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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
TROON PARTNERS, L.P.
(Name of Issuer)
TROON PARTNERS, L.P.
(Name of Person(s) Filing Statement)
PARTNERSHIP INTERESTS
(Title of Class of Securities)
Howard M. Singer
Troon Management, L.L.C.
CIBC Oppenheimer Tower
One World Financial Center, 31st Floor
200 Liberty Street
New York, New York 10281
(212) 667-7649
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of the Person(s) Filing Statement)
With a copy to:
Kenneth S. Gerstein, Esq.
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
(212) 756-2533
November ____, 1998
(Date Tender Offer First Published,
Sent or Given to Security Holders)
Calculation of Filing Fee
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Transaction Valuation: $50,000,000 (a) Amount of Filing Fee: $10,000 (b)
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(a) Calculated as the aggregate maximum purchase price for partnership
interests.
(b) Calculated at 1/50th of 1% of the Transaction Valuation.
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid:________________________________________________________
Form or Registration No.:______________________________________________________
Filing Party:__________________________________________________________________
Date of Filing:________________________________________________________________
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ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is Troon Partners, L.P. (the
"Partnership"). The Partnership is registered under the Investment Company Act
of 1940, as amended (the "1940 Act") as a closed-end, non-diversified,
management investment company and is organized as a Delaware limited
partnership. The principal executive office of the Partnership is located at
CIBC Oppenheimer Tower, One World Financial Center, 31st Floor, 200 Liberty
Street, New York, New York 10281.
(b) The title of the securities, which are the subject of the
offer to purchase ("Offer to Purchase"), is partnership interests or portions
thereof in the Partnership. (As used herein, the term "Interest" or "Interests",
as the context requires, shall refer to the partnership interests in the
Partnership and portions thereof which constitute the class of security which is
the subject of this tender offer or the partnership interests in the Partnership
or portions thereof which are tendered by partners to the Partnership pursuant
to the Offer to Purchase.) As of the close of business on October 31, 1998,
there was approximately $175,021,229 outstanding in capital of the Partnership
held in Interests. Subject to the conditions set forth in the Offer to Purchase,
the Partnership will purchase up to $50,000,000 of Interests which are tendered
by and not withdrawn prior to 12:00 Midnight, New York time, on December 31,
1998, subject to any extension of the Offer to Purchase. The purchase price of
Interests tendered to the Partnership will be their net asset value as of the
close of business on December 31, 1998, if the Offer to Purchase expires on the
initial expiration date of December 31, 1998, and otherwise, at their net asset
value as of the close of business on such later date as corresponds to any
extension of the Offer to Purchase. Payment of the purchase price will consist
of: (1) cash and/or marketable securities (valued in accordance with the
Partnership's Limited Partnership Agreement dated as of December 19, 1996, (the
"L.P. Agreement")) in an aggregate amount equal to 95 percent of the estimated
unaudited net asset value of Interests tendered and accepted by the Partnership,
determined as of the expiration date, which is expected to be 12:00 Midnight,
December 31, 1998, payable within ten days after the expiration date (the "Cash
Payment"); and (2) a promissory note (the "Note") entitling the holder thereof
to a contingent payment equal to the excess, if any, of (a) the net asset value
of Interests tendered and accepted by the Partnership as of the expiration date,
determined based on audited financial statements of the Partnership for 1998,
over (b) the Cash Payment. The Note will be delivered to the tendering partner
in the manner set forth in the Letter of Transmittal, attached hereto as Exhibit
C, within ten days after expiration of the Offer to Purchase and will not be
transferable. The Note will be payable in cash within ten days after completion
of the audit of the financial statements of the Partnership. The audit of the
Partnership's 1998 financial statements will be completed by no later than 60
days after the end of the year. Any amounts payable under the Note will include
interest, if any, earned by the Partnership on an amount, deposited by the
Partnership in a segregated custodial account, equal to 5 percent of the
estimated unaudited net asset value of Interests tendered and accepted by the
Partnership.
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The Partnership has been informed by Troon Management, L.L.C.,
the manager of the Partnership (the "Manager"), that the Manager intends to
tender a portion of the Interest held by it that was or will be acquired by it
as a result of any incentive allocation credited to its capital account as of
December 31, 1998 or as an allocation of net profits to its capital account
during the fiscal year ended December 31, 1998.
Although the Partnership has retained the option to pay all or
a portion of the purchase price by distributing marketable securities, the
purchase price will be paid entirely in cash except in the unlikely event that
the Partnership's Individual General Partners determine that the distribution of
securities is necessary to avoid or mitigate any adverse effect of the Offer to
Purchase on the remaining partners of the Partnership. A copy of (i) the cover
letter to the Offer to Purchase and Letter of Transmittal and (ii) the Offer to
Purchase are attached hereto as Exhibits A and B, respectively.
(c) Interests are not traded in any market, and any transfer
thereof is strictly limited by the terms of the L.P. Agreement.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The Partnership expects that the purchase price for
Interests acquired pursuant to the Offer to Purchase, which will not exceed
$50,000,000, will be derived from: (1) cash on hand; (2) the proceeds of the
sale of and/or delivery of securities and portfolio assets held by the
Partnership; and (3) possibly borrowings, as described in paragraph (b), below.
The Partnership will segregate with its custodian cash or U.S. government
securities or other liquid securities equal to the value of the amount estimated
to be paid under any Notes as described above. The purchase price for Interests
acquired pursuant to the Offer to Purchase shall not be derived from any of the
General Partners.
(b) Neither the Partnership nor the General Partners has
determined at this time to borrow funds to purchase Interests in connection with
the Offer to Purchase. However, depending on the dollar amount of Interests
tendered and prevailing general economic and market conditions, the Partnership,
in its sole discretion, may decide to fund any portion of the purchase price,
subject to compliance with applicable law, from its existing margin facility
established with the Partnership's prime broker, Morgan Stanley & Co. ("Morgan
Stanley"). If the Partnership funds any portion of the purchase price in that
manner, it will be required to deposit assets in a special custody account with
Morgan Stanley Trust Company to serve as collateral for any amounts so borrowed,
and if the Partnership were to fail to repay any such amounts, Morgan Stanley
would be entitled to satisfy the Partnership's obligations from the collateral
deposited in the special custody account. The Partnership expects that the
repayment of any amounts borrowed from Morgan Stanley will be financed from
additional funds contributed to the Partnership by existing and/or new limited
partners, or from the proceeds of the sale of securities and portfolio assets
held by the Partnership.
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ITEM 3. PURPOSE OF THIS TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
The purpose of the Offer to Purchase is to provide liquidity
to limited partners who hold Interests as contemplated by and in accordance with
the procedures set forth in the Partnership's Confidential Memorandum dated
January, 1997, as supplemented (the "Confidential Memorandum"), and the L.P.
Agreement. Interests that are tendered to the Partnership in connection with the
Offer to Purchase will be retired, although the Partnership may issue Interests
from time to time in transactions not involving any public offering conducted
pursuant to Rule 506 of Regulation D promulgated under the Securities Act of
1933, as amended. The Partnership expects that in the future it will generally
accept subscriptions for Interests as of the first day of each fiscal quarter.
The Partnership currently has no other plans to offer for sale any other
additional Interests, but may do so in the future.
Neither the Partnership nor the General Partners have any
plans or proposals which relate to or would result in: (a) the acquisition by
any person of additional Interests in the Partnership (other than the ability to
make additional Interests available for subscription from time to time in the
discretion of the Partnership), or the disposition of Interests in the
Partnership; (b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Partnership; (c) a sale or transfer
of a material amount of assets of the Partnership (other than as the Individual
General Partners determine may be necessary or appropriate to fund any portion
of the purchase price for Interests acquired pursuant to the Offer to Purchase
or in connection with ordinary portfolio transactions of the Partnership); (d)
any change in the identity of the General Partners of the Partnership, or in the
management of the Partnership including, but not limited to, any plans or
proposals to change the number or the term of the Individual General Partners of
the Partnership, to fill any existing vacancy for an Individual General Partner
of the Partnership or to change any material term of the investment advisory
arrangements with the Manager; (e) any material change in the present
distribution policy or indebtedness or capitalization of the Partnership; (f)
any other material change in the Partnership's structure or business, including
any plans or proposals to make any changes in its fundamental investment
policies, as amended, for which a vote would be required by Section 13 of the
1940 Act; or (g) any changes in the L.P. Agreement or other actions which might
impede the acquisition of control of the Partnership by any person. Items (h)
through (j) of this Item 3 are not applicable to the Partnership.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
There have not been any transactions involving the Interests
that were effected during the past 40 business days by the Partnership, any
General Partner of the Partnership or any person controlling the Partnership or
controlling any General Partner of the Partnership.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
The Confidential Memorandum and the L.P. Agreement, which were
provided to each limited partner in advance of subscribing for Interests,
provide that the Individual General
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Partners have the discretion to determine whether the Partnership will purchase
Interests from time to time from partners pursuant to written tenders. The
Confidential Memorandum also states that the Manager of the Partnership expects
that generally it will recommend to the Individual General Partners that the
Partnership purchase Interests from partners once in each year (other than 1997)
effective as of the end of each such year and that it intended to recommend the
making of an offer to purchase Interests effective as of March 31, 1998. At the
end of 1997, the Partnership did not offer to purchase Interests from partners
pursuant to written tenders. However, the Partnership made an offer to purchase
Interests effective as of March 31, 1998 pursuant to written tenders. The
Partnership is not aware of any contract, arrangement, understanding or
relationship relating, directly or indirectly, to this tender offer (whether or
not legally enforceable) between: (i) the Partnership and any General Partner of
the Partnership or any person controlling the Partnership or controlling any
General Partner of the Partnership; and (ii) any person, with respect to
Interests.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
No persons have been employed, retained or are to be
compensated by the Partnership to make solicitations or recommendations in
connection with the Offer to Purchase.
ITEM 7. FINANCIAL INFORMATION.
(a) Reference is hereby made to the financial statements
attached as part of Exhibit B hereto, which are incorporated herein by
reference. Audited financial statements for 1997 are included. No financial
statements for the Partnership exist prior to 1997. The Partnership does not
file quarterly unaudited financial statements under the Securities Exchange Act
of 1934, as amended. Also included are the unaudited financial statements of the
Partnership for the six-month period ended June 30, 1998, which the Partnership
has prepared and furnished to limited partners pursuant to Rule 30d-1 under the
1940 Act, and filed with the Securities and Exchange Commission pursuant to Rule
30b2-1 under the 1940 Act. The Partnership does not have shares, and
consequently does not have earnings or book value per share information.
