AUGUSTA PARTNERS, L.P.
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED
JUNE 30, 1998
(UNAUDITED)
<PAGE>
AUGUSTA PARTNERS, L.P.
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED
JUNE 30, 1998
(UNAUDITED)
CONTENTS
Statement of Assets, Liabilities and Partners' Capital.................... 1
Statement of Operations................................................... 2
Statement of Changes in Partners' Capital - Net Assets.................... 3
Notes to Financial Statements............................................. 4
Schedule of Portfolio Investments......................................... 12
Schedule of Securities Sold, Not Yet Purchased............................ 17
Schedule of Written Options............................................... 18
<PAGE>
AUGUSTA PARTNERS, L.P.
STATEMENT OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL (IN THOUSANDS)
- --------------------------------------------------------------------------------
JUNE 30, 1998
(UNAUDITED)
ASSETS
Cash $ 1,492
Investments in securities, at market (identified cost - $138,524) 155,083
Due from broker 15,972
Dividends receivable 43
Interest receivable 92
Organizational costs (net of accumulated amortization of $252) 439
Other assets 11
--------
TOTAL ASSETS 173,132
--------
LIABILITIES
Securities sold, not yet purchased - at market
(proceeds of sales - $15,734) 16,828
Outstanding options written, at value (premiums received - $585) 551
Dividends payable on securities sold, not yet purchased 11
Management fee payable 123
Accrued expenses 226
--------
TOTAL LIABILITIES 17,739
--------
NET ASSETS $155,393
========
PARTNERS' CAPITAL - NET ASSETS
Represented by:
Capital contributions - net $90,666
Accumulated net investment loss (1,342)
Accumulated net realized gain on investments 50,570
Accumulated net unrealized appreciation on investments and
foreign currency transactions 15,499
--------
PARTNERS' CAPITAL - NET ASSETS $155,393
========
The accompanying notes are an integral part of these financial statements.
-1-
<PAGE>
AUGUSTA PARTNERS, L.P.
STATEMENT OF OPERATIONS (IN THOUSANDS)
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, 1998
(UNAUDITED)
INVESTMENT INCOME
Interest $ 659
Dividends 383
-------
1,042
-------
EXPENSES
OPERATING EXPENSES:
Management fee 724
Professional fees 174
Administration fees 101
Amortization of organizational costs 69
Custodian fees 34
Insurance expense 33
Individual General Partners' fees and expenses 11
Miscellaneous 15
-------
1,161
INTEREST EXPENSE 219
DIVIDENDS ON SECURITIES SOLD, NOT YET PURCHASED 81
-------
TOTAL EXPENSES 1,461
-------
NET INVESTMENT LOSS (419)
-------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
REALIZED GAIN (LOSS) ON INVESTMENTS:
Investment securities 21,198
Purchased options (3,329)
Futures transactions (89)
Written options 121
Short sales 820
-------
NET REALIZED GAIN ON INVESTMENTS 18,721
-------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON
INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS (878)
-------
NET REALIZED AND UNREALIZED GAIN 17,843
-------
INCREASE IN PARTNERS' CAPITAL DERIVED FROM
INVESTMENT ACTIVITIES $17,424
=======
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
AUGUSTA PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL - NET ASSETS (IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
(UNAUDITED)
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net investment loss $ (419) $ (619)
Net realized gain on investments 18,721 23,297
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency transactions (878) 7,585
-------- --------
INCREASE IN PARTNERS' CAPITAL DERIVED
FROM INVESTMENT ACTIVITIES 17,424 30,263
PARTNERS' CAPITAL TRANSACTIONS
Capital contributions 9,390 0
Capital withdrawals - General Partner (187) (9,573)
Capital withdrawals - Limited Partners 0 (8,969)
-------- --------
INCREASE (DECREASE) IN PARTNERS' CAPITAL
DERIVED FROM CAPITAL TRANSACTIONS 9,203 (18,542)
PARTNERS' CAPITAL AT BEGINNING OF PERIOD 128,766 117,045
-------- --------
PARTNERS' CAPITAL AT END OF PERIOD $155,393 $128,766
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
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, and as further amended October 29, 1997. 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
may also invest in equity securities of foreign issuers and in bonds,
options and other fixed-income securities of U.S. and foreign issuers,
as well as other financial instruments.
