SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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.
One World Financial Center, 31st Floor
200 Liberty Street
New York, New York 10281
(212) 667-4122
(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
December 1, 1999
(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:
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Form or Registration No.:
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Filing Party:
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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 One World Financial
Center, 31st Floor, 200 Liberty Street, New York, New York 10281.
(b) The title of the securities that 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 that constitute the class of security that is the subject
of this tender offer or the partnership interests in the Partnership or portions
thereof that are tendered by partners to the Partnership pursuant to the Offer
to Purchase.) As of the close of business on October 31, 1999, there was
approximately $402,610,269 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 that are tendered by
and not withdrawn prior to 12:00 Midnight, New York time, on December 31, 1999,
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, 1999, if the Offer
to Purchase expires on the initial expiration date of December 31, 1999, 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.
For partners who tender their entire Interest, payment of the purchase
price will consist of: (1) cash and/or marketable securities (valued in
accordance with the Partnership's First Amended and Restated Limited Partnership
Agreement dated as of February 10, 1999 (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, 1999,
payable within ten days after the expiration date (the "95% 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 1999, over (b) the
95% 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. It is anticipated
that the audit of the Partnership's 1999 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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Partners who tender a portion of their Interest (subject to maintenance of
a minimum capital account balance) will receive a cash payment of 100% of the
tendered Interest within ten days after the Expiration of the offer.
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 an allocation
of net profits to its capital account during the fiscal year ended December 31,
1999.
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; (ii) the Offer to
Purchase; (iii) a form of Letter of Transmittal; and (iv) a form of Notice of
Withdrawal of Tender are attached hereto as Exhibits A, B, C and D 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/or (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 have 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 Dean Witter & Co. ("Morgan
Stanley"). If the Partnership funds any portion of the purchase price in that
manner, it will deposit assets in a special custody account with its custodian,
The Chase Manhattan Bank, N.A., 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
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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.
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 quarterly (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 under the Securities Act of 1933, as
amended. The Partnership currently expects that it will accept subscriptions for
Interests as of January 1, 2000 and on the first day of each calendar quarter
thereafter, but is under no obligation to do so.
Neither the Partnership nor the General Partners have any plans or
proposals that relate to or would result in: (a) the acquisition by any person
of additional Interests in the Partnership (other than the Partnership's
intention to accept subscriptions for Interests 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 that 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.
Other than the acceptance of subscriptions for Interests on October 1,
1999, there have been no 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.
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<PAGE>
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 Partners have the discretion to determine whether the
Partnership will purchase Interests from partners from time to time 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
effective as of the end of each such year. The Partnership offered to purchase
Interests from limited partners effective as of March 31, 1998 and December 31,
1998 pursuant to written tenders. Those were the first two tender offers made by
the Partnership. 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 and 1998 are included. Also included are the
unaudited financial statements of the Partnership for the six-month period ended
June 30, 1999, 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 is not required to and does not file quarterly unaudited
financial statements under the Securities Exchange Act of 1934, as amended. 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
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(d) None
(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.
D. Form of Notice of Withdrawal of Tender.
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<PAGE>
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 World Markets Corp.
Managing Member
By:
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December 1, 1999 Name: Howard M. Singer
Title: Managing Director
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<PAGE>
EXHIBIT INDEX
EXHIBIT PAGE NUMBER
A Cover letter to Offer to Purchase and Letter of Transmittal
B Offer to Purchase
(including Financial Statements)
C Form of Letter of Transmittal
D Form of Notice of Withdrawal of Tender
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[Partnership Letterhead]
December 1, 1999
Dear Limited Partner:
On December 31, 1999, Troon Partners, L.P. will provide its investors with
the opportunity to redeem all or a portion of their investment by means of a
tender offer. Enclosed please find all documentation necessary to participate in
this tender offer. Please review Section 3 of the offer (Amount of Tender) in
order to determine if you are eligible to tender your entire investment. Note
that if you wish to maintain your investment and withdraw nothing from your
account, no action on your part is required.
We hope you have been 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 M. Singer
For Troon Management, L.L.C.
TROON PARTNERS, L.P.
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 DECEMBER 1, 1999
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK TIME,
ON FRIDAY, DECEMBER 31, 1999, 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 on 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 net asset
value as of December 31, 1999, if the Offer expires on December 31, 1999, and
otherwise, their 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 on 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 First Amended and Restated Limited
Partnership Agreement dated as of February 10, 1999 (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 ANY OF ITS GENERAL PARTNERS MAKES 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.