(b) The Partnership's assets will be reduced by the amount of
the tendered Interests. Thus, income relative to assets may be affected by the
tender offer. The Partnership does not have shares and consequently does not
have earnings or book value per share information.
ITEM 8. ADDITIONAL INFORMATION.
(a) None
(b) None
(c) Not Applicable
(d) None
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(e) Reference is hereby made to the information contained
in the Offer of Purchase attached as Exhibit B, which
is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
A. Cover letter to Offer to Purchase and Letter of
Transmittal.
B. Offer to Purchase (including Financial Statements).
C. Form of Letter of Transmittal.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
TROON PARTNERS, L.P.
By: Troon Management, L.L.C.
Manager
By: CIBC Oppenheimer Corp.
Managing Member
/s/ Howard M. Singer
By:____________________________
November 23, 1998 Name: Howard M. Singer
Title: Managing Director
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EXHIBIT INDEX
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EXHIBIT PAGE NUMBER
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A Cover letter to Offer to Purchase and Letter of Transmittal
B Offer to Purchase
(including Financial Statements)
C Form of Letter of Transmittal
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Exhibit A
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[CIBC OPPENHEIMER CORP. LETTERHEAD]
November 25, 1998
Dear Limited Partner:
As indicated in the offering material, Troon Partners, L.P. (the
"Partnership") provides investors with the opportunity to redeem some or all of
their investment by means of a tender offer. Accordingly, enclosed please find
the documentation necessary to tender interests in the Partnership. If you wish
to maintain your investment and withdraw nothing from your account you do not
have to do anything.
We hope you are pleased with your investment to date and elect to remain
invested in the Partnership. If you have any questions or require further
information, please contact your Account Executive.
Sincerely,
Howard Singer
For Troon Management, L.L.C.
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Exhibit B
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EXHIBIT B
TROON PARTNERS, L.P.
CIBC Oppenheimer Tower
One World Financial Center, 31st Floor
200 Liberty Street
New York, New York 10281
OFFER TO PURCHASE $50,000,000 OF OUTSTANDING
PARTNERSHIP INTERESTS AT NET ASSET VALUE
DATED NOVEMBER 25, 1998
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME,
ON THURSDAY, DECEMBER 31, 1998, UNLESS THE OFFER IS EXTENDED
To the Partners of
Troon Partners, L.P.:
Troon Partners, L.P., a closed-end, non-diversified, management
investment company organized as a Delaware limited partnership (the
"Partnership"), is offering to purchase for cash upon the terms and conditions
set forth in this offer to purchase ("Offer to Purchase") and the related letter
of transmittal ("Letter of Transmittal," which together with the Offer to
Purchase constitutes the "Offer") up to $50,000,000 of interests in the
Partnership or portions thereof pursuant to tenders by partners at a price equal
to their unaudited net asset value as of December 31, 1998, if the Offer expires
on December 31, 1998, and otherwise, their unaudited net asset value on such
later date as corresponds to any extension of the Offer. (As used in this Offer,
the term "Interest" or "Interests", as the context requires, shall refer to the
interests in the Partnership and portions thereof representing beneficial
interests in the Partnership.) This Offer is being made to all partners of the
Partnership and is not conditioned upon any minimum amount of Interests being
tendered, but is subject to certain conditions described below. Interests are
not traded on any established trading market and are subject to strict
restrictions on transferability pursuant to the Partnership's Limited
Partnership Agreement dated as of December 19, 1996 (the "L.P. Agreement").
If you desire to tender all or any portion of your Interest in the
Partnership in accordance with the terms of the Offer, you should complete and
sign the attached Letter of Transmittal and send or deliver it to the
Partnership in the manner set forth below.
IMPORTANT
NEITHER THE PARTNERSHIP NOR ITS GENERAL PARTNERS MAKE ANY
RECOMMENDATION TO ANY LIMITED PARTNER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING INTERESTS. LIMITED PARTNERS MUST MAKE THEIR OWN DECISIONS WHETHER TO
TENDER INTERESTS, AND, IF SO, THE PORTION OF THEIR INTERESTS TO TENDER.
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NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF
THE PARTNERSHIP AS TO WHETHER LIMITED PARTNERS SHOULD TENDER INTERESTS PURSUANT
TO THE OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED
HEREIN OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION
AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE PARTNERSHIP.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF SUCH
TRANSACTION OR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN
THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
Questions and requests for assistance and requests for additional
copies of the Offer may be directed to the Partnership's service agent:
PFPC Inc.
P.O. Box 358
Claymont, Delaware 19703
Phone: (888) 520-3280
Fax: (302) 791-2386
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TABLE OF CONTENTS
Page
1. Background and Purpose of the Offer................................ 4
2. Offer to Purchase and Price........................................ 4
3. Amount of Tender................................................... 6
4. Procedure for Tenders.............................................. 6
5. Withdrawal Rights.................................................. 7
6. Purchases and Payment.............................................. 7
7. Certain Conditions of the Offer.................................... 9
8. Certain Information About the Partnership.......................... 10
9. Certain Federal Income Tax Consequences............................ 10
10. Miscellaneous...................................................... 11
Annex A Financial Statements
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1. BACKGROUND AND PURPOSE OF THE OFFER. The purpose of the Offer is to
provide liquidity to limited partners for Interests as contemplated by and in
accordance with the procedures set forth in the Partnership's Confidential
Memorandum dated January 1997, as supplemented (the "Confidential Memorandum"),
and the L.P. Agreement. The Confidential Memorandum and the L.P. Agreement,
which were provided to each partner in advance of subscribing for Interests,
provide that the Individual General Partners have the discretion to determine
whether the Partnership will purchase Interests from time to time from partners
pursuant to written tenders. The Confidential Memorandum also states that Troon
Management, L.L.C., the manager of the Partnership (the "Manager"), expects that
generally it will recommend to the Individual General Partners that the
Partnership purchase Interests from limited partners at the end of each year and
that it intends to recommend the making of an offer to purchase Interests as of
March 31, 1998. The Partnership made an offer to purchase Interests from limited
partners effective March 31, 1998 pursuant to written tenders. That was the
first such tender offer made by the Partnership. In light of the fact that there
is no secondary trading market for Interests and transfers of Interests are
prohibited without prior approval of the Partnership, the Individual General
Partners have determined, after consideration of various matters, including but
not limited to those set forth in the Confidential Memorandum, that the Offer is
in the best interests of limited partners of the Partnership in order to provide
liquidity for Interests as contemplated in the Confidential Memorandum and the
L.P. Agreement. The Individual General Partners intend to consider the continued
desirability of the Partnership making an offer to purchase Interests at the end
of each year, but the Partnership will at no time be required to make any such
offer.
The purchase of Interests pursuant to the Offer will have the effect of
increasing the proportionate interest in the Partnership of partners who do not
tender Interests. Partners who retain their Interests may be subject to
increased risks that may possibly result from the reduction in the Partnership's
aggregate assets resulting from payment for the Interests tendered. These risks
include the potential for greater volatility due to decreased diversification.
However, the Partnership believes that this result is unlikely given the nature
of the Partnership's assets. A reduction in the aggregate assets of the
Partnership may result in partners who do not tender interests bearing higher
costs to the extent that certain expenses borne by the Partnership are
relatively fixed and may not decrease if assets decline.
Interests that are tendered to the Partnership in connection with this
Offer will be retired, although the Partnership may issue new Interests from
time to time in transactions not involving any public offering conducted
pursuant to Rule 506 of Regulation D promulgated under the Securities Act of
1933, as amended. The Partnership expects that in the future it will generally
accept subscriptions for Interests as of the first day of each fiscal quarter.
The Partnership currently has no other plans to offer for sale any other
additional Interests, but may do so in the future.
2. OFFER TO PURCHASE AND PRICE. The Partnership will, upon the terms
and subject to the conditions of the Offer, purchase up to $50,000,000 of
outstanding Interests which are properly tendered by and not withdrawn (in
accordance with Section 5 below) prior to 12:00 Midnight, New York City time, on
Thursday, December 31, 1998 (such time and date being
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hereinafter called the "Initial Expiration Date"), or such later date as
corresponds to any extension of the Offer. The later of the Initial Expiration
Date or the latest time and date to which the Offer is extended is hereinafter
called the "Expiration Date." The Partnership reserves the right to extend,
amend or cancel the Offer as described in Sections 3 and 7 below. The purchase
price of an Interest tendered will be its net asset value as of the close of
business on the Expiration Date, payable as set forth in Section 6. As of the
close of business on October 31, 1998, the estimated unaudited net asset value
of an Interest corresponding to an initial capital contribution of $150,000 on
the following closing dates of the Partnership was:
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Unaudited Net Asset Value
Closing Date as of October 31, 1998
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February 27, 1997 $214,581
April 1, 1997 $224,154
May 1, 1997 $215,265
June 1, 1997 $205,912
July 1, 1997 $195,714
August 1, 1997 $195,149
September 1, 1997 $193,064
October 1, 1997 $172,364
November 1, 1997 $173,325
January 1, 1998 $166,750
April 1, 1998 $147,446
July 1, 1998 $136,340
</TABLE>
As of the close of business on October 31, 1998, there was
approximately $175,021,229 outstanding in capital of the Partnership held in
Interests (based on the unaudited net asset value of such Interests). Partners
may obtain weekly current net asset value information until the expiration of
the Offer, and daily net asset value information during the last five business
days of the Offer, by contacting PFPC Inc. ("PFPC"), at the telephone number or
address set forth on page 2 above, Monday through Friday, except holidays,
during normal business hours of 9:00 a.m. to 5:00 p.m. (E.S.T.).
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3. AMOUNT OF TENDER. Subject to the limitations set forth below,
limited partners may tender their entire Interest or a portion of their
Interest, defined as a specific dollar value. However, a limited partner who
tenders for repurchase only a portion of such limited partner's Interest, and
any limited partner who tenders its entire Interest of which any portion thereof
has not been outstanding for at least 12 full calendar months, shall be required
to maintain a capital account balance equal to the greater of: (i) $150,000, net
of the amount of the incentive allocation, if any, that would be debited from
the capital account of the limited partner and credited to the capital account
of the Manager on the Expiration Date if the offer were a day on which an
incentive allocation was made (the "Tentative Incentive Allocation"); or (ii)
the Tentative Incentive Allocation. The Offer is being made to all partners of
the Partnership and is not conditioned upon any minimum amount of Interests
being tendered.
