<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 March 31, 1996
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: 0-26002
PRUDENTIAL SECURITIES AGGRESSIVE GROWTH FUND L.P.
- - --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 13-3702808
- - --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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) 804-7866
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 __
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Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRUDENTIAL SECURITIES AGGRESSIVE GROWTH FUND L.P.
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
<S> <C> <C>
- - ---------------------------------------------------------------------------------------------------
ASSETS
Equity in commodity trading accounts:
Cash $ 2,701,058 $ 1,857,161
U.S. Treasury bills, at amortized cost 8,327,270 10,500,166
Net unrealized gain on open commodity positions 77,798 653,980
----------- ------------
Net equity 11,106,126 13,011,307
Organizational costs, net 10,581 12,282
----------- ------------
Total assets $11,116,707 $13,023,589
----------- ------------
----------- ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable $ 532,737 $ 1,001,720
Accrued expenses 89,456 101,202
Management fees payable 18,380 21,539
----------- ------------
Total liabilities 640,573 1,124,461
----------- ------------
Commitments
Partners' capital
Limited partners (124,597.820 and 130,094.922 units outstanding) 10,371,334 11,704,062
General partner (1,259.000 and 2,168.070 units outstanding) 104,800 195,066
----------- ------------
Total partners' capital 10,476,134 11,899,128
----------- ------------
Total liabilities and partners' capital $11,116,707 $13,023,589
----------- ------------
----------- ------------
Net asset value per limited and general partnership unit
(``Units'') $ 83.24 $ 89.97
----------- ------------
----------- ------------
- - ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
2
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PRUDENTIAL SECURITIES AGGRESSIVE GROWTH FUND L.P.
(a limited partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1996 1995
- - --------------------------------------------------------------------------------------------------
<S> <C> <C>
REVENUES
Net realized loss on commodity transactions $ (91,675) $ (43,585)
Change in net unrealized gain on open commodity positions (576,182) 1,050,110
Interest from U.S. Treasury bills 126,504 133,790
Other interest income 24,971 13,469
------------ ------------
(516,382) 1,153,784
------------ ------------
EXPENSES
Commissions 239,753 247,318
Other transaction fees 25,444 20,048
Management fees 58,553 63,224
General and administrative 48,424 47,038
Amortization of organizational costs 1,188 2,520
------------ ------------
373,362 380,148
------------ ------------
Net income (loss) $ (889,744) $ 773,636
------------ ------------
------------ ------------
ALLOCATION OF NET INCOME (LOSS)
Limited partners $ (875,149) $ 764,392
------------ ------------
------------ ------------
General partner $ (14,595) $ 9,244
------------ ------------
------------ ------------
NET INCOME (LOSS) PER WEIGHTED AVERAGE
LIMITED AND GENERAL PARTNERSHIP UNIT
Net income (loss) per weighted average
limited and general partnership unit $ (6.73) $ 4.26
------------ ------------
------------ ------------
Weighted average number of
limited and general partnership units outstanding 132,262.992 181,444.889
------------ ------------
------------ ------------
- - --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
3
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PRUDENTIAL SECURITIES AGGRESSIVE GROWTH FUND L.P.
(a limited partnership)
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
<TABLE>
<CAPTION>
LIMITED GENERAL
UNITS PARTNERS PARTNER TOTAL
<S> <C> <C> <C> <C>
- - ----------------------------------------------------------------------------------------------------
Partners' capital--December 31, 1995 132,262.992 $11,704,062 $195,066 $11,899,128
Net loss (875,149) (14,595) (889,744)
Redemptions (6,406.172) (457,579) (75,671) (533,250)
----------- ----------- -------- -----------
Partners' capital--March 31, 1996 125,856.820 $10,371,334 104,800 $10,476,134
----------- ----------- -------- -----------
----------- ----------- -------- -----------
- - ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of this statement
</TABLE>
4
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PRUDENTIAL SECURITIES AGGRESSIVE GROWTH FUND L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(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 Securities Aggressive Growth Fund L.P. (the
``Partnership'') as of March 31, 1996 and the results of its operations for the
three months ended March 31, 1996. However, the operating results for the
interim periods may not be indicative of the results expected for a full year.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Partnership's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1995 (the ``Annual
Report'').