<PAGE>
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 ON 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 ON THE FAIRNESS OR MERITS OF SUCH TRANSACTION
OR ON 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
(888) 697-9661
Fax: (302) 791-2387
(302) 791-3225
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TABLE OF CONTENTS
Page
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1. Background and Purpose of the Offer....................................4
2. Offer to Purchase and Price............................................4
3. Amount of Tender.......................................................6
4. Procedure for Tenders..................................................7
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 quarterly (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. The Partnership offered to purchase Interests from limited partners
effective as of March 31, 1998 and December 31, 1998 pursuant to written
tenders. Those were the first two tender offers 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 is not
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 investment program. 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. These effects may be
reduced or eliminated to the extent that additional subscriptions for Interests
are made by new and existing limited partners on January 1, 2000.
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 under the Securities Act of 1933, as
amended. The Partnership currently expects that it will accept subscriptions for
Interests as of January 1, 2000 and on the first day of each calendar quarter
thereafter, but is under no obligation to do so.
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 those
outstanding Interests that are properly tendered by and not withdrawn (in
accordance with Section 5 below) prior to 12:00 Midnight, New York time, on
Friday, December 31, 1999 (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, 1999, 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:
Unaudited Net Asset Value
Closing Date as of October 31, 1999
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February 28, 1997 $341,853.87
April 1, 1997 $360,141.84
May 1, 1997 $345,799.08
June 1, 1997 $328,933.74
July 1, 1997 $318,822.26
August 1, 1997 $300,235.50
September 1, 1997 $303,589.77
October 1, 1997 $274,952.63
November 1, 1997 $277,667.27
January 1, 1998 $262,618.17
April 1, 1998 $236,972.62
July 1, 1998 $222,632.25
October 1, 1998 $247,225.98
January 1, 1999 $202,217.97
April 1, 1999 $173,845.91
July 1, 1999 $157,233.14
October 1, 1999 $157,338.45
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As of the close of business on October 31, 1999, there was approximately
$402,610,269 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 numbers or address set forth on
page 2, Monday through Friday, except holidays, during normal business hours of
9:00 a.m. to 5:00 p.m. (Eastern Time).
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 who has not been a limited partner 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 is to be debited from the capital account of
the limited partner and credited to the capital account of the Manager on the
Expiration Date (the "Incentive Allocation") or would be so debited if the
Expiration Date were on a day on which an incentive allocation was made (the
"Tentative Incentive Allocation"); or (ii) the amount of the Tentative Incentive
Allocation, if any. If a partner tenders an amount that would cause the
partner's capital account balance to fall below the required minimum, the
Partnership reserves the right to reduce the amount to be purchased from such
partner so that the required minimum balance is maintained. The Offer is being
made to all partners of the Partnership and is not conditioned on 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, on 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) 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 the aggregate net asset value of tendered Interests. 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
an allocation of net profits to its capital account during the fiscal year ended
December 31, 1999. The Manager may tender such portion of its Interest by
following the procedures for tenders set forth in Item 4, below.
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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 Karl Garrett, at the address set forth
on page 2, or fax a completed and executed Letter of Transmittal to PFPC, also
to the attention of Karl Garrett, at the fax numbers set forth on page 2. 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
certified mail, return receipt requested, or by facsimile transmission. A
limited partner choosing to fax a Letter of Transmittal to PFPC should also send
or deliver the original 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. 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
interpretation 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 numbers set forth on page 2. A form to give notice of
withdrawal is available by calling PFPC at the phone numbers indicated on page
2. 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 tendered prior to the Expiration
Date by following the procedures described in Section 4.
6. PURCHASES AND PAYMENT. For purposes of the Offer, the Partnership will
be deemed to have accepted (and thereby purchased) Interests that 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
-7-
<PAGE>
asset value thereof as of the close of business on December 31, 1999, 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.
For partners who tender their entire Interest, 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 Interests tendered and accepted by the
Partnership, determined as of the Expiration Date, which is expected to be 12:00
Midnight, New York time, on Friday, December 31, 1999, payable within ten days
after the Expiration Date (the "95% 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 1999, over (b) the 95% 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 1999. It is anticipated that the
audit of the Partnership's 1999 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.
Partners who tender a portion of their Interest (subject to maintenance of
the minimum capital account balance described in Item 3, above) will receive a
cash payment of 100% of the tendered Interest (the "100% Cash Payment") within
ten days after the Expiration Date.
Both the 95% Cash Payment and the 100% Cash Payment (together, the "Cash
Payment") will be made by wire transfer directly to the tendering partner's
brokerage account with CIBC World Markets Corp. ("CIBC WM"). Cash Payments wired
directly to brokerage accounts will be subject upon withdrawal from such
accounts to any fees that CIBC WM 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 WM. Any contingent payment due pursuant to the Note will also
be deposited directly to the tendering partner's brokerage account at CIBC WM,
and will be subject upon withdrawal from such account to any fees that CIBC WM
would customarily assess upon the withdrawal of cash from such brokerage
account.
