PRUDENTIAL BACHE DIVERSIFIED FUTURES FUND L P - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the quarter ended September 30, 2002

/ / 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: 0-17592

PRUDENTIAL-BACHE DIVERSIFIED FUTURES FUND L.P.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)

Delaware 13-3464456
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

One New York Plaza, 13th Floor, New York, New York 10292
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (212) 778-7866

N/A
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.

Indicate by check CK whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _CK_ No __

Indicate by check CK whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes __ No _CK_

Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRUDENTIAL-BACHE DIVERSIFIED FUTURES FUND L.P.
(a limited partnership)

STATEMENTS OF FINANCIAL CONDITION
(Unaudited)

2

PRUDENTIAL-BACHE DIVERSIFIED FUTURES FUND L.P.
(a limited partnership)

CONDENSED SCHEDULES OF INVESTMENTS
(Unaudited)

3

PRUDENTIAL-BACHE DIVERSIFIED FUTURES FUND L.P.
(a limited partnership)
STATEMENTS OF OPERATIONS
(Unaudited)

STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)

4

PRUDENTIAL-BACHE DIVERSIFIED FUTURES FUND L.P.
(a limited partnership)

NOTES TO FINANCIAL STATEMENTS
September 30, 2002
(Unaudited)

A. General

These financial statements have been prepared without audit. In the opinion
of Seaport Futures Management, Inc. (the 'General Partner'), the financial
statements contain all adjustments (consisting of only normal recurring
adjustments) necessary to state fairly the financial position of
Prudential-Bache Diversified Futures Fund L.P. (the 'Partnership') as of
September 30, 2002 and December 31, 2001 and the results of its operations for
the nine and three months ended September 30, 2002 and 2001. However, the
operating results for the interim periods may not be indicative of the results
expected for the full year.

Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been omitted. It is suggested that
these financial statements be read in conjunction with the financial statements
and notes thereto included in the Partnership's annual report on Form 10-K filed
with the Securities and Exchange Commission for the year ended December 31,
2001.

John W. Henry & Company, Inc. ('JWH'), the Partnership's trading manager,
terminated its World Financial Perspective trading program. Effective May 23,
2002, the General Partner reallocated all of the Partnership's assets that had
been traded according to the World Financial Perspective trading program to
JWH's Financial and Metals Portfolio Program, which was already being used to
trade a portion of the Partnership's assets.

B. 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 and other administrative services. A portion of the
general and administrative expenses of the Partnership for the nine and three
months ended September 30, 2002 and 2001 was borne by Prudential Securities
Incorporated ('PSI'), an affiliate of the General Partner, and its affiliates.

Costs and expenses charged to the Partnership for these services for the nine
and three months ended September 30, 2002 and 2001 were:

General and administrative expenses payable to the General Partner and its
affiliates (which are included in accrued expenses payable) as of September 30,
2002 and December 31, 2001 were $1,946 and $3,298, respectively.

The Partnership's assets are maintained either in trading or cash accounts
with PSI, the Partnership's commodity broker and an affiliate of the General
Partner, or, for margin purposes, with the various exchanges on which the
Partnership is permitted to trade.

The Partnership, acting through its trading manager, may execute
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

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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 marked-to-market positions of the Partnership.

C. Derivative Instruments and Associated Risks

The Partnership is exposed to various types of risk associated with the
derivative instruments and related markets in which it invests. These risks
include, but are not limited to, risk of loss from fluctuations in the value of
derivative instruments held (market risk) and the inability of counterparties to
perform under the terms of the Partnership's investment activities (credit
risk).

Market risk

Trading in futures and forward contracts (including foreign exchange)
involves entering into contractual commitments to purchase or sell a particular
commodity at a specified date and price. The gross or face amount of the
contracts, which is typically many times that of the Partnership's net assets
being traded, significantly exceeds the Partnership's future cash requirements
since the Partnership intends to close out its open positions prior to
settlement. As a result, the Partnership 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 derivative instruments to be the
net unrealized gain or loss on the contracts. The market risk associated with
the Partnership's commitments to purchase commodities is limited to the gross or
face amount of the contracts held. However, when the Partnership enters into a
contractual commitment to sell commodities, it must make delivery of the
underlying commodity at the contract price and then repurchase the contract at
prevailing market prices. Since the repurchase price to which a commodity can
rise is unlimited, entering into commitments to sell commodities exposes the
Partnership to unlimited risk.