If the amount of the Interests that are properly tendered pursuant to
the Offer, and not withdrawn pursuant to Section 5 below, is less than or equal
to $50,000,000 (or such greater amount as the Partnership may elect to purchase
pursuant to the Offer), the Partnership will, upon the terms and subject to the
conditions of the Offer, purchase all of the Interests so tendered unless the
Partnership elects to cancel or amend the Offer, or postpone acceptance of
tenders made pursuant to the Offer, as provided in Section 7 below. If more than
$50,000,000 of Interests are duly tendered to the Partnership prior to the
expiration of the Offer, and not withdrawn pursuant to Section 5 below, the
Partnership will, in its sole discretion either (a) accept the additional
Interests permitted to be accepted pursuant to Rule 13e-4(f)(1) promulgated
under the Securities Exchange Act of 1934, as amended; (b) extend the Offer, if
necessary, and increase the amount of Interests that the Partnership is offering
to purchase to an amount it believes sufficient to accommodate the excess
Interests tendered as well as any Interests tendered during the extended Offer;
or (c) accept Interests tendered prior to or on the Expiration Date for payment
on a pro rata basis based on their net asset value. The Offer may be extended,
amended or canceled in various other circumstances described in Section 7 below.
The Partnership has been informed by the Manager that the Manager
intends to tender a portion of the Interest held by it that was or will be
acquired as a result of any incentive allocation credited to its capital account
as of December 31, 1998 or as an allocation of net profits to its capital
account during the fiscal year ended December 31, 1998. The Manager may tender
such portion of its Interest by following the procedures for tenders set forth
in Item 4, below.
4. PROCEDURE FOR TENDERS. Limited partners wishing to tender Interests
pursuant to the Offer should send or deliver a completed and executed Letter of
Transmittal to PFPC, to the attention of Karen Castagna, at the address set
forth on page 2 above, or fax a completed and executed Letter of Transmittal to
PFPC, also to the attention of Karen Castagna, at the fax number set forth on
page 2 above. The completed and executed Letter of Transmittal must be received
by PFPC no later than the Expiration Date.
The Partnership recommends that all documents be submitted to PFPC via
registered mail, return receipt requested or by facsimile transmission. A
Limited Partner choosing to fax to PFPC such Letter of Transmittal should also
send or deliver the original
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completed and executed Letter of Transmittal to PFPC. Limited Partners wishing
to confirm receipt of a Letter of Transmittal may contact PFPC at the address
and phone numbers set forth on page 2 above. The method of delivery of any
documents is at the election and complete risk of the partner tendering an
Interest including, but not limited to, the failure of PFPC to receive any
Letter of Transmittal or other document submitted by facsimile transmission. All
questions as to the validity, form, eligibility (including time of receipt) and
acceptance of tenders will be determined by the Partnership, in its sole
discretion, and such determination shall be final and binding. The Partnership
reserves the absolute right to reject any or all tenders determined by it not to
be in appropriate form or the acceptance of or payment for which would, in the
opinion of counsel for the Partnership, be unlawful. The Partnership also
reserves the absolute right to waive any of the conditions of the Offer or any
defect in any tender with respect to any particular Interest or any particular
partner, and the Partnership's interpretations of the terms and conditions of
the Offer will be final and binding. Unless waived, any defects or
irregularities in connection with tenders must be cured within such time as the
Partnership shall determine. Tenders will not be deemed to have been made until
the defects or irregularities have been cured or waived. Neither the Partnership
nor any General Partner of the Partnership shall be obligated to give notice of
any defects or irregularities in tenders, nor shall any of them incur any
liability for failure to give such notice.
5. WITHDRAWAL RIGHTS. Any partner tendering an Interest pursuant to
this Offer may withdraw such tender at any time prior to or on the Expiration
Date and, if Interests are not accepted by the Partnership at the close of the
Expiration Date, at any time after 40 business days after the commencement of
the Offer. To be effective, any notice of withdrawal must be timely received by
PFPC at the address or fax number set forth on page 2 above. Any notice of
withdrawal must specify the name of the person withdrawing a tender and the
amount of the Interest previously tendered which is being withdrawn. All
questions as to the form and validity (including time of receipt) of notices of
withdrawal will be determined by the Partnership, in its sole discretion, and
such determination shall be final and binding. Interests properly withdrawn
shall not thereafter be deemed to be tendered for purposes of the Offer.
However, withdrawn Interests may be retendered by following the procedures
described in Section 4 prior to the Expiration Date.
6. PURCHASES AND PAYMENT. For purposes of the Offer, the Partnership
will be deemed to have accepted (and thereby purchased) Interests which are
tendered as, if and when it gives oral or written notice to the tendering
partner of its election to purchase such Interest. As stated in Section 2 above,
the purchase price of an Interest tendered by any partner will be the net asset
value thereof as of the close of business on December 31, 1998, if the Offer
expires on the Initial Expiration Date, and otherwise the net asset value
thereof as of the close of business on such later date as corresponds to any
extension of the Offer. The net asset value will be determined after all
allocations to capital accounts of the partners required to be made by the L.P.
Agreement have been made.
Payment of the purchase price will consist of: (1) cash and/or
marketable securities (valued in accordance with the L.P. Agreement) in an
aggregate amount equal to 95% of the estimated unaudited net asset value of the
Interests tendered and accepted by the
-7-
<PAGE> 9
Partnership, determined as of the Expiration Date, which is expected to be 12:00
Midnight, New York City time, on Thursday, December 31, 1998, payable within ten
days after the Expiration Date (the "Cash Payment") in the manner set forth
below; and (2) a promissory note (the "Note") entitling the holder thereof to a
contingent payment equal to the excess, if any, of (a) the net asset value of
the Interests tendered and accepted by the Partnership as of the Expiration
Date, determined based on the audited financial statements of the Partnership
for 1998, over (b) the Cash Payment. The Note will be delivered to the tendering
partner in the manner set forth below within ten days after the Expiration Date
and will not be transferable. The Note will be payable in cash (in the manner
set forth below) within ten days after completion of the audit of the financial
statements of the Partnership for 1998. It is anticipated that the audit of the
Partnership's 1998 financial statements will be completed no later than 60 days
after the end of the year. Any amounts payable under the Note will include
interest, if any, earned by the Partnership on an amount, deposited by the
Partnership in a segregated custodial account, equal to 5 percent of the
estimated unaudited net asset value of Interests tendered and accepted by the
Partnership. Although the Partnership has retained the option to pay all or a
portion of the purchase price by distributing marketable securities, the
purchase price will be paid entirely in cash except in the unlikely event that
the Partnership's Individual General Partners determine that the distribution of
securities is necessary to avoid or mitigate any adverse effect of the Offer on
the remaining partners of the Partnership.
The Cash Payment will be made by wire transfer directly to the
tendering partner's brokerage account with CIBC Oppenheimer Corp. ("CIBC Opco")
unless, pursuant to the Letter of Transmittal, the tendering partner elects to
receive the Cash Payment by check mailed first class (AT THE SOLE RISK OF THE
TENDERING PARTNER) to the address set forth in the Letter of Transmittal.
Partners who do not elect to have the Cash Payment mailed to them should note
that Cash Payments wired directly to brokerage accounts will be subject upon
withdrawal from such accounts to any fees that CIBC Opco would customarily
assess upon the withdrawal of cash from such brokerage account.
The Note will be deposited directly to the tendering partner's
brokerage account with CIBC Opco unless, pursuant to the Letter of Transmittal,
the tendering partner elects to have the Note delivered directly to the
tendering partner at the address set forth in the Letter of Transmittal (AT THE
SOLE RISK OF THE TENDERING PARTNER). Any amounts payable under the Note will be
paid to the tendering partner in the same manner designated in the Letter of
Transmittal for payment of the Cash Payment. Limited Partners who elect to
receive the Note directly will be required to return the Note pursuant to
instructions that will be provided at a later date in order to receive payment
of such amounts.
It is expected that cash payments for Interests acquired pursuant to
the Offer will be derived from: (a) cash on hand; (b) the proceeds of the sale
of securities and portfolio assets held by the Partnership; and (c) possibly
borrowings, as describe below. The Partnership will segregate with its custodian
cash or U.S. government securities or other liquid securities equal to the value
of the amount estimated to be paid under any Notes, as described above. The
Partnership has not determined at this time to borrow funds to purchase
Interests tendered in connection with the Offer. However, depending on the
dollar amount of Interests tendered and
-8-
<PAGE> 10
prevailing general economic and market conditions, the Partnership, in its sole
discretion, may decide to fund any portion of the purchase price, subject to
compliance with applicable law, from its existing margin facility established
with the Partnership's prime broker, Morgan Stanley & Co. ("Morgan Stanley"). If
the Partnership funds any portion of the purchase price in that manner, it will
be required to deposit assets in a special custody account with Morgan Stanley
Trust Company to serve as collateral for any amounts so borrowed, and if the
Partnership were to fail to repay any such amounts, Morgan Stanley would be
entitled to satisfy the Partnership's obligations from the collateral deposited
in the special custody account. The Partnership expects that the repayment of
any amounts borrowed from Morgan Stanley will be financed from additional funds
contributed to the Partnership by existing and/or new limited partners, or from
the proceeds of the sale of securities and portfolio assets held by the
Partnership.
7. CERTAIN CONDITIONS OF THE OFFER. The Partnership reserves the right,
at any time and from time to time, to extend the period of time during which the
Offer is pending by notifying partners of such extension. In the event that the
Partnership so elects to extend the tender period, the net asset value of
Interests tendered will be determined as of a date after December 31, 1998,
corresponding to any extension of the Offer. During any such extension, all
Interests previously tendered and not withdrawn will remain subject to the
Offer. The Partnership also reserves the right, at any time and from time to
time, up to and including acceptance of tenders pursuant to the Offer, to: (a)
cancel the Offer in the circumstances set forth in the following paragraph and
in the event of such cancellation not to purchase or pay for any Interests
tendered pursuant to the Offer; (b) amend the Offer; and (c) postpone the
acceptance of Interests. If the Partnership determines to amend the Offer or to
postpone the acceptance of Interests tendered, it will, to the extent necessary,
extend the period of time during which the Offer is open as provided above and
will promptly notify partners.
