<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 September 30, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______________________ to ______________________
Commission file number: 0-19805
PRUDENTIAL-BACHE OPTIMAX FUTURES FUND, L.P.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 13-3577395
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One New York Plaza, 13th Floor, New York, New York 10292
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 778-7866
N/A
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicate by check CK whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _CK_ No __
<PAGE>
<PAGE>
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRUDENTIAL-BACHE OPTIMAX FUTURES FUND, L.P.
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------
ASSETS
Equity in commodity trading accounts:
Cash $ 4,066,908 $ 2,930,275
U.S. Treasury bills, at amortized cost 12,997,728 11,957,555
Net unrealized gain on open commodity positions 1,622,458 1,082,273
Options, at market -- 36,807
------------- ------------
Total assets $18,687,094 $16,006,910
------------- ------------
------------- ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable $ 745,995 $ 203,740
Incentive fees payable 600,242 85,079
Accrued expenses 102,830 100,952
Management fees payable 31,438 28,516
Other transaction fees payable 2,469 2,421
------------- ------------
Total liabilities 1,482,974 420,708
------------- ------------
Commitments
Partners' capital
Limited partners (83,075.579 and 92,158.661 OptiMax Units
outstanding) 17,031,906 15,430,323
General partner (840 and 931 OptiMax Units outstanding) 172,214 155,879
------------- ------------
Total partners' capital 17,204,120 15,586,202
------------- ------------
Total liabilities and partners' capital $18,687,094 $16,006,910
------------- ------------
------------- ------------
Net asset value per limited and general partnership units (the
'OptiMax Units') $ 205.02 $ 167.43
------------- ------------
------------- ------------
- -----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
2
<PAGE>
PRUDENTIAL-BACHE OPTIMAX FUTURES FUND, L.P.
(a limited partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
------------------------------ ------------------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
REVENUES
Net realized gain on commodity
transactions $ 4,762,563 $ 2,684,285 $ 1,599,134 $ 1,021,233
Change in net unrealized gain/loss on
open commodity positions 527,210 728,803 1,767,688 1,061,233
Interest from U.S. Treasury bills 463,768 437,333 152,916 145,885
------------- ------------- ------------- -------------
5,753,541 3,850,421 3,519,738 2,228,351
------------- ------------- ------------- -------------
EXPENSES
Commissions 960,151 892,074 317,003 300,468
Other transaction fees 61,404 44,763 15,382 16,570
Management fees 262,708 256,666 87,081 85,254
Incentive fees 1,012,240 524,772 600,242 256,411
General and administrative 112,639 150,298 44,266 52,827
------------- ------------- ------------- -------------
2,409,142 1,868,573 1,063,974 711,530
------------- ------------- ------------- -------------
Net income $ 3,344,399 $ 1,981,848 $ 2,455,764 $ 1,516,821
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
ALLOCATION OF NET INCOME
Limited partners $ 3,310,941 $ 1,962,012 $ 2,431,194 $ 1,501,639
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
General partner $ 33,458 $ 19,836 $ 24,570 $ 15,182
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
NET INCOME PER WEIGHTED AVERAGE LIMITED
AND GENERAL PARTNERSHIP UNIT
Net income per weighted average limited
and general partnership unit $ 36.92 $ 20.17 $ 28.05 $ 15.80
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Weighted average number of limited and
general partnership units outstanding 90,594 98,280 87,554 96,017
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
<TABLE>
<CAPTION>
OPTIMAX LIMITED GENERAL
UNITS PARTNERS PARTNER TOTAL
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Partners' capital--December 31, 1997 93,089.661 $15,430,323 $155,879 $15,586,202
Net income -- 3,310,941 33,458 3,344,399
Redemptions (9,174.082) (1,709,358) (17,123 ) (1,726,481)
---------- ----------- -------- -----------
Partners' capital--September 30, 1998 83,915.579 $17,031,906 $172,214 $17,204,120
---------- ----------- -------- -----------
---------- ----------- -------- -----------
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
3
<PAGE>
PRUDENTIAL-BACHE OPTIMAX FUTURES FUND, L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
(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 OptiMax Futures Fund, L.P. (the 'Partnership') as
of September 30, 1998 and the results of its operations for the nine and three
months ended September 30, 1998 and 1997. However, the operating results for the
interim periods may not be indicative of the results expected for the full year.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Partnership's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1997.
