PRUDENTIAL BACHE CAPITAL RETURN FUTURES FUND 2 L P, 10-Q, 1997-08-14

PRUDENTIAL BACHE CAPITAL RETURN FUTURES FUND 2 L P
10-Q, 1997-08-14
COMMODITY CONTRACTS BROKERS & DEALERS

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<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 quarterly period ended June 30, 1997

/ / 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: 0-18418

PRUDENTIAL-BACHE CAPITAL RETURN FUTURES FUND 2, L.P.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)

Delaware 13-3533120
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)

One New York Plaza, 14th 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 CAPITAL RETURN FUTURES FUND 2, L.P.
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
ASSETS
Equity in commodity trading accounts:
Cash $ 5,762,080 $ 7,947,679
U.S. Treasury bills, at amortized cost 22,336,031 25,015,580
Net unrealized gain on open commodity positions 804,391 658,774
Options, net, at market 25,981 (44,006)
------------- ------------
Total assets $28,928,483 $33,578,027
------------- ------------
------------- ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable $ 670,604 $ 1,692,233
Management fees payable 120,056 117,811
Due to affiliates 59,541 54,587
Accrued expenses 42,126 49,264
Incentive fees payable 29,589 657,105
------------- ------------
Total liabilities 921,916 2,571,000
------------- ------------
Commitments
Partners' capital
Limited partners (126,106 and 131,697 units outstanding) 27,726,456 30,696,788
General partner (1,274 and 1,331 units outstanding) 280,111 310,239
------------- ------------
Total partners' capital 28,006,567 31,007,027
------------- ------------
Total liabilities and partners' capital $28,928,483 $33,578,027
------------- ------------
------------- ------------
Net asset value per limited and general partnership unit ('Units') $ 219.87 $ 233.09
------------- ------------
------------- ------------
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
2
<PAGE>
PRUDENTIAL-BACHE CAPITAL RETURN FUTURES FUND 2, L.P.
(a limited partnership)
STATEMENTS OF OPERATIONS
(Unaudited)

<TABLE>
<CAPTION>
Six Months Three Months
Ended June 30, Ended June 30,
-------------------------- --------------------------
1997 1996 1997 1996
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
REVENUES
Net realized gain (loss) on commodity
transactions $ (473,141) $1,642,326 $(2,252,501) $1,369,240
Change in net unrealized gain on open
commodity positions 148,486 55,792 574,505 (301,569)
Interest from U.S. Treasury bills 595,376 543,940 303,009 271,454
----------- ---------- ----------- ----------
270,721 2,242,058 (1,374,987) 1,339,125
----------- ---------- ----------- ----------
EXPENSES
Commissions 1,306,445 1,308,385 633,918 622,160
Management fees 551,679 549,180 261,645 261,342
Incentive fees 29,590 47,687 29,590 14,719
General and administrative 94,747 80,030 54,018 20,018
----------- ---------- ----------- ----------
1,982,461 1,985,282 979,171 918,239
----------- ---------- ----------- ----------
Net income (loss) $(1,711,740) $ 256,776 $(2,354,158) $ 420,886
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
ALLOCATION OF NET INCOME (LOSS)
Limited partners $(1,694,614) $ 262,777 $(2,330,604) $ 416,676
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
General partner $ (17,126) $ (6,001) $ (23,554) $ 4,210
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
NET INCOME (LOSS) PER WEIGHTED AVERAGE
LIMITED AND GENERAL PARTNERSHIP UNIT
Net income (loss) per weighted average
limited and general partnership unit $ (12.99) $ 1.65 $ (18.05) $ 2.81
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
Weighted average number of limited and
general partnership units outstanding 131,729 155,791 130,430 149,763
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
- ------------------------------------------------------------------------------------------------------
</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, 1996 133,028 $30,696,788 $ 310,239 $31,007,027
Net loss (1,694,614) (17,126) (1,711,740)
Redemptions (5,648) (1,275,718) (13,002) (1,288,720)
-------- ----------- ----------- -----------
Partners' capital--June 30, 1997 127,380 $27,726,456 $ 280,111 $28,006,567
-------- ----------- ----------- -----------
-------- ----------- ----------- -----------
- -----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
3
<PAGE>
PRUDENTIAL-BACHE CAPITAL RETURN FUTURES FUND 2, L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
(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 Capital Return Futures Fund 2, L.P. (the
'Partnership') as of June 30, 1997 and the results of its operations for the six
and three months ended June 30, 1997 and 1996. However, the operating results
for the interim periods may not be indicative of the results expected for a 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, 1996 (the 'Annual Report').

Certain balances from the prior period have been reclassified to conform with
the current financial statement presentation.

B. Related Parties

Prudential Securities 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.

The costs incurred for these services for the six months ended June 30, 1997
and 1996 were:

<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
- ---------------------------------------------------------------------------
Commissions $1,306,445 $1,308,385
General and administrative 41,276 34,302
---------- ----------
$1,347,721 $1,342,687
---------- ----------
---------- ----------
</TABLE>

The costs incurred for these services for the three months ended June 30,
1997 and 1996 were:

<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
- -----------------------------------------------------------------------
Commissions $633,918 $622,160
General and administrative 12,417 5,902
-------- --------
$646,335 $628,062
-------- --------
-------- --------
</TABLE>

The General Partner is a wholly-owned subsidiary of Prudential Securities
Incorporated ('PSI'). The Partnership maintains its trading and cash accounts at
PSI, the Partnership's commodity broker. Approximately 75% of the net asset
value is invested in interest-bearing U.S. Government obligations (primarily
U.S. Treasury bills), a significant portion of which is utilized for margin
purposes for the Partnership's commodity trading activities. As described in the
Annual Report, all commissions for brokerage services are paid to PSI.

In connection with the Partnership's interbank transactions, PSI engages in
foreign currency forward transactions with the Partnership and an affiliate of
PSI who, as principal, attempts to earn a profit on the bid-ask spreads (which
must be competitive) on any foreign currency forward transactions entered into
between the Partnership and PSI, on the one hand, and PSI and such affiliate on
the other. In connection with its trading of foreign currencies in the interbank
market, PSI may arrange bank lines of credit at major international banks. To
the extent such lines of credit are arranged, PSI does not charge the
Partnership for maintaining such lines of credit, but requires margin deposits
with respect to forward contract transactions.

4
<PAGE>
C. Credit and Market 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 on 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 managers 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 managers as
it, in good faith, deems to be in the best interest 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, 1997 and December 31, 1996, such segregated assets totalled $24,556,183
and $24,078,572, 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 $4,853,680 and $9,271,094 at June 30, 1997 and December
31, 1996, respectively. There are no segregation requirements for assets related
to forward trading.

As of June 30, 1997 and December 31, 1996, the Partnership's open futures,
forward and options contracts mature within one year.

5
<PAGE>
At June 30, 1997 and December 31, 1996, gross contract amounts of open
futures, forward and options contracts are:

<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Currency Forward Contracts:
Commitments to purchase $ 34,376,175 $27,427,116
Commitments to sell $ 22,409,295 $19,223,534
Currency Futures and Options
Contracts:
Commitments to purchase $ 1,390,707 $ 7,651,893
Commitments to sell $ 2,395,850 $15,877,256
Financial Futures and Options
Contracts:
Commitments to purchase $458,227,134 $110,757,098
Commitments to sell $ 42,807,350 $ 38,688,741
Other Futures and Options Contracts:
Commitments to purchase $ 513,319 --
Commitments to sell $ 17,543,692 $ 320,262
</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, forward or options 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, forward and options contracts to be the net unrealized gain or loss on
the contracts (plus premiums on options). 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.

6
<PAGE>
At June 30, 1997 and December 31, 1996, the fair value of open futures,
forward and options contracts was:

<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
-------------------------- --------------------------
Fair Value Fair Value
-------------------------- --------------------------
Assets Liabilities Assets Liabilities
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Futures Contracts:
Domestic exchanges
Financial $ 311,713 $ (2,063) $ -- $ (55,900)
Currencies 50,651 (3,696) 194,561 (96,820)
Other 531,344 (7,045) 313,497 (6,743)
Foreign exchanges
Financial 468,835 (78,218) 316,218 (238,492)
Other 14,250 -- 4,092 --
Forward Contracts:
Currencies 285,459 (766,839) 535,753 (307,392)
Options Contracts:
Domestic exchanges
Financial -- (20,663) -- (10,000)
Currencies 8,300 (10,925) -- --
Other 51,778 (3,400) -- (23,168)
Foreign exchanges
Financial 2,265 (1,374) -- (10,838)
---------- ----------- ---------- -----------
$1,724,595 $ (894,223) $1,364,121 $ (749,353)
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
</TABLE>

The following table presents the average fair value of futures, forward and
options contracts during the six months ended June 30, 1997 and 1996,
respectively.

<TABLE>
<CAPTION>
Six months ended Six months ended
June 30, 1997 June 30, 1996
-------------------------- --------------------------
Average Fair Value Average Fair Value
-------------------------- --------------------------
Assets Liabilities Assets Liabilities
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Futures Contracts:
Domestic exchanges
Financial $ 105,668 $ (20,566) $ 467,057 $ (20,927)
Currencies 305,963 (47,179) 343,855 (211,024)
Other 261,928 (17,652) 85,594 (47,975)
Foreign exchanges
Financial 365,258 (157,370) 502,418 (57,497)
Other 7,720 (3,680) 319 (6,087)
Forward Contracts:
Currencies 580,379 (666,353) 794,756 (337,127)
Options Contracts:
Domestic exchanges
Financial -- (18,108) -- --
Currencies 1,186 (59,832) 10,752 (4,582)
Other 26,992 (4,537) -- --
Foreign exchanges
Financial 6,390 (8,408) -- --
---------- ----------- ---------- -----------
$1,661,484 $(1,003,685) $2,204,751 $ (685,219)
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
</TABLE>

7
<PAGE>
The following table presents the average fair value of futures, forward
and options contracts during the three months ended June 30, 1997 and 1996,
respectively.

<TABLE>
<CAPTION>
Three months ended Three months ended
June 30, 1997 June 30, 1996
-------------------------- --------------------------
Average Fair Value Average Fair Value
-------------------------- --------------------------
Assets Liabilities Assets Liabilities
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Futures Contracts:
Domestic exchanges
Financial $ 174,716 $ (8,617) $ 472,228 $ (36,622)
Currencies 108,608 (47,476) 296,054 (136,585)
Other 175,835 (26,761) 145,461 (16,119)
Foreign exchanges
Financial 347,566 (199,425) 199,238 (55,429)
Other 7,500 (1,391) 558 (10,653)
Forward Contracts:
Currencies 234,800 (784,932) 877,606 (320,994)
Options Contracts:
Domestic exchanges
Financial -- (24,693) -- --
Currencies 2,075 (19,019) 11,472 (4,534)
Other 32,638 (1,163) -- --
Foreign exchanges
Financial 11,182 (9,952) -- --
---------- ----------- ---------- -----------
$1,094,920 $(1,123,429) $2,002,617 $ (580,936)
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
</TABLE>

The following table presents the net realized gains (losses) and the
change in net unrealized
gains/losses of futures, forward and options contracts during the six months
ended June 30, 1997 and 1996, respectively.

<TABLE>
<CAPTION>
Six months ended June 30, 1997 Six months ended June 30, 1996
----------------------------------------------- -----------------------------------------------
Change in Change in
Net Realized Net Unrealized Net Realized Net Unrealized
Gains (Losses) Gains/Losses Total Gains (Losses) Gains/Losses Total
-------------- -------------- ----------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Futures Contracts:
Domestic exchanges
Financial $ (498,088) $ 365,550 $ (132,538) $ 1,358,838 $ (587,831) $ 771,007
Currencies 264,004 (50,786) 213,218 679,828 123,779 803,607
Other 432,842 217,545 650,387 (137,394) 494,080 356,686
Foreign exchanges
Financial (412,433) 312,891 (99,542) (1,100,681) (546,496) (1,647,177)
Other 23,409 10,158 33,567 (24,496) 1,794 (22,702)
Forward Contracts:
Currencies (406,663) (709,741) (1,116,404) 792,064 578,704 1,370,768
Options Contracts:
Domestic exchanges
Financial (404) (27,442) (27,846) -- -- --
Currencies 104,600 (19,404) 85,196 74,167 (8,238) 65,929
Other 82,308 54,766 137,074 -- -- --
Foreign exchanges
Financial (62,716) (5,051) (67,767) -- -- --
-------------- -------------- ----------- -------------- -------------- -----------
$ (473,141) $ 148,486 $ (324,655) $ 1,642,326 $ 55,792 $ 1,698,118
-------------- -------------- ----------- -------------- -------------- -----------
-------------- -------------- ----------- -------------- -------------- -----------
</TABLE>
8
<PAGE>
The following table presents the net realized gains (losses) and the change
in net unrealized gains/losses of futures, forward and options contracts
during the three months ended June 30, 1997 and 1996, respectively.

<TABLE>
<CAPTION>
Three months ended June 30, 1997 Three months ended June 30, 1996
----------------------------------------------- -----------------------------------------------
Change in Change in
Net Realized Net Unrealized Net Realized Net Unrealized
Gains (Losses) Gains/Losses Total Gains (Losses) Gains/Losses Total
-------------- -------------- ----------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Futures Contracts:
Domestic exchanges
Financial $ (48,825) $ 3,687 $ (45,138) $ 955,388 $ (752,000) $ 203,388
Currencies (250,556) 9,928 (240,628) 520,148 (208,919) 311,229
Other 266 505,414 505,680 234,676 506,865 741,541
Foreign exchanges
Financial (510,380) 302,746 (207,634) (1,006,083) (61,038) (1,067,121)
Other 10,125 12,125 22,250 (24,496) 1,794 (22,702)
Forward Contracts:
Currencies (1,460,047) (267,145) (1,727,192) 686,357 243,467 929,824
Options Contracts:
Domestic exchanges
Financial (1,985) (6,615) (8,600) -- -- --
Currencies 37,550 13,560 51,110 3,250 (31,738) (28,488)
Other 40,140 26,595 66,735 -- -- --
Foreign exchanges
Financial (68,789) (25,790) (94,579) -- -- --
-------------- -------------- ----------- -------------- -------------- -----------
$ (2,252,501) $ 574,505 $(1,677,996) $ 1,369,240 $ (301,569) $ 1,067,671
-------------- -------------- ----------- -------------- -------------- -----------
-------------- -------------- ----------- -------------- -------------- -----------
</TABLE>

D. Subsequent Event

Effective July 1, 1997, all assets previously managed by Analytic/TSA Capital
Management ('TSA') were reallocated to Eclipse Capital Management, Inc.
('Eclipse'). Eclipse receives management fees at the same rate as TSA (a monthly
fee on traded assets equal to a 2% annual rate). In addition, Eclipse will earn
a quarterly incentive fee equal to 20% of New High Net Trading Profits (as
defined in the Advisory Agreement between the Partnership, the General Partner
and Eclipse) as compared to 15% paid to TSA.

9
<PAGE>
PRUDENTIAL-BACHE CAPITAL RETURN FUTURES FUND 2, 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 trading operations on October 6, 1989 with gross
proceeds of $101,010,000. After accounting for organizational and offering
costs, the Partnership's net proceeds were $99,010,000. At the inception of the
Partnership, sixty percent of the net proceeds was allocated to commodities
trading activity and forty percent was placed in reserve and invested in
investment grade interest-bearing obligations ('Reserve Assets'). On January 3,
1995, the Reserve Assets matured and the resulting proceeds were allocated to
commodities trading.

At June 30, 1997, 100% of the Partnership's assets are allocated to
commodities trading. A significant portion of the net asset value was held in
U.S. Treasury bills (which represented approximately 78% 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 total net assets varies
each day, and from month to month, as the market values of commodity interests
change. The balance of the total 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 managers 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, forwards and options contracts.

