<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 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
- --------------------------------------------------------------------------------
(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
Securities registered pursuant to Section 12(b) of the Act:
None
- ------------------------------------------------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
- -------------------------------------------------------------------------------
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes CK No _
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[ ]
DOCUMENTS INCORPORATED BY REFERENCE
Agreement of Limited Partnership of the Registrant, dated July 12, 1990,
included as part of the Registration Statement on Form S-1 (File No. 33-36216)
filed with the Securities and Exchange Commission on August 3, 1990 pursuant to
Rule 424(b) of the Securities Act of 1933, and amended on October 3, 1990 and
November 5, 1990, is incorporated by reference into Part IV of this Annual
Report on 10-K
Registrant's Annual Report to Limited Partners for the year ended December
31, 1998 is incorporated by reference into Parts II and IV of this Annual Report
on Form 10-K
Index to exhibits can be found on pages 9 through 11.
<PAGE>
PRUDENTIAL-BACHE OPTIMAX FUTURES FUND, L.P.
(a limited partnership)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I PAGE
<S> <C> <C>
Item 1 Business......................................................................... 3
Item 2 Properties....................................................................... 4
Item 3 Legal Proceedings................................................................ 4
Item 4 Submission of Matters to a Vote of Limited Partners.............................. 4
PART II
Item 5 Market for the Registrant's Units and Related Limited Partner Matters............ 4
Item 6 Selected Financial Data.......................................................... 5
Item 7 Management's Discussion and Analysis of Financial Condition and Results of
Operations..................................................................... 6
Item 7A Quantitative and Qualitative Disclosures About Market Risk....................... 6
Item 8 Financial Statements and Supplementary Data...................................... 6
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure..................................................................... 6
PART III
Item 10 Directors and Executive Officers of the Registrant............................... 6
Item 11 Executive Compensation........................................................... 8
Item 12 Security Ownership of Certain Beneficial Owners and Management................... 8
Item 13 Certain Relationships and Related Transactions................................... 8
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K.................. 9
Financial Statements and Financial Statement Schedules........................... 9
Exhibits......................................................................... 9
Reports on Form 8-K.............................................................. 11
SIGNATURES.................................................................................. 12
2
<PAGE>
PART I
Item 1. Business
General
Prudential-Bache OptiMax Futures Fund, L.P. (the 'Registrant'), a Delaware
limited partnership, was formed on July 12, 1990 and will terminate on December
31, 2010 unless terminated sooner under the provisions of the Agreement of
Limited Partnership (the 'Partnership Agreement'), as amended. The Registrant
was formed to engage in speculative trading of a portfolio consisting primarily
of commodity futures, forward and options contracts. On February 15, 1991, the
Registrant completed its offering of units and raised $64,000,000 of Class A
units and $6,309,500 of Class B units from the sale of 633,563 Class A and
62,470 Class B units of limited partnership interest and 6,437 Class A and 625
Class B units of general partnership interest (the 'Class A Units' and the
'Class B Units,' and collectively, the 'Units') which resulted in net proceeds
to the Registrant of $68,609,503. The Registrant's fiscal year for book and tax
purposes ends on December 31.
Through March 31, 1996, the Registrant maintained two classes (each a
'Class') of Units. At the inception of the Registrant, 60% of the net asset
value of the Class A Units and 100% of the net asset value of the Class B units
were allocated to commodities trading (the 'Traded Assets'). As a protective
device in conjunction with the letter of credit (see further discussion below),
the remaining 40% was placed in reserve (the 'Reserve Assets') and was not
committed to commodities trading until March 31, 1996 (the 'Capital Return
Date'). On the Capital Return Date, the letter of credit expired and the Reserve
Assets were allocated evenly to Robert M. Tamiso ('Tamiso') and Hyman Beck &
Company, Inc. ('Hyman Beck'), new independent commodities trading managers to
the Registrant.
On April 1, 1996, in conjunction with the expiration of the letter of credit
and maturity of the Reserve Assets as discussed above, 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.
All trading decisions for the Registrant are currently being made by Eagle
Trading Systems, Inc. ('Eagle'), Tamiso and Hyman Beck. Effective May 1, 1997,
all assets previously managed by Chesapeake Capital Corporation ('Chesapeake')
were reallocated to Eagle pursuant to its Eagle-Global System trading program.
The monthly management fee paid to Eagle equals 1/6 of 1% (a 2% annual rate) of
its Traded Assets as compared to 5/24 of 1% (a 2.5% annual rate) paid to
Chesapeake. The quarterly incentive fee paid to Eagle equals 23% of the New High
Net Trading Profits (as defined in the Advisory Agreement among the Registrant,
the General Partner and Eagle) as compared to 17% of the New High Net Trading
Profits paid to Chesapeake. During July 1998, Willowbridge Associates Inc.
('Willowbridge') ceased to serve as a trading manager to the Registrant. 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 Registrant, the
General Partner and Tamiso) as compared to 20% of the New High Net Trading
Profits paid to Willowbridge. The general partner retains the authority to
override trading instructions that violate the Registrant's trading policies.
The Registrant is engaged solely in the business of commodity futures,
forward and options trading; therefore, presentation of industry segment
information is not applicable.
Letter of Credit
An irrevocable letter of credit ('Letter of Credit') was issued in favor of
the Partnership by Citibank, N.A. (the 'Bank') on February 15, 1991. The Letter
of Credit was intended to provide protection to the Class A limited partners
against loss of their initial investment as of the Capital Return Date when the
limited partners had the option to redeem their Class A Units and receive the
greater of the then current net asset
3
<PAGE>
value per Class A Unit or 100% of their initial investment. The Letter of Credit
expired on the Capital Return Date (with no payment required by the Bank) and
does not provide protection thereafter.
General Partner
The general partner of the Registrant is Seaport Futures Management, Inc.
(the 'General Partner'), which is an affiliate of Prudential Securities
Incorporated ('PSI'), the Registrant's commodity broker. Both the General
Partner and PSI are wholly owned subsidiaries of Prudential Securities Group
Inc. ('PSGI'). The General Partner is required to maintain at least a one
percent interest in the Registrant as long as it is acting as the Registrant's
General Partner.
Competition
The General Partner has formed and may continue to form various entities to
engage in the speculative trading of futures, forward and options contracts
which, in part, have certain of the same investment policies as the Registrant.
The Registrant is a closed-end fund which does not currently, and does not
intend in the future to, solicit the sale of additional units. As such, the
Registrant does not compete with other entities to attract new fund
participants. However, to the extent that the trading managers recommend similar
or identical trades to the Registrant and other accounts which they manage, the
Registrant may compete with those accounts for the execution of the same or
similar trades.
Employees
The Registrant has no employees. Management and administrative services for
the Registrant are performed by the General Partner and its affiliates pursuant
to the Partnership Agreement as further discussed in Notes A, C and D to the
Registrant's annual report to limited partners for the year ended December 31,
1998 ('Registrant's 1998 Annual Report') which is filed as an exhibit hereto.
Item 2. Properties
The Registrant does not own or lease any property.
Item 3. Legal Proceedings
There are no material legal proceedings pending by or against the Registrant
or the General Partner.
Item 4. Submission of Matters to a Vote of Limited Partners
None
PART II
Item 5. Market for the Registrant's Units and Related Limited Partner Matters
Information with respect to the offering of Units is incorporated by
reference to Note A to the Registrant's 1998 Annual Report, which is filed as an
exhibit hereto.
A significant secondary market for the Units has not developed, and it is not
expected that one will develop in the future. There are also certain
restrictions set forth in the Partnership Agreement limiting the ability of a
partner to transfer Units. The Partnership Agreement does, however, provide that
a limited partner may redeem its units as of the last business day of any full
calendar quarter at the then current net asset value per Unit. Consequently,
holders of Units may not be able to liquidate their investments in the event of
an emergency or any other reason.