Certain balances for prior periods have been reclassified to conform with
current financial statement presentation.
B. Related Parties
Prudential Securities Futures Management Inc. (the ``General Partner'') and
its affiliates perform services for the Partnership which include, but are not
limited to: brokerage services; accounting and financial management; registrar,
transfer and assignment functions; investor communications; printing and other
administrative services. The costs incurred for these services were:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1996 1995
<S> <C> <C>
- - -------------------------------------------------------------
Commissions $ 239,753 $ 247,318
General and administrative 24,699 25,500
--------- ---------
$ 264,452 $ 272,818
--------- ---------
--------- ---------
</TABLE>
Expenses payable to the General Partner and its affiliates as of March 31,
1996 and December 31, 1995 were $45,338 and $49,472, respectively.
The General Partner is a wholly-owned subsidiary of Prudential Securities
Incorporated (``PSI''). The Partnership maintains its trading and cash accounts
at PSI, the Partnership's commodity broker. Approximately 75% of the
Partnership's assets are invested in interest-earning U.S. Treasury obligations
(primarily U.S. Treasury bills), a significant portion of which is utilized for
margin purposes for the Partnership's trading activities. As described in the
Annual Report, all commissions for brokerage services are paid to PSI.
Other interest income represents interest earned on equity balances held at
PSI beginning February 1, 1995.
When the Partnership engages in forward foreign currency transactions it
trades with PSI who simultaneously engages in back-to-back transactions with an
affiliate who, pursuant to the Partnership's prospectus, is obligated to charge
a competitive price.
As of March 31, 1996, a non-U.S. affiliate of the General Partner owns
361.248 limited partnership units of the Partnership.
5
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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. To the extent that the Partnership engages
in forward transactions, it will present its unrealized gains and losses on open
forward positions as a net amount in its 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
March 31, 1996 and December 31, 1995, such segregated assets totalled $9,183,542
and $9,351,323, 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 $1,922,584 and $3,659,984 at March 31, 1996 and December
31, 1995, respectively. There are no segregation requirements for assets related
to forward trading.
As of March 31, 1996 and December 31, 1995, the Partnership's open futures
contracts mature within nine months.
At March 31, 1996 and December 31, 1995 gross contract amounts of open
futures contracts are:
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
-------------- -----------------
<S> <C> <C>
Financial Futures Contracts:
Commitments to purchase $ 17,917,661 $ 236,546,535
Commitments to sell $140,946,002 $ 83,584,472
Currency Futures Contracts:
Commitments to purchase $ 1,105,050 --
Commitments to sell $ 1,099,063 $ 1,773,800
</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 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
6
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the value of the contracts. As such, the Partnership considers the ``fair
value'' of its futures contracts to be the net unrealized gain or loss on the
contracts. Thus, the amount at risk associated with counterparty nonperformance
of all contracts is the net unrealized gain included in the statements of
financial condition. The market risk associated with the Partnership's
commitments to 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 March 31, 1996 and December 31, 1995, the fair value of futures contracts
were:
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
------------------------ ------------------------
Fair Value Fair Value
------------------------ ------------------------
Assets Liabilities Assets Liabilities
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Futures Contracts:
Domestic exchanges
Financial $ 12,131 $ 3,000 $ 33,813 $ --
Currencies 3,988 9,326 16,938 11,088
Foreign exchanges
Financial 105,703 31,698 624,634 10,317
-------- ----------- -------- -----------
$121,822 $44,024 $675,385 $21,405
-------- ----------- -------- -----------
-------- ----------- -------- -----------
</TABLE>
The following table represents the average fair value of futures contracts
during the three months ended March 31, 1996 and 1995, respectively.
