SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTER ENDED: 6/30/04

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. x YES NO ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). ¨ YES NO x

TUDOR FUND FOR EMPLOYEES L.P.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS


		Page
	PART I
Item 1.	Financial Statements

	Statements of Financial Condition as of June 30, 2004 and December 31, 2003	3

	Condensed Schedule of Investments as of June 30, 2004	4

	Condensed Schedule of Investments as of December 31, 2003	5

	Statements of Operations for the three and six months ended June 30, 2004 and 2003	6

	Statements of Changes in Partners’ Capital for the six months ended June 30, 2004 and the year ended December 31, 2003	7

	Notes to Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16

Item 4.	Controls and Procedures	18

	PART II

Item 1.	Legal Proceedings	19

Item 2.	Changes in Securities and Use of Proceeds	19

Item 3.	Defaults Upon Senior Securities	19

Item 4.	Submission of Matters to a Vote of Unit Holders	19

Item 5.	Other Information	19

Item 6.	Exhibits and Reports on Form 8-K	20

Signatures		21

PART I—FINANCIAL INFORMATION

Item 1.—Financial Statements

TUDOR FUND FOR EMPLOYEES L.P.

STATEMENTS OF FINANCIAL CONDITION


	June 30, 2004		DECEMBER 31, 2003
	(UNAUDITED)		(AUDITED)
Assets:
Cash and cash equivalents	$	74,067,582	$	51,326,211
Due from brokers		4,272,124		7,368,022

Total assets	$	78,339,706	$	58,694,233

Liabilities and partners’ capital:
Liabilities:
Pending partner additions	$	4,939,469	$	2,045,527
Redemptions payable		4,264,163		2,036,104
Incentive fee payable		265,727		—
Management fee payable		194,841		221,828
Accrued professional fees and other		127,672		117,179

Total liabilities		9,791,872		4,420,638

Partners’ capital:
Limited Partners, 20,000 units authorized and 4,964.062 and 4,383.242 units outstanding as of June 30, 2004 and December 31, 2003		65,936,699		51,944,007
General Partner, 196.580 units outstanding as of June 30, 2004 and December 31, 2003		2,611,135		2,329,588

Total partners’ capital		68,547,834		54,273,595

Total liabilities and partners’ capital	$	78,339,706	$	58,694,233

Net asset value per unit	$	13,282.81	$	11,850.59

See accompanying notes to financial statements.

TUDOR FUND FOR EMPLOYEES L.P.

CONDENSED SCHEDULE OF INVESTMENTS


June 30, 2004 (unaudited)	Cost (Proceeds)			Market or Fair Value			Percent of Partners’ Capital
Long contracts⁽¹⁾
Futures
Foreign exchange				$	32,000		0.05	%
Equity index					(175,750	)	(0.26	)

Total futures					(143,750	)	(0.21	)

Forwards
Foreign exchange					118,630		0.17

Short contracts⁽¹⁾
Options
Commodity	$	(66,870	)	$	(14,585	)	(0.02	)%
Futures
Foreign exchange					(32,000	)	(0.05	)
Forwards
Foreign exchange					(10,792	)	(0.02	)

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

See accompanying notes to financial statements.

TUDOR FUND FOR EMPLOYEES L.P.

CONDENSED SCHEDULE OF INVESTMENTS


December 31, 2003 (audited)	Cost (Proceeds)		Market or Fair Value			Percent of Partners’ Capital
Long contracts⁽¹⁾
Options
Metal	$	66,980	$	134,677		0.25	%
Futures
Bond				443,052		0.82
Interest rate				212,500		0.39
Commodity				425		0.00
Foreign exchange				(140,080	)	(0.26	)

Total futures				515,897		0.95

Forwards
Metal				12,680		0.02
Swaps
Equity index				1,168,183		2.15
Short contracts⁽¹⁾
Futures
Foreign exchange			$	138,720		0.26	%
Bond				137,530		0.25
Equity index				(190,512	)	(0.35	)

Total futures				85,738		0.16

Forwards
Foreign exchange				(281	)	0.00

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

See accompanying notes to financial statements.

