TROON PARTNERS, L.P.
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT AUDITORS
FOR THE YEAR ENDED DECEMBER 31, 1998
<PAGE>
TROON PARTNERS, L.P.
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1998
CONTENTS
Report of Independent Auditors................................................ 1
Statement of Assets, Liabilities and Partners' Capital........................ 2
Statement of Operations....................................................... 3
Statement of Changes in Partners' Capital - Net Assets........................ 4
Notes to Financial Statements................................................. 5
Schedule of Portfolio Investments.............................................14
<PAGE>
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, 1998, and the related statement of operations
for the year then ended, and the statement of changes in partners' capital - net
assets for the year then ended and 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, 1998, 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, 1998, the results of its operations for the year then ended, and
the changes in its partners' capital - net assets for the year then ended and
for the period from February 27, 1997 to December 31, 1997, in conformity with
generally accepted accounting principles.
[GRAPHIC OMITTED]
/S/ ERNST & YOUNG LLP
New York, New York
February 12, 1999
1
<PAGE>
TROON PARTNERS, L.P.
STATEMENT OF ASSETS, LIABILITIES, AND PARTNERS' CAPITAL (IN THOUSANDS)
- --------------------------------------------------------------------------------
DECEMBER 31, 1998
ASSETS
Investments in securities, at market (identified cost-$136,451) $ 217,559
Due from broker 659
Dividends receivable 303
Organizational costs (net of accumulated amortization of $88) 148
Other assets 40
---------
TOTAL ASSETS 218,709
---------
LIABILITIES
Loan payable 2,051
Loan interest payable 7
Withdrawals payable 13,262
Management fee payable 152
Accrued expenses 265
---------
TOTAL LIABILITIES 15,737
---------
NET ASSETS $ 202,972
=========
PARTNERS' CAPITAL - NET ASSETS
Represented by:
Capital contributions - net $ 122,746
Accumulated net investment loss (807)
Accumulated net realized gain on investments (74)
Accumulated net unrealized appreciation on investments 81,107
---------
PARTNERS' CAPITAL - NET ASSETS $ 202,972
=========
The accompanying notes are an integral part of these financial statemets.
2
<PAGE>
TROON PARTNERS, L.P.
STATEMENT OF OPERATIONS (IN THOUSANDS)
- --------------------------------------------------------------------------------
YEAR ENDED
DECEMBER 31, 1998
INVESTMENT INCOME
Dividends $ 1,827
Interest 58
-------
1,885
-------
EXPENSES
OPERATING EXPENSES:
Management fee 1,514
Professional fees 260
Administration fees 218
Custodian fees 118
Amortization of organizational costs 47
Insurance expense 29
Individual General Partners' fees and expenses 25
Miscellaneous 21
-------
TOTAL OPERATING EXPENSES 2,232
Interest expense 115
-------
TOTAL EXPENSES 2,347
-------
NET INVESTMENT LOSS (462)
-------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
REALIZED GAIN (LOSS) ON INVESTMENTS:
Investment securities 7,189
Purchased options (7,561)
Written options 9
Short sales (76)
-------
NET REALIZED GAIN ON INVESTMENTS (439)
-------
NET CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS 52,928
-------
NET REALIZED AND UNREALIZED GAIN 52,489
-------
INCREASE IN PARTNERS' CAPITAL DERIVED FROM
INVESTMENT ACTIVITIES $52,027
=======
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
TROON PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL - NET ASSETS (IN THOUSANDS)
- --------------------------------------------------------------------------------
PERIOD FROM
FEBRUARY 27, 1997
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
DECEMBER 31, 1998 DECEMBER 31, 1997
FROM INVESTMENT ACTIVITIES
Net investment loss $ (462) $ (345)
Net realized gain (loss) on
invesstrments (439) 365
Net change in unrealized
appreciation on investments 52,928 28,179
-------- --------
INCREASE IN PARTNERS' CAPITAL
DERIVED FROM INVESTMENT
ACTIVITIES 52,027 28,199
PARTNERS' CAPITAL TRANSACTIONS
Capital contributions 64,460 77,250
Syndication costs (0) (50)
Capital withdrawls - General Partner (5,939) (0)
Capital withdrawls - Limited Partners (12,975) (0)
-------- --------
INCREASE IN PARTNERS' CAPITAL
DERIVED FROM CAPITAL TRANSACTIONS 45,546 77,200
PARTNERS' CAPITAL AT BEGINNING
OF PERIOD 105,399 (0)
-------- --------
PARTNERS' CAPITAL AT END
OF PERIOD $202,972 $105,399
======== ========
4
<PAGE>
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENT - DECEMBER 31, 1998
- --------------------------------------------------------------------------------
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 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. (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. 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>
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENT - DECEMBER 31, 1998 (CONTINUED)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (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
6
<PAGE>
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENT - DECEMBER 31, 1998 (CONTINUED)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. PORTFOLIO VALUATION (CONTINUED)
markets in the U.S. Foreign exchange rates are also determined
prior to such close. On occasion, the values of such securities
and exchange rates may be affected by events occurring between the
time 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 were 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, 1998, CIBC Opco earned $16,304 in
brokerage commissions from portfolio transactions executed on behalf of
the Partnership.