<TABLE>
<CAPTION>
Three months ended Three months ended
March 31, 1996 March 31, 1995
------------------------ ------------------------
Average Fair Value Average Fair Value
------------------------ ------------------------
Assets Liabilities Assets Liabilities
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Futures Contracts:
Domestic exchanges
Commodities $ -- $ -- $ 10,238 $ 3,048
Financial 26,552 750 58,058 1,481
Currencies 34,000 9,294 63,288 12,006
Foreign exchanges
Financial 373,377 29,765 602,451 64,447
-------- ----------- -------- -----------
$433,929 $39,809 $734,035 $80,982
-------- ----------- -------- -----------
-------- ----------- -------- -----------
</TABLE>
The following table represents the net realized gains (losses) and the change
in unrealized gains/losses of futures contracts during the three months ended
March 31, 1996 and 1995, respectively.
<TABLE>
<CAPTION>
Three months ended March 31, 1996 Three months ended March 31, 1995
----------------------------------------------- ------------------------------------------------
Change in Change in
Net Realized Unrealized Net Realized Unrealized
Gains (Losses) Gains/Losses Total Gains (Losses) Gains/Losses Total
-------------- -------------- --------- -------------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Futures Contracts:
Domestic exchanges
Commodities $ -- $ -- $ -- $ (136,205) $ 21,725 $ (114,480)
Financial 47,569 (24,682) 22,887 143,180 (118,980) 24,200
Currencies 13,105 (11,188) 1,917 174,753 127,613 302,366
Foreign exchanges
Commodities -- -- -- 19,524 -- 19,524
Financial (152,349) (540,312) (692,661) (244,837) 1,019,752 774,915
-------------- -------------- --------- -------------- -------------- ----------
$ (91,675) $ (576,182) $(667,857) $ (43,585) $1,050,110 $1,006,525
-------------- -------------- --------- -------------- -------------- ----------
</TABLE>
7
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<PAGE>
PRUDENTIAL SECURITIES AGGRESSIVE GROWTH 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 trading operations on August 2, 1993 with gross
proceeds of $10,388,300. After accounting for organizational and offering
expenses, the Partnership's net proceeds were $10,180,534.
The Partnership continued to offer Units on a monthly basis until the
continuous offering was terminated on January 31, 1995. Additional contributions
raised through the continuous offering resulted in additional net proceeds to
the Partnership of $9,988,243.
At March 31, 1996, 100% of the Partnership's total net assets were allocated
to commodities trading. A significant portion of the net asset value was held in
U.S. Treasury bills (which represented approximately 76% of the net asset value
prior to redemptions payable) and cash, which are used as margin for the
Partnership's trading in commodities. Inasmuch as the sole business of the
Partnership is to trade in commodities, the Partnership continues to own such
liquid assets to be used as margin. Beginning February 1, 1995, interest earned
on equity balances held at PSI, which currently approximate 25% of Partnership
assets, is being paid to the Partnership in addition to all interest earned on
the U.S. Treasury bills.
The commodity contracts are subject to periods of illiquidity because of
market conditions, regulatory considerations and other reasons. For example,
commodity exchanges limit fluctuations in certain commodity futures contract
prices during a single day by regulations referred to as ``daily limits.''
During a single day no trades may be executed at prices beyond the daily limit.
Once the price of a futures contract for a particular commodity has increased or
decreased by an amount equal to the daily limit, positions in the commodity can
neither be taken nor liquidated unless traders are willing to effect trades at
or within the daily 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 for the three months
ended March 31, 1996 were $457,579 and $75,671, respectively. Redemptions
recorded for the period from August 2, 1993 (commencement of operations) through
March 31, 1996 were $7,473,069 for limited partners and $75,671 for the general
partner. Future redemptions will impact the amount of funds available for
investments in commodity contracts in subsequent periods.