There are four "Individual General Partners" and a "Manager." The
Manager is Augusta Management, L.L.C. whose principal members are CIBC
Oppenheimer Corp. ("CIBC Opco") and Ardsley Advisory Partners
("Ardsley"). Investment professionals at Ardsley manage the
Partnership's investment portfolio on behalf of the Manager under CIBC
Opco's supervision.
The acceptance of initial and additional contributions is 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 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.
-4-
<PAGE>
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1998 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
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 held 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 held 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, or consultation with brokers and dealers in such securities. 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.
-5-
<PAGE>
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1998 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
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.
B. ORGANIZATION COSTS
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, September 4, 1996.
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. MANAGEMENT FEE, RELATED PARTY TRANSACTIONS AND OTHER
CIBC 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 CIBC Opco a monthly management fee of
0.08333% (1% on an annualized basis) of the Partnership's net assets
determined as of the beginning of the month, excluding assets
attributable to the Manager's capital account.
During the six months ended June 30, 1998, CIBC Opco and CIBC Wood
Gundy earned $20,550 and $2,507, respectively, 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. For the six months ended June 30, 1998 there were no
incentive allocations.
Each Independent Individual General Partner, who is not an "interested
person" of the Partnership, as defined by the Act, receives an annual
retainer of $5,000 plus a fee for each meeting attended. Any Individual
General Partner who is an "interested person"
-6-
<PAGE>
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1998 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
does not receive any annual or other fee from the Partnership. 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 six months ended June 30, 1998, fees paid to the
Individual General Partners (including meeting fees and the annual
retainer) and expenses totaled $19,761.
Morgan Stanley Trust Company serves as Custodian of the Partnership's
assets.
PFPC Inc. serves as Administrator and Accounting Agent to the
Partnership, and in that capacity provides certain accounting, record
keeping, tax and investor related services.
4. SECURITIES TRANSACTIONS
Aggregate purchases and sales of investment securities, excluding
short-term securities, for the six months ended June 30, 1998, amounted
to $529,268,526 and $529,405,732, respectively.
At June 30, 1998, the cost of investments for federal income tax
purposes was substantially the same as the cost for financial reporting
purposes. At June 30, 1998, accumulated net unrealized appreciation on
investments, options, and securities sold, not yet purchased, was
$15,498,559, consisting of $22,146,663 gross unrealized appreciation
and $6,648,104 gross unrealized depreciation.
Due from broker primarily represents receivables and payables from
unsettled security trades and short sales.
5. SHORT-TERM BORROWINGS
The Partnership has the ability to trade on margin and, in that
connection, borrow funds from brokers and banks for investment
purposes. 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. The Partnership pays
interest on outstanding margin borrowings at an annualized rate of
LIBOR plus 0.875%. The Partnership pledges securities as collateral for
the margin borrowings, which are maintained in a segregated account
held by the Custodian. As of June 30, 1998, the Partnership did not
have any margin borrowings outstanding. For the six months ended June
30, 1998, the average daily amount of such borrowings was $5,558,041.
-7-
<PAGE>
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1998 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
6. 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 contains
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. At June 30, 1998, 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.