There are no material restrictions upon the Registrant's present or future
ability to make distributions in accordance with the provisions of the
Partnership Agreement. No distributions have been made since inception and no
distributions are anticipated in the future.
As of March 4, 1999, there were 808 holders of record owning 82,744.579
OptiMax Units which include 828 units of general partnership interest.
4
<PAGE>
Item 6. Selected Financial Data
The following table presents selected financial data of the Registrant. This
data should be read in conjunction with the financial statements of the
Registrant and the notes thereto on pages 2 through 13 of the Registrant's 1998
Annual Report which is filed as an exhibit hereto.
As more fully discussed in Item 1 Business, through March 31, 1996, limited
partners owned Class A Units and/or Class B Units and, accordingly, separate
financial data is presented for Class A Units and Class B Units through such
date. On April 1, 1996, each Class A Unit was exchanged into one new OptiMax
Unit and each Class B Unit was exchanged into .99467 new OptiMax Unit.
Accordingly, all references to per unit data in prior periods have been
restated. In accordance with the Partnership Agreement, combined financial
statements for the Class A and Class B Units are presented in the 'Combined
Units' columns and collectively, with the OptiMax Units, in the 'Total Units'
columns.
</TABLE>
<TABLE>
<CAPTION>
OptiMax Units
----------------------------
Year ended December 31,
----------------------------
1998 1997
------------ ------------
<S> <C> <C>
Total revenues (including interest)...................... $ 5,493,048 $ 4,802,183
------------ ------------
------------ ------------
Net income............................................... $ 2,654,129 $ 2,422,998
------------ ------------
------------ ------------
Net income per weighted average OptiMax Unit............. $ 29.85 $ 24.91
------------ ------------
------------ ------------
Total assets............................................. $16,613,057 $16,006,910
------------ ------------
------------ ------------
Net asset value per OptiMax Unit......................... $ 196.79 $ 167.43
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
Nine Months
ended Three Months
December 31, ended Year ended
1996 March 31, December 31,
------------ 1996 1996
OptiMax -------------------------- --------------
Units A Units B Units Total Units
------------ ----------- ----------- --------------
<S> <C> <C> <C> <C>
Total revenues (including interest).......... $ 3,217,314 $ 267,967 $ 35,806 $ 3,521,087
------------ ----------- ----------- --------------
------------ ----------- ----------- --------------
Net income (loss)............................ $ 1,651,464 $ (68,148) $ (32,283) $ 1,551,033
------------ ----------- ----------- --------------
------------ ----------- ----------- --------------
Net income (loss) per weighted average
unit....................................... $ 14.85 $ (.52) $ (2.07)
------------ ----------- -----------
------------ ----------- -----------
Total assets................................. $ 15,537,123
--------------
--------------
Net asset value per OptiMax Unit............. $ 142.51
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
Year ended December 31, 1995
-----------------------------------------
<S> <C> <C> <C>
Combined
A Units B Units Units
----------- ----------- -----------
Total revenues (including interest)...................... $ 2,686,951 $ 448,357 $ 3,135,308
----------- ----------- -----------
----------- ----------- -----------
Net income............................................... $ 1,245,756 $ 159,073 $ 1,404,829
----------- ----------- -----------
----------- ----------- -----------
Net income per weighted average Unit..................... $ 8.40 $ 8.70
----------- -----------
----------- -----------
Total assets............................................. $17,831,277 $ 2,186,780 $20,018,057
----------- ----------- -----------
----------- ----------- -----------
Net asset value per Unit................................. $ 128.12 $ 129.67 $ 128.29
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Year ended December 31, 1994
-----------------------------------------
Combined
A Units B Units Units
----------- ----------- -----------
<S> <C> <C> <C>
Total revenues (including interest)...................... $ 191,659 $ 24,276 $ 215,935
----------- ----------- -----------
----------- ----------- -----------
Net loss................................................. $(1,571,227) $ (345,683) $(1,916,910)
----------- ----------- -----------
----------- ----------- -----------
Net loss per weighted average Unit....................... $ (8.80) $ (14.81)
----------- -----------
----------- -----------
Total assets............................................. $20,012,993 $ 2,693,915 $22,706,908
----------- ----------- -----------
----------- ----------- -----------
Net asset value per Unit................................. $ 119.54 $ 120.52 $ 119.65
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This information is incorporated by reference to pages 14 through 17 of the
Registrant's 1998 Annual Report which is filed as an exhibit hereto.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Information regarding quantitative and qualitative disclosures about market
risk is not required pursuant to Item 305(e) of Regulation S-K.
Item 8. Financial Statements and Supplementary Data
The financial statements are incorporated by reference to pages 2 through 13
of the Registrant's 1998 Annual Report which is filed as an exhibit hereto.
Supplementary data specified by Item 302 of Regulation S-K (selected
quarterly financial data) is not applicable.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
There are no directors or executive officers of the Registrant. The
Registrant is managed by the General Partner.
The General Partner's directors and executive officers, and any persons
holding more than 10% of the Registrant's Units ('Ten Percent Owners') are
required to report their initial ownership of such Units and any subsequent
changes in that ownership to the Securities and Exchange Commission on Forms 3,
4 or 5. Such executive officers, directors and Ten Percent Owners are required
by Securities and Exchange Commission regulations to furnish the Registrant with
copies of all Forms 3, 4 and 5 they file. All of these filing requirements were
satisfied on a timely basis (other than Tamara B. Wright who did not file a Form
3 in a timely manner upon becoming a Director but subsequently filed and is now
current in all filings.) In making these disclosures, the Registrant has relied
solely on written representations of the General Partner's directors and
executive officers and Ten Percent Owners or copies of the reports that they
have filed with the Securities and Exchange Commission during and with respect
to its most recent fiscal year.
6
<PAGE>
The directors and executive officers of Seaport Futures Management, Inc. and
their positions with respect to the Registrant are as follows:
Name Position
Eleanor L. Thomas First Vice President
Barbara J. Brooks Chief Financial Officer
Steven Carlino Vice President, Chief Accounting Officer and
Treasurer
A. Laurence Norton, Jr. Director
Guy S. Scarpaci Director
Tamara B. Wright Senior Vice President and Director
ELEANOR L. THOMAS, age 44, has been a Vice President of Seaport Futures
Management, Inc. and Prudential Securities Futures Management Inc. since April
1993 and a First Vice President since October 1998. She is primarily responsible
for origination, asset allocation, and due diligence for the managed futures
group within PSI. She is also a First Vice President of PSI. Prior to joining
PSI in March 1993, she was with MC Baldwin Financial Company from June 1990
through February 1993 and Arthur Andersen & Co. from 1986 through May 1990. Ms.
Thomas is a certified public accountant.
BARBARA J. BROOKS, age 50, is the Chief Financial Officer of Seaport Futures
Management, Inc. She is a Senior Vice President of PSI. She is also the Chief
Financial Officer of Prudential Securities Futures Management Inc. and serves in
various capacities for other affiliated companies. She has held several
positions within PSI since April 1983. Ms. Brooks is a certified public
accountant.
STEVEN CARLINO, age 35, is a Vice President and Treasurer of Seaport Futures
Management, Inc. He is a First Vice President of PSI. He is also a Vice
President and Treasurer of Prudential Securities Futures Management Inc. and
serves in various capacities for other affiliated companies. Prior to joining
PSI in October 1992, he was with Ernst & Young for six years. Mr. Carlino is a
certified public accountant.
A. LAURENCE NORTON, JR., age 60, is a Director of Seaport Futures Management,
Inc. He is an Executive Vice President of PSI and, since March 1994, has been
the head of the International and Futures Divisions of PSI. He is also a
Director of Prudential Securities Futures Management Inc. From October 1991 to
March 1994, he held the position of Executive Director of Retail Development and
Retail Strategies at PSI. Prior to joining PSI in 1991, Mr. Norton was a Senior
Vice President and Branch Manager of Shearson Lehman Brothers.
