<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter ended June 30, 1998
/ / 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: 0-17592
PRUDENTIAL-BACHE DIVERSIFIED FUTURES FUND L.P.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 13-3464456
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One New York Plaza, 13th Floor, New York, New York 10292
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 778-7866
N/A
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check CK 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 _CK_ No __
<PAGE>
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRUDENTIAL-BACHE DIVERSIFIED FUTURES FUND L.P.
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
ASSETS
Equity in commodity trading accounts:
Cash $ 3,342,987 $ 3,663,968
U.S. Treasury bills, at amortized cost 13,475,880 14,948,662
Net unrealized (loss) gain on open commodity positions (505,882) 1,431,940
------------- ------------
Total assets $16,312,985 $20,044,570
------------- ------------
------------- ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable $ 464,458 $ 227,022
Management fees payable 54,285 66,634
Accrued expenses 27,494 54,239
Incentive fees payable -- 160,551
------------- ------------
Total liabilities 546,237 508,446
------------- ------------
Commitments
Partners' capital
Limited partners (40,765 and 43,534 units outstanding) 15,608,992 19,340,647
General partner (412 and 440 units outstanding) 157,756 195,477
------------- ------------
Total partners' capital 15,766,748 19,536,124
------------- ------------
Total liabilities and partners' capital $16,312,985 $20,044,570
------------- ------------
------------- ------------
Net asset value per limited and general partnership unit ('Units') $ 382.90 $ 444.27
------------- ------------
------------- ------------
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
2
<PAGE>
PRUDENTIAL-BACHE DIVERSIFIED FUTURES FUND L.P.
(a limited partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six months ended Three months ended
June 30, June 30,
--------------------------- ---------------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
REVENUES
Net realized gain (loss) on commodity
transactions $ 150,639 $ (472,480) $ 39,967 $(1,479,432)
Change in net unrealized gain/loss on
open commodity positions (1,937,822) 101,886 (1,014,644) 446,911
Interest from U.S Treasury bills 342,080 367,933 160,032 183,442
----------- ----------- ----------- -----------
(1,445,103) (2,661) (814,645) (849,079)
----------- ----------- ----------- -----------
EXPENSES
Commissions 811,799 864,506 382,810 416,562
Management fees 353,157 381,724 166,090 180,847
General and administrative 36,739 42,114 17,523 21,608
----------- ----------- ----------- -----------
1,201,695 1,288,344 566,423 619,017
----------- ----------- ----------- -----------
Net loss $(2,646,798) $(1,291,005) $(1,381,068) $(1,468,096)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
ALLOCATION OF NET LOSS
Limited partners $(2,620,320) $(1,278,080) $(1,367,255) $(1,453,399)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
General partner $ (26,478) $ (12,925) $ (13,813) $ (14,697)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
NET LOSS PER WEIGHTED AVERAGE
LIMITED AND GENERAL PARTNERSHIP UNIT
Net loss per weighted average
limited and general partnership unit $ (61.29) $ (27.23) $ (32.58) $ (31.34)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average number of
limited and general partnership units
outstanding 43,182 47,411 42,390 46,849
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
- -------------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
<TABLE>
<CAPTION>
LIMITED GENERAL
UNITS PARTNERS PARTNER TOTAL
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Partners' capital--December 31, 1997 43,974 $19,340,647 $195,477 $19,536,124
Net loss -- (2,620,320) (26,478) (2,646,798)
Redemptions (2,797) (1,111,335) (11,243) (1,122,578)
------ ----------- -------- -----------
Partners' capital--June 30, 1998 41,177 $15,608,992 $157,756 $15,766,748
------ ----------- -------- -----------
------ ----------- -------- -----------
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
3
<PAGE>
PRUDENTIAL-BACHE DIVERSIFIED FUTURES FUND L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
(Unaudited)
A. General
These financial statements have been prepared without audit. In the opinion
of management, the financial statements contain all adjustments (consisting of
only normal recurring adjustments) necessary to present fairly the financial
position of Prudential-Bache Diversified Futures Fund L.P. (the 'Partnership')
as of June 30, 1998 and the results of its operations for the six and three
months ended June 30, 1998 and 1997. However, the operating results for the
interim periods may not be indicative of the results expected for the full year.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Partnership's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1997.