7
<PAGE>
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENT - DECEMBER 31, 1998 (CONTINUED)
- --------------------------------------------------------------------------------
3. MANAGEMENT FEE, RELATED PARTYTRANSACTIONS AND OTHER (CONTINUED)
At the end of the twelve month period following the admission of a
limited partner to the Partnership, and generally at the end of each
fiscal year thereafter, the Manager is entitled to an incentive
allocation of 20% of net profits, if any, that have been credited to
the capital account of such limited partner during such period. The
incentive allocation will be charged to a limited partner only to the
extent that cumulative net profits with respect to such limited partner
through the close of any period exceeds the highest level of cumulative
net profits with respect to such limited partner through the close of
any prior period. During the year ended December 31, 1998, incentive
allocations to the Manager were $13,715,650.
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 year ended December 31, 1998, fees paid to the Individual General
Partners (including meeting fees and the annual retainer) and expenses
totaled $25,015. One Individual General Partner is an "interested
person" of the Partnership.
The Chase Manhattan Bank 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 year ended December 31, 1998, amounted
to $161,205,235 and $112,888,582, respectively.
At December 31, 1998, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial reporting
purposes. At December 31, 1998, accumulated net unrealized appreciation
on investments was $81,107,090, consisting of $91,395,674 gross
unrealized appreciation and $10,288,584 gross unrealized depreciation.
8
<PAGE>
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENT - DECEMBER 31, 1998 (CONTINUED)
- --------------------------------------------------------------------------------
4. SECURITIES TRANSACTIONS (CONTINUED)
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 satisfy an asset coverage requirement of
300% of its indebtedness, including amounts borrowed, measured at the
time the Partnership incurs the indebtedness. The Partnership pays
interest on outstanding margin borrowings at an annualized rate of
LIBOR plus .875%. The Partnership pledges securities as collateral for
the margin borrowings, which are maintained in a segregated account
held by the Custodian. As of December 31, 1998, the Partnership had
outstanding margin borrowings of $2,050,934. For the year ended
December 31 1998, the average daily amount of such borrowings was
$1,654,100.
6. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK OR
CONCENTRATIONS OF CREDIT RISK
In the normal course of business, the Partnership may trade various
financial instruments and enter into various investment activities with
off-balance sheet risk. These financial instruments include forward and
futures contracts, options and sales of securities not yet purchased.
Generally, these financial instruments represent future commitments to
purchase or sell other financial instruments at specific terms at
specified future dates. Each of these financial instruments contains
varying degrees of off-balance sheet risk whereby changes in the market
value of the securities underlying the financial instruments may be in
excess of the amounts recognized in the statement of assets,
liabilities and partners' capital.
The 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.
9
<PAGE>
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENT - DECEMBER 31, 1998 (CONTINUED)
- --------------------------------------------------------------------------------
6. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
OR CONCENTRATIONS OF CREDIT RISK (CONTINUED)
Transactions in purchased options were as follows:
CALL OPTIONS PUT OPTIONS
--------------------------- -------------------------
NUMBER NUMBER
OF CONTRACTS COST OF CONTRACTS COST
------------ ----------- ------------ --------
Beginning balance 1,110 $ 1,311,665 656 $ 566,887
Options purchased 41,548 42,104,553 39,209 40,647,368
Options closed (40,188) (41,205,313) (35,686) (37,627,814)
Expired options (984) (703,448) (3,171) (2,664,397)
---------- ----------- ------- ------------
Options outstanding
at December 31, 1998 1,486 $ 1,507,457 1,008 $ 922,044
========== =========== ======= ============
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.
