FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT AUDITORS
AUGUSTA PARTNERS, L.P.
PERIOD FROM SEPTEMBER 4, 1996
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1996
<PAGE>
AUGUSTA PARTNERS, L.P.
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT AUDITORS
PERIOD FROM SEPTEMBER 4, 1996 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1996
CONTENTS
Report of Independent Auditors............................................. 1
Statement of Assets, Liabilities and Partners' Capital..................... 2
Statement of Operations.................................................... 3
Statement of Changes in Partners' Capital - Net Assets..................... 4
Notes to Financial Statements.............................................. 5
Schedule of Portfolio Investments.......................................... 13
Schedule of Securities Sold, Not Yet Purchased............................. 18
<PAGE>
Report of Independent Auditors
To the Partners of
Augusta Partners, L.P.
We have audited the accompanying statement of assets, liabilities and partners'
capital of Augusta Partners, L.P., including the schedules of portfolio
investments and securities sold, not yet purchased, as of December 31, 1996, and
the related statements of operations and changes in partners' capital - net
assets for the period from September 4, 1996 (commencement of operations) to
December 31, 1996. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1996, by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Augusta Partners, L.P. at
December 31, 1996, the results of its operations, the changes in partners'
capital - net assets, for the period from September 4, 1996 to December 31,
1996, in conformity with generally accepted accounting principles.
New York, New York
February 5, 1997 /s/ ERNST & YOUNG LLP
1
<PAGE>
AUGUSTA PARTNERS, L.P.
STATEMENT OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL (IN THOUSANDS)
- --------------------------------------------------------------------------------
DECEMBER 31, 1996
ASSETS
Cash $ 2,758
Investments in securities, at market
(identified cost of $92,000) 100,349
Due from broker 20,931
Dividends receivable 23
Interest receivable 120
Organizational costs (net of accumulated amortization of $45) 646
Other assets 48
--------
TOTAL ASSETS $124,875
========
LIABILITIES
Due to broker 951
Securities sold, not yet purchased - at market 6,395
(proceeds of sales - $6,839)
Due to affiliate 4
Management fee payable 97
Accrued expenses 383
--------
TOTAL LIABILITIES 7,830
--------
Net Assets $117,045
========
PARTNERS' CAPITAL
Represented by:
Capital contributions, (net of syndications costs of $50) $100,005
Accumulated net investment loss (304)
Accumulated net realized gain on investments 8,552
Net unrealized appreciation on investments and foreign
currency transactions 8,792
--------
PARTNERS' CAPITAL - NET ASSETS $117,045
========
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
AUGUSTA PARTNERS, L.P.
STATEMENT OF OPERATIONS (IN THOUSANDS)
- --------------------------------------------------------------------------------
PERIOD FROM SEPTEMBER 4, 1996
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1996
INVESTMENT INCOME
Dividends $ 142
Interest 414
------
556
------
OPERATING EXPENSES
Management fee 350
Professional fees 295
Administration fees 71
Amortization of organizational costs 45
Custodian fees 16
Dividends on securities sold, not yet purchased 20
Individual General Partners' fees & expenses 14
Miscellaneous 49
------
860
------
NET INVESTMENT LOSS (304)
------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
REALIZED GAIN (LOSS) ON INVESTMENTS
Investment securities 9,747
Futures transactions (84)
Purchased options (341)
Written options (64)
Short sales (706)
------
NET REALIZED GAIN ON INVESTMENTS 8,552
------
UNREALIZED APPRECIATION ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS:
Beginning of period --
End of period 8,792
-------
8,792
-------
NET REALIZED AND UNREALIZED GAIN 17,344
-------
INCREASE IN PARTNERS' CAPITAL DERIVED
FROM INVESTMENT ACTIVITIES $17,040
=======
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
AUGUSTA PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL - NET ASSETS (IN THOUSANDS)
- --------------------------------------------------------------------------------
PERIOD FROM SEPTEMBER 4, 1996
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1996
INVESTMENT ACTIVITIES
Net investment loss $ (304)
Net realized gain on investments 8,552
Change in unrealized appreciation on
investments and foreign currency transactions 8,792
--------
INCREASE IN PARTNERS' CAPITAL DERIVED
FROM INVESTMENT ACTIVITIES 17,040
PARTNERS' CAPITAL TRANSACTIONS
Capital contributions 100,055
Syndication costs (50)
--------
INCREASE IN PARTNERS' CAPITAL DERIVED
FROM CAPITAL TRANSACTIONS 100,005
PARTNERS' CAPITAL AT BEGINNING OF PERIOD -
--------
PARTNERS' CAPITAL AT END OF PERIOD $117,045
========
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1996
- --------------------------------------------------------------------------------
1. ORGANIZATION
Augusta Partners, L.P. (the "Partnership") was organized under the
Delaware Revised Uniform Limited Partnership Act on May 30, 1996. The
Partnership is registered under the Investment Company Act of 1940 (the
"Act") as a closed-end, non-diversified management investment company.