TUDOR FUND FOR EMPLOYEES L.P.

STATEMENTS OF OPERATIONS

(UNAUDITED)


	THREE MONTHS ENDED JUNE 30,						SIX MONTHS ENDED JUNE 30,
	2004			2003			2004			2003
Investment income
Interest	$	174,356		$	154,882		$	327,150		$	301,738

Total investment income		174,356			154,882			327,150			301,738

Investment expense
Brokerage commissions		103,875			120,318			217,670			196,629
Interest		2,311			13,025			5,000			13,561

Total investment expenses		106,186			133,343			222,670			210,190

Net investment income		68,170			21,539			104,480			91,548
Operating expenses
Management fee		292,735			211,633			556,847			408,438
Incentive fee		265,727			11,580			868,378			11,580
Professional fees and other		51,956			56,199			116,243			120,153

Total operating expenses		610,418			279,412			1,541,468			540,171

Total expenses		716,604			412,755			1,764,138			750,361

Net operating loss		(542,248	)		(257,873	)		(1,436,988	)		(448,623	)

Net realized and unrealized gains/losses on trading activities
Net realized gain		6,849,174			2,512,074			11,617,994			997,003
Change in net unrealized appreciation (depreciation)		(3,624,114	)		765,881			(1,885,180	)		(63,316	)

Net realized and unrealized gains		3,225,060			3,277,955			9,732,814			933,687

Net increase in net assets resulting from operations	$	2,682,812		$	3,020,082		$	8,295,826		$	485,064

Limited Partners’ net increase in net assets resulting from operations	$	2,590,948		$	2,899,635		$	8,014,279		$	475,853
General Partner’s net increase in net assets resulting from operations		91,864			120,447			281,547			9,211

Net increase in net assets resulting from operations	$	2,682,812		$	3,020,082		$	8,295,826		$	485,064

Change in net asset value per unit	$	467.31		$	612.66		$	1,432.22		$	46.81

Net increase in net assets per unit	$	486.26		$	619.18		$	1,544.38		$	102.86

See accompanying notes to financial statements.

TUDOR FUND FOR EMPLOYEES L.P.

STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL

FOR THE SIX MONTHS ENDED JUNE 30, 2004 (UNAUDITED)

AND THE YEAR ENDED DECEMBER 31, 2003 (AUDITED)


	Limited Partners					General Partner						Net Asset Value Per Unit
	Units		Capital			Units	Capital		Total Capital			Net Asset Value Per Unit
Partners’ Capital, December 31, 2002	3,990.202		$	43,232,851		196.580	$	2,129,895	$	45,362,746		$	10,834.75
Net increase in net assets resulting from operations	—			5,115,684		—		199,693		5,315,377
TIC 401(k) Plan unit adjustment^(a)	27.598			—		—		—		—
Capital contributions	1,003.074			10,708,900		—		—		10,708,900
Capital redemptions	(637.632	)		(7,113,428	)	—		—		(7,113,428	)

Partners’ Capital, December 31, 2003^(b)	4,383.242			51,944,007		196.580		2,329,588		54,273,595		$	11,850.59
Net increase in net assets resulting from operations	—			8,014,279		—		281,547		8,295,826
TIC 401(k) Plan unit adjustment^(a)	23.276			—		—		—		—
Capital contributions	1,382.438			16,548,706		—		—		16,548,706
Capital redemptions	(824.894	)		(10,570,293	)	—		—		(10,570,293	)

Partners’ Capital, June 30, 2004^(b)	4,964.062		$	65,936,699		196.580	$	2,611,135	$	68,547,834		$	13,282.81

^(a)	See Note 3—Capital Accounts

^(b)	See Note 3—Redemption of Units

See accompanying notes to financial statements.

