UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______________________ to ______________________
Commission file number 0-23885
PRUDENTIAL SECURITIES STRATEGIC TRUST
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(Exact name of registrant as specified in its charter)
Delaware 13-7075398
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One New York Plaza, 13th Floor, New York, New York 10292
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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:
Limited Interests
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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 [ ]
DOCUMENTS INCORPORATED BY REFERENCE
Second Amended and Restated Declaration of Trust and Trust Agreement of the
Registrant dated as of January 31, 1996, included as part of the Registration
Statement on Form S-1 (File No. 33-80443) filed with the Securities and Exchange
Commission on February 7, 1996, pursuant to Rule 424(b) of the Securities Act of
1933, is incorporated by reference into Part IV of this Annual Report on Form
10-K
Annual Report to Interest holders for the year ended December 31, 1998 is
incorporated by reference into Parts II and IV of this Annual Report on Form
10-K
Index to exhibits can be found on pages 11 and 12.
PRUDENTIAL SECURITIES STRATEGIC TRUST
(a Delaware Business Trust)
TABLE OF CONTENTS
PART I PAGE
Item 1 Business......................................................................... 3
Item 2 Properties....................................................................... 4
Item 3 Legal Proceedings................................................................ 4
Item 4 Submission of Matters to a Vote of Interest Holders.............................. 4
PART II
Item 5 Market for the Registrant's Interests and Related Interest Holder Matters........ 4
Item 6 Selected Financial Data.......................................................... 4
Item 7 Management's Discussion and Analysis of Financial Condition and Results of
Operations..................................................................... 4
Item 7A Quantitative and Qualitative Disclosures About Market Risk....................... 5
Item 8 Financial Statements and Supplementary Data...................................... 8
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure..................................................................... 8
PART III
Item 10 Directors and Executive Officers of the Registrant............................... 8
Item 11 Executive Compensation........................................................... 9
Item 12 Security Ownership of Certain Beneficial Owners and Management................... 9
Item 13 Certain Relationships and Related Transactions................................... 10
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K.................. 11
Financial Statements and Financial Statement Schedules........................... 11
Exhibits......................................................................... 11
Reports on Form 8-K.............................................................. 12
SIGNATURES.................................................................................. 13
2
PART I
Item 1. Business
General
Prudential Securities Strategic Trust, formerly known as Willowbridge
Strategic Trust, (the 'Registrant') was organized under the Delaware Business
Trust Statute on October 16, 1995 and commenced trading operations on May 1,
1996. The Registrant will terminate on December 31, 2015 unless terminated
sooner as provided in the Second Amended and Restated Declaration of Trust and
Trust Agreement (the 'Trust Agreement'). The Registrant was formed to engage in
the speculative trading of commodity futures, forward and options contracts. The
trustee of the Registrant is Wilmington Trust Company.
On May 1, 1996, the Registrant completed its initial offering with gross
proceeds of $12,686,200 from the sale of 125,352 limited interests and 1,510
general interests (collectively, the 'Interests'). Additional Interests were
being offered monthly at the then current net asset value per Interest until the
continuous offering period expired on January 31, 1998. Additional contributions
raised during the continuous offering period resulted in additional proceeds to
the Registrant of $51,242,700.
During July 1998, Willowbridge Associates Inc. ('Willowbridge') ceased to
serve as a trading manager to the Registrant with regard to all trading programs
with the exception of its XLIM program, which represented approximately 50% of
the Registrant's assets. These assets were reallocated to a new trading manager
to the Registrant, Bridgewater Associates, Inc. ('Bridgewater'), who began
trading Registrant assets on August 26, 1998. The monthly management fee paid to
Bridgewater equals .0813% (a .9756% annual rate) of its traded assets as
compared to 1/4 of 1% (a 3% annual rate) paid to Willowbridge. The quarterly
incentive fees paid to Bridgewater and Willowbridge (the 'Trading Managers')
equal 20% of the New High Net Trading Profits as defined in the Advisory
Agreements among the Registrant, Prudential Securities Futures Management Inc.