B. Related Parties
Seaport Futures Management, Inc. (the 'General Partner') and its affiliates
perform services for the Partnership which include, but are not limited to:
brokerage services, accounting and financial management, registrar, transfer and
assignment functions, investor communications, printing and other administrative
services. A portion of the general and administrative expenses of the
Partnership for the six months ended June 30, 1998 and 1997 was borne by
Prudential Securities Incorporated ('PSI') and its affiliates.
Costs and expenses charged to the Partnership for these services for the six
and three months ended June 30, 1998 and 1997 were:
<TABLE>
<CAPTION>
Six months ended Three months ended
June 30, June 30,
--------------------- ---------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Commissions $811,799 $864,506 $382,810 $416,562
General and Administrative 5,753 8,850 2,472 4,424
-------- -------- -------- --------
$817,552 $873,356 $385,282 $420,986
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
Expenses payable to the General Partner and its affiliates (which are
included in accrued expenses) as of June 30, 1998 and December 31, 1997 were
$5,896 and $5,780, respectively.
The Partnership maintains its trading and cash accounts at PSI, the
Partnership's commodity broker and an affiliate of the General Partner. Except
for the portion of assets that is deposited as margin to maintain forward
currency contract positions as further discussed below, the Partnership's assets
are maintained either with PSI or, for margin purposes, with the various
exchanges on which the Partnership is permitted to trade.
The Partnership, acting through its trading manager, executes
over-the-counter, spot, forward and/or option foreign exchange transactions
with PSI. PSI then engages in back-to-back trading with an affiliate,
Prudential-Bache Global Markets Inc. ('PBGM'). PBGM attempts to earn a profit
on such transactions. PBGM keeps its prices on foreign currency competitive
with other interbank trading desks. All over-the-counter currency transactions
are conducted between PSI and the Partnership pursuant to a line of credit. PSI
may require that collateral be posted against the marked-to-market position of
the Partnership.
4
<PAGE>
C. Credit and Market Risk
Since the Partnership's business is to trade futures, forward (including
foreign exchange transactions) and options contracts, its capital is at risk due
to changes in the value of these contracts (market risk) or the inability of
counterparties to perform under the terms of the contracts (credit risk).
Futures, forward and options contracts involve varying degrees of off-balance
sheet risk; and changes in the level of volatility of interest rates, foreign
currency exchange rates or the market values of the contracts (or commodities
underlying the contracts) frequently result in changes in the Partnership's
unrealized gain (loss) on open commodity positions reflected in the statements
of financial condition. The Partnership's exposure to market risk is influenced
by a number of factors including the relationships among the contracts held by
the Partnership as well as the liquidity of the markets in which the contracts
are traded.
Futures and options contracts are traded on organized exchanges and are thus
distinguished from forward contracts which are entered into privately by the
parties. The credit risks associated with futures and options contracts are
typically perceived to be less than those associated with forward contracts
because exchanges typically provide clearinghouse arrangements in which the
collective credit (subject to certain limitations) of the members of the
exchanges is pledged to support the financial integrity of the exchange. On the
other hand, the Partnership must rely solely on the credit of its broker (PSI)
with respect to forward transactions. The Partnership presents unrealized gains
and losses on open forward positions as a net amount in the statements of
financial condition because it has a master netting agreement with PSI.
The General Partner attempts to minimize both credit and market risks by
requiring the Partnership's trading manager to abide by various trading
limitations and policies. The General Partner monitors compliance with these
trading limitations and policies which include, but are not limited to,
executing and clearing all trades with creditworthy counterparties (currently,
PSI is the sole counterparty or broker); limiting the amount of margin or
premium required for any one commodity or all commodities combined; and
generally limiting transactions to contracts which are traded in sufficient
volume to permit the taking and liquidating of positions. The General Partner
may impose additional restrictions (through modifications of such trading
limitations and policies) upon the trading activities of the trading manager as
it, in good faith, deems to be in the best interests of the Partnership.
