<PAGE>
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, 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 (I.R.S. Employer
of incorporation or organization) Identification No.)
One New York Plaza, 14th Floor, New York, NY 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. [CK]
DOCUMENTS INCORPORATED BY REFERENCE
Agreement of Limited Partnership of the Registrant, dated March 19, 1993,
included as part of Registration Statement on Form S-1 (File No. 33-59828) filed
with the Securities and Exchange Commission March 19, 1993 pursuant to Rule
424(b) of the Securities Act of 1933, and amended and restated as of May 7,
1993, is incorporated by reference into Part IV of this Annual Report on Form
10-K
Annual Report to Limited Partners for the year ended December 31, 1996 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 7 and 8.
<PAGE>
PRUDENTIAL SECURITIES AGGRESSIVE GROWTH FUND L.P.
(a limited partnership)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I PAGE
<S> <C> <C>
Item 1 Business......................................................................... 3
Item 2 Properties....................................................................... 3
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.......................................................... 4
Item 7 Management's Discussion and Analysis of Financial Condition and Results of
Operations..................................................................... 5
Item 8 Financial Statements and Supplementary Data...................................... 5
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure..................................................................... 5
PART III
Item 10 Directors and Executive Officers of the Registrant............................... 5
Item 11 Executive Compensation........................................................... 6
Item 12 Security Ownership of Certain Beneficial Owners and Management................... 6
Item 13 Certain Relationships and Related Transactions................................... 6
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K
Financial Statements and Financial Statement Schedules........................... 7
Exhibits......................................................................... 7
Reports on Form 8-K.............................................................. 8
SIGNATURES.................................................................................. 9
</TABLE>
2
<PAGE>
PART I
Item 1. Business
General
Prudential Securities Aggressive Growth Fund L.P. (the ``Registrant''), a
Delaware limited partnership, was formed on February 17, 1993 and will terminate
on December 31, 2013 unless terminated sooner under the provisions of the
Agreement of Limited Partnership (the ``Partnership Agreement''). The Registrant
was formed to engage in the speculative trading of a portfolio consisting
primarily of commodity futures and forward contracts. On August 2, 1993, the
Registrant completed its initial offering and raised $10,388,300 from the sale
of 102,383 units of limited partnership interest and 1,500 units of general
partnership interest (collectively, the ``Units'') which resulted in net
proceeds to the Registrant of $10,180,534. The Registrant 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 Registrant of $9,988,243 The
Registrant's fiscal year for book and tax purposes ends on December 31.
Sjo, Inc. and Welton Investment Systems Corporation (``WISC'') (each a
``Trading Manager'') currently make all the Registrant's trading decisions.
Effective April 15, 1994, all trading assets previously allocated to Colorado
Commodities Management Corp. (``CCM'') were allocated to WISC. WISC is not
entitled to receive an incentive fee until it recoups $1,500,000 of the prior
trading losses of CCM. As of December 31, 1996, WISC has recouped approximately
$262,000 of such prior trading losses. 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.
General Partner
The general partner of the Registrant is Prudential Securities Futures
Management Inc. (the ``General Partner''). The General Partner is a wholly-owned
subsidiary of Prudential Securities Incorporated (``PSI''), which in turn is a
wholly-owned subsidiary of Prudential Securities Group Inc. (``PSGI''). PSI was
the principal underwriter of the limited partnership units and is the commodity
broker of the Registrant. The General Partner is required to maintain at least a
1% interest in the Registrant as long as it is acting as the Registrant's
general partner.
Competition
The General Partner and its affiliates have formed and may continue to form
various entities to engage in the speculative trading of futures and forward
contracts which, in part, have certain of the same investment policies as the
Registrant.
The Registrant is a closed-ended fund which solicited the sale of additional
Units on a monthly basis until the continuous offering was terminated and does
not intend to solicit the sale of additional Units in the future. 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. See Notes A, C and D to the Registrant's annual
report to limited partners for the year ended December 31, 1996 (``Registrant's
1996 Annual Report'') which is filed as an exhibit hereto.
Item 2. Properties
The Registrant does not own or lease any property.
3
<PAGE>
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
As of March 3, 1997, there were 739 holders of record owning 92,535.501 Units
which includes 926 units of general partnership interest. 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 provides that a limited partner may only redeem its
units as of the last business day of any full calendar quarter at the then
current net asset value per Unit reduced by each Unit's pro rata portion of
unamortized organizational costs. Consequently, holders of Units may not be able
to liquidate their investment in the event of an emergency or for 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.
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 10 of the Registrant's 1996
Annual Report which is filed as an exhibit hereto. The data presented for the
period ended December 31, 1993 does not represent a full year's operations.