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2004

(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 Partnership’s trading approach and resulting positions are also utilized by the proprietary and other customer accounts of TIC and its affiliates. 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, principals or affiliates of TIC.

The objective of the Partnership is to realize capital appreciation through speculative trading of futures, forwards, equity and interest rate swaps, option contracts and other derivative instruments, including commodity interests (collectively, “derivative contracts”). The Partnership will terminate on December 31, 2010 or at an earlier date if certain conditions occur as outlined in the Third Amended and Restated Partnership Agreement dated as of May 12, 2004 (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.

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.

2. Summary of Significant Accounting Policies

The financial statements have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue Recognition

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

Brokerage commissions represents all brokerage commissions, exchange, National Futures Association and other fees incurred in connection with the execution and clearance of derivative instruments. Commissions on transactions are recorded on an execution basis and are included in brokerage commissions in the statements of operations.

Derivative Contracts

In the normal course of business, the Partnership enters into derivative contracts for trading. Typically, derivatives serve as components of the Partnership’s investment strategies and are utilized primarily to structure portfolio transactions to economically match the investment objectives of the Partnership.

The Partnership values derivative contracts on the statements of financial condition at independent market values when readily available from major exchanges. Otherwise, valuations are based on independent broker quotations or pricing models that consider the time value of money, volatility, and the current market and contractual prices of the underlying financial instruments. Changes in values of derivative contracts are included in the statements of operations.

2. Summary of Significant Accounting Policies (continued)

Derivative Contracts (continued)

Assets and liabilities at June 30, 2004 and December 31, 2003 relating to the Partnership’s derivative contracts are recorded on the statements of financial condition on a net basis for counterparties with master agreements with netting provisions. On the condensed schedules of investments, derivatives are presented net by type of derivative contract, considering long and short contracts separately.

Fair Value of Financial Instruments

The fair value of the Partnership’s assets and liabilities that qualify as financial instruments under Statement of Financial Accounting Standards No. 107, Disclosures About Fair Value of Financial Instruments, approximates the carrying amounts presented in the statements of financial condition.

Cash and Cash Equivalents

Cash and cash equivalents consists of cash and overnight time deposits of $68,700,000 and $49,000,000 with one European bank as of June 30, 2004 and December 31, 2003. At June 30, 2004 and December 31, 2003, there were no significant foreign currency balances.

Due From Brokers

Due from brokers includes cash balances carried as margin deposits for trading purposes. When legal right of offset exists, the Partnership nets cash collateral received or pledged against the contractual commitment asset or liability, and this net amount is included in due from brokers. Also included are unrealized gains and losses on open futures, forward, options and swap contracts. Due from brokers consists primarily of balances with U.S. brokers.

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 (or upon withdrawal). Since inception of the TIC 401(k) Savings and Profit-Sharing Plan (the “TIC 401(k) Plan”), TIC does not 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 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 does not 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

The functional currency of the Partnership is the United States dollar. All other currencies are considered to be foreign. Assets and liabilities denominated in a currency other than the U.S. dollar are translated into U.S. dollars at the closing rate of exchange as reported by a major international bank. Purchases and sales of derivative contracts, and income and expenses denominated in currencies other than U.S. dollars, are translated at the rates of exchange on the respective dates of such transactions. The resulting gains and losses from such translation are included, as part of the underlying transactions, in the accompanying statements of operations.

Net Increase in Net Assets Per Unit

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

2. Summary of Significant Accounting Policies (continued)

New Accounting Pronouncement

On May 15, 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 150, Accounting for Certain Instruments with Characteristics of both Liabilities and Equity (“SFAS 150”). This Statement establishes standards for classifying and measuring as liabilities certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity. SFAS 150 requires that financial instruments that are issued in the form of shares that are mandatorily redeemable on a fixed or determinable date or upon an event certain to occur be classified as liabilities. For SEC registrants deemed “non-public” entities under SFAS 150, SFAS 150 is effective for fiscal periods beginning after December 15, 2003. The Partnership adopted SFAS 150 on January 1, 2004. The Partnership has amended its Limited Partnership Agreement to clarify that limited partner interests are not mandatorily redeemable upon an event certain to occur as defined in SFAS 150. Therefore, the adoption of SFAS 150 did not affect the presentation of the Partnership’s financial position and ratios to average net assets.

