10-K 1 d10k.txt FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) X ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES ----- EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2001 ---------------------- OR TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE ---- SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from ____________ to ___________ 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 (I.R.S Employer of incorporation or organization) Identification No.) 1275 King Street, Greenwich, Connecticut 06831 -------------------------------------------------- ------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (203) 863-6700 -------------- Securities registered pursuant to Section 12(g) of the Act: Title of each class Name of each exchange on which registered ------------------- ----------------------------------------- N/A N/A -------------------- ------------------- Securities registered pursuant to Section 12(g) of the Act: N/A ----------------------------------------------------- (Title of class) N/A ----------------------------------------------------- (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [_] (Cover page 1 of 2 pages) State the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant. The aggregate market value shall be computed by reference to the price at which the common equity was sold, or the average bid and asked prices of such common equity, as of a specified date within 60 days prior to the date of filing. (See definition of affiliate in Rule 405.) Not Applicable -------------- APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Not Applicable -------------- DOCUMENTS INCORPORATED BY REFERENCE. List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statements; and (3) any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). Partnership's Registration Statement on Form S-1, File No. 333-52543, as ------------------------------------------------------------------------ amended, dated June 8, 1998 - Part IV ------------------------------------- (cover page 2 of 2 pages) PART I ITEM 1. BUSINESS. -------- (a). GENERAL DEVELOPMENT OF BUSINESS. Tudor Fund For Employees ------------------------------- L.P., a Delaware limited partnership (the "Partnership"), was formed on November 22, 1989. The business and objective of the Partnership is to generate appreciation of its assets through speculative trading of futures, forwards, option contracts and other derivative instruments, including commodity interests (collectively,"derivative instruments"). Only employees of Tudor Investment Corporation ("TIC") or its affiliates, and certain employee benefit plans of TIC or its affiliates, are eligible to become limited partners (each such owner a "Limited Partner") of the Partnership. Second Management LLC, a Delaware limited liability company and the general partner of the Partnership (the "General Partner" and together with the Limited Partners, the "Partners"), is responsible for selecting and monitoring the commodity trading advisors and brokers used by the Partnership and for performing all administrative services necessary to the Partnership's operations. The General Partner's main business office is located at 1275 King Street, Greenwich, Connecticut 06831, telephone (203) 863-6700, facsimile (203) 863-8600. In connection with a public offering of 10,000 units of Limited Partnership Interest (together with units of General Partnership Interest issued to the General Partner, the "Units"), an S-1 Registration Statement was filed with the Securities and Exchange Commission on June 20, 1990. Beginning on June 22, 1990, the Partnership solicited initial subscriptions for Units at an offering price of $1,000 per Unit, with a minimum subscription of $1,000. At the initial closing held on July 2, 1990, the Partnership sold a total of 421 Units for an aggregate capital contribution of $421,000 and 400 units of general partnership interest for an aggregate capital contribution of $400,000 and commenced trading activities. The Partnership registered an additional 10,000 units of Limited Partnership Interest pursuant to an S-1 Registration Statement (the "Registration Statement") that became effective on June 9, 1998. Units are offered for sale on a continuous basis (the "Continuing Offering") at quarterly closings at a purchase price equal to 100% of the Net Asset Value per Unit as of the opening of business on the first business day of the month in which the General Partner accepts the subscription. The minimum subscription is $1,000. Amounts in excess of this minimum must be contributed in increments of $1,000. Management. The General Partner conducts and manages the business of the ---------- Partnership. The General Partner is authorized to delegate complete trading authority of all of the Partnership's Net Assets to one or more trading advisors. The General Partner has appointed TIC as the Partnership's sole trading advisor pursuant to a management agreement between TIC and the Partnership (the "Management Agreement"). The Management Agreement may be terminated at any time upon twenty-four hours written notice to the other party. The General Partner, on behalf of the Partnership, may engage and compensate from the funds of the Partnership, such persons as the General Partner deems advisable, including any person or entity affiliated with the General Partner. The General Partner is also authorized to retain commodity brokers. Other responsibilities of the General Partner include, but are not limited to, the following: determining whether the Partnership will make distributions; administering redemptions of Limited Partners' Units; preparing account statements, filings, registrations and other documents required by applicable regulatory bodies, exchanges, or boards; depositing the Partnership's assets in an account or accounts at banks or brokers selected by the General Partner; directing the investment of the Partnership's assets; executing various documents on behalf of the Partnership and the Limited Partners; and supervising the liquidation of the Partnership if an event causes the termination of the Partnership to occur. Professional fees and other. The Partnership pays its ordinary administrative --------------------------- expenses, including the ordinary and recurring legal, accounting and auditing expenses incurred in connection with preparing and printing reports and tax information for Limited Partners and regulatory bodies, and mailing costs and filing fees. Such expenses were $143,721, $162,807 and $111,279 for the years ended December 31, 2001, 2000 and 1999. Compensation of the Trading Advisor. Pursuant to the Management Agreement, the ----------------------------------- Partnership pays TIC a quarterly incentive fee equal to 12% of the "Trading Profits" (as defined in the Registration Statement) earned as of the end of each fiscal quarter and receives a monthly management fee equal to 1/12 of 2% of the Net Assets (a 2% annual rate). TIC waived its right to receive incentive and management fees attributable to Units held at the beginning of each month by the Tudor Investment Corporation 401(k) Savings and Profit-Sharing Plan (the "TIC 401(k) Plan"). For definitions of the terms "Management Agreement", "Trading Profits", "Charges and Expenses", "Trading Managers", "Net Asset Value per Unit" and "Net Assets", refer to the Registration Statement. The General Partner estimates that, considering the above charges, the Partnership may have to generate gross profits of up to approximately 1% of the Partnership's average annual Net Assets, depending on trading volume and the interest income it receives, simply to break even. It is contemplated that the greatest of these charges will be brokerage commissions (estimated at up to approximately 1% of the Partnership's average annual Net Assets) even though the General Partner endeavors to negotiate rates that are reasonable based on comparable industry standards. Commodity Brokers. The Partnership's commodity trading accounts are carried by ----------------- its commodity brokers including Prudential Securities Incorporated, Bear Stearns Securities Corp., Salomon Smith Barney Inc., Lehman Brothers Inc., Morgan Stanley & Co. Incorporated, Morgan Stanley & Co International Limited, Goldman, Sachs & Co., Cargill Investor Services, Inc., J.P. Morgan Futures, Inc., Merrill Lynch Futures Inc., Barclays Capital, Inc. The General Partner in its sole discretion may at any time appoint new commodity brokers. The commodity brokers are responsible for holding and maintaining the Partnership's funds, commodities and other property; executing and/or clearing trades for the Partnership's accounts; and performing other record keeping and preparing and transmitting to the Partnership daily confirmations of transactions and monthly statements of account, calculating equity balances and margin requirements for the Partnership's account and other similar administrative functions. Foreign Exchange Dealer. Since inception, the Partnership has engaged in the ----------------------- trading of foreign exchange forward and metal forward contracts with Bellwether Partners LLC, a Delaware limited liability company ("BPL"), or its predecessor Bellwether Partners Inc. BPL is an affiliate of both the General Partner and TIC. Regulation. Congress enacted the Commodity Exchange Act as amended, (the "CE ---------- Act"), to regulate trading in commodity interests, the exchanges on which they are traded, the individual brokers who are members of such exchanges and the commodity professionals and commodity brokerage houses that trade in these commodity interests. The Commodity Futures Trading Commission ("CFTC") is an independent federal agency which administers the CE Act and is authorized to promulgate rules thereunder. Under the CE Act, the CFTC is empowered, among other things to (i) hear and adjudicate customer complaints against all individuals and firms registered or subject to registration under the CE Act; (ii) seek injunctions and restraining orders; (iii) issue orders to cease and desist; and (iv) levy substantial fines. Transactions in spot or forward contracts or on exchanges located outside the United States may not be within the jurisdiction of the CFTC, and to the extent that the Partnership engages in such transactions, it may be engaging in "unregulated" transactions. Both the General Partner and TIC are registered with the CFTC as commodity pool operators ("CPO") and commodity trading advisors ("CTA") as defined in the CE Act. As such, each is subject to regulation by the CFTC. If the registration of the General Partner were suspended, revoked or not renewed, the Partnership would no longer be able to trade until a substitute general partner could be duly elected and registered. If the registration of TIC as a CTA was suspended, revoked or not renewed, TIC would not be permitted by the General Partner to advise the Partnership. The CFTC has adopted extensive regulations affecting CPOs and CTAs which, among other things, requires distribution of disclosure documents to new customers, requires the retention of current trading and other records, prohibits CPOs from commingling pool assets with those of the operator or its other customers and requires CPOs to provide their customers with monthly account statements and annual reports. Limited Partners are afforded certain rights for reparations under the CE Act. Limited Partners may also be able to maintain a private right of action for certain violations of the CE Act. The CFTC has adopted rules implementing the reparations provision of the CE Act which provide that any person may file a complaint for a reparation award with the CFTC for violation of the CE Act against a floor broker, futures commission merchant, CTA, CPO or their respective associated persons. In order to prevent excessive speculation and attempted undue concentrated control in certain markets ("market corners"), the CFTC and certain United States exchanges have imposed speculative position limits on transactions in certain commodity interest contracts. In addition, certain exchanges have set limits on the total net positions that may be held by a commodity broker. Position limits are subject to certain exemptions, such as bona fide hedging transactions. While foreign exchanges do not generally impose position limits, such limits are set by many of the member firms. The Partnership is subject to the rules and regulations of the various exchanges on which it trades. The General Partner is a member of the National Futures Association ("NFA"), a self-regulatory organization authorized by the CFTC. The NFA became operational in 1982 and has assumed certain functions which were previously the responsibility of the CFTC, (e.g., audits of registrants). Among other things, the NFA has assumed responsibility for all CFTC registrations; has developed training and proficiency standards for members; and has established arbitration procedures for its members and customers of its members. (b). FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS. The Partnership's --------------------------------------------- business constitutes only one segment, a speculative commodity pool, for financial reporting purposes. (c). NARRATIVE DESCRIPTION OF BUSINESS. --------------------------------- (1) See discussion under Item 1 (a) above. (i) - (ix): Not applicable. (x) Competition. The Partnership experiences and will continue to ----------- experience competition from publicly and privately offered commodity pools and other investment funds, such as mutual funds. The Partnership also competes with other customers of TIC and with affiliates of the General Partner that trade proprietary trading accounts. Under TIC's trading method, all commodity-only accounts under management (other than proprietary accounts) are generally traded in a parallel fashion, with substantially equivalent trades made for all accounts on a proportional basis. When TIC trades commodity interest contracts on behalf of an investment pool or a customer with narrower or broader investment parameters, hedging, loss reduction, arbitrage and similar strategies often mandate that such accounts be traded in a manner that is not parallel with commodity-only accounts. Thus, the Partnership is in competition with such accounts for the same or similar positions at a particular time in a particular market. The widespread utilization of trend-based and technical computerized trading methods by many participants in the commodities markets causes similar trades to be made at or about the same time which increases competition for the Partnership as described above. The General Partner and TIC have a conflict of interest in managing the Partnership because BPL executes on foreign exchange forward contracts for the Partnership. This involves posting collateral with BPL in amounts of up to 5% of the Partnership's Net Assets. Although, BPL has unrestricted use of these funds, it does not receive a fee for its services. Many of the employee traders of the Trading Advisor are also employees of BPL. There is no affiliation, and consequently there is no conflict of interest, between the clearing brokers and the General Partner, TIC or BPL. The Partnership trades in markets in competition with other traders whose assets are greater than its assets. (xi) - (xii): Not applicable. (xiii): The Partnership has no employees; however, the General Partner has arranged for TIC to fulfill its management and administrative responsibilities. (d). FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC CORPORATIONS AND ----------------------------------------------------------------- EXPORT SALES. The Partnership has engaged in the trading of commodity interest ------------ contracts on exchanges located in foreign countries and has derived significant revenue therefrom. See Note 7 included in the Partnership's financial statements attached hereto. ITEM 2. PROPERTIES. ---------- The Partnership does not utilize any physical properties in the conduct of its business. ITEM 3. LEGAL PROCEEDINGS. ----------------- The Partnership is not aware of any material pending legal proceedings to which it is a party or to which any of its assets are subject. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF UNIT HOLDERS. ----------------------------------------------- To date, there have been no items which have been presented to the Unit holders. PART II. ITEM 5. MARKET FOR REGISTRANT'S UNITS AND RELATED UNIT HOLDER MATTERS. ------------------------------------------------------------- (a) MARKET FOR REGISTRANT'S UNITS. There is no established public trading ----------------------------- market for the Units. There have been no general distributions by the Partnership since its organization. Pursuant to the Partnership Agreement, the General Partner has the sole discretion to determine what distributions, if any, the Partnership will make to its Partners. Limited Partners may redeem some or all of their respective Units at the end of each calendar quarter. Redemption of Units in $1,000 increments and full redemption by a Limited Partner of all of its Units are made at 100% of the Net Asset Value per Unit effective as of the last business day of any quarter as defined in the Limited Partnership Agreement. 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. (b) USE OF PROCEEDS. The Partnership initially registered 10,000 Units of --------------- Limited Partnership Interest 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 Interest on June 9, 1998 (commission file number 33-52543). Of the 20,000 Units that have been registered, 13,665 Units having an aggregate value of $42,917,302 had been sold through January 1, 2002. ITEM 6. SELECTED FINANCIAL DATA. -----------------------