-8-
<PAGE>
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1998 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
Transactions in purchased options were as follows:
<TABLE>
<CAPTION>
CROSS CURRENCY, INDEX
CALL OPTIONS AND PUT OPTIONS
--------------------------- ------------------------------
NUMBER NUMBER
OF CONTRACTS COST OF CONTRACTS COST
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Beginning balance 750 $ 847,562 340,000 $ 4,743,000
Options purchased 20,555 10,957,328 9,490 11,935,328
Options closed (16,510) (9,038,353) (348,680) (16,148,892)
Expired options (975) (137,844) (675) (151,166)
-------- ----------- -------- ------------
Options outstanding at
June 30, 1998 3,820 $ 2,628,693 135 $ 378,270
======== =========== ======== ============
</TABLE>
Transactions in written options were as follows:
<TABLE>
<CAPTION>
INDEX AND CROSS CURRENCY, INDEX
CALL OPTIONS AND PUT OPTIONS
------------------------------ --------------------------------
NUMBER AMOUNT OF NUMBER AMOUNT OF
OF CONTRACTS PREMIUM OF CONTRACTS PREMIUM
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Beginning balance 1,125 $ 176,657 270,000 $ 4,209,000
Options written 10,965 7,551,805 3,275 4,621,522
Options closed (9,780) (7,044,705) (273,140) (8,722,796)
Expired options (1,375) (206,533) 0 0
------- ----------- -------- ----------
Options outstanding at
June 30, 1998 935 $ 477,224 135 $ 107,726
======= =========== ======== ==========
</TABLE>
-9-
<PAGE>
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1998 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
7. 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 gains from investment transactions:
NET GAINS / (LOSSES)
FOR THE SIX MONTHS ENDED
JUNE 30, 1998
------------------------
Equity securities $22,465,436
Equity option (210,456)
Equity index options (3,159,254)
Cross currency options (9,103,617)
Written options 3,845,374
Fixed income securities 2,611,227
Futures (88,726)
FOREIGN SECURITIES:
Equity securities 1,483,429
-----------
$17,843,413
===========
The following table presents the market values of derivative financial
instruments and the average market values of those instruments:
AVERAGE MARKET VALUE
MARKET VALUE AT FOR THE SIX MONTHS
JUNE 30, 1998 ENDED JUNE 30, 1998
--------------- --------------------
ASSETS:
Equity options $2,402,250 $2,510,498
Equity index options 239,625 2,198,054
Cross currency options 0 334,705
LIABILITIES:
Written options (551,125) (4,038,084)
Average market values presented above are based upon month-end market
value during the six months ended June 30, 1998.
-10-
<PAGE>
AUGUSTA PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1998 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
8. SELECTED FINANCIAL RATIOS AND OTHER SUPPLEMENTAL INFORMATION
The following represents the ratios to average net assets and other
supplemental information for each period:
<TABLE>
<CAPTION>
SEPTEMBER 4, 1996
(COMMENCEMENT OF
SIX MONTHS ENDED YEAR ENDED OPERATIONS) TO
JUNE 30, 1998 DECEMBER 31, 1997 DECEMBER 31, 1996
---------------- ----------------- -------------------
<S> <C> <C> <C>
Ratio of net investment loss to
average net assets (0.49%)* (0.48%) (0.83%)*
Ratio of operating expenses to
average net assets 1.35%* 1.61% 2.27%*
Ratio of interest expense to
average net assets 0.25%* 0.07% 0.01%*
Ratio of dividends on securities
sold, not yet purchased
to average net assets 0.10%* 0.12% 0.06%*
Total return *** 12.62% 25.94% 17.20%
Portfolio turnover rate 354% 627% 215%
Average commission rate paid ** $ 0.0575 $ 0.0527 $ 0.0569
Average debt ratio 3.21% 1.04% 0.28%
<FN>
* Annualized.
** Average commission rate paid on purchases and sales of investment
securities held long.
*** 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 Manager, if any. Total returns for a period of
less than a full year are not annualized.