<TABLE>
<CAPTION>
Year ended December 31, Period from August 2, 1993
----------------------------------------- (commencement of operations)
1996 1995 1994 to December 31, 1993
---------- ----------- ------------ -------------------------------
<S> <C> <C> <C> <C>
Net realized gain (loss) on
commodity transactions... $1,575,922 $ 4,296,778 $ (354,808) $(2,373,585)
---------- ----------- ------------ ----------------
---------- ----------- ------------ ----------------
Change in net unrealized
gain on open commodity
positions................ $(415,706) $ 207,232 $ 19,357 $ 427,391
---------- ----------- ------------ ----------------
---------- ----------- ------------ ----------------
Commissions................ $ 801,140 $ 1,021,543 $ 1,151,714 $ 389,655
---------- ----------- ------------ ----------------
---------- ----------- ------------ ----------------
Management fees............ $ 201,323 $ 261,882 $ 286,993 $ 104,862
---------- ----------- ------------ ----------------
---------- ----------- ------------ ----------------
Incentive fees............. $ 21,247 $ 285,701 $ 344,430 $ 43,690
---------- ----------- ------------ ----------------
---------- ----------- ------------ ----------------
Net income (loss).......... $ 399,782 $ 3,349,952 $(2,055,849) $(2,548,262)
---------- ----------- ------------ ----------------
---------- ----------- ------------ ----------------
Allocation of net income
(loss)
Limited partners......... $ 401,458 $ 3,305,512 $(2,033,779) $(2,520,630)
---------- ----------- ------------ ----------------
---------- ----------- ------------ ----------------
General partner.......... $ (1,676) $ 44,440 $ (22,070) $ (27,632)
---------- ----------- ------------ ----------------
---------- ----------- ------------ ----------------
Net income (loss) per
weighted average Unit.... $ 3.40 $ 20.98 $ (10.38) $ (17.23)
---------- ----------- ------------ ----------------
---------- ----------- ------------ ----------------
Total assets............... $9,754,335 $13,023,589 $13,757,176 $14,758,541
---------- ----------- ------------ ----------------
---------- ----------- ------------ ----------------
Redemptions................ $3,316,749 $ 4,056,314 $ 2,787,362 $ 171,814
---------- ----------- ------------ ----------------
---------- ----------- ------------ ----------------
Net asset value per Unit... $ 97.07 $ 89.97 $ 69.47 $ 80.33
---------- ----------- ------------ ----------------
---------- ----------- ------------ ----------------
</TABLE>
4
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This information is incorporated by reference to pages 11 and 12 of the
Registrant's 1996 Annual Report which is filed as an exhibit hereto.
Item 8. Financial Statements and Supplementary Data
The financial statements are incorporated by reference to pages 2 through 10
of the Registrant's 1996 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
Reference is made to the Registrant's Current Report on Form 8-K dated May
14, 1996, as filed with the Securities and Exchange Commission on May 16, 1996
regarding the change in the Registrant's certifying accountant from Deloitte &
Touche LLP to Price Waterhouse LLP.
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 ten percent 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. In making these disclosures, the Registrant has
relied solely on written representations of the General Partner's directors and
executive officers 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.
The directors and executive officers of Prudential Securities Futures
Management Inc. and their positions with respect to the Registrant are as
follows:
Name Position
James M. Kelso President and Director
Barbara J. Brooks Treasurer and Chief Financial Officer
Steven Carlino Vice President and Chief Accounting Officer
A. Laurence Norton, Jr. Director
Guy S. Scarpaci Director
JAMES M. KELSO, age 42, is the President and a Director of Prudential
Securities Futures Management Inc. He is a Senior Vice President of Futures
Administration for PSI. He is also the President and a Director of Seaport
Futures Management, Inc. and serves in various capacities for other affiliated
companies. He has held several positions within PSI since July 1981.
BARBARA J. BROOKS, age 48, is the Treasurer and Chief Financial Officer of
Prudential Securities Futures Management Inc. She is a Senior Vice President of
PSI. She is also the Treasurer and Chief Financial Officer of Seaport 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 33, is a Vice President of Prudential Securities Futures
Management Inc. He is a First Vice President of PSI. He is also a Vice President
of Seaport Futures Management, Inc. and serves in
5
<PAGE>
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 58, is a Director of Prudential Securities
Futures Management Inc. He is an Executive Vice President of PSI and head of its
Futures Division. He is also a Director of Seaport Futures Management, Inc. Most
recently, 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 50, is a Director of Prudential Securities Futures
Management Inc. He is a First Vice President of the Futures Division of PSI. He
is also a Director of Seaport Futures Management, Inc. Mr. Scarpaci has been
employed by PSI in positions of increasing responsibility since August 1974.
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.
Item 11. Executive Compensation
The Registrant does not pay or accrue any fees, salaries or any other form of
compensation to directors and executive officers of the General Partner for
their services. Certain officers and directors 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 3, 1997, no director or executive officer of the General Partner
owns directly or beneficially any interest in the voting securities of the
General Partner.
As of March 3, 1997, no director or executive officer of the General Partner
owns directly or beneficially any of the Units issued by the Registrant.