Market risk is influenced by a wide variety of factors including government
programs and policies, political and economic events, the level and volatility
of interest rates, foreign currency exchange rates, the diversification effects
among the derivative instruments the Partnership holds and the liquidity and
inherent volatility of the markets in which the Partnership trades.

Credit risk

When entering into futures or forward contracts, the Partnership is exposed
to credit risk that the counterparty to the contract will not meet its
obligations. The counterparty for futures contracts traded on United States and
most foreign futures exchanges is the clearinghouse associated with the
particular exchange. In general, clearinghouses are backed by their corporate
members who are required to share any financial burden resulting from the
nonperformance by one of their members and, as such, should significantly reduce
this credit risk. In cases where the clearinghouse is not backed by the clearing
members (i.e., some foreign exchanges), it is normally backed by a consortium of
banks or other financial institutions. On the other hand, if the Partnership
enters into forward transactions, the sole counterparty is PSI, the
Partnership's commodity broker. The Partnership has entered into a master
netting agreement with PSI and, as a result, when applicable, presents
unrealized gains and losses on open forward positions as a net amount in the
statements of financial condition. The amount at risk associated with
counterparty nonperformance on all of the Partnership's contracts is the net
unrealized gain included in the statements of financial condition; however,
counterparty nonperformance on only certain of the Partnership's contracts may
result in greater loss than nonperformance on all of the Partnership's
contracts. There can be no assurance that any counterparty, clearing member or
clearinghouse will meet its obligations to the Partnership.

The General Partner attempts to minimize both credit and market risks by
requiring the Partnership and its trading manager 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; 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.
Additionally, pursuant to the advisory agreement among the Partnership, the
General Partner and the trading manager, the General Partner has the right,
among other rights, to terminate the trading manager if the net asset value
allocated to the trading manager declines by 50% from the value at the beginning
of any year or 40% since the commencement of trading activities. Furthermore,
the Partnership Agreement provides that the Partnership will liquidate its
positions, and eventually dissolve, if the Partnership experiences a decline in
the net asset

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value to less than 50% of the value at commencement of trading activities. In
each case, the decline in net asset value is after giving effect for
distributions and redemptions. The General Partner may impose additional
restrictions (through modifications of trading limitations and policies) upon
the trading activities of the trading manager 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 permitted to commingle such assets with other assets
of PSI. At September 30, 2002, such segregated assets totalled $6,249,426. Part
30.7 of the CFTC regulations also requires PSI to secure assets of the
Partnership related to foreign futures and options trading which totalled
$3,541,251 at September 30, 2002. There are no segregation requirements for
assets related to forward trading.

As of September 30, 2002, all open futures and forward contracts mature
within one year.

D. Financial Highlights

These financial highlights represent the overall results of the Partnership
during the nine and three month periods ended September 30, 2002 and 2001,
respectively. An individual Partner's actual results may differ depending on the
timing of redemptions.

7

PRUDENTIAL-BACHE DIVERSIFIED FUTURES FUND L.P.
(a limited partnership)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources

The Partnership commenced operations on October 19, 1988 with gross proceeds
of $30,107,800. After accounting for organizational and offering costs, the
Partnership's net proceeds were $29,387,470.

At September 30, 2002, 100% of the Partnership's total net assets was
allocated to commodities trading. A significant portion of the net asset value
was held in U.S. Treasury bills (which represented approximately 60% 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.

The percentage that U.S. Treasury bills bears to the total net assets varies
each day, and from month to month, as the market values of commodity interests
change. The balance of the net assets is held in cash. All interest earned on
the Partnership's interest-bearing funds is paid to the Partnership.