</FN>
</TABLE>
-11-
<PAGE>
AUGUSTA PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
JUNE 30, 1998
SHARES MARKET VALUE
COMMON STOCKS - 87.49%
AGRICULTURAL BIOTECHNOLOGY - 1.80%
50,000 Monsanto Co. $ 2,793,750
------------
APPLICATIONS SOFTWARE - 1.38%
50,000 J.D. Edwards & Co.* 2,146,900
------------
AUTO - MED & HEAVY DUTY TRUCKS - 1.21%
65,000 Navistar International Corp.* 1,876,875
------------
CABLE TV - 4.24%
150,000 MediaOne Group, Inc.$ 6,590,700
------------
COMMERCIAL BANKS - 1.24%
20,000 UnionBanCal Corp. 1,930,000
------------
COMPUTERS - INTEGRATED SYSTEMS - 1.39%
80,000 Systems & Computer Technology Corp.* 2,160,000
------------
COMPUTERS - MICRO - 0.98%
35,000 Sun Microsystems, Inc.* 1,520,313
------------
COMPUTER SOFTWARE - 7.23%
125,000 Compuware Corp.*(a) 6,390,625
25,000 Microsoft Corp.* 2,709,375
75,000 Platinum Technology, Inc.* 2,142,225
------------
11,242,225
------------
DATA PROCESSING/MANAGEMENT - 1.52%
75,000 Arbor Software Corp.*(b) 2,357,850
------------
FINANCIAL SAVINGS & LOANS/THRIFTS - 2.16%
125,000 Bank Plus Corp.*(b) 1,531,250
80,000 Staten Island Bancorp, Inc. 1,820,000
------------
3,351,250
------------
GOLD MINING - 1.14%
75,000 Newmont Mining Corp. 1,771,875
------------
HEALTH CARE COST CONTAINMENT - 3.09%
800,000 Medaphis Corp.* 4,800,000
------------
The accompanying notes are an integral part of these financial statements.
-12-
<PAGE>
AUGUSTA PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
JUNE 30, 1998
SHARES MARKET VALUE
COMMON STOCKS - (CONTINUED)
HOTELS & MOTELS - 0.47%
35,000 La Quinta Inns, Inc. $ 739,375
------------
HUMAN RESOURCES - 1.31%
100,000 RCM Technologies, Inc.* 2,031,300
------------
MEDICAL - BIOMEDICAL/GENE - 2.04%
35,000 Biogen, Inc.* 1,715,000
40,000 Centocor, Inc.* 1,450,000
------------
3,165,000
------------
MEDICAL - DRUGS - 6.56%
285,000 Alteon, Inc.* 997,500
80,000 ICN Pharmaceuticals, Inc. 3,655,040
80,000 Warner-Lambert Co. 5,550,000
------------
10,202,540
------------
MULTI-LINE INSURANCE - 1.17%
30,000 Travelers Group, Inc. 1,818,750
------------
OFFICE FURNISHINGS - 0.67%
40,000 Steelcase, Inc., Class A 1,040,000
------------
OIL COMPANY - INTEGRATED - 1.67%
40,000 ENI SPA, Sponsored ADR 2,600,000
------------
OIL FIELD MACHINERY & EQUIPMENT - 1.15%
35,000 Cooper Cameron Corp.* 1,785,000
------------
OIL FIELD SERVICES - 1.40%
75,000 BJ Services Co.* 2,179,725
------------
OIL & GAS DRILLING - 1.55%
100,000 Noble Drilling Corp.* 2,406,300
------------
PRIVATE CORRECTIONS - 3.93%
260,000 Corrections Corporation of America*(a) 6,110,000
------------
The accompanying notes are an integral part of these financial statements.