The Partnership may cancel the Offer, or amend the Offer, or postpone
the acceptance of tenders made pursuant to the Offer, if: (a) the Partnership
would not be able to liquidate portfolio securities in a manner which is orderly
and consistent with the Partnership's investment objectives and policies in
order to purchase Interests tendered pursuant to the Offer; (b) there is, in the
Individual General Partners' judgment, any (i) legal action or proceeding
instituted or threatened challenging the Offer or otherwise materially adversely
affecting the Partnership, (ii) declaration of a banking moratorium by Federal
or state authorities or any suspension of payment by banks in the United States
or New York State, which is material to the Partnership, (iii) limitation
imposed by Federal or state authorities on the extension of credit by lending
institutions, (iv) suspension of trading on any organized exchange or
over-the-counter market where the Partnership has a material investment, (v)
commencement of war, armed hostilities or other international or national
calamity directly or indirectly involving the United States which is material to
the Partnership, (vi) material decrease in the net asset value of the
Partnership from the net asset value of the Partnership as of commencement of
the Offer, or (vii) other event or condition which would have a material adverse
effect on the Partnership or its partners if Interests tendered pursuant to the
Offer were purchased; or (c) the Independent Individual General Partners of the
Partnership determine that it is not in the best interest of the Partnership to
purchase Interests pursuant to the Offer. However, there can be no assurance
that
-9-
<PAGE> 11
the Partnership will exercise its right to extend, amend or cancel the Offer or
to postpone acceptance of tenders pursuant to the Offer.
8. CERTAIN INFORMATION ABOUT THE PARTNERSHIP. The Partnership is
registered under the Investment company Act of 1940, as amended (the "1940 Act")
as a closed-end, non-diversified, management investment company. It is organized
as a Delaware limited partnership. The principal office of the Partnership is
located at CIBC Oppenheimer Tower, One World Financial Center, 31st Floor, 200
Liberty Street, New York, New York 10281. Interests are not traded on any
established trading market and are subject to strict restrictions on
transferability pursuant to the L.P. Agreement.
The Partnership does not have any plans or proposals which relate to or
would result in: (a) the acquisition by any person of additional Interests other
than the Partnership's intention to accept subscriptions for Interests generally
as of the first day of each fiscal quarter and at such other times as the
Partnership may determine, or the disposition of Interests; (b) an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Partnership; (c) a sale or transfer of a material amount of assets
of the Partnership (other than as the Individual General Partners determine may
be necessary or appropriate to fund any portion of the purchase price for
Interests acquired pursuant to this Offer to Purchase or in connection with
ordinary portfolio transactions of the Partnership); (d) any change in the
identity of the General Partners of the Partnership, or in the management of the
Partnership including, but not limited to, any plans or proposals to change the
number or the term of the Individual General Partners of the Partnership, to
fill any existing vacancy for an Individual General Partner of the Partnership
or to change any material term of the investment advisory arrangements with the
Manager; (e) any material change in the present distribution policy or
indebtedness or capitalization of the Partnership; (f) any other material change
in the Partnership's structure or business, including any plans or proposals to
make any changes in its fundamental investment policy for which a vote would be
required by Section 13 of the 1940 Act; or (g) any changes in the L.P. Agreement
or other actions which may impede the acquisition of control of the Partnership
by any person.
The Manager of the Partnership is entitled under the terms of the L.P.
Agreement to receive, subject to certain limitations, an incentive allocation,
as specified in the L.P. Agreement and described in the Confidential Memorandum.
9. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The following discussion is
a general summary of the federal income tax consequences of the purchase by the
Partnership from partners of Interests pursuant to the Offer. Partners should
consult their own tax advisers for a complete description of the tax
consequences to them of a purchase by the Partnership of Interests pursuant to
the Offer.
In general, a partner from whom an Interest is purchased by the
Partnership will be treated as receiving a distribution from the Partnership.
Such partner generally will not recognize income or gain as a result of the
purchase, except to the extent (if any) that the amount of consideration
received by the partner exceeds such partner's then adjusted tax basis in such
partner's Interest. A partner's basis in such partner's Interest will be reduced
(but not below zero)
-10-
<PAGE> 12
by the amount of consideration received by the partner from the Partnership in
connection with the purchase of such Interest. A partner's basis in such
partner's Interest will be adjusted for income, gain or loss allocated (for tax
purposes) to such partner for periods prior to the purchase of such Interest.
Cash distributed to a partner in excess of the adjusted tax basis of such
partner's Interest is taxable as capital gain or ordinary income, depending on
the circumstances. A partner whose entire Interest is purchased by the
Partnership may recognize a loss, but only to the extent that the amount of
consideration received from the Partnership is less than the partner's then
adjusted tax basis in such partner's Interest.
10. MISCELLANEOUS. The Offer is not being made to, nor will tenders be
accepted from, partners in any jurisdiction in which the Offer or its acceptance
would not comply with the securities or Blue Sky laws of such jurisdiction. The
Partnership is not aware of any jurisdiction in which the Offer or tenders
pursuant thereto would not be in compliance with the laws of such jurisdiction.
However, the Partnership reserves the right to exclude partners from the Offer
in any jurisdiction in which it is asserted that the Offer cannot lawfully be
made. The Partnership believes such exclusion is permissible under applicable
laws and regulations, provided the Partnership makes a good faith effort to
comply with any state law deemed applicable to the Offer.
The Partnership has filed an Issuer Tender Offer Statement on Schedule
13E-4 with the Securities and Exchange Commission which includes certain
information relating to the Offer summarized herein. A copy of such statement
may be obtained from the Partnership by contacting PFPC at the address and phone
numbers set forth on page 2 above, or from the public reference office of the
Securities and Exchange Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington D.C. 20549, or from the Securities and Exchange Commission's web
site, www.sec.gov.
-11-
<PAGE> 13
ANNEX A
Financial Statements
<PAGE> 14
TROON PARTNERS, L.P.
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED
JUNE 30, 1998
(UNAUDITED)
<PAGE> 15
TROON 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
<PAGE> 16
TROON PARTNERS, L.P.
STATEMENT OF ASSETS, LIABILITIES, AND PARTNERS' CAPITAL (IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, 1998
(UNAUDITED)
<S> <C>
ASSETS
Investments in securities, at market (identified cost-$120,260) $ 176,768
Due from broker 951
Dividends receivable 11
Organizational costs (net of accumulated amortization of $64) 172
Other assets 8
---------
TOTAL ASSETS 177,910
---------
LIABILITIES
Loan payable 2,969
Loan interest payable 9
Management fee payable 125
Accrued expenses 196
---------
TOTAL LIABILITIES 3,299
---------
NET ASSETS $ 174,611
=========
PARTNERS' CAPITAL - NET ASSETS
Represented by:
Capital contributions - net $ 118,603
Accumulated net investment loss (950)
Accumulated net realized gain on investments 450
Accumulated net unrealized appreciation on investments 56,508
---------
PARTNERS' CAPITAL - NET ASSETS $ 174,611
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-1-
<PAGE> 17
TROON PARTNERS, L.P.
STATEMENT OF OPERATIONS (IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30,
1998
(UNAUDITED)
<S> <C>
INVESTMENT INCOME
Dividends $ 450
Interest 29
--------
479
--------
EXPENSES
OPERATING EXPENSES:
Management fee 660
Professional fees 129
Administration fees 97
Custodian fees 50
Amortization of organizational costs 23
Insurance expense 17
Individual General Partners' fees and expenses 11
Miscellaneous 14
--------
1,001
INTEREST EXPENSE 83
--------
TOTAL EXPENSES 1,084
--------
NET INVESTMENT LOSS (605)
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
REALIZED GAIN (LOSS) ON INVESTMENTS:
Investment securities 3,137
Purchased options (3,000)
Written options 24
Short sales (76)
--------
NET REALIZED GAIN ON INVESTMENTS 85
--------
NET CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS 28,329
--------
NET REALIZED AND UNREALIZED GAIN 28,414
--------
INCREASE IN PARTNERS' CAPITAL DERIVED FROM INVESTMENT ACTIVITIES $ 27,809
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE> 18
TROON PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL - NET ASSETS (IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTHS FEBRUARY 27, 1997
ENDED (COMMENCEMENT OF
JUNE 30, 1998 OPERATIONS) TO
(UNAUDITED) DECEMBER 31, 1997
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net investment loss $ (605) $ (345)
Net realized gain on investments 85 365
Net change in unrealized appreciation
on investments 28,329 28,179
--------- ---------
INCREASE IN PARTNERS' CAPITAL
DERIVED FROM INVESTMENT
ACTIVITIES
27,809 28,199
PARTNERS' CAPITAL TRANSACTIONS
Capital contributions 47,055 77,250
Syndication costs 0 (50)
Capital withdrawals - General Partner (2,895) 0
Capital withdrawals - Limited Partners (2,757) 0
--------- ---------
INCREASE IN PARTNERS' CAPITAL DERIVED
FROM CAPITAL TRANSACTIONS 41,403 77,200
PARTNERS' CAPITAL AT BEGINNING OF PERIOD 105,399 0
--------- ---------
PARTNERS' CAPITAL AT END OF PERIOD $ 174,611 $ 105,399
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
-3-
<PAGE> 19
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1998 (UNAUDITED)
1. ORGANIZATION
Troon Partners, L.P. (the "Partnership") was organized under the
Delaware Revised Uniform Limited Partnership Act on December 12, 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"), dated December 19, 1996, as
amended October 29, 1997. The Partnership's investment objective is to
seek long-term 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, bonds, options and other fixed-income
securities of U.S. issuers.
There are four "Individual General Partners" and a "Manager." The
Manager is Troon Management, L.L.C. which is a joint venture between
CIBC Oppenheimer Corp. ("CIBC Opco") and Mark Asset Management
Corporation ("MAMC"). Investment professionals at MAMC 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.
-4-
<PAGE> 20
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1998 (UNAUDITED) (CONTINUED)
A. PORTFOLIO VALUATION
Securities 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.
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. 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.
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.
-5-
<PAGE> 21
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1998 (UNAUDITED) (CONTINUED)
On occasion, the values of such securities and exchange rates
may be affected by events occurring between the time such
values or exchange rates are determined and the time that 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.
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, February 27,
1997.
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 earned $8,698 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
-6-
<PAGE> 22
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1998 (UNAUDITED) (CONTINUED)
period. For the six months ended June 30, 1998, Incentive Allocations
to the General Partner were $7,118,209.
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" does not receive any
annual or other fees 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 $19,813.
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,
recordkeeping, 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 $82,288,873 and $46,622,378, 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 was $56,507,312, consisting of $59,512,231 gross unrealized
appreciation and $3,004,919 gross unrealized depreciation.
Due from broker primarily represents receivables and payables from
unsettled security trades.