Results of Operations
The net asset value per Unit as of March 31, 1996 was $83.24, a decrease of
7.48% from the December 31, 1995 net asset value per Unit of $89.97.
The Partnership posted gains for the month of January. Profits were made in
the currency, financial, and stock indices sectors. The month was marked by
volatile U.S. equities and strong global financial markets. Profitable trades in
January resulted from buying the Hang Seng, Italian bond, Euromark, Nikkei, and
CAC 40, and from short exposures to the Japanese yen, German mark, and S&P 500.
Losses were sustained in the Spanish Government Bond. European bonds rallied
during the first half of January but sold off during the last week of the month.
In France and Germany, political leaders' intentions to comply with the European
Monetary Union's economic requirements caused fluctuations in bond prices.
British bond prices initially rose due to a cut in short-term interest rates,
but fell towards the end of the month on stronger than expected retail sales
data and political uncertainty. The Italian bond market sold off sharply when
Prime
8
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Minister Dini resigned. Australian bond prices sold off and Canadian bond prices
traded in a volatile sideways manner off the lead of U.S. bond prices. After
selling off during the last week of December, Japanese bond prices rebounded
modestly and traded in a broad range.
The Partnership's performance was negative in the month of February. Losses
occurred in the financials, currencies and stock indices sectors. February was
marked by sharp movements in interest rates worldwide, volatile metals markets
and global equity indices. In the financials sector, global bonds reversed a
long-term downward trend in yields as European interest rates rose on stronger
than expected economic data and a reaction to rising U.S. interest rates. In
France, bond prices fell on stronger than expected German economic data and
falling U.S. bond prices. The U.S. bond market sold off as U.S. Federal Reserve
Bank Chairman Greenspan commented that he was not eager to cut short-term
interest rates. British bond prices fell on stronger than expected industrial
production, gross domestic product, money supply data and a poorly accepted gilt
auction. The Italian bond market sold off when Antonio Maccanico was unable to
form a new government and a call for early elections occurred. German bond
prices sold off on a stronger than expected industrial output report and because
the German Bundesbank left interest rates unchanged at its February 15 meeting.
Australian and Canadian bond prices traded lower off the lead of U.S. bond
prices. Bond prices in Japan continued to fall as economic data started to
verify the economy's recovery from recession.
The Partnership's performance was negative in the month of March. Losses
occurred in the financials, currencies and stock indices sectors, specifically
in selling the Australian, British, Canadian, French, German, Japanese, and
Swiss bond positions. Except for Japan, world bond prices reacted negatively to
a fall in U.S. bond prices as U.S. non-farm payroll employment in January was
much greater than market expectations and the U.S. Federal Open Market Committee
voted to keep the federal funds rate unchanged at its February meeting. This
changed the sentiment of global bond market participants such that further
short-term interest rate cuts seemed unlikely. European bond prices also fell as
the German Bundesbank left short-term interest rates unchanged in February. In
France, bond prices strengthened relative to German bond prices as French
inflation data was slightly below market expectations. British bond prices fell
on stronger than expected growth in industrial production. Italian bond prices
were pressured lower on strong growth in fourth quarter 1995 GDP. German bond
prices moved lower on stronger than expected fourth quarter money supply growth.
Australian and Canadian bond prices followed the lead of U.S. bond prices. Bond
prices in Japan rallied sharply as the Japanese economy has not yet recovered
from its recession.
Interest income on U.S. Treasury bills decreased by approximately $7,000 for
the three months ended March 31, 1996 compared to the corresponding period in
1995. This decrease was primarily due to lower interest rates during 1996.
Other interest income consists of interest earned since February 1995 on
equity balances held at PSI. Other interest income for the three months ended
March 31, 1996 increased by approximately $12,000 compared to the corresponding
period in 1995.
Commissions are calculated on the Partnership's net asset value as of the
first day of each month and, therefore, vary according to trading performance,
contributions and redemptions. Commissions decreased by approximately $8,000 for
the three months ended March 31, 1996 compared to the corresponding period in
1995 primarily due to redemptions.