The commodities contracts are subject to periods of illiquidity because of
market conditions, regulatory considerations and other reasons. For example,
commodity exchanges limit fluctuations in certain commodity futures contract
prices during a single day by regulations referred to as 'daily limits.' During
a single day, no trades may be executed at prices beyond the daily limit. Once
the price of a futures contract for a particular commodity has increased or
decreased by an amount equal to the daily limit, positions in the commodity can
neither be taken nor liquidated unless traders are willing to effect trades at
or within the 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 and forward 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 Partnership's exposure to market risk is influenced
by a number of factors including the volatility of interest rates and foreign
currency exchange rates, the liquidity of the markets in which the contracts are
traded and the relationships among the contracts held. The inherent uncertainty
of the Partnership's speculative trading, as well as the development of drastic
market occurrences, could result in monthly losses considerably beyond the
Partnership's experience to date and could ultimately lead to a loss of all or
substantially all of investors' capital. The General Partner attempts to
minimize these risks by requiring the Partnership and its trading manager to
abide by various trading limitations and policies, which include limiting margin
amounts, trading only in liquid markets and permitting the use of stop loss
provisions. See Note C to the financial statements for a further discussion of
the credit and market risks associated with the Partnership's futures and
forward contracts.

Redemptions by limited partners were $1,279,841 and $390,694 for the nine and
three months ended September 30, 2002, respectively, and General Partner
redemptions for the nine and three months ended September 30, 2002, totalled
$13,131 and $4,007, respectively. Redemptions recorded from commencement of
operations (October 19, 1988) through September 30, 2002 totalled $51,031,274
and $1,119,937 for the limited partners and General Partner, respectively.
Limited partners may redeem units as of the last business day of any calendar
quarter at the then current net asset value per Unit. Future redemptions will
impact the amount of funds available for investment in commodity contracts in
subsequent periods.

The Partnership does not have, nor does it expect to have, any capital
assets.

John W. Henry & Company, Inc. ('JWH'), the Partnership's trading manager,
terminated its World Financial Perspective trading program. Effective May 23,
2002, the General Partner reallocated all of the Partnership's assets that had
been traded according to the World Financial Perspective trading program to
JWH's Financial and Metals Portfolio Program, which was already being used to
trade a portion of the Partnership's assets.

8

Results of Operations

The net asset value per Unit as of September 30, 2002 was $500.89, an
increase of 50.90% from the December 31, 2001 net asset value per Unit of
$331.94 and an increase of 28.29% from the June 30, 2002 net asset value per
unit of $390.43. Past performance is not necessarily indicative of future
results.

The Partnership's trading gains before commissions were approximately
$3,796,000 and $2,330,000 during the nine and three months ended September 30,
2002, respectively, compared to $231,000 and $513,000 for the corresponding
periods in the prior year. Due to the nature of the Partnership's trading
activities, a period to period comparison of its trading results is not
meaningful. However, a detailed discussion of the Partnership's current quarter
trading results is presented below.

Quarterly Market Overview

Throughout the third quarter of 2002, household wealth continued to decrease
as the result of pervasive declines in global equity markets and uncertainty
regarding worldwide economies. As a result, U.S. consumer spending, which helped
boost U.S. economic growth in the past, was adversely impacted. Additionally,
the higher cost of equity capital, heightened degree of risk aversion and
uncertainty regarding debt and equity markets further inhibited consumer and
business investment worldwide. In the U.S., decreasing wealth stemming from
losses on equities were offset, in part, by continuing increases in home equity
values. Low mortgage interest rates remained a key factor in sustaining the
housing market at a relatively elevated level. Fears of slowing global economies
resulted in major declines in long-term interest rates and bond markets surged.
Foreign economies followed the lead of the U.S. with persistent weakness evident
in European, Asian and Latin American economies, particularly in Japan and
Brazil.

In the interest rate sector, negative economic news throughout the quarter
coupled with significant downturns in world equity markets and disappointing
corporate profits caused a flight to quality into bond markets around the world.
The U.S. Federal Reserve Bank left interest rates unchanged at 1.75% in its two
meetings this quarter, switching its economic outlook for the near future from
'uncertain' to a bias toward 'economic weakness'. The European Central Bank left
short-term interest rates unchanged as well. The Japanese bond market was
particularly strong as the Japanese economy continued to struggle with recession
and investors fled to bonds for safety.

The S&P 500 fell 17.63%, the Dow Jones Industrial Average decreased 17.87%
and the London FTSE dropped 20.07% for the quarter as investor confidence
collapsed in response to continued concerns about accounting transparency,
government investigations, heightened tension in the Middle East, and decreased
corporate sales and profits. In Japan, the Nikkei Index hit new lows as the
economy continued to struggle with structural problems and the Japanese
government prepared new fiscal policy initiatives.