During July 1998, Willowbridge Associates Inc. ('Willowbridge') ceased to
serve as a Trading Manager to the Partnership. All assets previously managed by
Willowbridge were reallocated to Robert M. Tamiso ('Tamiso'), an existing
Trading Manager to the Partnership. The monthly management fee paid to Tamiso
equals 1/6 of 1% (a 2% annual rate) of its traded assets as compared to 1/4 of
1% (a 3% annual rate) paid to Willowbridge. The quarterly incentive fee paid to
Tamiso equals 17% of the New High Net Trading Profits (as defined in the
Advisory Agreement among the Partnership, the General Partner and Tamiso) as
compared to 20% of the New High Net Trading Profits paid to Willowbridge.
B. Related Parties
Seaport Futures Management, Inc. (the 'General Partner') and its affiliates
perform services for the Partnership which include, but are not limited to:
brokerage services; accounting and financial management; registrar, transfer and
assignment functions; investor communications; printing services and other
administrative services. The costs incurred for these services were:
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
------------------------------ --------------------
1998 1997 1998 1997
------------------ -------- -------- --------
<S> <C> <C> <C> <C>
Commissions $ 960,151 $892,074 $317,003 $300,468
General and Administrative 58,682 76,921 14,163 28,669
------------------ -------- -------- --------
$1,018,833 $968,995 $331,166 $329,137
------------------ -------- -------- --------
------------------ -------- -------- --------
</TABLE>
Expenses payable to the General Partner and its affiliates (which are
included in accrued expenses) were $34,481 and $17,761 as of September 30, 1998
and December 31, 1997, respectively.
The Partnership maintains its trading and cash accounts at Prudential
Securities Incorporated ('PSI'), the Partnership's commodity broker and an
affiliate of the General Partner. Except for the portion of assets that is
deposited as margin to maintain forward currency contract positions as further
discussed below, the Partnership's assets are maintained either with PSI or, for
margin purposes, with the various exchanges on which the Partnership is
permitted to trade.
The Partnership, acting through its Trading Managers, executes
over-the-counter, spot, forward and/or option foreign exchange transactions with
PSI. PSI then engages in back-to-back trading with an affiliate,
Prudential-Bache Global Markets Inc. ('PBGM'). PBGM attempts to earn a profit on
such transactions. PBGM keeps its prices on foreign currency competitive with
other interbank currency trading desks. All over-the-counter currency
transactions are conducted between PSI and the Partnership pursuant to a line of
credit. PSI may require that collateral be posted against the marked-to-market
position of the Partnership.
4
<PAGE>
C. Credit and Market Risk
Since the Partnership's business is to trade futures, forward and options
contracts, its capital is at risk due to changes in the value of these contracts
(market risk) or the inability of counterparties to perform under the terms of
the contracts (credit risk).
Futures, forward and options contracts involve varying degrees of off-balance
sheet risk; and changes in the level of volatility of interest rates, foreign
currency exchange rates or the market values of the contracts (or commodities
underlying the contracts) frequently result in changes in the Partnership's
unrealized gain (loss) on open commodity positions reflected in the statements
of financial condition. The Partnership's exposure to market risk is influenced
by a number of factors including the relationships among the contracts held by
the Partnership as well as the liquidity of the markets in which the contracts
are traded.
Futures and options contracts are traded on organized exchanges and are thus
distinguished from forward contracts which are entered into privately by the
parties. The credit risks associated with futures and options contracts are
typically perceived to be less than those associated with forward contracts
because exchanges typically provide clearinghouse arrangements in which the
collective credit (subject to certain limitations) of the members of the
exchanges is pledged to support the financial integrity of the exchange. On the
other hand, the Partnership must rely solely on the credit of its broker (PSI)
with respect to forward transactions. The Partnership presents unrealized gains
and losses on open forward positions as a net amount in the statements of
financial condition because it has a master netting agreement with PSI.
The General Partner attempts to minimize both credit and market risks by
requiring the Partnership's Trading 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 interests of the Partnership.