(the 'Managing Owner') and each Trading Manager. In conjunction with this
change, the Registrant was renamed Prudential Securities Strategic Trust.
The Registrant is engaged solely in the business of commodity futures,
forward and options trading; therefore, presentation of industry segment
information is not applicable.
Managing Owner
The Managing Owner, Prudential Securities Futures Management Inc., is a
wholly owned subsidiary of Prudential Securities Incorporated ('PSI'), which, in
turn, is a wholly owned subsidiary of Prudential Securities Group Inc. PSI was
the principal underwriter and selling agent for the Registrant's Interests and
is the commodity broker ('Commodity Broker') of the Registrant. The Managing
Owner is required to maintain at least a 1% interest in the Registrant so long
as it is acting as the Managing Owner.
Competition
The Managing Owner 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 have certain of the same investment policies as the
Registrant.
The Registrant was an open-end fund which solicited the sale of additional
Interests on a monthly basis until the Continuous Offering Period expired. As
such, the Registrant no longer competes with other entities to attract new
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 Managing Owner and its affiliates pursuant
to the Trust Agreement as further discussed in Notes A, C and D to the
Registrant's annual report to limited owners for the year ended December 31,
1998 ('Registrant's 1998 Annual Report') which is filed as an exhibit hereto.
3
Item 2. Properties
The Registrant does not own or lease any property.
Item 3. Legal Proceedings
There are no material legal proceedings pending by or against the Registrant
or the Managing Owner.
Item 4. Submission of Matters to a Vote of Interest Holders
None
PART II
Item 5. Market for the Registrant's Interests and Related Interest Holder
Matters
Information with respect to the offering of Interests is incorporated by
reference to Note A to the Registrant's 1998 Annual Report, which is filed as an
exhibit hereto.
A significant secondary market for the Interests has not developed, and it is
not expected that one will develop in the future. There are also certain
restrictions set forth in the Trust Agreement limiting the ability of an
Interest holder to transfer Interests. However, redemptions are permitted
monthly on at least ten days' prior written notice at the net asset value per
Interest, but are subject to redemption charges of 4% and 3%, respectively, of
the net asset value at which they are redeemed if effected on or prior to the
end of the first and second successive six-month periods after their effective
date of purchase. These redemption charges are paid to the Managing Owner.
Consequently, holders of Interests may not be able to liquidate their
investments 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 Trust
Agreement. No distributions have been made since inception and no distributions
are anticipated in the future.
As of March 4, 1999, there were 2,175 holders of record owning 349,306.656
Interests which include 3,494 general interests.
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 1998
Annual Report which is filed as an exhibit hereto.
Year Ended December 31, Period from May 1, 1996
----------------------------- (commencement of operations)
1998 1997 to December 31, 1996
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Total revenues (including interest) $ 13,710,698 $ 4,475,048 $ 4,148,504
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Net income (loss) $ 6,950,929 $(1,784,677 ) $ 2,290,184
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Net income (loss) per weighted
average Interest $ 15.76 $ (4.15 ) $ 10.79
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Total assets $ 48,605,769 $49,233,450 $ 27,823,974
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Net asset value per Interest $ 123.81 $ 102.96 $ 103.47
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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 through 13 of the
Registrant's 1998 Annual Report which is filed as an exhibit hereto.
4
Item 7A. Quantitative and Qualitative Disclosures About Market Risks
Introduction
Past Results Not Necessarily Indicative of Future Performance
The Registrant is a speculative commodity pool. The market sensitive
instruments held by it are acquired for speculative trading purposes, and
substantially all of the Registrant's assets are subject to the risk of trading
loss. Unlike an operating company, the risk of market sensitive instruments is
integral, not incidental, to the Registrant's main line of business.
Market movements result in frequent changes in the fair market value of the
Registrant's open positions and, consequently, in its earnings and cash flow.