As of March 3, 1997, no partner beneficially owns more than five percent (5%)
of the outstanding limited partnership units of the Registrant.
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 executive officers of
the General Partner.
Reference is made to Notes A, C and D to the financial statements of the
Registrant's 1996 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.
6
<PAGE>
PART IV
<TABLE>
<CAPTION>
Page in
Annual Report
<S> <C> <C> <C> <C>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements and Reports of Independent Accountants--Incorporated by
reference to the Registrant's 1996 Annual Report which is filed as an
exhibit hereto
Reports of Independent Accountants:
Report of Independent Accountants as of December 31, 1996 and for the year
then ended 2
Independent Auditors' Report as of December 31, 1995 and for the years ended
December 31, 1995 and 1994 2A
Financial Statements:
Statements of Financial Condition--December 31, 1996 and 1995 3
Statements of Operations--Years ended December 31, 1996, 1995 and 1994 4
Statements of Changes in Partners' Capital--Years ended December 31, 1996,
1995 and 1994 4
Notes to Financial Statements 5
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
Description:
3.1-- Agreement of Limited Partnership of the Registrant, dated March 19,
1993, as amended and restated as of May 6, 1993 (Incorporated by
reference to Exhibit A to Amendment No. 1 to Registrant's Registration
Statement on Form S-1, File No. 33-59828, dated May 7, 1993)
10.1-- Escrow Agreement, dated May 13, 1993, among the Registrant, Prudential
Securities Futures Management Inc., Prudential Securities Incorporated
and Bankers Trust Company (Incorporated by reference to Exhibit 10.1
of the Registrant's Quarterly Report on Form 10-Q for the period ended
June 30, 1993)
10.2-- Brokerage Agreement, dated as of August 2, 1993, between the
Registrant and Prudential Securities Incorporated (Incorporated by
reference to Exhibit 10.2 of the Registrant's Quarterly Report on Form
10-Q for the period ended June 30, 1993)
10.3-- Advisory Agreement dated May 13, 1993 among the Registrant, Prudential
Securities Futures Management Inc., Sjo, Inc. and Colorado Commodities
Management Corporation (Incorporated by reference to Exhibit 10.3 of
the Registrant's Quarterly Report on Form 10-Q for the period ended
June 30, 1993)
</TABLE>
7
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
10.4-- Representation Agreement concerning the Registration Statement and the
Prospectus dated May 13, 1993 among the Registrant, Prudential
Securities Futures Management Inc., Prudential Securities
Incorporated, Sjo, Inc. and Colorado Commodities Management
Corporation (Incorporated by reference to Exhibit 10.4 of the
Registrant's Quarterly Report on Form 10-Q for the period ended June
30, 1993)
10.5-- Net Worth Agreement, dated as of May 13, 1993, between Prudential
Securities Futures Management Inc. and Prudential Securities Group
Inc. (Incorporated by reference to Exhibit 10.5 of the Registrant's
Quarterly Report on Form 10-Q for the period ended June 30, 1993)
10.6-- Promissory Note, dated August 2, 1993, issued by Prudential Securities
Group Inc. (Incorporated by reference to Exhibit 10.6 of the
Registrant's Quarterly Report on Form 10-Q for the period ended June
30, 1993)
10.7-- Form of Secured Demand Note Collateral Agreement, dated August 2,
1993, between Prudential Securities Futures Management Inc. and
Prudential Securities Group Inc. (Incorporated by reference to Exhibit
10.7 of the Registrant's Quarterly Report on Form 10-Q for the period
ended June 30, 1993)
10.8-- Advisory Agreement, dated April 5, 1994, among the Registrant,
Prudential Securities Futures Management Inc. and Welton Investment
Systems Corporation (Incorporated by reference to Exhibit 10.8 of the
Registrant's Quarterly Report on Form 10-Q for the period ended March
31, 1994)
10.9-- Form of Foreign Currency Addendum to Brokerage Agreement between the
Registrant and Prudential Securities Incorporated (incorporated by
reference to Exhibit 10.9 to the Registrant's Quarterly Report on Form
10-Q for the period ended March 31, 1996)
13-- Registrant's 1996 Annual Report (With the exception of the information
and data incorporated by reference in Items 7 and 8 of this Annual
Report on Form 10-K, no other information or data appearing in the
Registrant's 1996 Annual Report is to be deemed filed as part of this
report) (filed herewith)
16.1-- Letter dated May 15, 1996 from Deloitte & Touche LLP to the Securities
and Exchange Commission regarding change in certifying accountant
(incorporated by reference to Exhibit 16.1 to the Registrant's Current
Report on Form 8-K dated May 14, 1996)
27.1-- 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>
8
<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 Securities Aggressive Growth Fund L.P.
By: Prudential Securities Futures Management Inc.
A Delaware Corporation, General Partner
By: /s/ Steven Carlino Date: March 27, 1997
------------------------------------------
Steven Carlino
Vice President and Chief Accounting Officer
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: Prudential Securities Futures Management Inc.