The Partnership will operate until December 31, 2021 unless further
extended or sooner terminated as provided for in the Limited
Partnership Agreement (the "Agreement"), as amended and restated on
July 16, 1996. The Partnership's investment objective is to achieve
capital appreciation. The Partnership pursues this objective by
investing principally in equity securities of publicly-traded U.S.
companies. The Partnership will also invest in equity securities of
foreign issuers and in bonds and other fixed-income securities of U.S.
and foreign issuers.
The Agreement provides for five "Individual General Partners" and a
"Manager." The Manager is Augusta Management, L.L.C. whose principal
members are Oppenheimer & Co., Inc. ("Opco") and Ardsley Advisory
Partners ("Ardsley"). Investment professionals employed by Ardsley will
manage the Partnership's investment portfolio on behalf of the Manager
under Opco's supervision.
The acceptance of initial and additional contributions, as well as the
repurchase of Partnership interests, are subject to approval by the
Manager. The Partnership may from time to time offer to repurchase
interests pursuant to written tenders by Partners. Such repurchases
will be made at such times and on such terms as may be determined by
the Individual General Partners, in their complete and exclusive
discretion. The Manager expects that generally it will recommend to the
Individual General Partners that the Partnership repurchase interests
from Partners once in each year (other than in 1996) effective as of
the end of each such year.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Manager to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. The Manager believes that the
estimates utilized in preparing the Partnership's financial
statements are reasonable and prudent; however, actual results could
differ from these estimates.
a. PORTFOLIO VALUATION
Securities and commodities transactions, including related revenue
and expenses, are recorded on a trade-date basis and dividends are
recorded on an ex-dividend date basis. Interest income is recorded
on the accrual basis.
5
<PAGE>
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Domestic exchange traded or NASDAQ listed equity securities will
be valued at their last composite sale prices as reported on the
exchanges where such securities are traded. If no sales of such
securities are reported on a particular day, the securities will
be valued based upon their composite bid prices for securities
held long, or their composite ask prices for securities held
short, as reported by such exchanges. Securities traded on a
foreign securities exchange will be valued at their last sale
prices on the exchange where such securities are primarily traded,
or in the absence of a reported sale on a particular day, at their
bid prices (in the case of securities held long) or ask prices (in
the case of securities sold short) as reported by such exchange.
Listed options will be valued using last sales prices as reported
by the exchange with the highest reported daily volume for such
options or, in the absence of any sales on a particular day, at
their bid prices as reported by the exchange with the highest
volume on the last day a trade was reported. Other securities for
which market quotations are readily available will be valued at
their bid prices (or ask prices in the case of securities sold
short) as obtained from one or more dealers making markets for
such securities. If market quotations are not readily available,
securities and other assets will be valued at fair value as
determined in good faith by, or under the supervision of, the
Individual General Partners.
Debt securities will be valued in accordance with the procedures
described above, which with respect to such securities may include
the use of valuations furnished by a pricing service which employs
a matrix to determine valuation for normal institutional size
trading units. The Individual General Partners will periodically
monitor the reasonableness of valuations provided by any such
pricing service. Debt securities with remaining maturities of 60
days or less will, absent unusual circumstances, be valued at
amortized cost, so long as such valuation is determined by the
Individual General Partners to represent fair value.
