<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, 1997
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
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
One New York Plaza, 13th Floor, New York, NY 10292
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(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
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Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
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(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 6,
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, 1997 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.
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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.................. 7
Financial Statements and Financial Statement Schedules........................... 7
Exhibits......................................................................... 7
Reports on Form 8-K.............................................................. 8
SIGNATURES.................................................................................. 9
</TABLE>
2
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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
Amended and Restated 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, forward and options
contracts. On August 2, 1993, the Registrant completed its initial offering with
sales of 102,383 units of limited partnership interest and 1,500 units of
general partnership interest (collectively, '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.
Since October 1, 1997, trading decisions for the Registrant are made by Eagle
Trading Systems, Inc. ('Eagle') and Welton Investment Systems Corporation,
independent commodity trading managers. Eagle replaced Sjo, Inc. ('Sjo') as a
trading manager effective October 1, 1997. Eagle receives management fees at the
same rate ad did Sjo (a monthly fee on traded assets equal to a 2% annual rate).
In addition, Eagle earns a quarterly incentive fee equal to 23% of New High Net
Trading Profits (as defined in the Advisory Agreement among the Registrant, the
General Partner and Eagle) as compared to a monthly incentive fee of 15% paid to
Sjo. Except for the October 1, 1997 replacement of Sjo, there were no changes in
trading managers during the three years ended December 31, 1997. 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, forward and
options 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, 1997 ('Registrant's
1997 Annual Report') which is filed as an exhibit hereto.
Item 2. Properties
The Registrant does not own or lease any property.
3
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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 5, 1998, there were 544 holders of record owning 66,363.974 Units
which include 664 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 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 1997
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)
1997 1996 1995 1994 to December 31, 1993
---------- ---------- ----------- ------------ -------------------------------
<S> <C> <C> <C> <C> <C>
Net realized gain (loss)
on commodity
transactions............ $ 393,201 $1,575,922 $ 4,296,778 $ (354,808 ) $(2,373,585)
---------- ---------- ----------- ------------ ---------------
---------- ---------- ----------- ------------ ---------------
Change in net unrealized
gain on open commodity
positions............... $ (40,219) $ (415,706) $ 207,232 $ 19,357 $ 427,391
---------- ---------- ----------- ------------ ---------------
---------- ---------- ----------- ------------ ---------------
Commissions............... $ 622,043 $ 801,140 $ 1,021,543 $ 1,151,714 $ 389,655
---------- ---------- ----------- ------------ ---------------
---------- ---------- ----------- ------------ ---------------
Management fees........... $ 155,528 $ 201,323 $ 261,882 $ 286,993 $ 104,862
---------- ---------- ----------- ------------ ---------------
---------- ---------- ----------- ------------ ---------------
Incentive fees............ $ 19,952 $ 21,247 $ 285,701 $ 344,430 $ 43,690
---------- ---------- ----------- ------------ ---------------
---------- ---------- ----------- ------------ ---------------
Net income (loss)......... $ (201,966) $ 399,782 $ 3,349,952 $(2,055,849 ) $(2,548,262)
---------- ---------- ----------- ------------ ---------------
---------- ---------- ----------- ------------ ---------------
Allocation of net income
(loss)
Limited partners........ $ (199,983) $ 401,458 $ 3,305,512 $(2,033,779 ) $(2,520,630)
---------- ---------- ----------- ------------ ---------------
---------- ---------- ----------- ------------ ---------------
General partner......... $ (1,983) $ (1,676) $ 44,440 $ (22,070 ) $ (27,632)
---------- ---------- ----------- ------------ ---------------
---------- ---------- ----------- ------------ ---------------
Net income (loss) per
weighted average Unit... $ (2.44) $ 3.40 $ 20.98 $ (10.38 ) $ (17.23)
---------- ---------- ----------- ------------ ---------------
---------- ---------- ----------- ------------ ---------------
Total assets.............. $6,978,978 $9,754,335 $13,023,589 $13,757,176 $14,758,541
---------- ---------- ----------- ------------ ---------------
---------- ---------- ----------- ------------ ---------------
Redemptions............... $2,487,230 $3,316,749 $ 4,056,314 $ 2,787,362 $ 171,814
---------- ---------- ----------- ------------ ---------------