A Delaware Corporation, General Partner
By: /s/ James M. Kelso Date: March 27, 1997
----------------------------------------------
James M. Kelso
President and Director
By: /s/ Barbara J. Brooks Date: March 27, 1997
----------------------------------------------
Barbara J. Brooks
Treasurer and Chief Financial Officer
By: /s/ Steven Carlino Date: March 27, 1997
----------------------------------------------
Steven Carlino
Vice President
By: /s/ A. Laurence Norton, Jr. Date: March 27, 1997
----------------------------------------------
A. Laurence Norton, Jr.
Director
By: /s/ Guy S. Scarpaci Date: March 27, 1997
----------------------------------------------
Guy S. Scarpaci
Director
9
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1996
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Prudential Securities Annual
Aggressive Growth Fund L.P. Report
<PAGE>
<PAGE>
PRUDENTIAL SECURITIES AGGRESSIVE GROWTH FUND L.P.
LETTER TO THE LIMITED PARTNERS FOR THE YEAR ENDED DECEMBER 31, 1996 <PAGE>
1
<PAGE>
1177 Avenue of the Americas Telephone 212 596 7000
New York, NY 10036 Facsimile 212 596 8910
Price Waterhouse LLP (LOGO)
Report of Independent Accountants
January 29, 1997
To the General Partner and
Limited Partners of
Prudential Securities Aggressive Growth Fund L.P.
In our opinion, the accompanying statement of financial condition and the
related statements of operations and of changes in partners' capital present
fairly, in all material respects, the financial position of Prudential
Securities Aggressive Growth Fund L.P. (the ``Partnership'') at December 31,
1996, and the results of its operations and the changes in its partners' capital
for the year then ended, 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 audit. We conducted our audit 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 audit provides a reasonable basis for the
opinion expressed above.
/s/ Price Waterhouse LLP
2
<PAGE>
Deloitte &
Touche LLP
--------------------------------------------------------
Two World Financial Center Telephone: (212) 436-2000
New York, New York 10281-1414 Facsimile: (212) 436-5000
INDEPENDENT AUDITORS' REPORT
To the Partners of
Prudential Securities Aggressive Growth Fund L.P.
We have audited the accompanying statement of financial condition of Prudential
Securities Aggressive Growth Fund L.P. as of December 31, 1995, and the related
statements of operations and changes in partners' capital for the years ended
December 31, 1995 and 1994. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Prudential Securities Aggressive Growth Fund
L.P. as of December 31, 1995, and the results of its operations for the two
years ended December 31, 1995 and 1994 in conformity with generally accepted
accounting principles.
/s/ Deloitte & Touche LLP
January 29, 1996
- -----------------
Deloitte Touche
Tohmatsu
International
- -----------------
2A
<PAGE>
PRUDENTIAL SECURITIES AGGRESSIVE GROWTH FUND L.P.
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
December 31,
----------------------------
1996 1995
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
ASSETS
Equity in commodity trading accounts:
Cash $2,303,638 $ 1,857,161
U.S. Treasury bills, at amortized cost 7,205,981 10,500,166
Net unrealized gain on open commodity positions 239,559 653,980
------------ -----------
Net equity 9,749,178 13,011,307
Organizational costs, net 5,157 12,282
------------ -----------
Total assets $9,754,335 $13,023,589
------------ -----------
------------ -----------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable $ 650,836 $ 1,001,720
Accrued expenses 77,089 101,202
Options, at market 28,167 --
Management fees payable 16,082 21,539
------------ -----------
Total liabilities 772,174 1,124,461
------------ -----------
Commitments
Partners' capital
Limited partners (91,609.501 and 130,094.922 units outstanding) 8,892,274 11,704,062
General partner (926 and 2,168.070 units outstanding) 89,887 195,066
------------ -----------
Total partners' capital 8,982,161 11,899,128
------------ -----------
Total liabilities and partners' capital $9,754,335 $13,023,589
------------ -----------
------------ -----------
Net asset value per limited and general partnership unit
(``Units'') $ 97.07 $ 89.97
------------ -----------
------------ -----------
- ---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
3
<PAGE>
PRUDENTIAL SECURITIES AGGRESSIVE GROWTH FUND L.P.
