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EX-31.1 - SECTION 302 CEO CERTIFICATION - ROGERS INTERNATIONAL RAW MATERIALS FUND LPd301394dex311.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-K

 

 

 

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

or

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                    

Commission File number: 000-51836

 

 

ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.

(Exact name of registrant as specified in its charter)

 

Illinois   36-4368292
(State of Organization)   (IRS Employer Identification Number)

 

c/o Beeland Management Company, L.L.C.  

General Partner

141 West Jackson Boulevard, Suite 1340A

 
Chicago, Illinois  

60604

(Address of principal executive offices)   (Zip Code)

(312) 264-4375

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Units of Limited Partnership

 

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

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 the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.     Yes  x    No  ¨

Indicate by check mark if the 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 the 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.     Yes  x    No  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   ¨    Accelerated filer   ¨
Non-accelerated filer   ¨  (Do not check if a smaller reporting company)    Smaller reporting company   x

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes  ¨    No  x

 

 

DOCUMENTS INCORPORATED BY REFERENCE

None

 

 

 


PART I

 

ITEM 1. BUSINESS

(a) General development

Rogers International Raw Materials Fund, L.P. (the “Partnership”) is an Illinois Limited Partnership established in May 2000. The Partnership invests and trades a portfolio primarily of commodity futures and forward contracts designed to track the change in values of the Rogers International Commodity Index® (the “Index”). The Partnership commenced trading during November 2001. Beeland Management Company, L.L.C., an Illinois limited liability company (“Beeland Management”), serves as the general partner of the Partnership.

The Partnership originally filed a registration statement, under the Securities Act of 1933, as amended, with the Securities and Exchange Commission to register $200 million of units of limited partnership interest (the “Series A units”), which registration statement became effective in January 2001. The Partnership’s initial offering period was held during fiscal year 2001. The Series A units were initially offered for sale at a fixed price of $100 per Unit. An initial closing was held after a minimum of 50,000 units in subscriptions was received.

The net proceeds from the initial closing, after deducting the subscription fee, were placed in a trading account with the Partnership’s futures commission merchant and were used to acquire a portfolio of futures positions, consistent with the Partnership’s trading policies, as well as U.S. Government obligations.

The Partnership subsequently filed an additional registration statement with the Securities and Exchange Commission to bring the total dollar amount of Series A units registered for sale to approximately $245,405,200, and a total of 677,673.54 of units have been sold to the public as of March 1, 2012.

Effective September 22, 2010, the Partnership filed an additional registration statement with the Securities Exchange Commission to register $150,000,000 of Series B Units of limited partnership interest (the “Series B units”). A total of $867,432 Series B units have been sold to the public as of March 1, 2012. Series A and Series B units are identical with respect to participation in the Partnership’s profits or losses. Series B units do not, however, participate in any Partnership recoveries arising out of the bankruptcy of Refco Inc. and its affiliates.

The Partnership will terminate December 31, 2020 or earlier upon certain circumstances as defined in the Limited Partnership Agreement.

(b) Financial information about segments

The Partnership’s business constitutes only one business segment, i.e., a speculative commodity pool. The Partnership does not engage in sales of goods and services. Financial information regarding the Partnership’s business is set forth in Item 8 “Financial Statements and Supplementary Data.”

(c) Narrative description of business

The Partnership invests and trades in a portfolio of commodity futures and forward contracts. The Partnership’s investment activities are designed to replicate the positions that comprise the Rogers International Commodity Index ® (the “Index”). The Index consists of a compendium, sometimes known as a basket, of raw materials employed within the world economy and traded on established exchanges as futures and forward contracts. The Partnership invests and trades exclusively on the “long side” of the market. This means that the Partnership only buys positions in commodities and does not engage in any short-selling. The Partnership historically has closed out all positions by making an offsetting sale and has not taken delivery of the actual commodities, although it may take delivery in the future. Funds for its business are obtained only by the sale of units of limited partnership interest and from the retention of any profits generated from the Partnership’s trading. As of December 31, 2011, the Partnership was offering only Series B units for sale.

 

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The Index was developed by James Beeland Rogers, Jr. to be a balanced, representative, international raw materials index. Beeland Management believes that the Index includes most of the publicly traded raw materials used in international commerce for which futures contracts or forward contracts are regularly traded in recognized markets. Beeland Management attempts to replicate the composition of the Index using various commodity futures contracts. The initial components of the Index and their weightings were chosen by Mr. Rogers based on his perception of the relative importance of the underlying raw materials in international trade and commerce. A committee now formulates and enacts all business assessments and decisions regarding the composition of the Index. Mr. Rogers, as the founder and owner of the Index, chairs that committee and is the final arbiter of its decisions. “Rogers International Commodity Index” is a registered service mark of Beeland Interests, Inc., a company wholly owned by Mr. Rogers. Beeland Management uses and publishes the Index and markets products designed to track the Index pursuant to a nonexclusive license from Beeland Interests, Inc.

Since the Partnership’s portfolio is based on the Index, there is no active trading by Beeland Management in the traditional sense. Unlike most commodity pools, commodity contracts are not bought or sold to take advantage of potential profitable price movement. Other than effecting trades to reflect a possible adjustment in the composition of the Index or the weightings among its components, the only regular trading performed by Beeland Management is for rolling positions from near delivery dates to later delivery dates to ensure that the Partnership will not take actual delivery of a physical commodity. These rolling trades, made pursuant to a predetermined formula and rules, are placed and effected, to the extent possible, as spread transactions in which the Partnership simultaneously buys and sells futures contracts corresponding to the same commodity but for delivery in different months.

The Partnership’s principal objective is to provide an alternative investment vehicle for investors with diversified investment portfolios. The performance of the Partnership is not correlated with traditional securities markets. In other words, the performance of the Partnership is largely independent from how the traditional equity and debt markets perform. Accordingly, the Partnership’s returns will not necessarily increase when that of stocks or bonds increase and will not necessarily decrease when that of stocks or bonds decrease. However, the Partnership will not necessarily perform better when traditional markets decline, or perform worse when the traditional markets are rising.

The Partnership pays a monthly management fee to Beeland Management equal to 0.08333% of the average monthly sum of all limited partner capital accounts at the close of each month (1.00% per annum). The Partnership pays the costs of executing and clearing its trades, its administrative expenses, compensation due to its selling agents, and any extraordinary expenses which it may incur.

ADM Investor Services, Inc. (“ADMIS”) acts as the futures commission merchant for the Partnership, and The Price Futures Group, Inc., related to Beeland Management through common management, acts as introducing broker for the Partnership. The Partnership is open-ended and may offer Series B units at the net asset value per Series B unit as of the first day of each month. Unitholders of Series A and B units normally may be redeemed upon 6 business days written notice to the Partnership’s general partner.

Regulation

Under the Commodity Exchange Act, as amended (the “CEA”), commodity exchanges and futures trading are subject to regulation by the Commodity Futures Trading Commission (the “CFTC”). National Futures Association (“NFA”), a “registered futures association” under the CEA, is the only non-exchange self-regulatory organization for futures industry professionals. The CFTC has delegated to the NFA responsibility for the registration of “commodity trading advisors,” “commodity pool operators,” “futures commission merchants,” “introducing brokers” and their respective associated persons and “floor brokers” and “floor traders.” The CEA requires commodity pool operators and commodity trading advisors, such as Beeland Management, and commodity brokers or futures commission merchants and introducing brokers, such as ADMIS and The Price Futures Group, Inc. to be registered and to comply

 

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with various reporting and record keeping requirements. The CFTC may suspend a commodity pool operator’s or trading advisor’s registration if it finds that its trading practices tend to disrupt orderly market conditions or in certain other situations. In the event that the registration of Beeland Management as a commodity pool operator or a commodity trading advisor were terminated or suspended, Beeland Management would be unable to continue to manage the business of the Partnership. Should Beeland Management’s registration be suspended, termination of the Partnership might result.