The Registrant's market risk is influenced by a wide variety of factors,
including the level and volatility of interest rates, exchange rates, equity
price levels, the market value of financial instruments and contracts, the
diversification effects among the Registrant's open positions and the liquidity
of the markets in which it trades.
The Registrant rapidly acquires and liquidates both long and short positions
in a wide range of different markets. Consequently, it is not possible to
predict how a particular futures market scenario will affect performance, and
the Registrant's past performance is not necessarily indicative of its future
results.
Value at risk is a measure of the maximum amount which the Registrant could
reasonably be expected to lose in a given market sector. However, the inherent
uncertainty of the Registrant's speculative trading and the recurrence in the
markets traded by the Registrant of market movements far exceeding expectations
could result in actual trading or non-trading losses far beyond the indicated
Value at Risk or the Registrant's experience to date (i.e., 'risk of ruin'). In
light of the foregoing, as well as the risks and uncertainties intrinsic to all
future projections, the inclusion of the quantification included in this section
should not be considered to constitute any assurance or representation that the
Registrant's losses in any market sector will be limited to Value at Risk or by
the Registrant's attempts to manage its market risk.
Standard of Materiality
Materiality as used in this section, 'Qualitative and Quantitative
Disclosures About Market Risk,' is based on an assessment of reasonably possible
market movements and the potential losses caused by such movements, taking into
account the leverage, optionality and multiplier features of the Registrant's
market sensitive instruments.
Quantifying the Registrant's Trading Value at Risk
Quantitative Forward-Looking Statements
The following quantitative disclosures regarding the Registrant's market risk
exposures contain 'forward-looking statements' within the meaning of the safe
harbor from civil liability provided for such statements by the Private
Securities Litigation Reform Act of 1995 (set forth in Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934).
The Registrant's risk exposure in the various market sectors traded by the
Trading Managers is quantified below in terms of Value at Risk. Due to the
Registrant's mark-to-market accounting, any loss in the fair value of the
Registrant's open positions is directly reflected in the Registrant's earnings
(realized or unrealized) and cash flow (at least in the case of exchange-traded
contracts in which profits and losses on open positions are settled daily
through variation margin).
Exchange maintenance margin requirements have been used by the Registrant as
the measure of its Value at Risk. Maintenance margin requirements are set by
exchanges to equal or exceed the maximum losses reasonably expected to be
incurred in the fair value of any given contract in 95%-99% of any one-day
intervals. The maintenance margin levels are established by dealers and
exchanges using historical price studies as well as an assessment of current
market volatility (including the implied volatility of the options on a given
futures contract) and economic fundamentals to provide a probabilistic estimate
of the maximum expected near-term one-day price fluctuation. Maintenance margin
has been used rather than the
5
more generally available initial margin, because initial margin includes a
credit risk component which is not relevant to Value at Risk.
In the case of market sensitive instruments which are not exchange-traded
(almost exclusively currencies in the case of the Registrant), the margin
requirements for the equivalent futures positions have been used as Value at
Risk. In those rare cases in which a futures-equivalent margin is not available,
dealers' margins have been used.
In quantifying the Registrant's Value at Risk, 100% positive correlation in
the different positions held in each market risk category has been assumed.
Consequently, the margin requirements applicable to the open contracts have
simply been aggregated to determine each trading category's aggregate Value at
Risk. The diversification effects resulting from the fact that the Registrant's
positions are rarely, if ever, 100% positively correlated have not been
reflected.
The Registrant's Trading Value at Risk in Different Market Sectors
The following table indicates the trading Value at Risk associated with the
Registrant's open positions by market sector at December 31, 1998. All open
position trading risk exposures of the Registrant have been included in
calculating the figures set forth below. At December 31, 1998, the Registrant's
total capitalization was approximately $45.0 million.