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
-7-
<PAGE> 23
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1998 (UNAUDITED) (CONTINUED)
satisfy an asset coverage requirement of 300% of its indebtedness,
including amounts borrowed, measured at the time the Partnership incurs
the indebtedness. As of June 30, 1998, the Partnership had outstanding
margin borrowings of $2,969,205. The Partnership pays interest on
outstanding margin borrowings at an annualized rate of LIBOR plus
.875%. The Partnership pledges securities as collateral for the margin
borrowings, which are maintained in a segregated account held by the
Custodian. For the six months ended June 30, 1998, the average daily
amount of such borrowings was $2,429,346.
6. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK OR CONCENTRATIONS OF
CREDIT RISK
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> 24
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1998 (UNAUDITED) (CONTINUED)
Transactions in purchased options were as follows:
<TABLE>
<CAPTION>
CALL OPTIONS INDEX AND PUT OPTIONS
------------ ---------------------
NUMBER NUMBER
OF CONTRACTS COST OF CONTRACTS COST
------------ ---- ------------ ----
<S> <C> <C> <C> <C>
Beginning balance 1,110 $ 1,311,665 656 $ 566,887
Options purchased 19,502 19,156,071 16,620 9,037,098
Options closed (17,619) (18,112,314) (14,988) (8,534,158)
Expired options 0 0 (1,408) (481,307)
------------ ------------ ------------ ------------
Options outstanding at
June 30, 1998 2,993 $ 2,355,422 880 $ 588,520
============ ============ ============ ============
</TABLE>
Transactions in written options were as follows:
<TABLE>
<CAPTION>
CALL OPTIONS
------------
NUMBER AMOUNT OF
OF CONTRACTS PREMIUM
------------ -------
<S> <C> <C>
Beginning balance 0 $ 0
Options written 88 90,595
Options closed (88) (90,595)
Expired options 0 0
-------- --------
Options outstanding at
June 30, 1998 0 $ 0
======== ========
</TABLE>
-9-
<PAGE> 25
TROON 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:
<TABLE>
<CAPTION>
NET GAINS / (LOSSES)
FOR THE SIX MONTHS ENDED
JUNE 30, 1998
------------------------
<S> <C>
Equity securities $ 32,109,947
Equity options (1,706,057)
Equity index options (2,014,614)
Written options 24,268
------------
$ 28,413,544
============
</TABLE>
The following table presents the market values of derivative financial
instruments and the average market values of those instruments:
<TABLE>
<CAPTION>
AVERAGE MARKET VALUE
MARKET VALUE AT FOR THE SIX MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1998
------------- -------------
<S> <C> <C>
ASSETS:
Equity options $2,348,950 $2,176,409
Equity index options 57,520 123,949
</TABLE>
Average market values presented above are based upon month-end market
value during the six months ended June 30, 1998.
-10-
<PAGE> 26
TROON 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 the periods indicated:
<TABLE>
<CAPTION>
FEBRUARY 27, 1997
(COMMENCEMENT OF
SIX MONTHS ENDED OPERATIONS) TO
JUNE 30, 1998 DECEMBER 31, 1997
------------- -----------------
<S> <C> <C>
Ratio of net investment loss
to average net assets* (0.76%) (0.49%)
Ratio of operating expenses
to average net assets* 1.26% 1.73%
Ratio of interest expense
to average net assets* 0.11% 0.07%
Portfolio turnover rate 33.62% 58.73%
Average commission rate paid** $ 0.0634 $ 0.0566
Total return*** 22.30% 37.60%
Average debt ratio 1.52% 1.06%
</TABLE>
* 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.
-11-
<PAGE> 27
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1998
SHARES MARKET VALUE
<S> <C> <C>
COMMON STOCKS - 97.84%
AGRICULTURAL BIOTECH - 1.73%
54,058 Monsanto Co. $ 3,020,491
-------------------------
APPLICATIONS SOFTWARE - 1.22%
34,681 Intuit, Inc.* 2,124,211
-------------------------
BROADCASTING SERVICE/PROGRAMMING - 7.31%
9,524 Grupo Televisa S.A. - Sponsored GDR* 358,340
84,734 TCI Satellite Entertainment, Inc., Class A* 497,812
293,481 Tele-Communications, Inc., Liberty Media Group, Series A* 11,390,878
13,259 United Video Satellite Group, Inc.* 525,388
-------------------------
12,772,418
-------------------------
BUILDING - RESIDENTIAL/COMMERCIAL - 0.99%
58,791 Lennar Corp. 1,734,334
-------------------------
CABLE TV - 13.48%
59,458 Cablevision Systems Corp., Class A* 4,964,743
84,558 Comcast Corp., Class A 3,361,180
129,573 Comcast Corp., Special Class A 5,259,886
38,953 Comcast UK Cable Partners Ltd., Class A* 611,095
19,595 MediaOne Group, Inc.* 860,965
210,933 Tele-Communications Inc.,TCI Group, Series A* 8,107,843
15,568 TeleWest Communications PLC - Sponsored ADR* 369,740
-------------------------
23,535,452
-------------------------
CASINO HOTELS - 1.23%
93,064 Mirage Resorts, Inc.* 1,983,473
11,157 Station Casinos, Inc.* 163,874
-------------------------
2,147,347
-------------------------
CATALOG AND MAIL ORDER HOUSES - 2.87%
199,746 USA Networks, Inc.* 5,018,618
-------------------------
CELLULAR TELECOMMUNICATIONS - 0.16%
10,591 CoreComm, Inc.* 278,014
-------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-12-
<PAGE> 28
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1998
MARKET VALUE
SHARES
<S> <C> <C>
COMMON STOCKS - (CONTINUED)
COMMERCIAL SERVICES - 1.61%
88,847 Cendant Corp.* $ 1,821,363
22,250 Iron Mountain, Inc.* 995,687
-------------------------
2,817,050
-------------------------
COMMERCIAL SERVICES - FINANCE - 0.51%
52,566 Crescent Operating, Inc.* 893,622
-------------------------
COMMUNICATIONS SOFTWARE - 0.08%
11,394 General Magic, Inc.* 140,294
-------------------------
COMPUTER SOFTWARE - 8.71%
100,717 Microsoft Corp.* 10,915,205
18,992 SAP AG - Sponsored ADR 4,292,059
-------------------------
15,207,264
-------------------------
COMPUTERS - MICRO - 5.40%
101,529 Dell Computer Corp.* (a) 9,423,211
-------------------------
DIVERSIFIED MANUFACTURING OPERATIONS - 2.81%
154,677 CBS Corp.* 4,910,995
-------------------------
FINANCE - CREDIT CARDS - 2.54%
38,956 American Express Co. 4,431,245
-------------------------
FINANCIAL GUARANTEE INSURANCE - 1.93%
59,202 MGIC Investment Corp. 3,378,244
-------------------------
HOTELS & MOTELS - 1.95%
191,194 Host Marriott Corp.* 3,405,739
-------------------------
INTERNET CONTENT - 1.53%
56,385 At Home Corp., Series A* 2,667,744
-------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-13-
<PAGE> 29
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1998
MARKET VALUE
SHARES
<S> <C> <C>
COMMON STOCKS - (CONTINUED)
INTERNET SOFTWARE - 1.83%
3,191 Infoseek Corporation* $ 114,477
19,609 Yahoo!, Inc.* 3,088,418
-------------------------
3,202,895
-------------------------
INVESTMENT COMPANIES - 1.94%
168,373 Tele-Communications, Inc., TCI Ventures Group, Series A 3,378,068
-------------------------
LEISURE & RECREATION/GAMING - 1.70%
102,495 AMF Bowling, Inc.* 2,972,355
-------------------------
MEDICAL-BIOMEDICAL/GENE - 0.01%
177 EntreMed, Inc.* 5,885
-------------------------
MONEY CENTER BANKS - 0.42%
8,563 BankAmerica Corp. 740,700
-------------------------
MULTI-LINE INSURANCE - 0.30%
8,664 Travelers Group, Inc. 525,255
-------------------------
MULTIMEDIA - 7.41%
131,852 Cox Communications, Inc., Class A* 6,386,647
106,994 News Corp., Ltd. - Sponsored ADR 3,437,182
34,755 Time Warner, Inc. 2,969,398
1,409 The Walt Disney Co. 148,034
-------------------------
12,941,261
-------------------------
MUSIC CLUBS - 2.95%
112,169 SFX Entertainment, Inc., Class A* 5,145,753
-------------------------
OFFICE FURNISHINGS - 0.29%
19,631 Steelcase, Inc., Class A 510,406
-------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-14-
<PAGE> 30
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1998
MARKET VALUE
SHARES
<S> <C> <C>
COMMON STOCKS - (CONTINUED)
OIL & GAS DRILLING - 0.08%
3,570 Ensco International, Inc. $ 62,475
3,570 Rowan Companies, Inc.* 69,394
-------------------------
131,869
-------------------------
OIL COMPANIES - EXPLORATION & PRODUCTION - 1.07%
77,981 Pioneer Natural Resources, Co. 1,861,796
-------------------------
RADIO - 1.79%
28,617 Clear Channel Communications, Inc.* 3,122,830
-------------------------
REAL ESTATE INVESTMENT/MANAGEMENT - 0.48%
38,676 Trizec Hahn Corp. 829,136
-------------------------
REAL ESTATE INVESTMENT TRUST - HOTEL/RESTAURANT - 3.35%
121,200 Starwood Hotels & Resorts Trust 5,855,536
-------------------------
REAL ESTATE INVESTMENT TRUST - OFFICE PROPERTY - 5.70%
143,739 Boston Properties, Inc. 4,887,126
150,512 Crescent Real Estate Equities Company 5,060,966
-------------------------
9,948,092
-------------------------
REAL ESTATE INVESTMENT TRUST - SHOPPING CENTERS - 3.47%
152,742 Vornado Realty Trust 6,062,024
-------------------------
RETAIL - INTERNET - 1.90%
33,274 Amazon.com, Inc.* 3,319,082
-------------------------
RETAIL - RESTAURANTS - 2.52%
63,772 McDonald's Corp. 4,400,268
-------------------------
SATELLITE TELECOMMUNICATIONS - 1.61%
71,312 Globalstar Telecommunications Ltd.* 1,925,424
31,141 Loral Space and Communications Ltd.* 879,733
-------------------------
2,805,157
-------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-15-
<PAGE> 31
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1998
MARKET VALUE
SHARES
<S> <C> <C>
COMMON STOCKS - (CONTINUED)
TELECOMMUNICATIONS EQUIPMENT - 1.03%
66,000 General Instrument Corp.* $ 1,794,408
-------------------------
TELECOMMUNICATIONS SERVICES - 1.11%
36,256 NTL Inc.* 1,939,696
-------------------------
TELEPHONE - LONG DISTANCE - 0.82%
29,642 WorldCom, Inc.* 1,435,799
-------------------------
TOTAL COMMON STOCKS (COST $114,955,741) 170,834,564
=========================
PREFERRED STOCKS - 2.02%
MULTIMEDIA - 2.00%
123,552 News Corp. Ltd. - Sponsored ADR Preferred 3,490,344
-------------------------
RADIO - 0.02%
1,964 TCI Music, Inc., CV Preferred, Class A* 36,334
-------------------------
TOTAL PREFERRED STOCKS (COST $2,360,717) 3,526,678
=========================
NUMBER OF
CONTRACTS
CALL OPTIONS - 1.32%
AGRICULTURAL BIOTECH - 0.05%
160 Monsanto Co., 07/18/98, $50.00 92,000
-------------------------
BEVERAGES-NON-ALCOHOLIC - 0.01%
88 Coca-Cola Femsa S.A.-Ser L, 07/18/98, $ 16.625 7,700
-------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-16-
<PAGE> 32
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1998
NUMBER OF MARKET VALUE
CONTRACTS
CALL OPTIONS - (CONTINUED)
<S> <C> <C>
BROADCASTING SERVICE/PROGRAMMING - 0.12%