PSI, when acting as the Partnership's futures commission merchant in
accepting orders for the purchase or sale of domestic futures and options
contracts, is required by Commodity Futures Trading Commission ('CFTC')
regulations to separately account for and segregate as belonging to the
Partnership all assets of the Partnership relating to domestic futures and
options trading and is not to commingle such assets with other assets of PSI. At
September 30, 1998 and December 31, 1997, such segregated assets totalled
$6,512,458 and $8,917,171, 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 $11,873,867 and $6,988,356 at September 30, 1998
and December 31, 1997, respectively. There are no segregation requirements for
assets related to forward trading.
As of September 30, 1998, all open futures, forward and options contracts
mature within one year.
At September 30, 1998 and December 31, 1997, gross contract amounts of open
futures, forward and options contracts were:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
------------- ------------
Financial Futures and Options Contracts:
Commitments to purchase $ 146,468,134 $139,900,563
Commitments to sell 878,377 7,437,372
Currency Futures and Options Contracts:
Commitments to purchase 12,090,388 492,662
Commitments to sell 1,334,714 21,706,418
Currency Forward Contracts:
Commitments to purchase 10,759,812 7,046,771
Commitments to sell 6,626,692 10,358,738
Other Futures Contracts:
Commitments to purchase 639,534 456,506
Commitments to sell 6,151,199 11,247,722
Other Forward Contracts:
Commitments to purchase -- 121,273
</TABLE>
5
<PAGE>
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.
At September 30, 1998 and December 31, 1997, respectively, the fair values of
futures, forward and options contracts were:
<TABLE>
<CAPTION>
1998 1997
-------------------------- --------------------------
Assets Liabilities Assets Liabilities
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Futures Contracts:
Domestic exchanges
Financial $ 415,869 $ -- $ 146,750 $ 23,700
Currencies 118,233 938 197,088 38,848
Other 46,442 100,687 390,029 --
Foreign exchanges
Financial 1,323,732 1,388 324,620 3,840
Other 9,160 488,734 119,206 130,415
Forward Contracts:
Currencies 608,568 307,799 257,080 154,865
Other -- -- -- 832
Options Contracts:
Domestic exchanges
Financial -- -- 6,907 --
Currencies -- -- 29,900 --
---------- ----------- ---------- -----------
$2,522,004 $ 899,546 $1,471,580 $ 352,500
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
</TABLE>
The following table presents the average fair value of futures, forward and
options contracts during the nine months ended September 30, 1998 and 1997,
respectively.
<TABLE>
<CAPTION>
1998 1997
-------------------------- --------------------------
Assets Liabilities Assets Liabilities
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Futures Contracts:
Domestic exchanges
Financial $ 160,137 $ 12,226 $ 182,040 $ 7,537
Currencies 239,147 30,637 121,392 8,156
Other 155,141 27,763 149,447 30,298
Foreign exchanges
Financial 555,789 44,626 272,641 37,100
Other 49,372 146,605 184,816 81,083
Forward Contracts:
Currencies 327,614 276,540 590,295 321,276
Other 12,683 17,375 1,101 --
Options Contracts:
Domestic exchanges
Financial 6,785 -- 3,393 309
Currencies 4,128 -- 1,786 --
Other -- -- 3,111 --
Foreign exchanges
Financial 743 -- 1,199 --
Other 1,450 -- 7,930 --
---------- ----------- ---------- -----------
$1,512,989 $ 555,772 $1,519,151 $ 485,759
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
</TABLE>
6
<PAGE>
The following table presents the average fair value of futures, forward and
options contracts during the three months ended September 30, 1998 and 1997,
respectively.
<TABLE>
<CAPTION>
1998 1997
-------------------------- --------------------------
Assets Liabilities Assets Liabilities
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Futures Contracts:
Domestic exchanges
Financial $ 287,324 $ 5,530 $ 340,147 $ 5,672
Currencies 195,917 39,196 114,461 5,405
Other 149,643 37,536 72,164 17,909
Foreign exchanges
Financial 645,162 41,263 500,005 20,563
Other 9,702 289,516 136,408 135,827
Forward Contracts:
Currencies 318,380 480,174 575,888 459,423
Other -- 21,484 2,752 --
Options Contracts:
Domestic exchanges
Financial -- -- 5,356 --
Currencies -- -- 700 --
Foreign exchanges
Other 1,003 -- 19,612 --
---------- ----------- ---------- -----------
$1,607,131 $ 914,699 $1,767,493 $ 644,799
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
</TABLE>
The following table presents trading revenues from futures, forward and
options contracts during the nine and three months ended September 30, 1998 and
1997, respectively.