-13-
<PAGE>
AUGUSTA PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
JUNE 30, 1998
SHARES MARKET VALUE
COMMON STOCKS - (CONTINUED)
PROPERTY/CASUALTY INSURANCE - 1.63%
55,000 Chicago Title Corp.* $ 2,540,340
------------
PUBLISHING - PERIODICALS - 1.32%
80,000 Petersen Companies, Inc., Class A* 2,050,000
------------
RENTAL AUTO/ EQUIPMENT - 0.93%
50,000 Leasing Solutions, Inc.*(b) 1,437,500
------------
RETAIL - INTERNET - 1.85%
150,000 software.net Corp.* 2,868,750
------------
RETAIL - MAJOR DEPARTMENT STORE - 0.98%
25,000 Sears, Roebuck and Co. 1,526,575
------------
RETAIL - RESTAURANTS - 2.18%
60,000 Outback Steakhouse, Inc.* 2,340,000
300,000 Shoney's, Inc.* 1,050,000
------------
3,390,000
------------
SATELLITE TELECOMMUNICATIONS - 5.88%
250,000 ICG Communications, Inc.* 9,140,750
------------
TELECOMMUNICATIONS EQUIPMENT - 4.69%
70,000 Associated Group, Inc., Class B*(b) 2,782,500
150,000 DSC Communications Corp.* 4,500,000
------------
7,282,500
------------
TELECOMMUNICATIONS SERVICES - 2.05%
100,000 Hyperion Telecommunications, Inc., Class A* 1,568,800
55,000 Teligent, Inc., Class A* 1,619,090
------------
3,187,890
------------
TELEPHONE - INTEGRATED - 3.51%
50,000 Telecomunicacoes Brasileiras S.A.,
Sponsored ADR 5,450,000
------------
TELEPHONE - LONG DISTANCE - 10.66%
285,000 MCI Communications Corp.(a) 16,565,625
------------
The accompanying notes are an integral part of these financial statements.
-14-
<PAGE>
AUGUSTA PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
JUNE 30, 1998
SHARES MARKET VALUE
COMMON STOCKS - (CONTINUED)
TELEVISION - 2.51%
60,000 Young Broadcasting, Inc., Class A*(a) $ 3,900,000
------------
TOTAL COMMON STOCKS (COST $121,203,619) 135,959,658
============
PREFERRED STOCKS - 3.74%
COMMERCIAL SERVICES - 1.21%
50,000 Cendant Corp., 7.5%, 02/16/01,
PRF Conv., $48.10 1,871,900
------------
DRUG DELIVERY SYSTEMS - 1.33%
15,000 Alkermes, Inc., 6.5%, 12/31/49,
PRF Conv., $29.625 620,625
35,000 Alkermes, Inc., 6.5%, 12/31/49, 144A
PRF Conv., $29.625 1,448,125
------------
2,068,750
------------
TELECOMMUNICATIONS SERVICES - 1.20%
40,000 Omnipoint Corp., 7.0%, 12/31/49, 144A
PRF Conv., $31.12 1,870,000
------------
TOTAL PREFERRED STOCKS (COST $6,108,783) 5,810,650
============
FACE
AMOUNT
BONDS - 6.87%
TELECOMMUNICATIONS SERVICES - 6.87%
$7,250,000 NTL Inc., 7.00%, 06/15/08, Conv., $37.87 10,670,550
------------
TOTAL BONDS (COST $8,204,745) 10,670,550
============
NUMBER OF
CONTRACTS
CALL OPTIONS - 1.55%
CABLE TV - 0.10%
270 MediaOne Group, Inc., 07/18/98, $40.00 148,500
------------
OIL COMPANY - EXPLORATION & PRODUCTION - 0.10%
600 Triton Energy Ltd., 07/18/98, $40.00 52,500
400 Triton Energy Ltd., 08/22/98, $40.00 97,500
------------
150,000
------------
The accompanying notes are an integral part of these financial statements.