3. Capital Accounts

Subscriptions and Capital Contributions

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 increase in net assets resulting from operations is 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. The TIC 401(k) Plan’s equity in the Partnership as of July 1, 2004 and January 1, 2004 was $13,423,447 and $11,123,065, respectively.

The minimum subscription amount is $1,000 for new Limited Partners. Additional capital contributions may be made in increments of $1,000. Both subscriptions and contributions may be made quarterly, at the beginning of the respective quarter, or on a more frequent basis at the discretion of the General Partner. The purchase price of a unit will be the net asset value per unit, as defined in the Limited Partnership Agreement, at the opening of business on the first business day of the month.

Pending Partner Additions

Pending partner additions is comprised of cash received prior to month-end for which units were issued on the first day of the subsequent month. Pending partner additions do not participate in the earnings or losses of the Partnership until the related units are issued.

Redemptions

Units are redeemable at the discretion of each Limited Partner, within limits and subject to the terms of the Limited Partnership Agreement. Redemptions of units may be made as of the last business day of any month subject to the following restrictions. Redemptions occurring on any month-end that is also a calendar quarter-end, require written notice of redemption that must be received by the General Partner at least five business days in advance of such redemption. Redemptions occurring on any month-end that is not a calendar quarter-end, require written notice of redemption that must be received by the General Partner at least 15 calendar days in advance of such redemption. 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.

4. Income Taxes

Individual partners are liable for income taxes on their share of the Partnership’s income. The Partnership is not liable for any federal, state or local income taxes.

5. 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 only forward contract counterparty. BPL does not charge commissions for transacting the Partnership’s foreign exchange and commodity forward contracts. At June 30, 2004 and December 31, 2003, the amounts on deposit with BPL as margin for forward contracts were $1,523,761 (including $107,838 in net unrealized gains) and $2,562,105 (including $12,399 in net unrealized gains). The Partnership earned interest income of $3,850 and $8,082 for the three and six months ended June 30, 2004 and $4,511 and $9,415 for the three and six months ended June 30, 2003, from deposits of collateral with BPL.

The Partnership reimburses expenses paid by TIC relating to the operations of the Partnership.

In the normal course of business, the Partnership has entered into contracts which provide a variety of general indemnifications. Such contracts include those with the Partnership’s Service Company, General Partner, trading advisor and certain of the Partnership’s brokers and trading counterparties. Any exposure to the Partnership under these arrangements would involve future claims that may be made against the Partnership. No such claims have occurred, nor are they expected to occur. Therefore, the Partnership has not accrued any liability in connection with such indemnifications.

6. Risk Management

Market Risk Management

The Partnership maintains positions in derivative instruments that trade both on exchanges and “over-the-counter” (“OTC”). The Partnership is subject to credit risk and changes in market value associated with the financial instruments that are traded. In conjunction with other customer and proprietary accounts, TIC takes an active role in managing the Partnership’s market and counterparty risks and has established formal internal control procedures that are reviewed on an ongoing basis.

TIC has developed a set of guidelines and policies that are designed to maintain risk at levels that are deemed 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.

TIC evaluates the positions taken by the Partnership in various instruments and markets globally and assesses the market risk associated with those positions. TIC 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 based on a historical simulation methodology which uses two years of historical data, a one day holding period, and a 99% confidence level. Other analytical techniques used in monitoring the Partnership’s market risk include regular reviews of the Partnership’s largest exposures. Additionally, regular reviews are performed of various liquidity factors, including average daily volume, number of days to liquidate, and percentage of net assets for all individual positions.