In addition to such registration requirements, the CFTC and certain commodity exchanges have established limits on the maximum net long or net short position which any person may hold or control in particular commodities. Most exchanges also limit the changes in futures contract prices that may occur during a single trading day. In November 2011, the CFTC finalized rules for a separate position limits regime for 28 so-called “exempt” (i.e. metals and energy) and agricultural futures and options contracts and their economically equivalent swap contracts. Position limits in spot months are to be 25% of the official estimated deliverable supply of the underlying commodity and, in a non-spot month, a percentage of the average aggregate 12-month rolling open interest in all months (swaps and futures) for each contract. Compliance with these new limits is delayed pending further definition of the term “swap” by the CFTC and Securities and Exchange Commission. However, Beeland Management believes that the limits, once compliance is required, are sufficiently large that they should not restrict the Partnership’s ability to replicate the Index.

(i) through (xii)—not applicable.

(xiii) the Partnership has no employees.

(d) Financial information about geographic areas

The Partnership does not engage in material operations in foreign countries (although it does trade from the United States on foreign futures exchanges), nor is a material portion of its revenues derived from foreign customers.

 

ITEM 1A. RISK FACTORS

Not Required.

 

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not Required.

 

ITEM 2. PROPERTIES

The Partnership does not own or use any physical properties in the conduct of its business. Beeland Management Company L.L.C., 141 W. Jackson Blvd., Suite 1340A, Chicago, IL 60604, conducts the Partnership’s trading activities and performs certain administrative services for the Partnership from its offices.

 

ITEM 3. LEGAL PROCEEDINGS

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

 

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PART II

 

ITEM 5. MARKET FOR REGISTRANT’S LIMITED PARTNERSHIP UNITS AND RELATED PARTNER MATTERS AND ISSUER PURCHASES OF LIMITED PARTNERSHIP UNITS

(a) Market Information. There is no established market for the Series A and B units, and none is likely to develop. Series A and B units normally may be redeemed upon 6 business days’ written notice to the Partnership’s general partner, Beeland Management Company, LLC, 141 W. Jackson Blvd., Suite 1340A, Chicago, IL 60604.

(b) Holders. There were approximately 1082 Series A and 53 Series B Limited Partners at March 1, 2012.

(c) Dividends. The Fund has not paid any dividends.

(d) Securities Authorized for Issuance Under Equity Compensation Plans. There are no securities authorized for issuance under equity compensation plans.

(e) Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities. There have been no sales of unregistered securities of the Partnership during 2011. A total of $883,715 of Series B units have been sold to the public as of March 1, 2012.

(f) Issuer Purchases of Equity Securities. Unitholders may redeem their Series A and B units at the end of each calendar month at the then current month-end Net Asset Value per unit. The redemption of units has no impact on the value of Series A and B units that remain outstanding, and Series A and B units are not reissued once redeemed.

The following table summarizes the redemptions by Series A and Series B Unitholders during the fourth calendar quarter of 2011:

Series A

 

            Redemption Date  

Month

   Units Redeemed      NAV per Unit  

October 31, 2011

     4,290.88         175.90   

November 30, 2011

     4,514.56         173.30   

December 31, 2011

     9,922.51         169.55   

Series B

 

     Units Redeemed      Redemption Date  

Month

      NAV per Unit  

October 31, 2011

     —           173.18   

November 30, 2011

     —           170.62   

December 31, 2011

     —           166.92   

 

ITEM 6. SELECTED FINANCIAL DATA

Not required.

 

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

The Partnership’s trading is designed to replicate the positions which comprise the Index. The Partnership invests and trades in a portfolio of commodity futures and possibly forward contracts. The Partnership invests and trades solely on the “long side” of the market. Beeland Management, as general partner, manages all business of the Partnership.

The Index is not designed to predict which markets will exhibit positive (or negative) performance in any given year, and the specific components of the Index were not selected based on expectations of their future performance. Rather, the Index was designed to be a balanced, representative international raw materials index and to include most of the publicly traded raw materials used in international commerce. As a diversified index, the Index as a whole can be expected to produce different levels of return (including negative returns) in its various sectors from year to year.

CAPITAL RESOURCES

The Partnership will raise additional capital only through the sale of units of limited partnership interest. At December 31, 2011, the Partnership was offering only Series B units for sale. The Partnership does not intend to raise any capital through borrowing. Due to the nature of the Partnership’s business, it will make no capital expenditures and will have no capital assets that are not operating capital or assets.

LIQUIDITY

Most United States commodity exchanges limit fluctuations in futures contracts prices during a single day by regulations referred to as “daily price fluctuation limits” or “daily limits.” During a single trading day, no trades may be executed at prices beyond the daily limit. This may affect the Partnership’s ability to close existing positions and initiate new positions when the Partnership is rolling its positions forward from one futures contract delivery month to another or when adjusting the Partnership’s portfolio to reflect additions or withdrawals of capital. Futures prices have occasionally moved the daily limit for several consecutive days with little or no trading. Trading in forward or other over the counter contracts introduces a possible further impact on liquidity. Because such contracts are executed “off exchange” between private parties, the time required to offset or “unwind” these positions may be greater than that for regulated instruments. Other than these limitations on liquidity, which are inherent in the Partnership’s trading operations; the Partnership’s assets are highly liquid and are expected to remain so. During its operations through December 31 2011, the Partnership experienced no meaningful periods of illiquidity in any of the markets traded by the Partnership.

On October 31, 2011, MF Global Holdings Ltd., the parent company of MF Global Inc., then the Partnership’s futures commission merchant, filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code. The Securities and Exchange Commission and CFTC agreed that a bankruptcy led by the Securities Investor Protection Corporation (“SIPC”) of MF Global Inc. would be the safest and most prudent course of action to protect customer accounts and assets and SIPC initiated the liquidation of MF Global Inc. under the Securities Investor Protection Act. As of October 31, 2011, the Partnership held $5,131,353 or approximately 12.6% of partners’ capital in customer segregated and secured accounts at MF Global Inc. The CFTC has stated that there is a shortfall in customer segregated accounts held by MF Global Inc., and the true extent of such shortfall remains unknown. Although some assets have been transferred from MF Global Inc. to the Partnership’s new futures commission merchant, ADM Investors Services, Inc., as of December 31, 2011, the General Partner believes that a portion of the Partnership’s assets are, and may remain for some time, illiquid, but does not have sufficient information to estimate accurately how long such assets may be unavailable to the Partnership or the percentage of assets that may not be recovered, if any. Through December 31, 2011, this receivable was reduced by $2,174,797 comprised of disbursements initiated by the bankruptcy trustee, as well as other trading related activities. The Company has filed appropriate claims with the bankruptcy trustee for remaining amounts due (the MF Global Claim). However, due to the inherent uncertainty in the timing and results of the liquidation process from the bankruptcy proceedings, the Partnership has recognized a 2.78% (or $1,130,702) loss on the MF Global Claim, which is an estimate of the Partnership’s pro-rata share of the projected MF Global Inc. asset shortfall. This loss is reflected as Loss on MF Global on the statement of operations. The remaining receivable from MF Global Inc. of $1,825,854 is estimated by management based upon

 

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information provided by the bankruptcy trustee as well as independent third party bids to purchase the MF Global Claim, and may be subject to change in the near term. Such change could be material to the presentation of the statement of financial condition. In addition, the Partnership is withholding approximately 5% of the proceeds of redemptions attributable to Partnership assets, for which a loss was not taken and that are encumbered in the MF Global liquidation subject to a claims recovery process to be administered by the liquidation Trustee, pending completion of the MF Global liquidation or the receipt by the Partnership of the full amount of its claims.

RESULTS OF OPERATIONS

The Partnership’s net income or loss is directly related to changes in the value of the Index, which the Partnership is designed to replicate, and is not dependent on trading decisions made by Beeland Management apart from balancing positions to track the Index. In periods of general market inflation, Beeland Management would expect the value of the Index to increase; similarly, in periods of general market deflation, Beeland Management would expect the value of the Index to decrease. The Partnership’s performance may be negative in years when the Index’s performance is positive due to fees charged.

The components of the Partnership’s return are normally the gains and losses recognized from the changes in futures market prices and the interest income earned on cash balances. The mechanics and rules of futures markets allow the Partnership to earn interest on approximately 90% to 100% of its assets.

At December 31, 2011 and 2010, the Partnership’s net assets were $34,885,591 and $49,939,841, respectively.