PSI, when acting as the Partnership's futures commission merchant in
accepting orders for the purchase or sale of domestic futures and options
contracts, is required by Commodity Futures Trading Commission ('CFTC')
regulations to separately account for and segregate as belonging to the
Partnership all assets of the Partnership relating to domestic futures and
options trading and is not to commingle such assets with other assets of PSI. At
June 30, 1998 and December 31, 1997, such segregated assets totalled $11,791,005
and $15,454,142, respectively. Part 30.7 of the CFTC regulations also requires
PSI to secure assets of the Partnership related to foreign futures and options
trading which totalled $5,187,186 and $4,551,236 at June 30, 1998 and December
31, 1997, respectively. There are no segregation requirements for assets related
to forward trading.
As of June 30, 1998, all open futures and forward contracts mature within one
year.
5
<PAGE>
At June 30, 1998 and December 31, 1997, gross contract amounts of open
futures and forward contracts are:
<TABLE>
<CAPTION>
1998 1997
-------------- -----------------
<S> <C> <C>
Futures Currency Contracts:
Commitments to purchase $ 3,531,463 $ 3,390,000
Commitments to sell 5,220,213 6,473,978
Forward Currency Contracts:
Commitments to purchase 3,968,221 1,407,251
Commitments to sell 20,157,162 17,951,973
Financial Futures Contracts:
Commitments to purchase 266,845,248 94,581,750
Commitments to sell 66,357,809 $57,703,723
Other Futures Contracts:
Commitments to purchase 233,480 3,567,655
Commitments to sell 9,489,916 9,032,727
</TABLE>
The gross contract amounts represent the Partnership's potential involvement
in a particular class of financial instrument (if it were to take or make
delivery on an underlying futures or forward contract). The gross contract
amounts significantly exceed the future cash requirements as the Partnership
intends to close out open positions prior to settlement and thus is generally
subject only to the risk of loss arising from the change in the value of the
contracts. As such, the Partnership considers the 'fair value' of its futures
and forward contracts to be the net unrealized gain or loss on the contracts.
Thus, the amount at risk associated with counterparty nonperformance of all
contracts is the net unrealized gain included in the statements of financial
condition. The market risk associated with the Partnership's commitments to
purchase commodities is limited to the gross contract amounts involved, while
the market risk associated with its commitments to sell is unlimited since the
Partnership's potential involvement is to make delivery of an underlying
commodity at the contract price; therefore, it must repurchase the contract at
prevailing market prices.
At June 30, 1998 and December 31, 1997, the fair values of open futures and
forward contracts were:
<TABLE>
<CAPTION>
1998 1997
------------------------ --------------------------
Assets Liabilities Assets Liabilities
-------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Futures Contracts:
Domestic exchanges
Financial $205,944 $ 48,750 $ 139,389 $ --
Currencies 21,638 61,851 170,950 --
Other 116,564 137,493 872,883 33,653
Foreign exchanges
Financial 307,863 250,532 369,178 132,611
Other 16,666 10,725 7,642 1,030
Forward Contracts:
Currencies 8,738 673,944 280,315 241,123
-------- ----------- ---------- -----------
$677,413 $ 1,183,295 $1,840,357 $ 408,417
-------- ----------- ---------- -----------
-------- ----------- ---------- -----------
</TABLE>
6
<PAGE>
The following table presents the average fair value of futures and forward
contracts during the six months ended June 30, 1998 and 1997, respectively.
<TABLE>
<CAPTION>
1998 1997
-------------------------- --------------------------
Assets Liabilities Assets Liabilities
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Futures Contracts:
Domestic exchanges
Financial $ 150,109 $ 30,041 $ 88,861 $ 10,529
Currencies 147,444 30,371 59,208 13,299
Other 316,313 68,607 274,642 31,931
Foreign exchanges
Financial 397,159 108,260 242,109 138,158
Other 10,547 5,280 4,942 789
Forward Contracts:
Currencies 224,175 356,110 356,121 489,636
---------- ----------- ---------- -----------
$1,245,747 $ 598,669 $1,025,883 $ 684,342
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
</TABLE>
The following table presents the average fair value of futures and forward
contracts during the three months ended June 30, 1998 and 1997, respectively.