Futures contracts and options thereon, which are traded on
commodities exchanges, are valued at their settlement value as of
the close of such exchanges.
All assets and liabilities initially expressed in foreign
currencies will be converted into U.S. dollars using foreign
exchange rates provided by a pricing service compiled as of 4:00
p.m. London time. Trading in foreign securities generally is
completed, and the values of such securities are determined, prior
to the close of securities markets in the U.S. Foreign exchange
rates are also determined prior to such close. On occasion, the
values of such securities and exchange rates may be affected by
events occurring between the time as of which determination of
such values or exchange rates are made and the time as of which
the net asset value of the Partnership is determined. When such
events materially affect the values of securities held by the
Partnership or its liabilities, such securities and liabilities
will be valued at fair value as determined in good faith by, or
under the supervision of, the Individual General Partners.
The Partnership may enter into transactions in financial futures,
foreign exchange options and foreign currency forward contracts
that are used for hedging and nonhedging purposes. These contracts
are valued at fair value with the resulting gains and losses
included in net gain from investment transactions.
Morgan Stanley Trust Company serves as custodian of the
Partnership's assets.
6
<PAGE>
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
b. PARTNERSHIP EXPENSES
The expenses incurred by the Partnership in connection with its
organization are being amortized over a 60 month period
beginning with the commencement of operations.
Syndication costs totaling $50,000 related to the Partnership's
initial offering have been charged directly to the capital
accounts of the limited and general partners.
c. INCOME TAXES
No federal, state or local income taxes will be provided on the
profits of the Partnership since the partners are individually
liable for their share of the Partnership's income.
3. RELATED PARTY TRANSACTIONS
Opco provides certain management and administrative services to the
Partnership including, among other things, providing office space and
other support services to the Partnership. In exchange for such
services the Partnership pays Opco a monthly management fee of
.08333% (1% on an annualized basis) of the Partnership's net assets for
the month, excluding assets attributable to the Manager's capital
account.
During the period ended December 31, 1996, Opco earned $19,106 in
brokerage commissions from portfolio transactions executed on behalf of
the Partnership.
At the end of the twelve month period following the admission of a
limited partner to the Partnership, and generally at the end of each
fiscal year thereafter, the Manager is entitled to an incentive
allocation of 20% of net profits, if any, that have been credited to
the capital account of such limited partner during such period. The
incentive allocation will be charged to a limited partner only to the
extent that cumulative net profits with respect to such limited partner
through the close of any period exceeds the highest level of cumulative
net profits with respect to such limited partner through the close of
any prior period. As of December 31, 1996, there was no incentive
allocation.
Each Independent General Partner receives an annual retainer of $5,000
plus a fee for each meeting attended. The other Individual General
Partners do not receive any annual
7
<PAGE>
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
or other fees. All Individual General Partners are reimbursed by the
Partnership for all reasonable out-of-pocket expenses incurred by them
in performing their duties. For the period from September 4, 1996 to
December 31, 1996, these fees (including meeting fees and a pro-rata
portion of the annual retainer) and expenses totaled $13,517. One
Individual General Partner, who is as an "interested person," as
defined by the Act, holds a limited partnership interest in the
Partnership.
4. SECURITIES TRANSACTIONS
Aggregate purchases and sales of investment securities, excluding
short-term debt securities, for the period from September 4, 1996 to
December 31, 1996, amounted to $296,890,226 and $215,761,834,
respectively.
At December 31, 1996, the cost of investments for federal income tax
purposes was substantially the same as the cost for financial reporting
purposes. At December 31, 1996, accumulated net unrealized appreciation
on investments in securities, and securities sold, not yet purchased,
was $8,792,156, consisting of $11,254,994 gross unrealized appreciation
and $2,462,838 gross unrealized depreciation.
Due from broker primarily represents proceeds from unsettled trades and
short sales. Due to broker primarily represents liabilities from
unsettled security purchases.
5. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK OR
CONCENTRATIONS OF CREDIT RISK
In the normal course of business, the Partnership may trade various
financial instruments and enter into various investment activities with
off-balance sheet risk. These financial instruments include forward and
futures contracts, options and sales of securities not yet purchased.
Generally, these financial instruments represent future commitments to
purchase or sell other financial instruments at specific terms at
specified future dates. Each of these financial instruments contain
varying degrees of off-balance sheet risk whereby changes in the market
value of the securities underlying the financial instruments may be in
excess of the amounts recognized in the statement of assets,
liabilities and partners' capital.
The Partnership's foreign exchange trading activities involve the
purchase and sale (writing) of foreign exchange options having various
maturity dates. The Partnership may seek to limit its exposure to
foreign exchange rate movements by hedging such option positions with
foreign exchange positions in spot currency, futures and forward
contracts.
8
<PAGE>
At December 31, 1996, the Partnership had no spot currency, futures or
forward contracts outstanding.
Securities sold, not yet purchased, represent obligations of the
Partnership to deliver the specified security and thereby creates a
liability to purchase the security in the market at prevailing prices.
Accordingly, these transactions result in off-balance sheet risk as the
Partnership's ultimate obligation to satisfy the sale of securities
sold, not yet purchased, may exceed the amount recognized in the
statement of assets, liabilities and partners' capital.
The risk associated with purchasing an option is that the Partnership
pays a premium whether or not the option is exercised. Additionally,
the Partnership bears the risk of loss of premium and change in market
value should the counterparty not perform under the contract. Put and
call options purchased are accounted for in the same manner as
investment securities.
When the Partnership writes an option, the premium received by the
Partnership is recorded as a liability and is subsequently adjusted to
the current market value of the option written. If a call option is
exercised, the premium is added to the proceeds from the sale of the
underlying security or currency in determining whether the Partnership
has realized a gain or loss. In writing an option, the Partnership
bears the market risk of an unfavorable change in the price of the
security or currency underlying the written option. Exercise of an
option written by the Partnership could result in the Partnership
selling or buying a security or currency at a price different from the
current market value.
A summary of the notional amount of open purchased option contracts as
of December 31, 1996, is as follows:
NOTIONAL AMOUNTS
---------------
Equity Options $ 7,078,750
Equity Index Options 8,750,000
Foreign Exchange Options 49,514,200
9
<PAGE>
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Transactions in written options were as follows:
<TABLE>
<CAPTION>
CALL OPTIONS PUT OPTIONS
---------------------------- --------------------------------
NUMBER AMOUNT NUMBER AMOUNT
OF CONTRACTS OF PREMIUM OF CONTRACTS OF PREMIUM
------------ ---------- ------------ -----------
<S> <C> <C> <C> <C>
Beginning balance - $ 0 - $ 0
Options written 2,680 890,170 1,000 61,498
Options closed (2,680) (890,170) (1,000) (61,498)
------ --------- ------ --------
Options outstanding at
December 31, 1996 - $ 0 - $ 0
====== ========= ====== ========
</TABLE>
6. FINANCIAL INSTRUMENTS HELD OR ISSUED FOR TRADING PURPOSES
The Partnership maintains positions in a variety of financial
instruments. The following table summarizes the components of net
realized and unrealized gain from investment transactions:
<TABLE>
<CAPTION>
NET GAINS
(LOSSES)
FOR 1996
--------------
<S> <C>
Equity transactions $15,263,691
Fixed income 135,175
Foreign Exchange (including realized gains of $566,945) 1,945,522
-----------
Net Gain from investment transactions $17,344,388
===========
</TABLE>
The following table presents the year-end fair values of derivative
financial instruments and the average fair values during the year of
those instruments:
10
<PAGE>
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
FAIR VALUE AT AVERAGE FAIR
DECEMBER 31, VALUE FOR
1996 1996
------------- ---------------
ASSETS:
Equity $1,745,438 $1,234,430
Fixed Income - -
Foreign Exchange 2,024,103 1,311,029
Average fair values presented above are based upon each type's
month-end fair value during the period ended December 31, 1996.