-8-
<PAGE>
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/or (c) possibly
borrowings, as described 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 the 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 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 Dean Witter & Co. ("Morgan Stanley"). If the Partnership
funds any portion of the purchase price in that manner, it will deposit assets
in a special custody account with its custodian, The Chase Manhattan Bank, N.A.,
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, for the purpose of
determining the purchase price for tendered Interests, the net asset value of
such Interests will be determined as of a date after December 31, 1999,
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, 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 that 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 that 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
-9-
<PAGE>
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 that 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 that 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 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 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 that 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
from time to time in the discretion of the Partnership) 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 that 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, the 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 of
Interests by the Partnership from partners pursuant to the Offer. Partners
should consult their own tax advisers
-10-
<PAGE>
for a complete description of the tax consequences to them of a purchase of
their Interests by the Partnership 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) 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 free copy of such
statement may be obtained from the Partnership by contacting PFPC at the address
and phone numbers set forth on page 2 or from the Securities and Exchange
Commission's internet web site, www.sec.gov. For a fee, a copy may be obtained
from the public reference office of the Securities and Exchange Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549.
-11-
<PAGE>
ANNEX A
Financial Statements
<PAGE>
TROON PARTNERS, L.P.
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT AUDITORS
PERIOD FROM FEBRUARY 27, 1997
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1997
<PAGE>
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>
[LETTERHEAD OF ERNST & YOUNG]
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.
/s/ Ernst & Young LLP
New York, New York
February 9, 1998
-1-
<PAGE>
TROON PARTNERS, L.P.
STATEMENT OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL (IN THOUSANDS)
- --------------------------------------------------------------------------------
DECEMBER 31, 1997
ASSETS
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
=========
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
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>
TROON PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL - NET ASSETS (IN THOUSANDS)
- --------------------------------------------------------------------------------
PERIOD FROM FEBRUARY 27, 1997
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1997
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
=========
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
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>
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>
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>
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>
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>
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:
NET GAINS / (LOSSES)
FOR THE PERIOD ENDED
DECEMBER 31, 1997
--------------------
Equity securities $ 30,557,274
Equity options (366,788)
Equity index options (1,646,649)
---------------
$ 28,543,837
===============
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 PERIOD ENDED
DECEMBER 31, 1997 DECEMBER 31, 1997
----------------- --------------------
ASSETS:
Equity options $1,940,190 $964,800
Equity index options 121,550 167,388
Average market values presented above are based upon month-end
market value during the period ended December 31, 1997.
-10-
<PAGE>
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>
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>
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1997
MARKET VALUE
SHARES
<C> <S> <C>
COMMON STOCKS - 99.04%
APPLICATIONS SOFTWARE - .27%
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>
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1997
MARKET VALUE
SHARES
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
COMMERCIAL SERVICES - 3.63%
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>
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1997
MARKET VALUE
SHARES
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
INTERNET SOFTWARE - .34%
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>
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1997
MARKET VALUE
SHARES
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
RETAIL - RESTAURANTS - 2.79%
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>
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1997
NUMBER OF MARKET VALUE
CONTRACTS
<C> <S> <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>
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1997
NUMBER OF MARKET VALUE
CONTRACTS
<C> <S> <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>
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>
[LETTERHEAD OF ERNST & YOUNG]
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.
/s/ ERNST & YOUNG LLP
New York, New York
February 12, 1999
<PAGE>
TROON PARTNERS, L.P.
STATEMENT OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL (IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1998
<S> <C>
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 loss on investments (74)
Accumulated net unrealized appreciation on investments 81,107
-----------
PARTNERS' CAPITAL - NET ASSETS $ 202,972
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
TROON PARTNERS, L.P.
STATEMENT OF OPERATIONS (IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1998
<S> <C>
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 LOSS 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
==========
</TABLE>
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)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD FROM
FEBRUARY 27, 1996
(COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
DECEMBER 31, 1998 DECEMBER 31, 1997
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net investment loss $ (462) $ (345)
Net realized gain (loss) on investments (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 withdrawals - General Partner (5,939) (0)
Capital withdrawals - 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
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-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
- --------------------------------------------------------------------------------
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 PARTY TRANSACTIONS 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:
<TABLE>
<CAPTION>
CALL OPTIONS 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 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
============ ============ ============ ============
</TABLE>
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:
<TABLE>
<CAPTION>
CALL OPTIONS
------------------------------------
NUMBER OF AMOUNT OF
CONTRACTS PREMIUM
--------- -------
<S> <C> <C>
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
======== ========
</TABLE>
-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:
<TABLE>
<CAPTION>
FEBRUARY 27, 1997
COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
DECEMBER 31, 1998 DECEMBER 31, 1997
------------ ---- -----------------
<S> <C> <C>
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%
</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
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1998
SHARES MARKET VALUE
COMMON STOCKS - 105.02%
AGRICULTURAL BIOTECH - 1.48%
<C> <S> <C>
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
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-14-
<PAGE>
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1998
SHARES MARKET VALUE
COMMON STOCKS - (CONTINUED)
CASINO HOTELS - 0.98%
<C> <S> <C>
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
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-15-
<PAGE>
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1998
SHARES MARKET VALUE
COMMON STOCKS - (CONTINUED)
INTERNET SOFTWARE - 1.63%
<S> <C> <C>
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
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-16-
<PAGE>
TROON PARTNERS, L.P.