(a limited partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------------
1996 1995 1994
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
REVENUES
Net realized gain (loss) on commodity
transactions $ 1,575,922 $ 4,296,778 $ (354,808)
Change in net unrealized gain/loss on open
commodity positions (415,076) 207,232 19,357
Interest from U.S. Treasury bills 404,667 584,056 449,334
Other interest income 87,021 100,146 --
------------ ------------ ------------
1,652,534 5,188,212 113,883
------------ ------------ ------------
EXPENSES
Commissions 801,140 1,021,543 1,151,714
Other transaction fees 61,589 91,697 165,469
Management fees 201,323 261,882 286,993
Incentive fees 21,247 285,701 344,430
General and administrative expenses 163,232 170,518 212,033
Amortization of organizational costs 4,221 6,919 9,093
------------ ------------ ------------
1,252,752 1,838,260 2,169,732
------------ ------------ ------------
Net income (loss) $ 399,782 $ 3,349,952 $ (2,055,849)
------------ ------------ ------------
------------ ------------ ------------
ALLOCATION OF NET INCOME (LOSS)
Limited partners $ 401,458 $ 3,305,512 $ (2,033,779)
------------ ------------ ------------
------------ ------------ ------------
General partner $ (1,676) $ 44,440 $ (22,070)
------------ ------------ ------------
------------ ------------ ------------
NET INCOME (LOSS) PER WEIGHTED
AVERAGE LIMITED AND GENERAL
PARTNERSHIP UNIT
Net income (loss) per weighted average limited
and general partnership unit $ 3.40 $ 20.98 $ (10.38)
------------ ------------ ------------
------------ ------------ ------------
Weighted average number of limited and general
partnership units 117,669.937 159,699.587 198,016.543
------------ ------------ ------------
------------ ------------ ------------
- ---------------------------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
<CAPTION>
LIMITED GENERAL
UNITS PARTNERS PARTNER TOTAL
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Partners' capital--December 31, 1993 178,994.055 $14,233,685 $144,218 $14,377,903
Additional capital contributions 40,818.157 3,093,100 29,000 3,122,100
Offering costs -- (55,690) (522) (56,212)
Net loss -- (2,033,779) (22,070) (2,055,849)
Redemptions (38,437.999) (2,787,362) -- (2,787,362)
----------- ----------- -------- -----------
Partners' capital--December 31, 1994 181,374.213 12,449,954 150,626 12,600,580
Additional capital contributions 70.675 5,000 -- 5,000
Offering costs -- (90) -- (90)
Net income -- 3,305,512 44,440 3,349,952
Redemptions (49,181.896) (4,056,314) -- (4,056,314)
----------- ----------- -------- -----------
Partners' capital--December 31, 1995 132,262.992 11,704,062 195,066 11,899,128
Net income (loss) -- 401,458 (1,676) 399,782
Redemptions (39,727.491) (3,213,246) (103,503) (3,316,749)
----------- ----------- -------- -----------
Partners' capital--December 31, 1996 92,535.501 $ 8,892,274 $ 89,887 $ 8,982,161
----------- ----------- -------- -----------
----------- ----------- -------- -----------
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
4
<PAGE>
PRUDENTIAL SECURITIES AGGRESSIVE GROWTH FUND L.P.
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
A. General
Prudential Securities Aggressive Growth Fund L.P. (the ``Partnership'') is a
Delaware limited partnership which was formed on February 17, 1993 and will
terminate on December 31, 2013 unless ended sooner under the provisions of the
Agreement of Limited Partnership (the ``Partnership Agreement''). On August 2,
1993, the Partnership completed its initial offering having raised $10,388,300
from the sale of 102,383 limited partnership units and 1,500 general partnership
units and commenced operations. 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. The Partnership was
formed to engage in the speculative trading of a portfolio consisting primarily
of commodity futures and forward contracts. The general partner is Prudential
Securities Futures Management Inc. (the ``General Partner''), a wholly-owned
subsidiary of Prudential Securities Incorporated (``PSI''), which in turn is a
wholly-owned subsidiary of Prudential Securities Group Inc. (``PSGI''). PSI was
the principal underwriter of the limited partnership units and is the commodity
broker (``Commodity Broker'') of the Partnership. The General Partner is
required to maintain at least such a 1% interest in the Partnership as long as
it is acting as the Partnership's general partner.
The General Partner generally maintains not less than seventy-five percent
(75%) of the net asset value 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 twenty-five percent (25%) is held in cash in the Partnership's
commodity trading accounts.
Sjo, Inc. and Welton Investment Systems Corporation (``WISC'') (each a
``Trading Manager'') currently make all the Partnership's trading decisions.
Effective April 15, 1994, all trading assets previously allocated to Colorado
Commodities Management Corp. (``CCM'') were allocated to WISC. 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 is reflected as net unrealized gain or
loss. Option 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 net asset value in U.S. Treasury bills to fulfill original margin
requirements. U.S. Treasury bills are carried at amortized cost, which
approximates market value. Interest earned on these obligations accrues for the
benefit of the Partnership. See Note D for additional discussion on interest
income.
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 period end, adjusted proportionately for Units contributed and
redeemed based on their respective time outstanding during such period.
5
<PAGE>
<PAGE>
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.
Profit and loss allocations, distributions, subscriptions and redemptions
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
monthly to all partners on a pro rata basis based on each partner's number of
Units outstanding during the month.
Distributions (other than on 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.
Additional Units were offered monthly at their month-end net asset value
until the continuous offering was terminated as discussed in Note A. Each
partner bore its pro rata portion of the Partnership's offering expenses. As
such, each new subscriber's investment experienced an immediate dilution of
approximately 1.8%.