Value at % of Total
Market Sector Risk Capitalization
----------------------- ---------- --------------
Currencies $1,857,167 4.12%
Interest Rates 1,069,880 2.38
Stock Indices 323,431 .72
Commodities 89,400 .20
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Total $3,339,878 7.42%
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Material Limitations on Value at Risk as an Assessment of Market Risk
The face value of the market sector instruments held by the Registrant is
typically many times the applicable maintenance margin requirement (maintenance
margin requirements generally range between approximately 1% and 10% of the
contract face value), as well as, many times the total capitalization of the
Registrant. The magnitude of the Registrant's open positions creates a 'risk of
ruin' not typically found in most other investment vehicles. Because of the size
of its positions, certain market conditions, although unusual, but historically
recurring from time to time, could cause the Registrant to incur severe losses
over a short period of time. The foregoing Value at Risk table, as well as the
past performance of the Registrant, give no indication of this 'risk of ruin.'
Non-Trading Risk
The Registrant has non-trading market risk on its foreign cash balances not
needed for margin. However, these balances (as well as any market risk they
represent) are immaterial.
Qualitative Disclosures Regarding Primary Trading Risk Exposures
The following qualitative disclosures regarding the Registrant's market risk
exposures--except for (i) those disclosures that are statements of historical
fact and (ii) the descriptions of how the Registrant manages its primary market
risk exposures--constitute forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The Registrant's primary market risk exposures as well as
the strategies used and to be used by the Managing Owner and the Trading
Managers for managing such exposures are subject to numerous uncertainties,
contingencies and risks, any one of which could cause the actual results of the
Registrant's risk controls to differ materially from the objectives of such
strategies. Government interventions, defaults and expropriations, illiquid
markets, the emergence of dominant fundamental factors, political upheavals,
changes in historical price relationships, an influx of new market participants,
increased regulation and many other factors could result in material losses as
well as in material changes to the risk exposures and the risk management
strategies of the Registrant.
6
There can be no assurance that the Registrant's current market exposure and/or
risk management strategies will not change materially or that any such
strategies will be effective in either the short- or long-term. Investors must
be prepared to lose all or substantially all of their investment in the
Registrant.
The primary trading risk exposures of the Registrant at December 31, 1998, by
market sector, were:
Currencies. Currency exposure represents the principal market exposure of the
Registrant at December 31, 1998. These risks arise from exchange rate
fluctuations, primarily fluctuations which disrupt the historical pricing
relationships between different currencies and currency pairs. These
fluctuations are influenced by interest rate changes as well as political and
general economic conditions. The Registrant's major exposure has typically
resulted from positions in the local currencies of G-7 countries. These include
outright, as well as, cross-rate positions--i.e., positions between two
currencies other than the U.S dollar. The Managing Owner does not anticipate
that the risk profile of the Registrant's currency sector will change
significantly in the future, although it is difficult at this point to predict
the effect of the introduction of the Euro on the Trading Managers' currency
trading strategies. The currency trading Value at Risk figure includes foreign
margin amounts converted into U.S. dollars with an incremental adjustment to
reflect the exchange rate risk inherent to the dollar-based Registrant in
expressing Value at Risk in a functional currency other than U.S. dollars.
Interest Rates. Interest rate movements directly affect the price of
sovereign bond positions held by the Registrant and indirectly affect the value
of its stock index and currency positions. Interest rate movements in one
country, as well as, relative interest rate movements between countries may
materially impact the Registrant's profitability. The Registrant's primary
interest rate exposure is to interest rate fluctuations in the U.S. and other
G-7 countries. To a lesser extent, the Registrant also takes positions in the
government debt of smaller nations--e.g., Australia. The Managing Owner
anticipates that G-7 interest rates will remain the primary market exposure of
the Registrant in the foreseeable future. The changes in interest rates which
have the most effect on the Registrant are changes in long-term, as opposed to
short-term, rates. Most of the speculative positions held by the Registrant are
in medium- to long-term instruments. Consequently, even a material change in
short-term rates would have little effect on the Registrant were the medium- to
long-term rates to remain steady.