<TABLE>
<CAPTION>
1998 1997
------------------------ ------------------------
Assets Liabilities Assets Liabilities
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Futures Contracts:
Domestic exchanges
Financial $ 83,776 $ 52,572 $109,760 $ 10,844
Currencies 154,643 33,795 56,772 14,963
Other 176,910 82,100 230,470 37,953
Foreign exchanges
Financial 262,465 106,412 241,009 158,995
Other 12,260 7,132 5,341 818
Forward Contracts:
Currencies 288,900 283,909 179,050 503,227
-------- ----------- -------- -----------
$978,954 $ 565,920 $822,402 $ 726,800
-------- ----------- -------- -----------
-------- ----------- -------- -----------
</TABLE>
7
<PAGE>
The following tables present trading revenues from futures and forward
contracts during the six and three months ended June 30, 1998 and 1997,
respectively.
<TABLE>
<CAPTION>
For the six months ended For the three months ended
June 30, June 30,
--------------------------- --------------------------------
1998 1997 1998 1997
----------- ----------- ---------------- -----------
<S> <C> <C> <C> <C>
Futures Contracts:
Domestic exchanges
Financial $ (340,297) $ (154,146) $ (304,218) $ (87,665)
Currencies (100,774) 38,886 (159,777) 3,546
Other (475,379) 186,185 21,007 135,806
Foreign exchanges
Financial (410,930) (65,616) (321,401) (123,697)
Other 24,535 17,789 (3,082) 18,575
Forward Contracts:
Currencies (484,338) (393,692) (207,206) (979,086)
----------- ----------- ---------------- -----------
$(1,787,183) $ (370,594) $ (974,677) $(1,032,521)
----------- ----------- ---------------- -----------
----------- ----------- ---------------- -----------
</TABLE>
D. Subsequent Event
Effective August 1, 1998, the General Partner reduced the annual rate of
commissions charged to the Partnership from 9% to 8% of net asset value.
8
<PAGE>
PRUDENTIAL-BACHE DIVERSIFIED FUTURES FUND L.P.
(a limited partnership)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership commenced operations on October 19, 1988 with gross proceeds
of $30,107,800. After accounting for organizational and offering expenses, the
Partnership's net proceeds were $29,387,470.
At June 30, 1998, 100% of the Partnership's total net assets (the 'Net Asset
Value') was allocated to commodities trading. A significant portion of the Net
Asset Value was held in U.S. Treasury bills (which represented approximately 83%
of the Net Asset Value prior to redemptions payable) and cash, which are used as
margin for the Partnership's trading in commodities. Inasmuch as the sole
business of the Partnership is to trade in commodities, the Partnership
continues to own such liquid assets to be used as margin.
The percentage that U.S. Treasury bills bears to the net assets varies each
day, and from month to month, as the market values of commodity interests
change. The balance of the net assets is held in cash. All interest earned on
the Partnership's interest-bearing funds is paid to the Partnership.
The commodities contracts are subject to periods of illiquidity because of
market conditions, regulatory considerations and other reasons. For example,
commodity exchanges limit fluctuations in certain commodity futures contract
prices during a single day by regulations referred to as 'daily limits.' During
a single day, no trades may be executed at prices beyond the daily limit. Once
the price of a futures contract for a particular commodity has increased or
decreased by an amount equal to the daily limit, positions in the commodity can
neither be taken nor liquidated unless traders are willing to effect trades at
or within the limit. Commodity futures 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
futures positions.
Since the Partnership's business is to trade futures, forward and options
contracts, its capital is at risk due to changes in the value of these contracts
(market risk) or the inability of counterparties to perform under the terms of
the contracts (credit risk). The General Partner attempts to minimize these
risks by requiring the Partnership's trading manager to abide by various trading
limitations and policies. See Note C to the financial statements for a further
discussion on the credit and market risks associated with the Partnership's
futures, forward and options contracts.