Redemptions by limited partners recorded for the six and three months ended
June 30, 1997 were $1,275,718 and $663,788, respectively. Redemptions by the
General Partner recorded for the six and three months ended June 30, 1997 were
$13,002 and $6,816, respectively. Redemptions by limited partners and the
General Partner from commencement of operations, October 6, 1989, through June
30, 1997 totalled $116,555,700 and $1,723,347, 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.

Effective July 1, 1997, all assets previously managed by TSA were reallocated
to Eclipse. Eclipse receives management fees at the same rate as TSA (a monthly
fee on traded assets equal to a 2% annual rate). In addition, Eclipse will earn
a quarterly incentive fee equal to 20% of New High Net Trading Profits (as
defined in the Advisory Agreement between the Partnership, the General Partner
and Eclipse) as compared to 15% paid to TSA.

Results of Operations

The net asset value per Unit as of June 30, 1997 was $219.87, a decrease of
5.67% from the December 31, 1996 net asset value per Unit of $233.09.

10
<PAGE>
April's negative performance resulted from losses in the financial, grain,
energy and meat sectors. Positions in the currency, soft, metal, energy and
stock index sectors were profitable. Global equity markets tracked the downward
movement of U.S. bond and stock prices as economic reports seemed to strengthen
the argument for another short-term rate increase by the U.S. Federal Reserve
Bank during the first two weeks of the month. However, bearish sentiment gave
way to exuberance in the second half of April as new data, strong corporate
earnings and a budget deal in Washington restored investor confidence. This
sharp shift in the interest rate markets incurred losses for the Partnership, as
U.S., Australian, Japanese, Canadian, British, German, Italian and French bond
positions were unprofitable. In the currency sector, the Partnership benefited
from continued trends. There was little to shift the U.S. dollar from its
position of strength in world markets. Talk of central bank intervention to stem
the dollar's rise against the Japanese yen ruffled the markets throughout the
month. However, the dollar continued to rise in the weeks leading up to the
meeting of G-7 finance ministers on April 27, 1997, reaching new highs against
both the yen and German mark. In the final week of trading, new economic data
dampened expectations for a second U.S. rate hike and the dollar sagged against
its major counterparts. Positions in Canadian dollar, French franc, Japanese yen
and Swiss franc posted gains. In the stock index sector, S&P 500 and Nikkei
positions were profitable. In the soft sector, supply concerns continued to push
coffee prices upward. Long coffee positions were profitable.

May's negative performance resulted from losses in the currency, metal,
financial and meat sectors. Positions in the index, soft, energy and grain
sectors were profitable. Volatile trading conditions in key currency markets
generated losses for the Partnership. With the exception of the Australian
dollar, all other currency trading was unprofitable. European currencies were
buffeted by upset elections in France and England as well as feuding in Germany
over the revaluation of gold reserves. All of these events present serious
implications for the prospect of a single European currency. In Japan, officials
generated a considerable amount of trading activity as they initially judged the
yen too weak against the U.S. dollar and then too strong later in the month. In
the metal sector, losses were suffered as gold prices, which had languished for
several months, became more volatile reflecting world events. In the soft
sector, profits were experienced in coffee and cotton. The Partnership benefited
from coffee's continuous upward trend as intermittent labor unrest and heavy
rains in major producing countries threatened to reduce already tight
inventories. Gains were achieved in the index sector from profitable positions
in the Nikkei.

June's positive performance resulted from gains in the metal, financial and
index sectors. Positions in the currency and soft sectors were unprofitable. In
the metal sector, the Partnership profited as gold prices fell to a four year
low and the U.S. dollar strengthened, while inflation indicators remained
favorable. Positions in both gold and silver were profitable. In the financial
sector, continued uncertainty surrounding the European Monetary Union (EMU)
benefited bond markets outside and inside the circle of EMU nations. Italian
bonds gained on improved prospects for Italy's entry into the EMU. Profits were
achieved in U.S. Treasuries, British long gilts, Italian bonds, Eurodollar and
Australian bonds. In the currency sector, the Swiss Monetary Authority's
determination to keep the franc from appreciating against major currencies
succeeded in pushing the price of that currency down. As a result, the
Partnership incurred losses in Swiss franc, Japanese yen and German mark, which
were slightly mitigated by gains in the British pound and Australian dollar.

Interest income from U.S. Treasury bills for the six and three months ended
June 30, 1997 increased by approximately $51,000 and $32,000 as compared to the
same period in 1996. This increase was due to a greater amount of funds invested
in U.S. Treasury bills during early 1997 following a strong 1996 fourth quarter.

Commissions are calculated on the net asset value on the first day of each
month and, therefore, vary based on monthly trading performance and redemptions.
Commissions decreased by approximately $2,000 for the six months ended June 30,
1997, but increased by approximately $11,000 for the three months ended June 30,
1997 as compared to the same periods in 1996. These variances principally
reflect the impact of 1996 and 1997 redemptions on the monthly net asset values,
offset by strong trading performance in the last quarter of 1996 and early 1997.

All trading decisions are currently being made by John W. Henry & Co., Inc.,
Welton Investment System Corp. ('Welton') and Eclipse (Eclipse replaced TSA
effective July 1, 1997 as discussed in Liquidity and Capital Resources above).
Management fees are calculated on the net asset value allocated to each trading
manager as of the end of each month and, therefore, are affected by trading
performance and redemptions.

<PAGE>
Management fees increased by approximately $2,000 for the six month period ended
June 30, 1997 and remained the same for the three months ended June 30, 1997 as
compared to the same periods in 1996.

Incentive fees are based on the New High Net Trading Profits generated by
each trading manager, as defined in the Advisory Agreement between the
Partnership, the General Partner and each trading manager. Welton generated
sufficient trading profits (despite an overall loss for the Partnership) to earn
incentive fees of approximately $30,000 for the six and three months ended June
30, 1997. During the six and three months ended June 30, 1996, trading
performance resulted in incentive fees of approximately $48,000 and $15,000,
respectively.

General and administrative expenses increased by approximately $15,000 and
$34,000 for the six and three month periods ended June 30, 1997, respectively,
as compared to the same periods in 1996. These expenses include reimbursement of
costs incurred by the General Partner on behalf of the Partnership, in addition
to accounting, audit, tax and legal fees as well as printing and postage costs
related to reports sent to limited partners.

12
<PAGE>
<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. Exhibits and Reports on Form 8-K:

(a) Exhibits

4.1 Agreement of Limited Partnership of the Registrant, dated as
of June 8, 1989 as amended and restated as of July 21, 1989
(incorporated by reference to Exhibits 3.1 and 4.1 to the
Registrant's Annual Report on Form 10-K for the period ended
December 31, 1989)

4.2 Subscription Agreement (incorporated by reference to
Exhibit 4.2 to the Registrant's Registration Statement
on Form S-1, File No. 33-29039)

4.3 Request for Redemption (incorporated by
reference to Exhibit 4.3 to the Registrant's
Registration Statement on Form S-1, File No.
33-29039)

10.15 Advisory Agreement, dated July 1, 1997,
among the Registrant, Prudential
Securities Futures Management Inc. and
Eclipse Capital Management, Inc. (filed
herewith)

27 Financial Data Schedule (filed herewith)

(b) Reports on Form 8-K--

No reports on Form 8-K were filed during the quarter.

13
<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 hereunto duly authorized.

Prudential-Bache Capital Return Futures Fund 2, L.P.

By: Prudential Securities Futures Management Inc.
A Delaware corporation, General Partner

By: /s/ Steven Carlino Date: August 14, 1997
----------------------------------------
Steven Carlino
Vice President
Chief Accounting Officer for the Registrant

<PAGE>

ADVISORY AGREEMENT
ADVISORY AGREEMENT (the "Agreement") dated as of the 1st
day of July, 1997 by and among Prudential-Bache Capital Return Futures
Fund 2, L.P., a Delaware limited partnership (the "Partnership"), Prudential
Securities Futures Management Inc., a Delaware corporation (the "General
Partner") and Eclipse Capital Management, Inc., a Kentucky corporation
(the "Advisor").

W I T N E S S E T H :
WHEREAS, the Partnership has been organized primarily for the
purpose of trading, buying, selling, spreading or otherwise acquiring,
holding or disposing of futures, forwards and options contracts. Physical
commodities also may be traded from time to time. The foregoing
commodities related transactions are collectively referred to as
"Commodities"; and
WHEREAS, the General Partner is authorized to utilize the
services of one or more professional commodity trading advisors in
connection with the Commodities trading activities of the Partnership; and
WHEREAS, the Partnership wishes to re-hire the Advisor as a
commodity trading advisor to the Partnership to manage a portion of the
assets previously managed by another trading advisor; and
WHEREAS, the Advisor's present business includes the man-
agement of Commodities accounts for its clients; and
WHEREAS, the Advisor is registered as a commodity trading
advisor under the United States Commodity Exchange Act, as amended
("CE Act") and is a member

<PAGE>

of the National Futures Association ("NFA")
as a commodity trading advisor and will maintain such registration and
membership for the term of this Agreement; and
WHEREAS, the Partnership and the Advisor desire to enter into
this Agreement in order to set forth the terms and conditions upon which
the Advisor will render and implement commodity advisory services in
connection with the conduct by the Partnership of its Commodities trading
activities during the term of this Agreement;
NOW, THEREFORE, the parties agree as follows:
1. Duties of the Advisor.
(a) Appointment. The Partnership hereby appoints the
Advisor, and the Advisor hereby accepts appointment, as its attorney-in-
fact to invest and reinvest in Commodities a portion of the Net Asset Value
of the Partnership on the terms and conditions set forth herein,
commencing on the date hereof. The Advisor's initial allocation shall be
approximately $5.6 million. The precise definition of the term "Net Asset
Value" shall be as defined in Exhibit A hereto. This limited power-of-
attorney is a continuing power and shall continue in effect with respect to
the Advisor until terminated hereunder. To this end, the Advisor (i) agrees
to act as a commodity trading advisor retained by the General Partner on
behalf of the Partnership, and specifically, to exercise discretion with
respect to that portion of the Net Asset Value of the Partnership which the
General Partner has allocated to the Advisor's management above, and
which the General Partner may allocate to the Advisor in the future (with
the Advisor's consent) upon the terms and conditions, and for the
purposes, set forth in this Agreement and (ii) shall have sole authority and
responsibility for independently directing the investment and reinvestment
in Commodities of the portion of the Partnership's Net

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<PAGE>

Asset Value allocated to it for the term of this
Agreement pursuant to the trading methods,
systems and strategies of its Global Monetary Program (the
Advisor's "Trading Approach") as such trading approach is described in
the Advisor's Disclosure Document dated December 1, 1996 attached
hereto as Exhibit B (the "Disclosure Document"), receipt of which is
hereby acknowledged, subject to the Partnership's trading policies and
limitations as set forth in Exhibit C, attached hereto, as the same may be
modified or amended and provided in writing to the Advisor from time to
time (the Partnership's "Trading Policies and Limitations"). The General
Partner and the Partnership acknowledge that the Advisor makes no
guarantee of profits or of protection against loss, and that the Advisor's
Commodities transactions hereunder are for the account and risk of the
Partnership.
(b) Allocation of Responsibilities. The General Partner will have
the responsibility for the management of the portion of the Partnership's
Net Asset Value that is invested in United States Treasury bills or other
investments approved by the Commodity Futures Trading Commission
("CFTC") for the investment of "customer" funds or are held in cash. The
Advisor will use its good faith best efforts in determining the investment
and reinvestment in Commodities of that portion of the Partnership's Net
Asset Value allocated to him in compliance with the Trading Policies and
Limitations, and in accordance with its Trading Approach. In the event
that the General Partner shall, in its sole discretion, determine in good
faith following consultation, if appropriate under the circumstances, with
the Advisor that any trading instruction issued by the Advisor violates the
Partnership's Trading Policies and Limitations, then the General Partner,
following reasonable notice appropriate under the circumstances to the
Advisor,

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<PAGE>

may override such trading instruction and the Advisor shall not
be subject to liability for the results of any such action taken by the
General Partner. Nothing herein shall be construed to prevent the General
Partner from imposing any limitation(s) on the trading activities of the
Partnership beyond those enumerated in Exhibit C hereto if the General
Partner determines that such limitation(s) are necessary or in the best
interests of the Partnership, in which case the Advisor will adhere to such
limitations following written notification thereof.
(c) Modification of Trading Approach. In the event the Advisor
wishes to use a trading method or strategy other than or in addition to the
Trading Approach in connection with trading for the Partnership (including
without limitation the deletion of an agreed upon trading method or strat-
egy or the addition of a trading method or strategy in addition to the then
agreed upon Trading Approach), either in whole or in part, the Advisor
may not do so unless it gives the General Partner prior written notice of
its intention to utilize such different trading method or strategy, and the
General Partner consents thereto. Failure of the General Partner to object
to the Advisor's notice of any of the foregoing within ten (10) days' of the
date of the Advisor's notice shall be deemed consent of the General
Partner thereto.
(d) Notification of Material Changes. The Advisor also agrees
to give the Partnership prior written notice of any proposed material
change in its Trading Approach, and agrees not to make any material
change in such Trading Approach (as applied to the Partnership) over the
objection of the General Partner, it being understood that the Advisor shall
be free to institute non-material changes in its Trading Approach (as
applied to the Partnership) without prior written notification. Without
limiting the

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<PAGE>
generality of the foregoing, refinements to the Advisor's
Trading Approach, the addition or deletion of Commodities to or from the
Advisor's Trading Approach, and variations in the leverage principles and
policies utilized by the Advisor shall not be deemed a material change in
the Advisor's Trading Approach, and prior approval of the General Partner
shall not be required therefor. The Advisor agrees that it will discuss with
the General Partner upon request, subject to adequate assurances of
confidentiality, any trading methods or strategies used by it for trading
customer accounts which differ from the Trading Approach which it uses
for the Partnership.
(e) Request for Information. The Advisor agrees to provide the
Partnership with any reasonable information concerning the Advisor that
the Partnership may reasonably request, subject to receipt of adequate
assurances of confidentiality by the Partnership, including, but not limited
to, information regarding any change in control, key personnel, Trading
Approach and financial condition which the Partnership reasonably deems
to be material to the Partnership; the Advisor also shall notify the
Partnership of any such matters the Advisor, in its reasonable judgment,
believes may be material to the Partnership relating to the Advisor and its
Trading Approach.
(f) Nondisclosure. Nothing contained in this Agreement shall
require the Advisor to disclose what it deems to be proprietary or confi-
dential information concerning any such trading methods or strategies,
including but not limited to the Trading Approach or the identity of
customers.
(g) Notice of Errors. The Advisor is responsible for promptly
reviewing all oral and written confirmations it receives to determine that
the Commodities trades were made in accordance with the Advisor's
instructions. If the Advisor determines that an

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<PAGE>
error was made in connection with a trade or that
a trade was made other than in accordance with
the Advisor's instructions, the Advisor shall promptly notify the
Partnership of this fact, and shall utilize its reasonable best efforts to
cause the error or discrepancy to be corrected.
(h) Exculpation. The Advisor shall not be liable to the General
Partner, its officers, directors, shareholders or employees, or any person
who controls the General Partner, or the Partnership or its partners, or any
of their respective successors or assigns under this Agreement, except by
reason of the Advisor's (including any employee, director, officer or
shareholder of the Advisor, or any persons who controls the Advisor) acts
or omissions in material breach of this Agreement or due to its or their
misconduct or negligence or by reason of not having acted in good faith
in the reasonable belief that such actions or omissions were in the best
interests of the Partnership; it being understood that all purchases and
sales of Commodities shall be for the account and risk of the Partnership,
and the Advisor shall not incur any liability for trading profits or losses
resulting therefrom.
2. Indemnification.
(a) The Advisor and each employee of the Advisor shall be
indemnified by the Partnership against any losses, judgments, liabilities,
expenses (including, without limitation, reasonable attorneys' fees) and
amounts paid in settlement of any claims (collectively "Losses") sustained
by the Advisor (i) in connection with any matter relating to the
Partnership's Registration Statement as filed with the Securities and
Exchange Commission or its final prospectus, dated July 21, 1989,
("Prospectus") to the extent provided in the "Agreement Concerning the
Registration Statement and Prospectus"