GUY S. SCARPACI, age 52, is a Director of Seaport Futures Management, Inc. He is
a First Vice President of the Futures Division of PSI. He is also a Director of
Prudential Securities Futures Management Inc. Mr. Scarpaci has been employed by
PSI in positions of increasing responsibility since August 1974.
TAMARA B. WRIGHT, age 40, is a Senior Vice President and Director of Seaport
Futures Management, Inc. She is a Senior Vice President and Chief Administrative
Officer for the International and Futures Divisions of PSI. She is also a Senior
Vice President and Director of Prudential Securities Futures Management Inc. and
serves in various capacities for other affiliated companies. Prior to joining
PSI in July 1988, she was a manager with Price Waterhouse.
During the fourth quarter of 1998, Steven Carlino replaced Barbara J. Brooks
as Treasurer of Seaport Futures Management, Inc. and Prudential Securities
Futures Management Inc. Additionally, during December 1998, Tamara B. Wright was
elected as a Senior Vice President and Director of Seaport Futures Management,
Inc. and Prudential Securities Futures Management Inc. On March 26, 1999, Thomas
M. Lane, Jr. resigned as President and Director of Seaport Futures Management,
Inc. and Prudential Securities Futures Management Inc.
There are no family relationships among any of the foregoing directors or
executive officers. All of the foregoing directors and/or executive officers
have indefinite terms.
7
<PAGE>
Item 11. Executive Compensation
The Registrant does not pay or accrue any fees, salaries or any other form of
compensation to directors and officers of the General Partner for their
services. Certain directors and officers of the General Partner receive
compensation from affiliates of the General Partner, not from the Registrant,
for services performed for various affiliated entities, which may include
services performed for the Registrant; however, the General Partner believes
that any compensation attributable to services performed for the Registrant is
immaterial. (See also Item 13, Certain Relationships and Related Transactions,
for information regarding compensation to the General Partner.)
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 4, 1999, no director or officer of the General Partner owns
directly or beneficially any interest in the voting securities of the General
Partner.
As of March 4, 1999, no director or officer of the General Partner owns
directly or beneficially any of the units issued by the Registrant.
As of March 4, 1999, one owner of limited partnership units beneficially owns
more than five percent (5%) of the limited partnership units of the Registrant
as follows:
<TABLE>
<CAPTION>
Name and Address Amount
of and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership Class
- ------------------------ ------------------------ ------------------------ -----------
<S> <C> <C> <C>
Units of Limited Carmella Gonzalez 7,360 OptiMax Units 9%
Partnership Interest 13125 East Freeway
Houston, Texas
77015-5803
</TABLE>
Item 13. Certain Relationships and Related Transactions
The Registrant has and will continue to have certain relationships with the
General Partner and its affiliates. However, there have been no direct financial
transactions between the Registrant and the directors or officers of the General
Partner.
Reference is made to Notes A, C and D to the financial statements of the
Registrant's 1998 Annual Report which is filed as an exhibit hereto, which
identify the related parties and discuss the services provided by these parties
and the amounts paid or payable for their services.
8
<PAGE>
PART IV
<TABLE>
<CAPTION>
Page in
Annual Report
<S> <C> <C> <C>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements and Report of Independent
Accountants--incorporated by reference to the Registrant's 1998 Annual
Report which is filed as an exhibit hereto
Report of Independent Accountants 2
Financial Statements:
Statements of Financial Condition--December 31, 1998 and 1997 3
Statements of Operations--Three years ended December 31, 1998 4
Schedule to Statements of Operations--Year ended December 31, 1996 5
Statements of Changes in Partners' Capital--Three years ended December
31, 1998 6
Notes to Financial Statements 7
2. Financial Statement Schedules
All schedules have been omitted because they are not applicable or the
required information is included in the financial statements or notes
thereto.
3. Exhibits
1.1 Underwriting Agreement, dated November 5, 1990, between the Registrant,
Seaport Futures Management, Inc. and Prudential-Bache Securities Inc.
(incorporated by reference to Exhibit 1.1 of the Registrant's Annual
Report to Limited Partners for the year ended December 31, 1990 on Form
10-K)
3.1 Agreement of Limited Partnership of the Registrant, dated as of
and November 5, 1990, as amended (incorporated by reference to Exhibit A to
4.1 the Registrant's 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)
10.1 Escrow Agreement, dated November 5, 1990 among the Registrant, Seaport
Futures Management, Inc., Prudential-Bache Securities Inc. and Bankers
Trust Company (incorporated by reference to Exhibit 10.1 of the
Registrant's Annual Report to Limited Partners on Form 10-K for the
year ended December 31, 1990)
10.2 Brokerage Agreement dated February 15, 1991 between the Registrant and
Prudential-Bache Securities Inc. (incorporated by reference to Exhibit
10.2 of the Registrant's Annual Report to Limited Partners on Form 10-K
for the year ended December 31, 1990)
10.3 Advisory Agreement dated November 5, 1990 among the Registrant, Seaport
Futures Management, Inc., Campbell & Company Management, Inc., Chesa-
peake Capital Corporation and Reynwood Trading Corporation
(incorporated by reference to Exhibit 10.3 of the Registrant's Annual
Report to Limited Partners on Form 10-K for the year ended December 31,
1990)
</TABLE>
9
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
10.5 Representation Agreement Concerning the Registration Statement and the
Prospectus, dated November 5, 1990 among the Registrant, Seaport
Futures Management, Inc., Prudential-Bache Securities Inc., Campbell &
Company, Inc., Chesapeake Capital Corporation and Reynwood Trading
Corporation (incorporated by reference to Exhibit 10.5 of the
Registrant's Annual Report to Limited Partners on Form 10-K for the
year ended December 31, 1990)
10.6 Net Worth Agreement, dated November 5, 1990 between Seaport Futures
Management, Inc. and Prudential Securities Group Inc. (incorporated by
reference to Exhibit 10.6 of the Registrant's Annual Report to Limited
Partners on Form 10-K for the year ended December 31, 1990)
10.7 Letter of Credit and Reimbursement Agreement dated November 5, 1990 be-
tween the Registrant, Seaport Futures Management, Inc., Prudential
Securities Group Inc. and Citibank, N.A. (incorporated by reference to
Exhibit 10.7 of the Registrant's Annual Report to Limited Partners on
Form 10-K for the year ended December 31, 1990)
10.8 Secured Demand Note Collateral Agreement dated February 15, 1991
between Seaport Futures Management, Inc. and Prudential Securities
Group Inc. (incorporated by reference to Exhibit 10.8 of the
Registrant's Annual Report to Limited Partners on Form 10-K for the
year ended December 31, 1990)
10.9 Amendment No. 1 to Letter of Credit and Reimbursement Agreement dated
March 28, 1991 between the Registrant, Seaport Futures Management,
Inc., Prudential Securities Group Inc. and Citibank, N.A. (incorporated
by reference to Exhibit 10 of the Quarterly Report on Form 10-Q for the
period ended March 31, 1993)
10.10 Amendment No. 2 to Letter of Credit and Reimbursement Agreement dated
April 15, 1993 between the Registrant, Citibank, N.A., Seaport Futures
Management, Inc. and Prudential Securities Group Inc. (incorporated by
reference to Exhibit 10.1 of the Registrant's Quarterly Report on Form
10-Q for the period ended March 31, 1993)
10.11 Addendum to Advisory Agreement dated December 1, 1994 between the
Registrant, Seaport Futures Management, Inc. and Chesapeake Capital
Corporation (incorporated by reference to Exhibit 10.11 of the
Registrant's Quarterly Report on Form 10-Q for the period ended June
30, 1995)
10.12 Advisory Agreement dated July 17, 1995 between the Registrant, Seaport
Futures Management, Inc. and Willowbridge Associates Inc. (incorporated
by reference to Exhibit 10.12 of the Registrant's Quarterly Report on
Form 10-Q for the period ended June 30, 1995)
10.13 Advisory Agreement dated April 1, 1996 between the Registrant, Seaport
Futures Management, Inc. and Robert M. Tamiso (incorporated by
reference to Exhibit 10.13 of the Registrant's Quarterly Report on Form
10-Q for the period ended March 31, 1996)
10.14 Advisory Agreement dated April 1, 1996 between the Registrant, Seaport
Futures Management, Inc. and Hyman Beck & Company, Inc. (incorporated
by reference to Exhibit 10.14 of the Registrant's Quarterly Report on
Form 10-Q for the period ended March 31, 1996)
10.15 Form of Foreign Currency Addendum to Brokerage Agreement between the
Registrant and Prudential Securities Incorporated (incorporated by
reference to Exhibit 10.15 of the Registrant's Quarterly Report on Form
10-Q for the period ended March 31, 1996)
</TABLE>
10
<PAGE>
<TABLE>
<S> <C> <C> <C>
10.16 Advisory Agreement dated May 15, 1997 between the Registrant, Seaport
Futures Management, Inc. and Eagle Trading Systems, Inc. (incorporated
by reference to Exhibit 10.16 of the Registrant's Quarterly Report on
Form 10-Q for the period ended March 31, 1997)
13 Registrant's 1998 Annual Report (with the exception of the information
and data incorporated by reference in Items 5, 7 and 8 of this Annual
Report on Form 10-K, no other information or data appearing in the
Registrant's 1998 Annual Report is to be deemed filed as part of this
report) (filed herewith)
27 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the last quarter of the period
covered by this report.
