Item 1. Business
General
Prudential-Bache OptiMax Futures Fund, L.P. (the 'Registrant'), a Delaware limited partnership, was formed on July 12, 1990 and will terminate on December 31, 2010 unless terminated sooner under the provisions of the Agreement of Limited Partnership (the 'Partnership Agreement'), as amended. The Registrant was formed to engage in speculative trading of a portfolio consisting primarily of commodity futures, forward and options contracts. On February 15, 1991, the Registrant completed its offering of units and raised $64,000,000 of Class A units and $6,309,500 of Class B units from the sale of 633,563 Class A and 62,470 Class B units of limited partnership interest and 6,437 Class A and 625 Class B units of general partnership interest (the 'Class A Units' and the 'Class B Units,' and collectively, the 'Units') which resulted in net proceeds to the Registrant of $68,609,503. The Registrant's fiscal year for book and tax purposes ends on December 31.
Through March 31, 1996, the Registrant maintained two classes (each a 'Class') of Units. At the inception of the Registrant, 60% of the net asset value of the Class A Units and 100% of the net asset value of the Class B Units were allocated to commodities trading. As a protective device in conjunction with the letter of credit (see further discussion below), the remaining 40% was placed in reserve (the 'Reserve Assets') and was not committed to commodities trading until March 31, 1996 (the 'Capital Return Date'). On the Capital Return Date, the letter of credit expired and the Reserve Assets were allocated evenly to Robert M. Tamiso ('Tamiso') and Hyman Beck & Company, Inc. ('Hyman Beck'), new independent commodities trading managers to the Registrant.
On April 1, 1996, in conjunction with the expiration of the letter of credit and maturity of the Reserve Assets as discussed above, the general partner merged the Class A Units and the Class B Units in accordance with Article X, Section B(16) of the Partnership Agreement into a newly created Class of Units called the OptiMax Units. Each Class A Unit was exchanged into one new Optimax Unit and each Class B Unit was exchanged into .99467 new OptiMax Unit.
The Registrant is engaged solely in the business of commodity futures, forward and options trading; therefore, presentation of industry segment information is not applicable.
Letter of Credit
An irrevocable letter of credit ('Letter of Credit') was issued in favor of the Partnership by Citibank, N.A. (the 'Bank') on February 15, 1991. The Letter of Credit was intended to provide protection to the Class A limited partners against loss of their initial investment as of the Capital Return Date when the limited partners had the option to redeem their Class A Units and receive the greater of the then current net asset value per Class A Unit or 100% of their initial investment. The Letter of Credit expired on the Capital Return Date (with no payment required by the Bank) and does not provide protection thereafter.
Trading Managers
All trading decisions for the Registrant are currently being made by Eagle Trading Systems, Inc. ('Eagle'), Tamiso and Hyman Beck. Effective May 1, 1997, all assets previously managed by Chesapeake Capital Corporation ('Chesapeake') were reallocated to Eagle pursuant to its Eagle-Global System trading program. The monthly management fee paid to Eagle equals 1/6 of 1% (a 2% annual rate) of its net asset value as compared to 5/24 of 1% (a 2.5% annual rate) paid to Chesapeake. The quarterly incentive fee paid to Eagle equals 23% of the New High Net Trading Profits (as defined in the Advisory Agreement among the Registrant, the General Partner and Eagle) as compared to 17% of the New High Net Trading Profits paid to Chesapeake. During July 1998, Willowbridge Associates Inc. ('Willowbridge') ceased to serve as a trading manager to the Registrant. All assets previously managed by Willowbridge were reallocated to Tamiso. The monthly management fee paid to Tamiso equals 1/6 of 1% (a 2% annual rate) of its net asset value as compared to 1/4 of 1% (a 3% annual rate) paid to Willowbridge. The quarterly incentive fee paid to Tamiso equals 17% of the New High Net Trading Profits as compared to 20% of the New High Net Trading Profits
paid to Willowbridge. The general partner retains the authority to override trading instructions that violate the Registrant's trading policies.
General Partner and its Affiliates
The general partner of the Registrant is Seaport Futures Management, Inc. (the 'General Partner'), which is an affiliate of Prudential Securities Incorporated ('PSI'), the Registrant's commodity broker. Both the General Partner and PSI are wholly owned subsidiaries of Prudential Securities Group Inc. ('PSGI'). The General Partner is required to maintain at least a one percent interest in the Registrant as long as it is acting as the Registrant's General Partner.
Competition
The General Partner has formed and may continue to form various entities to engage in the speculative trading of futures, forward and options contracts which, in part, have certain of the same investment policies as the Registrant.
The Registrant is a closed-end fund which does not currently, and does not intend in the future to, solicit the sale of additional units. As such, the Registrant does not compete with other entities to attract new fund participants. However, to the extent that the trading managers recommend similar or identical trades to the Registrant and other accounts which they manage, the Registrant may compete with those accounts for the execution of the same or similar trades.
Employees
The Registrant has no employees. Management and administrative services for the Registrant are performed by the General Partner and its affiliates pursuant to the Partnership Agreement as further discussed in Notes A, C and D to the Registrant's annual report to limited partners for the year ended December 31, 1999 ('Registrant's 1999 Annual Report') which is filed as an exhibit hereto.