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 by approximately $5,000 for the three
months ended March 31, 1996 compared to the corresponding period in 1995
primarily due to an increase in trading volume.
All trading decisions are currently being made by Sjo, Inc. and Welton
Investment Systems Corporation (the ``Trading Managers''). Management fees are
calculated on the portion of the Partnership's net asset value allocated to each
Trading Manager at the end of each month and, therefore, are affected by trading
performance, contributions and redemptions. Management fees decreased
approximately $5,000 for the three months ended March 31, 1996 compared to the
corresponding period in 1995 primarily due to redemptions.
Incentive fees are based on the New High Net Trading Profits generated by
each Trading Manager as defined in the Advisory Agreement between the
Partnership, the General Partner and each Trading Manager. No incentive fees
were earned for the three months ended March 31, 1996 and 1995.
9
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<PAGE>
General and administrative expenses were unchanged for the three months ended
March 31, 1996 as compared to the same period in 1995. These expenses include
reimbursements of cost 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
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings--There are no material legal proceedings pending by or
against the Registrant or the General Partner.
Item 2. Changes in Securities--None
Item 3. Defaults Upon Senior Securities--None
Item 4. Submission of Matters to a Vote of Security Holders--None
Item 5. Other Information--None
Item 6. (a) Exhibits--
3.1--Agreement of Limited Partnership of the Registrant, dated as
of March 19, 1993 as amended and restated as of May 6, 1993
(Incorporated by reference to Exhibit A to Registrant's
Amendment No. 1 to Registration Statement on Form S-1, File
No. 33-59828 dated May 7, 1993)
10.9--Form of Foreign Currency Addendum to Brokerage Agreement
between the Registrant and PSI (filed herewith)
27.1--Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K--None
11
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PRUDENTIAL SECURITIES AGGRESSIVE GROWTH FUND L.P.
By: Prudential Securities Futures Management
Inc.A Delaware corporation, General Partner
By: /s/ Steven Carlino Date: May 15, 1996
----------------------------------------
Steven Carlino
Vice President and
Chief Accounting Officer for the
Registrant
12
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<PAGE>
FOREIGN CURRENCY ADDENDUM
This addendum ("Addendum) supplements the terms and conditions of
the Futures Account Client Agreement ("Agreement") entered into by and
between Prudential Securities Aggressive Growth Fund L.P. ("Customer")
and Prudential Securities Incorporated ("PSI") as of ___________, 199__.
In consideration of PSI agreeing to enter into various forward and
spot foreign currency and foreign currency options transactions
(collectively "Forex Contracts") with Customer, the parties agree
as follows:
1. Relationship to Agreement. Except as otherwise provided in
this Addendum, the terms and conditions of the Agreement shall remain
in full force and effect, and shall apply to all Forex Contracts that
PSI may transact with Customer. If there are any conflicts between
the terms and conditions of the Agreement and this Addendum, the terms
and conditions of this Addendum will govern with respect to Forex
Contracts.
2. Forex Contracts. PSI and Customer will each act as principals
with respect to Forex Contracts. Forex Contracts will be transacted within
the non-regulated portion of Customer's PSI futures account. Customer
acknowledges that Forex Contracts are not traded on or guaranteed by a
regulated exchange or its clearing house and accordingly, acknowledges
that trading in Forex Contracts is not subject to the same regulatory
or financial protections as is trading in futures contracts. Customer
represents and warrants that (a) it is authorized to enter into Forex
Contracts, (b) it understands that as principal opposite PSI the parties
will each be relying on the creditworthiness of the other, (c) each
Forex Contract will be individually negotiated as to its material
economic terms, and (d) PSI will be entitled to rely on any instructions,
notices and communications that it reasonably believes to have originated
with any authorized representative of Customer, including a person with
a Power of Attorney over trading decisions, and Customer shall be
bound thereby.