272 Grupo Televisa S.A.- Sponsored GDR, 07/18/98, $30.00 $ 204,000
-------------------------
CABLE TV - 0.10%
440 Tele-Communications Inc. TCI Group, 08/22/98, $35.00 170,500
-------------------------
COMMERCIAL SERVICES - 0.09%
220 Cendant Corporation, 08/22/98, $15.00 132,000
132 Cendant Corporation, 08/22/98, $20.00 31,350
-------------------------
163,350
-------------------------
INTERNET SOFTWARE - 0.08%
160 Netscape Communications Corp., 07/18/98, $20.00 130,000
-------------------------
MULTIMEDIA - 0.11%
88 The Walt Disney Co., 07/18/98, $100.00 63,800
160 Viacom, Inc., Class B, 07/18/98, $50.00 136,000
-------------------------
199,800
-------------------------
REAL ESTATE INVESTMENT TRUST - HOTEL/RESTAURANT - 0.18%
300 Starwood Hotels & Resorts Trusts, 08/22/98, $40.00 255,000
136 Starwood Hotels & Resorts Trusts, 08/22/98, $45.00 59,500
-------------------------
314,500
-------------------------
TELEPHONE - LONG DISTANCE - 0.58%
160 AT&T Corporation, 08/22/98, $50.00 130,000
597 MCI Communications Corp., 07/18/98, $45.00 776,100
80 WorldCom, Inc. 07/18/98, $35.00 109,000
-------------------------
1,015,100
-------------------------
TOTAL CALL OPTIONS (COST $2,355,422) 2,296,950
=========================
PUT OPTIONS - 0.06%
COMPUTERS - MICRO - 0.03%
80 Sun Microsystems, Inc., 07/18/98, $50.00 52,000
-------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-17-
<PAGE> 33
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1998
NUMBER OF MARKET VALUE
CONTRACTS
PUT OPTIONS - (CONTINUED)
<S> <C> <C>
STOCK INDEX - 0.03%
400 S&P 100 Index, 07/18/98, $500.00 $ 25,000
400 S&P 100 Index, 07/18/98, $510.00 32,520
-------------------------
57,520
-------------------------
TOTAL PUT OPTIONS (COST $588,520) 109,520
=========================
TOTAL INVESTMENTS (COST $120,260,400)**-101.24% 176,767,712
=========================
OTHER ASSETS, LESS LIABILITIES - (1.24%) (2,156,417)
-------------------------
NET ASSETS - 100.00% $ 174,611,295
=========================
</TABLE>
(a) Partially or wholly held in a pledged account by the Custodian as collateral
for borrowings.
* Non-income Producing Security
** Also cost for federal income tax purposes.
The accompanying notes are an integral part of these financial statements.
-18-
<PAGE> 34
TROON PARTNERS, L.P.
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT AUDITORS
PERIOD FROM FEBRUARY 27, 1997
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1997
<PAGE> 35
TROON PARTNERS, L.P.
FINANCIAL STATEMENTS
PERIOD FROM FEBRUARY 27, 1997 (COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1997
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
Proxy Results (Unaudited)............................................ 12
Schedule of Portfolio Investments.................................... 13
<PAGE> 36
[ERNST & YOUNG LETTERHEAD]
REPORT OF INDEPENDENT AUDITORS
To the Partners of
Troon Partners, L.P.
We have audited the accompanying statement of assets, liabilities and partners'
capital of Troon Partners, L.P., including the schedule of portfolio
investments, as of December 31, 1997, and the related statements of operations
and changes in partners' capital - net assets for the period from February 27,
1997 (commencement of operations) to December 31, 1997. 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, 1997, 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 Troon Partners, L.P. at
December 31, 1997, the results of its operations, and the changes in its
partners' capital - net assets for the period from February 27, 1997 to December
31, 1997, in conformity with generally accepted accounting principles.
[ERNST & YOUNG SIGNATURE]
New York, New York
February 9, 1998
-1-
<PAGE> 37
TROON PARTNERS, L.P.
STATEMENT OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL (IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1997
ASSETS
<S> <C>
Investments in securities, at market
(identified cost - $80,394) $ 108,573
Due from broker 41
Due from affiliate 2
Dividends receivable 93
Organizational costs (net of accumulated amortization of $41) 195
Other assets 19
-----------------
TOTAL ASSETS 108,923
-----------------
LIABILITIES
Loan payable 3,188
Management fee payable 82
Accrued expenses 254
-----------------
TOTAL LIABILITIES 3,524
-----------------
NET ASSETS $ 105,399
=================
PARTNERS' CAPITAL - NET ASSETS
Represented by:
Capital contributions (net of syndications costs of $50) $ 77,200
Accumulated net investment loss (345)
Accumulated net realized gain on investments 365
Accumulated net unrealized appreciation on investments 28,179
-----------------
PARTNERS' CAPITAL - NET ASSETS $ 105,399
=================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE> 38
TROON PARTNERS, L.P.
STATEMENT OF OPERATIONS (IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD FROM FEBRUARY 27, 1997
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1997
<S> <C>
INVESTMENT INCOME
Dividends $ 858
Interest 69
-----------------
927
-----------------
EXPENSES
OPERATING EXPENSES:
Management fee 683
Professional fees 220
Administration fees 134
Custodian fees 67
Amortization of organizational costs 41
Insurance expense 38
Individual General Partners' fees and expenses 27
Miscellaneous 10
-----------------
1,220
INTEREST EXPENSE 52
-----------------
TOTAL EXPENSES 1,272
-----------------
NET INVESTMENT LOSS (345)
-----------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
REALIZED GAIN (LOSS) ON INVESTMENTS:
Investment securities 2,564
Purchased options (2,199)
-----------------
NET REALIZED GAIN ON INVESTMENTS 365
-----------------
NET UNREALIZED APPRECIATION ON INVESTMENTS 28,179
-----------------
NET REALIZED AND UNREALIZED GAIN 28,544
-----------------
INCREASE IN PARTNERS' CAPITAL DERIVED FROM INVESTMENT ACTIVITIES $ 28,199
=================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE> 39
TROON PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL - NET ASSETS (IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD FROM FEBRUARY 27, 1997
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1997
<S> <C>
FROM INVESTMENT ACTIVITIES
Net investment loss $ (345)
Net realized gain on investments 365
Net unrealized appreciation on investments 28,179
-----------------
INCREASE IN PARTNERS' CAPITAL DERIVED
FROM INVESTMENT ACTIVITIES 28,199
PARTNERS' CAPITAL TRANSACTIONS
Capital contributions 77,250
Syndication costs (50)
-----------------
INCREASE IN PARTNERS' CAPITAL DERIVED
FROM CAPITAL TRANSACTIONS 77,200
PARTNERS' CAPITAL AT BEGINNING OF PERIOD 0
-----------------
PARTNERS' CAPITAL AT END OF PERIOD $ 105,399
=================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE> 40
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1997
- ------------------------------------------------------------------------------
1. ORGANIZATION
Troon Partners, L.P. (the "Partnership") was organized under the Delaware
Revised Uniform Limited Partnership Act on December 12, 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"), dated December 19, 1996, as amended October 29, 1997
(see Proxy Results on page 12). The Partnership's investment objective is
to seek long-term 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, bonds, options and other fixed-income securities of U.S.
issuers.
There are four "Individual General Partners" and a "Manager." The
Manager is Troon Management, L.L.C. which is a joint venture between
CIBC Oppenheimer Corp. (formerly Oppenheimer & Co., Inc.) and Mark
Asset Management Corporation ("MAMC"). Investment professionals at
MAMC manage the Partnership's investment portfolio on behalf of the
Manager under CIBC Oppenheimer Corp.'s ("CIBC Opco") 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. Beginning in 1998, 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.
-5-
<PAGE> 41
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1997 (CONTINUED)
- ------------------------------------------------------------------------------
A. PORTFOLIO VALUATION
Securities 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.
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. 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.
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.
-6-
<PAGE> 42
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1997 (CONTINUED)
- ------------------------------------------------------------------------------
On occasion, the values of such securities and exchange rates may be
affected by events occurring between the time such values or exchange
rates are determined and the time that 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.
B. PARTNERSHIP EXPENSES
The expenses incurred by the Partnership in connection with its
organization, which were $236,274, are being amortized over a 60 month
period beginning with the commencement of operations, February 27,
1997.
Syndication costs totaling $50,000 related to the Partnership's initial
offering have been charged directly to the capital accounts of the
limited partners of record as of April 30, 1997.
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 .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 period ended December 31, 1997, CIBC Opco earned $10,500 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
-7-
<PAGE> 43
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1997 (CONTINUED)
- ------------------------------------------------------------------------------
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. There was no incentive allocation for the period ended December
31, 1997.
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" does not receive any annual
or other fees 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 period from February
27, 1997 to December 31, 1997, fees paid to the Individual General
Partners (including meeting fees and the annual retainer) and expenses
totaled $26,572. One Individual General Partner, who is an "interested
person" of the Partnership holds a limited partnership interest in the
Partnership.
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, recordkeeping, tax and
investor related services.
4. SECURITIES TRANSACTIONS
Aggregate purchases and sales of investment securities, excluding
short-term securities, for the period from February 27, 1997 to December
31, 1997, amounted to $123,074,401 and $47,346,578, respectively.