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<PAGE>

("Representation Agreement") dated July 21, 1989 (incorporated by
reference to Exhibit 10.4 to Registrant's Annual Report on
Form 10-K for the period ended December 31, 1989), (ii) in connection
with any matters relating to the Partnership prior to the effective date of
this Agreement, other than matters involving the Advisor's management
of a portion of the Partnership assets through September 30, 1990
pursuant to an Advisory Agreement ("Advisory Agreement") dated July 21,
1989 (incorporated by reference to Exhibit 10.3 to Registrant's Annual
Report on Form 10-K for the period ended December 31, 1989), the
indemnification of which are covered by the Advisory Agreement,
(iii) in connection with any acts or omissions of the Advisor
relating to the Advisor's management of its allocable portion
of the Partnership's assets from and after the date of this
Agreement, or in its capacity as a trading advisor to the Partnership from
and after the date of this Agreement, and (iv) as a result of a material
breach of this Agreement by the Partnership or the General Partner,
provided that, with respect to (iii) (A) such Losses were not the direct
result of negligence, misconduct or a material breach of this Agreement
on the part of the Advisor, (B) the Advisor and its employees, officers,
directors, shareholders, and each person controlling the Advisor acted (or
omitted to act) in good faith and in a manner reasonably believed by it and
them to be in the best interests of the Partnership, and (C) any such
indemnification by the Partnership will only be recoverable from the assets
of the Partnership and/or the General Partner.
(b) The Partnership shall be indemnified by the Advisor against
any Losses sustained by the Partnership directly resulting from (i) the
negligence or misconduct of, or a material breach of this Agreement by,
the Advisor or its employees officers, directors, shareholders, and each
person controlling the Advisor or (ii) any action or omission to act of the
Advisor or its employees, officers, directors, shareholders, and each
person controlling the Advisor that was not taken in good faith or in a
manner reasonably

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<PAGE>

believed by it and them to be in the best interests of
the Partnership.
(c) No indemnification shall be permitted under this Section 2
for amounts paid in settlement if either (A) the party claiming indem-
nification (the "Indemnitee") fails to notify the indemnifying party of the
terms of any settlement proposed, at least fifteen (15) days before any
amounts are paid or (B) the indemnifying party does not in its good faith
business judgment approve the amount of the settlement within thirty (30)
days of its receipt of notice of the proposed settlement. Notwithstanding
the foregoing, the indemnifying party shall, at all times, have the right to
offer to settle any matter with the approval of the Indemnitee (which
approval shall not be withheld unreasonably) and if the indemnifying party
successfully negotiates a settlement and tenders payment therefor to the
Indemnitee, the Indemnitee must either use its reasonable best efforts to
dispose of the matter in accordance with the terms and conditions of the
proposed settlement or the Indemnitee may refuse to settle the matter and
continue its defense in which latter event the maximum liability of the
indemnifying party to the Indemnitee shall be the amount of said proposed
settlement. Any indemnification under this Section 2, unless ordered by
a court, shall be made by the indemnifying party only as authorized in the
specific case and only upon a determination by mutually acceptable
independent legal counsel in a written opinion that indemnification is
proper in the circumstances because the Indemnitee has met the
applicable standard of conduct set forth hereunder.
(d) None of the provisions for indemnification in this Section 2
shall be applicable with respect to default judgments or confessions of
judgment entered into by an Indemnitee, with its knowledge, without the
prior consent of the indemnifying party.

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<PAGE>
<PAGE>
(e) In the event that an Indemnitee under this Section 2 is made
a party to an action, suit or proceeding alleging both matters for which
indemnification can be made hereunder and matters for which
indemnification may not be made hereunder, such Indemnitee shall be
indemnified only for that portion of the Losses incurred in such action,
suit or proceeding which relates to the matters for which indemnification
can be made.
(f) Expenses incurred in defending a threatened or pending
civil, administrative or criminal action, suit or proceeding against an
Indemnitee shall be paid in advance of the final disposition of such action,
suit or proceeding if (i) the legal action, suit or proceeding, if sustained,
would entitle the Indemnitee to indemnification pursuant to the terms of
this Section 2, and (ii) the Indemnitee undertakes to repay the advanced
funds in cases in which the Indemnitee is not entitled to indemnification
pursuant to the preceding paragraph, and (iii) in the case of advancement
of expenses, the Indemnitee receives a written opinion of mutually ac-
ceptable independent legal counsel that advancing such expenses is
proper in the circumstances.
(g) The parties hereto each acknowledge that the
indemnification provisions of the Advisory Agreement and the
Representation Agreement defined in sub-paragraph (a) of this Section 2
survived the termination of those agreements with respect to any matters
arising while those agreements were in effect, and that this Agreement is
not intended to contradict or circumvent the continued effectiveness of
those provisions.
3. Advisor Independence. The Advisor shall for all purposes
herein be deemed to be an independent contractor with respect to the
Partnership, the General Partner and each other commodity trading
advisor that provides or may in the future provide

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<PAGE>
commodity trading advisory services to the Partnership
(the other Advisors and each such other commodity
trading advisor being collectively referred to herein as
the "Other Advisors"), and shall, unless otherwise expressly authorized,
have no authority to act for or to represent the Partnership, the General
Partner or any Other Advisor in any way or otherwise be deemed to be a
general agent, joint venturer or partner of the Partnership, the General
Partner or any Other Advisor, or in any way be responsible for the acts or
omissions of the Partnership, the General Partner or any Other Advisor as
long as it is acting independently of such person. The parties
acknowledge that the Advisor has not been an organizer or promoter of
the Partnership and has no responsibility and shall not be subject to
liability in connection therewith.
Nothing herein contained shall be deemed to require the Partnership
or the Advisor to take any action contrary to the Partnership's Agreement
of Limited Partnership or Certificate of Limited Partnership, or the
Advisor's By-Laws or Articles of Incorporation, respectively, or any appli-
cable statute, regulation or rule of any exchange or self-regulatory
organization.
The Partnership and the General Partner acknowledge that the
Advisor's Trading Approach is its confidential property. Nothing in this
Agreement shall require the Advisor to disclose the confidential or
proprietary details of its Trading Approach. The Partnership and the
General Partner further agree that they will keep confidential and will not
disseminate the Advisor's trading advice to the Partnership, except as, and
to the extent that, it may be determined by the General Partner to be (i)
necessary for the monitoring of the business of the Partnership, including
the performance of brokerage services by the Partnership's commodity
broker(s), or (ii) expressly required by law or

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<PAGE>
regulation.
4. Commodity Broker. All Commodities trades for the account of
the Partnership shall be made through such commodity broker or brokers
as the General Partner directs pursuant to such procedures as are
mutually agreed upon. The Advisor shall not have any authority or
responsibility in selecting or supervising any broker for execution of
Commodities trades of the Partnership or for negotiating commission rates
to be charged therefor. The Advisor shall not be responsible for
determining that any such bank or broker used in connection with any
Commodities transactions meets the financial requirements or standards
imposed by the Partnership's Trading Policies and Limitations. At the
present time it is contemplated that the Partnership will effect all
Commodities trades through Prudential Securities Incorporated
("Prudential Securities"); provided, however, that the Advisor may execute
transactions at such other broker(s), and upon such terms and conditions,
as the Advisor and the General Partner agree if such broker(s) agree to
"give up" all such transactions to Prudential Securities for clearance and
the General Partner's consent to the use of such other executing brokers
shall not be unreasonably withheld. To the extent that the Partnership
determines to utilize a broker or brokers other than Prudential Securities,
it will consult with the Advisor prior to directing it to utilize such
broker(s), and will not retain the services of such broker(s) over the
reasonable objection of the Advisor.
5. Fees. In consideration of and in compensation for the
performance of the Advisor's services under this Agreement, the Advisor
shall receive from the Partnership Management and Incentive Fees as set
forth below within fifteen (15) days following the end of the period to which
they relate, as follows:

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<PAGE>

(a) A management fee (the "Management Fee") of 1/6 of 1% (2%
annualized) of the portion of the Partnership's Net Asset Value allocated
to it as of the last day of each calendar month. For purposes of
determining such Management Fee, any distributions and redemptions
allocable to the Advisor made as of the last day of such month shall be
added back to the Net Asset Value and there shall be no reduction for (i)
the accrued Management Fee being calculated, or (ii) any fees due the
Advisor under paragraph (b) below accrued as of the last day of such
month or (iii) any reallocation of assets as of the last day of such month,
or (iv) any accrued but unpaid extraordinary expenses. The Management
Fee for any month in which the Advisor manages all or any portion of the
Net Asset Value of the Partnership allocated to it for less than a full month
shall be prorated, such proration to be calculated on the basis of the
number of days in the month the Net Asset Value allocated to the Advisor
was under the Advisor's management as compared to the total number of
days in such month.
(b) A quarterly incentive fee (the "Incentive Fee") of twenty
percent (20%) of New High Net Trading Profits (as hereinafter defined)
achieved on the portion of the Partnership's Net Asset Value allocated to
the Advisor. New High Net Trading Profits for the Advisor shall be
computed as of the close of trading on the last day of each calendar
quarter. The first Incentive Fee which may be due and owing to the
Advisor in respect of any New High Net Trading Profits shall be computed
as of September 30, 1997. New High Net Trading Profits shall be
computed solely on the performance of the Advisor and shall not include
or be affected by the performance of any Other Advisor.

"New High Net Trading Profits" (for purposes of calculating
the Advisor's Incentive Fee only) for each calendar
quarter is defined as the excess (if any) of (A) the Net Asset

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<PAGE>

Value of the Partnership allocated to the Advisor as of the
last day of any calendar quarter, over (B) the Net Asset Value of the
Partnership allocated to the Advisor as of the last day of the most recent
preceding calendar quarter for which an Incentive Fee was earned (or the
date the Advisor commenced trading the Partnership's Net Asset Value,
whichever date the Net Asset Value allocated to it was higher). In com-
puting New High Net Trading Profits:
(1) The Net Asset Value of (A) in the preceding sentence shall
be reduced by Management Fees for such quarter together with brokerage
commissions and other transaction costs attributable to the Advisor's
trading activities, general administrative charges attributable to the pro
rata portion of the Partnership's Net Asset Value allocated to the Advisor
for trading, and extraordinary expenses, if any, directly attributable to the
Advisor;
(2) The Net Asset Value of (B) in the preceding sentence shall
be reduced by Management and Incentive Fees for such quarter together
with brokerage commissions and other transaction costs attributable to
the Advisor's trading activities, general administrative charges attributable
to the pro rata portion of the Partnership's Net Asset Value allocated to the
Advisor for trading, and extraordinary expenses, if any, directly attributable
to the Advisor;
(3) The difference between (A) and (B) in the preceding
sentence shall be (i) decreased by all interest earned on the portion of the
Partnership's Net Asset Value allocated to the Advisor between the dates
referred to in (A) and (B), and (ii) increased by (x) any distributions or
redemptions allocable to the Advisor and paid or payable by the
Partnership as of, or subsequent to, the date in (B) through the date in

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<PAGE>

(A); as well as (y) losses (including losses incurred from the date of the
last Incentive Fee paid or payable), if any, associated with redeemed Units
allocable to the Advisor, and (iii) adjusted (either increased or decreased,
as the case may be) to reflect any additional allocations or negative
reallocations of the Partnership's Net Asset Value to or from the Advisor
from the date in (B) to the last day of the calendar quarter as of which the
current Incentive Fee calculation is made.
For purposes of calculating the first Incentive Fee payable to the
Advisor, the date referred to in (B) shall be the date of this Agreement.
If there is a cumulative loss when a withdrawal is made from the Net
Asset Value allocated to the Advisor for any reason, such loss shall be
reduced by the proportionate amount of the loss attributable to the monies
being withdrawn.
If an Incentive Fee shall have been paid by the Partnership to the
Advisor in respect of any calendar quarter and the Advisor shall incur
subsequent losses on the portion of the Partnership's Net Asset Value
under its management, the Advisor shall nevertheless be entitled to retain
amounts previously paid to it in respect of New High Net Trading Profits.
(c) Neither the Advisor nor any of its employees shall receive
any commissions, compensation, remuneration or payments whatsoever
from any broker with which the Partnership carries an account for trans-
actions executed in the Partnership's account.
6. Term and Termination.
(a) Term. This Agreement shall commence on the date hereof
and, unless sooner terminated, shall continue in effect until the close of
business on June 30, 1998. Thereafter, this Agreement shall be renewed
automatically on the terms and conditions

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<PAGE>

set forth herein for additional successive twelve
(12) month terms, each of which shall commence on the
first day of the month subsequent to the conclusion of the preceding
twelve (12) month term, unless this Agreement is terminated pursuant to
paragraphs (b), (c) or (d) of this Section 6. The automatic renewal(s) set
forth in the preceding sentence hereof shall not be affected by (i) any
reallocation of Partnership's Net Asset Value away from the Advisor
pursuant to Section 7 of this Agreement, or (ii) the retention of Other
Advisors following a reallocation, or otherwise.
(b) Automatic Termination. This Agreement shall terminate
automatically in the event that the Partnership is terminated. This
Agreement shall terminate automatically with respect to the Advisor, upon
notice from the General Partner, without affecting the continuation of this
Agreement with any Other Advisor in the event that the Advisor's allocable
percentage of the Partnership's Net Asset Value at the close of trading on
any business day is equal to or less than the Termination Amount. The
"Termination Amount" shall be an amount equal to 66-2/3% of the portion
of the Partnership's Net Asset Value allocated to the Advisor's
management on the date it commences Commodities trading activities for
the Partnership, or the first day of any calendar year, whichever day the
Net Asset Value allocated to the Advisor is higher, in either case, as
adjusted on an ongoing basis by the percentage decline(s) or increases in
that portion of the Partnership's Net Asset Value allocated to the Advisor's
management caused by distributions, redemptions and permitted
reallocations, and new allocations to the Advisor covered by reallocations
away from other trading advisors, respectively. Each redemption and
distribution of funds shall have the effect of reducing the Termination
Amount by an amount equal to the portion of such redemption or distribu-
tion allocable

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<PAGE>
to the Advisor. Reallocations of funds away from the
Advisor shall reduce the Termination Amount dollar for dollar.
(c) Optional Termination Right of Partnership. This Agreement
may be terminated at any time in the sole discretion of the General Partner
upon at least thirty (30) days' prior written notice to the Advisor. The
General Partner will use its best efforts to cause any such termination to
occur as of a month-end.
(d) Optional Termination Right of Advisor. The Advisor shall
have the right to terminate this Agreement (1) upon written notice to the
General Partner at least thirty (30) days' prior to the end of each month of
this Agreement; and (2) upon thirty (30) days' prior written notice to the
General Partner in the event (i) of the receipt by the Advisor of an opinion
of independent counsel satisfactory to the Advisor and the Partnership
that by reason of the Advisor's activities with respect to the Partnership,
the Advisor is required to register as an investment adviser under the
Investment Advisers Act of 1940; (ii) that the registration of the General
Partner as a commodity pool operator under the CE Act, or its NFA
membership as a commodity pool operator is revoked, suspended,
terminated or not renewed; (iii) the General Partner imposes additional
trading limitation(s) pursuant to Section 1 of this Agreement which the
Advisor does not agree to follow in its management of the Partnership's
Net Asset Value or the General Partner overrides a trading instruction of
the Advisor; (iv) if the Net Asset Value allocated to the Advisor decreases,
for any reason, to less than $2,000,000; (v) the General Partner elects
(pursuant to Section 1 of this Agreement) to have the Advisor use a
different Trading Approach in the Advisor's management of Partnership
assets from that which the Advisor is then using to manage such assets
and the Advisor objects to