</TABLE>
11
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Prudential-Bache OptiMax Futures Fund, L.P.
By: Seaport Futures Management, Inc.
A Delaware corporation, General Partner
By: /s/ Steven Carlino Date: March 31, 1999
--------------------------------------------
Steven Carlino
Vice President, Chief Accounting Officer
and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities (with respect to the General Partner) and on
the dates indicated.
By: Seaport Futures Management, Inc.
A Delaware corporation, General Partner
By: /s/ Eleanor L. Thomas Date: March 31, 1999
----------------------------------------------
Eleanor L. Thomas
First Vice President
By: /s/ Barbara J. Brooks Date: March 31, 1999
----------------------------------------------
Barbara J. Brooks
Chief Financial Officer
By: /s/ Steven Carlino Date: March 31, 1999
----------------------------------------------
Steven Carlino
Vice President and Treasurer
By: Date:
----------------------------------------------
A. Laurence Norton, Jr.
Director
By: /s/ Guy S. Scarpaci Date: March 31, 1999
----------------------------------------------
Guy S. Scarpaci
Director
By: /s/ Tamara B. Wright Date: March 31, 1999
----------------------------------------------
Tamara B. Wright
Senior Vice President and Director
12
<PAGE>
1998
- --------------------------------------------------------------------------------
Prudential-Bache Annual
OptiMax Futures Fund, L.P. Report
<PAGE>
LETTER TO LIMITED PARTNERS FOR
PRUDENTIAL-BACHE OPTIMAX FUTURES FUND, L.P.
1
<PAGE>
PricewaterhouseCoopers (LOGO)
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Telephone (212) 596 8000
Facsimile (212) 596 8910
Report of Independent Accountants
January 26, 1999
To the General Partner and
Limited Partners of
Prudential-Bache OptiMax Futures Fund, L.P.
In our opinion, the accompanying statements of financial condition and the
related statements of operations and changes in partners' capital present
fairly, in all material respects, the financial position of Prudential-Bache
OptiMax Futures Fund, L.P. at December 31, 1998 and 1997, and the results of its
operations for each of the three years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the general partner; our responsibility is
to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by the general
partner, and evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
2
<PAGE>
PRUDENTIAL-BACHE OPTIMAX FUTURES FUND, L.P.
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
December 31,
-----------------------------
<S> <C> <C>
1998 1997
- -----------------------------------------------------------------------------------------------------
ASSETS
Cash $ 3,691,861 $ 2,930,275
U.S. Treasury bills, at amortized cost 12,336,668 11,957,555
Net unrealized gain on open commodity positions 584,528 1,082,273
Options, at market -- 36,807
------------ ------------
Total assets $16,613,057 $16,006,910
------------ ------------
------------ ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable $ 230,441 $ 203,740
Accrued expenses 70,377 100,952
Incentive fees payable -- 85,079
Management fees payable 27,570 28,516
Other transaction fees payable 1,260 2,421
------------ ------------
Total liabilities 329,648 420,708
------------ ------------
Commitments
Partners' capital
Limited partners (81,916.579 and 92,158.661 OptiMax Units
outstanding) 16,120,466 15,430,323
General partner (828 and 931 OptiMax Units outstanding) 162,943 155,879
------------ ------------
Total partners' capital 16,283,409 15,586,202
------------ ------------
Total liabilities and partners' capital $16,613,057 $16,006,910
------------ ------------
------------ ------------
Net asset value per limited and general partnership units (the
'OptiMax Units') $ 196.79 $ 167.43
------------ ------------
------------ ------------
- -----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
3
<PAGE>
PRUDENTIAL-BACHE OPTIMAX FUTURES FUND, L.P.
(a limited partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
OptiMax Units Total
------------------------- Units
----------
Year ended December 31,
----------------------------------------
<S> <C> <C> <C>
1998 1997 1996
- ----------------------------------------------------------------------------------------------------
REVENUES
Net realized gain on commodity transactions $5,398,731 $3,646,141 $3,249,181
Change in net unrealized gain on open commodity positions (510,717) 571,523 (376,934)
Change in unrealized gain on reserve assets -- -- (44,012)
Interest from U.S. Treasury bills 605,034 584,519 542,880
Interest from reserve assets -- -- 147,823
Realized gain on reserve assets -- -- 2,149
---------- ---------- ----------
5,493,048 4,802,183 3,521,087
---------- ---------- ----------
EXPENSES
Commissions 1,296,436 1,191,476 1,116,092
Other transaction fees 71,761 62,540 66,954
Letter of credit fees -- -- 36,621
Management fees 345,315 338,498 346,071
Incentive fees 1,012,240 609,850 186,834
General and administrative 113,167 176,821 214,278
Amortization of organizational costs -- -- 3,204
---------- ---------- ----------
2,838,919 2,379,185 1,970,054
---------- ---------- ----------
Net income $2,654,129 $2,422,998 $1,551,033
---------- ---------- ----------
---------- ---------- ----------
ALLOCATION OF NET INCOME
Limited partners $2,627,581 $2,398,743 $1,538,489
---------- ---------- ----------
---------- ---------- ----------
General partner $ 26,548 $ 24,255 $ 12,544
---------- ---------- ----------
---------- ---------- ----------
NET INCOME PER WEIGHTED AVERAGE LIMITED AND
GENERAL PARTNERSHIP UNIT
Net income per weighted average limited and general
partnership unit $ 29.85 $ 24.91
---------- ----------
---------- ----------
Weighted average number of limited and general
partnership units outstanding 88,924 97,287
---------- ----------
---------- ----------
- ----------------------------------------------------------------------------------------------------
The accompanying schedule and notes are an integral part of these statements.
</TABLE>
4
<PAGE>
PRUDENTIAL-BACHE OPTIMAX FUTURES FUND, L.P.