At December 31, 1997, the cost of investments for federal income tax
purposes was substantially the same as the cost for financial reporting
purposes (see Schedule of Portfolio Investments). At December 31, 1997,
accumulated net unrealized appreciation on investments was $28,178,859,
consisting of $29,658,068 gross unrealized appreciation and $1,479,209
gross unrealized depreciation.
Due from broker primarily represents receivables and payables from
unsettled security trades.
-8-
<PAGE> 44
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1997 (CONTINUED)
- ------------------------------------------------------------------------------
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. As of December 31, 1997, the
Partnership had outstanding margin borrowings of $3,188,472. The
Partnership pays interest on outstanding margin borrowings at an
annualized rate of LIBOR plus .875%. The Partnership pledges securities as
collateral for the margin borrowings, which are maintained in a segregated
account held by the Custodian.
6. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK OR
CONCENTRATIONS OF CREDIT RISK
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.
Transactions in purchased options were as follows:
<TABLE>
<CAPTION>
CALL OPTIONS PUT OPTIONS
NUMBER NUMBER
OF CONTRACTS COST OF CONTRACTS COST
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Beginning balance - - $ 0 - - $ 0
Options purchased 14,126 12,569,092 14,412 10,740,990
Options closed (12,790) (10,990,373) (13,338) (9,905,406)
Expired options (226) (267,054) (418) (268,697)
------------ ------------ ------------ ------------
Options outstanding at
December 31, 1997 1,110 $ 1,311,665 656 $ 566,887
============ ============ ============ ============
</TABLE>
-9-
<PAGE> 45
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1997 (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:
<TABLE>
<CAPTION>
NET GAINS/(LOSSES)
FOR THE PERIOD ENDED
DECEMBER 31, 1997
---------------
<S> <C>
Equity securities $ 30,557,274
Equity options (366,788)
Equity index options (1,646,649)
---------------
$ 28,543,837
===============
</TABLE>
The following table presents the market values of derivative financial
instruments and the average market values of those instruments:
<TABLE>
<CAPTION>
AVERAGE MARKET VALUE
MARKET VALUE AT FOR THE PERIOD ENDED
DECEMBER 31, 1997 DECEMBER 31, 1997
----------------- -----------------
<S> <C> <C>
ASSETS:
Equity options $1,940,190 $964,800
Equity index options 121,550 167,388
</TABLE>
Average market values presented above are based upon month-end market
value during the period ended December 31, 1997.
-10-
<PAGE> 46
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 1997 (CONTINUED)
- ------------------------------------------------------------------------------
8. SELECTED FINANCIAL RATIOS AND OTHER SUPPLEMENTAL INFORMATION
The following represents the ratios to average net assets and other
supplemental information for the period indicated:
<TABLE>
<CAPTION>
FEBRUARY 27, 1997
(COMMENCEMENT OF
OPERATIONS) TO
DECEMBER 31, 1997
-----------------
<S> <C>
Ratio of net investment loss to average net assets (0.49%)*
Ratio of operating expenses to average net assets 1.73%*
Ratio of interest expense to average net assets 0.07%*
Portfolio turnover rate 58.73%
Average commission rate paid $0.0566**
Total return 37.60%***
Average debt ratio 1.06%
</TABLE>
* 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.
9. SUBSEQUENT EVENT
Effective January 1, 1998, the Partnership received additional Limited
Partner capital contributions of approximately $6,370,000.
In February, 1998, the Individual General Partners determined that the
Partnership will make an offer to repurchase up to $25,000,000 in
interests in the Partnership, effective as of March 31, 1998.
-11-
<PAGE> 47
TROON PARTNERS, L.P.
PROXY RESULTS (UNAUDITED) - DECEMBER 31, 1997
- ------------------------------------------------------------------------------
On September 30, 1997, a Special Meeting of the Partners of the
Partnership was held to approve a proposed amendment to the Limited
Partnership Agreement which authorized the Manager to continue to
provide investment advice and management to the Partnership upon the
consummation of the acquisition of Oppenheimer & Co., Inc. by CIBC Wood
Gundy Securities Corp. A total of 253 Partners, representing $55,543,862
of interests in the Partnership and 65.8% of the votes eligible to be
cast at the Special Meeting voted to approve the amended Limited
Partnership Agreement as follows:
FOR AGAINST ABSTAIN
--- ------- -------
53,297,562 837,310 1,408,990
-12-
<PAGE> 48
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1997
MARKET VALUE
SHARES
COMMON STOCKS - 99.04%
APPLICATIONS SOFTWARE - .27%
<S> <C> <C>
6,793 Intuit, Inc.* $ 280,211
--------------------
BANKING - REGIONAL - 2.38%
7,403 Wells Fargo & Co.(a) 2,512,860
--------------------
BEVERAGES NON-ALCOHOLIC - 2.09%
33,092 Coca-Cola Co. 2,206,839
--------------------
BROADCASTING - 1.68%
33,124 Grupo Televisa S.A. - Sponsored GDR* 1,281,501
71,536 TCI Satellite Entertainment, Inc., Class A* 491,810
--------------------
1,773,311
--------------------
BUILDING - RESIDENTIAL/COMMERCIAL - 1.21%
59,100 Lennar Corp. 1,274,373
--------------------
CABLE TV - 24.12%
21,381 Cablevision Systems Corp., Class A* 2,047,231
52,565 Comcast Corp., Class A 1,675,509
99,239 Comcast Corp., Special Class A 3,132,281
18,052 Comcast UK Cable Partners, Ltd., Class A* 170,375
96,848 Cox Communications, Inc., Class A* 3,880,021
77,440 HSN, Inc.* 3,988,160
161,828 Tele-Communications Liberty Media Group., Inc., Series A* 5,866,265
166,831 Tele-Communications-TCI Group, Series A* 4,660,924
--------------------
25,420,766
--------------------
CASINO HOTELS - 1.52%
70,687 Mirage Resorts, Inc.* 1,608,129
--------------------
CHEMICALS - DIVERSIFIED - 1.14%
28,490 Monsanto Co. 1,196,580
--------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-13-
<PAGE> 49
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1997
MARKET VALUE
SHARES
COMMON STOCKS - (CONTINUED)
COMMERCIAL SERVICES - 3.63%
<S> <C> <C>
111,362 Cendant Corp.* $ 3,828,075
--------------------
COMMERCIAL SERVICES - FINANCE - 1.07%
45,816 Crescent Operating, Inc. * 1,122,492
--------------------
COMMUNICATIONS SOFTWARE - .02%
17,543 General Magic, Inc.* 24,121
--------------------
COMPUTER SOFTWARE - 6.24%
43,761 Microsoft Corp. * 5,656,109
8,458 SAP AG - Sponsored ADR 921,846
--------------------
6,577,955
--------------------
COMPUTERS - MICRO - 4.48%
56,232 Dell Computer Corp.* 4,723,488
--------------------
DIVERSIFIED MANUFACTURING OPERATIONS - 2.67%
95,440 CBS Corp. 2,809,563
--------------------
FINANCE - CREDIT CARDS - 2.48%
29,235 American Express Co.(a) 2,609,224
--------------------
FINANCIAL GUARANTEE INSURANCE - 2.88%
45,699 MGIC Investment Corp. 3,038,984
--------------------
GOLD MINING - .03%
12,186 Echo Bay Mines Ltd. 29,709
--------------------
HOTELS & MOTELS - 2.87%
154,369 Host Marriott Corp.* 3,029,492
--------------------
INTERNET CONTENT - .88%
36,917 At Home Corp., Series A* 927,540
--------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-14-
<PAGE> 50
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1997
MARKET VALUE
SHARES
COMMON STOCKS - (CONTINUED)
INTERNET SOFTWARE - .34%
<S> <C> <C>
11,834 Excite, Inc.* $ 355,020
--------------------
INVESTMENT COMPANIES - 2.98%
110,866 Telecom-TCI Ventures Group, Series A* 3,138,949
--------------------
MULTIMEDIA - 4.12%
90,118 News Corp. Ltd. - Sponsored ADR 2,010,803
37,676 Time Warner, Inc.(a) 2,335,912
--------------------
4,346,715
--------------------
OIL COMPANIES - EXPLORATION & PRODUCTION - 2.58%
93,611 Pioneer Natural Resources, Co. 2,714,719
--------------------
RADIO - .31%
23,054 Grupo Radio Centro S.A. de C.V. - Sponsored ADR 328,520
--------------------
REAL ESTATE INVESTMENT/MANAGEMENT - 1.04%
46,375 LNR Property Corp. 1,095,609
--------------------
REAL ESTATE INVESTMENT TRUST - HOTEL/RESTAURANT - 4.90%
89,283 Starwood Lodging Trust 5,167,254
--------------------
REAL ESTATE INVESTMENT TRUST - OFFICE PROPERTY - 9.41%
104,748 Boston Properties, Inc. 3,463,283
153,886 Crescent Real Estate Equities Company 6,059,261
12,375 Equity Office Properties Trust 390,592
--------------------
9,913,136
--------------------
REAL ESTATE INVESTMENT TRUST - SHOPPING CENTERS - 4.99%
112,075 Vornado Realty Trust 5,260,576
--------------------
RETAIL - DISCOUNT - .82%
21,818 Wal-Mart Stores, Inc. 860,458
--------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-15-
<PAGE> 51
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1997
MARKET VALUE
SHARES COMMON STOCKS - (CONTINUED)
RETAIL - RESTAURANTS - 2.79%
<S> <C> <C>
44,439 Host Marriott Services Corp.* $ 661,030
47,842 McDonald's Corp. 2,284,456
--------------------
2,945,486
--------------------
SATELLITE TELECOMMUNICATIONS - 2.86%
32,615 Globalstar Telecommunications Ltd.* 1,602,212
66,113 Loral Space and Communications Ltd.(a) 1,417,331
--------------------
3,019,543
--------------------
TELECOMMUNICATIONS EQUIPMENT - .24%
14,051 NextLevel Systems, Inc.* 251,162
--------------------
TOTAL COMMON STOCKS (COST $76,585,164) 104,390,859
====================
PREFERRED STOCKS - 2.01%
MULTIMEDIA - 2.01%
106,707 News Corp. Ltd. - Sponsored ADR Preferred 2,120,802
--------------------
TOTAL PREFERRED STOCKS (COST $1,930,826) 2,120,802
====================
NUMBER OF
CONTRACTS
CALL OPTIONS - 1.70%
AIRLINES - .24%
176 UAL Corp., 01/17/98, $80.00 257,400
--------------------
BANKING - REGIONAL - .39%
24 Wells Fargo & Co., 01/17/98, $250.00 215,100
24 Wells Fargo & Co., 01/17/98, $260.00 193,200
--------------------
408,300
--------------------
BROADCASTING SERVICE/PROGRAMMING - .04%
44 Grupo Televisa S.A.- Sponsored GDR, 01/17/98, $30.00 37,950
--------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-16-
<PAGE> 52
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1997
NUMBER OF MARKET VALUE
CONTRACTS
<S> <C> <C>
CALL OPTIONS - (CONTINUED)
CABLE TV - .28%
176 HSN, Inc., 01/17/98, $35.00 $ 297,000
--------------------
COMMERCIAL SERVICES - .12%
88 Cendant Corp., 01/17/98, $20.00 124,300
--------------------
COMPUTER SOFTWARE - .09%
45 Microsoft Corp., 01/17/98, $110.00 97,875
--------------------
FINANCE - CREDIT CARDS - .03%
39 American Express Co., 01/17/98, $80.00 35,588
--------------------
MEDICAL - DRUGS - .16%
96 Pfizer, Inc., 01/17/98, $60.00 142,800
24 Pfizer, Inc., 01/17/98, $65.00 24,000
--------------------
166,800
--------------------
REAL ESTATE INVESTMENT TRUST - HOTEL/RESTAURANT - .25%
88 Starwood Lodging Trust, 01/17/98, $50.00 69,300
154 Starwood Lodging Trust, 02/21/98, $45.00 196,350
--------------------
265,650
--------------------
RETAIL - RESTAURANTS - .10%
132 McDonald's Corp., 01/17/98, $40.00 102,300
--------------------
TOTAL CALL OPTIONS (COST $1,311,665) 1,793,163
====================
PUT OPTIONS - .26%
ATHLETIC FOOTWEAR - .05%
88 Nike, Inc., 01/17/98, $45.00 50,600
--------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-17-
<PAGE> 53
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1997
NUMBER OF MARKET VALUE
CONTRACTS
<S> <C> <C>
PUT OPTIONS - (CONTINUED)
COMPUTER SOFTWARE - .02%
18 Avant! Corp., 01/17/98, $25.00 $ 15,300
--------------------
ELECTRONIC COMPONENTS - SEMICONDUCTORS - .02%
44 Intel Corp., 01/17/98, $75.00 24,750
--------------------
OIL COMPANIES - INTEGRATED - .02%
44 Texaco, Inc., 01/17/98, $60.00 23,650
--------------------
OIL & GAS DRILLING - .03%
44 Diamond Offshore Drilling, Inc., 01/17/98, $50.00 12,377
44 Rowan Companies, Inc., 01/17/98, $35.00 20,350
--------------------
32,727
--------------------
STOCK INDEX - .12%
374 S&P 100 Index, 01/17/98, $440.00 121,550
--------------------
TOTAL PUT OPTIONS (COST $566,887) 268,577
====================
TOTAL INVESTMENTS (COST $80,394,542) - 103.01% 108,573,401
====================
OTHER ASSETS, LESS LIABILITIES - (3.01%) (3,174,540)
--------------------
NET ASSETS - 100.00% $ 105,398,861
====================
</TABLE>
(a) Partially held in a pledged account by the Custodian as collateral for
borrowings.