Stock Indices. The Registrant's equity exposure is due to equity price risk
in various indices including the FIB 30 (Italy), FTSE 100 (Britain), TSE TOPIX
(Japan) and Australian All Ordinaries Index. The stock index futures traded by
the Registrant are, by law, limited to futures on broadly based indices.
Commodities. The Trading Managers of the Registrant trade a variety of
agricultural, metal and energy-related commodities. At year-end, the
Registrant's commodities exposure is in copper within the base metals market.
Qualitative Disclosures Regarding Means of Managing Risk Exposure
The means by which the Managing Owner and the Trading Managers, severally,
attempt to manage the risk of the Registrant's open positions is essentially the
same in all market categories traded.
Each Trading Manager attempts to minimize market risk exposure by applying
its own risk management trading policies. In general, each Trading Manager's
portfolio is diversified, consisting of a wide variety of contracts traded in
both domestic and foreign markets. Additionally, stop or limit orders may, in
each Trading Manager's discretion, be given with respect to initiating or
liquidating positions in order to seek to limit losses or secure profits.
The Managing Owner attempts to minimize market risk exposure by requiring the
Trading Managers to abide by various trading limitations and policies. The
Managing Owner monitors compliance with these trading limitations and policies
which include, but are not limited to, 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 Managing Owner may impose
restrictions (through modifications of such trading limitations and policies)
upon the trading activities of each Trading Manager as it, in good faith, deems
to be in the best interests of the Registrant. Additionally, the Managing Owner
may terminate a Trading Manager if the net asset value
7
allocated to the Trading Manager declines by 33 1/3% during any year or since
the commencement of trading activities. Furthermore, the Trust Agreement
provides that the Registrant will liquidate its positions, and eventually
dissolve, if the Registrant experiences a decline in the net asset value of 50%
in any year or since the commencement of trading activities. In each case, the
decline in the net asset value is after giving effect for distributions,
contributions and redemptions.
Qualitative Disclosures Regarding Non-Trading Risk Exposure
At December 31, 1998, the Registrant's primary exposure to non-trading market
risk resulted from foreign currency balances held in Canadian dollars. As
discussed above, these balances, as well as any risk they represent, are
immaterial.
Item 8. Financial Statements and Supplementary Data
The financial statements are incorporated by reference to pages 2 through 10
of the Registrant's 1998 Annual Report which is filed as an exhibit hereto.
Supplementary data specified by Item 302 of Regulation S-K (selected
quarterly financial data) is not applicable.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
There are no directors or executive officers of the Registrant. The
Registrant is managed by the Managing Owner.
The Managing Owner's directors and executive officers and any person holding
more than 10% of the Registrant's Interests ('Ten Percent Owners') are required
to report their initial ownership of such Interests 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 or 5 they file. All of these filing requirements were
satisfied on a timely basis (other than Tamara B. Wright who did not file Form 3
in a timely manner upon becoming a Director but subsequently filed and is now
current in all filings). In making these disclosures, the Registrant has relied
solely on written representations of the Managing Owner'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 Prudential Securities Futures
Management Inc. and their positions with respect to the Registrant are as
follows:
Name Position
Eleanor L. Thomas First Vice President
Barbara J. Brooks Chief Financial Officer
Steven Carlino Vice President, Chief Accounting Officer and
Treasurer
A. Laurence Norton, Jr. Director
Guy S. Scarpaci Director
Tamara B. Wright Senior Vice President and Director
ELEANOR L. THOMAS, age 44, has been a Vice President of Prudential Securities
Futures Management Inc. and Seaport Futures Management, Inc. since April 1993
and a First Vice President since October 1998. She is primarily responsible for
origination, asset allocation, and due diligence for the managed futures group
within PSI. She is also a First Vice President of PSI. Prior to joining PSI in
March 1993, she was with MC Baldwin Financial Company from June 1990 through
February 1993 and Arthur Andersen & Co. from 1986 through May 1990. Ms. Thomas
is a certified public accountant.