The Partnership Agreement provides that a limited partner may redeem units as
of the last business day of any full calendar quarter at the then current net
asset value per Unit reduced by each Unit's pro rata portion of unamortized
organizational costs.
C. Costs, Fees and Expenses
Organizational and offering costs
The Partnership is responsible for all of its organizational and offering
expenses, subject to a limitation of 2% of the gross proceeds to the
Partnership. Costs incurred to organize the Partnership are considered deferred
organizational costs. These costs were capitalized and are being amortized over
a 60-month period. The capitalized costs are reduced by each redeeming Unit's
pro rata portion of the unamortized balance as discussed in Note B above. The
accumulated amortization as of December 31, 1996 and 1995 was $22,742 and
$18,521, respectively. As of December 31, 1996 and 1995, the organizational
costs have been reduced by each redeeming Unit's pro rata portion of the
unamortized balance in the amount of $2,904 and $4,310, respectively. Offering
costs were charged directly to partners' capital. Organizational and offering
costs in excess of the 2% limitation were the responsibility of the General
Partner and/or its affiliates.
Commissions
The General Partner, on behalf of the Partnership, entered into an agreement
with PSI to act as Commodity Broker whereby the Partnership pays a fixed monthly
fee for brokerage services rendered. The monthly fee equals 2/3 of 1% (8% per
annum) of the Partnership's net asset value as of the first day of each month.
In addition, the Partnership is obligated to pay the National Futures
Association, exchange and clearing fees incurred in connection with the
Partnership's commodity trading activities.
Management and incentive fees
The Partnership pays each Trading Manager a monthly management fee of 1/6 of
1% (2% per annum) of the portion of the Partnership's net asset value allocated
to that Trading Manager as of the last day of each month. In addition, the
Partnership pays each Trading Manager a monthly incentive fee equal to 15% of
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.) WISC is not entitled to receive an incentive fee
until it recoups $1,500,000 of the prior trading losses of Colorado Commodities
Management
6
<PAGE>
<PAGE>
Corp. (See Note A). As of December 31, 1996, WISC has recouped approximately
$262,000 of such prior trading losses.
General and administrative fees
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 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, 1996, 1995 and 1994
were:
<TABLE>
<CAPTION>
1996 1995 1994
-------- ---------- ----------
<S> <C> <C> <C>
Commissions $801,140 $1,021,543 $1,151,714
General and administrative 96,039 102,962 110,774
-------- ---------- ----------
$897,179 $1,124,505 $1,262,488
-------- ---------- ----------
-------- ---------- ----------
</TABLE>
Expenses payable to the General Partner and its affiliates (which are
included in accrued expenses) as of December 31, 1996 and 1995 were $21,231 and
$49,472, respectively.
The Partnership maintains its trading and cash accounts at PSI. Approximately
75% of the Partnership's net 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 commodity trading
activities.
Other interest income represents interest earned on equity balances held at
PSI beginning February 1, 1995.
In connection with the Partnership's interbank transactions, PSI engages in
foreign currency forward transactions with the Partnership and an affiliate of
PSI who, as principal, attempts to earn a profit on the bid-ask spreads (which
must be competitive) on any foreign currency forward transactions entered into
between the Partnership and PSI, on the one hand, and PSI and such affiliate on
the other. In connection with its trading of foreign currencies in the interbank
market, PSI may arrange bank lines of credit at major international banks. To
the extent such lines of credit are arranged, PSI does not charge the
Partnership for maintaining such lines of credit, but requires margin deposits
with respect to forward contract transactions.
As of December 31, 1996, a non-U.S. affiliate of the General Partner owns
361.248 limited partnership units of the Partnership.
E. Income Taxes
There have been no differences between the tax basis and book basis of
partners' capital from the commencement of operations through December 31, 1996.
F. 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
7
<PAGE>
<PAGE>
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 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, 1996 and 1995, such segregated assets totalled $6,681,753 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 $3,039,258 and $3,659,984 at December 31, 1996 and 1995,
respectively. There are no segregation requirements for assets related to
forward trading.
As of December 31, 1996 and 1995, the Partnership's open futures contracts
mature within one year and nine months, respectively. Additionally, open options
contracts as of December 31, 1996 mature within one year.
At December 31, 1996 and 1995, gross contract amounts of open futures and
options contracts are:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Financial Futures and Options Contracts:
Commitments to purchase $164,104,016 $236,546,535
Commitments to sell $ 27,390,279 $ 83,584,472
Currency Futures Contracts:
Commitments to purchase $ 6,277,845 $ --
Commitments to sell $ 2,997,574 $ 1,773,800
Other Futures Contracts:
Commitments to purchase $ 87,850 $ --
</TABLE>
The gross contract amounts represent the Partnership's potential involvement
in a particular class of financial instrument (if it were to take or make
delivery on an underlying futures or 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.