7. SHORT-TERM BORROWINGS
The Partnership has the ability to trade on margin, and, in that
connection, borrow funds from brokers and banks for the purchase of
equity and fixed income securities. Trading in equity securities on
margin involves an initial cash requirement representing at least 50%
of the underlying security's value with respect to transactions in U.S.
markets and varying percentages with respect to transactions in foreign
markets. The Act requires the Partnership to satisfy an asset coverage
requirement of 300% of its indebtedness, including amounts borrowed,
measured at the time the Partnership incurs the indebtedness. As of
December 31, 1996, the Partnership had no outstanding borrowings.
During the period ended December 31, 1996, the average daily amount of
short term debt was not material the Partnership's total net assets.
11
<PAGE>
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
8. SELECTED FINANCIAL RATIOS AND OTHER SUPPLEMENTAL INFORMATION
The following represents the ratios to average net assets and other
supplemental information for the period:
SEPTEMBER 4, 1996
(COMMENCEMENT OF
OPERATIONS) TO
DECEMBER 31, 1996
-----------------
Investment loss (.83%)*
Operating expenses 2.34%*
Dividends on securities
sold, not yet purchased .06%*
Portfolio turnover 215%
Average Commission Rate $.0569**
Total return 17.20%***
* Annualized.
** Average commission rate per share on purchases of investment
securities.
*** Total return assumes a purchase of a limited Partnership interest
in the Partnership on the first day and a sale of the Partnership
interest on the last day of the period noted, before incentive
allocation to the General Partner, if any. Total returns for a
period of less than a full year are not annualized.
12
<PAGE>
AUGUSTA PARTNERS, L.P.
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO INVESTMENTS
- -------------------------------------------------------------------------------------------
DECEMBER 31, 1996
SHARES MARKET VALUE
<S> <C> <C>
COMMON STOCKS - 74.38%
AGRICULTURAL OPERATIONS - 1.23%
45,000 Delta & Pine Land Co. $ 1,440,000
------------
AIRLINES - 1.57%
65,000 Continental Airlines, Inc., Class B * 1,836,250
------------
COMMERCIAL SERVICES - 3.11%
150,000 CUC International, Inc. * 3,637,500
------------
COMPUTER SERVICES & SOFTWARE - 3.96%
50,000 BMC Software, Inc. * 2,068,750
10,000 Computer Associates Int'l, Inc. 497,500
75,000 Jetform Corp. * 1,387,500
50,000 Platinum Technology, Inc. * 681,250
------------
4,635,000
------------
COMPUTER HARDWARE - 1.31%
40,000 Interphase Corp. * 400,000
20,000 Western Digital Corp. * 1,137,500
------------
1,537,500
------------
DIVERSIFIED OPERATIONS - .99%
25,000 Corning, Inc. 1,156,250
------------
ELECTRONICS - 3.55%
85,000 Kent Electronics Corp. * 2,188,750
60,000 Sheldahl, Inc. * 1,125,000
27,500 Ultrak, Inc. * 838,750
------------
4,152,500
------------
FINANCIAL SERVICES - 5.09%
50,000 Big Foot Financial Corp. * 650,000
33,000 Chase Manhattan Corp. 2,949,375
75,000 Lehman Brothers Holdings, Inc. 2,353,125
------------
5,952,500
============
HEALTHCARE SERVICES & MANAGEMENT - 1.18%
135,000 American Oncology Resources, Inc. * 1,383,750
------------
</TABLE>
*Non-income producing security
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
AUGUSTA PARTNERS, L.P.