(a limited partnership)
SCHEDULE TO STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
OptiMax Class A Class B Total
Units Units Units Units
------------- -------- -------- -------------
<S> <C> <C> <C> <C>
Nine months
ended Three months ended Year ended
December 31, March 31, December 31,
1996 1996 1996
- --------------------------------------------------------------------------------------------------------
REVENUES
Net realized gain on commodity transactions $ 2,787,947 $378,211 $ 83,023 $ 3,249,181
Change in net unrealized gain on open
commodity positions (1,118) (308,169) (67,647) (376,934)
Change in net unrealized gain on reserve
assets -- (44,012) -- (44,012)
Interest from U.S. Treasury bills 430,485 91,965 20,430 542,880
Interest from reserve assets -- 147,823 -- 147,823
Realized gain on reserve assets -- 2,149 -- 2,149
------------- -------- -------- -------------
3,217,314 267,967 35,806 3,521,087
------------- -------- -------- -------------
EXPENSES
Commissions 893,683 182,042 40,367 1,116,092
Other transaction fees 46,178 17,037 3,739 66,954
Letter of credit fees -- 36,621 -- 36,621
Management fees 272,742 60,015 13,314 346,071
Incentive fees 186,834 -- -- 186,834
General and administrative 166,413 37,542 10,323 214,278
Amortization of organizational costs -- 2,858 346 3,204
------------- -------- -------- -------------
1,565,850 336,115 68,089 1,970,054
------------- -------- -------- -------------
Net income (loss) $ 1,651,464 $(68,148) $(32,283) $ 1,551,033
------------- -------- -------- -------------
------------- -------- -------- -------------
ALLOCATION OF NET INCOME (LOSS)
Limited partners $ 1,634,928 $(65,441) $(30,998) $ 1,538,489
------------- -------- -------- -------------
------------- -------- -------- -------------
General partner $ 16,536 $ (2,707) $ (1,285) $ 12,544
------------- -------- -------- -------------
------------- -------- -------- -------------
NET INCOME (LOSS) PER WEIGHTED AVERAGE
LIMITED AND GENERAL PARTNERSHIP UNIT
Net income (loss) per weighted average
limited and general partnership unit $ 14.85 $ (.52) $ (2.07)
------------- -------- --------
------------- -------- --------
Weighted average number of limited and
general partnership units outstanding 111,224 130,224 15,619
------------- -------- --------
------------- -------- --------
- --------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of this schedule.
</TABLE>
5
<PAGE>
PRUDENTIAL-BACHE OPTIMAX FUTURES FUND, L.P.
(a limited partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
<CAPTION>
CLASS A LIMITED GENERAL
UNITS PARTNERS PARTNER TOTAL
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Partners' capital--December 31, 1995 130,224.001 $ 16,016,742 $ 667,499 $ 16,684,241
Net loss -- (65,441) (2,707) (68,148)
Redemptions (27,518.000) (2,977,674) (533,623) (3,511,297)
------------- ------------ --------- ------------
Partners' capital--March 31, 1996 102,706.001 12,973,627 131,169 13,104,796
Merger into OptiMax Units (102,706.001) (12,973,627) (131,169) (13,104,796)
------------- ------------ --------- ------------
Partners' capital--April 1, 1996 -- $ -- $ -- $ --
------------- ------------ --------- ------------
------------- ------------ --------- ------------
<CAPTION>
CLASS B LIMITED GENERAL
UNITS PARTNERS PARTNER TOTAL
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Partners' capital--December 31, 1995 15,619.348 $ 1,944,752 $ 80,610 $ 2,025,362
Net loss -- (30,998) (1,285) (32,283)
Redemptions (1,986.356) (191,649) (61,810) (253,459)
------------- ------------ --------- ------------
Partners' capital--March 31, 1996 13,632.992 1,722,105 17,515 1,739,620
Merger into OptiMax Units (13,632.992) (1,722,105) (17,515) (1,739,620)
------------- ------------ --------- ------------
Partners' capital--April 1, 1996 -- $ -- $ -- $ --
------------- ------------ --------- ------------
------------- ------------ --------- ------------
</TABLE>
<TABLE>
<CAPTION>
COMBINED LIMITED GENERAL
UNITS PARTNERS PARTNER TOTAL
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Partners' capital--December 31, 1995 145,843.349 $ 17,961,494 $ 748,109 $ 18,709,603
Net loss -- (96,439) (3,992) (100,431)
Redemptions (29,504.356) (3,169,323) (595,433) (3,764,756)
------------- ------------ --------- ------------
Partners' capital--March 31, 1996 116,338.993 14,695,732 148,684 14,844,416
Merger into OptiMax Units (116,338.993) (14,695,732) (148,684) (14,844,416)
------------- ------------ --------- ------------
Partners' capital--April 1, 1996 -- $ -- $ -- $ --
------------- ------------ --------- ------------
------------- ------------ --------- ------------
<CAPTION>
OPTIMAX LIMITED GENERAL
UNITS PARTNERS PARTNER TOTAL
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Partners' capital--April 1, 1996 116,338.993 $ 14,695,732 $ 148,684 $ 14,844,416
Net income -- 1,634,928 16,536 1,651,464
Redemptions (16,000.234) (2,174,739) (22,140) (2,196,879)
------------- ------------ --------- ------------
Partners' capital--December 31, 1996 100,338.759 14,155,921 143,080 14,299,001
Net income -- 2,398,743 24,255 2,422,998
Redemptions (7,249.098) (1,124,341) (11,456) (1,135,797)
------------- ------------ --------- ------------
Partner's capital--December 31, 1997 93,089.661 15,430,323 155,879 15,586,202
Net income -- 2,627,581 26,548 2,654,129
Redemptions (10,345.082) (1,937,438) (19,484) (1,956,922)
------------- ------------ --------- ------------
Partner's capital--December 31, 1998 82,744.579 $ 16,120,466 $ 162,943 $ 16,283,409
------------- ------------ --------- ------------
------------- ------------ --------- ------------
- ------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
6
<PAGE>
PRUDENTIAL-BACHE OPTIMAX FUTURES FUND, L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
A. General
Prudential-Bache OptiMax Futures Fund, L.P. (the 'Partnership') is a Delaware
limited partnership formed on July 12, 1990 to engage in the speculative trading
of commodity futures, forward and options contracts. The Partnership will
terminate on December 31, 2010 unless ended sooner under the provisions of the
Agreement of Limited Partnership, as amended (the 'Partnership Agreement').
These provisions, as set forth in Article XVII of the Partnership Agreement
include, but are not limited to, the dissolution of the Partnership if the
Partnership's net asset value declines to less than $10 million as of the end of
any business day. On February 15, 1991, the Partnership completed its offering
of units and raised $64,000,000 of Class A units and $6,309,500 of Class B units
from the sale of 633,563 Class A and 62,470 Class B units of limited partnership
interest and 6,437 Class A and 625 Class B units of general partnership interest
and commenced operations.
The general partner of the Partnership is Seaport Futures Management, Inc.
(the 'General Partner') which is an affiliate of Prudential Securities
Incorporated ('PSI'), the Partnership's commodity broker. Both the General
Partner and PSI are wholly owned subsidiaries of Prudential Securities Group
Inc. ('PSGI'). The General Partner is required to maintain at least a one
percent interest in the Partnership as long as it is acting as the Partnership's
general partner.
Through March 31, 1996, the Partnership maintained two classes (each a
'Class') of units. Sixty percent of the initial net asset value of the Class A
Units and 100% of the initial net asset value of the Class B units were
deposited in the Partnership's trading accounts for commodity trading purposes
(referred to as the Partnership's 'Traded Assets'). The remaining 40% of the
initial net asset value of the Class A Units ('Class A Reserve Assets') was held
in reserve as a protective device in conjunction with the letter of credit (see
discussion below) and invested in U.S. Government interest-bearing obligations,
zero coupon bonds and a Guaranteed Investment Contract ('GIC'). The General
Partner generally maintains not less than 75% of the Partnership's Traded Assets
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. The remaining 25% of the
Partnership's Traded Assets is held in cash in the Partnership's commodity
trading accounts.