 

     Year ended
2011
    Year ended
2010
 

Net Revenues

    

Realized net trading gain

   $ 1,357,010      $ 6,112,004   

Change in unrealized net trading gain

     (3,985,745     1,710,493   

Interest income

     66,249        63,124   

Other income

     536,778        445,653   

Loss from MF Global

     (1,130,702     —     
  

 

 

   

 

 

 

Total Net Revenues

   $ (3,156,410   $ 8,331,274   
  

 

 

   

 

 

 

Operating Expenses

    

Brokerage commissions

   $ 81,722      $ 98,386   

Management fees

     462,368        461,453   

Administrative and other fees

     858,136        798,078   
  

 

 

   

 

 

 

Total Operating Expenses

   $ 1,402,226      $ 1,357,917   
  

 

 

   

 

 

 

2011

During 2011, the Index and the Partnership experienced negative performance. The performance of the Index, and thus the Partnership, reflected the uncertainty of the world economy as some European nations risked financial default. The combination of the European debt crisis and the failure of MF Global Inc. in the fourth quarter of 2011, were contributing factors to the price of agriculture and metals commodities.

 

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The Index can be categorized into three sectors: agriculture, energy and metals. During 2011, the performance of the Index’s sectors was mixed. Energy led the sectors with a positive increase of 4.02% while agriculture and metals sectors posted losses of -15.49% and -15.99%, respectively. The Index returned -6.93% while the Partnership returned -11.26%. Performance of the Partnership deviated from the Index due to the expenses charged at the Partnership level, but primarily due to the loss of 2.78% taken by the Partnership as it related to estimated uncollectable assets held at MF Global.

On October 31, 2011, MF Global Holdings Ltd., the parent company of MF Global Inc., then the Partnership’s futures commission merchant, filed for bankruptcy under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court, Southern District of New York. On October 31, 2011, MF Global Inc. reported an unprecedented potential deficiency in customer segregated assets and the Securities and Exchange Commission and Commodity Futures Trading Commission determined that the most prudent course to protect customer accounts and assets would be an immediate SIPC-led liquidation of MF Global Inc. As of October 31, 2011, $5,131,353 or approximately 12.6% of the Partnership’s assets were held on deposit in customer segregated and secured accounts at MF Global Inc. In a statement dated November 21, 2011, the Trustee for the liquidation of MF Global Inc. stated that he believes there is at least a $1.2 billion deficiency in customer segregated assets at MF Global Inc. Based on this estimate, Beeland Management Company, LLC determined that the Partnership take a loss of 2.78% (or $1,130,702) of the Partnership’s total net assets, representing the Partnership’s pro rata share of the Trustee’s estimated deficiency in customer segregated assets at MF Global Inc. This loss was reflected in October 2011 performance for the Partnership. Although some assets have been transferred from MF Global Inc. to the Partnership’s new futures commission merchant, ADM Investors Services, Inc., as of December 31, 2011, the Beeland Management Company, LLC believes that a portion of the Partnership’s assets are, and may remain for some time, illiquid, but does not have sufficient information to estimate accurately how long such assets may be unavailable to the Partnership or the percentage of assets that may not be recovered, if any.

The Partnership had capital contributions in 2011 totaling $509,622. The total value of capital withdrawals in 2011 was $11,005,236.

2010

During 2010, the Partnership had another year of positive performance. The performance of the Index, and thus the Partnership, reflected the continued, perceived economic recovery that was evident among most financial indices. Some commodity prices hit the highs of past years, and commodities such as gold hit new highs.

The Partnership allocates to three sectors of the marketplace: agriculture, energy and metals. During 2010, all sectors had positive returns. Agriculture led the sectors with an increase of 36.31% while energy and metals sectors posted returns of 3.25% and 24.64%, respectively. The Index returned 19.01% while the Partnership returned 16.74%. Performance of the Partnership deviates slightly from the Index due to the expenses charged at the Partnership level.

The Partnership was open to new investment effective November 1, 2010, and there were capital contributions in 2010 totaling $307,633. The total value of capital withdrawals in 2010 was $9,417,785.

OFF-BALANCE SHEET RISK

The term “off-balance sheet risk” refers to an unrecorded potential liability that, even though it does not appear on the balance sheet, may result in future obligation or loss. The Partnership trades primarily in futures and forward contracts and may therefore become a party to financial instruments with elements of off-balance sheet market and credit risk. Market risks arise from changes in the market value of financial instruments. Theoretically, the Partnership’s exposure is equal to the notional contract value of futures contracts entered. Exposure to market risk is influenced by a number of factors, including the relationships between financial instruments, and the volatility and liquidity in the markets in which the financial instruments are traded. Credit risk arises primarily from the potential inability of counterparties to perform in accordance with the terms of a contract. The Partnership’s exposure to credit risk associated with counterparty nonperformance is generally the net unrealized gain on the open positions

 

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plus the value of the margin or collateral held by the counterparty. Exchange-traded financial instruments generally do not give rise to significant counterparty exposure due to the cash settlement procedures for daily market movements and the margin requirements of individual exchanges. Financial instruments traded off-exchange give rise to the risk of the failure of, or the inability or refusal to perform by, the counterparties to such trades.

The Partnership clears all of its futures trades through one clearing broker, ADMIS. In the event this counterparty does not fulfill its obligations, the Partnership may be exposed to risk. This risk of default depends on the creditworthiness of the counterparties to these transactions. The Partnership has a substantial portion of its assets on deposit with financial institutions in connection with its cash management activities. In the event of a financial institution’s insolvency, recovery of the Partnership’s assets on deposit may be limited to the amount of insurance or other protection afforded such deposits. The Partnership attempts to minimize this credit risk by monitoring the creditworthiness of the clearing broker and financial institutions.

CRITICAL ACCOUNTING POLICIES – VALUATION OF THE PARTNERSHIP’S POSITIONS

Beeland Management believes that the accounting policies that are most critical to the Partnership’s financial condition and results of operations relate to the valuation of the Partnership’s positions. The Partnership’s positions are exchange-traded futures contracts, which are valued daily at settlement prices published by the exchanges. Thus, Beeland Management expects that under normal circumstances substantially all of the Partnership’s assets are valued on a daily basis using objective measures.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Based on the nature of the business and operations of the Partnership, Beeland Management believes that the estimates utilized in preparing the Partnership’s financial statements are appropriate and reasonable; however actual results could differ from these estimates. The estimates used do not provide a range of possible results that would require the exercise of subjective judgment. Beeland Management further believes that, based on the nature of the business and operations of the Partnership, no other reasonable assumptions relating to the application of the Partnership’s accounting estimates other than those currently used would likely result in materially different amounts from those reported. The estimate of the receivable from MF Global is deemed a significant estimate as of December 31, 2011.

OFF-BALANCE SHEET ARRANGEMENTS

The Partnership does not engage in off-balance sheet arrangements with other entities.

CONTRACTUAL OBLIGATIONS

The Partnership does not enter into any contractual obligations or commercial commitments to make future payments of a type that would be typical for an operating company or that would affect its liquidity or capital resources. The Partnership’s sole business is trading futures, forwards, and other over the counter contracts. All such contracts are settled by offset, not delivery. The Partnership’s financial statements, included in Item 8 of this report, present audited Schedules of Investments setting forth unrealized gains and losses on the Partnership’s open futures contracts at December 31, 2011 and 2010.

 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not required.

 

9


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following financial statements of The Rogers International Raw Materials Fund, L.P. are included in Item 8:

 

    

Page

Financial Statements   
Report of Independent Registered Public Accounting Firm    F-1
Statements of Financial Condition as of December 31, 2011 and 2010    F-2
Condensed Schedule of Investments, December 31, 2011    F-3
Condensed Schedule of Investments, December 31, 2010    F-4
Statements of Operations for the Years Ended December 31, 2011 and 2010    F-5
Statements of Changes in Partners’ Capital (Net Assets) for the Years Ended December 31, 2011 and 2010    F-6
Notes to Financial Statements    F-7-13

 

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Report of Independent Registered Public Accounting Firm

To the Partners

Rogers International Raw Materials Fund, L.P.