---------- ---------- ----------- ------------ ---------------
Net asset value per
Unit.................... $ 94.83 $ 97.07 $ 89.97 $ 69.47 $ 80.33
---------- ---------- ----------- ------------ ---------------
---------- ---------- ----------- ------------ ---------------
</TABLE>
4
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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 1997 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 1997 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 10% of the Registrant's Units ('Ten Percent Owners') are
required to report their initial ownership of such Units and any subsequent
changes in that ownership to the Securities and Exchange Commission on Forms 3,
4, or 5. Such executive officers, directors and Ten Percent Owners are required
by Securities and Exchange Commission regulations to furnish the Registrant with
copies of all Forms 3, 4 and 5 they file. All of these filing requirements were
satisfied on a timely basis. 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
Thomas M. Lane, Jr. 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
THOMAS M. LANE, JR., age 49, is the President and a Director of Prudential
Securities Futures Management Inc. He is also the President and a Director of
Seaport Futures Management, Inc. Mr. Lane has been a Senior Vice President of
Futures Sales and Execution Services in the Futures Division since joining PSI
in September 1995. Prior to joining PSI, Mr. Lane was employed by Merrill Lynch
as the Vice President of Group Future Sales and Marketing from November 1983
until September 1995, and prior to that, Imperial Chemical as a Marketing
Manager.
BARBARA J. BROOKS, age 49, 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 34, 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 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 59, 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
5
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<PAGE>
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 51, 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.
During December 1997, Thomas M. Lane, Jr. replaced James M. Kelso as
President and as a Director of Prudential Securities Futures Management Inc.
There are no family relationships among any of the foregoing directors or
executive officers. All of the foregoing directors and/or executive officers
have indefinite terms.
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 5, 1998, 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 5, 1998, no director or executive officer of the General Partner
owns directly or beneficially any of the Units issued by the Registrant.
As of March 5, 1998, no partner beneficially owns more than five percent 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 1997 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
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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 Report of Independent Accountants (incorporated by
reference to the Registrant's 1997 Annual Report which is filed as an
exhibit hereto)
Reports of Independent Accountants:
Report of Independent Accountants at December 31, 1997 and 1996 and for the
years then ended 2
Independent Auditors' Report for the year ended December 31, 1995 2A
Financial Statements:
Statements of Financial Condition--December 31, 1997 and 1996 3
Statements of Operations--Three years ended December 31, 1997 4
Statements of Changes in Partners' Capital--Three years ended December 31,
1997 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)
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)
</TABLE>
7
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<TABLE>
<S> <C> <C> <C> <C>
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)
10.10-- Advisory Agreement, dated October 1, 1997, among the Registrant,
Prudential Securities Futures Management Inc. and Eagle Trading
Systems, Inc. (incorporated by reference to Exhibit 10.10 of the
Registrant's Quarterly Report on Form 10-Q for the period ended
September 30, 1997)
13-- Registrant's 1997 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 1997 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
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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 30, 1998
------------------------------------
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/ Thomas M. Lane, Jr. Date: March 30, 1998
-----------------------------------------
Thomas M. Lane, Jr.
President and Director
By: /s/ Barbara J. Brooks Date: March 30, 1998
----------------------------------------
Barbara J. Brooks
Treasurer and Chief Financial Officer
By: /s/ Steven Carlino Date: March 30, 1998
---------------------------------------
Steven Carlino
Vice President
By: Date: March , 1998
---------------------------------------
A. Laurence Norton, Jr.
Director
By: /s/ Guy S. Scarpaci Date: March 30, 1998
----------------------------------------
Guy S. Scarpaci
Director
9
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1997
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Prudential Securities Annual
Aggressive Growth Fund L.P. Report
<PAGE>
PRUDENTIAL SECURITIES AGGRESSIVE GROWTH FUND L.P.
March 1998
Dear Limited Partner:
Enclosed is the Annual Report of Prudential Securities Aggressive Growth Fund
L.P. (the 'Fund') for the year ended December 31, 1997, including the audited
financial statements for the Fund which contain, among other things, the
operating results for the year.