8
BARBARA J. BROOKS, age 50, is the Chief Financial Officer of Prudential
Securities Futures Management Inc. She is a Senior Vice President of PSI. She
is also the 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 35, is a Vice President and Treasurer of Prudential
Securities Futures Management Inc. He is a First Vice President of PSI. He is
also a Vice President and Treasurer 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 60, is a Director of Prudential Securities Futures
Management Inc. He is an Executive Vice President of PSI and, since March 1994,
has been the head of the International and Futures Divisions of PSI. He is also
a Director of Seaport Futures Management, Inc. From October 1991 to March 1994,
he held the position of Executive Director of Retail Development and Retail
Strategies at PSI. Prior to joining PSI in 1991, Mr. Norton was a Senior Vice
President and Branch Manager of Shearson Lehman Brothers.
GUY S. SCARPACI, age 52, is a Director of 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.
TAMARA B. WRIGHT, age 40, is a Senior Vice President and Director of Prudential
Securities 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 Seaport Futures Management, Inc.
and serves in various capacities for other affiliated companies. Prior to
joining PSI in July 1988, she was a manager with Price Waterhouse.
During the fourth quarter of 1998, Steven Carlino replaced Barbara J. Brooks
as Treasurer of Prudential Securities Futures Management Inc. and Seaport
Futures Management, Inc. Additionally, during December 1998, Tamara B. Wright
was elected as a Senior Vice President and Director of Prudential Securities
Futures Management Inc. and Seaport Futures Management, Inc. On March 26, 1999,
Thomas M. Lane, Jr. resigned as President and Director of Prudential Securities
Futures Management Inc. and Seaport 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 officers of the Managing Owner for their services.
Certain directors and officers of the Managing Owner receive compensation from
affiliates of the Managing Owner, not from the Registrant, for services
performed for various affiliated entities, which may include services performed
for the Registrant; however, the Managing Owner 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 Managing Owner.)
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 4, 1999, no director or executive officer of the Managing Owner
owns directly or beneficially any interest in the voting securities of the
Managing Owner.
As of March 4, 1999, no director or executive officer of the Managing Owner
owns directly or beneficially any of the Interests issued by the Registrant.
As of March 4, 1999, no owners of Interests beneficially own more than five
percent (5%) of the limited interests issued by the Registrant.
9
Item 13. Certain Relationships and Related Transactions
The Registrant has and will continue to have certain relationships with the
Managing Owner and its affiliates. However, there have been no direct financial
transactions between the Registrant and the directors or officers of the
Managing Owner.
Reference is made to Notes A, C and D to the financial statements in the
Registrant's 1998 Annual Report which is filed as an exhibit hereto, which
identify the related parties and discuss the services provided by these parties
and the amounts paid or payable for their services.