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. The Partnership’s ultimate obligations for options written may exceed the amount recognized in the statements of financial condition.

Credit Risk Management

Derivative instruments are bilateral agreements that result in credit exposure between counterparties. Exchange traded derivatives settle through clearing houses backed by multiple members and present relatively low credit risk. Certain derivative instruments are traded in unregulated markets. Derivative instruments are either liquidated by entering into offsetting contracts with the same counterparty or held to maturity. For certain of these instruments the unrealized gain or loss, rather than the contract or notional amounts, represents the present value of future net cash requirements. OTC derivatives are settled with individual counterparties and, therefore, present potential concentrated credit risk exposure.

TIC attempts to minimize 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 Credit Committee, comprised of senior managers from different disciplines throughout TIC and its affiliates, which 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. TIC attempts to reduce the credit risk of the Partnership by establishing stringent credit terms in its legal trade documentation (i.e., ISDA agreements, master netting agreements, etc.) with counterparties. In addition, TIC monitors exposure levels and actively moves collateral with counterparties to reduce exposure.

7. Derivative Contracts

The Partnership has Collateral Agreements with its counterparties whereby the Partnership obtains and is required to pledge collateral. The Partnership monitors the value of its derivative transactions on a daily basis and will obtain or pull back excess collateral when appropriate. As of June 30, 2004, the Partnership pledged $2,270,000 of cash collateral and no cash collateral had been received. As of December 31, 2003, the Partnership had pledged $142,000 of cash collateral and no cash collateral had been received. The Partnership records cash collateral posted as due from brokers.

The amounts of net unrealized gains (losses) on swaps, futures, options and forward contracts as of June 30, 2004 and December 31, 2003 are ($15,627) and $1,885,103, which are the amounts of credit risk related to these instruments before the benefit of any collateral.

8. Financial Highlights


	Three Months Ended June 30, 2004			Six Months Ended June 30, 2004			Three Months Ended June 30, 2003			Six Months Ended June 30, 2003
Per unit operating performance:
Net asset value per unit, beginning of the period	$	12,815.50		$	11,850.59		$	10,268.90		$	10,834.75
Income from investment operations:
Net operating loss		(125.10	)		(314.76	)		(63.68	)		(64.65	)
Net realized and unrealized gain on trading activities		592.41			1,746.98			676.34			111.46

Total from investment operations		467.31			1,432.22			612.66			46.81

Net asset value per unit, end of period	$	13,282.81		$	13,282.81		$	10,881.56		$	10,881.56

Total return:
Total return before incentive fee		4.11	%		13.71	%		6.00	%		0.46	%
Incentive fee		(0.46	)%		(1.62	)%		(0.03	)%		(0.03	)%

Total return after incentive fee		3.65	%		12.09	%		5.97	%		0.43	%

Ratios to average net assets:
Net investment income		0.10	%		0.16	%		0.04	%		0.18	%
Net operating loss⁽¹⁾		(0.97	)%		(2.63	)%		(0.61	)%		(1.09	)%
Total expenses before incentive fee		0.66	%		1.53	%		0.88	%		1.66	%
Incentive fee		0.46	%		1.59	%		0.03	%		0.03	%

Total expenses including incentive fee		1.12	%		3.12	%		0.91	%		1.69	%

⁽¹⁾	Includes incentive fees

The per unit operating performance, total return 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 six months ended June 30, 2004 and 2003. Total return is calculated as the change in the net asset value of the Limited Partner interests for the three and six months ended June 30, 2004 and 2003. 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 the TIC 401(k) Plan is not charged management or incentive fees (Note 2). The average net assets for the Limited Partner interests used in the above ratios is calculated by adding any redemptions payable effective at the end of the period to the Limited Partners’ capital for such period. The financial highlights ratios presented above are not annualized.

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.

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in conformity with U.S. generally accepted accounting principles. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Management believes that the estimates utilized in preparing its financial statements are reasonable and prudent; however, actual results may vary from these estimates. For a description of critical accounting policies see Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Partnership’s Form 10-K for the year ended December 31, 2003.