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<PAGE>
using such different Trading Approach; (vi) there is an
unauthorized assignment of this Agreement by the Partnership
or the General Partner; or (vii) other good cause is shown and the written
consent of the General Partner is obtained (which shall not be withheld
unreasonably).
(e) In the event that this Agreement is terminated pursuant to
subparagraphs (b), (c) or (d) of this Section 6, the Advisor shall be entitled
to, and the Partnership shall pay, the Management Fee and the Incentive
Fee, if any, which shall be computed (A) with respect to the Management
Fee, on a pro rata basis, based upon the portion of the month for which
the Advisor had its portion of the Partnership's Net Asset Value under
management, and (B) with respect to the Incentive Fee, if any, as if the
effective date of termination was the last day of the then current calendar
quarter. The rights of the Advisor to fees earned through the earlier to
occur of the date of expiration or termination of this Agreement shall
survive this Agreement until satisfied.
7. Reallocation of Funds. The General Partner may, at any month-
end, in its sole discretion, upon at least thirty (30) days' prior written
notice, reallocate a portion of the Partnership's Net Asset Value then
allocated to the Advisor's management away from the Advisor.
8. Liquidation of Positions.
The Advisor agrees to liquidate open positions in the amount
that the General Partner informs the Advisor, in writing via telecopy or
other equivalent means, that the General Partner considers necessary or
advisable to liquidate in order to (i) effect any termination or reallocation
pursuant to Sections 6 or 7, respectively, or (ii) fund its pro rata share of
any redemption, distribution or Partnership expense. The

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<PAGE>
General Partner shall not, however, have authority
to instruct the Advisor as to which specific open
positions to liquidate, except as provided in Section 1 here-
of. The General Partner shall provide the Advisor with such reasonable
prior notice of such liquidation as is practicable under the circumstances
and will endeavor to provide at least three (3) business days' prior notice.
In the event that losses incurred by the Advisor exceed the assets
allocated to the Advisor, the General Partner will withdraw the funds
necessary to cover such excess losses pro rata from the assets under the
management of all Other Advisors.
9. Other Accounts of the Advisor.
(a) Subject to paragraph (b) of this Section 9, the Advisor shall
be free to manage and trade accounts for other investors (including other
public and private commodity pools) during the term of this Agreement
and to use the same or other information and Trading Approach utilized
in the performance of services for the Partnership for such other accounts
so long as the Advisor's ability to carry out its obligations and duties to
the Partnership pursuant to this Agreement is not materially impaired
thereby. In addition, the Advisor and its employees, as applicable, also
will be permitted to trade in Commodities for their own accounts, so long
as the Advisor's ability to carry out its obligations and duties to the
Partnership is not materially impaired thereby.
(b) Furthermore, so long as the Advisor is performing services
for the Partnership, it agrees that it will not accept additional capital for
management in the Commodities markets if doing so would have a
reasonable likelihood of resulting in the Advisor having to modify
materially its agreed upon Trading Approach being used for the
Partnership in a manner which might reasonably be expected to have a
material adverse

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<PAGE>

effect on the Partnership (without limiting the generality
of the foregoing, it is understood that this paragraph shall not prohibit the
acceptance of additional capital, which acceptance requires only routine
adjustments to trading patterns in order to comply with speculative
position limits or daily trading limits).
(c) The Advisor agrees, in its management of accounts other
than the account of the Partnership, that it will not knowingly or
deliberately favor any other account managed or controlled by him or any
of its employees or affiliates (in whole or in part) over the Partnership.
The preceding sentence shall not be interpreted to preclude inter alia (i)
the Advisor from charging another client fees which differ from the fees
to be paid to it hereunder, or (ii) an adjustment by the Advisor in the
implementation of any agreed upon Trading Approach in accordance with
the procedures set forth in Section 1 hereof, which is undertaken by the
Advisor in good faith in order to accommodate additional accounts. The
Advisor, upon reasonable request and receipt of adequate assurances of
confidentiality, shall provide the General Partner with an explanation of the
differences, if any, in performance between the Partnership and any other
similar account pursuant to the same Trading Approach for which the
Advisor or any of its affiliates acts as a commodity trading advisor (in
whole or in part).
(d) Upon reasonable notice from the General Partner, the Advi-
sor shall permit the General Partner to review at the Advisor's offices
during normal business hours such trading records as it reasonably may
request for the purpose of confirming that the Partnership has been treat-
ed equitably with respect to advice rendered during the term of this
Agreement by the Advisor for other accounts managed by the Advisor,
which the parties acknowledge to mean that the General Partner may
inspect, subject to

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<PAGE>

such restrictions as the Advisor may reasonably deem
necessary or advisable so as to preserve the confidentiality of proprietary
information and the identity of its clients, all trading records of the Advisor
as it reasonably may request related to such other accounts during normal
business hours. The Advisor may, in its discretion, withhold from any
such report or inspection the identity of the client for whom any such ac-
count is maintained and in any event, the Partnership and the General
Partner shall keep all such information obtained by it from the Advisor
confidential.
10. Speculative Position Limits. If, at any time during the term of
this Agreement, it appears to the Advisor that it may be required to
aggregate the Partnership's Commodities positions with the positions of
any other accounts it owns or controls for purposes of applying the
speculative position limits of the CFTC, any exchange, self-regulatory
body, or governmental authority, the Advisor promptly will notify the
General Partner if the Partnership's positions are included in an aggregate
amount which equals or exceeds one hundred percent (100%) of the
applicable speculative limit. The Advisor agrees that, if its trading recom-
mendations pursuant to its agreed upon Trading Approach are altered
because of the potential application of speculative position limits, the
Advisor will modify its trading instructions to the Partnership and its other
accounts in a good faith effort to achieve an equitable treatment of all
accounts. The Advisor presently believes that its Trading Approach for
the management of the Partnership's account can be implemented for the
benefit of the Partnership notwithstanding the possibility that, from time
to time, speculative position limits may become applicable.

-20-
<PAGE>

11. Redemptions, Distributions and Reallocations.
(a) The General Partner agrees to give the Advisor at least three
(3) business days' prior notice of any proposed redemptions, distributions
or reallocations.
(b) Redemptions and distributions shall be charged against the
various Partnership accounts managed by its trading advisors, including
the Advisor, in such proportions as the General Partner, in its discretion,
determines to be in the Partnership's best interests.
12. Brokerage Confirmations and Reports. The General Partner will
instruct the Partnership's commodity broker or brokers to furnish the
Advisor with copies of all trade confirmations, daily equity runs, and
monthly trading statements relating to the Partnership's assets under the
management of the Advisor. The Advisor will maintain records and will
monitor all open positions relating thereto; provided, however, that except
as provided in Section 1(g) hereof, the Advisor shall not be responsible for
any brokerage errors. The General Partner also will furnish the Advisor
with a copy of all reports, including but not limited to, monthly, quarterly
and annual reports, sent to the limited partners, the Securities and
Exchange Commission ("SEC"), the CFTC and the NFA. The Advisor shall,
at the General Partner's request, provide the General Partner with copies
of all trade confirmations, daily equity runs, monthly trading reports or
other reports sent to the Advisor by the Partnership's commodity broker
regarding the Partnership, and in the Advisor's possession or control, as
the General Partner deems appropriate, if the General Partner cannot
obtain such copies on its own behalf. Upon request, the General Partner
will provide the Advisor with accurate information with respect to the
Partnership's then current Net Asset Value and Net Asset Value per Unit.

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<PAGE>
13. The Advisor's Representations and Warranties. The Advisor
represents and warrants that:
(a) It has full corporate capacity and authority to enter into
this Agreement, and to provide the services required of it hereunder;
(b) It will not by entering into this Agreement and by acting as
a commodity trading advisor to the Partnership, (i) be required to take any
action contrary to its incorporating documents, any applicable statute, law
or regulation of any jurisdiction or (ii) breach or cause to be breached any
undertaking, agreement, contract, statute, rule or regulation to which it is
a party or by which it is bound which, in the case of (i) or (ii), would
materially limit or materially adversely affect its ability to perform its
duties under this Agreement;
(c) It is duly registered as a commodity trading advisor under
the CE Act and is a member of the NFA as a commodity trading advisor
and it will maintain and renew such registration and membership during
the term of this Agreement, and has complied, and will continue to comply,
with all laws, rules and regulations having application to its business,
including but not limited to rules and regulations promulgated by the CFTC
and NFA.
(d) A copy of its most recent Commodity Trading Advisor Dis-
closure Document, as required by Part 4 of the CFTC's regulations, has
been provided to the Partnership in the form of Exhibit B hereto and,
except as disclosed in such Disclosure Document, all information in such
Disclosure Document (including, but not limited to, background,
performance, trading methods and trading systems) is true, complete and
accurate in all material respects and is in conformity in all material
respects with the

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<PAGE>
provisions of the CE Act including the rules and
regulations thereunder;
(e) The amount of Partnership assets to be allocated to the
Advisor should not, in the reasonable judgment of the Advisor, result in
the Advisor being required to alter its Trading Approach to a degree which
would be expected to have a material adverse effect on the Partnership;
(f) Neither the Advisor nor its stockholders, directors, officers,
employees, agents, principals or affiliates, nor any of its or their respective
successors or assigns: (i) shall knowingly or deliberately use or distribute
for any purpose whatsoever any list containing the names and/or
residence addresses of, and/or other information about, the limited
partners of the Partnership; nor (ii) shall solicit any person it or they know
is a limited partner of the Partnership for the purpose of soliciting
commodity business from such limited partner, unless such limited partner
shall have first contacted the Advisor or is already a client of the Advisor
or a prospective client with which the Advisor has commenced
discussions or is introduced or referred to the Advisor by an unaffiliated
agent other than in violation of clause (i);
(g) This Agreement has been duly and validly executed and
delivered and is a valid and binding agreement, enforceable against it in
accordance with its terms;
(h) Thomas Moller devotes, and will continue to devote during
the term of this Agreement, such portion of his time to the trading
activities of, and the conduct of the business of, the Advisor as he shall
reasonably believe is necessary and appropriate; and
(i) There is not pending, or to the best of its knowledge,
threatened or contemplated, any action, suit or proceeding before any
court or arbitration panel, or

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<PAGE>
before or by any governmental, administrative
or self-regulatory body, to which the Advisor or its stockholders, directors,
officers, employees, agents, principals or affiliates is a party, or to which
any of its assets is subject, which might reasonably be expected to result
in any material adverse change in the condition of the Advisor (financial
or otherwise), business or prospects or reasonably might be expected to
affect adversely in any material respect any of the Advisor's assets or
which reasonably might be expected to (A) materially impair the Advisor's
ability to discharge its obligations to the Partnership, or (B) result in a
matter which would require disclosure in its Disclosure Document which
has not been so disclosed; and the Advisor has not received any notice
of an investigation by (i) the NFA regarding noncompliance with NFA rules
or the CE Act, (ii) the CFTC regarding noncompliance with the CE Act, or
the rules and regulations thereunder, or (iii) any exchange regarding
noncompliance with the rules of such exchange, which investigation
reasonably might be expected to (1) materially impair its ability to
discharge its obligations to the Partnership, or (2) result in a matter which
would require disclosure in its Disclosure Document which has not been
so disclosed.
The within representations and warranties shall be continuing during
the term of this Agreement, and, if at any time, any event has occurred
which would make or tend to make any of the foregoing not true, the
Advisor promptly will notify the Partnership in writing thereof.
14. The General Partner's Representations and Warranties. The
General Partner represents and warrants on behalf of the Partnership and
itself that:
(a) It has full corporate and other capacity and authority to
enter into this Agreement;

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<PAGE>

(b) It will not, by acting as general partner to the Partnership
or by entering into this Agreement, (i) be required to take any action contrary
to its incorporating or partnership documents or any applicable statute,
law or regulation of any jurisdiction, or (ii) breach or cause to be breached
(A) any undertaking, agreement, contract, statute, rule, regulation, to which
it or the Partnership is a party or by which it or the Partnership is bound
or (B) any order of any court or governmental or regulatory agency having
jurisdiction over the Partnership or the General Partner, which in the case
of (i) or (ii) would materially limit or materially adversely affect the
performance of its or the Partnership's duties under this Agreement;
(c) The Partnership and the General Partner have obtained all
required governmental and regulatory licenses, registrations and approvals
required by law as may be necessary to act as described in the
Partnership's Registration Statement and Prospectus, including, without
limitation, registration as a commodity pool operator under the CE Act and
membership as a commodity pool operator in the NFA. The General
Partner will maintain and renew the foregoing registrations, licenses,
memberships and approvals, as appropriate, during the term of this
Agreement;
(d) The Partnership and the General Partner have complied, and
will continue to comply, with all laws, rules and regulations having
application to its or their business, including but not limited to rules and
regulations promulgated by the CFTC and NFA, and there are no actions,
suits or proceedings pending or, to the best of the knowledge of the
Partnership or the General Partner, threatened against it or them, at law or
in equity or before or by any federal, state, municipal or other
governmental or regulatory department, commission, board, bureau,
agency or instrumentality, or by any

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<PAGE>
commodity or security exchange worldwide in which
an adverse decision would materially and adversely affect
the ability of the Partnership or the General Partner to comply with,
and perform their obligations under, this Agreement;
(e) This Agreement has been duly and validly authorized,
executed and delivered, and is a valid and binding agreement, enforceable
against each of them, in accordance with its terms; and
(f) On the date hereof, it is, and during the term of this
Agreement, it will be (i) in the case of the Partnership, a duly formed and
validly existing limited partnership, and (ii) in the case of the General
Partner, a duly formed and validly existing corporation, in each case, in
good standing under the laws of the State of Delaware, and in good
standing and qualified to do business in each jurisdiction in which the
nature and conduct of its business requires such qualification and the
failure to be so qualified would materially adversely affect its ability to
perform its obligations under this Agreement; and
(g) All authorizations, consents or orders of any court, or of
any federal, state or other governmental or regulatory agency or body required
for the valid authorization, issuance, offer and sale of the Partnership's
Units were obtained, and, to the best of its knowledge, after due inquiry no
order preventing or suspending the use of the Prospectus with respect to
the Units was issued by the SEC, the CFTC or the NFA. The Partnership's
Registration Statement and Prospectus contained all statements which
were required to be made therein, conformed in all material respects with
the requirements of the Securities Act of 1933, as amended and the CE
Act, and the rules and regulations of the SEC and the CFTC, respectively,
thereunder, and with the rules of the NFA, and did not contain an untrue
statement of a material fact or omit to state

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<PAGE>

a material fact required to be stated therein or necessary
to make the statements therein (with respect
to the Prospectus, in light of the circumstances in which they were made)
not misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and
in conformity with information furnished to the General Partner, the
Partnership or to Prudential Securities by or on behalf of the Advisor
specifically for use in the Registration Statement or Prospectus,
supplement thereto, or monthly report.
(h) The Partnership's offering of its Units has terminated and
there are not currently, and will not be in the future, any offering materials
in use by the Partnership or the General Partner in connection with the
offer or sale of Units in the Partnership.
The within representations and warranties shall be continuing during
the term of this Agreement, and, if at any time, any event has occurred
which would make or tend to make any of the foregoing not true, the
General Partner promptly will notify the Advisor in writing.
15. Assignment. This Agreement may not be assigned by any of the
parties hereto without the express prior written consent of the other
parties hereto.
16. Successors. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and the successors and permitted
assigns of each of them, and no other person (except as otherwise
provided herein) shall have any right or obligation under this Agreement.
The terms "successors" and "assigns" shall not include any purchasers,
as such, of Units.
17. Amendment or Modification. This Agreement may not be
amended or