We have audited the accompanying statements of financial condition, including the condensed schedules of investments, of Rogers International Raw Materials Fund, L.P. (the Partnership) as of December 31, 2011 and 2010, and the related statements of operations and changes in partners’ capital (net assets) for the years then ended. 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 the standards of the Public Company Accounting Oversight Board (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. The Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 Rogers International Raw Materials Fund, L.P. as of December 31, 2011 and 2010, and the results of its operations for the years then ended in conformity with U.S. generally accepted accounting principles.

/s/ McGladrey & Pullen, LLP

Chicago, Illinois

March 26, 2012

 

F-1


ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.

STATEMENTS OF FINANCIAL CONDITION

December 31, 2011 and 2010

 

     2011     2010  

ASSETS

    

Equity in broker trading accounts:

    

Cash at brokers

   $ 5,387,385      $ 8,027,725   

Unrealized gain/(loss) on open futures contracts, net

     (860,221     3,125,524   
  

 

 

   

 

 

 

Total equity in brokers trading accounts

     4,527,164        40,235,357   

U.S. Government securities, at fair value

     27,673,158        29,082,108   

Cash and cash equivalents

     2,899,515        11,189,077   

Receivable from MF Global (Note 4)

     1,825,854        —     

Interest receivable

     —          553   
  

 

 

   

 

 

 

Total assets

   $ 36,925,691      $ 51,424,987   
  

 

 

   

 

 

 

LIABILITIES

    

Brokerage commissions payable

   $ 4,357      $ 4,944   

Accrued management fees – General Partner

     31,147        37,973   

Administrative and other fees payable

     214,855        466,818   

Subscriptions received in advance

     —          56,581   

Withdrawals payable

     1,789,741        918,830   
  

 

 

   

 

 

 

Total liabilities

     2,040,100        1,485,146   

PARTNERS’ CAPITAL (NET ASSETS)

    

Partners’ capital (net assets)

     34,885,591        49,939,841   
  

 

 

   

 

 

 

Total liabilities and partners’ capital (net assets)

   $ 36,925,691      $ 51,424,987   
  

 

 

   

 

 

 

See accompanying notes to financial statements.

 

F-2


ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS

December 31, 2011

 

U.S. Government securities:

   Fair Value     Percent of
Partners’
Capital
(Net Assets)
 
(total cost—$27,649,960)             

U.S. Treasury Bills due 2/9/2012 at 0.19%, principal amount $2,510,000

   $ 2,509,478        7.19

U.S. Treasury Bills due 3/8/2012 at 0.26%, principal amount $2,330,000

     2,328,863        6.68   

U.S. Treasury Bills due 4/5/2012 at 0.20%, principal amount $3,300,000

     3,298,273        9.45   

U.S. Treasury Bills due 5/3/2012 at 0.08%, principal amount $4,070,000

     4,068,855        11.66   

U.S. Treasury Bills due 5/31/2012 at 0.18%, principal amount $3,678,000

     3,675,215        10.54   

U.S. Treasury Bills due 6/28/2012 at 0.17%, principal amount $3,300,000

     3,297,278        9.45   

U.S. Treasury Bills due 7/26/2012 at 0.06%, principal amount $2,000,00

     1,999,319        5.73   

U.S. Treasury Bills due 8/23/2012 at 0.09%, principal amount $3,400,000

     3,398,046        9.74   

U.S. Treasury Bills due 8/23/2012 at 0.09%, principal amount $2,100,000

     2,098,618        6.02   

U.S. Treasury Bills due 10/18/2012 at 0.10%, principal amount $1,000,000

     999,213        2.87   
  

 

 

   

 

 

 
   $ 27,673,158        79.33
  

 

 

   

 

 

 
     Unrealized
Gain (Loss)

on Open Long
Contracts
    Percent of
Partners’
Capital

(Net Assets)
 
    

Futures contracts*:

    

U.S. Futures Positions

    

Agricultural

   $ (235,456     (0.68 )% 

Metals

     (227,120     (0.65

Energy

     (181,989     (0.52
  

 

 

   

 

 

 

Total U.S. Futures Positions

     (644,565     (1.85
  

 

 

   

 

 

 

Foreign Futures Positions

    

Agricultural

     35,348        0.10   

Metals

     (251,004     (0.72
  

 

 

   

 

 

 

Total Foreign Futures Positions

     (215,656     (0.62
  

 

 

   

 

 

 

Total Futures Contracts

   $ (860,221     (2.47 )% 
  

 

 

   

 

 

 

 

* No individual futures contract position constitutes greater than 1 percent of Partners’ Capital (Net Assets).
     Accordingly, the number of contracts and expiration dates are not presented.

See accompanying notes to financial statements.

 

F-3


ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.

CONDENSED SCHEDULE OF INVESTMENTS

December 31, 2010

 

U.S. Government securities:           Percent of
Partners’
Capital
 
(total cost - $29,077,799)    Fair Value      (Net Assets)  

U.S. Treasury Bills due 1/13/2011 at 0.08%, principal amount $2,800,000

   $ 2,799,922         5.61

U.S. Treasury Bills due 1/27/2011 at 0.11%, principal amount $5,500,000

     5,499,586         11.01   

U.S. Treasury Bills due 2/24/2011 at 0.12%, principal amount $2,300,000

     2,299,591         4.60   

U.S. Treasury Bills due 4/21/2011 at 0.16%, principal amount $3,300,000

     3,298,406         6.61   

U.S. Treasury Bills due 5/26/2011 at 0.18%, principal amount $3,500,000

     3,497,545         7.00   

U.S. Treasury Bills due 6/30/2011 at 0.17%, principal amount $3,300,000

     3,297,239         6.60   

U.S. Treasury Bills due 7/28/2011 at 0.17%, principal amount $3,400,000

     3,396,700         6.80   

U.S. Treasury Bills due 8/25/2011 at 0.18%, principal amount $2,000,000

     1,997,712         4.00   

U.S. Treasury Bills due 9/22/2011 at 0.20%, principal amount $2,000,000

     1,997,144         4.00   

U.S. Treasury Bills due 10/20/2011 at 0.22%, principal amount $1,000,000

     998,263         2.00   
  

 

 

    

 

 

 
   $ 29,082,108         58.23
  

 

 

    

 

 

 
     Unrealized
Gain (Loss)
on Open Long
     Percent of
Partners’
Capital
 
     Contracts      (Net Assets)  

Futures contracts*:

     

U.S. Futures Positions

     

Agricultural

   $ 1,719,954         3.45

Metals

     361,250         0.72   

Energy

     479,818         0.96   
  

 

 

    

 

 

 

Total U.S. Futures Positions

     2,561,022         5.13   
  

 

 

    

 

 

 

Foreign Futures Positions

     

Agricultural

     79,167         0.16   

Metals

     485,335         0.97   
  

 

 

    

 

 

 

Total Foreign Futures Positions

     564,502         1.13   
  

 

 

    

 

 

 

Total Futures Contracts

   $ 3,125,524         6.26
  

 

 

    

 

 

 

 

* No individual futures contract position constitutes greater than 1 percent of Partners’ Capital (Net Assets).
     Accordingly, the number of contracts and expiration dates are not presented.

See accompanying notes to financial statements.

 

F-4


ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.

STATEMENTS OF OPERATIONS

For the years ended December 31, 2011 and 2010

 

     2011     2010  

Net trading gains (losses):

    

Realized

   $ 1,357,010      $ 6,112,004   

Change in unrealized

     (3,985,745     1,710,493   

Commissions

     (81,722     (98,386
  

 

 

   

 

 

 
     (2,710,457     7,724,111   
  

 

 

   

 

 

 

Investment income (loss):

    

Interest income

     66,249        63,124   

Other income

     536,778        445,653   

Loss from MF Global (Note 4)

     (1,130,702     —     
  

 

 

   

 

 

 
     (527,675     508,777   
  

 

 

   

 

 

 

Expenses:

    

Management fees – General Partner

     462,368        461,453   

Administrative and other fees

     858,136        798,078   
  

 

 

   

 

 

 
     1,320,504        1,259,531   
  

 

 

   

 

 

 

Net investment loss

     (1,848,179     (750,754
  

 

 

   

 

 

 

Net income (loss)

   $ (4,558,636   $ 6,973,357   
  

 

 

   

 

 

 

Net increase (decrease) in NAV per GP and LP unit for the period:

 

    

General Partner

   $ (21.52   $ 27.40   

Limited Partners-Series A

   $ (21.52   $ 27.40   

Limited Partners-Series B

   $ (23.52   $ 17.61   

Net income (loss) per General and Limited Partners (based on weighted average number of units outstanding during the period):

 

General Partner

   $ (86,816   $ 110,545   

Limited Partners-Series A

     (4,351,948     6,830,491   

Limited Partners-Series B

     (119,872     32,321   
  

 

 

   

 

 

 
   $ (4,558,636   $ 6,973,357   
  

 

 

   

 

 

 

 

See accompanying notes to financial statements.