8
<PAGE>
<PAGE>
At December 31, 1996 and 1995, the fair value of open futures and options
contracts was:
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
------------------------- -----------------------
<S> <C> <C> <C> <C>
Fair Value Fair Value
------------------------- -----------------------
Assets Liabilities Assets Liabilities
---------- ----------- -------- -----------
Futures Contracts:
Domestic exchanges
Financial $ -- $ 1,350 $ 33,813 $ --
Currencies 150,473 5,008 16,938 11,088
Other -- 5,010 -- --
Foreign exchanges
Financial 236,276 135,822 624,634 10,317
Options Contracts:
Domestic exchanges
Financial -- 12,450 -- --
Foreign exchanges
Financial -- 15,717 -- --
---------- ----------- -------- -----------
$ 386,749 $ 175,357 $675,385 $ 21,405
---------- ----------- -------- -----------
---------- ----------- -------- -----------
</TABLE>
The following table presents the average fair value of futures and options
contracts during the years ended December 31, 1996 and 1995, respectively.
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31,1996 December 31, 1995
------------------------- -------------------------
<S> <C> <C> <C> <C>
Average Fair Value Average Fair Value
------------------------- -------------------------
Assets Liabilities Assets Liabilities
---------- ----------- ---------- -----------
Futures Contracts:
Domestic exchanges
Financial $ 14,043 $ 786 $ 44,694 $ 2,506
Currencies 82,753 7,711 58,886 12,572
Other 710 449 7,300 1,184
Foreign exchanges
Financial 393,777 32,558 671,085 56,330
Options Contracts:
Domestic exchanges
Financial -- 2,931 -- --
Foreign exchanges
Financial -- 1,209 -- --
---------- ----------- ---------- -----------
$ 491,283 $ 45,644 $ 781,965 $ 72,592
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
</TABLE>
9
<PAGE>
The following table presents the net realized gains (losses) and the change
in net unrealized gains/losses of futures and options contracts during the years
ended December 31, 1996 and 1995, respectively.
<TABLE>
<CAPTION>
Year Ended December 31, 1996 Year Ended December 31, 1995
-------------------------------------------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Change in Change in
Net Realized Net Unrealized Net Realized Net Unrealized
Gains (Losses) Gains/Losses Total Gains (Losses) Gains/Losses Total
-------------- -------------- ---------- -------------- -------------- ----------
Futures Contracts:
Domestic exchanges
Financial $ 35,663 $ (35,163) $ 500 $ 358,206 $ (107,143) $ 251,063
Currencies 73,183 139,615 212,798 350,232 5,851 356,083
Other 6,850 (5,010) 1,840 (220,605) -- (220,605)
Foreign exchanges
Financial 1,407,839 (513,863) 893,976 3,867,179 308,524 4,175,703
Currencies 3,036 -- 3,036 (77,759) -- (77,759)
Other -- -- -- 19,525 -- 19,525
Options Contracts:
Domestic exchanges
Financial 49,250 15,062 64,312 -- -- --
Foreign exchanges
Financial 101 (15,717) (15,616) -- -- --
-------------- -------------- ---------- -------------- -------------- ----------
$1,575,922 $ (415,076) $1,160,846 $4,296,778 $ 207,232 $4,504,010
-------------- -------------- ---------- -------------- -------------- ----------
-------------- -------------- ---------- -------------- -------------- ----------
</TABLE>
10
<PAGE>
PRUDENTIAL SECURITIES AGGRESSIVE GROWTH 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 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 December 31, 1996, 100% of the Partnership's 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 75% 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's
net 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 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 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.
Redemptions by limited partners recorded for the years ended December 31,
1996, 1995 and 1994 were $3,213,246, $4,056,314 and $2,787,362, respectively.
Redemptions by the General Partner for the year ended December 31, 1996 were
$103,503. Redemptions recorded from the commencement of operations in August
1993 through December 31, 1996 were $10,228,736 for the limited partners and
$103,503 for the General Partner. Future redemptions will impact the amount of
funds available for investments in commodity contracts in subsequent periods.
The Partnership does not have, nor does it expect to have, any capital
assets.
Results of Operations
The net asset value per Unit as of December 31, 1996 was $97.07, an increase
of 7.89% from the December 31, 1995 net asset value per Unit of $89.97, which
was an increase of 29.51% from the December 31, 1994 net asset value per Unit of
$69.47. The MAR (Managed Account Reports) Fund/Pool Index, which tracked the
performance of 420 futures funds for the year ended December 31, 1996, returned
11.89%, outperforming the Partnership. Past performance is not necessarily
indicative of future results.
The global interest rate market was the solid performer in 1996.