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<PAGE>
modified except by the written consent of the parties hereto.
18. Notices. Except as otherwise provided herein, all notices
required to be delivered under this Agreement shall be effective only if in
writing and shall be deemed given by the party required to provide notice
when received by the party to whom notice is required to be given and
shall be delivered personally, by registered mail, postage prepaid, return
receipt requested, or by telecopy, as follows (or to such other address as
the party entitled to notice shall hereafter designate by written notice to
the other parties):

If to the General Partner: If to the Partnership:

Prudential Securities Futures Prudential-Bache Capital Return
Management Inc. Futures Fund 2, L.P.
One New York Plaza, 14th floor c/o Prudential Securities Futures
Management Inc.
New York, New York 10292-2585 One New York Plaza, 14th floor
Attention: James M. Kelso New York, New York 10292-2585
Facsimile: (212) 778-6809 Attention: James M. Kelso
Facsimile: (212) 778-6809

and in either case with a copy to:

Prudential Securities Incorporated
One New York Plaza, 14th Floor
New York, New York 10292-2585
Attention: James M. Kelso
Facsimile: (212) 778-6809

and, with respect to legal notices,
a copy to:

Rosenman & Colin LLP
575 Madison Avenue
New York, New York 10022
Attention: Fred M. Santo, Esq.
Facsimile: (212) 940-7079

If to the Advisor: and, with respect to legal notices,
a copy to:

Eclipse Capital Management, Inc. Sidley & Austin
12400 Olive Boulevard, Suite 408 One First National Plaza
St. Louis, Missouri 63141 Chicago, Illinois 60603
Attention: Thomas W. Moller Attention: Jodie Nedeau, Esq.
Facsimile: (314) 579-0525 Facsimile: (212) 972-9150

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<PAGE>

19. Governing Law. The parties agree that this Agreement shall be
governed by and construed in accordance with the laws of the State of
New York without regard to conflict of laws principles.
20. Survival. The provisions of this Agreement shall survive the
termination of this Agreement with respect to any matter arising while this
Agreement was in effect.
21. Disclosure Document Modifications. The Advisor shall promptly
furnish the General Partner with a copy of all modifications to its
Disclosure Document when available for distribution. Upon receipt of any
modified Disclosure Document by the General Partner, the General Partner
will provide the Advisor with an acknowledgement of receipt thereof.
22. Promotional Literature. The parties agree that prior to using any
promotional or other material in which reference to the other parties hereto
is made (including reports to clients), they shall furnish a copy of such
information to the other parties and will not make use of any literature
containing references to such other parties to which such other parties
object, except as otherwise required by law or regulation.
23. No Waiver. No failure or delay on the part of any party hereto
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. Any waiver granted hereunder must be
in writing and shall be valid only in the specific instance in which given.
24. Headings. Headings to Sections herein are for the convenience
of the parties only, and are not intended to be or to affect the meaning or
interpretation of this

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<PAGE>
Agreement.

25. Complete Agreement. Except as otherwise provided herein, this
Agreement constitutes the entire agreement between the parties with
respect to the matters referred to herein, and no other agreement, verbal
or otherwise, shall be binding
upon the parties hereto.
26. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which,
when taken together, shall constitute one original instrument.

IN WITNESS WHEREOF, this Agreement has been executed for
and on behalf of the undersigned as of the day and year first above
written.

PRUDENTIAL-BACHE CAPITAL RETURN PRUDENTIAL SECURITIES FUTURES
FUTURES FUND 2, L.P. MANAGEMENT INC.

By: PRUDENTIAL SECURITIES FUTURES
MANAGEMENT INC., By: /s/ James M. Kelso
-----------------------
Its: General Partner James M. Kelso, President

By: /s/ James M. Kelso
-----------------------------
James M. Kelso, President

ECLIPSE CAPITAL MANAGEMENT, INC.

By: /s/ Thomas W. Moller
-----------------------------
Thomas W. Moller, President

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<PAGE>

EXHIBIT "A"

"Net Asset Value" means the total assets, including, but not limited
to, all cash and cash equivalents (valued at cost plus accrued interest and
amortization of original issue discount) less total liabilities, of the
Partnership, each determined on the basis of generally accepted accounting
principles in the United States, consistently applied under the accrual
method of accounting ("GAAP"), including, but not limited to, the extent
specifically set forth below:

(a) Net Asset Value shall include any unrealized profit or loss
on open Commodities Positions, and any other credit or debit accruing
to the Partnership but unpaid or not received by the Partnership.

(b) All open commodity futures contracts and options traded
on a United States exchange are calculated at their then current market
value, which shall be based upon the settlement price for that
particular commodity futures contract and option traded on the
applicable United States exchange on the date with respect to which
Net Asset Value is being determined; provided, that if a commodity
futures contract or option traded on a United States exchange could
not be liquidated on such day, due to the operation of daily limits or
other rules of the exchange upon which that position is traded or
otherwise, the settlement price on the first subsequent day on which
the position could be liquidated shall be the basis for determining the
market value of such position for such day. The current market value
of all open commodity futures contracts and options traded on a non-
United States exchange shall be based upon the liquidating value for
that particular commodity futures contract and option traded on the
applicable non-United States exchange on the date with respect to
which Net Asset Value is being determined; provided, that if a
commodity futures contract or option traded on a non-United States
exchange could not be liquidated on such day, due to the operation of
rules of the exchange upon which that position is traded or otherwise,
the liquidating value on the first subsequent day on which the position
could be liquidated shall be the basis for determining the market value
of such position for such day. The current market value of all open
forward contracts entered into by the Partnership shall be the mean
between the last bid and last asked prices quoted by the bank or
financial institution which is a party to the contract on the date with
respect to which Net Asset Value is being determined; provided, that
if such quotations are not available on such date, the mean between
the last bid and asked prices on the first subsequent day on which
such quotations are available shall be the basis for determining the
market value of such forward contract for such day. The General
Partner may in its discretion value any assets of the Partnership
pursuant to such other principles as it may deem fair and equitable.

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<PAGE>

(d) The amount of any distribution made pursuant to Article VIII
of the Partnership's Partnership Agreement shall be a liability of the
Partnership from the day when the distribution is declared until it is
paid.

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<PAGE>
EXHIBIT "B"

(LOGO) Eclipse Capital(r)

Disclosure Document

The date of this Disclosure Document is
December 1, 1996

Eclipse Capital Management, Inc. is registered under the
Commodity Exchange Act as a Commodity Trading Advisor. No
person is authorized by Eclipse Capital Management, Inc. to
give any information or make any representations not contained
herein. Delivery of this Disclosure Document at any time does
not imply that the information contained herein is correct as of
any time subsequent to the date shown above.

THE COMMODITY FUTURES TRADING COMMISSION HAS NOT
PASSED UPON THE MERITS OF PARTICIPATING IN THIS
TRADING PROGRAM NOR HAS THE COMMISSION PASSED ON
THE ADEQUACY OR ACCURACY OF THIS DISCLOSURE
DOCUMENT.

THE DATE ON WHICH ECLIPSE CAPITAL MANAGEMENT, INC.
FIRST INTENDS TO USE THIS DISCLOSURE DOCUMENT IS
DECEMBER 1, 1996 AND THIS DISCLOSURE DOCUMENT MAY
NOT BE UTILIZED PRIOR TO SUCH DATE OR AFTER
SEPTEMBER 1, 1997.

12400 Olive Boulevard, Suite 408
St. Louis, Missouri 63141
Telephone (314) 579-0515
Fax (314) 579-0525

Web: http://www.eclipsecap.com/
e-mail: [email protected]

<PAGE>

RISK DISCLOSURE STATEMENT

THE RISK OF LOSS IN TRADING COMMODITIES CAN BE SUBSTANTIAL.
YOU SHOULD, THEREFORE, CAREFULLY CONSIDER WHETHER SUCH
TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL
CONDITION. IN CONSIDERING WHETHER TO TRADE OR TO AUTHORIZE
SOMEONE ELSE TO TRADE FOR YOU, YOU SHOULD BE AWARE OF THE
FOLLOWING:

IF YOU PURCHASE A COMMODITY OPTION YOU MAY SUSTAIN A TOTAL
LOSS OF THE PREMIUM AND OF ALL TRANSACTION COSTS.

IF YOU PURCHASE OR SELL A COMMODITY FUTURE OR SELL A
COMMODITY OPTION YOU MAY SUSTAIN A TOTAL LOSS OF THE INITIAL
MARGIN FUNDS AND ANY ADDITIONAL FUNDS THAT YOU DEPOSIT WITH
YOUR BROKER TO ESTABLISH OR MAINTAIN YOUR POSITION. IF THE
MARKET MOVES AGAINST YOUR POSITION, YOU MAY BE CALLED UPON
BY YOUR BROKER TO DEPOSIT A SUBSTANTIAL AMOUNT OF
ADDITIONAL MARGIN FUNDS, ON SHORT NOTICE, IN ORDER TO
MAINTAIN YOUR POSITION. IF YOU DO NOT PROVIDE THE REQUIRED
FUNDS WITHIN THE PRESCRIBED TIME, YOUR POSITION MAY BE
LIQUIDATED AT A LOSS, AND YOU WILL BE LIABLE FOR ANY RESULTING
DEFICIT IN THE ACCOUNT.

UNDER CERTAIN MARKET CONDITIONS, YOU MAY FIND IT DIFFICULT OR
IMPOSSIBLE TO LIQUIDATE A POSITION. THIS CAN OCCUR, FOR
EXAMPLE, WHEN THE MARKET MAKES A "LIMIT MOVE."

THE PLACEMENT OF CONTINGENT ORDERS BY YOU OR YOUR TRADING
ADVISOR, SUCH AS A "STOP-LOSS" OR "STOP-LIMIT" ORDER, WILL NOT
NECESSARILY LIMIT YOUR LOSSES TO THE INTENDED AMOUNTS, SINCE
MARKET CONDITIONS MAY MAKE IT IMPOSSIBLE TO EXECUTE SUCH
ORDERS.

A "SPREAD" POSITION MAY NOT BE LESS RISKY THAN A SIMPLE
"LONG" OR "SHORT" POSITION.

THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN
COMMODITY TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU.
THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS
GAINS.

IN SOME CASES, MANAGED COMMODITY ACCOUNTS ARE SUBJECT TO
SUBSTANTIAL CHARGES FOR MANAGEMENT AND ADVISORY FEES. IT
MAY BE NECESSARY FOR THOSE ACCOUNTS THAT ARE SUBJECT TO
THESE CHARGES TO MAKE SUBSTANTIAL TRADING PROFITS TO AVOID
DEPLETION OR EXHAUSTION OF THEIR ASSETS. THIS DISCLOSURE
DOCUMENT CONTAINS, AT PAGE 17, A COMPLETE DESCRIPTION OF
EACH FEE TO BE CHARGED TO YOUR ACCOUNT BY THE COMMODITY
TRADING ADVISOR.

THIS BRIEF STATEMENT CANNOT DISCLOSE ALL THE RISKS AND OTHER
SIGNIFICANT ASPECTS OF THE COMMODITY MARKETS. YOU SHOULD
THEREFORE CAREFULLY STUDY THIS DISCLOSURE DOCUMENT AND
COMMODITY TRADING BEFORE YOU TRADE, INCLUDING THE
DESCRIPTION OF THE PRINCIPAL RISK FACTORS OF THIS INVESTMENT,
AT PAGES 6 THROUGH 10.

YOU SHOULD ALSO BE AWARE THAT THIS COMMODITY TRADING
ADVISOR MAY ENGAGE IN TRADING FOREIGN FUTURES OR OPTIONS
CONTRACTS. TRANSACTIONS ON MARKETS LOCATED OUTSIDE THE
UNITED STATES, INCLUDING MARKETS FORMALLY LINKED TO A UNITED
STATES MARKET, MAY BE SUBJECT TO REGULATIONS WHICH OFFER
DIFFERENT OR DIMINISHED PROTECTION. FURTHER, UNITED STATES
REGULATORY AUTHORITIES MAY BE UNABLE TO COMPEL THE
ENFORCEMENT OF THE RULES OF REGULATORY AUTHORITIES OR
MARKETS IN NON-UNITED STATES JURISDICTIONS WHERE YOUR
TRANSACTIONS MAY BE EFFECTED. BEFORE YOU TRADE YOU SHOULD
INQUIRE ABOUT ANY RULES RELEVANT TO YOUR PARTICULAR
CONTEMPLATED TRANSACTIONS AND ASK THE FIRM WITH WHICH YOU
INTEND TO TRADE FOR DETAILS ABOUT THE TYPES OF REDRESS
AVAILABLE TO BOTH YOUR LOCAL AND OTHER RELEVANT
JURISDICTIONS.

THIS COMMODITY TRADING ADVISOR IS PROHIBITED BY LAW FROM
ACCEPTING FUNDS IN THE TRADING ADVISOR'S NAME FROM A CLIENT
FOR TRADING COMMODITY INTERESTS. YOU MUST PLACE ALL FUNDS
FOR TRADING IN THIS TRADING PROGRAM DIRECTLY WITH A FUTURES
COMMISSION MERCHANT.

2
<PAGE>

TABLE OF CONTENTS

Introduction . . . . . . . . . . . . . . . . . . . . . . Page 4

The Advisor . . . . . . . . . . . . . . . . . . . . . . Page 4

Trading Programs . . . . . . . . . . . . . . . . . . . . Page 5

Trading Approach . . . . . . . . . . . . . . . . . . . . Page 5

Foreign Currency Trading . . . . . . . . . . . . . . . . Page 6

Risk Factors . . . . . . . . . . . . . . . . . . . . . . Page 6

Past Performance of Programs . . . . . . . . . . . . . . Page 10

Fees . . . . . . . . . . . . . . . . . . . . . . . . . . Page 17

Potential Conflicts of Interest . . . . . . . . . . . . Page 18

Client Advisory Agreement . . . . . . . . . . . . . . . Page 18

Client Brokerage Account . . . . . . . . . . . . . . . . Page 19

Miscellaneous . . . . . . . . . . . . . . . . . . . . . Page 20

3
<PAGE>

INTRODUCTION

Eclipse Capital Management, Inc.
manages accounts trading
primarily in foreign exchange and
global interest rate futures on a
discretionary basis. Its trading
programs incorporate quantitative
trend analysis and technical
trading principles. These trading
programs are speculative in
nature, and potential investors
should determine after reading
this Disclosure Document whether
any of the trading programs
currently being offered by Eclipse
Capital Management, Inc. are
consistent with their financial
situations and investment
objectives. Because speculative
commodity interest trading can
lead to substantial losses as well
as gains, each prospective
investor should carefully consider
the risks involved in commodity
interest trading. See "Risk
Factors."

THE ADVISOR

Eclipse Capital Management, Inc.
("Eclipse Capital") is a Kentucky
corporation incorporated on July
18, 1983. It was registered on
August 14, 1986 as a Commodity
Trading Advisor ("CTA") under the
Commodity Exchange Act as
amended, and is a member as
such in good standing of the
National Futures Association. Its
books and records are kept at its
office, located at the address listed
on the cover page of this
document. Past performance
information of Eclipse Capital and
its principals is contained on
pages 10 through 16 of this
Disclosure Document.