 

F-5


ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.

STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL (NET ASSETS)

For the years ended December 31, 2011 and 2010

 

     General Partner     Limited Partners        
                 Series A     Series B              
     Number of
Units
    Dollars     Number
of Units
    Dollars     Number
of Units
    Dollars     Total     Total  

Partners’ capital (net assets), January 1, 2010

     4,034      $ 660,293        314,149      $ 51,416,343        —        $ —        $ 51,416,343      $ 52,076,636   

Contributions

     —          —          —          —          1,785        307,633        307,633        307,633   

Net income

     —          110,545        —          6,830,491        —          32,321        6,862,812        6,973,357   

Withdrawals

     —          —          (58,588     (9,416,908     (5     (877     (9,417,785     (9,417,785
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Partners’ capital (net assets), December 31, 2010

     4,034        770,838        255,561        48,829,926        1,780        339,077        49,169,003        49,939,841   

Contributions

     —          —          —          —          2,573        509,622        509,622        509,622   

Net income (loss)

     —          (86,816     —          (4,351,948     —          (119,872     (4,471,820     (4,558,636

Withdrawals

     (590     (100,000     (57,323     (10,866,706     (218     (38,530     (10,905,236     (11,005,236
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Partners’ capital (net assets), December 31, 2011

     3,444      $ 584,022        198,238      $ 33,611,272        4,135      $ 690,297      $ 34,301,569      $ 34,885,591   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Per unit data    2011      2010  

Net asset value Series A

   $ 169.55       $ 191.07   

Net asset value Series B

   $ 166.92       $ 190.44   

Net asset value General Partner

   $ 169.55       $ 191.07   

See accompanying notes to financial statements.

 

F-6


ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.

NOTES TO FINANCIAL STATEMENTS

December 31, 2011

Note 1. Significant Accounting Policies:

Nature of Business and Organization: Rogers International Raw Materials Fund, L.P. (the “Partnership”) is an Illinois Limited Partnership that was established in May 2000. The Partnership trades a portfolio primarily of commodity futures contracts, principally on recognized exchanges. The Partnership may also purchase contracts in the over the counter marketplace under certain circumstances. The Partnership invests and trades exclusively on the “long side” of the market. The Partnership’s investment strategy is designed to replicate the Rogers International Commodity Index® (the “Index”) and positions are rebalanced monthly to maintain the Index’s relative weightings. The Partnership commenced trading during November 2001. The Partnership will terminate on December 31, 2020 or earlier upon certain circumstances as defined in the Limited Partnership Agreement. The Partnership’s General Partner and commodity pool operator is Beeland Management Company, L.L.C. (the “General Partner”). Beeland Interests, Inc. is the owner and sponsor of the Index.

Accounting Policies: The Partnership follows Generally Accepted Accounting Principles (“GAAP”), as established by the Financial Accounting Standards Board (“FASB”), to ensure consistent reporting of financial condition and results of operation.

Net Assets: The valuation of net assets includes open commodity futures owned by the Partnership, if any, at the end of the period. The unrealized gain or loss on these contracts has been calculated based on settlement prices on the last business day of each month. Net assets are determined by subtracting liabilities from assets, which also equals partners’ capital.

Cash and Cash Equivalents: Cash and cash equivalents include highly liquid instruments with original maturities of three months or less at the date of acquisition. Cash and cash equivalents include amounts on deposit with a broker to facilitate payment of expenses and partner withdrawals.

Profit and Loss Allocation: Limited partners and the General Partner share in the profits and losses of the Partnership in the proportion that each partner’s capital account bears to the total partners’ capital.

Income Taxes: No provision for income taxes has been made in these financial statements as each partner is individually responsible for reporting income or loss based on its respective share of the Partnership’s income and expenses as reported for income tax purposes.

The Partnership is generally not subject to examination by U.S. federal or state taxing authorities for tax years before 2008. The Partnership has no material uncertain tax positions, and accordingly, has not recorded a liability for the payment of interest or penalties through December 31, 2011.

Fair Value of Financial Instruments: Securities and derivative financial instruments are recorded at fair value.

Revenue Recognition: Futures and forward contracts are recorded on a trade date basis and realized gains or losses are recognized when contracts are liquidated. Unrealized gains or losses on open contracts (the difference between contract trade price and market price) are reported in the statements of financial condition as a net unrealized gain or loss, as there exists a right of offset of unrealized gains or losses. Any change in net unrealized gain or loss from the preceding period is reported in the statement of operations.

Interest Income Recognition: The Partnership records interest income on the accrual basis.

Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Partnership’s estimate regarding the carrying value of its receivable from MF Global, Inc. (Note 4) is a significant estimate and due to the uncertainty of future events, this estimate could change in the near term.

Foreign Currency Translation: Foreign currency is translated into U.S. dollars at the exchange rate prevailing on the last business day of each month. The Partnership does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities and derivative financial instruments held. Such fluctuations are included with the net realized trading gains or losses.

 

F-7


Note 1. Significant Accounting Policies (continued):

Ongoing Offering Expenses: Ongoing offering expenses are accrued on an ongoing basis and charged to expense as incurred.

Deposits with Brokers: The Partnership deposits assets with brokers subject to Commodity Futures Trading Commission regulations and various exchange and broker requirements. Margin requirements are satisfied by the deposit of cash with such brokers. The Partnership earns interest income on its assets deposited with the brokers.

Withdrawals Payable: Withdrawals approved by the General Partner prior to month-end with a fixed effective date and fixed amount are recorded as withdrawals payable as of month-end (See Note 6).

Statement of Cash Flows: The Partnership has elected not to provide a statement of cash flows as permitted by GAAP as all of the following conditions have been met:

-During the year, substantially all of the Partnership’s investments were highly liquid;

-Substantially all of the Partnership’s investments are carried at fair value;

-The Partnership had little or no debt during the year;

-The Partnership’s financial statements include a statement of changes in partners’ capital (net assets).

Note 2. Fair Value of Financial Instruments:

As described in Note 1, the Partnership records its investments at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Partnership utilizes valuation techniques to maximize the use of observable inputs and minimize the use of unobservable inputs. Inputs are broadly defined as assumptions market participants would use in pricing an asset or liability. Assets and liabilities recorded at fair value are categorized within the fair value hierarchy based upon the level of judgment associated with the inputs used to measure their value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

Level 1. Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2. Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly; and fair value is determined through the use of models or other valuation methodologies.

Level 3. Inputs are unobservable for the asset or liability and include situations where there is little, if any, market activity for the asset or liability. The inputs into the determination of fair value are based upon the best information in the circumstances and may require significant management judgment or estimation.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Partnership’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. The following section describes the valuation techniques used by the Partnership to measure different financial instruments at fair value and includes the level within the fair value hierarchy in which the financial instrument is categorized.

The fair values of exchange traded futures contracts are based upon exchange settlement prices. Money market funds included in cash at brokers are valued using quoted market prices. U.S. Government securities are stated at cost plus accrued interest, which approximates fair value based on quoted prices for identical assets in an active market. These financial instruments are categorized in Level 1 of the fair value hierarchy.