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
--------------------------------- -------------------------
1998 1997 1998 1997
------------------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Futures Contracts:
Domestic exchanges
Financial $ 865,316 $ 202,688 $1,032,048 $ 226,957
Currencies 188,419 486,240 234,313 353,825
Other 36,222 376,150 (51,738) (14,767)
Foreign exchanges
Financial 4,217,205 549,388 2,428,980 1,057,725
Other (323,319) 220,815 (529,703) (77,892)
Forward Contracts:
Currencies 588,605 1,634,328 254,497 587,480
Other (111,484) 11,009 -- 11,009
Options Contracts:
Domestic exchanges
Financial (90,705) 35,363 2,438 (23,619)
Currencies (66,612) (44,701) -- (16,913)
Other -- (7,757) -- (4,020)
Foreign exchanges
Financial (8,148) (25,079) -- --
Other (5,726) (25,356) (4,013) (17,319)
------------------ ---------- ---------- ----------
$5,289,773 $3,413,088 $3,366,822 $2,082,466
------------------ ---------- ---------- ----------
------------------ ---------- ---------- ----------
</TABLE>
7
<PAGE>
PRUDENTIAL-BACHE OPTIMAX FUTURES FUND, L.P.
(a limited partnership)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership commenced operations on February 15, 1991 with gross proceeds
of $70,309,500. After accounting for organizational and offering expenses, the
Partnership's net proceeds were $62,452,578 for Class A Units and $6,156,925 for
Class B Units. At the inception of the Partnership, 60% of the initial net
proceeds of the Class A Units and 100% of the initial net proceeds of the Class
B Units were allocated to trading activity. The remaining 40% of the initial net
proceeds of the Class A Units was placed in reserve and invested in investment
grade interest-bearing obligations ('Reserve Assets').
On March 31, 1996, the Partnership's letter of credit expired. Additionally,
the Reserve Assets matured on April 1, 1996 and the resulting proceeds were
allocated for commodities trading. As such, 100% of the Partnership's net assets
are currently allocated to commodities trading ('Traded Assets'). Also, on April
1, 1996, in conjunction with the expiration of the letter of credit and maturity
of the Reserve Assets, the General Partner merged the Class A Units and the
Class B Units in accordance with Article X, Section B(16) of the Partnership
Agreement into a newly created Class of Units called the OptiMax Units. Each
Class A Unit was exchanged into one new OptiMax Unit and each Class B Unit was
exchanged into .99467 new OptiMax Unit.
As of September 30, 1998, a significant portion of the Partnership's net
assets were held in U.S. Treasury bills (which represented approximately 72% of
the net assets prior to redemptions payable) and cash, which are used as margin
for the Partnership's trading in commodities. Inasmuch as the sole business of
the Partnership is to trade in commodities, the Partnership continues to own
such liquid assets to be used as margin. The percentage that U.S. Treasury bills
bears to the net assets varies each day, and from month to month, as the market
value 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 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, forward and options contracts.
The Partnership does not have, nor does it expect to have, any capital
assets.
Redemptions by limited partners and the General Partner recorded for the nine
months ended September 30, 1998 were $1,709,358 and $17,123, respectively, and
from commencement of operations, February 15, 1991, through September 30, 1998
totalled $73,599,802 and $796,877, respectively. Future redemptions will impact
the amount of funds available for investment in commodity contracts in
subsequent periods.
In accordance with the Agreement of Limited Partnership, if the Partnership's
net asset value declines below $10 million, the Partnership will dissolve.
Year 2000 Risk
Investment funds, like financial and business organizations and individuals
around the world, depend on the smooth functioning of computer systems. The year
2000, however, holds the potential for a significant disruption in the operation
of these systems. Many computer systems in use today cannot distinguish the
8
<PAGE>
year 2000 from the year 1900 because of the way in which dates are encoded. This
is commonly known as the 'Year 2000 Problem.' The Partnership could be adversely
affected if computer systems used by it or any third party with whom it has a
material relationship do not properly perform date comparisons and calculations
concerning dates on or after January 1, 2000, which in turn could have a
negative impact on the handling or determination of trades and prices and the
services provided to the Partnership.