2001 2000 1999 1998 1997 ~~1996~~ ----------- ----------- ----------- ----------- ----------- Revenues~~................~~ $ 8,850,572 $ 5,538,110 $ 1,981,370 $ 5,159,521 $ 3,362,714 $Expenses 1,~~417~~554,~~232~~422 ~~Expenses................~~ 1,035,471 684,010 962,387 649,909 ~~596,480~~ ----------- ----------- ----------- ----------- ----------- Net Income~~..............~~ $ 7,296,150 $ 4,502,639 $ 1,297,360 $ 4,197,134 $ 2,712,805 ~~$ 820,752~~ ----------- ----------- ----------- ----------- ----------- Total Assets~~............~~ $33,669,386 $27,918,377 $22,242,164 $18,265,036 $17,166,451 ~~$12,138,706~~ ----------- ----------- ----------- ----------- ----------- Partners' Capital~~.......~~ $31,790,384 $22,161,072 $16,332,215 $14,891,112 $ 9,495,687 ~~$ 8,526,366~~ ----------- ----------- ----------- ----------- ----------- Units Outstanding 3,560.~~......~~390 3,123.135 2,846.856 2,786.401 2,382.864 ~~2,718.466~~ ----------- ----------- ----------- ----------- ----------- NAV Per Unit $ 8,928.~~...........~~90 $ 7,095.78 $ 5,736.93 $ 5,344.21 $ 3,984.99 ~~$ 3,136.46~~ ----------- ----------- ----------- ----------- ----------- Change in NAV Per Unit $ 1,833..12 $ 1,358.85 $ 392.72 $ 1,359.22 $ 848.53 ~~$ 272.71~~ ----------- ----------- ----------- ----------- ----------- Net Income Per Unit $ 1,897.~~....~~59 $ 1,337.56 $ 378.91 $ 1,327.46 $ 845.18 ~~$ 246.06~~ ----------- ----------- ----------- ----------- -----------