Transactions in written options were as follows:
CALL OPTIONS
-------------------------------------
NUMBER OF AMOUNT OF
CONTRACTS PREMIUM
-------- ---------
Beginning balance 0 $ 0
Options written 134 123,110
Options closed (134) (123,110)
Expired options (0) (0)
-------- --------
Options outstanding at
December 31, 1998 0 $ 0
======== ========
10
<PAGE>
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENT - DECEMBER 31, 1998 (CONTINUED)
- --------------------------------------------------------------------------------
7. FINANCIAL INSTRUMENTS HELD OR ISSUED FOR TRADING PURPOSES
The Partnership maintains positions in a variety of financial
instruments. The following table summarizes the components of net
realized and unrealized gains from investment transactions:
NET GAINS / (LOSSES)
FOR THE YEAR ENDED
DECEMBER 31, 1998
--------------------
Equity securities $59,767,130
Equity short sales (76,330)
Equity options (2,003,257)
Equity index options (5,207,528)
Written options 8,799
-----------
$52,488,814
===========
The following table presents the market values of derivative financial
instruments and the average market values of those instruments:
AVERAGE MARKET VALUE
MARKET VALUE AT FOR THE YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1998
----------------- --------------------
ASSETS:
Equity options $2,915,804 $2,413,209
Equity index options 47,292 764,436
Average market values presented above are based upon month-end market
values during the year ended December 31, 1998.
11
<PAGE>
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENT - DECEMBER 31, 1998 (CONTINUED)
- --------------------------------------------------------------------------------
8. SELECTED FINANCIAL RATIOS AND OTHER SUPPLEMENTAL INFORMATION
The following represents the ratios to average net assets and other
supplemental information for the year indicated:
FEBRUARY 27, 1997
COMMENCEMENT OF
YEAR ENDED OPERATIONS)TO
DECEMBER 31, 1998 DECEMBER 31, 1997
----------------- ------------------
Ratio of net investment
loss to average net assets (0.30%) (0.49%)*
Ratio of operating expenses
to average net assets 1.43% 1.73%*
Ratio of interest expense
to average net assets 0.07% 0.07%*
Portfolio turnover rate 72.00% 58.73%
Average commission rate paid $0.0616** $0.0566**
Total return 37.34%*** 37.60%***
Average debt ratio 1.06% 1.06%
* 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
On January 1, 1999, the Partnership received additional Limited Partner
capital contributions of approximately $11,405,000.
10. YEAR 2000 (UNAUDITED)
Like other investment companies, financial and business organizations
around the world, the Partnership could be adversely affected if the
computer systems it uses and those used by the Partnership's brokers
and other major service providers do not properly process and calculate
date-related information and data from and after
12
<PAGE>
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENT - DECEMBER 31, 1998 (CONTINUED)
- --------------------------------------------------------------------------------
10. YEAR 2000 (UNAUDITED) (CONTINUED)
January 1, 2000. This is commonly known as the "Year 2000 Issue."
The Partnership has assessed its computer systems and the systems
compliance issues of its brokers and other major service providers. The
Partnership has taken steps that it believes are reasonably designed to
address the Year 2000 Issue with respect to the computer systems it
uses and has obtained satisfactory assurances that comparable steps are
being taken by its brokers and other major service providers. At this
time, however, there can be no assurance that these steps will be
sufficient to address all Year 2000 Issues. The inability of the
Partnership or its third party providers to timely complete all
necessary procedures to address the Year 2000 Issue could have a
material adverse effect on the Partnership's operations. Management
will continue to monitor the status of and its exposure to this issue.
For the year ended December 31, 1998, the Partnership incurred no Year
2000 related expenses, and it does not expect to incur significant Year
2000 expenses in the future.
The Partnership intends to develop contingency plans intended to ensure
that third party non-compliance will not materially affect the
Partnership's operations.
