following table illustrates the Partnership’s high, low and average daily VaR during the nine months ended September 30, 2002 for each component of market risk noted above:

Risk Factors		High		Low		Average

	Interest rate derivatives	$	1,051,417	$	45,909	$	363,138
	Foreign exchange derivatives		1,424,552		274,626		597,858
	Equity index derivatives		643,822		—		159,296
	Non-financial derivative instruments		173,062		14,783		157,528

		$	3,292,853	$	335,318	$	1,277,820

At September 30, 2002, the Partnership’s primary market exposure was to foreign exchange instruments.

	Changes in interest rates directly affect the price of interest rate futures and may, indirectly, affect the price of foreign exchange futures and equity index futures. At September 30, 2002, the Partnership’s interest rate exposure was primarily to interest rate fluctuations in the United States and other G-7 countries.

	The Partnership’s foreign exchange contract exposure is a result of fluctuations in exchange rates. Exchange rates fluctuate due to many factors including interest rates, rates of inflation and government policies and programs.

	The Partnership’s equity index exposure was primarily attributable to equity price risk in the United States and other G-7 countries. Stock index futures traded by the Partnership are principally limited to futures on broad based equity indices.

	In addition to exchange traded instruments, the Partnership is exposed to various over-the-counter derivative instruments including swaps and spot and forward contracts. As discussed below, in addition to having price risk that may be similar to exchange traded instruments, over-the-counter instruments may result in the Partnership having credit risk associated with its over-the-counter contract counterparties.

	Cash and due from brokers balances are held principally at high credit quality U.S. banks, U.S. securities dealers, and certain international financial institutions.

	Exchange traded futures and option contracts are marked-to-market daily, with variations in value settled on a daily basis with the exchange upon which they are traded and with the futures commission merchant through which the futures and options contracts are executed. Forward contracts are generally cash settled with the counterparty two days after the trade.

	TIC attempts to minimize credit risk exposure to trading counterparties and brokers through formal credit policies and monitoring procedures. TIC has established a formal Credit Committee, comprised of senior managers from different disciplines, that meets regularly to analyze the credit risks associated with the Partnership’s counterparties, intermediaries and service providers. A significant portion of the Partnership’s positions, including cash and cash equivalents, are invested with or held at institutions of high credit standing. The Credit Committee establishes counterparty exposure limits and specifically designates which instrument types are approved for trading.

	TIC also attempts to minimize the Partnership’s credit risk exposure to trading counterparties by entering into bilateral collateral agreements. These agreements typically include specialized margin terms, collateral thresholds and master agreements with certain counterparties that include netting provisions that incorporate the right of “offset” across OTC contracts with such counterparties. Accordingly, TIC monitors exposure levels of the Partnership and actively moves collateral with counterparties to reduce exposure.

	Notwithstanding the risk monitoring and credit review performed by TIC with respect to its counterparties there is always a risk of non-performance.

	Generally, financial contracts can be closed out at TIC’s discretion. An illiquid or closed market, however, could prevent the close-out of positions.

PART II – OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

	The Partnership initially registered 10,000 Units of Limited Partnership Interests pursuant to a registration statement (Commission file number 33-33982) that was declared effective on June 22, 1990. The Partnership registered an additional 10,000 Units of Limited Partnership Interests on June 9, 1998 (Commission file number 333-52543). Of the 20,000 Units that have been registered, 12,997 Units having an aggregate value of $48,466,256 have been sold through October 1, 2002.

ITEM 4. CONTROLS AND PROCEDURES

	As of September 30, 2002, an evaluation was performed under the supervision and with the participation of the Partnership’s management, including the President and Chief Executive Officer and the Chief Financial Officer of the General Partner of the Partnership, of the effectiveness of the design and operation of the Partnership’s disclosure controls and procedures. Based on that evaluation, the Partnership’s management, including the President and Chief Executive Officer and the Chief Financial Officer of the General Partner of the Partnership, concluded that the Partnership’s disclosure controls and procedures were effective as of September 30, 2002. There have been no significant changes in the Partnership’s internal controls or in other factors that could significantly affect internal controls subsequent to September 30, 2002.

ITEM 5. OTHER INFORMATION

	The Partnership has included in this Form 10-Q filing, and from time to time its management may make, statements which may constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts but instead represent only the Partnership’s beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the Partnership’s or its management’s control. Statements preceded by, followed by, or that include the words ‘‘expect,’’ ‘‘will,’’ ‘‘may,’’ ‘‘could,’’ ‘‘intend,’’ ‘‘anticipate,’’ ‘‘believe,’’ and ‘‘should’’, involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or those of the industry in which the Partnership operates, to be materially different from any expected future results, performance or achievements expressed or implied in these forward-looking statements. It is possible that actual results may differ, possibly materially, from the anticipated results indicated in these forward-looking statements. Important factors that could cause actual results to differ from those in the Partnership’s specific forward-looking statements include:

	•	a decline in general economic conditions;
	•	a decline in liquidity in global markets generally or certain sectors and instruments within such markets;
	•	material changes in government regulations relating to contracts, instruments, or participants in various markets in which the Partnership is active;
	•	reduced availability of credit and other forms of leverage from counterparties, banks, and dealers in various markets in which the Partnership is active;
	•	increased volatility in the capital markets; and
	•	default by counterparties.

	Additional information regarding these and other important factors that could cause actual results to differ from those in the Partnership’s forward-looking statements is contained in the Partnership’s Form 10-K for the fiscal year ended December 31, 2001. The Partnership hereby incorporates by reference those risk factors into this Form 10-Q. Other additional information regarding important factors that cause results to differ from those in the Partnership’s forward looking statements are contained in the Partnership’s periodic filings with the Securities & Exchange Commission.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

		(a) Exhibits

	99.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	99.2	Certification Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

		(b) Reports on Form 8-K

	The Partnership did not file any reports on Form 8-K during the three months ended September 30, 2002.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	TUDOR FUND FOR EMPLOYEES L.P.

	By:	Second Management LLC, General Partner


	By:	/s/ MARK F. DALTON

		Mark F. Dalton, President and Chief Executive Officer of the General Partner


	By:	/s/ JOHN R. TORELL

		John R. Torell, Chief Financial Officer of the General Partner

November 14, 2002

CERTIFICATIONS

I, Mark F. Dalton, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of the Tudor Fund for Employees L.P.;

2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition and results of operations of the registrant as of, and for, the periods presented in this quarterly report;

4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

	a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

	b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

	c)	presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

	a)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.	The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

	TUDOR FUND FOR EMPLOYEES L.P.
	By:	Second Management LLC, General Partner


	By:	/s/ MARK F. DALTON

		Mark F. Dalton, President and Chief Executive Officer of the General Partner

November 14, 2002

CERTIFICATIONS

I, John R. Torell, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of the Tudor Fund for Employees L.P.;

2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition and results of operations of the registrant as of, and for, the periods presented in this quarterly report;

4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

	a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

	b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

	c)	presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

	d)	all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

	e)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.	The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

	TUDOR FUND FOR EMPLOYEES L.P.

	By:	Second Management LLC, General Partner

	By:	/s/ JOHN R. TORELL

		John R. Torell Chief Financial Officer of the General Partner

November 14, 2002