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- -------------------------------------------------------------------------------------------
DECEMBER 31, 1996
SHARES MARKET VALUE
<S> <C> <C>
HOTELS & MOTELS - 1.52%
110,000 Prime Hospitality Corp. * $ 1,773,750
------------
HOUSEHOLD PRODUCTS/WARES - .98%
70,000 AJL Peps Trust 1,146,250
------------
HUMAN RESOURCES - 1.19%
60,000 Emcare Holdings, Inc. * 1,395,000
------------
MANUFACTURING - 1.06%
75,000 Foamex Int'l, Inc. * 1,237,500
------------
MEDICAL / BIOMEDICAL - 9.85%
150,000 Alpha-Beta Tech., Inc. * 1,584,375
30,000 Biochem Pharmaceuticals, Inc. * 1,507,500
100,000 Cellpro, Inc. * 1,250,000
20,000 Centocor, Inc. * 715,000
200,000 Liposome Co., Inc. * 3,825,000
80,000 Myriad Genetics, Inc.* 2,020,000
150,000 NeoRx Corp. * 618,750
------------
11,520,625
------------
MEDICAL INSTRUMENTS & PRODUCTS - 12.21%
80,500 Boston Scientific Corp. * 4,830,000
100,000 Cytyc Corp. * 2,700,000
45,000 Interneuron Pharmaceuticals, Inc. * 1,170,000
60,000 OccuSystems, Inc. * 1,620,000
31,000 Sabratek Corp. * 492,125
75,000 Ventritex, Inc. * 1,846,875
45,000 Vivus, Inc. * 1,631,258
------------
14,290,258
============
NETWORKING PRODUCTS - 1.90%
35,000 Cisco Systems, Inc. * 2,226,875
------------
OFFICE SUPPLIES & FORMS - 2.26%
25,000 Alco Standard Corp. * 1,290,625
75,000 Staples, Inc. * 1,354,688
------------
2,645,313
============
</TABLE>
*Non-income producing security
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
AUGUSTA PARTNERS, L.P.
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- -------------------------------------------------------------------------------------------
DECEMBER 31, 1996
SHARES MARKET VALUE
OIL/GAS EQUIPMENT & SERVICES - 15.16%
<S> <C> <C>
80,000 Baker Hughes, Inc. $ 2,760,000
15,000 Callon Petroleum Co. * 285,000
70,000 Global Industries, Ltd. * 1,303,750
115,000 Input / Output, Inc. * 2,127,500
65,000 Marine Drilling Companies, Inc. * 1,279,688
100,000 Nabors Industries, Inc. * 1,925,000
35,000 Noble Drilling Corp. * 695,625
30,000 Nuevo Energy Co. * 1,560,000
50,000 Reading & Bates Corp. * 1,325,000
80,000 Texas Meridian Resources Corp. * 1,370,000
30,000 Union Pacific Resources Group Inc. 870,000
75,000 Weatherford Enterra, Inc.* 2,250,000
------------
17,751,563
------------
RESTAURANTS - .86%
50,000 Dave & Busters, Inc. * 1,006,250
------------
RETAIL & MERCHANDISING - 1.38%
20,000 Home Depot, Inc. 1,002,500
52,500 Micro Warehouse, Inc. * 616,875
------------
1,619,375
------------
RETIREMENT / AGED CARE - .45%
45,000 ARV Assisted Living, Inc. * 523,125
------------
TELECOMMUNICATIONS EQUIPMENT &
LONG DISTANCE SERVICE - 2.42%
50,000 ACC Corp. * 1,512,500
75,000 ICG Communications, Inc. * 1,321,875
------------
2,834,375
------------
THERAPEUTICS - 1.16%
20,000 Agouron Pharmaceuticals, Inc. * 1,355,000
------------
TOTAL COMMON STOCKS (COST $80,910,903) 87,056,509
============
PREFERRED STOCKS - 2.29%
TELECOMMUNICATIONS EQUIPMENT &
LONG DISTANCE SERVICE
50,000 Globalstar Telecom. Ltd., PRF, Conv. 6.50%, 144A $ 2,675,000
------------
TOTAL PREFERRED STOCKS (COST $2,125,000) $ 2,675,000
============
</TABLE>
*Non-income producing security
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
AUGUSTA PARTNERS, L.P.