Thomas W. Moller, the sole
shareholder of Eclipse Capital, has
served as its President, Treasurer,
and sole director since founding
the firm. Mr. Moller received an
undergraduate degree in Business
and Economics from Vanderbilt
University and a graduate degree
in Accounting from the University
of Kentucky. He was a Certified
Public Accountant and has a
background in financial planning
and investment management. In
1980, as Chief Financial Officer of
a privately held company, he
designed and implemented one of
the first variable rate loan hedge
programs using interest rate
futures contracts. In 1982 he
formed Interest Rate Management,
Inc., another CTA which provided
interest rate hedging advisory and
management services. Mr. Moller
has devoted 100% of his time to
Eclipse Capital since September,
1986, and is primarily involved in
the areas of trading, research, and
product development.

Ronald R. Breitigam is Secretary
and Vice President, Trading, with
responsibility for the
implementation of the firm's
trading strategies. After
graduating from Pacific Union
College in 1982, Mr. Breitigam
became an independent floor
trader at the Mid-America
Commodity Exchange. He served
as an institutional broker with
Thompson McKinnon (1984-1985)
and PaineWebber (1986), and in
1986 formed his own trading
company to work full time
implementing various proprietary
futures and options trading
strategies. Mr. Breitigam joined
Eclipse Capital in May, 1989.

James W. Dille, Ph.D. is Vice
President, Information Systems,
with responsibility for computer-
based research, development and
operations. Dr. Dille has
undergraduate and graduate
engineering degrees from the
University of Virginia. He received
his masters and Ph.D. in Applied
Sciences from Harvard University
specializing in the areas of
Decision and Control Theory and
Computer Science. From 1987
through 1993 he worked for
McDonnell Douglas Training
Systems where he was
responsible for research in the
areas of computer architectures
and networking. He is an affiliate
professor at Washington
University in St. Louis, teaching
courses in numerical analysis and
the simulation and analysis of
complex systems. Dr. Dille joined
Eclipse Capital in January, 1994.

Neither Eclipse Capital nor any of
its principals has ever been
involved in or been the subject of
any material administrative, civil or
criminal action.

4
<PAGE>

FURTHER INFORMATION
REGARDING ECLIPSE CAPITAL IS
AVAILABLE UPON REQUEST AT
THE ADDRESS AND TELEPHONE
NUMBER LISTED ON THE COVER
PAGE OF THIS DISCLOSURE
DOCUMENT.

TRADING PROGRAMS

Eclipse Capital currently offers
two financially oriented trading
portfolios under its Global
Financial Trading approach.
These programs are designed
primarily for commodity pools and
certain other qualified investors.
Both trading programs employ a
systematic trading approach using
multiple trend-following models.
Before selecting a particular
program, a client should consider
a number of different factors
including portfolio composition,
trading methodology, instruments
traded, and minimum account size.
The following descriptions have
been provided to assist the
potential client in selecting the
most appropriate program:

Global Monetary Program. This
"financial, metals and energy"
program has a $2 million minimum
account size and trades a global
portfolio of futures, options on
futures and exchanges-of-futures-
for-physical contracts ("EFP") on
interest rate instruments,
currencies, stock indices, precious
and base metals, and energy
products. The foreign currency
portion of the portfolio may be
traded in the interbank foreign
exchange market. A key
component of this program is the
extensive diversification achieved
by applying multiple trading
models to a wide variety of
financial markets located
throughout the world.

Global Yield Program. This
"sector" program has a $2 million
minimum account size and trades
a specialized portfolio comprised
entirely of domestic and foreign
interest rate instruments. Global
money markets and bond futures
contracts are traded on major
exchanges located throughout the
world, including Chicago,
Montreal, London, Paris, Madrid,
Tokyo, Singapore and Sydney.

TRADING APPROACH

Eclipse Capital's trading programs
are systematic and trend-
following in nature, with the
objective of capitalizing on
intermediate and long-term price
trends. Eclipse Capital makes all
trading decisions pursuant to its
proprietary trend identification,
capital allocation, and risk
management models. The Eclipse
Capital programs make use of
multiple models to accentuate
overall diversification. Trend
identification models use various
technical and statistical analysis
techniques to identify and evaluate
price trends. Capital allocation
models determine the percentage
of trading capital allocated to
various markets and trading
models.

Eclipse Capital's risk management
models were developed with the
objective of limiting losses,
capturing profits, and conserving
capital in choppy, sideways
markets. The risk management
principles which Eclipse Capital
employs include: (1) using stop
orders to exit trades when markets
are moving against an established
position; (2) diversifying positions
among several different futures
and/or futures groups to limit
exposure in any one area; (3)
using multiple entry and exit
points; (4) limiting the assets
committed as margin, generally
within a range of 5% to 25% of
assets managed, at minimum
exchange margin requirements,
but possibly above or below that
range at certain times; and (5)
prohibiting the use of unrealized
profits in a particular futures
contract as margin for additional
contracts in the same or a related
futures contract.

Decisions whether to trade a
particular futures contract are
based upon various factors,
including liquidity, significance in
terms of desired degrees of
concentration, diversification, and
profit potential, both historical and
at a given time. These decisions
are based upon output generated
by a proprietary risk management
program, but require the exercise
of judgment by principals of
Eclipse Capital. The decision not
to trade specific contracts for
certain periods, or to reduce the
number of contracts traded may

5
<PAGE>
result at times in missing
significant profit opportunities
which otherwise would be
captured by technical strategies.
The specific contracts traded in
each portfolio have been selected
based on liquidity, historical
volatility, and the degree of past
directional movement. The actual
number of contracts held at any
particular point in time depends on
a number of factors including
evaluation of market volatility and
potential risk versus return. There
are occasions when a trading
model may indicate that no
position is appropriate in a
particular contract or contract
group.

In addition to technical trading in
futures contracts, Eclipse Capital
may also employ trading
techniques such as spreads and
straddles, and buy or sell futures
options. Eclipse Capital may alter
its trading programs including,
without limitation, trading
strategies, commodity interests
and markets traded, and trading
principles, without approval from
clients if Eclipse Capital
determines that such change is in
the best interest of the accounts it
manages.

FOREIGN CURRENCY TRADING

Foreign currency trading takes
place in the interbank foreign
exchange markets and in foreign
currency futures and EFPs. The
trading of forward contracts on
foreign currencies may involve
greater risks than those
accompanying the trading of
futures contracts on exchanges.
Generally, neither the Commodity
Futures Trading Commission
("CFTC") nor the banking
authorities have regulated the
trading of forward currency
contracts. Forward contracts are
not traded on exchanges.
Although the foreign currency
markets may not be necessarily
more volatile than other
commodity markets, such forward
trading may involve less
protection against defaults than
trading on exchanges.

Since such contracts are not
guaranteed by an exchange or
clearing house thereof, the client
is subject to the risk of dealer
failure or inability or refusal to
perform with respect to such
contracts. The failure of a dealer
with which the client has
contracted would likely result in a
default, thereby depriving the
client of unrealized profits or
forcing the client to cover its
commitments for resale, if any, at
the current market price. In
addition, the imposition of
exchange and credit controls or
the fixing of currency exchange
rates by governmental authorities
might limit forward trading to less
than that which Eclipse Capital
would otherwise recommend.

Due to the foregoing factors and
the absence of CFTC regulation,
the trading of forward contracts
may thus involve greater risks
than those accompanying the
trading of futures contracts on
exchanges. No specific limitation
on the percentage or amount of
forward contracts, if any, engaged
in by the client has been imposed.
The CFTC may, in the future, seek
to assert jurisdiction over forward
contracts on currencies such as
those traded by Eclipse Capital
and attempt to prohibit certain
United States entities, including
the pool clients of Eclipse Capital,
from engaging in transactions in
such contracts.

RISK FACTORS

Trading commodity interest
contracts involves a HIGH
DEGREE OF RISK. In such
trading, the liability of the client is
not limited to the initial investment
or the equity in a managed
account, but extends to any and all
losses. Although it is the intention
of Eclipse Capital to reduce risk
through relative diversification,
there can be no guarantee that
substantial losses will not in fact
be incurred. Listed below are
some of the risks associated with
trading commodity interest
contracts which a potential client
should carefully consider before
participating in any of Eclipse
Capital's Global Financial Trading
programs.

(1) Trading in Commodity Interest
Contracts is Speculative and
Volatile. Commodity interest
contract prices are highly volatile.
Price movements of commodity
interest contracts are influenced
by, among other things,

<PAGE>

changing supply and demand relationships;
climate

government agricultural, trade,
fiscal, monetary and exchange
control programs and policies;
national and international political
and economic events; crop
diseases; the purchasing and
marketing programs of different
nations; and changes in interest
rates. In addition, governments
from time to time intervene,
directly and by regulation, in
certain markets, particularly those
in currencies and gold. Such
intervention is often intended to
influence prices directly. None of
these factors can be controlled by
Eclipse Capital. No assurances
can be given that Eclipse Capital's
advice will result in profitable
trades for a client or that a client
will not incur substantial losses.

(2) Futures Trading Is Highly
Leveraged. The low margin
deposits normally required in
commodity interest contract
trading (typically between 2% and
15% of the value of the contract
purchased or sold) permit an
extremely high degree of leverage.
For example, if at the time of
purchase 10% of the price of a
contract is deposited as margin, a
10% decrease in the price of the
contract would, if the contract is
then closed out, result in a total
loss of the margin deposit before
any deduction for brokerage
commissions. A decrease of more
than 10% would result in a loss of
more than the total margin
deposit. Accordingly, a relatively
small price movement in a
contract may result in immediate
and substantial losses to the
investor. Like other leveraged
investments, any trade may result
in losses in excess of the amount
invested. When the market value
of a particular open position
changes to a point where the
margin on deposit in a client's
account does not satisfy the
applicable maintenance margin
requirement imposed by the
client's FCM or IB, the client, and
not Eclipse Capital, will receive a
margin call from the FCM or IB. If
the client does not satisfy the
margin call within a reasonable
time (which may be as brief as a
few hours), the FCM or IB will
close out the client's position and
the client will be responsible for all
resulting losses.

(3) Futures Markets May Be
Illiquid. United States commodity
exchanges impose "daily limits"
on the amount by which the price
of most futures contracts traded
on such exchanges may vary
during a single day. Daily limits
prevent trades from being
executed during a given trading
day at a price above or below the
daily limit. Once the price of a
futures contract has moved to the
limit price, it may be difficult,
costly or impossible to liquidate a
position. Such limits could
prevent Eclipse Capital from
promptly liquidating unfavorable
positions and restrict its ability to
exercise or offset commodity
options held in a managed
account. In addition, even if
futures prices have not moved the
daily limit, Eclipse Capital may be
unable to execute trades at
favorable prices if the liquidity of
the market is not adequate. Daily
limits have been applicable to
bond futures for some time and
have recently been imposed on
stock index futures (although none
exist on actual stocks) as a result
of the market turbulence of
October 1987. It is also possible
for an exchange or the CFTC to
suspend trading in a particular
contract (as, in fact, occurred in
the case of stock index futures on
October 20, 1987), order immediate
settlement of a particular contract
or order that trading in a particular
contract be conducted for
liquidation only.

(4) Failure of a Client's FCM.
Under CFTC regulations, FCMs are
required to maintain a client's
assets in a segregated account. If
a client's FCM fails to do so, the
client may be subject to a risk of
loss of his funds on deposit with
his FCM in the event of its
bankruptcy. In addition, under
certain circumstances, such as the
inability of another client of the
FCM or the FCM itself to satisfy
substantial deficiencies in such
other client's account, a client may
be subject to a risk of loss of his
funds on deposit with his FCM,
even if such funds are properly
segregated. In the case of any
such bankruptcy or client loss, a
client might recover, even in
respect of property specifically
traceable to the client, only a pro
rata share of all property available
for distribution to all of the FCM's
clients.

7
<PAGE>

(5) Importance of Price Trends to
Profitability. Eclipse Capital
applies a trend-following trading
technique, which seeks to identify
significant price trends soon after
they begin and participate in such
trends until soon after they have
begun to reverse. The profitability
of any trend-following strategy
depends upon the occurrence of
major price moves in some futures
contracts traded; generally, the
majority of trend-following trades
result in small losses, but attempt
to achieve gains on relatively
fewer trades to offset such losses.
There is no guarantee that there
will actually be such trends in the
future. The best trend-following
strategy, whatever elements it may
contain, is unlikely to be profitable
if there are no trends of the kind it
seeks to identify. Furthermore, a
strategy which is successful in the
case of upward price trends may
not be successful in downward
trends and vice versa. Any factor
which may lessen the prospect of
major trends in the future (such as
increased government control of,
or participation in, the markets)
may reduce the prospect that any
trend-following strategy will be
profitable.

(6) Substantial Fees and
Expenses. A client is subject to
substantial brokerage
commissions and management
fees and, possibly, incentive fees.
Accordingly, a client's account will
have to earn substantial trading
profits to avoid depletion of assets
due to such commissions and
fees. It is possible that substantial
brokerage commissions may be
generated by Eclipse Capital's
trading method which could
negatively impact the profitability
of a client's account. A client is
responsible for bearing any and all
expenses, losses and fees
incurred as a result of maintaining
and having Eclipse Capital trade
the client's account. See "Fees"
and "Client Brokerage Account."

(7) Limited Deduction by
Noncorporate Taxpayers for
Management and Incentive Fees.
Under prior law, noncorporate
taxpayers who itemized
deductions were permitted to
deduct expenses of producing
income, including investment
advisory fees, when computing
taxable income. The Internal
Revenue Code of 1986, as
amended, now provides that such
expenses are to be aggregated
with unreimbursed employee
business expenses and other
expenses of producing income
(collectively, "Aggregate
Investment Expenses") and the
aggregate amount of such
expenses will be deductible only
to the extent such amount exceeds
2% of a noncorporate taxpayer's
adjusted gross income. Such
limitation could substantially
reduce the deductibility for federal
income tax purpose of any
amounts deemed to constitute
"investment advisory fees." The
fees payable to Eclipse Capital
will, in all probability, be
characterized as investment
advisory fees subject to the above
limitation. EACH CLIENT,
THEREFORE, MAY PAY TAX ON
MORE THAN THE NET PROFITS
GENERATED BY ECLIPSE
CAPITAL'S TRADING PROGRAM.
EACH PROSPECTIVE CLIENT
MUST CONSULT AND MUST
DEPEND ON HIS OWN TAX
ADVISOR REGARDING THE
FEDERAL, STATE, LOCAL AND
FOREIGN TAX CONSEQUENCES
OF PARTICIPATING IN ECLIPSE
CAPITAL'S TRADING PROGRAM.

(8) Possible Effects of Speculative
Position Limits. The CFTC and the
United States commodity
exchanges have established limits
on certain commodities referred to
as "speculative position limits" on
the maximum net long or short
speculative positions that any
person may hold or control in
futures or options contracts traded
on United States commodity
exchanges. Eclipse Capital also
will be subject to position limits on
the basis of all accounts
(proprietary or client) under its
management.

(9) Adverse Effects of Increased
Regulation of Financial Futures.
As a result of the stock market
decline during October 1987 and
general volatility, there has been
considerable public discussion,
and congressional investigation,
of the desirability of imposing
major additional regulation on the
financial and (in particular) the
stock index futures

<PAGE>

markets, including proposals for reduced
speculative position limits and
significantly increased margin
requirements. Some
commentators have suggested
eliminating the stock index futures
market or "program trading" -- i.
e., arbitraging between the stock
index futures and the underlying
stock markets - altogether.

Although it is not possible to
predict what, if any, regulatory
changes will in fact be imposed on
the financial and stock index
futures markets, any such
regulations could significantly
restrict Eclipse Capital's access
to, and ability to allocate and
reallocate assets to and from,
financial and stock index futures
positions, to the material detriment
of Eclipse Capital's trading
programs. Any such regulations
may also impair the liquidity of the
financial and stock index futures
markets, increasing the
transaction costs associated with
stock index futures contracts.