3. Limits. This Addendum does not evidence a commitment of PSI
or Customer to enter into Forex Contracts generally or to enter into
any specific Forex Contract. PSI shall have the right to set limits
on the number of Forex Contracts that PSI will transact with Customer.
PSI reserves the right to increase or decrease such limits as, in PSI's
good faith judgment, market and economic conditions warrant, including
but not limited to the material change in Customer's credit rating or
Customer's country or sovereign rating by an internationally recognized
rating agency. Additionally, PSI reserves the right, exercisable at
any time when warranted by market conditions in PSI's sole discretion,
to refuse acceptance of Customer's orders.
4. Confirmations. Upon entering into a Forex Contract with
Customer, PSI shall verbally confirm the economic terms to Customer
followed by a written confirmation (via letter, telex, facsimile or
telecopier at PSI's election) (the "Confirmation) specifying the
amount of
<PAGE>
foreign currency bought or sold by Customer against U.S.
dollars or another foreign currency, the exchange rate, and the date
on which, and the location where, the currency is to be delivered.
Confirmations shall be conclusive and binding on Customer unless
Customer promptly notifies PSI of any objection within three (3) days
of receipt by Customer of the Confirmation.
5. Collateral; Settlement. PSI reserves the right to require
customer to deposit collateral with respect to Forex Contract
transactions. All Forex Contracts will be transacted pursuant
to a line of credit or will be otherwise collateralized at PSI's
option, and will be subject to the netting provisions set forth in
Section 8 below. All payments due under a Forex Contract shall be
made by wire transfer on the delivery date specified in the Confirmation
in immediately available funds in the designated currency. In the
event that either party's performance of its payment obligations
shall be interrupted or delayed by reason of war, riot, civil
commotion, sovereign conduct or other acts of state, the time of
performance of such party's obligations shall be extended for the
period of such interruption.
6. Dispute Resolution. Any dispute between Customer and PSI
relating to Customer's Forex Contracts shall be settled and determined
by an arbitration panel of either the New York Stock Exchange, the
National Association of Securities Dealers Inc., or the National
Futures Association as Customer may elect, or if the foregoing qualified
forums decline to arbitrate such dispute, before such forum as may be
agreed upon between the parties. At such time that PSI notifies Customer
of its intent to submit a claim to arbitration Customer will have seven
business days to elect a qualified forum for conducting the proceeding.
If Customer fails to notify PSI of its selection within seven business
days, PSI shall have the absolute right to make such selection.
7. Governing Law. The interpretation and enforcement of this
Addendum (and the Forex Contracts covered hereunder) and the rights,
obligations and remedies of the parties shall be governed by and
construed in accordance with the laws of the State of New York,
without regard to principles of choice of law.
8. Netting Provisions.
(a) Netting by Novation. Unless separately agreed and set out
in the Confirmation regarding a specific Forex Contract, each Forex
Contract made between Customer and PSI will immediately, upon its
being entered into, be netted with all then existing Forex Contracts
between Customer and PSI for the same paired currencies having the
same delivery date. Each Forex Contract containing an obligation to
deliver that has been netted pursuant to the foregoing shall immediately
be deemed cancelled and simultaneously replaced by a single transaction.
For purposes hereof, each Forex Contract shall be deemed a Forex
Contract from and after its inception for all purposes.
(b) Payment Netting. If on any delivery date more than one
delivery of a particular currency is to be made between Customer and
PSI pursuant to a Forex Contract,
2
<PAGE>
each party shall aggregate the amounts deliverable by it and only
the difference, if any, between these aggregate amounts shall be
delivered by the party owing the larger amount to the other party.