Redemptions recorded for the six and three months ended June 30, 1998 were
$1,111,335 and $459,863 for the limited partners and $11,243 and $4,595 for the
General Partner, respectively. Redemptions by limited partners and the general
partner from commencement of operations (October 19, 1988) through June 30, 1998
totalled $42,549,286 and $1,034,837, respectively. Future redemptions will
impact the amount of funds available for investment in commodity contracts in
subsequent periods.
The Partnership does not have, nor does it expect to have, any capital
assets.
Results of Operations
The Net Asset Value per Unit as of June 30, 1998 was $382.90, a decrease of
13.81% from the December 31, 1997 Net Asset Value per Unit of $444.27.
The Partnership's trading for April resulted in losses. Unprofitable sectors
included the financial, currency and metal sectors. Partially offsetting losses,
gains were recognized in the soft, grain, energy, index and meat sectors.
Trading in the financial sector led to losses. Early in the month, 30-year U.S.
Treasury bond yields approached record lows, driving prices higher. On April
28th, the market suffered what seemed to be a major setback on a report that the
Federal Reserve policy makers were leaning toward a rate hike which would cause
bond prices to fall. However, mild inflation data released on April 29th sent
bond prices soaring again, pushing the yield back below 6%. In Europe, bond
yields, which had been declining for much of the first quarter, rose in April,
resulting in losses in most positions held. In the currency sector, the biggest
losing position for the Partnership was the deutsche mark as it rose against the
U.S. dollar, reflecting expectations of a German tax hike. Long positions in the
Australian dollar performed poorly as the Aussie dollar succumbed to the
worsening economic picture from Asia. Swiss franc positions lost value as well.
On the brighter side, the Partnership was able to partially offset losses with
gains in the soft sector. The Partnership
9
<PAGE>
took advantage of the five-year low in sugar prices caused by expectations of a
large Brazillian crop. Positions in coffee were also profitable. Corn and wheat
contracts were profitable in the grain sector, as were positions in light crude
and heating oil in the energy sector.
The Partnership's trading during May resulted in gains. Profitable sectors
included the financial, currency, metal, energy and grain sectors. Partially
offsetting gains were losses in the index, soft and meat sectors. In the
financial sector, the Japanese Government bond (JGB) reached record highs as it
rallied in response to reports that no end to economic problems in Japan was in
sight. This rise generated profits for the Partnership's long JGB positions. The
U.S. 30-year bond rose throughout the month on the back of a strong U.S. dollar,
resulting in gains. Long positions in Australian three-year and Treasury bonds
also fared well. Hurt by continuing bank failings and other negative news, the
Japanese yen continued its slide versus the U.S. dollar in the currency sector.
During the month, skeptical investors drove the yen to a seven-year low,
generating profits for the Partnership's short positions. Short silver positions
in the metal sector gained as silver prices fell due to profit taking by
impatient investors who had bought silver with high hopes of rising values. Long
S&P 500 positions in the index sector diminished May's profits as the S&P 500
dropped for the first time in more than six months. Cotton and coffee positions
were unprofitable in the soft sector as were live cattle positions in the meat
sector.
June trading resulted in losses. Unprofitable sectors included the metal,
currency, financial, index and grain sectors. Partially offsetting losses, gains
were generated in the energy, soft and meat sectors. Unprofitable positions in
the Japanese government bond led losses in the financial sector as the yield
rose from record lows following the United State's intervention to support the
Japanese yen. The yen's reversal also had a negative impact on the Australian
ten-year and three-year bond positions as well as Eurodollar bond positions.