An irrevocable letter of credit ('Letter of Credit') was issued in favor of
the Partnership by Citibank, N.A. (the 'Bank') on February 15, 1991. The Letter
of Credit was intended to provide protection to the Class A limited partners
against loss of their initial investment as of March 31, 1996 (the 'Capital
Return Date') when the limited partners had the option to redeem their Class A
units and receive the greater of the then current net asset value per Class A
unit or one hundred percent of their initial investment. The Letter of Credit
expired on the Capital Return Date (with no payment required by the Bank) and
does not provide protection thereafter. The Reserve Assets held in connection
with the Letter of Credit matured on April 1, 1996 and their proceeds were
allocated evenly to Robert M. Tamiso ('Tamiso') and Hyman Beck & Company, Inc.
('Hyman Beck'), new independent commodities trading managers to the Partnership.
On April 1, 1996, in conjunction with the expiration of the Letter of Credit
and maturity of the Reserve Assets as discussed above, 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.
Accordingly, all references in the financial statements to outstanding units and
per unit data in prior periods have been restated to reflect the merger.
Prior to April 1, 1996, trading gains and losses and expenses (other than
those expenses that are particular to Class A units) were allocated between the
Class A units and Class B units based upon the pro rata portion of the
Partnership's Traded Assets to each Class. The allocation was adjusted quarterly
to take into account the effect of redemptions. The allocation between the Class
A units and Class B units was 82% and 18%, respectively, during the quarter
ended March 31, 1996.
Through March 31, 1996, limited partners owned Class A units and/or Class B
units and, accordingly, separate financial statements are presented for Class A
units and Class B units through such date. In
7
<PAGE>
accordance with the Partnership Agreement, combined financial statements for the
Class A and Class B units are presented in the 'Combined Units' columns and
collectively, with the OptiMax Units, in the 'Total Units' columns.
All trading decisions for the Partnership are currently being made by Eagle
Trading Systems, Inc. ('Eagle'), Tamiso and Hyman Beck. Effective May 1, 1997,
all assets managed by Chesapeake Capital Corporation ('Chesapeake') were
reallocated to Eagle pursuant to its Eagle-Global System trading program. The
monthly management fee paid to Eagle equals 1/6 of 1% (a 2% annual rate) of its
traded assets as compared to 5/24 of 1% (a 2.5% annual rate) paid to Chesapeake.
The quarterly incentive fee paid to Eagle equals 23% of the New High Net Trading
Profits (as defined in the Advisory Agreement among the Partnership, the General
Partner and Eagle) as compared to 17% of the New High Net Trading Profits paid
to Chesapeake. 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 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. The General Partner retains the authority to override trading
instructions that violate the Partnership's trading policies.
B. Summary of Significant Accounting Policies
Basis of accounting
The books and records of the Partnership are maintained on the accrual basis
of accounting in accordance with generally accepted accounting principles.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the General Partner to make estimates and
assumptions that affect the reported amounts of liabilities at the date of the
financial statements and the reported amounts of expenses during the reporting
period. Actual results could differ from those estimates.
Commodity futures and forward transactions are reflected in the accompanying
statements of financial condition on trade date. The difference between the
original contract amount and market value of futures and forward contracts is
reflected as net unrealized gain or loss. Options transactions are reflected in
the statements of financial condition at market value which is inclusive of the
net unrealized gain or loss. The market value of each contract is based upon the
closing quotation on the exchange, clearing firm or bank on, or through, which
the contract is traded.
To the extent practicable, the Partnership invests a significant portion of
its Traded Assets in U.S. Treasury bills which are often used to fulfill margin
requirements. U.S. Treasury bills are carried at amortized cost, which
approximates market. Interest on the Reserve Asset accrued for the benefit of
the Class A unitholders and all other interest on interest-bearing assets
accrues for the benefit of the Partnership.
The weighted average number of limited and general partnership units
outstanding was computed for purposes of disclosing net income (loss) per
weighted average limited and general partnership unit. The weighted average
limited and general partnership units are equal to the number of units
outstanding at year end, adjusted proportionately for the units redeemed based
on their respective time outstanding during such year.
The Partnership has elected not to provide a Statement of Cash Flows as
permitted by Statement of Financial Accounting Standards No. 102, 'Statement of
Cash Flows--Exemption of Certain Enterprises and Classification of Cash Flows
from Certain Securities Acquired for Resale.'
Income taxes
The Partnership is not required to provide for, or pay, any Federal or state
income taxes. Income tax attributes that arise from the Partnership's operations
are passed directly to the individual partners. The Partnership may be subject
to other state and local taxes in jurisdictions in which it operates.
8
<PAGE>
Profit and loss allocations, distributions, redemptions and exchanges
Net realized profits or losses for tax purposes are allocated first to
partners who redeem units to the extent the amounts received on redemption are
greater than or are less than the amounts paid for the redeemed units by the
partners. Net realized profits or losses remaining after these allocations are
allocated to each partner in proportion to such partner's capital account at
year-end. Net income or loss for financial reporting purposes is allocated
quarterly to all partners on a pro rata basis based on each partner's number of
units outstanding during the quarter.
Distributions (other than redemptions of units) are made at the sole
discretion of the General Partner on a pro rata basis in accordance with the
respective capital accounts of the partners. No distributions have been made
since inception.
The Partnership Agreement provides that a partner may redeem its units as of
the last business day of any full calendar quarter at the then current net asset
value per unit.
New Accounting Guidance
In June 1998, the Financial Accounting Standards Board issued Statement No.
133, Accounting for Derivative Instruments and Hedging Activities ('SFAS 133'),
which the Partnership is required to adopt effective January 1, 2000. SFAS 133
establishes accounting and reporting standards for derivative instruments and
for hedging activities and requires that an entity recognize all derivatives as
assets or liabilities measured at fair value. The Partnership does not believe
the effect of adoption will be material.
C. Costs, Fees and Expenses
Organizational costs
Costs incurred to organize the Partnership, including but not limited to,
legal, accounting, registration fees and certain printing costs, were considered
deferred organizational costs. These costs were capitalized and amortized over a
60-month period ending in 1996.
Commissions
The General Partner, on behalf of the Partnership, entered into an agreement
with PSI to act as commodity broker for the Partnership. The Partnership pays
PSI commissions at a rate of 2/3 of 1% per month (an 8% annual rate) of the
Partnership's Traded Assets as of the first day of each month. In addition, the
Partnership is obligated to pay the National Futures Association, floor
brokerage, exchange and clearing fees incurred in connection with the
Partnership's commodity trading activities.
Letter of Credit fees
Through March 31, 1996, Letter of Credit fees were calculated as follows: (i)
.0007291 (an annualized rate of 7/8 of 1%) of the outstanding Letter of Credit
amount as of the first day of each month was due to the Bank for issuing and
maintaining the Letter of Credit and (ii) .0002083 (an annualized rate of 1/4 of
1%) of the outstanding Letter of Credit amount as of the first day of each month
was due to PSGI for being obligated to make payment of the General Partner's
repayment obligation in the event the General Partner was unable to do so.
Following the expiration of the Letter of Credit on March 31, 1996 (see Note A),
the Partnership was no longer obligated to pay these fees.
Management and incentive fees
The Partnership pays each trading manager a monthly management fee of 1/6 of
1% (a 2% annual rate) of the portion of the Traded Assets allocated to each
trading manager as of the end of each month.
In addition, the Partnership pays each trading manager a quarterly incentive
fee ranging from 17% to 23% of the 'New High Net Trading Profits' generated by
each trading manager (as defined in the Advisory Agreements among the
Partnership, the General Partner and each trading manager).
See Note A for further information concerning changes to management and
incentive fees during 1998 and 1997.
9
<PAGE>
<PAGE>
General and administrative expenses
In addition to the costs, fees and expenses previously discussed, the
Partnership reimburses the General Partner and its affiliates for actual
Partnership operating expenses payable by, or allocable to, the Partnership. The
amount of reimbursement from the Partnership is limited by the provisions of the
Partnership Agreement. The Partnership also pays amounts directly to unrelated
parties for certain operating expenses.