(10) General Uncertainty
Concerning Future Regulatory
Changes. In addition to possible
changes in the regulation of the
stock index and financial futures
markets, other regulatory changes
could have a material and adverse
effect on clients' managed
accounts' prospects for
profitability. The United States
securities and commodities
markets are subject to ongoing
and substantial regulatory
changes, and it is impossible to
predict what statutory,
administrative or exchange
imposed restrictions may become
applicable in the future.

(11) Forward Trading is
Unregulated. Forward contracts
are not traded on exchanges.
Rather, banks and dealers act as
principals in these markets.
Neither the CFTC nor banking
authorities currently regulate
trading in forward contracts on
currencies, and there is no
limitation on the daily price
movements of forward contracts.
Speculative position limits are also
not applicable to forward trading.

(12) Trading in Options on
Commodity Futures. Trading in all
options on commodities was
prohibited in 1978 due to
perceived abuses, but
commodities options trading has
been permitted since October 1,
1982 pursuant to a "pilot program"
established by the CFTC.
Commodity options trading in the
United States has now been made
permanent and United States
commodity exchanges are
permitted to trade an unlimited
number of such options (subject
to CFTC approval). There can be
no assurance that any trading
approach can successfully
incorporate significant levels of
options trading or the variety of
new options which have recently
become, and are expected in the
near future to become, available
for trading. Although successful
trading in options on futures
contracts requires many of the
same skills required for successful
futures trading, the risks involved
are somewhat different.

(13) Foreign Futures and Options
Trading. Participation in foreign
futures and foreign options
transactions involves the
execution and clearing of trades
on or subject to the rules of a
foreign board of trade. Neither the
CFTC, NFA nor any domestic
exchange regulates activities of
any foreign boards of trade,
including the execution, delivery
and clearing of transactions, or
has the power to compel
enforcement of the rules of a
foreign board of trade or any
applicable foreign laws. Generally,
the foreign transaction will be
governed by applicable foreign
law. This is true even if the
exchange is formally linked to a
domestic market so that a position
taken on the market may be
liquidated by a transaction on
another market. Moreover, such
laws or regulations will vary
depending on the foreign country
in which the foreign futures or
foreign options transaction
occurs. For these reasons,
customers who trade foreign
futures or foreign options
contracts may not be afforded
certain of the protective measures
provided by the Commodity
Exchange Act, the Commission's
Regulations and the Rules of the
National Futures Association and
any domestic exchange, including
the right to use the reparation
proceedings before the
Commission and arbitration
proceedings provided by the
National Futures Association or
any domestic futures exchange. In
particular, funds received from
customers for foreign futures or
foreign options transactions may
not be provided the same
protection as funds received in
respect of transactions on United
States futures exchanges.

9
<PAGE>

The price of any foreign futures or
foreign options contract and,
therefore, the potential profit and
loss thereon, may be affected by
fluctuating foreign exchange rates
between the time an order is
placed and the time it is liquidated,
offset or exercised.

(14) Potential Conflicts of Interest.
Eclipse Capital's trading programs
will be subject to certain potential
conflicts of interest. See
"Potential Conflicts of Interest."

(15) Special Disclosure for
Notionally-Funded Accounts. You
should request your commodity
trading advisor to advise you of
the amount of cash or other assets
(actual funds) which should be
deposited to the advisor's trading
program for your account to be
considered "fully-funded." This is
the amount upon which the
commodity trading advisor will
determine the number of contracts
traded in your account and should
be an amount sufficient to make it
unlikely that any further cash
deposits would be required from
you over the course of your
participation in the commodity
trading advisor's program.

You are reminded that the account
size you have agreed to in writing
(the "nominal" or "notional"
account size) is not the maximum
possible loss that your account
may experience.

You should consult the account
statements received from your
futures commission merchant in
order to determine the actual
activity in your account, including
profits, losses and current cash
equity balance. To the extent that
the equity in your account is at
any time less than the nominal
account size you should be aware
of the following:

1. Although your gains and
losses, fees and commissions
measured in dollars will be the
same, they will be greater when
expressed as a percentage of
account equity.
2. You may receive more frequent
and larger margin calls.
3. The disclosures which
accompany the performance
summary may be used to
convert the rates-of-return
("RORs") in the performance
summary to the corresponding
RORs for particular partial
funding levels.

The preceding list of risk factors
does not purport to be a complete
explanation of the risks involved in
investing in Eclipse Capital's
trading programs. Each
prospective client who intends to
trade commodity interest
contracts should carefully read
this Disclosure Document, the
Risk Disclosure Statement on the
first page of this Disclosure
Document, and the risk disclosure
statements of the relevant FCM or
IB with particular care and give
due consideration to the risks
described therein. In addition,
each prospective client is urged to
consult with the prospective
client's financial advisor.

PERFORMANCE HISTORY

The CFTC requires a commodity
trading advisor to disclose to
prospective customers the actual
performance record of all
accounts for which the trading
advisor and its principals have had
the authority to cause transactions
to be effected without clients'
specific authorization. All
performance information set forth
below is current through
September, 1996.

In the following performance
summaries, Eclipse Capital has
adopted a method of computing
rate of return, referred to as the
Time Weighting of Additions and
Withdrawals method.

10
<PAGE>

PERFORMANCE SUMMARY - GLOBAL MONETARY PROGRAM

Name of CTA: Eclipse Capital Management, Inc.
Program: Global Monetary Program
Inception of trading by CTA: April 1986
Inception of trading in program: August 1990
Number of accounts open: 10
Number of accounts closed while profitable: 9
Number of accounts closed while unprofitable: 4
Assets under management in program (excluding Notional): $53,350,671
Assets under management in program (including Notional): $55,850,671
Assets under management in all programs (excluding Notional): $109,410,873
Assets under management in all programs (including Notional): $111,910,873
Largest monthly drawdown: -14.62% (July 1994)
Largest peak to valley drawdown: -26.97% (March to September 1994)

Monthly / Annual Rates Of Return (%)

<TABLE>
<CAPTION>
MONTH 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
January 5.45 -2.28 1.34 4.23 -6.77 1.15
February -0.07 1.19 3.00 9.34 -5.38 8.01
March -0.30 4.52 6.09 -2.11 5.51 23.70
April 5.58 0.84 -3.43 1.42 -5.29 -3.29
May 1.96 8.09 -2.91 -1.02 -0.24 -13.06
June 0.11 -2.34 0.28 3.03 11.74 12.41
July 0.58 1.04 -11.70 3.09 16.56 8.99
August 3.04 6.80 -5.12 0.81 8.13 -0.51
September 2.77 -0.57 -1.42 3.61 -10.27 3.23
October 0.34 0.90 2.06 1.88 -0.96
November 2.16 4.50 -0.03 2.33 2.50
December -0.64 -2.24 2.84 -2.50 16.96
Annual 20.60 20.21 -11.37 30.37 12.95 69.76
(9 Months)
</TABLE>

Eclipse Capital began using the Fully-Funded Subset method to calculate
Rates of Return for periods subsequent to August 1, 1996.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE
RESULTS.

11
<PAGE>
PERFORMANCE SUMMARY - GLOBAL YIELD PROGRAM

Name of CTA: Eclipse Capital Management, Inc.
Program: Global Yield Program
Inception of trading by CTA: April 1986
Inception of trading in program: April 1992
Number of accounts open: 1
Number of accounts closed while profitable: 5
Number of accounts closed while unprofitable: 6
Assets under management in program (excluding Notional): $55,684,720
Assets under management in program (including Notional): $55,684,720
Assets under management in all programs (excluding Notional): $109,410,873
Assets under management in all programs (including Notional): $111,910,873
Largest monthly drawdown: -14.41% (July 1994)
Largest peak to valley drawdown: -26.10% (May 1994 to January 1995)

Monthly / Annual Rates Of Return (%)

<TABLE>
<CAPTION>
MONTH 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
January 1.54 -6.53 2.44 6.76
February 0.05 -3.90 2.06 6.65
March -1.00 1.88 5.97 -1.47
April 1.67 2.08 0.25 0.63 -3.22
May 0.39 15.83 -0.92 -1.50 -0.60
June -4.13 -1.05 -0.89 4.08 4.59
July 1.64 0.22 -6.53 2.86 12.79
August 3.86 -1.36 -1.85 5.50 2.39
September 3.34 -0.03 0.37 -0.32 -0.77
October 0.28 -2.28 2.25 0.17
November 4.72 2.58 1.46 0.18
December 2.78 -0.65 1.95 -3.02
Annual 7.37 14.23 0.02 32.40 12.20
(9 Months) (9 Months)
</TABLE>

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

12
<PAGE>

PERFORMANCE SUMMARY - FOREIGN EXCHANGE PROGRAM
(Not open to new investment)

Name of CTA: Eclipse Capital Management, Inc.
Program: Foreign Exchange Program
Inception of trading by CTA: April 1986
Inception of trading in program: March 1992
Number of accounts open: 0
Number of accounts closed while profitable: 3
Number of accounts closed while unprofitable: 2
Assets under management in program (excluding Notional): $0
Assets under management in program (including Notional): $0
Assets under management in all programs (excluding Notional): $109,410,873
Assets under management in all programs (including Notional): $111,910,873
Largest monthly drawdown: -20.86% (September 1992)
Largest peak to valley drawdown: -20.86% (August 1992 to September 1992)

Monthly / Annual Rates Of Return (%)

<TABLE>
<CAPTION>
MONTH 1995 1994 1993 1992
<S> <C> <C> <C> <C>
January 3.15 -2.67 -2.64
February 3.94 0.61 7.86
March 2.79 1.99 -3.95 -1.95
April -4.30 3.21 -4.71
May -1.23 -0.48 -1.17
June 4.19 1.98 16.44
July -2.71 -1.06 11.57
August -2.67 -5.01 10.55
September -1.48 4.79 -19.39
October 3.00 0.58 3.76
November 3.42 -1.55 1.92
December -2.75 3.22 0.12
Annual 10.20 -4.93 6.35 13.18
(3 Months) (10 Months)
</TABLE>

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

13
<PAGE>

PERFORMANCE SUMMARY - FINANCIAL FUTURES ACCOUNT
(Not open to new investment)

Name of CTA: Eclipse Capital Management, Inc.
Program: Financial Futures Account
Inception of trading by CTA: April 1986
Inception of trading in program: April 1986
Number of accounts open: 0
Number of accounts closed while profitable: 99
Number of accounts closed while unprofitable: 314
Assets under management in program (excluding Notional): $0
Assets under management in program (including Notional): $0
Assets under management in all programs (excluding Notional):
$109,410,873
Assets under management in all programs (including Notional):
$111,910,873
Largest monthly drawdown: -20.91% (October 1991)
Largest peak to valley drawdown: -69.20 (February 1989 to April 1992)

Monthly / Annual Rates Of Return (%)

<TABLE>
<CAPTION>
MONTH 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
January 6.19 -4.40 -1.17 0.98 -20.89 -14.51
February 0.06 2.22 15.82 29.00 -14.23 -2.14
March -0.14 -5.18 12.35 -5.47 2.83 13.97
April 2.77 -3.67 1.72 -11.66 -9.98
May 0.93 3.84 3.16 0.81 -12.42
June -5.13 -9.43 13.27 23.77 5.11
July -17.46 0.17 44.02 6.84
August -17.31 2.12 16.00 -1.64
September 6.00 5.29 -14.15 0.62
October -2.14 -1.02 -6.02 -20.91
November 4.97 0.00 -12.78 14.85
December -5.48 2.77 4.59 14.09
Annual 4.41 -7.33 -18.16 60.35 -5.43 -13.42
(6 Months) (3 Months)
</TABLE>

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

14
<PAGE>

NOTES TO PERFORMANCE SUMMARIES

In the preceding performance summaries, Asset Under Management
(excluding Notional) represents the total actual equity (including cash and
cash equivalents) deposited in the accounts at the carrying FCM plus
committed funds.

Asset Under Management (including Notional) represents the total actual
equity (including cash and cash equivalents) deposited in the accounts at
the carrying FCM plus committed funds plus notional funds.

Largest Monthly Drawdown is the largest monthly loss experienced by any
single account in the relevant program in any calendar month expressed as
a percentage of the total equity in such account in the program and
includes the month and year of such drawdown. Largest Peak to Valley
Drawdown is the largest calendar month-end to calendar month-end loss
experienced by any single account in the program expressed as a
percentage of total equity (including notional equity) in such account in the
program.

Prior to August 1, 1996, Monthly Rate of Return is calculated by dividing net
performance by the sum total of the starting equity plus the time-weighted
additions minus the time-weighted withdrawals for the period. Beginning in
1994, additions and withdrawals occurred other than at the beginning of the
month and, consequently, additions and withdrawals made other than at
the beginning of the month are time-weighted. Time weight is calculated by
multiplying an addition by the number of days in the period it was available
for trading and/or a withdrawal by the number of days in the period it was
not available for trading, and dividing by the total number of days in the
period. Prior to August 1, 1996, the time weighting of additions and
withdrawals method yields the same rates of return as the Fully-Funded
Subset Method (described below) since Eclipse Capital did not manage
notional funds prior to August 1, 1996.

For the periods beginning after August 1, 1996, Eclipse Capital has adopted
a new method of computing rate-of-return and performance disclosure,
referred to as the Fully-Funded Subset method, pursuant to an Advisory
published by the CFTC. The Fully-Funded Subset refers to that subset of
accounts included in the applicable composite which is funded entirely by
Actual Funds (as defined in the Advisory). To qualify for use of the Fully-
Funded Subset method, the Advisory requires that certain computations be
made in order to arrive at the Fully-Funded Subset and that the accounts
for which performance is so reported meet two tests which are designed to
provide assurance that the Fully-Funded Subset and the resultant RORs are
representative of the trading program. Eclipse Capital has performed these
computations for periods subsequent to August 1, 1996.

In July of 1994, because of a large addition occurring at mid-month and the
timing of profits and losses during the month, the composite of the Global
Yield Program shows a better return than accounts open for the entire
month, due to the use of the time-weighted method. The composite rate of
return shown for July is -6.53%. The composite return of the Global Yield
Program without this account would have been -9.69%. The return for the
new account alone was -1.61%.

In March of 1995, all remaining accounts in the Financial Futures Account
closed early in the month. Using the time-weighted method of calculating
the rate of return resulted in a material distortion of the performance result.
Therefore, for this month, the rate of return was calculated by dividing the
net performance by the beginning net asset value.

15
<PAGE>

Annual Rate of Return is calculated by dividing the change in the net asset
value of a hypothetical $1,000 investment (VAMI) during the period by the
VAMI at the beginning of the period or at the commencement of trading.
VAMI is calculated by multiplying (1 plus the period rate of return %) times
the prior period value of a hypothetical $1,000 investment (VAMI).

<TABLE>
PERFORMANCE SUMMARY MATRIX - GLOBAL MONETARY PROGRAM
<CAPTION>
ACTUAL RATE RATES OF RETURN BASED ON VARIOUS FUNDING LEVELS
OF RETURN (3)
(1)
<S> <C> <C> <C> <C>
20.00% 25.00% 33.33% 50.00% 100.00%
15.00% 18.75% 25.00% 37.50% 75.00%
10.00% 12.50% 16.67% 25.00% 50.00%
5.00% 6.25% 8.33% 12.50% 25.00%
-5.00% -6.25% -8.33% -12.50% -25.00%
- -10.00% -12.50% -16.67% -25.00% -50.00%
- -15.00% -18.75% -25.00% -37.50% -75.00%
- -20.00% -25.00% -33.33% -50.00% -100.00%
100% 80% 60% 40% 20%
</TABLE>
LEVEL OF FUNDING (2)

Footnotes to Rate Conversion Chart:

(1) This column represents the range of actual rates of return for fully-
funded accounts reflected in accompanying Performance Summary for
the Global Monetary Program.

(2) This represents the percentage of actual funds divided by the fully-
funded trading level.