The Fund incurred a loss of 2.31% in 1997. The MAR (Managed Account Reports)
Fund/Pool Index, which tracked the performance of 315 futures funds for the year
ended December 31, 1997, returned 9.34%, outperforming the Fund. At year-end,
the Fund's net asset value per unit was $94.83*. Past performance is not
necessarily indicative of future results.
During the course of the year, the Fund incurred losses in the currency, metal,
grain and soft sectors. Slightly offsetting losses, the Fund had gains in the
financial, index and energy sectors. Further information with respect to the
Fund's performance is included in the section of the report entitled
'Management's Discussion and Analysis of Financial Condition and Results of
Operations.'
As of October 1, 1997, Sjo, Inc. no longer served as a Trading Advisor to the
Fund. Assets of the Fund formerly managed by Sjo, Inc. were reallocated to the
Eagle Global Diversified and Eagle-FX programs managed by Eagle Trading Systems,
Inc. We believe that these programs more effectively complement the performance
of the Fund.
We value your continued participation as a Limited Partner of the Fund. Should
you have any questions, please contact your Prudential Securities Financial
Advisor. For account status inquiries, contact Prudential Securities Client
Services at 1-800-535-2077.
Sincerely,
Thomas M. Lane, Jr.
President and Director
Prudential Securities Futures Management Inc.
*As of March 25, 1998, the estimated net asset value per unit was $101.75.
1
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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 26, 1998
To the General Partner and
Limited Partners of
Prudential Securities Aggressive Growth Fund L.P.
In our opinion, the accompanying statements of financial condition and the
related statements of operations and changes in partners' capital present
fairly, in all material respects, the financial position of Prudential
Securities Aggressive Growth Fund L.P. at December 31, 1997 and 1996, and the
results of its operations for the years 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 audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by the general
partner, and evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
2
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Deloitte &
Touche LLP
(LOGO)
- ------------------------------------------------------------------------------
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 statements of operations and of changes in
partners' capital of Prudential Securities Aggressive Growth Fund L.P. for the
year ended December 31, 1995. 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 audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the results of operations and changes in partners' capital of
Prudential Securities Aggressive Growth Fund L.P. for the year ended December
31, 1995 in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
January 29, 1996
2A
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<PAGE>
PRUDENTIAL SECURITIES AGGRESSIVE GROWTH FUND L.P.
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
December 31,
---------------------------
1997 1996
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
ASSETS
Equity in commodity trading accounts:
Cash $1,811,247 $2,303,638
U.S. Treasury bills, at amortized cost 5,035,022 7,205,981
Net unrealized gain on open commodity positions 131,368 239,559
------------ ----------
Net equity 6,977,637 9,749,178
Organizational costs, net 1,341 5,157
------------ ----------
Total assets $6,978,978 $9,754,335
------------ ----------
------------ ----------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Redemptions payable $ 597,404 $ 650,836
Accrued expenses 73,381 77,089
Management fees payable 11,503 16,082
Options, at market 3,725 28,167
------------ ----------
Total liabilities 686,013 772,174
------------ ----------
Commitments
Partners' capital
Limited partners (65,699.974 and 91,609.501 units outstanding) 6,230,001 8,892,274
General partner (664 and 926 units outstanding) 62,964 89,887
------------ ----------
Total partners' capital 6,292,965 8,982,161
------------ ----------
Total liabilities and partners' capital $6,978,978 $9,754,335
------------ ----------
------------ ----------
Net asset value per limited and general partnership unit ('Units') $ 94.83 $ 97.07
------------ ----------
------------ ----------
- ---------------------------------------------------------------------------------------------------
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,
---------------------------------------------
1997 1996 1995
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
REVENUES
Net realized gain on commodity transactions $ 393,201 $ 1,575,922 $ 4,296,778
Change in net unrealized gain on open commodity
positions (40,219) (415,076) 207,232
Interest income 452,931 491,688 684,202
----------- ------------ ------------
805,913 1,652,534 5,188,212
----------- ------------ ------------
EXPENSES
Commissions 622,043 801,140 1,021,543
Other transaction fees 48,740 61,589 91,697
Management fees 155,528 201,323 261,882
Incentive fees 19,952 21,247 285,701
General and administrative expenses 158,710 163,232 170,518
Amortization of organizational costs 2,906 4,221 6,919
----------- ------------ ------------