The Partnership has engaged third parties to perform primarily all of the
services it needs. Accordingly, the Partnership's Year 2000 problems, if any,
are not its own but those that center on the ability of the General Partner,
Prudential Securities Incorporated, its Trading Managers and any other third
party with whom the Partnership has a material relationship (individually, a
'Service Provider,' and collectively, the 'Service Providers') to address and
correct problems that may cause their systems not to function as intended as a
result of the Year 2000 Problem.
The Partnership has received assurances from the General Partner and
Prudential Securities Incorporated that they anticipate being able to continue
their operations without any material adverse impact from the Year 2000 Problem.
Although other Service Providers, such as the Partnership's Trading Managers,
have not made similar representations to the Partnership, the Partnership has no
reason to believe that these Service Providers will not take steps necessary to
avoid any material adverse impact on the Partnership, though there can be no
assurance that this will be the case. The costs or consequences of incomplete or
untimely resolution of the Year 2000 Problem by the Service Providers, or by
governments, exchanges, clearing houses, regulators, banks and other third
parties, are unknown to the Partnership at this time, but could have a material
adverse impact on the operations of the Partnership. The General Partner will
promptly notify the Partnership's limited partners in the event it determines
that the Year 2000 Problem will have a material adverse impact on the
Partnership's operations.
The Partnership has considered various alternatives as a contingency plan. If
the Year 2000 Problems are systemic, for example, the federal government, the
banking system, exchanges or utilities are affected materially, there may be no
adequate contingency plan for the Partnership to follow other than to suspend
operations. If the Year 2000 Problems are related to one or more of the other
Service Providers selected by the Partnership, the Partnership believes that
each such Service Provider is prepared to address any Year 2000 Problems which
arise that could have a material adverse impact on the Partnership's operations.
Results of Operations
The net asset value per OptiMax Unit as of September 30, 1998 was $205.02, an
increase of 22.45% from the December 31, 1997 value of $167.43. Additionally,
the net asset value per Optimax Unit increased 15.85% during the third quarter.
Trading for the third quarter resulted in gains in the financial, currency,
energy and index sectors. The metal, grain and soft sectors experienced losses.
The third quarter was tumultuous throughout the financial world. As the quarter
began, it looked as if Japan might be getting their banks back in order.
Quickly, however, it became apparent that this might not be the case as
investors began to think that the situation in Japan might spill over into the
world economy. Russia's devaluation of the ruble, and its decision to suspend
debt payment to avoid default further compounded economic concerns. Japanese and
Russian events heightened investors' fears about the future of the world
economy. This caused a 'flight to quality' resulting in rising global government
bond prices, profiting the Partnership's long Japanese, German, British and
Eurodollar bond positions. In the currency sector, the Partnership capitalized
on the continuing slide of the Canadian dollar. Positions in the Japanese yen
were profitable as well. The Partnership incurred some losses during the
quarter, particularly in the metal sector. Positions in base metals lost value
as the price of aluminum and copper failed to find significant direction.
Precious metal exposure also led to losses as both gold and silver prices
reacted to fluctuating fears regarding the world's stock markets.
Interest income from U.S. Treasury bills increased $26,000 and $7,000 for the
nine and three months ended September 30, 1998 as compared to 1997. These
increases are the result of strong trading performance during the first and
third quarter of 1998 which resulted in higher levels of investments in U.S.
Treasury bills.
Commissions are calculated on the Traded Assets on the first day of each
month and, therefore, vary due to trading performance and redemptions.
Commissions increased $68,000 and $17,000 for the nine and three months ended
September 30, 1998 as compared to 1997 due to the effect of strong trading
performance during the latter part of 1997 and continued positive trading
performance during 1998, partially offset by redemptions, on the monthly Traded
Assets.
9
<PAGE>
Other transaction fees consist of National Futures Association, exchange and
clearing fees which are based on the number of trades the Trading Managers
execute. Other transaction fees increased $17,000 for the nine months ended
September 30, 1998 as compared to 1997 but decreased $1,000 for the three months
ended September 30, 1998 as compared to 1997 due to fluctuations in trading
volume.