D. Related Parties
The General Partner and its affiliates perform services for the Partnership
which include, but are not limited to: brokerage and Letter of Credit services;
accounting and financial management; registrar, transfer and assignment
functions; investor communications; printing services and other administrative
services.
The costs incurred for these services for the years ended December 31, 1998,
1997 and 1996 were:
<TABLE>
<CAPTION>
OPTIMAX UNITS TOTAL UNITS
------------------------- -----------
1998 1997 1996
---------- ---------- -----------
<S> <C> <C> <C>
Commissions $1,296,436 $1,191,476 $1,116,092
Letter of Credit fees -- -- 8,138
General and administrative 65,324 80,720 115,589
---------- ---------- -----------
$1,361,760 $1,272,196 $1,239,819
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
Expenses payable to the General Partner and its affiliates (which are
included in accrued expenses) as of December 31, 1998 and 1997 were $15,295 and
$17,761, respectively.
The Partnership's Traded Assets are maintained either in trading or cash
accounts with PSI, the Partnership's commodity broker, 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.
Additionally, the Reserve Assets consisted of an 8.17% GIC which matured on
April 1, 1996 with The Prudential Asset Management Company, Inc., an affiliate
of the General Partner.
E. Income Taxes
The following is a reconciliation of net income for financial reporting
purposes to net income for tax reporting purposes for the years ended December
31, 1998, 1997 and 1996:
<TABLE>
<CAPTION>
OPTIMAX UNITS TOTAL UNITS
------------------------- -----------
1998 1997 1996
---------- ---------- -----------
<S> <C> <C> <C>
Net income per financial statements $2,654,129 $2,422,998 $1,551,033
Change in unrealized gain/loss on nonregulated
commodity positions (285,928) 85,051 (101,791 )
Change in unrealized gain/loss on GIC -- -- 44,012
---------- ---------- -----------
Tax basis net income $2,368,201 $2,508,049 $1,493,254
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
The differences between the tax and book bases of partners' capital are
attributable primarily to the cumulative effect of the book to tax income
adjustments.
F. Credit and Market Risk
The quantitative disclosures presented below through March 31, 1996 are for
Combined Units. Allocation of these amounts to the Class A Units and Class B
Units can be made in conjunction with the quarterly allocation percentages as
more fully discussed in Note A.
10
<PAGE>
<PAGE>
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 or 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 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
December 31, 1998, such segregated assets totalled $5,866,813. 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 $10,983,942 at December
31, 1998. There are no segregation requirements for assets related to forward
trading.
As of December 31, 1998, all open futures and forward contracts mature within
one year.
11
<PAGE>
At December 31, 1998 and 1997, gross contract amounts of open futures,
forward and options contracts are:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
------------ ------------
Financial Futures and
Options Contracts:
Commitments to purchase $45,547,184 $139,900,563
Commitments to sell 50,274,885 7,437,372
Currency Futures and
Options Contracts:
Commitments to purchase 216,163 492,662
Commitments to sell 1,262,608 21,706,418
Currency Forward
Contracts:
Commitments to purchase 7,750,478 7,046,771
Commitments to sell 7,482,181 10,358,738
Other Futures Contracts:
Commitments to purchase 138,101 456,506
Commitments to sell 8,197,840 11,247,722
Other Forward Contracts:
Commitments to purchase -- 121,273
</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.
At December 31, 1998 and 1997, the fair value of open futures, forward and
options contracts was:
<TABLE>
<CAPTION>
1998 1997
---------------------------- ----------------------------
<S> <C> <C> <C> <C> <C>
Assets Liabilities Assets Liabilities
------------ ------------ ------------ ------------
Futures Contracts:
Domestic exchanges
Financial $ 3,400 $ 3,572 $ 146,750 $ 23,700
Currencies 20,106 3,388 197,088 38,848
Other 97,898 22,075 390,029 --
Foreign exchanges
Financial 644,508 3,568 324,620 3,840
Other 95,112 6,195 119,206 130,415
Forward Contracts:
Currencies -- 237,698 257,080 154,865
Other -- -- -- 832
Options Contracts:
Domestic exchanges
Financial -- -- 6,907 --
Currencies -- -- 29,900 --
------------ ------------ ------------ ------------
$861,024 $276,496 $1,471,580 $352,500
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
12
<PAGE>
<PAGE>
The following table presents the average fair value of futures, forward and
options contracts during the years ended December 31, 1998 and 1997,
respectively.
<TABLE>
<CAPTION>
1998 1997
---------------------------- ----------------------------
<S> <C> <C> <C> <C> <C>
Assets Liabilities Assets Liabilities
------------ ------------ ------------ ------------
Futures Contracts:
Domestic exchanges
Financial $ 133,743 $ 9,680 $ 188,384 $ 7,993
Currencies 205,413 27,874 131,258 15,083
Other 160,882 30,397 149,036 28,108
Foreign exchanges
Financial 520,967 35,569 322,537 37,267
Other 46,884 138,318 160,381 111,278
Forward Contracts:
Currencies 347,672 281,380 569,991 307,155
Other 9,756 13,365 847 2,015
Options Contracts:
Domestic exchanges
Financial 5,219 -- 3,391 238
Currencies 3,175 -- 6,064 --
Other -- -- 2,393 --
Foreign exchanges
Financial 571 -- 923 --
Other 1,116 -- 6,100 --
------------ ------------ ------------ ------------
$1,435,398 $536,583 $1,541,305 $509,137
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
The following table presents trading revenues from futures, forward and
options contracts for the three years ended December 31, 1998:
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C> <C>
Futures Contracts:
Domestic exchanges
Financial $ 793,456 $ 260,862 $ 115,977
Currencies (355,979) 523,171 869,022
Other 263,362 335,196 290,951
Foreign exchanges
Financial 4,490,202 1,113,209 1,567,704
Other (232,652) 141,588 164,632
Forward Contracts:
Currencies 212,300 1,985,427 307,185
Other (111,484) (14,860) 1,200
Options Contracts:
Domestic exchanges
Financial (90,705) (9,512) (75,942)
Currencies (66,612) (56,626) (93,996)
Other -- (10,356) (158,789)
Foreign exchanges
Financial (8,148) (25,079) (108,272)
Other (5,726) (25,356) (7,425)
---------- ---------- ----------
$4,888,014 $4,217,664 $2,872,247
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
13
<PAGE>
<PAGE>
PRUDENTIAL-BACHE OPTIMAX FUTURES FUND, L.P.
(a limited partnership)
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 ('Traded Assets'). In conjunction
with a letter of credit, 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 Letter of Credit expired and the Reserve Assets became
available for commodities trading. On April 1, 1996, these assets were allocated
for commodities trading evenly to Robert M. Tamiso and Hyman Beck & Company,
Inc., new independent trading managers to the Partnership. As such, since April
1, 1996, 100% of the Partnership's net assets have been allocated to commodities
trading. Also, on April 1, 1996, in conjunction with the expiration of the
Letter of Credit and maturity of the Reserve Assets as discussed above, 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. See Note A to the financial statements for further information.
At December 31, 1998, a significant portion of the Traded Assets was held in
U.S. Treasury bills (which represented approximately 75% of the Traded 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 Traded 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 Partnership's exposure to market risk is
influenced by a number of factors including the volatility of interest rates and
foreign currency exchange rates, the liquidity of the markets in which the
contracts are traded and the relationship among the contracts held. The inherent
uncertainty of the Partnership's speculative trading as well as the development
of drastic market occurrences could result in monthly losses considerably beyond
the Partnership's experience to date and could ultimately lead to a loss of all
or substantially all of investors' capital. 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 F 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 recorded for the years ended December 31,
1998, 1997 and 1996 were $1,937,438, $1,124,341 and $5,344,062, respectively.