1,007,879 1,252,752 1,838,260
----------- ------------ ------------
Net income (loss) $ (201,966) $ 399,782 $ 3,349,952
----------- ------------ ------------
----------- ------------ ------------
ALLOCATION OF NET INCOME (LOSS)
Limited partners $ (199,983) $ 401,458 $ 3,305,512
----------- ------------ ------------
----------- ------------ ------------
General partner $ (1,983) $ (1,676) $ 44,440
----------- ------------ ------------
----------- ------------ ------------
NET INCOME (LOSS) PER WEIGHTED
AVERAGE LIMITED AND GENERAL
PARTNERSHIP UNIT
Net income (loss) per weighted average limited and
general partnership unit $ (2.44) $ 3.40 $ 20.98
----------- ------------ ------------
----------- ------------ ------------
Weighted average number of limited and general
partnership units outstanding 82,842 117,670 159,700
----------- ------------ ------------
----------- ------------ ------------
- ---------------------------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
<CAPTION>
LIMITED GENERAL
UNITS PARTNERS PARTNER TOTAL
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
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
Net loss -- (199,983) (1,983) (201,966)
Redemptions (26,171.527) (2,462,290) (24,940) (2,487,230)
----------- ----------- -------- -----------
Partners' capital--December 31, 1997 66,363.974 $ 6,230,001 $ 62,964 $ 6,292,965
----------- ----------- -------- -----------
----------- ----------- -------- -----------
- ----------------------------------------------------------------------------------------------------
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
Amended and Restated 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 (collectively, '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, forward and options 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 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 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 25% is held in cash in
the Partnership's commodity trading accounts.
All trading decisions for the Partnership since October 1, 1997 are made by
Eagle Trading Systems, Inc. ('Eagle') and Welton Investment Systems Corporation
('WISC'), independent commodity trading managers. Eagle replaced Sjo, Inc.
('Sjo') as a trading manager effective October 1, 1997. Eagle receives
management fees at the same rate as did Sjo (a monthly fee on traded assets
equal to a 2% annual rate). In addition, Eagle earns a quarterly incentive fee
equal to 23% of New High Net Trading Profits (as defined in the Advisory
Agreement among the Partnership, the General Partner and Eagle) as compared to a
monthly incentive fee of 15% paid to Sjo. Except for the October 1, 1997
replacement of Sjo, there were no changes in trading managers during the three
years ended December 31, 1997. Eagle, WISC and Sjo are collectively referred to
as the 'Trading Managers.' 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.
5
<PAGE>
The weighted average number of limited and general partnership units
outstanding was computed for purposes of disclosing net income (loss) per
weighted average limited and general partnership unit. The weighted average
limited and general partnership units are equal to the number of Units
outstanding at year end, adjusted proportionately for Units contributed and
redeemed based on their respective time outstanding during the year.
Certain balances from prior years have been reclassified to conform with the
current financial statement presentation.
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, 1997 and 1996 was $25,648 and
$22,742, respectively. As of December 31, 1997 and 1996, the organizational
costs have been reduced by each redeeming Unit's pro rata portion of the
unamortized balance in the amount of $910 and $2,904, respectively. Offering
costs were charged directly to partners' capital. Organizational and offering
costs in excess of the two percent 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.
6
<PAGE>
<PAGE>
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 WISC a monthly incentive fee equal to 15% and Eagle a quarterly
incentive fee equal to 23% of the 'New High Net Trading Profits' (as defined in
the Advisory Agreement among the Partnership, the General Partner and each
Trading Manager).
See Note A for further information concerning changes to incentive fees
during 1997.
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, 1997, 1996 and 1995
were:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- ----------
<S> <C> <C> <C>
Commissions $622,043 $801,140 $1,021,543
General and administrative 92,905 96,039 102,962
-------- -------- ----------
$714,948 $897,179 $1,124,505
-------- -------- ----------
-------- -------- ----------
</TABLE>
Expenses payable to the General Partner and its affiliates (which are
included in accrued expenses) as of December 31, 1997 and 1996 were $19,078 and
$21,231, respectively.
The Partnership maintains its trading and cash accounts at PSI. Except for
the portion of assets that is deposited as margin to maintain forward currency
contract positions as further discussed below, the Partnership's assets are
maintained either with PSI or, for margin purposes, with the various exchanges
on which the Partnership is permitted to trade.