Schedule of Portfolio Investments (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1998
SHARES MARKET VALUE
COMMON STOCKS - (CONTINUED)
REAL ESTATE DEVELOPMENT - 0.80%
<S> <C> <C>
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
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-17-
<PAGE>
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1998
SHARES MARKET VALUE
RETAIL - RESTAURANTS - 2.65%
<S> <C> <C>
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
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-18-
<PAGE>
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1998
NUMBER OF MARKET VALUE
CONTRACTS
CALL OPTIONS - (CONTINUED)
TELEPHONE - LONG DISTANCE - 0.87%
<S> <C> <C>
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
=============
</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.
-19-
<PAGE>
TROON PARTNERS, L.P.
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED
JUNE 30, 1999
(UNAUDITED)
<PAGE>
TROON PARTNERS, L.P.
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED
JUNE 30, 1999
(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 ...........................................11
<PAGE>
TROON PARTNERS, L.P.
STATEMENT OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL (IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1999
(UNAUDITED)
<S> <C>
ASSETS
Investments in securities, at market (identified cost - $200,782) $ 335,049
Dividends receivable 249
Organizational costs (net of accumulated amortization of $112) 124
Other assets 36
---------
TOTAL ASSETS 335,458
---------
LIABILITIES
Due to broker 532
Loan payable 5,473
Loan interest payable 17
Management fee payable 243
Accrued expenses 298
---------
TOTAL LIABILITIES 6,563
---------
NET ASSETS $ 328,895
=========
PARTNERS' CAPITAL - NET ASSETS
Represented by:
Capital contributions - net $ 168,239
Accumulated net investment loss (1,727)
Accumulated net realized gain on investments 28,116
Accumulated net unrealized appreciation on investments 134,267
---------
PARTNERS' CAPITAL - NET ASSETS $ 328,895
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-1-
<PAGE>
TROON PARTNERS, L.P.
STATEMENT OF OPERATIONS (IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999
(UNAUDITED)
<S> <C>
INVESTMENT INCOME
Dividends $ 768
Interest 55
--------
823
--------
EXPENSES
OPERATING EXPENSES:
Management fee 1,277
Administration fees 159
Professional fees 129
Custodian fees 69
Amortization of organizational costs 24
Individual General Partners' fees and expenses 14
Insurance expense 11
Miscellaneous 10
--------
TOTAL OPERATING EXPENSES 1,693
Interest expense 50
--------
TOTAL EXPENSES 1,743
--------
NET INVESTMENT LOSS (920)
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
REALIZED GAIN ON INVESTMENTS:
Investment securities 27,981
Purchased options 209
--------
NET REALIZED GAIN ON INVESTMENTS 28,190
--------
NET CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS 53,160
--------
NET REALIZED AND UNREALIZED GAIN 81,350
--------
INCREASE IN PARTNERS' CAPITAL DERIVED FROM INVESTMENT ACTIVITIES $ 80,430
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
TROON PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL - NET ASSETS (IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
(UNAUDITED)
FROM INVESTMENT ACTIVITIES
<S> <C> <C>
Net investment loss $ (920) $ (462)
Net realized gain (loss) on investments 28,190 (439)
Net change in unrealized appreciation on
investments 53,160 52,928
---------- ---------
INCREASE IN PARTNERS' CAPITAL DERIVED
FROM INVESTMENT ACTIVITIES 80,430 52,027
PARTNERS' CAPITAL TRANSACTIONS
Capital contributions 46,791 64,460
Capital withdrawals - General Partner (1,298) (5,939)
Capital withdrawals - Limited Partners 0 (12,975)
---------- ---------
INCREASE IN PARTNERS' CAPITAL
DERIVED FROM CAPITAL TRANSACTIONS 45,493 45,546
PARTNERS' CAPITAL AT BEGINNING OF PERIOD 202,972 105,399
---------- ---------
PARTNERS' CAPITAL AT END OF PERIOD $ 328,895 $ 202,972
========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1999 (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 First Amended and Restated Limited Partnership Agreement dated
as of February 10, 1999. 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", who serve as the
governing board of the Partnership, and a "Manager." The Manager is
Troon Management, L.L.C., whose principal members are CIBC World
Markets Corp. (formerly CIBC Oppenheimer Corp.) and Mark Asset
Management Corporation ("MAMC"). Investment professionals at MAMC
manage the Partnership's investment portfolio on behalf of the
Manager under the supervision of CIBC World Markets Corp. ("CIBC
WM").