With the exception of a downward spike mid-month, the prices of both silver and
gold advanced throughout the month, resulting in metal sector losses for the
Partnership. As concerns grew over the worsening economic picture in Russia, the
value of the German deutsche mark fell versus the U.S. dollar. This initiated a
flight to the safety of the British pound driving it higher versus the U.S.
dollar. This shift was unprofitable for the Partnership. In the index sector,
the S&P 500 began the month with volatile swings. However, these swings subsided
and the market trended upwards, resulting in losses for the Partnership's short
positions. The Partnership generated profits from short energy sector positions
as prices fell on a perceived oversupply of light crude and heating oil. In the
soft sector, coffee prices reached an 18-month low on indications of strong
supplies, profiting short positions. Trading in cotton positions resulted in
profits.
Interest income from U.S. Treasury bills for the six and three months ended
June 30, 1998 decreased by approximately $26,000 and $23,000, respectively, as
compared to the same periods in 1997. These declines in interest income were the
result of fewer funds being invested in U.S. Treasury bills principally due to
redemptions and weak trading performance during the first half of 1998.
Commissions paid to PSI are calculated on the Partnership's Net Asset Value
on the first day of each month and, therefore, vary monthly according to trading
performance and redemptions. Accordingly, they must be compared to the
fluctuations in the monthly Net Asset Values. Commissions decreased by
approximately $53,000 and $34,000 for the six and three months ended June 30,
1998 as compared to the corresponding periods in 1997 principally due to the
effect of redemptions and weak trading performance during the first half of 1998
on the monthly Net Asset Values.
Management fees are calculated on the Partnership's Net Asset Value at the
end of each month and, therefore, are affected by trading performance and
redemptions. Management fees decreased by approximately $29,000 and $15,000 for
the six and three months ended June 30, 1998 as compared to the corresponding
periods in 1997 due to the same reasons commissions decreased as discussed
above.
Incentive fees are based on the New High Net Trading Profits as defined in
the Advisory Agreement, as amended, among the Partnership, the General Partner
and the trading manager. No incentive fees were earned during the six months
ended June 30, 1998 and 1997.
General and administrative expenses include audit, tax and legal fees as well
as printing and postage costs. General and administrative expenses for the six
and three months ended June 30, 1998 decreased by approximately $5,000 and
$4,000 as compared to the corresponding periods in 1997.
10
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings--There are no material legal proceedings pending by or
against the Registrant or the General Partner.
Item 2. Changes in Securities--None
Item 3. Defaults Upon Senior Securities--None
Item 4. Submission of Matters to a Vote of Security Holders--None
Item 5. Other Information--None
Item 6. (a) Exhibits
4.1 Agreement of Limited Partnership of the Registrant,
dated as of May 25, 1988 as amended and restated
as of July 12, 1988 (incorporated by reference to
Exhibit 3.1 and 4.1 of Registrant's Annual
Report on Form 10-K for the period ended December 31, 1988)
4.2 Subscription Agreement (incorporated by reference
to Exhibit 4.2 to the Registrant's Registration
Statement on Form S-1, File No. 33-22100)
4.3 Request for Redemption (incorporated by reference
to Exhibit 4.3 to the Registrant's Registration
Statement on Form S-1, File No. 33-22100)
27.1 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K--None
11
<PAGE>
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.
PRUDENTIAL-BACHE DIVERSIFIED FUTURES FUND L.P.
By: Seaport Futures Management, Inc.
A Delaware corporation, General Partner
By: /s/ Steven Carlino Date: August 14, 1998
----------------------------------------
Steven Carlino
Vice President
Chief Accounting Officer for the Registrant
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information
extracted from the financial statements for
Prudential-Bache Diversified Futures Fund L.P.
and is qualified in its entirety by reference
to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000833225
<NAME> Prudential-Bache Diversified Futures Fund L.P.
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-1-1998
<PERIOD-END> Jun-30-1998
<PERIOD-TYPE> 6-MOS
<CASH> 3,342,987
<SECURITIES> 12,969,998
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,312,985
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,312,985
<CURRENT-LIABILITIES> 546,237
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 15,766,748
<TOTAL-LIABILITY-AND-EQUITY> 16,312,985
<SALES> 0
<TOTAL-REVENUES> (1,445,103)
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,201,695
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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