Additionally, redemptions by the General Partner recorded for the years ended
December 31, 1998, 1997 and 1996 were $19,484, $11,456 and $617,573,
respectively. Redemptions by limited partners and the General Partner recorded
from commencement of
14
<PAGE>
<PAGE>
operations, February 15, 1991, through December 31, 1998 totalled $74,627,120
(including $799,238 General Partner redemptions). Future redemptions will impact
the amount of funds available for investment in commodity contracts in
subsequent periods.
Results of Operations
The net asset value per OptiMax Unit as of December 31, 1998 was $196.79, an
increase of 17.54% from the December 31, 1997 net asset value per OptiMax Unit
of $167.43, which was an increase of 17.49% from the December 31, 1996 net asset
value per OptiMax Unit of $142.51. The MAR (Managed Account Reports) Fund/Pool
Index, which tracked the performance of 281 and 315 futures funds in 1998 and
1997, returned 6.57% and 9.34%, respectively. Past performance is not
necessarily indicative of future results.
The Partnership's positive performance in 1998 was the result of gains in the
financial, energy, and soft sectors offset by losses in the currency, metal,
grain and index sectors.
Market activity in the financial sector brought considerable profits to the
Partnership in 1998. In January, an imbalance in the relationship between stocks
and bonds, helped along by increasing amounts of bonds made available for sale
by central banks, caused bond prices to rise. However, economic events in Japan
fueled most financial sector activity throughout the rest of the year. News
regarding the Bank of Japan's plans to stimulate the economy caused volatility
in April which generated losses for the Partnership. Profits on short positions
were earned in May as Japanese government bonds ('JGBs') fell as economic fears
worsened. In the second half of the year the Partnership gained on two moves as
JGBs rose in late summer only to fall in the fourth quarter.
The energy sector also profited the Partnership in 1998. Middle Eastern
turmoil in January and the fourth quarter as well as an overall bear market
trend throughout much of the year brought opportunities for profits.
Volatility characterized metal sector performance with gold, copper, and
silver recording the biggest losses for the Partnership. Speculative buying
caused silver prices to rise in February profiting the Partnership. In March,
short gold positions lost value due to an interruption in the bear market when
investors purchased gold as a hedge against inflation. Losses were also
sustained in the third quarter as gold and silver prices reacted to fluctuating
fears concerning global stock markets.
Interest income is earned on the Partnership's investment in U.S. Treasury
bills and varies monthly according to interest rates, trading performance and
redemptions. Strong trading performance during 1998 and 1997, partially offset
by the liquidation of U.S. Treasury bills for the payment of redemptions, were
the primary reasons for the increases in interest income from U.S. Treasury
bills of approximately $21,000 and $42,000 for the years ended December 31, 1998
and 1997 as compared to prior years. The increase in interest income during 1997
versus 1996 was also the result of the additional allocation of assets to
commodities trading during April 1996 (as further discussed in Liquidity and
Capital Resources above) which led to increased 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. Strong
trading performance in 1998 and 1997, partially offset by redemptions, led to
continuously increasing Traded Assets during the two year period. In addition,
Traded Assets increased when the Letter of Credit expired on March 31, 1996 and
Reserve Assets were allocated to commodities trading as discussed above. As a
result, commissions increased approximately $105,000 for the year ended December
31, 1998 as compared to 1997 and approximately $75,000 for the year ended
December 31, 1997 compared to 1996.
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 approximately $9,000 for the year
ended December 31, 1998 as compared to 1997, but decreased approximately $4,000
for the year ended December 31, 1997 as compared to 1996 primarily due to
fluctuations in trading volume.
All trading decisions for the Partnership are currently being made by Eagle
Trading Systems, Inc. ('Eagle'), Robert M. Tamiso ('Tamiso') and Hyman Beck &
Company, Inc. ('Hyman Beck'). Effective May 1, 1997, all assets previously
managed by Chesapeake Capital Corporation ('Chesapeake') were reallocated to
Eagle pursuant to its Eagle-Global System trading program. Eagle is paid a
management fee at a 2% annual rate on its Traded Assets compared to 2.5% paid to
Chesapeake. Additionally, 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 Tamiso. Tamiso is
paid a management fee at a 2% annual rate on its Traded Assets compared to 3%
paid to Willowbridge.
15
<PAGE>
<PAGE>
Management fees are calculated on the portion of the Traded Assets allocated
to each trading manager at the end of each month, and, therefore, are affected
by trading performance and redemptions. Management fees increased $7,000 for the
year ended December 31, 1998 as compared to 1997 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. An increase in 1997 versus 1996 management fees resulting from strong
1997 trading performance and the additional allocation of assets to commodities
trading during April 1996 as discussed above was offset by the 1997 decrease in
the management fee paid to Eagle versus Chesapeake as discussed above. These
events led to a decrease in management fees of approximately $8,000 for the year
ended December 31, 1997 as compared to 1996.
Incentive fees are based on the New High Net Trading Profits generated by
each trading manager, as defined in the Advisory Agreements between the
Partnership, the General Partner and each trading manager. Incentive fees
increased by $402,000 and $423,000 for the years ended December 31, 1998 and
1997 as compared to prior years due primarily to continuously stronger trading
performance during the three years ended December 31, 1998, as well as an
increase in the incentive fee rate paid to Eagle as compared to Chesapeake, as
discussed in Note A to the financial statements.
General and administrative expenses decreased approximately $64,000 for the
year ended December 31, 1998 as compared to 1997 and by approximately $37,000
for the year ended December 31, 1997 as compared to 1996. 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. These
decreases are due primarily to a reduction in overall costs associated with
administering the Partnership as well as costs incurred in 1996 and the first
quarter of 1997 relating to the expiration of the Letter of Credit and the
merger of A and B units as discussed in Note A to the financial statements.
New Accounting Guidance
In June 1998, the Financial Accounting Standards Board issued Statement No.
133, Accounting for Derivative Instruments and Hedging Activities ('SFAS 133'),
which the Partnership is required to adopt effective January 1, 2000. SFAS 133
establishes accounting and reporting standards for derivative instruments and
for hedging activities and requires that an entity recognize all derivatives as
assets or liabilities measured at fair value. The Partnership does not believe
the effect of adoption will be material.
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 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 assurance from its 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, clearinghouses, 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.
16
<PAGE>
<PAGE>
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.
Inflation
Inflation has had no material impact on operations or on the financial
condition of the Partnership from inception through December 31, 1998.
17
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
I hereby affirm that, to the best of my knowledge and belief, the information
contained herein relating to Prudential-Bache OptiMax Futures Fund, L.P. is
accurate and complete.
SEAPORT FUTURES
MANAGEMENT, INC.
(General Partner)
By: Barbara J. Brooks
Chief Financial Officer
- --------------------------------------------------------------------------------
18
<PAGE>
OTHER INFORMATION
The actual round-turn equivalent of brokerage commissions paid per trade for
the year ended December 31, 1998 was $59.
The Partnership's Annual Report on Form 10-K as filed with the Securities and
Exchange Commission is available to limited partners without charge upon written
request to:
Prudential-Bache OptiMax Futures Fund, L.P.
P.O. Box 2016
Peck Slip Station
New York, NY 10272-2016
19
<PAGE>
Peck Slip Station BULK RATE
P.O. Box 2016 U.S. POSTAGE
New York, NY 10272-2016 PAID
Automatic Mail
OPTIA/171976
<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> Dec-31-1998
<PERIOD-TYPE> 12-Mos
<CASH> 3,691,861
<SECURITIES> 12,921,196
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,613,057
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,613,057
<CURRENT-LIABILITIES> 329,648
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 16,283,409
<TOTAL-LIABILITY-AND-EQUITY> 16,613,057
<SALES> 0
<TOTAL-REVENUES> 5,493,048
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,838,919
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,654,129
<EPS-PRIMARY> 29.85
<EPS-DILUTED> 0
</TABLE>