Item 2.
Item 2. Properties
The Registrant does not own or lease any property.
Item 3.
Item 3. Legal Proceedings
There are no material legal proceedings pending by or against the Registrant or the General Partner.
Item 4.
Item 4. Submission of Matters to a Vote of Limited Partners
None
PART II
Item 5.
Item 5. Market for the Registrant's Units and Related Limited Partner Matters
Information with respect to the offering of Units is incorporated by reference to Note A to the Registrant's 1999 Annual Report, which is filed as an exhibit hereto.
A significant secondary market for the Units has not developed, and it is not expected that one will develop in the future. There are also certain restrictions set forth in the Partnership Agreement limiting the ability of a partner to transfer Units. The Partnership Agreement does, however, provide that a limited partner may redeem its units as of the last business day of any full calendar quarter at the then current net asset value per Unit. Consequently, holders of Units may not be able to liquidate their investments in the event of an emergency or any other reason.
There are no material restrictions upon the Registrant's present or future ability to make distributions in accordance with the provisions of the Partnership Agreement. No distributions have been made since inception and no distributions are anticipated in the future.
As of March 21, 2000, there were 724 holders of record owning 73,843.467 OptiMax Units which include 739 units of general partnership interest.
Item 6.
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 12 of the Registrant's 1999 Annual Report which is filed as an exhibit hereto.
As more fully discussed in Item 1 Business, through March 31, 1996, limited partners owned Class A Units and/or Class B Units and, accordingly, separate financial data is presented for Class A Units and Class B Units through such date. On April 1, 1996, each Class A Unit was exchanged into one new OptiMax Unit and each Class B Unit was exchanged into .99467 new OptiMax Unit. Accordingly, all references to per unit data in prior periods have been restated. In accordance with the Partnership Agreement, combined financial statements for the Class A and Class B Units are presented in the 'Combined Units' columns and collectively, with the OptiMax Units, in the 'Total Units' columns.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
This information is incorporated by reference to pages 14 through 17 of the Registrant's 1999 Annual Report which is filed as an exhibit hereto.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Information regarding quantitative and qualitative disclosures about market risk is not required pursuant to Item 305(e) of Regulation S-K.
Item 8.
Item 8. Financial Statements and Supplementary Data
The financial statements are incorporated by reference to pages 2 through 12 of the Registrant's 1999 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.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
PART III
Item 10.
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 and Ten Percent Owners or copies of the reports that they have filed with the Securities and Exchange Commission during and with respect to its most recent fiscal year.
The directors and executive officers of Seaport Futures Management, Inc. and their positions with respect to the Registrant are as follows:
Name Position Eleanor L. Thomas President and Director Joseph A. Filicetti Executive Vice President and Director Barbara J. Brooks Chief Financial Officer Steven Carlino Vice President and Treasurer Alan J. Brody Director A. Laurence Norton, Jr. Director Guy S. Scarpaci Director Tamara B. Wright Senior Vice President and Director
ELEANOR L. THOMAS, age 45, is the President and a Director of Seaport Futures Management, Inc. and is the Executive Vice President and a Director of Prudential Securities Futures Management Inc. She is primarily responsible for origination, asset allocation, and due diligence for the managed futures department within PSI. She is also a First Vice President of PSI. Prior to joining PSI in March 1993, she was with MC Baldwin Financial Company from June 1990 through February 1993 and Arthur Andersen & Co. from 1986 through May 1990. Ms. Thomas is a certified public accountant.
JOSEPH A. FILICETTI, age 37, is the Executive Vice President and a Director of Seaport Futures Management, Inc. He had been a Vice President of Seaport Futures Management, Inc. and Prudential Securities Futures Management Inc. from October 1998 to March 1999. In April 1999, Mr. Filicetti was named to his current positions at Seaport Futures Management, Inc. and became the President and a Director of Prudential Securities Futures Management Inc. Mr. Filicetti is also a Vice President of PSI and the Director of Sales and Marketing for its managed futures department. Prior to joining PSI, Mr. Filicetti was with Rotella Capital Management as Director of Sales and Marketing from September 1996 through September 1998, and was with Merrill Lynch as a market maker trading bonds from July 1992 to August 1996.
BARBARA J. BROOKS, age 51, is the Chief Financial Officer of Seaport Futures Management, Inc. She is a Senior Vice President of PSI. She is also the Chief Financial Officer of Prudential Securities Futures Management Inc. and serves in various capacities for other affiliated companies. She has held several positions within PSI since April 1983. Ms. Brooks is a certified public accountant.
STEVEN CARLINO, age 36, is a Vice President and Treasurer of Seaport Futures Management, Inc. He is a First Vice President of PSI. He is also a Vice President and Treasurer of Prudential Securities Futures Management Inc. and serves in various capacities for other affiliated companies. Prior to joining PSI in October 1992, he was with Ernst & Young for six years. Mr. Carlino is a certified public accountant.