In foreign exchange markets, the U.S. dollar began the quarter down against
many foreign currencies, but reversed its trend towards quarter-end. The euro
surpassed parity with the U.S. dollar early in the quarter as investors' desire
for U.S. assets decreased, but ended the quarter lower. The British pound rose
against the U.S. dollar early in the quarter amid perceived strength in the
British economy, while the Japanese yen weakened as worries regarding the
Japanese economy persisted.

Energy markets continued their upward climb as fears of impending war with
Iraq pushed crude oil prices up significantly. Crude oil rose from the low $20's
per barrel earlier in the year to approximately $30 a barrel at quarter-end.

Gold and other precious metals soared throughout most of the quarter in
response to weaknesses in the U.S. dollar and global equity markets and
instability in the Middle East. In commodities markets, drought in the
Mid-Western United States drove price increases in corn, wheat and soybean
markets. Cocoa prices soared as supply deficits and violence in the Ivory Coast
pushed the markets to sixteen-year highs.

Quarterly Partnership Performance

The following is a summary of performance for the major sectors in which the
Partnership traded:

Interest rates (+): Interest rate instruments rose throughout the quarter in
response to weak economies and poor equity market performance worldwide. Long
positions in U.S., European and Japanese bonds resulted in gains.

9

Indices (+): Short positions in the Nikkei Dow, London FTSE, NASDAQ and Euro
DAX resulted in gains as weak economic data and disappointing earning reports
pressed global equity markets downward throughout the quarter.

Energies (+): Energy prices rallied amid speculation of imminent war with
Iraq, low crude oil stock in the U.S. and seasonal demand pressure. Long crude
oil, heating oil and natural gas positions resulted in gains.

Grains (+): Drought conditions in the Mid-Western United States drove corn,
wheat and soybean prices higher resulting in gains for long positions.

Currencies (-): The U.S. dollar reversed its downward trend against many
foreign currencies toward quarter-end resulting in losses for long Swiss
franc/U.S. dollar, Japanese yen/U.S. dollar, Australian dollar/U.S. dollar and
euro/U.S. dollar cross-rate positions.

Metals (-): Short gold and silver positions incurred losses as precious metal
prices rose in response to uncertainty in the Middle East and the weak global
economy.

Softs (-): Coffee prices rose as frosts threatened the Brazilian crop
resulting in losses for short positions.

Interest income is earned on the Partnership's investment in U.S. Treasury
bills and varies monthly according to interest rates, as well as the effect of
trading performance and redemptions on the level of interest-bearing funds.
Interest income from U.S. Treasury bills decreased by approximately $141,000 and
$29,000 for the nine and three months ended September 30, 2002 as compared to
the corresponding periods in 2001. These declines in interest income were
principally due to lower interest rates during the nine and three months ended
September 30, 2002 versus the corresponding periods in 2001. Additionally,
interest income during the nine month period ended September 30, 2002 decreased
from lower overall investment in U.S. Treasury bills primarily due to the effect
of unfavorable trading performance during 2001 and redemptions on the monthly
net asset values, partially offset by the effect of strong trading performance
since the first quarter of 2002.

Commissions paid to PSI are calculated on the Partnership's net asset value
on the first day of each month and, therefore, vary monthly according to trading
performance and redemptions. Commissions decreased by $85,000 for the nine
months ended September 30, 2002 as compared to the corresponding period in 2001,
but increased by $7,000 for the three months ended September 30, 2002 as
compared to the corresponding period in 2001. The decrease was primarily due to
the effect of unfavorable trading performance during 2001 and redemptions on the
monthly net asset values, partially offset by the effect of strong trading
performance since the first quarter of 2002. The increase was due to the effect
of strong trading performance since the first quarter of 2002 on the monthly net
asset values, partially offset by the effect of unfavorable trading performance
during 2001 and redemptions on the monthly net asset values.

All trading decisions for the Partnership are made by John W. Henry &
Company, Inc. (the 'Trading Manager'). Management fees are calculated on the
Partnership's net asset value as of the end of each month and, therefore, are
affected by trading performance and redemptions. Management fees decreased by
$16,000 for the nine months ended September 30, 2002 as compared to the
corresponding period in 2001, but increased by $5,000 for the three months ended
September 30, 2002 as compared to the corresponding period in 2001. The decrease
for the nine months ended September 30, 2002 and the increase for the three
months ended September 30, 2002 were primarily due to fluctuations in the
monthly net asset values as further discussed above.