-15-
<PAGE>
AUGUSTA PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
NUMBER OF JUNE 30, 1998
CONTRACTS MARKET VALUE
CALL OPTIONS - (CONTINUED)
PRIVATE CORRECTIONS - 0.08%
700 Corrections Corporation of America,
7/18/98, $22.50 $ 122,500
------------
TELEPHONE - INTEGRATED - 1.23%
475 Telecomunicacoes Brasileiras S.A.,
Sponsored ADR, 08/22/98, $105.00 546,250
625 Telecomunicacoes Brasileiras S.A.,
Sponsored ADR, 10/17/98, $110.00 796,875
550 Telecomunicacoes Brasileiras S.A.,
Sponsored ADR, 10/17/98, $115.00 570,625
------------
1,913,750
------------
TELEPHONE - LONG DISTANCE - 0.04%
200 MCI Communications Corp., 07/18/98, $55.00 67,500
------------
TOTAL CALL OPTIONS (COST $2,628,693) 2,402,250
============
PUT OPTIONS - 0.15%
INDEX - .15%
135 S & P 500 Index, 09/19/98, $1,075.00 239,625
------------
TOTAL PUT OPTIONS (COST $378,270) 239,625
============
TOTAL INVESTMENTS
(COST $138,524,110)** - 99.80% 155,082,733
============
OTHER ASSETS, LESS LIABILITIES - 0.20% 310,660
------------
NET ASSETS - 100.00% $155,393,393
============
(a) Partially or wholly held in a pledged account by the Custodian as
collateral for securities sold short.
(b) Wholly held in a pledged account by the Custodian as collateral for open
written options.
* Non-income producing security.
** Also cost for federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
-16-
<PAGE>
AUGUSTA PARTNERS, L.P.
SCHEDULE OF SECURITIES SOLD, NOT YET PURCHASED (UNAUDITED)
- --------------------------------------------------------------------------------
JUNE 30, 1998
SHARES MARKET VALUE
SHORT COMMON STOCK - (10.83%)
AUTO/TRUCK PARTS & EQUIPMENT - (0.32%)
30,000 Exide Corp. $ (504,390)
------------
COLLECTIBLES - (0.73%)
35,000 Action Performance Companies, Inc. (1,126,580)
------------
COMMERCIAL BANKS - (2.29)%
150,000 Synovus Financial Corp. (3,562,500)
------------
COMPUTER DATA SECURITY - (0.40%)
10,000 SCM Microsystems, Inc. (625,000)
------------
MEDICAL - BIOMEDICAL/GENE - (0.39%)
31,250 Organogenesis, Inc. (613,281)
------------
MEDICAL - DRUGS - (3.02%)
35,000 Merck & Co., Inc. (4,681,250)
------------
MEDICAL INSTRUMENTS - (1.85%)
40,000 Boston Scientific Corp. (2,865,000)
------------
MEDICAL PRODUCTS - (0.48%)
30,000 Closure Medical Corp. (746,250)
------------
TELECOMMUNICATIONS SERVICES - (0.95%)
20,000 Level 3 Communications, Inc. (1,480,000)
------------
25,000 WIRELESS EQUIPMENT - (0.40%)
American Tower Corp., Class A (623,450)
------------
TOTAL SHORT COMMON STOCK PROCEEDS
($15,733,812) $(16,827,701)
============
The accompanying notes are an integral part of these financial statements.
-17-
<PAGE>
AUGUSTA PARTNERS, L.P.
SCHEDULE OF WRITTEN OPTIONS (UNAUDITED)
- --------------------------------------------------------------------------------
NUMBER OF JUNE 30, 1998
CONTRACTS MARKET VALUE
WRITTEN CALL OPTIONS - (0.31%)
AGRICULTURAL BIOTECHNOLOGY - (0.08%)
500 Monsanto Co., 10/17/98, $60.00 $ (118,750)
------------
INDEX - (0.20%)
135 S & P 500, 09/19/98, $1,175.00 (313,875)
------------
MEDICAL - DRUGS - (0.03%)
300 Warner-Lambert Co., 08/22/98, $75.00 (54,375)
------------
TOTAL WRITTEN CALL OPTIONS -
PROCEEDS ($477,224) (487,000)
------------
WRITTEN PUT OPTIONS - (0.04%)
INDEX -(0.04%)
135 S & P 500, 09/19/98, $950.00 (64,125)
------------
TOTAL WRITTEN PUT OPTIONS -
PROCEEDS ($107,726) (64,125)
------------
TOTAL OPTIONS WRITTEN - PROCEEDS ($584,950) $ (551,125)
============
The accompanying notes are an integral part of these financial statements.
-18-