The Partnership, acting through its Trading Managers, executes
over-the-counter, spot, forward and/or option foreign exchange transactions with
PSI. PSI then engages in back-to-back trading with an affiliate,
Prudential-Bache Global Markets Inc. ('PBGM'). PBGM attempts to earn a profit on
such transactions. PBGM keeps its prices on foreign currency competitive with
other interbank currency trading desks. All over-the-counter currency
transactions are conducted between PSI and the Partnership pursuant to a line of
credit. PSI may require that collateral be posted against the market-to-market
position of the Partnership.
PSI credits the Partnership monthly with 100% of the interest it earns on the
average equity balances in the Partnership's accounts.
As of December 31, 1997, a non-U.S. affiliate of the General Partner owns
249.772 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, 1997.
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
7
<PAGE>
<PAGE>
(or commodities underlying the contracts) frequently result in changes in the
Partnership's unrealized gain (loss) on open commodity positions reflected in
the statements of financial condition. The Partnership's exposure to market risk
is influenced by a number of factors including the relationships among the
contracts held by the Partnership as well as the liquidity of the markets in
which the contracts are traded.
Futures and options contracts are traded on organized exchanges and are thus
distinguished from forward contracts which are entered into privately by the
parties. The credit risks associated with futures and options contracts are
typically perceived to be less than those associated with forward contracts,
because exchanges typically provide clearinghouse arrangements in which the
collective credit (subject to certain limitations) of the members of the
exchanges is pledged to support the financial integrity of the exchange. On the
other hand, the Partnership must rely solely on the credit of its broker (PSI)
with respect to forward transactions. The Partnership presents unrealized gains
and losses on open forward positions as a net amount in the statements of
financial condition because it has a master netting agreement with PSI.
The General Partner attempts to minimize both credit and market risks by
requiring the Partnership's Trading Managers to abide by various trading
limitations and policies. The General Partner monitors compliance with these
trading limitations and policies which include, but are not limited to,
executing and clearing all trades with creditworthy counterparties (currently,
PSI is the sole counterparty or broker); limiting the amount of margin or
premium required for any one commodity or all commodities combined; and
generally limiting transactions to contracts which are traded in sufficient
volume to permit the taking and liquidating of positions. The General Partner
may impose additional restrictions (through modifications of such trading
limitations and policies) upon the trading activities of the Trading Managers as
it, in good faith, deems to be in the best interests of the Partnership.
PSI, when acting as the Partnership's futures commission merchant in
accepting orders for the purchase or sale of domestic futures and options
contracts, is required by Commodity Futures Trading Commission ('CFTC')
regulations to separately account for and segregate as belonging to the
Partnership all assets of the Partnership relating to domestic futures and
options trading and is not to commingle such assets with other assets of PSI. At
December 31, 1997 and 1996, such segregated assets totalled $5,383,588 and
$6,681,753, 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 $1,615,755 and $3,039,258 at December 31, 1997 and 1996,
respectively. There are no segregation requirements for assets related to
forward trading.
As of December 31, 1997, the Partnership's open futures, forward and options
contracts mature within three months.
At December 31, 1997 and 1996, gross contract amounts of open futures,
forward and options contracts are:
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Financial Futures and Options Contracts:
Commitments to purchase $31,963,286 $164,104,016
Commitments to sell 3,430,271 27,390,279
Currency Futures Contracts:
Commitments to purchase 1,371,557 6,277,845
Commitments to sell 7,726,254 2,997,574
Currency Forward Contracts:
Commitments to purchase 173,921 --
Commitments to sell 8,190,630 --
Other Futures Contracts:
Commitments to purchase 48,400 87,850
Commitments to sell 3,413,653 --
</TABLE>
The gross contract amounts represent the Partnership's potential involvement
in a particular class of financial instrument (if it were to take or make
delivery on an underlying futures, forward or options contract). The gross
contract amounts significantly exceed the future cash requirements as the
Partnership intends to close out open positions prior to settlement and thus is
generally subject only to the risk of loss arising from the change in the value
of the contracts. As such, the Partnership considers the 'fair value' of its
futures, forward and options contracts to be the net unrealized gain or loss on
the contracts (plus premiums on
8
<PAGE>
<PAGE>
options). Thus, the amount at risk associated with counterparty nonperformance
of all contracts is the net unrealized gain included in the statements of
financial condition. The market risk associated with the Partnership's
commitments to purchase commodities is limited to the gross contract amounts
involved, while the market risk associated with its commitments to sell is
unlimited since the Partnership's potential involvement is to make delivery of
an underlying commodity at the contract price; therefore, it must repurchase the
contract at prevailing market prices.