The Partnership values derivative contracts at independent market values when readily available from major exchanges. Otherwise, valuations are based on independent broker quotations or pricing models that consider the time value of money, volatility, and the current market and contractual prices of the underlying financial instruments.

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 (“LP Units”) for $421,000. In addition, the General Partner purchased 400 units of General Partnership Interest (“GP Units” and collectively with LP Units, “Units”) for $400,000. From inception through July 1, 2004, the Partnership received total Limited Partner subscriptions and contributions of $80,663,332 and had total withdrawals (inclusive of trading gains) of $54,369,738. In addition, the General Partner contributed $1,900,000 since inception. The General Partner redeemed $2,000,000 (inclusive of trading gains) on March 31, 1994 and $1,400,000 (inclusive of trading gains) on December 31, 1996. The General Partner’s equity in the Partnership as of July 1, 2004 was $2,611,135 representing approximately 4% of the Partnership’s equity. At July 1, 2004, the Partnership had a total of 159 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, TIC, and certain of their affiliates. On August 1, 1995, the Partnership accepted an investment of $99,306 from 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 July 1, 2004 of $6,478,899. The TIC 401(k) Plan’s equity in the Partnership as of July 1, 2004 was $13,423,447 representing approximately 18.27% of the Partnership’s equity or approximately 19.82% 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 LP Units 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 for the quarter ended June 30, 2004 were positive overall and mixed across a range of markets and instruments. The Partnership benefited from positions held in currencies and global fixed income as the U.S. dollar rebounded against the Euro and the Japanese Yen after reaching new lows earlier in the quarter, while interest rates in Japan continue to reach new highs and interest rates in the U.S. increased on speculation of a rate hike at the end of the quarter. The Partnership suffered losses in the equity markets and from positions in commodities for the quarter ended June 30, 2004.

RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004 AS COMPARED TO THE THREE AND SIX MONTHS ENDED JUNE 30, 2003

The Partnership reported a net increase in net assets resulting from operations of $2,682,812 and $8,295,826 for the three and six months ended June 30, 2004 compared to a net increase in net assets resulting from operations of $3,020,082 and $485,064 for the three and six months ended June 30, 2003.

The following table compares Net Asset Value per Unit for the three and six months ended June 30, 2004 and 2003:


	Net Asset Value per Unit		Change in Net Asset Value Per Unit
	Net Asset Value per Unit		Three Months Ended June 30				Six Months Ended June 30
June 30, 2004	$	13,282.81	$	467.31	3.65	%	$	1,432.22	12.09	%
June 30, 2003	$	10,881.56	$	612.66	5.97	%	$	46.81	0.43	%

INVESTMENT INCOME

Interest income for the three and six months ended June 30, 2004 was $174,356 and $327,150 compared to the three and six months ended June 30, 2003 of $154,882 and $301,738. 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 collateral to engage in futures, option and forward contracts and other commodity interest contracts. The Partnership’s interest income fluctuates with its levels of collateral pledged with counterparties as well as changes in overall interest rates.

INVESTMENT EXPENSE

Interest expense for the three and six months ended June 30, 2004 was $2,311 and $5,000 compared to the three and six months ended June 30, 2003 of $13,025 and $13,561. The Partnership’s interest expense will fluctuate with its levels of collateral pledged by counterparties.

Brokerage commissions expense for the three and six months ended June 30, 2004 was $103,875 and $217,670 compared to the three and six months ended June 30, 2003 of $120,318 and $196,629. 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 and will vary based on the Partnership’s trading activity during the period. Trading activity remained relatively stable for the three and six months ended June 30, 2004 as compared to same period in 2003. The General Partner anticipates that the Partnership will normally pay approximately 1% of its average Net Assets in brokerage commissions and other transaction costs and charges annually.