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS ----------------------------------------------------------------------- OF OPERATIONS. ------------- The Partnership commenced operations on July 2, 1990. From inception through January 1, 2002, the Partnership received total Limited Partner contributions of $42,917,302. Total Limited Partner withdrawals for the same period were $34,554,533. In addition, the General Partner has 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 interest in the Partnership as of January 1, 2002 was approximately $1,755,250, representing approximately 5% of the Partnership's equity. At January 1, 2002, the Partnership had a total of 111 Partners. As specified in the Second Amended and Restated Limited Partnership Agreement dated May 22, 1996, the Partnership may accept investments from certain employee benefit plans of affiliates to the extent that such investment does not exceed 25% of the aggregate value of outstanding Units, excluding Units held by the General Partner and affiliates. On August 1, 1995, the Partnership accepted an initial 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 January 1, 2002 of $3,472,624. The TIC 401(k) Plan's equity in the Partnership as of January 1, 2002 was approximately $6,345,005, representing approximately 18.8% of the Partnership equity or approximately 21.3% of the Partnership equity excluding Units held by the General Partner and affiliates. TIC has waived its right to receive management and incentive fees attributable to Units held by the TIC 401(k) Plan. Furthermore, on August 1, 1995, BPL ceased charging commissions for transacting the Partnership's foreign exchange forward and commodity contracts. (1) LIQUIDITY. --------- The Partnership's assets are deposited and maintained with banks, BPL, or in trading accounts with clearing brokers, and are used by the Partnership as margin and collateral to engage in futures, option, and forward contract trading. Since the Partnership's sole purpose is to trade in futures, options, forward contracts and other commodity interests contracts, it is anticipated that the Partnership will continue to maintain substantial liquid assets for margin purposes. Net Interest income for the years ended December 31, 2001, 2000 and 1999 was $1,174,097, $1,203,878, and $842,756 which represented 4.0%, 6.2%, and 4.9% of average net assets. In the context of the commodity or futures trading industry, cash and cash equivalents are part of the Partnership's inventory. Cash and cash equivalents represented approximately 89% and 91% of the Partnership's total assets as of December 31, 2001 and 2000. 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 "daily price fluctuation limits" 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 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. (2) CAPITAL RESOURCES. ----------------- The Partnership does not have, nor does it expect to have, any fixed assets. Redemptions and additional sales of Units in the future will impact the amount of funds available for investments 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 affiliates and certain employee benefit plans, including, but not limited to, the TIC 401(k) Plan. (3) RESULTS OF OPERATIONS. --------------------- The following table compares Net Asset Value per Unit for the years ended December 31, 2001, 2000 and 1999. Net Asset Value Increase in Net Asset Value Per Unit per Unit For the Year Ended ------------------ ------------------------------ December 31, 2001 $ 8,928.90 $ 1,833.12 25.83% December 31, 2000 $ 7,095.78 $ 1,358.85 23.69% December 31, 1999 $ 5,736.93 $ 392.72 7.35% Net trading gains and losses (includes realized and unrealized trading gains, losses and commissions ("Net Trading Gains")) 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 Trading Gains, for the years ended December 31, 2001, 2000 and 1999:

~~Increase~~2001 in2000 ~~Net~~1999 ~~Asset Value per Unit For the Year Ended Net Asset~~ ----------- ---------- -------- ~~Value~~Exchange ~~Per~~traded ~~Unit~~contracts: Interest rate futures and option contracts $ %3,167 $ 1,794 $ 491 Foreign exchange contracts 2,578 480 (1,370) Equity index contracts 1,547 1,493 (258) Over-the-counter contracts: Forward currency 554 1,147 884 Commodity swaps (615) (125) 59 Equity index swaps 73 157 (99) Interest rate swaps (112) 129 236 Non-financial derivative instruments 289 (957) 981 --------~~---~~ --------~~----~~ ---------- ~~December~~Total ~~31, 2000......................~~ $ 7,~~095.78~~481 $ 14,~~358.85~~118 ~~23.69% December 31, 1999......................~~ $~~5,736.93~~ $924 ~~392.72~~======== ~~7.35%~~======== ~~December 31, 1998...................... $5,344.21 $ 1,359.22 34.11%~~========

Since the Partnership is a speculative trader in the commodities markets, current year results are not comparable to results generated in previous years. The following table illustrates the Partnership's Net Trading Gains as a return on average Net Assets, brokerage commissions and fees as a percentage of average Net Assets, and incentive fees as a percentage of Net Trading Gains.