10
PART IV
Page
Number
------------
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements and Report of Independent Accountants--incorporated
by reference to the Registrant's 1998 Annual Report which is filed as an
exhibit hereto
Report of Independent Accountants 2
Financial Statements:
Statements of Financial Condition--December 31, 1998 and 1997 3
Statements of Operations--Two years ended December 31, 1998 and the
period from May 1, 1996 (commencement of operations) to December 31, 1996 4
Statements of Changes in Trust Capital--Three years ended December 31,
1998 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
3.1 Second Amended and Restated Declaration of Trust and Trust Agreement of
and the Registrant dated as of January 31, 1996 (incorporated by reference to
4.1 Exhibits 3.1 and 4.1 of Registrant's Registration Statement on Form S-1,
File No. 33-08443)
4.2 Subscription Agreement (incorporated by reference to Exhibit 4.2 of
Registrant's Registration Statement on Form S-1, File No. 33-08443)
4.3 Request for Redemption (incorporated by reference to Exhibit 4.3 of
Registrant's Registration Statement on Form S-1, File No. 33-08443)
10.1 Form of Escrow Agreement among the Registrant, Prudential Securities
Futures Management Inc., Prudential Securities Incorporated and The Bank
of New York (incorporated by reference to Exhibit 10.1 of the
Registrant's Registration Statement on Form S-1, File No. 33-08443)
10.2 Brokerage Agreement between the Registrant and Prudential Securities
Incorporated (incorporated by reference to Exhibit 10.2 of the
Registrant's Registration Statement on Form S-1, File No. 33-08443)
10.3 Advisory Agreement, among the Registrant, Prudential Securities Futures
Management Inc. and Willowbridge Associates Inc. (incorporated by
reference to Exhibit 10.3 of the Registrant's Registration Statement on
Form S-1, File No. 33-08443)
10.4 Representation Agreement Concerning the Registration Statement and the
Prospectus among the Registrant, Prudential Securities Futures Management
Inc., Prudential Securities Incorporated, Wilmington Trust Company and
Willowbridge Associates Inc. (incorporated by reference to Exhibit 10.4
of the Registrant's Registration Statement on Form S-1, File No.
33-08443)
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10.5 Net Worth Agreement between Prudential Securities Futures Management Inc.
and Prudential Securities Group Inc. (incorporated by reference to
Exhibit 10.5 of the Registrant's Registration Statement on Form S-1, File
No. 33-08443)
10.6 Secured Demand Note between Prudential Securities Group Inc. and
Prudential Securities Futures Management Inc. (incorporated by reference
to Exhibit 10.6 of the Registrant's Registration Statement on Form S-1,
File No. 33-08443)
10.7 Secured Demand Note Collateral Agreement between Prudential Securities
Futures Management Inc. and Prudential Securities Group Inc.
(incorporated by reference to Exhibit 10.7 of the Registrant's
Registration Statement on Form S-1, File No. 33-08443)
10.8 Form of Foreign Currency Addendum to Brokerage Agreement between the
Registrant and Prudential Securities Incorporated (incorporated by
reference to Exhibit 10.8 of the Registrant's Quarterly Report on Form
10-Q for the period ended June 30, 1996)
10.9 Advisory Agreement dated August 25, 1998 among the Registrant, Prudential
Securities Futures Management Inc. and Bridgewater Associates, Inc.
(incorporated by reference to Exhibit 10.9 of the Registrant's Quarterly
Report on Form 10-Q for the period ended September 30, 1998)
13.1 Registrant's 1998 Annual Report (with the exception of the information
and data incorporated by reference in Items 5, 7 and 8 of this Annual
Report on Form 10-K, no other information or data appearing in the
Registrant's 1998 Annual Report is to be deemed filed as part of this
report) (filed herewith)
27.1 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.
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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 Strategic Trust
By: Prudential Securities Futures Management Inc.
A Delaware corporation, Managing Owner
By: /s/ Steven Carlino Date: March 31, 1999
----------------------------------------
Steven Carlino
Vice President, Chief Accounting Officer
and Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities (with respect to the Managing Owner) and on the
dates indicated.
By: Prudential Securities Futures Management Inc.
A Delaware corporation, Managing Owner
By: /s/ Eleanor L. Thomas Date: March 31, 1999
-----------------------------------------
Eleanor L. Thomas
First Vice President
By: /s/ Barbara J. Brooks Date: March 31, 1999
-----------------------------------------
Barbara J. Brooks
Chief Financial Officer
By: /s/ Steven Carlino Date: March 31, 1999
-----------------------------------------
Steven Carlino
Vice President and Treasurer
By: Date:
-----------------------------------------
A. Laurence Norton, Jr.
Director
By: /s/ Guy S. Scarpaci Date: March 31, 1999
-----------------------------------------
Guy S. Scarpaci
Director
By: /s/ Tamara B. Wright Date: March 31, 1999
-----------------------------------------
Tamara B. Wright
Senior Vice President and Director
13