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1996
FACE MARKET VALUE
AMOUNT
<S> <C> <C>
BONDS - 5.85%
BROADCASTING - 1.19%
$1,500,000 Comcast Corp., 3.375%, 09/09/05, Conv. $ 1,391,250
------------
CABLE & OTHER PAY TELEVISION SERVICES - 3.90%
4,250,000 International Cabletel, Inc., 7.25%, 04/15/05, Conv., 144A 4,568,750
------------
RETIREMENT / AGED CARE - .76%
1,250,000 Sterling House Corp., 6.75%, 06/30/06, Conv., 144A 887,500
------------
TOTAL BONDS (COST $6,712,325) $ 6,847,500
============
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS
<S> <C> <C>
CALL OPTIONS - 1.39%
COMPUTER SERVICES & SOFTWARE - .19%
500 Platinum Technology, Inc., 06/21/97, $10.00 $ 218,750
------------
MEDICAL / BIOMEDICAL - .68%
500 Autoimmune, Inc., 04/19/97, $12.50 193,750
1,000 Autoimmune, Inc., 07/19/97, $12.50 475,000
400 Liposome Co., Inc., 02/22/97, $17.50 125,000
------------
793,750
------------
OIL/GAS EQUIPMENT & SERVICES - .06%
150 Ashland, Inc., 01/18/97, $40.00 58,125
300 Ashland, Inc., 01/18/97, $45.00 13,125
------------
71,250
------------
TELECOMMUNICATIONS EQUIPMENT &
LONG DISTANCE SERVICE - .46%
180 WorldCom, Inc., 01/98, $20.00 162,000
175 WorldCom, Inc., 01/98, $22.50 122,500
400 WorldCom, Inc., 01/98, $25.00 255,000
------------
539,500
------------
TOTAL CALL OPTIONS (COST $1,322,627) $ 1,623,250
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
AUGUSTA PARTNERS, L.P.
<TABLE>
<CAPTION>
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- ---------------------------------------------------------------------------------------------------------------
DECEMBER 31, 1996
NUMBER OF MARKET VALUE
CONTRACTS
<S> <C> <C>
PUT OPTIONS - 1.83%
CROSS CURRENCY - 1.73%
2 OTC ITL Call/ CHF Put, 09/27/97, strike 1210 ITL/CHF,
Notional 66,250,000 CHF $ 2,024,103
------------
LEISURE & RECREATION / GAMING - .02%
100 Callaway Golf Co., 01/18/97, $30.00 20,000
------------
STOCK INDEX - .08%
250 S & P 400 Midcap, 01/18/97, $250 60,937
100 S & P 400 Midcap, 01/18/97, $255 41,250
------------
102,187
------------
TOTAL PUT OPTIONS (COST $929,256) $ 2,146,290
============
TOTAL INVESTMENTS (COST $92,000,111) - 85.74% $100,348,549
============
OTHER ASSETS, LESS LIABILITIES - 14.26% 16,696,523
------------
NET ASSETS - 100.00% $117,045,072
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
AUGUSTA PARTNERS, L.P.
<TABLE>
<CAPTION>
SCHEDULE OF SECURITIES SOLD, NOT YET PURCHASED
- -------------------------------------------------------------------------------------------
DECEMBER 31, 1996
SHARES MARKET VALUE
<S> <C> <C>
SHORT COMMON STOCK - (5.46%)
COMMERCIAL SERVICES - (.67%)
(30,000) TeleTech Holdings, Inc. ($780,000)
-----------
COSMETICS & TOILETRIES - (.17%)
(12,500) Thermolase Corp. (196,875)
-----------
CONSULTING SERVICES - (.30%)
(7,500) Registry, Inc. (345,938)
-----------
FOOD - (1.96%)
(35,000) Kellogg Co. (2,296,875)
-----------
MEDICAL INSTRUMENTS & PRODUCTS - (.44%)
(15,000) Henry Schein, Inc. (515,625)
-----------
NETWORKING PRODUCTS - (.54%)
(30,000) Bay Networks, Inc. (630,000)
-----------
TELECOMMUNICATIONS EQUIPMENT &
LONG DISTANCE SERVICE - (1.38%)
(80,000) Deutsche Telekom AG-Sponsored ADR (1,630,000)
-----------
TOTAL SHORT COMMON STOCK - PROCEEDS ($6,839,031) ($6,395,313)
===========
</TABLE>
The accompanying notes are an integral part of these financial statements
18