~~2000~~For ~~1999~~the ~~1998~~Year Ended ------ ------ ---------------------------------------- ~~Exchange~~December ~~traded contracts: Interest rate futures and option contracts......... $1~~31,~~794~~ $December ~~491 $3~~31,~~253~~ ~~Foreign~~December ~~exchange contracts......................... 480 (1~~31,~~370)~~ ~~(219)~~------------- ~~Equity~~------------- ~~index~~------------- ~~contracts.............................~~2001 ~~1,493~~2000 ~~(258)~~1999 ~~782~~---- ~~Over~~-~~the~~-~~counter~~-- ~~contracts:~~---- ~~Forward~~Net ~~currency...................................~~Trading ~~1,147~~Gains ~~884~~as ~~792~~a ~~Commodity~~% ~~swaps....................................~~of ~~(125)~~average 59Net ~~(350)~~Assets ~~Equity~~25.74% ~~index~~21.26% ~~swaps~~5.~~................................~~31% ~~157~~Brokerage ~~(99)~~Commissions 82& ~~Interest~~Fees ~~rate~~as ~~swaps................................~~a ~~129~~% ~~236~~of --average ~~Non-financial~~Net ~~derivative~~Assets ~~instruments~~0.64% 1.10% 1.~~..............~~20% ~~(957)~~Incentive ~~981~~Fees ~~(36)~~as ~~------~~a ~~------~~% ~~------~~of ~~Total............................................~~Net ~~$4,118~~Trading $Gains ~~924~~9.40% ~~$4,304~~8.25% ~~====== ====== ======~~6.73%

In general, commission rates have remained stable during the past three years. Inflation is not expected to be a major factor in the Partnership's operations, except that traditionally commodity markets have tended to be more active, and thus potentially more profitable, during times of high inflation. Since the commencement of the Partnership's trading operations in July 1990, inflation has not been a major factor in the Partnership's operations. (4) RISK MANAGEMENT. --------------- 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 one standard deviation level. These figures can be scaled up to indicate risk at the 95% or 99% confidence level. The following table illustrates the VaR for each component of market risk as of December 31, 2001. The dollar values represent the VaR scaled up to a 95% confidence level. VaR Risk Factors (95% Confidence) ------------ ------------------------ Exchange traded contracts: Interest rate contracts 53,603 Foreign exchange contracts 626,874 Equity index contracts 6,109 Over the counter contracts Equity Swaps 4,887 Currency contracts 13 Non-financial derivative instruments 100,465 ------- 791,951 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 rate agreements, forward currency contracts and OTC foreign currency options are traded in unregulated markets. Derivative instruments are bi-lateral 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 exposure risk. TIC attempts to minimize credit risk exposure to trading counterparties and brokers through the use of bi-lateral collateral agreements ("Collateral Agreements") with OTC derivative counterparts and through formal credit policies and monitoring procedures. TIC has a formal Credit Committee, comprised of senior managers 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 top tier 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, the 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 and forward rate agreements 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. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. ------------------------------------------- See attached financial statements for: Statements of Financial Condition as of December 31, 2001 and 2000 Condensed Schedule of Investments as of December 31, 2001 Statements of Operations for the years ended December 31, 2001, 2000 and 1999 Statements of Changes in Partners' Capital for the years ended December 31, 2001, 2000 and 1999 Notes to Financial Statements, December 31, 2001, 2000 and 1999 The financial statements presented have been prepared pursuant to rules and regulations of the Securities and Exchange Commission ("SEC") and, in the opinion of management of the General Partner, includes all adjustments necessary for a fair statement of each year presented. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND --------------------------------------------------------------- FINANCIAL DISCLOSURE. -------------------- None PART III. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. -------------------------------------------------- Second Management LLC, a Delaware limited liability company (the "General Partner"), is the general partner of the Partnership. The General Partner's principal office is located at 1275 King Street, Greenwich, Connecticut 06831; Telephone No. 203-863-6700; and Facsimile No. 203-863-8600. The General Partner is registered with the CFTC as a CPO and CTA and is a member of the NFA in such capacities. Tudor Investment Corporation, a Delaware corporation ("TIC"), is the Trading Advisor to the Partnership. TIC's principal office is located at 1275 King Street, Greenwich, Connecticut 06831; Telephone No. 203-863-6700; and Facsimile No. 203-863-8600. TIC is registered with the CFTC as a CPO and CTA and is a member of the NFA in such capacities. TIC and its United Kingdom affiliate, Tudor Capital (U.K.), L.P., act as general partner and/or trading advisor or sub-advisor to other United States and non-United States investment funds that invest in global (including emerging market) fixed income and equity securities, currencies, commodities, and derivatives. Paul Tudor Jones, II, age 47, is the Chairman, the Chief Executive Officer, and the controlling principal of Tudor. Mr. Jones formed Tudor in 1980, and has operated the company continuously since 1983. Mr. Jones is a member of the Commodity Exchange, Inc., the New York Board of Trade, Inc., the Chicago Board of Trade, and the Chicago Mercantile Exchange. In addition, Mr. Jones is a member of the Board of Directors of the Cantor Fitzgerald Futures Exchange. Mr. Jones served as Chairman of the New York Cotton Exchange (which is now a division of the New York Board of Trade, Inc.) from August 1992 through June 1995. Mr. Jones is the Founder and a Director of The Robin Hood Foundation, a charitable foundation, and is a Director of the National Fish and Wildlife Foundation and The Everglades Foundations Inc. Mark F. Dalton, age 51, is the President of Tudor. Prior to joining Tudor in September 1988, Mr. Dalton was employed by Kidder, Peabody & Co. Incorporated where he served in various senior positions, including Chief Financial Officer. Mr. Dalton is also a director of Progenics Pharmaceuticals, Inc., Cathay Investment Fund Limited, and certain non-for-profit educational and charitable organizations. John G. Macfarlane, III, age 47, is the Chief Operating Officer and a Managing Director of Tudor. Prior to joining Tudor in January 1998, Mr. Macfarlane was employed by Salomon Brothers and its affiliates where he served in various senior positions, including Managing Director and head of United States and Asian Fixed Income Derivatives, and Treasurer. Mr. Macfarlane does not participate in the trading of customer accounts of Tudor or its affiliates. Andrew S. Paul, age 49, is a Managing Director, the General Counsel and the Secretary of Tudor. Mr. Paul joined Tudor in July 1989. Mr. Paul does not participate in the trading of customer accounts for Tudor or its affiliates. James J. Pallotta, age 44, is a Managing Director and the Director-U.S. Equities Group of Tudor. Prior to joining Tudor in August 1993, Mr. Pallotta was a principal portfolio manager at Essex Investment Management Company, Inc. He joined Essex in 1983 as a Vice President, became a Senior Vice President and the Director of Research in 1989, and commenced managing client funds in January 1989. Mr. Pallotta is also a director of certain non-for-profit educational and charitable organizations. Mark V. Houghton-Berry, age 43, is a Managing Director of the affiliates of Tudor that maintain offices in Surrey, England. Prior to joining Tudor in July 1995, Mr. Houghton-Berry was an Executive Director and Head of Proprietary Trading in London with Goldman Sachs International. Robert P. Forlenza, age 46, is a Managing Director of Tudor. Prior to joining Tudor in January 1995, Mr. Forlenza was a Vice President of Carlisle Capital Corporation, a private leveraged buyout firm, where he was responsible for the management of several of its portfolio companies. Mr. Forlenza is a director of PRT Group Inc. and various private companies in the United States. Richard L. Fisher, age 48, is an outside Director of Tudor. Since September 1983, Mr. Fisher has been a Managing Director of Dunavant Enterprises, Inc. Mr. Fisher has been a Director of Tudor since June 1991. Mr. Fisher does not participate in the trading or day-to-day management Tudor or its affiliates. John R. Torell, age 39, is a Managing Director and the Chief Financial Officer of Tudor. Mr. Torell joined Tudor in May 1994. Mr. Torell does not participate in the trading of customer accounts of Tudor or its affiliates. There have been no material administrative, civil or criminal actions against the General Partner, TIC or any of their executive officers or directors within the last five years. ITEM 11. EXECUTIVE COMPENSATION. ---------------------- The Partnership has no officers or directors. The General Partner administers the business and affairs of the Partnership. Mr. Jones, the Chairman, Chief Executive Officer and controlling shareholder of the General Partner receives no compensation from the Partnership. TIC earned $1,215,170, $656,067, and $357,955 in incentive and management fees from the Partnership during 2001, 2000 and 1999. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. -------------------------------------------------------------- (a) Security Ownership of Certain Beneficial Owners. As of January 1, ----------------------------------------------- 2002, the only Unit holders who owned more than five percent (5%) of the total Units outstanding were:

~~For~~NAME ~~the~~ADDRESS ~~Year~~NO. ~~Ended~~UNITS PERCENT ---- ------- --------- -------~~-----------~~ ~~December~~Tudor ~~31,~~401k ~~December~~Savings ~~31,~~and ~~December~~1275 ~~31,~~King ~~2000~~Street ~~1999~~710.614 ~~1998~~18.8% Profit-~~-----------~~Sharing ~~------------~~Plan ~~------------~~Greenwich, ~~Net~~CT ~~Trading~~06831 ~~Gains~~James asPulaski ac/o %Tudor ofInvestment ~~average~~Corporation ~~Net Assets~~231.~~........................~~326 216.261% ~~5.31%~~1275 ~~31.43%~~King ~~Brokerage~~Street ~~Commissions~~Greenwich, &CT ~~Fees~~06831 asRobert aP. %Forlenza of(1) ~~average~~c/o ~~Net~~Tudor ~~Assets~~Investment Corporation 229.~~.............~~498 16.1% ~~1.2%~~1275 ~~1.4%~~King ~~Incentive~~Street ~~Fees~~Greenwich, asCT a06831 %Second ofManagement ~~Net~~LLC ~~Trading~~1275 ~~Gains..............................~~King ~~8.25%~~Street 6196.~~73%~~581 95.342% Greenwich, CT 06831

(1) Robert P. Forlenza is a Managing Director and a Director of TIC. (b) Security Ownership of Management. As of January 1, 2002, the -------------------------------- General Partner and the executive officers of the General Partner collectively owned 11.85% of the outstanding interests in the Partnership. As of January 1, 2002, in addition to the persons identified in the table above, Mark Dalton and Andrew Paul, each of whom is a principal of both the General Partner and Tudor, owned 118.8156 Units (3.14%) and 133.6957 Units (3.53%), respectively. (c) Changes in Control. There have been no changes in control of the ------------------ Partnership. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. ---------------------------------------------- (a) Transactions with Management and Others. --------------------------------------- See Item 1(a), GENERAL DEVELOPMENT OF BUSINESS, MANAGEMENT; Item 1(c) ------------------------------- ---------- (1)(x), NARRATIVE DESCRIPTION OF BUSINESS, COMPETITION; Item 11, --------------------------------- ----------- __________________ EXECUTIVE COMPENSATION; and Note 6 - "Related Party Transactions" of ---------------------- "Notes To Financial Statements" in the accompanying Financial Statements. (b) Certain Business Relationships. ------------------------------ (1) None. (2) The Partnership incurred incentive and management fees payable to TIC of $1,215,170, $656,067 and $357,955 for the years ended December 31, 2001, 2000, and 1999, which were in excess of 10% of the Partnership's total revenue of $8,850,572, $5,538,110, and $1,981,370 for the respective periods referred to above. (3) None. (4) Not applicable. (5) Not applicable. PART IV. ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. --------------------------------------------------------------- (a) 1. Financial Statements. --------------------- The following financial statements and report of independent public accountants are set forth in the annexed financial statements: Report of Independent Public Accountants Statements of Financial Condition as of December 31, 2001 and 2000 Condensed Schedule of Investments as of December 31, 2001 For the years ended December 31, 2001, 2000 and 1999: Statements of Operations Statements of Changes in Partners' Capital Notes to Financial Statements, December 31, 2001, 2000 and 1999 The Partnership meets all the provisions of SFAS No. 102, Paragraph 7, "Statement of Cash Flows - Exemption of Certain Enterprises and Classification of Cash Flows from Certain Securities Required for Resale." Therefore, statements of cash flows have not been provided. 2. No financial statement schedules are required to be filed. --------------------------------------------------------- 3. Exhibits. (unless otherwise indicated, each Exhibit was -------- previously filed and has not been amended in any material respect). 1.01 Form of Selling Agreement among Cargill Investor Services, Inc., Second Management LLC, and the Partnership. 3.01 Form of Second Amended and Restated Limited Partnership Agreement of the Partnership. 3.02(a) Certificate of Limited Partnership of the Partnership. 3.02(b) Amendment to the Certificate of Limited Partnership of the Partnership. 10.01(a) Form of Amended and Restated to Customer Foreign Exchange Agreement between the Partnership and Bellwether Partners LLC. 10.02(a) Form of Management Agreement among the Partnership, Second Management Company, Inc. (succeeded by Second Management LLC), and Tudor Investment Corporation. 10.02(b) Form of Amendment to Management Agreement among the Partnership, Second Management Company, Inc., and Tudor Investment Corporation. 10.03(a) Form of Subscription Agreement and Power of Attorney to be executed by purchasers of Units who are individuals. 10.03(b) Form of Subscription Agreement and Power of Attorney to be executed by a Trustee of the Tudor Investment Corporation 401(k) Savings and Profit-Sharing Plan. 10.03(c) Form of Representations to be made by participants in the Tudor Investment Corporation 401(k) Savings and Profit Sharing Plan. 10.03(d) Form of Subscription Agreement for use in making additions to existing accounts. 10.04(a) Form of Escrow Agreement among the Partnership, Seventh Management, Inc., and United States Trust Company of New York. 10.04(b) Form of Amendment to Escrow Agreement among the Partnership, Cargill Investor Services, Inc., and United States Trust Company of New York. 99.1 Letter to the Securities and Exchange Commission pursuant to Temporary Note 3T. (filed herewith) (b) Reports on Form 8-K. No reports on Form 8-K were filed during the year ended December 31, 2001. 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 MANAGMENT LLC, General Partner By: /s/ Mark F. Dalton ------------------- Mark F. Dalton President DATE: March 28, 2002 Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. SECOND MANAGEMENT LLC By: /s/ Paul T. Jones, II March 28, 2002 --------------------------------------- Paul T. Jones, II, Chairman and Chief Executive Officer By: /s/ Mark F. Dalton March 28, 2002 --------------------------------------- Mark F. Dalton, President By: /s/ John Macfarlane, III March 28, 2002 --------------------------------------- John Macfarlane, III, Managing Director and Chief Operating Officer By: /s/ John R. Torell March 28, 2002 --------------------------------------- John R. Torell, Managing Director and Chief Financial Officer By: /s/ Andrew S. Paul March 28, 2002 --------------------------------------- Andrew S. Paul, Managing Director, General Counsel and Secretary REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Partners of Tudor Fund For Employees L.P.: We have audited the accompanying statements of financial condition of Tudor Fund For Employees L.P. (a Delaware limited partnership) as of December 31, 2001 and 2000, including the condensed schedule of investments as of December 31, 2001, and the related statements of operations and changes in partners' capital for each of the three years in the period ended December 31, 2001. 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 auditing standards generally accepted in the United States. 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 Tudor Fund For Employees L.P. as of December 31, 2001 and 2000, and the results of its operations for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States. /s/ Arthur Andersen LLP New York, New York March 5, 2002 TUDOR FUND FOR EMPLOYEES L.P. ------------------------------ STATEMENTS OF FINANCIAL CONDITION --------------------------------- DECEMBER 31, 2001 AND 2000 --------------------------