Through April 1997, all trading decisions for the Partnership were made by
Willowbridge, Chesapeake Capital Corporation ('Chesapeake'), Tamiso and Hyman
Beck & Company Inc. (the 'Trading Managers'). Effective May 1997, Eagle Trading
Systems, Inc. ('Eagle') replaced Chesapeake as a Trading Manager for the
Partnership. Additionally, during July 1998, Willowbridge ceased to serve as a
Trading Manager to the Partnership. All assets previously managed by
Willowbridge were reallocated to Tamiso. The monthly management fee paid to
Tamiso equals 1/6 of 1% (a 2% annual rate) of its Traded Assets as compared to
1/4 of 1% (a 3% annual rate) paid to Willowbridge. The quarterly incentive fee
paid to Tamiso equals 17% of the New High Net Trading Profits (as defined in the
Advisory Agreement among the Partnership, the General Partner and Tamiso) as
compared to 20% of the New High Net Trading Profits paid to Willowbridge.
Management fees are calculated on the portion of the Traded Assets allocated
to each Trading Manager at the end of the month, and, therefore, are affected by
trading performance and redemptions. Management fees increased $6,000 and $2,000
for the nine and three months ended September 30, 1998 as compared to 1997.
These increases are primarily due to the effect of strong trading performance
during 1998 offset, in part, by redemptions and a reduction in the rate paid to
Tamiso as compared to Willowbridge, as discussed above.
Incentive fees are based on the New High Net Trading Profits generated by
each Trading Manager, as defined in the Advisory Agreement among the
Partnership, the General Partner and each Trading Manager. Incentive fees were
paid to each Trading Manager during 1998 and 1997 with the exception of
Willowbridge who did not earn an incentive fee during 1998. Incentive fees
increased $487,000 and $344,000 for the nine and three months ended September
30, 1998 as compared to 1997 due primarily to stronger trading performance
during 1998.
General and administrative expenses decreased $38,000 and $9,000 for the nine
and three months ended September 30, 1998 as compared to 1997. These expenses
include reimbursements 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.
10
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings--There are no material legal proceedings pending by or
against the Registrant or the General Partner.
Item 2. Changes in Securities--None
Item 3. Defaults Upon Senior Securities--None
Item 4. Submission of Matters to a Vote of Security Holders--None
Item 5. Other Information--None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<S> <C>
3.1 Agreement of Limited Partnership of the Partnership, dated as of July 12, 1990 as amended
and as of October 3, 1990 (incorporated by reference to Exhibit A to the Registrant's
4.1 Registration Statement on Form S-1, File No. 33-36216)
4.2 Subscription Agreement (incorporated by reference to Exhibit E to the Registrant's
Registration Statement on Form S-1, File No. 33-36216)
4.3 Request for Redemption (incorporated by reference to Exhibit B to the Registrant's
Registration Statement on Form S-1, File No. 33-36216)
4.4 Request for Exchange (incorporated by reference to Exhibit B to the Registrant's
Registration Statement on Form S-1, File No. 33-36216)
27.1 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K--None
</TABLE>
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRUDENTIAL-BACHE OPTIMAX FUTURES FUND, L.P.
By: Seaport Futures Management, Inc.
A Delaware corporation, General Partner
By: /s/ Steven Carlino Date: November 13, 1998
----------------------------------------
Steven Carlino
Vice President
Chief Accounting Officer for the Registrant
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for Prudential-Bache OptiMax Futures
Fund, LP and is qualified in its entirety by
reference to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000866533
<NAME> Prudential-Bache OptiMax Futures Fund, LP
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-1-1998
<PERIOD-END> Sep-30-1998
<PERIOD-TYPE> 9-Mos
<CASH> 4,066,908
<SECURITIES> 14,620,186
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 18,687,094
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 18,687,094
<CURRENT-LIABILITIES> 1,482,974
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 17,204,120
<TOTAL-LIABILITY-AND-EQUITY> 18,687,094
<SALES> 0
<TOTAL-REVENUES> 5,753,541
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,409,142
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,344,399
<EPS-PRIMARY> 36.92
<EPS-DILUTED> 0
</TABLE>