The following table summarizes the Partnership’s assets measured at fair value on a recurring basis as of December 31, 2011 and 2010 using the fair value hierarchy:

 

F-8


Note 2. Fair Value of Financial Instruments (continued):

 

     2011     2010  

Description

   Level 1     Level 1  

Equity in brokers trading account:

    

Unrealized gain/ (loss) on open futures contracts, net*

   $ (860,221   $ 3,125,524   

U.S. Government securities*

     27,673,158        29,082,108   

Cash and cash equivalents:

    

Money market funds

     2,409,216        2,577,040   
  

 

 

   

 

 

 
   $ 29,222,153      $ 34,784,672   
  

 

 

   

 

 

 

 

* See the condensed schedule of investments for further description.

During the years ended December 31, 2011 and 2010, there were no Level 2 or Level 3 assets or liabilities.

The Partnership assesses the levels of assets and liabilities measured at fair value at each measurement date, and transfers between levels are recognized on the accrual date of the event or change in circumstances that caused the transfer. There was no transfer among Levels 1, 2, and 3 during the years ended December 31, 2011 or 2010.

In addition, substantially all of the Partnership’s other assets and liabilities are considered financial instruments and are reflected at fair value, or at carrying amounts that approximate fair value because of the short maturity of the instruments.

Note 3. Derivative Transactions

Qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of gains and losses on derivative instruments, and disclosures about credit-risk related contingent features in derivative agreements are presented.

The Partnership’s business is the speculative trading of futures contracts. The Partnership does not consider any derivative instruments to be hedging instruments, as this term is generally understood under FASB guidance.

As of and for the years ended December 31, 2011 and 2010, the Partnership’s derivative contracts had the following impact on the statements of financial condition and statements of operations:

 

     Asset Derivatives      Liability Derivatives     Net Derivatives  
     December 31, 2011      December 31, 2011     December 31, 2011  
     Fair Value      Fair Value     Fair Value*  

Futures positions:

       

Agricultural

   $ 191,448       $ (391,556   $ (200,108

Metals

     118,572         (596,696     (478,124

Energy

     11,034         (193,023     (181,989
  

 

 

    

 

 

   

 

 

 

Totals

   $ 321,054       $ (1,181,275   $ (860,221
  

 

 

    

 

 

   

 

 

 
     Asset Derivatives      Liability Derivatives     Net Derivatives  
     December 31, 2010      December 31, 2010     December 31, 2010  
     Fair Value      Fair Value     Fair Value*  

Futures positions:

       

Agricultural

   $ 1,801,471       $ (2,350   $ 1,799,121   

Metals

     1,155,865         (309,280     846,585   

Energy

     486,668         (6,850     479,818   
  

 

 

    

 

 

   

 

 

 

Totals

   $ 3,444,004       $ (318,480   $ 3,125,524   
  

 

 

    

 

 

   

 

 

 

 

* The net fair value of all assets and liability derivatives is included in equity in broker trading accounts in the statements of financial condition.

 

F-9


Note 3. Derivative Transactions (continued):

Trading Revenue** for the years ended December 31, 2011 and 2010:

 

Type of Instrument    12/31/2011     12/31/2010  

Futures positions:

    

Agricultural

   $ (2,348,630   $ 5,025,529   

Metal

     (2,626,848     2,074,344   

Energy

     2,349,560        722,624   
  

 

 

   

 

 

 
   $ (2,625,918   $ 7,822,497   
  

 

 

   

 

 

 

Line Item in Statement of Operations

    

Realized

   $ 1,359,827      $ 6,112,004   

Change in unrealized

     (3,985,745     1,710,493   
  

 

 

   

 

 

 
   $ (2,625,918   $ 7,822,497   
  

 

 

   

 

 

 

Trading revenue is exclusive of brokerage commissions.

For the years ended December 31, 2011 and 2010, the monthly average of contracts bought and sold was 1,046 and 1,308, respectively.

Note 4. Receivable from MF Global:

On October 31, 2011, MF Global Holdings Ltd., the parent company of MF Global Inc., then the Partnership’s futures commission merchant, filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code. The Securities and Exchange Commission and CFTC agreed that a bankruptcy led by the Securities Investor Protection Corporation (“SIPC”) of MF Global Inc. would be the safest and most prudent course of action to protect customer accounts and assets and SIPC initiated the liquidation of MF Global Inc. under the Securities Investor Protection Act. As of October 31, 2011, the Partnership held $5,131,353 or approximately 12.6% of partners’ capital in customer segregated and secured accounts at MF Global Inc. The CFTC has stated that there is a shortfall in customer segregated accounts held by MF Global Inc., and the true extent of such shortfall remains unknown. Although some assets have been transferred from MF Global Inc. to the Partnership’s new futures commission merchant, ADM Investors Services, Inc., as of December 31, 2011, the General Partner believes that a portion of the Partnership’s assets are, and may remain for some time, illiquid, but does not have sufficient information to estimate accurately how long such assets may be unavailable to the Partnership or the percentage of assets that may not be recovered, if any. Through December 31, 2011, this receivable was reduced by $2,174,797 comprised of disbursements initiated by the bankruptcy trustee, as well as other trading related activities. The Company has filed appropriate claims with the bankruptcy trustee for remaining amounts due (the MF Global Claim). However, due to the inherent uncertainty in the timing and results of the liquidation process from the bankruptcy proceedings, the Partnership has recognized a 2.78% (or $1,130,702) loss on the MF Global Claim, which is an estimate of the Partnership’s pro-rata share of the projected MF Global Inc. asset shortfall. This loss is reflected as Loss on MF Global on the statement of operations. The remaining receivable from MF Global Inc. of $1,825,854 is estimated by management based upon information provided by the bankruptcy trustee as well as independent third party bids to purchase the MF Global Claim, and may be subject to change in the near term. Such change could be material to the presentation of the statement of financial condition. In addition, the Partnership is withholding approximately 5% of the proceeds of redemptions attributable to Partnership assets, for which a loss was not taken and that are encumbered in the MF Global liquidation subject to a claims recovery process to be administered by the liquidation Trustee, pending completion of the MF Global liquidation or the receipt by the Partnership of the full amount of its claims.

Note 5. Agreements and Related-Party Transactions:

The Limited Partnership Agreement vests all responsibility and powers for the management of the business and affairs of the Partnership with the General Partner, Beeland Management Company, L.L.C. including trading decisions.

The Partnership pays a monthly management fee to the General Partner equal to 0.08333% of the net assets of the Partnership at the close of the preceding month (1.00% per annum).

The Partnership is responsible for the administrative and trading expenses related to its operations. The General Partner may incur certain expenses on behalf of the Partnership and charge the Partnership for its allocable portion of these expenses.

 

F-10


Note 5. Agreements and Related-Party Transactions (continued):

Uhlmann Price Securities L.L.C. (“Uhlmann”), a party related to the General Partner by reason of common management, acts as the selling group manager for the Partnership. The Partnership pays Uhlmann a share of selling fees when units are sold by its registered brokers. Selling fees of up to 2% of the gross offering proceeds (which includes a 0.50% reallowance to Uhlmann) were charged to partners’ capital upon issuance of Series B Partnership units.

In addition, there is an annual trailing servicing fee of up to 1% of the net asset value of the specific partner’s capital account payable to the soliciting broker-dealer for ongoing investor services. For all Series B units sold, the total trailing servicing fee is not to exceed 7.99% of the gross offering proceeds of the units sold.

The Price Futures Group, Inc. (“PFG”), a related party to the General Partner through common management, acts as the introducing broker for the Partnership, whereby certain accounts of the Partnership are introduced to the Partnership’s clearing broker. A portion of the brokerage fee paid by the Partnership for clearing transactions is paid to PFG, by the clearing broker.

Fund Dynamics, LLC, an affiliate of the General Partner, through common management, acts as the Partnership’s administrator. Fund Dynamics, LLC calculates both the daily and monthly Net Asset Value (“NAV”), prepares the monthly accounting package, and prepares monthly investor statements.

A summary of fees charged by related parties to the Partnership is as follows:

 

     2011      2010  

Management fees – General Partner

   $ 462,368       $ 461,453   

Administrative fees – Fund Dynamics

     102,601         109,541   

Trailing servicing fees – Uhlmann

     295,145         305,138   

Selling Fees – Uhlmann

     10,169         5,090   

Note 6. Partnership Capital and Withdrawals:

The Partnership accepts contributions as of the close of business on the last business day of each month for investment on the first day of the next succeeding month. The General Partner may accept or reject contributions and waive the minimum contribution amounts in its sole discretion.