Incentive fees are based on the 'New High Net Trading Profits' generated by
the Trading Manager, as defined in the advisory agreement among the Partnership,
the General Partner and the Trading Manager. No incentive fees were incurred for
the nine and three months ended September 30, 2002 or 2001.

General and administrative expenses include audit, tax and legal fees as well
as printing and postage costs. General and administrative expenses for the nine
and three months ended September 30, 2002 were relatively comparable to the
corresponding periods in 2001.

ITEM 3. 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.

10

ITEM 4. CONTROLS AND PROCEDURES

Within the 90 days prior to the date of this report, the General Partner
carried out an evaluation, under the supervision and with the participation of
the officers of the General Partner, including the General Partner's Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Partnership's disclosure controls and procedures.
Based upon that evaluation, the General Partner's Chief Executive Officer and
Chief Financial Officer concluded that the Partnership's disclosure controls and
procedures are effective. There were no significant changes in the Partnership's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation.

11

PART II. OTHER INFORMATION

Item 1. Legal Proceedings--There are no material legal proceedings pending by or
against the Registrant or the General Partner.

Item 2. Changes in Securities--None

Item 3. Defaults Upon Senior Securities--None

Item 4. Submission of Matters to a Vote of Security Holders--None

Item 5. Other information--None

Item 6. (a) Exhibits

4.1 Agreement of Limited Partnership of the Registrant, dated as of
May 25, 1988 as amended and restated as of July 12, 1988
(incorporated by reference to Exhibit 3.1 and 4.1 of
Registrant's Annual Report on Form 10-K for the period ended
December 31, 1988)

4.2 Subscription Agreement (incorporated by reference to
Exhibit 4.2 to the Registrant's Registration Statement on
Form S-1, File No. 33-22100)

4.3 Request for Redemption (incorporated by reference to
Exhibit 4.3 to the Registrant's Registration Statement on
Form S-1, File No. 33-22100)

99.1 Certificate pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the SARBANES-OXLEY Act of 2002
(filed herewith)

(b) Reports on Form 8-K--None

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

PRUDENTIAL-BACHE DIVERSIFIED FUTURES FUND L.P.

By: Seaport Futures Management, Inc.
A Delaware corporation, General Partner

By: /s/ Steven Weinreb Date: November 14, 2002
----------------------------------------
Steven Weinreb
Chief Financial Officer

CERTIFICATIONS

I, Eleanor L. Thomas, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Prudential-Bache
Diversified Futures Fund L.P. (the 'Partnership');

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the Partnership as of, and for, the periods presented in this
quarterly report;

4. The Partnership's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Partnership and
we have:

a) designed such disclosure controls and procedures to ensure
that material information relating to the Partnership,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the Partnership's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the 'Evaluation
Date'); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The Partnership's other certifying officers and I have disclosed, based
on our most recent evaluation, to the Partnership's auditors and the
board of directors of the general partner of the Partnership:

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
Partnership's ability to record, process, summarize and
report financial data and have identified for the
Partnership's auditors any material weaknesses in internal
controls; and

b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
Partnership's internal controls; and

6. The Partnership's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal

13

controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.

Date: November 14, 2002 /s/ Eleanor L. Thomas
--------------------------------------
Eleanor L. Thomas
President (chief executive officer)
of the general partner
of the Partnership

I, Steven Weinreb, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Prudential-Bache
Diversified Futures Fund L.P. (the 'Partnership');

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the Partnership as of, and for, the periods presented in this
quarterly report;

4. The Partnership's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Partnership and
we have:

a) designed such disclosure controls and procedures to ensure
that material information relating to the Partnership,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the Partnership's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the 'Evaluation
Date'); and

c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The Partnership's other certifying officers and I have disclosed, based
on our most recent evaluation, to the Partnership's auditors and the
board of directors of the general partner of the Partnership:

a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
Partnership's ability to record, process, summarize and
report financial data and have identified for the
Partnership's auditors any material weaknesses in internal
controls; and

b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
Partnership's internal controls; and

6. The Partnership's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.

Date: November 14, 2002 /s/ Steven Weinreb
--------------------------------------
Steven Weinreb
Chief Financial Officer
of the general partner
of the Partnership

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