OPERATING EXPENSES

Management fees for the three and six months ended June 30, 2004 were $292,735 and $556,847 compared to the three and six months ended June 30, 2003 of $211,633 and $408,438. Because management fees are calculated as a percentage of the Partnership’s net assets, the increase in fees in 2004 was due to the overall increase in assets under management from $52,129,376 at June 30, 2003 to $68,547,834 at June 30, 2004.

Incentive fees for the three and six months ended June 30, 2004 were $265,727 and $868,378 compared to the three and six months ended June 30, 2003 of $11,580. Incentive fees fluctuate based on the amount, if any, of Net Trading Profits earned by the Partnership at each quarter-end. For the three months ended March 31, 2003, there were no net trading profits.

Professional fees and other expenses for the three and six months ended June 30, 2004 were $51,956 and $116,243 compared to the three and six months ended June 30, 2003 of $56,199 and $120,153. Professional fees and other expenses remained relatively stable for the three and six months ended June 30, 2004 as compared to the same period in 2003.

NET REALIZED AND UNREALIZED GAINS (LOSSES) ON TRADING ACTIVITIES

Net realized and unrealized trading gains and losses are recorded in the statements of operations. The following table summarizes the components (in thousands) of net realized and unrealized gains and losses, net of brokerage commissions, for the three and six months ended June 30, 2004 and 2003:


	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2003			2004			2003
Exchange traded :
Interest rate futures and options	$	(8	)	$	1,537		$	188		$	763
Foreign exchange futures		(5	)		57			(9	)		48
Commodity futures and options		7			75			138			75
Equity index futures		(549	)		(363	)		1,418			(1,339	)
Bond futures		3,741			—			3,193			—
Over-the-counter contracts:
Foreign exchange forwards and options		1,126			2,086			4,353			2,055
Commodity swaps		(432	)		(22	)		289			(305	)
Equity index swaps		5			(157	)		(46	)		(242	)
Forward rate agreements		—			—			—			(16	)
Interest rate swaps		—			—			—			(35	)
Non-financial derivative instruments		(764	)		(55	)		(9	)		(267	)

Total	$	3,121		$	3,158		$	9,515		$	737

As the Partnership is a speculative trader in the commodities markets, current period results are generally 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 on trading activities (these percentages are not annualized):


	Three Months Ended,				Six Months Ended,
	June 30, 2004		June 30, 2003		June 30, 2004		June 30, 2003
Net realized and unrealized gains on trading activities as a percentage of average Net Assets	4.6	%	6.4	%	15.1	%	1.9	%
Brokerage commissions and fees as a percentage of average Net Assets	0.1	%	0.2	%	0.3	%	0.4	%
Incentive fees as a percentage of net realized and unrealized gains on trading activities	8.2	%	0.4	%	8.9	%	1.2	%

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 with banks or in trading accounts with clearing brokers and counterparties. These assets are used by the Partnership as margin 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 collateral purposes.

Cash and cash equivalents are part of the Partnership’s inventory. Cash and cash equivalents of $74,067,582 and $51,326,211 represented approximately 95% and 87% of the Partnership’s assets as of June 30, 2004 and December 31, 2003. The cash and cash equivalents satisfy the Partnership’s need for cash on both a short term and long term basis.

Since futures 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 may be adjusted.

The Partnership is currently open to new subscriptions and contributions, which can be made quarterly. Periodically, the Partnership opens up subscriptions and contributions on a monthly basis. Such subscriptions and contributions 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.

OFF-BALANCE SHEET ARRANGEMENTS

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 of derivative instruments. For certain derivative instruments, the unrealized gain or loss, rather than the contract notional amounts, represents the approximate future cash requirements. See “Net Realized and Unrealized Gains (Losses) on Trading Activities” above for additional information.

NEW ACCOUNTING PRONOUNCEMENT

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk Management

The following table illustrates the VaR for each component of market risk as of June 30, 2004 and December 31, 2003. The dollar values represent the VaR at the 99% confidence level.