At December 31, 1997 and 1996, the fair value of open futures, forward and
options contracts was:
<TABLE>
<CAPTION>
1997 1996
----------------------- -----------------------
<S> <C> <C> <C> <C>
Assets Liabilities Assets Liabilities
-------- ----------- -------- -----------
Futures Contracts:
Domestic exchanges
Financial $ 4,438 $ -- $ -- $ 1,350
Currencies 77,423 20,787 150,473 5,008
Other 107,158 -- -- 5,010
Foreign exchanges
Financial 33,537 2,970 236,276 135,822
Other 6,400 48,400 -- --
Forwards Contracts:
Currencies 170,173 195,604 -- --
Options Contracts:
Domestic exchanges
Financial -- 3,725 -- 12,450
Foreign exchanges
Financial -- -- -- 15,717
-------- ----------- -------- -----------
$399,129 $ 271,486 $386,749 $ 175,357
-------- ----------- -------- -----------
-------- ----------- -------- -----------
</TABLE>
The following table presents the average fair value of futures, forward and
options contracts during the years ended December 31, 1997 and 1996,
respectively.
<TABLE>
<CAPTION>
1997 1996
----------------------- -----------------------
<S> <C> <C> <C> <C>
Assets Liabilities Assets Liabilities
-------- ----------- -------- -----------
Futures Contracts:
Domestic exchanges
Financial $ 16,325 $ 851 $ 14,043 $ 786
Currencies 103,491 8,945 82,753 7,711
Other 8,243 2,066 710 449
Foreign exchanges
Financial 168,893 33,150 393,777 32,558
Currencies 33,454 38,896 -- --
Other 492 18,981 -- --
Forwards Contracts:
Currencies 19,630 28,425 -- --
Options Contracts:
Domestic exchanges
Financial -- 24,578 -- 2,931
Currencies 2,215 6,673 -- --
Foreign exchanges
Financial 3,787 2,501 -- 1,209
-------- ----------- -------- -----------
$356,530 $ 165,066 $491,283 $45,644
-------- ----------- -------- -----------
-------- ----------- -------- -----------
</TABLE>
9
<PAGE>
<PAGE>
The following table presents the trading revenues from futures, forward and
options contracts during the three years ended December 31, 1997:
<TABLE>
<CAPTION>
1997 1996 1995
--------- ---------- ----------
<S> <C> <C> <C>
Futures Contracts:
Domestic exchanges
Financial $ 138,719 $ 500 $ 251,063
Currencies (64,498) 212,798 356,083
Other 37,086 1,840 (220,605)
Foreign exchanges
Financial 267,972 893,976 4,175,703
Currencies -- 3,036 (77,759)
Other (92,775) -- 19,525
Forwards Contracts:
Currencies (25,431) -- --
Options Contracts:
Domestic exchanges
Financial 89,241 64,312 --
Currencies 34,794 -- --
Foreign exchanges
Financial (32,126) (15,616) --
--------- ---------- ----------
$ 352,982 $1,160,846 $4,504,010
--------- ---------- ----------
--------- ---------- ----------
</TABLE>
10
<PAGE>
<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 net
proceeds of $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, 1997, 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 73% 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 has been 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,
1997, 1996 and 1995 were $2,462,290, $3,213,246 and $4,056,314, respectively.
Redemptions by the General Partner for the years ended December 31, 1997 and
1996 were $24,940 and $103,503, respectively. Redemptions recorded from the
commencement of operations in August 1993 through December 31, 1997 were
$12,691,026 for the limited partners and $128,443 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.
Effective October 1, 1997, all assets previously managed by Sjo were
reallocated to Eagle. Eagle receives management fees at the same rate as did Sjo
(a monthly fee on traded assets equal to a 2% annual rate). In addition, Eagle
earns a quarterly incentive fee equal to 23% of New High Trading Profits (as
defined in the Advisory Agreement among the Partnership, the General Partner and
Eagle) as compared to a monthly incentive fee of 15% paid to Sjo.