~~VaR~~ASSETS ~~Risk~~2001 ~~Factors~~2000 ~~(95%~~------ ~~Confidence)~~------------- ------------- Cash and cash equivalents $ 29,804,258 $ 25,307,514 Due from brokers 3,865,128 2,610,863 ------------- ------------- ~~Exchange~~Total ~~traded~~assets ~~contracts~~33,669,386 ~~Interest~~27,918,377 ~~rate~~============= ~~futures~~============= ~~and~~LIABILITIES ~~option~~AND ~~contracts..............~~PARTNERS' CAPITAL ------------------------------------ LIABILITIES: Pending partner additions $~~204~~ 1,~~435~~525,056 ~~Foreign~~$ ~~exchange~~4,931,369 ~~contracts..............................~~Redemptions ~~198~~payable 187,808 369,794 Incentive fee payable - 339,869 Management fee payable 85,100 29,661 Accrued professional fees and other 81,038 86,612 ------------- ------------- Total liabilities 1,879,002 5,757,305 ------------- ------------- PARTNERS' CAPITAL: Limited partners, 20,000 ~~Equity~~units ~~index~~authorized ~~futures~~and 3,363.810 and 2,926.~~..................................~~555 87units outstanding as of December 31,~~450~~ ~~Non-derivative~~2001 ~~financial~~and ~~instruments~~2000 30,035,126 20,766,179 General Partner, 196.~~....................~~580 29units outstanding as of December 31,~~040~~ 2001 and 2000 1,755,258 1,394,893 ------------- ~~$518~~------------- Total partners' capital 31,~~925~~790,384 22,161,072 ------------- ------------- Total liabilities and partners' capital $ 33,669,386 $ 27,918,377 ============= =============

The accompanying notes are an integral part of these statements. TUDOR FUND FOR EMPLOYEES L.P. ----------------------------- CONDENSED SCHEDULE OF INVESTMENTS --------------------------------- DECEMBER 31, 2001 ------------------

~~No.~~---------- ~~Name~~---------- ~~Address~~--------- ~~Units~~ Percent of North ---------- --------- Partners' America Asia Europe Total Capital ---------- ---------- ~~Tudor~~--------- ~~401K~~----------- ~~Savings~~------------ ~~and~~OTC ~~1275~~OPTIONS, ~~King~~at ~~Street~~market ~~707.499~~value: ~~18.~~OTC Foreign Exchange Option $ - $ 352,710 - 352,710 1.11% ~~Profit~~-~~Sharing~~--------- ~~Plan~~---------- ~~Greenwich,~~--------- CT----------- ~~06831~~------------ ~~Robert~~Total P.securities, ~~Forlenza~~at market value (1cost $111,609) ~~c/o~~- ~~Tudor~~352,710 ~~Investment~~- ~~Corporation~~352,710 ~~229~~1.~~498~~11 ---------- ---------- --------- ----------- ------------ FUTURES, at market value: Index futures (24,950) (5,300) - (30,250) (.9%10) ~~1275~~Interest ~~King~~rate ~~Street~~futures ~~Greenwich~~- 101,645 CT- ~~06831~~101,645 ~~Mark~~.33 ~~Pickard~~Foreign exchange futures 220 - - 220 .00 Commodity futures (230,894) ~~c/o~~- ~~Tudor~~- ~~Investment~~(30,894) ~~Corporation 223~~(.~~004~~10) 5---------- ---------- --------- ----------- ------------ Total futures, at market value (55,624) 96,345 - 40,721 .7%13 ~~1275~~---------- ~~King~~---------- ~~Street~~--------- ~~Greenwich~~----------- ------------ FOREIGN EXCHANGE FORWARDS, CTat ~~06831~~market ~~Second~~value ~~Management~~- ~~LLC~~97,393 ~~1275~~215,973 ~~King~~313,366 ~~Street~~99 ~~196~~---------- ---------- --------- ----------- ------------ EQUITY SWAPS, at market value: 643,367 - - 643,367 2.~~580~~02 5---------- --------- --------- ----------- ------------ Total investments, at market value $ 587,743 $ 546,448 $ 215,973 $ 1,350,164 4.025% ~~Greenwich,~~========== CT========== ~~06831~~========= =========== ============

The accompanying notes are an integral part of this schedule. TUDOR FUND FOR EMPLOYEES L.P. ----------------------------- STATEMENTS OF OPERATIONS ------------------------ FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 ----------------------------------------------------

2001 2000 1999 --------- -- -------- ---------- ~~ASSETS~~REVENUES: ~~Cash~~Net ~~and~~realized ~~cash~~trading ~~equivalents............................~~gain $256,~~307~~890,~~514~~015 $194,~~825~~697,~~187~~983 ~~Due~~$1,048,971 ~~from~~Change ~~brokers.....................................~~in 2net unrealized trading gain (loss) 778,~~610~~210 (373,~~863~~658) 284,~~416~~556 Interest income 1,~~977~~182,347 1,213,785 847,843 ---------- ---------- ---------- Total revenues 8,850,572 5,538,110 1,981,370 ---------- ---------- ---------- EXPENSES: Brokerage commissions and fees 187,282 206,690 209,689 Management fee 512,176 316,198 295,771 Incentive fee 702,994 339,869 62,184 Professional fees and other 143,721 162,807 111,279 Interest expense 8,249 9,907 5,087 ---------- ---------- ---------- Total ~~assets.......................................~~expenses 1,554,422 1,035,471 684,010 ---------- ---------- ---------- Net income $277,~~918~~296,~~377~~150 $224,~~242~~502,~~164~~639 $1,297,360 ========== ========== ========== LIMITED PARTNERS' NET INCOME $6,935,785 $4,235,516 $1,220,159 GENERAL PARTNER'S NET INCOME 360,365 267,123 77,201 ---------- ---------- ---------- Net income $7,296,150 $4,502,639 $1,297,360 ========== ========== ========== Change in Net Asset Value Per Unit $ 1,833.12 $ 1,358.85 $ 392.72 ---------- ---------- ---------- Net Income Per Unit $ 1,897.59 $ 1,337.56 $ 378.91 ---------- ---------- ----------