Effective November 1, 2010, the Partnership was accepting contributions for Series B units. The Partnership has been closed to Series A units contributions since October 31, 2005.

The purchase price of a unit is the net asset value per unit as of the end of each calendar month. Net asset value per unit is calculated as the net asset value at month-end divided by the number of outstanding units.

The Partnership accepts withdrawals on a monthly basis. Requests for withdrawal should be received by the General Partner no later than six business days prior to the end of the month in which an investor chooses to withdraw. Requests for withdrawal should be sent to the General Partner by email, fax, or overnight courier.

Note 7. Financial Instruments with Off-Balance Sheet Credit and Market Risk:

The Partnership is involved in trading activities that may have market and/or credit risk. Financial instruments employed in the Partnership’s operations may have market and/or credit risk in excess of the amounts recorded in the statements of financial condition.

Market Risk—Market risks arise from changes in the market value of financial instruments. Theoretically, the Partnership’s exposure is equal to the notional contract value of futures contracts entered. Exposure to market risk is influenced by a number of factors, including the relationships between financial instruments, and the volatility and liquidity in the markets in which the financial instruments are traded. The use of financial instruments may serve to modify or offset market risk associated with other transactions.

Credit Risk—Credit risk arises primarily from the potential inability of counterparties to perform in accordance with the terms of a contract. The Partnership’s exposure to credit risk associated with counterparty nonperformance is generally the net unrealized gain on the open positions plus the value of the margin or collateral held by the counterparty. Exchange-traded financial instruments generally do not give rise to significant counterparty exposure due to the cash settlement procedures for daily market movements and the margin requirements of individual exchanges. Financial instruments traded off-exchange give rise to the risk of the failure of, or the inability or refusal to perform by, the counterparties to such trades.

 

F-11


Note 7. Financial Instruments with Off-Balance Sheet Credit and Market Risk (continued):

Concentration of Credit Risk—The Partnership clears all of its futures trades through one clearing broker, ADM Investor Services, Inc. In the event this counterparty does not fulfill its obligations, the Partnership may be exposed to risk. This risk of default depends on the creditworthiness of the counterparties to these transactions.

The Partnership has a substantial portion of its assets on deposit with financial institutions in connection with its cash management activities. In the event of a financial institution’s insolvency, recovery of the Partnership’s assets on deposit may be limited to the amount of insurance or other protection afforded such deposits.

The Partnership attempts to minimize this credit risk by monitoring the creditworthiness of the clearing broker and financial institutions.

Note 8. Financial Highlights:

Financial highlights for limited partners for the years ended December 31, 2011 and 2010 are as follows:

Per Unit Performance

 

     Series A
2011
    Series B
2011
    Series A
2010
    Series B
2010 (3)
 

Net asset value per unit at the beginning of the period

   $ 191.07      $ 190.44      $ 163.67      $ 172.83   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations:

        

Net trading gains (losses)

     (13.74     (12.25     30.01        18.35   
  

 

 

   

 

 

   

 

 

   

 

 

 

Investment income

     (2.19     (5.44     1.76        0.05   

Expenses:

     (5.59     (5.83     (4.37     (0.79
  

 

 

   

 

 

   

 

 

   

 

 

 

Net investment loss

     (7.78     (11.27     (2.61     (0.74
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per unit

     (21.52     (23.52     27.40        17.61   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net asset value per unit at the end of the period

   $ 169.55      $ 166.92      $ 191.07      $ 190.44   
  

 

 

   

 

 

   

 

 

   

 

 

 
     Series A
2011
    Series B
2011
    Series A
2010
    Series B
2010 (3)
 

Ratio of net investment loss to average partners’ capital (net assets)

     -4.05     -5.99     -1.62     -0.40 % (2) 

Ratio of expenses to average partners’ capital (net assets) (1)

     2.91     3.10     2.71     0.43 (2) 

Total return

     -11.26     -12.35     16.74     10.19 % (2) 

The above ratios were calculated for the partners taken as a whole. The computation of such ratios was not based on the amount of expenses assessed and income allocated to an individual partner’s capital account, which may vary from these ratios based on the timing of capital transactions and the different fee arrangements (see Note 5).

 

(1) 

The ratio of expenses to average partners’ capital (net asset) values does not include brokerage commissions.

(2) 

Annualized for Series B for 2010.

(3) 

Series B units were not offered for sale until November 1, 2010. The beginning unit price for a Series B unit was equal to Series A unit at November 1, 2010. Accordingly, per unit performance and financial highlights for 2010 are presented only from November 1, 2010 through December 31, 2010.

 

F-12


Note 9. Litigation:

The Partnership is a beneficiary of a Litigation Trust which is seeking recoveries from third parties, related to the 2005 bankruptcy of Refco, Inc. and numerous affiliates (the “Refco Bankruptcy”). As of December 31, 2011, the Partnership has received the full value of its allowed claims in the Refco Bankruptcy and has recovered approximately $4.8 million in excess of its allowed securities claim in the Refco Bankruptcy and may receive additional Refco Bankruptcy related recoveries, although there can be no assurance that it will or that any additional recoveries will be material. Management is unable to estimate the amounts of any such additional recoveries.

All Refco Bankruptcy related recoveries received by the Partnership, including excess recoveries except as described below, have been allocated among all partners in the Partnership who were partners as of October 31, 2005, on a pro-rata basis as October 31, 2005, with redeemed partners receiving cash distributions. Cash distributions to redeemed partners from excess recoveries totaled approximately $1,065,000 and $494,000 for the years ended December 31, 2011 and 2010, respectively. Pursuant to Section 12.2 of the Partnership’s Agreement of Limited Partnership, the Partnership reimbursed the General Partner and Beeland Interests approximately $400,000 and $428,000, respectively, from excess recoveries for legal costs incurred by the General Partner and Beeland Interests defending against suits related to the Refco Bankruptcy in 2011 and 2010. Beeland Interests, Inc. is the owner and sponsor of the Index. Included in administrative fees and other fees payable are amounts due under these arrangements of $0 and $249,542 at December 31, 2011 and 2010, respectively.

The Partnership has reserved $30,000 of the excess Refco related recoveries to apply to expenses incurred to administer ongoing communication with, and distributions and reporting to, redeemed limited partners with respect to Refco related recoveries received by the Partnership. These expenses include but are not limited to professional fees, printing, postage, and administration fees. At December 31, 2011, $26,557 of these expenses is included in administrative and other fees payable on the statement of financial condition.

At December 31, 2011 and 2010, approximately $0 and $208,000 of excess Refco related recoveries was payable to redeemed limited partners. These amounts are appropriately included in withdrawals payable for those years ended.

Note 10. Indemnifications:

In the normal course of business, the Partnership enters into contracts and agreements that contain a variety of representations and warranties, both of which provide general indemnifications. The Partnership’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Partnership that have not yet occurred. The Partnership expects the risk of any future obligation under these indemnifications to be remote.

Note 11. Subsequent Events:

From January 1, 2012 to March 26, 2012 there were $51,200 contributions, and withdrawals totaled approximately $1,304,908.

 

F-13


2. Supplementary Data

Not required.

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

 

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Control and Procedures

Under the supervision and with the participation of the Partnership’s general partner, Beeland Management, including the Chief Executive Officer and Chief Financial Officer, the Partnership has evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of December 31, 2011, the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures were effective as of December 31, 2011.

Management’s Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, an evaluation was conducted of our internal control over financial reporting as of December 31, 2011, based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations (“COSO”) of the Treadway Commission. The principal executive officer and principal financial officer of Beeland Management have evaluated the effectiveness of Beeland Management’s internal controls over financial reporting with respect to the Partnership and have concluded that Beeland Management’s internal controls over financial reporting are effective.

Changes in Internal Control Over Financial Reporting

There were no changes to internal control or financial reporting procedures during the fourth quarter that have materially affected, or are reasonably likely to affect, internal control over financial reporting.

 

ITEM 9B. OTHER INFORMATION

None.

PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

(a,b) Identification of Directors and Executive Officers

The Partnership has no directors or executive officers. The Partnership is managed by Beeland Management Company, L.L.C., its general partner.