The acceptance of initial and additional contributions is subject to
approval by the Manager. The Partnership may from time to time offer
to repurchase interests pursuant to written tenders by Partners.
Such repurchases will be made at such times and on such terms as may
be determined by the Individual General Partners, in their complete
and exclusive discretion. The Manager expects that generally it will
recommend to the Individual General Partners that the Partnership
repurchase interests from Partners once in each year effective as of
the end of each such year.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Manager to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. The Manager believes
that the estimates utilized in preparing the Partnership's financial
statements are reasonable and prudent; however, actual results could
differ from these estimates.
A. PORTFOLIO VALUATION
Securities transactions, including related revenue and expenses, are
recorded on a trade-date basis and dividends are recorded on an
ex-dividend date basis. Interest income is recorded on the accrual
basis.
-4-
<PAGE>
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1999 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. PORTFOLIO VALUATION (CONTINUED)
Domestic exchange traded or NASDAQ listed equity securities will be
valued at their last composite sale prices as reported on the
exchanges where such securities are traded. If no sales of such
securities are reported on a particular day, the securities will be
valued based upon their composite bid prices for securities held
long, or their composite asked 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 asked 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 asked
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. 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 on February 27, 1997.
-5-
<PAGE>
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1999 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. INCOME TAXES
No provision for the payment of Federal, state or local income taxes
on the profits of the Partnership will be made. The Partners are
individually liable for the income taxes on their share of the
Partnership's income.
3. MANAGEMENT FEE, RELATED PARTY TRANSACTIONS AND OTHER
CIBC WM 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 WM 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 June 30, 1999, CIBC WM earned $5,979 in
brokerage commissions from portfolio transactions executed on behalf
of the Partnership.
At the end of the twelve month period following the admission of a
limited partner to the Partnership, and generally at the end of each
fiscal year thereafter, the Manager is entitled to an incentive
allocation of 20% of net profits, if any, that have been credited to
the capital account of such limited partner during such period. The
incentive allocation will be charged to a limited partner only to
the extent that cumulative net profits with respect to such limited
partner through the close of any period exceeds the highest level of
cumulative net profits with respect to such limited partner through
the close of any prior period. During the six months ended June 30,
1999, incentive allocations to the Manager were $4,219,325.
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. One Individual General Partner is an "interested
person" of 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, 1999, fees (including meeting fees and the
annual retainer) and expenses paid to the Individual General
Partners totaled $21,790.
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.
-6-
<PAGE>
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1999 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
4. SECURITIES TRANSACTIONS
Aggregate purchases and sales of investment securities, excluding
short-term securities, for the six months ended June 30, 1999,
amounted to $165,289,076 and $127,823,704, respectively.
At June 30, 1999, the cost of investments for Federal income tax
purposes was substantially the same as the cost for financial
reporting purposes. At June 30, 1999, accumulated net unrealized
appreciation on investments was $134,266,937, consisting of
$139,269,611 gross unrealized appreciation and $5,002,674 gross
unrealized depreciation.
Due to broker 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 June
30, 1999, the Partnership had outstanding margin borrowings of
$5,472,546. For the six months ended June 30, 1999, the average
daily amount of such borrowings was $1,176,644.
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 contracts, options and securities sold, not yet purchased.
Generally, these financial instruments represent future commitments
to purchase or sell other financial instruments at specific terms at
specified future dates. Each of these financial instruments contains
varying degrees of off-balance sheet risk whereby changes in the
market value of the securities underlying the financial instruments
may be in excess of the amounts recognized in the Statement of
Assets, Liabilities and Partners' Capital.
The Partnership maintains cash in bank deposit accounts which, at
times, may exceed federally insured limits. The Partnership has not
experienced any losses in such accounts and does not believe it is
exposed to any significant credit risk on cash.