Risk Factors	June 30, 2004			December 31, 2003
Interest rate risk	$	40,703		$	1,282,353
Foreign exchange risk		596,263			50,494
Equity index risk		156,284			17,416
Non-financial derivative risk		—			556,394
Correlation offset⁽¹⁾		(433,250	)		(1,356,926	)

Aggregate VaR	$	360,000		$	549,731

⁽¹⁾

The correlation offset equals the difference between Aggregate VaR and the sum of the VaRs for the four risk factors. This offset arises due to the correlation that exists in the individual items being aggregated.

The Partnership is an active trader and the instruments and investments utilized by the Partnership change frequently. As the objective of the Partnership is to generate appreciation of its assets through speculative trading of derivatives, the risk taken in interest rates, foreign exchange rates, equity prices and non-financial derivatives will vary dependent on the strategies utilized by the Partnership as well as current economic conditions and global events.

The following table illustrates the Partnership’s high, low and average daily VaR during the six and twelve months ended June 30, 2004 and December 31, 2003 for each component of market risk noted above:


	June 30, 2004									December 31, 2003
Risk Factors	High⁽²⁾			Low⁽²⁾			Average			High⁽²⁾			Low⁽²⁾			Average
Interest rate risk	$	1,008,870		$	33,328		$	447,671		$	650,116		$	114,740		$	243,327
Foreign exchange risk		995,294			466,666			652,843			856,664			114,123			248,257
Equity index risk		2,086,493			187,255			825,845			1,081,240			165,731			309,518
Non-financial derivative risk		172,220			—			316,320			632,014			54,717			223,765
Correlation offset⁽¹⁾		(1,502,877	)		(420,249	)		(1,129,679	)		(1,382,034	)		(288,311	)		(353,867	)

Aggregate VaR	$	2,760,000		$	267,000		$	1,113,000		$	1,838,000		$	161,000		$	671,000

⁽¹⁾

⁽²⁾

The balances shown for each component of market risk represent their daily VaRs on the day that the Partnership experienced its highest and lowest daily Aggregate VaR during the period.

At June 30, 2004, the Partnership’s primary market exposure was to foreign exchange and equity index risks.

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 June 30, 2004 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 changes in 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.

The Partnership’s exposure to non-financial derivative instruments was primarily attributable to trading in commodities.

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

Cash and Due from Brokers balances are held principally at U.S. banks, U.S. securities dealers, and certain international financial institutions.

Credit Risk Management

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

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

ITEM 4. CONTROLS AND PROCEDURES

The Partnership’s management, with the participation of the President and Chief Executive Officer and the Chief Financial Officer of the General Partner of the Partnership, has evaluated the effectiveness of the Partnership’s disclosure controls and procedures as of June 30, 2004. 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 June 30, 2004. There were no material changes in the Partnership’s internal control over financial reporting during the second quarter of 2004.

PART II—OTHER INFORMATION

ITEM 1. 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 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 September 22, 1990. The Partnership registered an additional 10,000 Units of Limited Partnership Interests on September 9, 1998 (Commission file number 333-52543). Of the 20,000 Units that have been registered, 15,754 Units having an aggregate value of $80,663,332 have been sold through July 1, 2004.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF UNIT HOLDERS

None.

ITEM 5. OTHER INFORMATION

In early May 2004, the Partnership’s Limited Partners with the consent of the General Partner approved the adoption of the Third Amended and Restated Limited Partnership Agreement, dated as of May 12, 2004.

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:

•

decline in general economic conditions;

•

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, 2003. 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



31.1		Certification Pursuant to Rule 13A-14(a) and Rule 15D-14(a), of the Securities Exchange Act, as amended.

31.2		Certification Pursuant to Rule 13A-14(a) and Rule 15D-14(a), of the Securities Exchange Act, as amended.

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

32.2		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 June 30, 2004.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf 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

August 13, 2004

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TUDOR FUND FOR EMPLOYEES LP 10-Q