ALAN J. BRODY, age 48 is a Director of Seaport Futures Management, Inc. and Prudential Securities Futures Management Inc. Mr. Brody has been a Senior Vice President and Director of International Sales and Marketing for PSI since 1996. Based in London, Mr. Brody is currently responsible for the marketing and sales of all PSI products and services to international clientele throughout the firm's global branch system. Additionally, Mr. Brody has overall responsibility for the managed futures department within PSI. Prior to joining PSI, Mr. Brody was an Executive Director and Senior Vice President with Lehman Brothers' Financial Services Division in London and President of Lehman Brothers Futures Asset Management Corp. from 1990 to 1996. Prior to joining Lehman Brothers, Mr. Brody served as President and Chief Executive Officer of Commodity Exchange, Inc. from 1980 to 1989. Earlier in his career, Mr. Brody was associated with the law firm of Baer Marks and Upham from 1977 to 1980.
A. LAURENCE NORTON, JR., age 61, is a Director of Seaport Futures Management, Inc. He is an Executive Vice President of PSI and, since March 1994, has been the director of the International and Futures Divisions of PSI. He is also a Director of Prudential Securities Futures Management Inc. and is a member of PSI's Operating Committee. From October 1991 to March 1994, he held the position of Executive Director of Retail Development and Retail Strategies at PSI. Prior to joining PSI in 1991, Mr. Norton was a Senior Vice President and Branch Manager of Shearson Lehman Brothers.
GUY S. SCARPACI, age 53, is a Director of Seaport Futures Management, Inc. He is a First Vice President of the Futures Division of PSI. He is also a Director of Prudential Securities Futures Management Inc. Mr. Scarpaci has been employed by PSI in positions of increasing responsibility since August 1974.
TAMARA B. WRIGHT, age 41, is a Senior Vice President and Director of Seaport Futures Management, Inc. She is a Senior Vice President and Chief Administrative Officer for the International and Futures Divisions of PSI. She is also a Senior Vice President and Director of Prudential Securities Futures Management Inc. and serves in various capacities for other affiliated companies. Prior to joining PSI in July 1988, she was a manager with Price Waterhouse.
Effective April 1999, Eleanor L. Thomas and Joseph A. Filicetti were elected as Directors of both Prudential Securities Futures Management Inc. and Seaport Futures Management, Inc. In addition, Ms. Thomas was elected as President of Seaport Futures Management, Inc. replacing Thomas M. Lane, Jr. and Mr. Filicetti was elected as the Executive Vice President of Seaport Futures Management, Inc. Additionally, Alan J. Brody was elected as a Director of Seaport Futures Management, Inc. and Prudential Securities Futures Management Inc. during May 1999.
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.
Item 11. Executive Compensation
The Registrant does not pay or accrue any fees, salaries or any other form of compensation to directors and officers of the General Partner for their services. Certain directors and officers of the General Partner receive compensation from affiliates of the General Partner, not from the Registrant, for services performed for various affiliated entities, which may include services performed for the Registrant; however, the General Partner believes that any compensation attributable to services performed for the Registrant is immaterial. (See also Item 13, Certain Relationships and Related Transactions, for information regarding compensation to the General Partner.)
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 21, 2000, no director or officer of the General Partner owns directly or beneficially any interest in the voting securities of the General Partner.
As of March 21, 2000, no director or officer of the General Partner owns directly or beneficially any of the units issued by the Registrant.
As of March 21, 2000, one owner of limited partnership units beneficially owns more than five percent (5%) of the limited partnership units of the Registrant as follows:
Item 13.
Item 13. Certain Relationships and Related Transactions
The Registrant has and will continue to have certain relationships with the General Partner and its affiliates. However, there have been no direct financial transactions between the Registrant and the directors or officers of the General Partner.
Reference is made to Notes A, C and D to the financial statements of the Registrant's 1999 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.
PART IV
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Prudential-Bache OptiMax Futures Fund, L.P.
By: Seaport Futures Management, Inc. A Delaware corporation, General Partner
By: /s/ Steven Carlino Date: March 30, 2000 --------------------------------------- Steven Carlino Vice President and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities (with respect to the General Partner) and on the dates indicated.
By: Seaport Futures Management, Inc. A Delaware corporation, General Partner
By: /s/ Eleanor L. Thomas Date: March 30, 2000 -------------------------------------- Eleanor L. Thomas President and Director
By: /s/ Joseph A. Filicetti Date: March 30, 2000 --------------------------------------- Joseph A. Filicetti Executive Vice President and Director
By: /s/ Barbara J. Brooks Date: March 30, 2000 --------------------------------------- Barbara J. Brooks Chief Financial Officer
By: /s/ Steven Carlino Date: March 30, 2000 -------------------------------------- Steven Carlino Vice President and Treasurer
By: /s/ Alan J. Brody Date: March 30, 2000 -------------------------------------- Alan J. Brody Director
By: Date: --------------------------------------- A. Laurence Norton, Jr. Director By: /s/ Guy S. Scarpaci Date: March 30, 2000 --------------------------------------- Guy S. Scarpaci Director By: Date: --------------------------------------- Tamara B. Wright Senior Vice President and Director