The accompanying notes are an integral part of these statements. TUDOR FUND FOR EMPLOYEES L.P. ----------------------------- STATEMENTS OF CHANGES IN PARTNERS' CAPITAL ------------------------------------------ FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999 ----------------------------------------------------

~~2000~~Limited ~~1999~~Partners ~~1998~~General Partner Net Asset ---------- -------------------- ----------------------------- ~~Revenues:~~Total ~~Net~~Value ~~realized~~Units ~~trading~~Capital ~~gain..................~~Units ~~$4,697,983~~Capital ~~$1,048,971~~Capital ~~$3,978,084~~Per ~~Change~~Unit ~~in net unrealized trading gain (loss).................................... (373,658) 84,556 519,794 Interest income............................ 1,213,785 847,843 661,643~~ ---------- ------------- ------------- ~~Total revenues........................... 5,538,110 1,981,370 5,159,521~~ ------------ ----------- ---------- ~~Expenses:~~PARTNERS' ~~Brokerage~~CAPITAL, ~~commissions~~January ~~and~~1, ~~fees.............~~1999 ~~206~~2,~~690~~589.821 ~~209~~$13,~~689 194~~840,~~098~~543 ~~Management fee~~196.~~............................~~580 ~~316~~$ 1,~~198~~050,569 ~~295~~14,~~771~~891,112 ~~239~~$5,~~867~~344.21 ~~Incentive~~Net ~~fee..............................~~income ~~339~~- 1,~~869~~220,159 62- 77,~~184~~201 ~~402~~1,~~069~~297,360 ~~Professional~~TIC ~~fees~~401(k) ~~and~~Plan ~~other~~unit adjustment (Note 3) 14.~~...............~~141 ~~162,807~~- ~~111~~- - - Capital contributions 1,~~279~~051.500 ~~120~~5,~~599~~489,765 ~~Interest~~- ~~expense...........................~~- 95,~~907~~489,765 Redemptions (1,005.186) (5,~~087~~346,022) - - (5,~~754~~346,022) ---------- ------------ ------------ ~~Total~~----------- ~~expenses~~------------ PARTNERS' CAPITAL, December 31, 1999 2,650.276 $15,204,445 196.~~.........................~~580 $ 1,~~035~~127,~~471~~770 ~~684~~$ 16,~~010~~332,215 ~~962~~$5,~~387~~736.93 ----------- ------------ ------------ ----------- ------------ Net income~~...............................~~ $- 4,~~502~~235,~~639~~516 $1- 267,~~297,360~~123 $4,~~197~~502,~~134~~639 ~~==========~~TIC ~~==========~~401(k) ~~==========~~Plan ~~Limited~~unit ~~Partners'~~adjustment ~~Net~~(Note ~~Income~~3) 27.169 - - - - Capital contributions 959.~~...............~~408 $45,~~235~~416,~~516~~452 ~~$1,220,159~~- $3- 5,~~929~~416,~~937~~452 ~~General~~Redemptions ~~Partner's Net Income~~(710.~~................~~298) ~~267~~(4,~~123 77~~090,~~201~~234) ~~267~~- - (4,~~197~~090,234) --------- ------------ ------------ ----------- ~~Net~~------------ ~~income~~PARTNERS' CAPITAL, December 31, 2000 2,926.~~................................~~555 $420,~~502~~766,~~639~~179 196.580 $ 1,~~297~~394,~~360~~893 $4 22,~~197~~161,~~134~~072 ~~==========~~$7,095.78 ~~==========~~Net ~~==========~~income ~~Change~~- in6,935,785 ~~Net~~- ~~Asset~~360,365 ~~Value~~7,296,150 ~~Per~~TIC ~~Unit~~401(k) Plan unit adjustment (Note 3) 32.~~........~~780 $- - - - Capital contributions 1,~~358~~295.85726 $9,626,183 ~~392.72~~- $- 19,~~359~~626,183 Redemptions (891.22251) (7,293,021) - - (7,293,021) -------- --- ------- ---- ------ ~~Net Income Per Unit........................ $ 1,337.56 $ 378.91 $ 1,327.46~~ ------ ---- ------- --- ---------- PARTNERS' CAPITAL, December 31, 2001 3,363.810 $30,035,126 196.580 $ 1,755,258 $ 31,790,384 $8,928.90 =========== =========== ============ =========== ============