13
<PAGE>
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
DECEMBER 31, 1998
SHARES MARKET VALUE
COMMON STOCKS - 105.02%
AGRICULTURAL BIOTECH - 1.48%
63,098 Monsanto Co. $ 2,997,155
-----------
AIRLINES - 1.26%
8,200 AMR Corp. 486,875
34,562 UAL Corp. 2,062,937
-----------
2,549,812
-----------
ATHLETIC FOOTWEAR - 0.07%
3,460 Nike, Inc. 140,348
-----------
BEVERAGES-NON-ALCOHOLIC - 0.27%
41,060 Coca-Cola Femsa S.A., Sponsored ADR 544,045
-----------
BROADCASTING SERVICE/PROGRAMMING - 8.93%
129,609 Fox Entertainment Group, Inc., Class A* 3,256,426
28,896 Grupo Televisa S.A., Sponsored GDR 713,384
52,484 TCI Satellite Entertainment, Inc., Class A* 75,472
276,008 Tele-Communications, Inc., Liberty Media Group,
Series A* 12,713,757
57,775 United Video Satellite Group, Inc., Class A* 1,364,934
-----------
18,123,973
-----------
BUILDING - RESIDENTIAL/COMMERCIAL - 0.84%
67,918 Lennar Corp. 1,714,929
-----------
CABLE TV - 17.81%
143,272 Cablevision Systems Corp., Class A* 7,181,509
106,645 Comcast Corp., Class A 6,125,476
153,877 Comcast Corp., Special Class A 9,030,733
26,870 MediaOne Group, Inc. * 1,262,890
226,779 Tele-Communications, Inc., TCI Group, Series A* 12,543,827
-----------
36,144,435
-----------
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 1998
SHARES MARKET VALUE
COMMON STOCKS - (CONTINUED)
CASINO HOTELS - 0.98%
133,569 Mirage Resorts, Inc.* $ 1,995,254
-----------
CATALOG AND MAIL ORDER HOUSES - 3.49%
213,957 USA Networks, Inc.* 7,087,326
-----------
CELLULAR TELECOMMUNICATIONS - 0.20%
17,834 Sprint PCS * 412,411
-----------
COMMERCIAL SERVICES - 1.74%
116,821 Cendant Corp.* 2,256,164
35,254 Iron Mountain, Inc.* 1,271,365
-----------
3,527,529
-----------
COMMERCIAL SERVICES - FINANCE - 0.13%
56,298 Crescent Operating, Inc.* 267,416
-----------
COMPUTER SOFTWARE - 7.16%
88,074 Microsoft Corp.* 12,214,807
64,049 SAP AG, Sponsored ADR 2,309,799
-----------
14,524,606
-----------
COMPUTERS - MICRO - 4.58%
127,013 Dell Computer Corp.* 9,295,827
-----------
FINANCE - CREDIT CARDS - 2.70%
53,411 American Express Co. 5,474,628
-----------
INTERNET CONTENT - 2.79%
55,868 At Home Corp., Series A* 4,148,199
11,399 Inktomi Corp. * 1,474,746
2,100 Preview Travel, Inc. * 38,720
------------
5,661,665
------------
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 1998
SHARES MARKET VALUE
COMMON STOCKS - (CONTINUED)
INTERNET SOFTWARE - 1.63%
3,254 Excite, Inc. * $ 136,873
13,343 Yahoo!, Inc.* 3,161,464
------------
3,298,337
------------
INVESTMENT COMPANIES - 2.06%
177,775 Tele-Communications, Inc., TCI Ventures
Group, Series A* 4,188,912
------------
LEISURE & RECREATION/GAMING - 0.27%
107,257 AMF Bowling, Inc.* 549,692
------------
MULTIMEDIA - 10.56%
165,143 CBS Corp. 5,418,837
142,962 Cox Communications, Inc., Class A* (a) 9,882,248
53,042 News Corp., Ltd., Sponsored ADR 1,402,325
76,344 Time Warner, Inc. 4,738,138
------------
21,441,548
------------
MUSIC CLUBS - 3.17%
117,209 SFX Entertainment, Inc., Class A* 6,431,844
------------
OIL & GAS DRILLING - 0.17%
16,837 ENSCO International, Inc. 179,954
8,753 Rowan Companies, Inc. 86,436
2,974 Transocean Offshore, Inc. 79,742
------------
346,132
------------
RADIO - 6.33%
58,365 Chancellor Media Corp.* 2,794,224
70,209 Clear Channel Communications, Inc.* 3,826,391
23,345 Group Radio Centro SA, Sponsored ADR 125,479
18,549 Heftel Broadcasting Corp., Class A* 913,538
166,408 Infinity Broadcasting Corp., Class A * 4,555,419