(3) This represents the rate of return experienced by a customer at various
levels of funding traded by Eclipse Capital. The rates of return for
accounts that are not fully-funded are inversely proportional to the
actual rates of return based on the percentage level of funding.

16
<PAGE>

FEES

In exchange for providing its
investment management services,
Eclipse Capital's standard fee
structure consists of two types of
fees. Eclipse Capital charges a
monthly management fee equal to
1/4 of 1% (3% annually) of an
account's month-end equity plus
its notional assets, if any
(collectively, the "Trading Level"),
which will be paid whether or not
an account is profitable. All
management fees are expressed
as a percentage of nominal
account size but may vary when
expressed as a percentage of
actual funds. For example, a
management fee of 3% of a
nominal account size will equal 6%
when expressed as a percentage
of actual funds for a 50% funded
account. For purposes of
calculating management fees, a
"month" shall be a calendar
month. Accounts opened or
closed on a day other than the first
day of the month will be charged a
prorated management fee based
on the actual number of days the
account was open during the
month.

Eclipse Capital also charges a
managed account client a
quarterly incentive fee equal to
20% of the increase in an
account's Trading Profits for the
quarter. The quarterly incentive
fee will be payable only on
cumulative profits in an account.
If an account incurs a loss after an
incentive fee payment is made,
Eclipse Capital will retain the
payment but will receive no further
incentive fee in subsequent
quarters until the account again
achieves Trading Profits that
exceed the highest previous
Trading Profit at the end of a
previous incentive period. For
purposes of calculating incentive
fees, a "quarter" shall be deemed
to begin on the first day of the
month in which an account is
opened and shall end on the last
day of the third consecutive
calendar month thereafter. For
example, if an account was
opened in August, August would
be the first month of the first
quarter for incentive fee
calculations. Quarters for such an
account would end in October,
January, April and July.
Management fees will be accrued,
but brokerage commissions on
open positions in an account will
not be accrued, in calculating
incentive fees. Clients who have
opened accounts with Eclipse
Capital at different times may pay
different fees, or similar fees at
different rates, due to changes in
Eclipse Capital's fee structure
since it commenced management
of client accounts.

Eclipse Capital reserves the right
to charge more or less than its
stated fees. The fees charged to
clients may vary due to account
size, trading program selected,
brokerage commissions, pre-
existing relationships with clients,
etc. Management fees may range
between 0% and 8%. Incentive
fees may range between 0% and
33%.

Eclipse Capital may elect to
contract with independent parties
(provided they possess the
registrations required under the
Commodity Exchange Act, as
amended, and other applicable
laws) in order to raise accounts for
Eclipse Capital to manage.
Eclipse Capital may share a
portion of its management and/or
incentive fees with such
independent parties in exchange
for fund-raising services. In no
event will such agreement have
the effect of increasing the fees
paid by clients.

Trading Profits. Trading Profits
during a quarter means the sum of
(a) the net of any profits and
losses realized by all trades closed
out during the quarter, and (b) the
net of any unrealized profits and
losses on open positions as of the
end of the quarter, minus (c) the
net of any unrealized profits or
losses on open positions as of the
end of the preceding quarter, (d)
all expenses incurred or accrued
during the quarter and (e)
cumulative net realized losses, if
any, carried forward from
preceding quarters. The
withdrawal of equity from the
account will result in a
proportionate reduction in any
cumulative net realized losses
accrued as of the date of such
withdrawal; the reduction will be in
the same proportion that the
amount withdrawn bears to the
account equity prior to the
withdrawal. Any interest earned
on assets in the account is not
included in calculating Trading
Profits.

17
<PAGE>

The incentive fee is due and
payable on the last business day
of any quarter in which Eclipse
Capital has earned an incentive fee
and with respect to a withdrawal
made prior to a quarter-end. The
management fee is due and
payable on the last business day
of each month. After the end of
each month, Eclipse Capital will
prepare a Statement of Account
setting forth the amount of any
fees payable to it and furnish the
Statement of Account to the
client's broker. The client will be
required to execute the Fee
Payment Authorization appearing
on the signature page of the
Eclipse Capital Client Advisory
Agreement and Trading
Authorization authorizing such
payments by the broker from the
client's account.

POTENTIAL CONFLICTS OF
INTEREST

Trading Own Accounts. Eclipse
Capital, its principals or its
employees may invest in funds
managed by Eclipse Capital, may
trade commodity interest
contracts for their own proprietary
accounts and may test other
trading programs and methods.
For such accounts Eclipse Capital
may use trading approaches which
are different from the trading
programs described in this
Disclosure Document. Therefore,
it is possible that Eclipse Capital
and/or its principals and
employees may, from time to time,
compete with a client account for
similar commodity interest
contract positions in one or
several markets, or may take
positions in their proprietary
accounts which are opposite, or
ahead of, the positions taken in a
client account. Eclipse Capital will
permit clients to inspect such
trading records during normal
business hours on the premises of
Eclipse Capital.

Trading Multiple Accounts.
Eclipse Capital may in the future
manage and trade additional
accounts, including commodity
pools. Eclipse Capital will not,
however, knowingly or deliberately
favor one account over any other
such account.

Because of price volatility,
occasional variations in liquidity,
and differences in order execution,
it is impossible for Eclipse Capital
to obtain identical trade execution
for all of its clients. Such
variations and differences may
produce differences in
performance among client
accounts over time. In an effort to
treat its clients fairly when block
orders for client accounts are filled
at different prices, Eclipse Capital
assigns trades on a systematic
basis.

No Other Conflicts. There are no
actual or potential conflicts of
interest presently known to
Eclipse Capital or its principals
other than those disclosed herein.

CLIENT ADVISORY AGREEMENT

A client wishing to participate in
Eclipse Capital's trading programs
must authorize Eclipse Capital to
manage his trading account
pursuant to a grant of a limited
power-of-attorney contained in
Eclipse Capital's Client Advisory
Agreement and Trading
Authorization. The agreement
permits Eclipse Capital to place all
buy and sell orders for foreign
exchange forward contracts,
futures contracts, options on
futures contracts, and other
commodity interests, and to make
or take delivery in fulfillment of
such interests. In addition, the
client will instruct the FCM
carrying his account to transfer
from the client's account amounts
sufficient to pay Eclipse Capital's
fees, which will be billed by
Eclipse Capital directly to the
client's account (see "Fees").
However, except as indicated
above, the Client Advisory
Agreement and Trading
Authorization allows only the
client to withdraw funds from his
account. Eclipse Capital reserves
the right to terminate the Client
Advisory Agreement and Trading
Authorization at any time.

18
<PAGE>

CLIENT BROKERAGE ACCOUNT

A client who wishes to participate
in an Eclipse Capital trading
program must open an account
with the FCM of his choice, or
alternatively in the case of foreign
exchange trading, establish an
adequate line of credit with a bank
of his choice, which is acceptable
to Eclipse Capital. Eclipse Capital
manages funds for clients at a
number of FCMs and generally
accepts new accounts at one of
the established FCMs. The client
will be required to sign the
appropriate new account forms,
risk disclosure statements, and
customer agreements of his FCM.
A client does not deposit any
funds with Eclipse Capital. Rather,
the client makes all deposits of
funds with his FCM. A client is
also free to select an acceptable
Introducing Broker ("IB") of his
choice, if any, through which his
accounts will be carried by his
FCM.

Eclipse Capital has no affiliation or
direct or indirect business
relationship with any FCM or any
IB whereby it may benefit, directly
or indirectly, from the maintenance
of a client's account with any FCM
or IB. Eclipse Capital will not
receive or participate in brokerage
commissions charged to client
accounts. The only compensation
earned or to be earned, directly or
indirectly, by Eclipse Capital from
any of the accounts it manages
will be from fees described herein
or otherwise specifically
negotiated with the client.

The client accepts that Eclipse
Capital will have the right to direct
all trades to any FCM or floor
broker it chooses for execution
with instructions to "give-up" to
the customer's clearing broker. At
present, Eclipse Capital has no
affiliation or business arrangement
with any particular FCM or with
any floor brokers affiliated with
any particular FCMs, although it
may in the future. The clearing
broker will then pay the floor
brokerage and additional "give-
up" fees, unless otherwise
approved by the client, to the
executing FCM or floor broker
from the client's account. In
addition, clients will be required to
sign documentation which
specifically authorizes Eclipse
Capital to execute orders utilizing
a give-up procedure and to enter
into give-up agreements with the
executing and clearing brokers
involved, and authorizing Eclipse
Capital to act on behalf of the
client in negotiating those
agreements.

The client, and not Eclipse Capital,
is directly responsible for paying
to the client's FCM or IB, as
appropriate, all margins, option
premiums, brokerage
commissions and fees and
expenses incurred in connection
with transactions effected for the
client's managed account by
Eclipse Capital. Brokerage
commissions may be substantial.
No assurance can be given by
Eclipse Capital as to any minimum
or maximum number of
transactions which will be entered
into for the client's managed
account during any period for
which a managed account is
managed by Eclipse Capital.

The FCM or IB, as the case may
be, at its own expense, will provide
the client with a monthly statement
of equity, as well as a record of the
management and incentive fees
paid to Eclipse Capital and the
brokerage commissions paid to
the FCM or IB. In addition, the
FCM will supply the client with a
confirmation of every trade
executed for the client's managed
account and purchase and sale
statements setting forth the
realized gain or loss on each such
liquidated position and the
brokerage commissions charged.

A portion of the client's funds
initially deposited with the client's
FCM may be used to purchase
United States Treasury bills for the
client's account. The Treasury
bills may be utilized as original
margin for transactions in futures
contracts and for short option
positions. However, Treasury bills
may not be used as variation
margin or for the purchase of
option contracts. Accordingly, a
portion of the client's assets in the
account must be in the form of
cash. A client retains ultimate
control over his account at his
FCM and may close out such
account completely at any time
upon notice to his FCM in
accordance with the terms of his
client agreement with his FCM and
applicable exchange rules.

19
<PAGE>

Though Eclipse Capital will
attempt to correct trading errors
as soon as they are discovered, it
will not be responsible for poor
executions or trading errors
committed by brokers or FCMs.

FURTHER INFORMATION

Any questions should be directed
to Eclipse Capital at the address
and telephone number listed on
the cover page of this disclosure
document.

MISCELLANEOUS

BECAUSE OF THE COMPLEXITY
OF THE TAX LAWS AND THE
DIFFERENT CONSIDERATIONS
APPLICABLE TO EACH MANAGED
ACCOUNT AND CLIENT, THIS
DISCLOSURE DOCUMENT DOES
NOT PROVIDE TAX ADVICE.
EACH CLIENT SHOULD CONSULT
HIS OR ITS OWN TAX ADVISORS
TO DETERMINE THE TAX
CONSEQUENCES OF AN
INVESTMENT IN A MANAGED
ACCOUNT.

THIS DISCLOSURE DOCUMENT
DOES NOT PURPORT TO
DISCUSS ALL OF THE RISKS
CONCERNING TRADING IN
COMMODITY FUTURES OR
ECLIPSE CAPITAL'S GLOBAL
FINANCIAL TRADING PROGRAMS.

IN ADDITION TO THIS
DISCLOSURE DOCUMENT, AN
ADDITIONAL RISK DISCLOSURE
DOCUMENT AND VARIOUS
RELATED DOCUMENTS OF THE
RELEVANT FCM OR IB WILL BE
PROVIDED FOR YOUR
INSPECTION AND REVIEW.

<PAGE>

EXHIBIT "C"

Trading Limitations

The Partnership will not: (i) engage in pyramiding its Commodities
positions (i.e., the use of unrealized profits on existing positions to provide
margin for the acquisition of additional positions in the same or a related
commodity), but may take into account open trading equity on existing
positions in determining generally whether to acquire additional Commodities
positions; (ii) borrow or loan money (except with respect to the initiation or
maintenance of the Partnership's Commodities positions or obtaining lines
of credit for the trading of forward contracts; provided, however, that the
Partnership is prohibited from incurring any indebtedness on a non-recourse
basis); (iii) permit rebates or give-ups to be received by the General Partner
or its affiliates, or permit the General Partner or any affiliate to engage in
any reciprocal business arrangements which would circumvent the foregoing
prohibition; (iv) permit the Advisor to share in any portion of the commodity
brokerage fees paid by the Partnership; (v) commingle its assets, except as
permitted by law; or (vi) permit the churning of its commodity accounts.

The Partnership will conform in all respects to the rules, regulations
and guidelines of the markets on which its trades are executed.

Trading Policies

Subject to the foregoing limitations, the Advisor has agreed to abide
by the trading policies of the Partnership, which currently are as follows:

(1) Partnership funds will generally be invested in futures,
forward and option contracts which are traded in sufficient volume to
permit taking and liquidating positions.

(2) Stop or limit orders may, in the Advisor's discretion, be
given with respect to initiating or liquidating positions in order
to limit losses or secure profits. If stop or limit orders are used,
no assurance can be given, however, that Prudential Securities will
be able to liquidate a position at a specified stop or limit order
price, due to either the volatility of the market or the inability
to trade because of market limitations.

(3) The Partnership generally will not initiate an open
position in a futures contract (other than a cash settlement
contract) during any delivery month in that contract, except
when required by exchange rules, law or exigent market
circumstances. This policy does not apply
to forward and cash market transactions.

(4) The Partnership may occasionally make or accept delivery of
a commodity, including, without limitation, currencies.

(5) The Partnership will, from time to time, employ trading
techniques such as spreads, straddles and conversions.

<PAGE>
(Exhibit "C" - cont'd)

(6) The Advisor will not initiate open positions which would
result in net long or short positions requiring margin or premium for
outstanding positions in excess of 15% of the Partnership's Net Asset
Value allocated to the Advisor for any one commodity, or in excess of
66% of the Partnership's Net Asset Value allocated to the Advisor for
all Commodities combined.

(7) To the extent the Partnership engages in transactions in
foreign currency forward contracts other than with or through
Prudential Securities or its affiliates, the Partnership will only
engage in such transactions with or through a bank which as of the
end of its last fiscal year had an aggregate balance in its capital,
surplus and related accounts of at least $100,000,000, as shown
by its published financial statements for such year, and through
other broker-dealer firms with an aggregate balance in its
capital, surplus and related accounts of at least $50,000,000.

The General Partner will be responsible for the management of non-
Commodities assets, with the assistance of Prudential Securities or other
affiliates. At least 75% of the Partnership's Net Asset Value will be
maintained in interest-bearing U.S. Treasury obligations (primarily U.S.
Treasury bills), a significant portion of which will be utilized for margin
purposes (to the extent practicable) for the Partnership's Commodities
positions. All interest earned on such funds will be paid to the Partnership.
The balance of the Partnership's Net Asset Value will be held in cash (to
avoid the daily buying and selling of interest-bearing obligations and to pay
ongoing expenses).

-2-

<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for P-B Capital Return Futures
Fund 2, L.P. and is qualified in its entirety
by reference to such financial statements
</LEGEND>

<RESTATED>
<CIK> 0000851786
<NAME> P-B Capital Return Futures Fund 2, L.P.
<MULTIPLIER> 1

<FISCAL-YEAR-END> Dec-31-1997

<PERIOD-START> Jan-1-1997

<PERIOD-END> Jun-30-1997

<PERIOD-TYPE> 6-Mos

<CASH> 5,762,080

<SECURITIES> 23,166,403

<RECEIVABLES> 0

<ALLOWANCES> 0

<INVENTORY> 0

<CURRENT-ASSETS> 28,928,483

<PP&E> 0

<DEPRECIATION> 0

<TOTAL-ASSETS> 28,928,483

<CURRENT-LIABILITIES> 921,916

<BONDS> 0

<COMMON> 0

<OTHER-SE> 28,006,567

<TOTAL-LIABILITY-AND-EQUITY> 28,928,483

<SALES> 0

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