The risk associated with purchasing an option is that the
Partnership pays a premium whether or not
-7-
<PAGE>
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1999 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
6. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK OR CONCENTRATIONS
OF CREDIT RISK (CONTINUED)
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 1,486 $ 1,507,457 1,008 $ 922,044
Options purchased 9,272 11,630,488 7,712 8,695,375
Options closed (9,758) (11,986,183) (6,872) (8,303,152)
Expired options -- -- (1,698) (1,265,692)
------------ ------------ ------------ ------------
Options outstanding at
June 30, 1999 1,000 $ 1,151,762 150 $ 48,575
------------ ------------ ------------ ------------
</TABLE>
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
JUNE 30, 1999
-----------------
Equity securities $ 81,716,175
Equity options 461,655
Equity index options (827,360)
-------------
$ 81,350,470
-------------
The following table presents the market values of derivative
financial instruments and the average market values of those
instruments:
AVERAGE MARKET VALUE
MARKET VALUE AT FOR THE SIX MONTH ENDED
JUNE 30, 1999 JUNE 30, 1999
------------- -------------
ASSETS:
Equity options $1,155,000 $1,351,763
Equity index options 3,750 33,488
-8-
<PAGE>
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1999 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
7. FINANCIAL INSTRUMENTS HELD OR ISSUED FOR TRADING PURPOSES
(CONTINUED)
Average market values presented above are based upon month-end
market values during the six months ended June 30, 1999.
8. SELECTED FINANCIAL RATIOS AND OTHER SUPPLEMENTAL INFORMATION
The following represents the ratios to average net assets and other
supplemental information for each period:
<TABLE>
<CAPTION>
FEBRUARY 27, 1997
SIX MONTHS (COMMENCEMENT OF
ENDED YEAR ENDED OPERATIONS) TO
JUNE 30, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
------------- ----------------- -----------------
<S> <C> <C> <C>
Ratio of net investment loss to (0.68%)* (0.03%) (0.49%)*
average net assets
Ratio of operating expenses to 1.26%* 1.43% 1.73%*
average net assets
Ratio of interest expense to 0.04%* 0.07% 0.07%*
average net assets
Portfolio turnover rate 46.80% 72.00% 58.73%
Average commission rate paid $0.0608 ** $0.0616 ** $0.0566 **
Total return 35.36% *** 37.34%*** 37.60%***
Average debt ratio 0.43% 1.06% 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
Limited 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. YEAR 2000
Like other investment companies and 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 January 1, 2000. This is commonly known as the "Year
2000 Issue."
-9-
<PAGE>
TROON PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1999 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
9. YEAR 2000 (CONTINUED)
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 six months ended June 30, 1999,
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 designed to
ensure that third party non-compliance will not materially affect
the Partnership's operations.
-10-
<PAGE>
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1999
SHARES MARKET VALUE
<C> <S> <C>
COMMON STOCKS - 101.32%
ATHLETIC FOOTWEAR - 0.75%
38,637 Nike, Inc., Class B $ 2,448,620
------------
BROADCASTING SERVICES/PROGRAMMING - 15.23%
803,662 AT&T Corp. - Liberty Media Group, Class A* (a) 29,534,579
74,366 Clear Channel Communications, Inc.* 5,126,643
261,578 Fox Entertainment Group, Inc., Class A* 7,046,388
42,014 Grupo Televisa S.A. - Sponsored GDR* 1,882,773
1,668 King World Productions, Inc.* 58,068
17,690 TCI Music, Inc., Class A 625,784
158,473 TV Guide, Inc., Class A* 5,804,074
------------
50,078,309
------------
BUILDING - RESIDENTIAL/COMMERCIAL - 0.53%
72,652 Lennar Corp. 1,743,648
------------
CABLE TV - 12.05%
155,999 Cablevision Systems Corp., Class A* 10,919,930
126,055 Comcast Corp., Class A 4,514,407
467,438 Comcast Corp., Special Class A 17,967,382
83,957 MediaOne Group, Inc. * 6,244,302
------------
39,646,021
------------
CASINO HOTELS - 1.46%
96,180 Mandalay Resort Group 2,037,862
290,244 Park Place Entertainment Corp.* 2,774,442
------------
4,812,304
------------
CATALOG AND MAIL ORDER HOUSES - 2.96%
242,458 USA Networks, Inc.* 9,728,627
------------
CELLULAR TELECOMMUNICATIONS - 0.53%
61,500 VoiceStream Wireless Corp.* 1,748,937