9,778 Jacor Communications, Inc. * 629,459
------------
12,844,510
------------
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 1998
SHARES MARKET VALUE
COMMON STOCKS - (CONTINUED)
REAL ESTATE DEVELOPMENT - 0.80%
73,497 TrizecHahn Corp. $1,506,688
13,954 Vornado Operating, Inc. * 112,511
----------
1,619,199
----------
REAL ESTATE INVESTMENT TRUST - DIVERSIFIED - 0.02%
559 Alexander's, Inc.* 43,707
----------
REAL ESTATE INVESTMENT TRUST - HOTEL/RESTAURANT - 2.98%
20,766 Crestline Capital Corp. 303,703
207,669 Host Marriott Corp. 2,868,532
126,485 Starwood Hotels & Resorts
Worldwide, Inc. 2,869,691
----------
6,041,926
----------
REAL ESTATE INVESTMENT TRUST - OFFICE PROPERTY - 3.86%
166,143 Boston Properties, Inc. 5,067,362
18,924 Cornerstone Properties, Inc. 295,687
107,239 Crescent Real Estate Equities Co. 2,466,497
----------
7,829,546
----------
REAL ESTATE INVESTMENT TRUST - SHOPPING CENTERS - 2.95%
178,684 Vornado Realty Trust 5,985,914
----------
RETAIL - APPAREL / SHOES - 1.25%
45,048 Gap, Inc. 2,528,319
----------
RETAIL - DISCOUNT - 0.38%
9,460 Wal-Mart Stores, Inc. 770,403
----------
RETAIL - INTERNET - 6.78%
32,504 Amazon.com, Inc.* 10,441,910
6,415 eBay, Inc. * 1,547,619
31,819 Ticketmaster Online-CitySearch, Inc. * 1,781,864
----------
13,771,393
----------
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 1998
SHARES MARKET VALUE
RETAIL - RESTAURANTS - 2.65%
70,121 McDonald's Corp. $ 5,386,204
------------
SATELLITE TELECOMMUNICATIONS - 1.10%
9,933 EchoStar Communications Corp. * 480,509
98,439 Loral Space & Communications, Ltd.* 1,753,494
------------
2,234,003
------------
TELECOMMUNICATIONS EQUIPMENT - 0.81%
48,511 General Instrument Corp.* 1,646,366
------------
TELEPHONE - LONG DISTANCE - 2.82%
6,430 AT&T Corp. 487,073
73,086 MCI WorldCom, Inc.* 5,243,920
------------
5,730,993
------------
TOTAL COMMON STOCKS (COST $132,966,631) 213,150,307
============
PREFERRED STOCKS - 0.71%
MULTIMEDIA - 0.71%
58,536 News Corp., Ltd., Sponsored ADR, Preferred 1,445,137
------------
TOTAL PREFERRED STOCKS (COST $1,055,318) 1,445,137
============
NUMBER OF
CONTRACTS
CALL OPTIONS - 1.41%
CABLE TV - 0.44%
350 Tele-Communications, Inc., TCI Group,
01/16/99, $30.00 892,500
-------------
REAL ESTATE INVESTMENT TRUST - HOTEL/RESTAURANT - 0.10%
284 Starwood Hotels & Resorts Wrldwd, Inc.,
02/20/99, $20.00 99,400
168 Starwood Hotels & Resorts Wrldwd, Inc.,
05/22/99, $17.50 102,900
-------------
202,300
-------------
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
DECEMBER 31, 1998
NUMBER OF MARKET VALUE
CONTRACTS
CALL OPTIONS - (CONTINUED)
TELEPHONE - LONG DISTANCE - 0.87%
642 AT&T Corp., 1/16/99, $50.00 $ 1,701,300
42 AT&T Corp., 1/16/99, $60.00 68,250
------------
1,769,550
------------
TOTAL CALL OPTIONS (COST $1,507,457) 2,864,350
============
PUT OPTIONS - 0.05%
RETAIL - TOY STORE - 0.01%
42 Toys "R" Us, Inc., 1/16/99, $22.50 23,100
------------
RETAIL - BOOKSTORE - 0.02%
42 Barnes & Noble, Inc., 1/16/99, $35.00 1,315
42 Borders Group, Inc., 1/16/99, $25.00 5,514
42 Borders Group, Inc., 1/16/99, $30.00 21,525
------------
28,354
------------
STOCK INDEX - 0.02%
840 S&P 100 Index, 1/16/99, $540.00 47,292
------------
TOTAL PUT OPTIONS (COST $922,044) 98,746
============
TOTAL INVESTMENTS (COST $136,451,450) - 107.19% 217,558,540
============
OTHER ASSETS, LESS LIABILITIES - (7.19%) (14,587,025)
------------
NET ASSETS - 100.00% 202,971,515
============
(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.
19