(c) Discharge and Termination of Options. Any call option or
any put option written by a party will automatically be terminated and
discharged, in whole or in part, as applicable, against a call option
or a put option, respectively, written by the other party, such
termination and discharge to occur automatically upon the payment
in full of the premium payable in respect of such options; provided
that such termination and discharge may occur only in respect of
options:
(i) each being with respect to the same put currency and
the same call currency;
(ii) each having the same expiration date and expiration time;
(iii) each being of the same style, i.e. both being
America Style options or both being European Style options;
(iv) each having the same strike price; and
(v) neither of which shall have been exercised by delivery
of a notice of exercise;
and, upon the occurrence of such termination and discharge,
neither party shall have any further obligation to the other party in
respect of the relevant options or, as the case may be, parts thereof
so terminated and discharged. In the case of a partial termination and
discharge (i.e., where the relevant options are for different amounts
of the currency), the remaining portion of the option that is partially
discharged shall continue to be a Forex Contract for all purposes of
this Addendum.
(d) The occurrence at any time with respect to a party of any of
the following events constitutes an event of default (an Event of
Default ) with respect to such party:
(i) Failure to Pay or Deliver. Failure by the party to make,
when due, any payment under this Addendum or delivery required to be
made by it if such failure is not remedied on or before the third
business day after notice of such failure is given to such party;
(ii) Breach of Agreement. Failure by the party to comply
with or perform any agreement or obligation under this Addendum if
such failure is not remedied on or before the third business day after
notice of such failure is given to the Defaulting Party:
3
<PAGE>
(iii) Failure to Provide Adequate Assurances. Failure
by Customer to provide adequate assurances of its ability to perform
any of its obligations under this Addendum within three business days
of a written request from PSI to do so when PSI has reasonable grounds
for insecurity;
(iv) Bankruptcy. The Party - (A) is dissolved (other than
pursuant to a consolidation, amalgamation or merger); (B) becomes
insolvent or is unable to pay its debts or fails or admits in writing
its inability generally to pay its debts as they become due; (C) makes
a general assignment, arrangement or composition with or for the
benefit of its creditors; (D) institutes or has instituted against
it a proceeding seeking a judgment of insolvency or bankruptcy or
any other relief under any bankruptcy or insolvency law or other
similar law affecting creditors rights, or a petition is presented
for its winding-up or liquidation, and, in the case of any such
proceeding or petition instituted or presented against it, such
proceeding or petition (1) results in a judgment or insolvency or
bankruptcy or the entry of an order for relief or the making of an
order for its winding-up or liquidation or (2) is not dismissed,
discharged, stayed or restrained in each case within 30 days of the
institution or presentation thereof; (E) has a resolution passed for
its winding-up, official management or liquidation (other than pursuant
to a consolidation, amalgamation or merger); (F) seeks or becomes
subject to the appoint of an administrator, provisional liquidator,
conservator, receiver, trustee, custodian or other similar official
for it or for all or substantially all of its assets; (G) has a secured
party take possession of all or substantially all of its assets or has
a distress, execution, attachment, sequestration or other legal process
levied, enforced or sued on or against all or substantially all of its
assets and such secured party maintains possession, or any such process
is not dismissed, discharged, stayed or restrained, in each case within
30 days thereafter; (H) causes or is subject to any event with respect
to it which, under the applicable laws of any jurisdiction, has an
analogous effect to any of the events specified in clauses (A) to
(G) (inclusive); or (i) takes any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any
of the foregoing acts.