Beeland Management is an Illinois limited liability company formed in 1997 to serve as the general partner of and commodity trading advisor to partnerships and accounts that track the Rogers International Commodity Index.

The officers of Beeland Management are as follows:

Walter Thomas Price III, age 71, is a Managing Member of Beeland Management and is the Chairman of Price Asset Management, Inc. He has been the President and CEO of The Price Futures Group since June 1995. Mr. Price has been involved in the securities, cash commodities and commodity futures markets for more than 40 years as both a trader for his own account and as a broker. He is president, a registered principal, and associated person of Price Capital Markets Inc., with which he has been affiliated since February 1997. At Price Capital Markets, Mr. Price is ultimately responsible for overseeing all trading decisions. He is a graduate of the University of Texas and is also a licensed FINRA principal and NFA principal. Mr. Price does not hold any ownership interest in Beeland Management.

 

11


Allen D. Goodman, age 42, is the chief financial officer of Beeland Management, which he joined in November 2004. In March 2001 Mr. Goodman became Chief Financial Officer of Price Asset Management, Inc. From January 2000, to March 2001, he served as founder and president of Financial Products, Ltd., a management consulting firm specializing in financial process reengineering. From February 1999 to January 2000, he worked as a management consultant for Via International, preceded by service as a business valuation consultant for BDO Seidman LLP from May 1997 to February 1999. Prior to that, from February 1995 to May 1997, he founded and managed Exclusively Gourmet, Inc., a specialty food and confections brokerage company. Mr. Goodman holds a B.A. degree from the University of Wisconsin and a M.S.A. in Accounting from DePaul University. Mr. Goodman does not hold any ownership interest in Beeland Management.

 

  (c) Identification of Certain Significant Employees

None.

 

  (d) Family Relationships

None.

 

  (e) Business Experience

See Item 10 (a,b) above.

 

  (f) Involvement in Certain Legal Proceedings

None.

 

  (g) Code of Ethics

The Partnership has no employees, officers or directors and is managed by it general partner, Beeland Management, which has adopted an Executive Code of Ethics that applies to its principal executive officer and principal financial and accounting officer. A copy of this Executive Code of Ethics may be obtained at no charge by written request to Beeland Management Company, L.L.C., 141 W. Jackson Blvd., Suite 1340A, Chicago, Illinois 60604 or by calling 312-264-4375.

 

  (h) Audit Committee Financial Expert

Because the Partnership has no employees, officers or directors, it has no audit committee. The Partnership is managed by Beeland Management, its general partner. Allen Goodman serves as the Beeland Management’s “audit committee financial expert.” Mr. Goodman is not independent of the management of Beeland Management, which is a privately owned limited liability company. Beeland Management has no independent directors.

 

ITEM 11. EXECUTIVE COMPENSATION

The Partnership pays a monthly management fee to Beeland Management equal to 0.08333% of the average monthly sum of all Capital Accounts contributed by Limited Partners at the close of each month (1.00% per annum). In addition, there is an annual trailing servicing fee of up to 1% of the net asset value of the specific partner’s capital account payable to soliciting broker-dealers for ongoing investor services.

 

12


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED UNITHOLDER MATTERS

 

  (a) Security Ownership of Certain Beneficial Owners

The Partnership knows of no person who owns beneficially more than 5% of the units. All of the Partnership’s general partner interest is held by Beeland Management Company, L.L.C.

 

  (b) Security Ownership of Management

The Partnership’s affairs are managed by Beeland Management Company, L.L.C. As general partner, Beeland Management Company, L.L.C. held approximately 3,444 Units in the Partnership as of December 31, 2011, representing approximately 1.67% of the Partnership’s outstanding units as of December 31, 2011.

 

  (c) Changes in Control

None.

 

  (d) Securities Authorized for Issuance Under Equity Compensation Plans

None.

 

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The Price Futures Group, Inc. (“Price Futures Group”) introduces the Partnership’s commodity trading activity to ADMIS, the Partnership’s clearing broker, and receives compensation from ADMIS for doing so. Walter Thomas Price III and Allen D. Goodman are officers of Price Futures Group.

Fund Dynamics, LLC serves as the Partnership’s administrator and receives a fee for its services. Walter Thomas Price III and Allen D. Goodman are officers of Fund Dynamics, LLC.

Uhlmann Price Securities L.L.C. (“Uhlmann”), one of several broker-dealers selling units of the Partnership, receives selling fees when units are sold by its registered brokers and a share of the selling fees when units are sold by other broker-dealers.

Price Holdings, Inc. owns 100% of Price Futures Group, Fund Dynamics, LLC and Uhlmann. Price Holdings, Inc. ESOP, an “employee stock ownership plan,” holds 100% of the stock of Price Holdings, Inc. for the benefit of its employees, including Mr. Price and Mr. Goodman.

A summary of fees charged or received by related parties to the Partnership during 2011 is as follows:

 

     2011  

Management fees – General Partner

   $ 462,368   

Administrative fees – Fund Dynamics

     102,601   

Trailing servicing fees – Uhlmann

     295,145   

Selling Fees – Uhlmann

     10,169   

 

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

  (1) Audit Fees. McGladrey & Pullen, LLP (M&P) and RSM McGladrey (RSM), a prior affiliate of M&P that was acquired by M&P on December 1, 2011, has billed and anticipates billing the Partnership for professional services rendered for each of the last two years ended December 31, 2010 and 2011. Professional services relate to the audit of the Partnership’s annual financial statements, review of financial statements included in the Partnership’s regulatory quarterly filings and other services normally provided in connection with regulatory filings.

 

2011

   $ 112,300   

2010

   $ 108,000   

 

  (2) Audit-Related Fees. None.

 

13


  (3) Tax Fees. RSM provides tax compliance services which relate to the preparation of U.S. and applicable state income tax returns.

 

2011

   $ 35,000   

2010

   $ 35,000   

 

  (4) All Other Fees. None.

 

  (5) The Managing Members of Beeland Management Company, L.L.C. pre-approve the engagement of the Partnership’s auditor for all services to be provided by the auditor and have determined that the payments made for these services are compatible with maintaining the auditor’s independence.

 

  (6) Not Applicable.

PART IV

 

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

(a) The following documents filed as a part of the report:

 

  (1) Financial Statements:

The following are included with the 2011 Report of Independent Registered Public Accounting Firm included under Item 8 of this report.

Report of Independent Registered Public Accounting Firm

Statements of Financial Condition

Condensed Schedules of Investments

Statements of Operations

Statements of Changes in Partners’ Capital

Notes to Financial Statements

 

  (2) Financial statement schedules:

All Schedules are omitted for the reason that they are not required or are not applicable because equivalent information has been included in the financial statements or the notes thereto.

 

  (3) Exhibits required to be filed by Item 601 of Regulation S-K:

The following exhibits are included herewith.

 

Designation

  

Description

31.1    Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
31.2    Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer
32.1    Section 1350 Certification of Principal Executive Officer
32.2    Section 1350 Certification of Principal Financial Officer
101.INS    XBRL Instance Document.
101.SCH    XBRL Taxonomy Extension Schema Document.
101.CAL    XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF    XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB    XBRL Taxonomy Extension Label Linkbase Document.
101.PRE    XBRL Taxonomy Extension Presentation Linkbase Document.

 

14


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, on the 26th day of March, 2012.

 

ROGERS INTERNATIONAL RAW MATERIALS FUND, L.P.

(Registrant)

By: Beeland Management Company, L.L.C.
General Partner
By: /s/ Walter Thomas Price III
Walter Thomas Price III
Managing Member

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the General Partner of the Registrant in the capacities and on the date indicated.

 

Signature

  

Title with

General Partner

 

Date

/s/ Walter Thomas Price III

   Managing Member   March 26, 2012

    Walter Thomas Price III

   (Principal Executive Officer)  

/s/ Allen D. Goodman

   Managing Member   March 26, 2012

    Allen D. Goodman

   (Principal Financial and Accounting  
   Officer)  

(Being the principal executive officer and the principal financial and accounting officer, and a majority of the Managing Members of Beeland Management Company, L.L.C.)

 

15