------------
COMPUTER DATA SECURITY - 2.28%
87,060 VeriSign, Inc.* 7,508,925
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-11-
<PAGE>
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1999
SHARES MARKET VALUE
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
COMPUTER SOFTWARE - 3.74%
71,774 Microsoft Corp.* $ 6,473,154
157,168 Oracle Corp.* (a) 5,834,862
------------
12,308,016
------------
COMPUTERS - INTEGRATED SYSTEMS - 0.34%
68,067 Silicon Graphics, Inc.* 1,114,597
------------
COMPUTERS - MEMORY DEVICES - 1.01%
60,658 EMC Corp.* 3,336,190
------------
COMPUTERS - MICRO - 1.63%
145,222 Dell Computer Corp.* 5,373,214
------------
DIVERSIFIED OPERATIONS - 1.26%
82,353 Seagram Co. Ltd. 4,148,532
------------
DIVERSIFIED OPERATIONS/COMMERCIAL SERVICES - 0.11%
52,230 Crescent Operating, Inc.* 355,843
------------
FINANCE - CREDIT CARDS - 2.22%
56,158 American Express Co. 7,307,560
------------
FINANCE - INVESTMENT BANKER/BROKER - 2.06%
93,978 Goldman Sachs Group, Inc.* 6,789,911
------------
HOTELS & MOTELS - 1.74%
187,510 Starwood Hotels & Resorts Worldwide, Inc. 5,730,868
------------
INTERNET CONTENT - 4.37%
82,326 At Home Corp., Series A* 4,440,500
2,112 Broadcast.com, Inc.* 282,085
26,371 Inktomi Corp. * 3,467,786
71,943 SportsLine USA, Inc.* 2,580,955
20,854 Yahoo!, Inc.* 3,592,102
------------
14,363,428
------------
INTERNET SOFTWARE - 0.06%
2,557 RealNetworks, Inc.* 176,113
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-12-
<PAGE>
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1999
SHARES MARKET VALUE
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
LEISURE & RECREATION/GAMING - 0.30%
116,359 AMF Bowling, Inc.* $ 981,837
------------
MULTIMEDIA - 8.01%
184,073 CBS Corp.* 8,018,772
304,998 Cox Communications, Inc., Class A* 11,227,892
20,991 News Corp Ltd. - Sponsored ADR 741,255
87,714 Time Warner, Inc. 6,370,229
------------
26,358,148
------------
MUSIC CLUBS - 2.06%
105,826 SFX Entertainment, Inc.* 6,772,864
------------
NETWORKING PRODUCTS - 0.60%
30,814 Cisco Systems, Inc.* 1,985,593
------------
RADIO - 2.25%
9,419 CD Radio, Inc.* 286,987
40,268 Grupo Radio Centro SA - Sponsored ADR 211,407
19,242 Hispanic Broadcasting Corp.* 1,459,987
183,931 Infinity Broadcasting Corp., Class A * 5,437,552
------------
7,395,933
------------
REAL ESTATE DEVELOPMENT - 0.81%
124,191 TrizecHahn Corp. 2,530,392
15,269 Vornado Operating, Inc. * 122,152
------------
2,652,544
------------
REAL ESTATE INVESTMENT/MANAGEMENT - 0.38%
58,883 LNR Property Corp. 1,258,624
------------
REAL ESTATE INVESTMENT TRUST - HOTEL/RESTAURANT - 0.90%
247,896 Host Marriott Corp. 2,943,765
------------
REAL ESTATE INVESTMENT TRUST - OFFICE PROPERTY - 2.14%
195,754 Boston Properties, Inc. 7,022,675
------------
REAL ESTATE INVESTMENT TRUST - SHOPPING CENTERS - 2.18%
202,766 Vornado Realty Trust 7,160,276
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-13-
<PAGE>
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1999
SHARES MARKET VALUE
<C> <S> <C>
COMMON STOCKS - (CONTINUED)
RETAIL - APPAREL/SHOES - 0.98%
63,582 The Gap, Inc. $ 3,202,943
------------
RETAIL - INTERNET - 3.68%
53,351 Amazon.com, Inc.* (a) 6,675,544
20,395 eBay, Inc. * 3,087,293
77,752 Tickemaster Online - CitySearch, Inc., Class B* 2,351,998
------------
12,114,835
------------
RETAIL - RESTAURANTS - 1.89%
151,347 McDonald's Corp. 6,224,145
------------
SATELLITE TELECOMMUNICATIONS - 2.77%
13,927 EchoStar Communications Corp., Class A* 2,136,931
127,642 Globalstar Telecommunications Ltd.* 2,959,763
222,686 Loral Space & Communications Ltd.* 4,008,348
2,067 P.T. Pasifik Satelit Nusantara, ADR* 16,794
------------
9,121,836
------------
TELECOMMUNICATIONS EQUIPMENT - 9.40%
36,740 General Instrument Corp.* 1,561,450.00
204,618 QUALCOMM, Inc.* 29,362,683
------------
30,924,133
------------
TELECOMMUNICATIONS SERVICES - 2.94%
84,360 NTL, Inc.* 7,270,820
82,284 Time Warner Telecom, Inc., Class A* 2,386,236
------------
9,657,056
------------
TELEPHONE - INTEGRATED - 5.27%
310,208 AT&T Corp. 17,313,611
------------
TELEVISION - 0.43%
35,936 Pegasus Communications Corp.* 1,417,244
------------
TOTAL COMMON STOCKS (COST $198,931,512) 333,227,725
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-14-
<PAGE>
TROON PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1999
SHARES MARKET VALUE
<C> <S> <C>
PREFERRED STOCKS - 0.20%