(e) Close-Out Netting. If an Event of Default has occurred and
is continuing in respect of a party ("Defaulting Party"), the other
party ("Non-Defaulting Party") shall be entitled in its reasonable
discretion, immediately and at any time and upon notice (unless such
notice cannot practicably be provided in the circumstances) to close-out
all Defaulting Party's Forex Contracts, and may in its reasonable
discretion at any time or from time to time upon notice (unless such
notice cannot practicably be provided in the circumstances) liquidate
all or some of Defaulting Party's collateral in Non-Defaulting Party's
possession or control on any commercially reasonable basis and apply the
proceeds of such collateral to any
4
<PAGE>
amounts owing by Defaulting Party to Non-Defaulting Party resulting
from the close-out of such Forex Contracts. Any such close-out of
Forex Contracts shall be accomplished by the Non-Defaulting Party:
(i) closing-out each such Forex Contract so that each such
Forex Contract is cancelled and calculating settlement amounts
equal to the difference between the market value (as determined by PSI
in good faith) and contract value of the Forex Contract or, in the case
of options, settlement amounts equal to the current market premium for
a comparable option (as determined by PSI in good faith); (ii) discounting
each settlement amount then due to present value at the time of close-out
(to take into account the period between the date of close-out and the
maturity date of the relevant liquidated Forex Contract using an interest
rate equal to PSI's cost of funds as determined by PSI in good faith);
(iii) calculating an aggregate settlement payment in an amount equal
to the net amount of such discounted settlement amounts as is then due
from one party to the other; and (iv) setting off the settlement payments,
if any, that Non-Defaulting Party owes Defaulting Party as a result of
such liquidation and all collateral held by or for Non-Defaulting Party
against the settlement payments, if any, that Defaulting Party owes to
Non-Defaulting Party as a result of such close-out; so that all such
amounts are netted to a single liquidated amount payable by one party
to the other party, as appropriate, on the business day following the
close-out.
Notwithstanding anything to the contrary set forth above
regarding the Non- Defaulting Party's rights to close-out and value
Forex Contracts, if an event specified in clause (iv) of this sub-section
(d) has occurred, then upon the occurrence of such event, all outstanding
Forex Contracts will be deemed to have been automatically terminated as
of the time immediately preceding the institution of the relevant
proceeding, or the presentation of the relevant petition upon the
occurrence with respect to the party to such specified event.
The rights of PSI under this sub-section (e) shall be in
addition to, and not in limitation or exclusion of any other rights
that PSI may have (whether by agreement, operation of law or otherwise).
9. Liquidated Damages. The parties agree that the amount owing
by one party to the other party hereunder is a reasonable computation
of the loss or gain it would have incurred or received on the obligations
between the parties governed by this Addendum and is not a penalty.
Such amount is payable as liquidated damages to the other party for
the loss of the benefit of its bargains and neither party shall be
entitled to recover additional damages in respect of such loss of
the bargain. The determination of such amount shall be conclusive,
absent manifest error.
10. Understanding of Risks. Each party will be deemed to represent
to the other party on the date on which it enters into a Forex Contract
that it has the capability to evaluate and understand (on its own behalf
or through independent professional advice), and does understand, the
terms, conditions and risks of that Forex Contract and is willing to
accept those terms and conditions and to assume (financially and
otherwise) those risks.
5
<PAGE>
11. Termination. Each party may terminate this Addendum at
any time on three (3) business days prior written notice. No such
termination shall affect any Forex Contracts entered into prior to
such termination and this Addendum shall continue to govern any such
Forex Contract.
__________________________ ___________________________________
Date Name of Customer
By:_______________________________
Title: ___________________________
Signature:________________________
Accepted By Prudential Securities Incorporated
By:_____________________________ Date: ____________________________
Title:__________________________
Signature: _____________________
6
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for Prudential Securities
Aggressive Growth Fund, L.P. and is
qualified in its entirety by reference
to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000899174
<NAME> P-Securities Aggressive Growth Fund L.P.
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-1-1996
<PERIOD-END> Mar-31-1996
<PERIOD-TYPE> 3-Mos
<CASH> 2,701,058
<SECURITIES> 8,405,068
<RECEIVABLES> 10,581
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,116,707
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,116,707
<CURRENT-LIABILITIES> 640,573
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 10,476,134
<TOTAL-LIABILITY-AND-EQUITY> 11,116,707
<SALES> 0
<TOTAL-REVENUES> (516,382)
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 373,362
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (889,744)
<EPS-PRIMARY> (6.73)
<EPS-DILUTED> 0
</TABLE>