Specifically, the Partnership profited from British, Canadian, French, German,
Japanese, Italian and Spanish bond positions. In the first half of the year the
global interest rate market consolidated, primarily influenced by the quiet U.S.
bond market. Throughout the second half of the year global bond prices rose. The
U.S. bond market was helped by modest economic
11
<PAGE>
<PAGE>
growth coupled with inflation levels. European bond prices reflected optimism
for the European Monetary Union. In Japan, a deterioration of its stock market
drove investors to purchase bonds.
Interest income from U.S. Treasury bills decreased by approximately $179,000
for the year ended December 31, 1996 compared to 1995 due to lower interest
rates in 1996 and less funds available for investment in U.S. Treasury bills as
a result of redemptions and poor trading performance in the first half of 1996.
Interest income on U.S. Treasury bills increased by approximately $135,000 for
the year ended December 31, 1995 as compared to 1994 primarily due to higher
interest rates in 1995.
Other interest income consists of interest earned since February 1995 on
equity balances held at PSI. Other interest income for the year ended December
31, 1996 as compared to 1995 decreased by approximately $13,000 primarily due to
the Partnership's poor trading performance during the first half of 1996 which
reduced its monthly equity balances.
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 $220,000
for the year ended December 31, 1996 as compared to 1995 and decreased by
approximately $130,000 for the year ended December 31, 1995 as compared to 1994
primarily due to the effect of redemptions on the net asset value. The 1996
decrease was also affected by the Partnership's poor trading performance during
the first half of 1996 which reduced its monthly net asset values.
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 decreased by approximately $30,000 for the year
ended December 31, 1996 as compared to 1995 and decreased by approximately
$74,000 for the year ended December 31, 1995 as compared to 1994 due to
decreases in trading volume.
All trading decisions are currently being made by Sjo, Inc. and WISC.
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 by approximately $61,000 for the year ended December 31, 1996 as
compared to 1995 and decreased by approximately $25,000 for the year ended
December 31, 1995 as compared to 1994 primarily due to the effect of redemptions
on the net asset value. The 1996 decrease was also affected by the Partnership's
poor trading performance during the first half of 1996 which reduced its monthly
net asset values.
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. As discussed in Notes
A and C to the financial statements, during April 1994 WISC replaced Colorado
Commodities Management Corporation (``CCM'') as a Trading Manager to the
Partnership and is not entitled to receive an incentive fee until it recoups
$1,500,000 of the prior trading losses of CCM. As of December 31, 1996, WISC has
recouped approximately $262,000 of such prior trading losses. Sjo, Inc.
generated sufficient trading profits in each of the past three years (despite an
overall loss for the Partnership in 1994) to earn incentive fees of
approximately $21,000, $286,000 and $344,000 for the years ended December 31,
1996, 1995 and 1994, respectively.
General and administrative expenses decreased by approximately $7,000 for the
year ended December 31, 1996 as compared to 1995 and decreased by approximately
$42,000 for the year ended December 31, 1995 as compared to 1994. Expenses
include reimbursements of costs incurred by the General Partner on behalf of the
Partnership in addition to accounting, audit, tax and legal fees and printing
and postage costs. These decreases were due to the elimination of costs
associated with the continuous offering of the Partnership's units, which
terminated on January 31, 1995, as well as continuing declines in printing and
postage costs as partners redeem their units.
Inflation
Inflation has had no material impact on operations or on the financial
condition of the Partnership from inception through December 31, 1996.
12
<PAGE>
- --------------------------------------------------------------------------------
I hereby affirm that, to the best of my knowledge and belief, the information
contained herein relating to Prudential Securities Aggressive Growth Fund L.P.
is accurate and complete.
PRUDENTIAL SECURITIES FUTURES
MANAGEMENT INC.
(General Partner)
By: Barbara J. Brooks
Treasurer and Chief Financial Officer
- --------------------------------------------------------------------------------
13
<PAGE>
OTHER INFORMATION
The actual round-turn equivalent of brokerage commissions paid per contract
for the year ended December 31, 1996 was $44.
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 Securities Aggressive Growth Fund L.P.
P.O. Box 2016
Peck Slip Station
New York, NY 10272-2016
14
<PAGE>
Peck Slip Station BULK RATE
P.O. Box 2016 U.S. POSTAGE
New York, NY 10272 PAID
Automatic Mail
AGGGROWTH/17217-4
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for Prudential Securities Aggressive
Growth Fund LP and is qualified in its entirety
by reference to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000899174
<NAME> Prudential Securities Aggressive Growth Fund LP
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-1-1996
<PERIOD-END> Dec-31-1996
<PERIOD-TYPE> 12-Mos
<CASH> 2,303,638
<SECURITIES> 7,445,540
<RECEIVABLES> 5,157
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 9,754,335
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 9,754,335
<CURRENT-LIABILITIES> 772,174
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 8,982,161
<TOTAL-LIABILITY-AND-EQUITY> 9,754,335
<SALES> 0
<TOTAL-REVENUES> 1,652,534
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,252,752
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 399,782
<EPS-PRIMARY> 3.40
<EPS-DILUTED> 0
</TABLE>