The accompanying notes are an integral part of these statements TUDOR FUND FOR EMPLOYEES L.P. ----------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- DECEMBER 31, 2001, 2000, AND 1999 --------------------------------- 1. ORGANIZATION AND BUSINESS ------------------------- 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 either 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 and the commodity brokers used by the Partnership. The General Partner is also responsible for the performance of all administrative services necessary to the Partnership's operations. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------- 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 in securities, futures contracts and other derivative instruments. Also included in due from brokers are the unrealized gains and losses on open futures contracts and other derivative instruments, as reflected on the condensed schedule of investments. Pending Partner Additions ------------------------- Pending partner additions is comprised of cash received prior to year-end for which units were issued on January 1 of the subsequent year. 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 the accrual basis. For derivative instruments, fair value is generally based upon independent market values when available from major exchanges or, if none are available, at independent broker quotations. Additionally, in determining fair 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 terms. Brokerage Commissions and Fees ------------------------------ These expenses represent all brokerage commissions, exchange, National Futures Association and other fees incurred in connection with the execution and clearing of commodity interests trades. Commissions and fees associated with open commodity interests at the end of the year are accrued. 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. The Service Company has waived its right to receive any payment for these services. 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 held at the beginning of each month by the TIC 401(k) Plan. 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 held by the TIC 401(k) Plan. Foreign Currency Translation ---------------------------- Assets and liabilities denominated in foreign currencies are translated at year-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. Accounting Pronouncement ------------------------ In September of 2000, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities - a replacement of FASB Statement No. 125". SFAS 140 amended the recognition and reclassification of collateral and disclosures related to securitization transactions and collateral. These changes are effective for fiscal years ending after December 15, 2000. SFAS 140 also amended the accounting for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001. The SFAS 140 provisions did not impact the Partnership's financial statements. 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 month. Each partner, including the General Partner, has a capital account with an initial balance equal to the amount such partner paid for its units. The Partnership's net assets are determined monthly, and any increase or decrease from the end of the preceding month is added to or subtracted from the capital accounts of the partners based on the ratio that 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 ------------------- At each quarter-end, units are redeemable at the discretion of each limited partner. 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 quarter 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 that 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 and state 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. Effective August 1, 1995, BPL ceased charging 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. During 2001, 2000 and 1999, the Partnership earned interest income of $39,413, $37,163, and $30,518, respectively, from deposits of collateral with BPL. At December 31, 2001, 2000 and 1999, the amounts on deposit with BPL were $1,187,258, $1,128,484 and $540,796 (including $313,366, ($2,428) and $74,335, respectively, in unrealized trading gains (losses)). 7.FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET MARKET 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 rate agreements, forward currency contracts and OTC foreign currency options are traded in unregulated markets. Derivative instruments are bi-lateral 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 exposure risk. TIC attempts to minimize credit risk exposure to trading counterparties and brokers through the use of bi-lateral collateral agreements ("Collateral Agreements") with OTC derivative counterparts and through formal credit policies and monitoring procedures. TIC has a formal Credit Committee, comprised of senior managers 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 top tier 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, the 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 and forward rate agreements 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 pull back additional collateral as necessary. As of December 31, 2001 and 2000, the Partnership has pledged $703,791 and $351,000, respectively, of cash collateral. Under these Collateral Agreements, there was no securities collateral pledged as of December 31, 2001 and 2000. The Partnership records cash collateral posted as a receivable from the broker. As of December 31, 2001 and 2000, the Partnership has received $0 and $60,000, respectively, of cash collateral under these Collateral Agreements. The Partnership nets this cash collateral received against the contractual commitment asset, when legal right of offset exists. As of December 31, 2001 and 2000, the Partnership had no securities collateral pledged or received under these Collateral Agreements. The following table summarizes the Partnership's year-end assets and liabilities at December 31, 2001 and 2000, resulting from unrealized gains and losses on derivative instruments included in the accompanying statements of financial condition (in thousands):

~~Limited~~2001 ~~Partners~~2000 ~~General Partner Net Asset~~ ----~~-------------------~~ ----~~--------------~~ ~~Total~~Assets ~~Value~~Liabilities ~~Units~~Assets ~~Capital~~Liabilities ~~Units Capital Capital Per Unit~~ ------~~----~~ ----------- ------- ---------- -~~----------~~ ~~---------~~Exchange ~~PARTNERS'~~traded ~~CAPITAL,~~contracts: ~~January~~Interest 1,rate ~~1998........~~contracts ~~2,186.284~~ $ ~~8,712,315~~102 ~~196.580~~ $ ~~783,372~~- $ ~~9,495,687~~182 $~~3,984.99~~ ~~Net income.............~~ -- ~~3,929,937~~Forward --exchange ~~267,197~~contracts ~~4,197,134~~314 ~~TIC 401(k) Plan unit adjustment (Note 3)... 24.416~~ -- -- --6 --Equity ~~Capital~~index ~~contributions..~~contracts ~~1,303.556 5,270,917~~ -- --30 ~~5,270,917~~124 ~~Redemptions............ (924.435) (4,072,626)~~ -- Over-the-counter ~~(4,072,626)~~contracts: ~~----------~~Commodity ~~-----------~~swaps -~~------~~ -~~---------~~ ~~-----------~~94 ~~PARTNERS' CAPITAL, December 31, 1998...... 2,589.821 13,840,543 196.580 1,050,569 14,891,112 $5,344.21 Net income.............~~ -- ~~1,220,159~~Equity --swaps ~~77,201~~643 ~~1,297,360 TIC 401(k) Plan unit adjustment (Note 3)... 14.141~~ -- -- -- --Interest ~~Capital~~rate ~~contributions..~~swaps ~~1,051.500 5,489,765~~ -- -- ~~5,489,765~~7 ~~Redemptions............ (1,005.186) (5,346,022)~~ -- --Currency ~~(5,346,022)~~contracts ~~----------~~241 -~~----------~~ -~~------~~ -~~---------~~ Non-~~----------~~financial ~~PARTNERS'~~derivative ~~CAPITAL,~~instruments ~~December~~- 31, ~~1999...... 2,650.276 15,204,445 196.580 1,127,770 16,332,215 $5,736.93 Net income.............~~ -- ~~4,235,516 267,123 4,502,639 TIC 401(k) Plan unit adjustment (Note 3)... 27.169~~ -- -- -- -- ~~Capital contributions.. 959.408 5,416,452~~ -- -- ~~5,416,452 Redemptions............ (710.298) (4,090,234)~~ -- -- ~~(4,090,234)~~ -------~~---~~ ----------- ------- -~~---------~~ ~~-----------~~$ ~~PARTNERS' CAPITAL~~1,300 ~~December 31, 2000...... 2,926.555~~ $~~20,766,179~~ ~~196.580~~61 $~~1,394,893~~ ~~$22,161,072~~407 $~~7,095.78~~ ~~==========~~6 =======~~====~~ ======= =====~~=====~~ =====~~====== =========~~

8. FINANCIAL HIGHLIGHTS -------------------- The following represents financial highlights of the Partnership for the year ended December 31, 2001: Per unit operating performance: Net asset value per unit, December 31, 2000 $ 7,095.78 Net investment loss per unit (98.52) Net realized and unrealized trading gain (loss) per unit 1,931.64 ----------- 1,833.12 Net asset value per unit, December 31, 2001 $ 8,928.90 =========== Total return: Total return before incentive fee 29.72% Incentive fee (2.75) ----------- Total return after incentive fee 26.97% =========== Ratios to average net assets: Net investment income before incentive fee 1.09% Incentive fee (2.29) ----------- Net investment income (loss) after incentive fee (1.20)% =========== Expenses 2.75% Incentive fee 2.29 ----------- Total expenses and incentive fee 5.04% =========== The per unit operating performance and ratios are computed based upon the average units outstanding and average net assets for the Limited Partner interests, respectively, for the year ended December 31, 2001. Total return is calculated as the change in the net asset value of the Limited Partner interests for the year ended December 31, 2001. The total return and ratios assessed to an individual Limited Partner, may vary based on varying management and/or incentive fee arrangements and the timing of capital transactions.

2000 1999 ------------------ ------------------ Assets Liabilities Assets Liabilities ------ ----------- ------ ----------- Exchange traded contracts: Interest rate contracts............. $182 $-- $244 $12 Foreign exchange contracts.......... -- 6 64 -- Equity index contracts.............. 124 -- 56 3 Over-the-counter contracts: Commodity swaps..................... 94 -- 27 -- Equity swaps........................ -- -- -- 1 Interest rate swaps................. 7 -- 236 -- Non-financial instruments............. -- -- 183 -- ---- --- ---- --- $407 $ 6 $810 $16 ==== === ==== ===

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