Results of Operations
The net asset value per Unit as of December 31, 1997 was $94.83, a decrease
of 2.31% from the December 31, 1996 net asset value per Unit of $97.07, which
was an increase of 7.89% from the December 31, 1995 net asset value per Unit of
$89.97. The MAR (Managed Account Reports) Fund/Pool Index, which tracked the
performance of 315 futures funds for the year ended December 31, 1997, returned
9.34%, outperforming the Partnership. Past performance is not necessarily
indicative of future results.
During 1997, the Partnership incurred losses in the currency, metal, grain
and soft sectors. Slightly offsetting losses, the Partnership had gains in the
financial, index and energy sectors.
11
<PAGE>
<PAGE>
In the financial sector, the Partnership had gains as assets continued to
flow out of the Asian sector and into U.S. and European markets. The Partnership
also generated gains in S&P 500, German DAX and FTSE 100 positions. Gains were
outweighed by losses in the currency sector as many currency prices responded to
the flight to quality into Europe. Losses were also incurred in aluminum.
The Partnership earns interest on its investments in U.S. Treasury bills
(approximately 75% of its net asset value) and receives an interest credit from
PSI on the remaining 25% of its net asset value. Interest income decreased by
approximately $39,000 for the year ended December 31, 1997 as compared to 1996
primarily as a result of redemptions during 1996 and 1997 which reduced the
Partnership's net assets, including its investments in U.S. Treasury bills.
Interest income decreased by approximately $193,000 for the year ended December
31, 1996 as compared to 1995 primarily due to lower interest rates in 1996 and a
decline in net assets as a result of redemptions and poor trading performance in
the first half of 1996.
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 $179,000
for the year ended December 31, 1997 as compared to 1996 and approximately
$220,000 for the year ended December 31, 1996 as compared to 1995 primarily due
to the effect of redemptions on the monthly net asset values. The 1996 decrease
was also affected by the Partnership's poor trading performance during the first
half of 1996 which further 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 $13,000 for the year
ended December 31, 1997 as compared to 1996 and approximately $30,000 for the
year ended December 31, 1996 as compared to 1995 due to decreases in trading
volume.
All trading decisions are currently being made by Eagle (Eagle replaced Sjo
effective October 1, 1997 as discussed in Liquidity and Capital Resources above)
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 and redemptions. Management fees
decreased by approximately $46,000 for the year ended December 31, 1997 as
compared to 1996 and approximately $61,000 for the year ended December 31, 1996
as compared to 1995 for the same reasons commissions decreased as described
above.
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. WISC generated
sufficient trading profits to earn approximately $20,000 in incentive fees
during the year ended December 31, 1997. Sjo generated sufficient trading
profits in 1996 and 1995 to earn incentive fees of approximately $21,000 and
$286,000 for the years ended December 31, 1996 and 1995, respectively. See
Liquidity and Capital Resources above for information concerning changes to
incentive fees during 1997.
General and administrative expenses decreased by approximately $5,000 for the
year ended December 31, 1997 as compared to 1996 and approximately $7,000 for
the year ended December 31, 1996 as compared to 1995. Expenses include
reimbursements of costs incurred by the General Partner on behalf of the
Partnership in addition to accounting, audit, tax and legal fees as well as
printing and postage costs related to reports sent to limited partners.
Inflation
Inflation has had no material impact on operations or on the financial
condition of the Partnership from inception through December 31, 1997.
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, 1997 was $43.
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-31-1997
<PERIOD-START> Jan-1-1997
<PERIOD-END> Dec-31-1997
<PERIOD-TYPE> 12-Mos
<CASH> 1,811,247
<SECURITIES> 5,166,390
<RECEIVABLES> 1,341
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,978,978
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,978,978
<CURRENT-LIABILITIES> 686,013
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,292,965
<TOTAL-LIABILITY-AND-EQUITY> 6,978,978
<SALES> 0
<TOTAL-REVENUES> 805,913
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,007,879
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (201,966)
<EPS-PRIMARY> (2.44)
<EPS-DILUTED> 0
</TABLE>