* Non-income Producing Security
The accompanying notes are an integral part of these financial statements.
-18-
<PAGE> 1
Exhibit C
<PAGE> 2
Exhibit C
LETTER OF TRANSMITTAL
Regarding the
Interests
in
TROON PARTNERS, L.P.
Tendered Pursuant to the Offer to Purchase
Dated November 25, 1998
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT, AND THIS LETTER OF TRANSMITTAL MUST BE
RECEIVED BY THE PARTNERSHIP BY, 12:00 MIDNIGHT
NEW YORK CITY TIME, ON THURSDAY,
DECEMBER 31, 1998, UNLESS THE OFFER IS EXTENDED.
Complete This Letter Of Transmittal And Return Or Deliver To:
PFPC Inc.
P.O. Box 358
Claymont, Delaware 19703
Attn: Karen Castagna
For additional information call:
Phone: (888) 520-3280
Fax: (302) 791-2386
Ladies and Gentlemen:
The undersigned hereby tenders to Troon Partners, L.P., a
closed-end, non-diversified, management investment company organized under the
laws of the State of Delaware (the "Partnership"), the partnership interest in
the Partnership or portion thereof held by the undersigned, described and
specified below, upon the terms and conditions set forth in the offer to
purchase, dated November 25, 1998 ("Offer to Purchase"), receipt of which is
hereby acknowledged, and in this letter of transmittal (which together
constituted the "Offer"). THE TENDER AND THIS LETTER OF TRANSMITTAL ARE SUBJECT
TO ALL THE TERMS AND CONDITIONS SET FORTH IN THE OFFER TO PURCHASE, INCLUDING,
BUT NOT LIMITED TO, THE ABSOLUTE RIGHT OF THE PARTNERSHIP TO
<PAGE> 3
REJECT ANY AND ALL TENDERS DETERMINED BY IT, IN ITS SOLE DISCRETION, NOT TO BE
IN THE APPROPRIATE FORM.
The undersigned hereby sells to the Partnership the
partnership interest in the Partnership or portion thereof tendered hereby
pursuant to the Offer. The undersigned hereby warrants that the undersigned has
full authority to sell the partnership interest in the Partnership or portion
thereof tendered hereby and that the Partnership will acquire good title
thereto, free and clear of all liens, charges, encumbrances, conditional sales
agreements or other obligations relating to the sale thereof, and not subject to
any adverse claim, when and to the extent the same are purchased by it. Upon
request, the undersigned will execute and deliver any additional documents
necessary to complete the sale in accordance with the terms of the Offer.
The undersigned recognizes that under certain circumstances
set forth in the Offer, the Partnership may not be required to purchase any of
the partnership interests in the Partnership or portions thereof tendered
hereby.
Payment of the cash portion of the purchase price for the
partnership interest in the Partnership or portion thereof of the undersigned
(the "Cash Payment"), as described in Section 6 of the Offer to Purchase, shall
be sent to the undersigned by wire transfer to the undersigned's brokerage
account at CIBC Oppenheimer Corp. ("CIBC Opco") unless the undersigned elects to
receive such payment by check posted first class (AT THE SOLE RISK OF ADDRESSEE)
as based on the direction of the undersigned as indicated below. (The
undersigned hereby represents and warrants that the undersigned understands
that, for cash payments wired directly to a partner's brokerage account, upon a
withdrawal of such cash payment from such account, CIBC Opco will subject such
withdrawal to any fees that CIBC Opco would customarily assess upon the
withdrawal of cash from such brokerage account.) (Any payment in the form of
marketable securities would be made by means of special arrangement with the
tendering partner in the sole discretion of the Individual General Partners of
the Partnership.) A promissory note reflecting the contingent payment portion of
the purchase price, as described in Section 6 of the Offer to Purchase, will be
deposited directly to the undersigned's brokerage account with CIBC Opco unless
the undersigned elects below to have the promissory note delivered directly to
the undersigned at the address set forth below. (Any amounts payable under this
promissory note shall be paid to the undersigned in the same manner designated
in this Letter of Transmittal for payment of the Cash Payment. Limited Partners
who elect to receive the Note directly must return the Note pursuant to
instructions that will be provided at a later date in order to receive payment
of such amounts.) The undersigned recognizes that the amount of the Cash Payment
is based on the unaudited net asset value as of December 31, 1998, of the
partnership interest of the Partnership or portion thereof tendered, and that
the contingent payment portion of the purchase price shall be determined upon
completion of the audit of the Partnership's financial statements for 1998,
which is anticipated to be completed not later than 60 days after the
Partnership's fiscal year end, and shall be paid within ten days thereafter in
cash.
All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned and the obligation of the
undersigned hereunder shall be binding
-2-
<PAGE> 4
upon the heirs, personal representatives, successors and assigns of the
undersigned. Except as stated in Section 5 of the Offer to Purchase, this tender
is irrevocable.
PART 1. NAME AND ADDRESS:
Name of partner:_____________________________________________
Address: _____________________________________________
_____________________________________________
_____________________________________________
Social Security No.
or Taxpayer
Identification No.:__________________________________________
Telephone Number: ( )___________________________________
PART 2. AMOUNT OF PARTNERSHIP INTEREST IN THE PARTNERSHIP TENDERED:
/ / Entire partnership interest
/ / Portion of partnership interest expressed in
dollar value (a minimum interest of the
greater of $150,000, net of the tentative
incentive allocation, or the tentative
incentive allocation, must be maintained)
$_______________
PART 3. PAYMENT INSTRUCTIONS.
CASH PAYMENT
Cash payments will be wire transferred directly to the
undersigned's brokerage account at CIBC Opco unless the
undersigned elects (by checking the box below) to receive such
cash payment by check. (The undersigned hereby represents and
warrants that the undersigned understands that, for cash
payments wired directly to a partner's brokerage account, upon
a withdrawal of such cash payment from such account, CIBC Opco
will subject such withdrawal to any fees that CIBC Opco would
customarily assess upon the withdrawal of cash from such
brokerage account.)
/ / Remit cash payments by check mailed first class (at
the sole risk of addressee) to the address set forth
above.
(Any payment in the form of marketable securities
would be made by means of special arrangements with
the tendering partner.)
-3-
<PAGE> 5
PROMISSORY NOTE
The promissory note reflecting the contingent payment portion
of the purchase price, if applicable, will be deposited
directly to the undersigned's brokerage account at CIBC Opco
unless the undersigned elects (by checking the box below) to
have the promissory note delivered by first class mail
directly to the undersigned at the address set forth above.
/ / Deliver promissory note to the address set forth
above (at the sole risk of the addressee).
PART 4. SIGNATURE.
FOR INDIVIDUAL INVESTORS: FOR INVESTORS OTHER THAN INDIVIDUALS:
_____________________________ ________________________________________
Signature Print Name of Investor
(SIGNATURE OF OWNER(S) EXACTLY
AS APPEARED ON SUBSCRIPTION
AGREEMENT)
_____________________________ ________________________________________
Print Name of Investor Signature
(SIGNATURE OF OWNER(S) EXACTLY AS
APPEARED ON SUBSCRIPTION AGREEMENT)
________________________________________
Print Name of Signatory and Title
________________________________________
Co-signatory (or Joint Tenant Signature)
if necessary
(SIGNATURE OF OWNER(S) EXACTLY AS
APPEARED ON SUBSCRIPTION AGREEMENT)
________________________________________
Print Name of Co-signatory (or Joint
Tenant)
Date:___________________
-4-