MULTIMEDIA - 0.20%
20,989 News Corp. Ltd. - Sponsored ADR Preferred $ 662,476
------------
TOTAL PREFERRED STOCK (COST $650,165) 662,476
============
NUMBER OF
CONTRACTS
CALL OPTIONS - 0.35%
CABLE TV - 0.17%
400 MediaOne Group, Inc., 07/17/99, $60.00 565,000
------------
COMPUTER SOFTWARE - 0.07%
200 Oracle Corp., 07/17/99, $25.00 240,000
------------
TELECOMMUNICATIONS SERVICES - 0.11%
400 Frontier Corp., 07/17/99, $50.00 350,000
------------
TOTAL CALL OPTIONS (COST $1,151,762) 1,155,000
============
PUT OPTIONS - 0.00%
STOCK INDEX - 0.00%
150 S & P 100, 07/17/99, $600.00 3,750
------------
TOTAL PUT OPTIONS (COST $48,575) 3,750
============
TOTAL INVESTMENTS (COST $200,782,014) - 101.87% 335,048,951
============
OTHER ASSETS, LESS LIABILITIES - (1.87%) (6,153,578)
------------
NET ASSETS - 100.00% $328,895,373
============
</TABLE>
(a) Partially held in a pledged account by the custodian as collateral for
loan payable.
* Non-income producing security.
The accompanying notes are an integral part of these financial statements.
-15-
LETTER OF TRANSMITTAL
Regarding
Interests
in
TROON PARTNERS, L.P.
Tendered Pursuant to the Offer to Purchase
Dated December 1, 1999
- --------------------------------------------------------------------------------
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 TIME, ON FRIDAY, DECEMBER 31, 1999,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
Complete This Letter Of Transmittal And Return Or Deliver To:
PFPC Inc.
P.O. Box 358
Claymont, DE 19703
Attn: Karl Garrett
For additional information:
Phone: (888) 520-3280
(888) 697-9661
Fax: (302) 791-2387
(302) 791-3225
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, on the terms and conditions set forth in the offer to purchase, dated
December 1, 1999 ("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>
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
World Markets Corp. ("CIBC WM") 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 WM will impose such fees as it 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, if any, as described in Section 6 of the Offer to Purchase,
will be deposited directly to the undersigned's brokerage account with CIBC WM.
(Any contingent payment due pursuant to the Note will also be deposited directly
to the tendering partner's brokerage account at CIBC WM, and, upon a withdrawal
of such contingent payment from such account, CIBC WM will impose such fees as
it would customarily assess upon the withdrawal of cash from such brokerage
account.) The undersigned recognizes that the amount of the Cash Payment will be
based on the unaudited net asset value as of December 31, 1999, of the
partnership interest or portion thereof tendered, and that the contingent
payment portion of the purchase price, if any, will be determined upon
completion of the audit of the Partnership's financial statements for 1999,
which is anticipated to be completed not later than 60 days after the
Partnership's fiscal year end, and will be paid in cash within ten days
thereafter.
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 on 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.
-2-
<PAGE>
PART 1. NAME AND ADDRESS:
Name of partner:
--------------------------------------------------------
Social Security No.
or Taxpayer
Identification No.:
---------------------------
Telephone Number: ( )
----------------------------
PART 2. AMOUNT OF PARTNERSHIP INTEREST IN THE PARTNERSHIP TO BE TENDERED:
|_| Entire partnership interest. Any limited partner who has not been a
limited partner for at least twelve full calendar months must
maintain a minimum interest of the greater of: (a) $150,000, net of
the incentive allocation or net of the tentative incentive
allocation; or (b) the tentative incentive allocation (the "Required
Minimum Balance").*
|_| Portion of partnership interest expressed as a specific dollar
value. (Subject to maintenance of the Required Minimum Balance.*)
$
-------------
|_| Portion of partnership interest in excess of the Required Minimum.*
*The undersigned understands that if the undersigned tenders an
amount that would cause the undersigned's capital account balance to
fall below the Required Minimum Balance, the Partnership reserves
the right to reduce the amount to be purchased from the undersigned
so that the Required Minimum Balance is maintained.
PART 3. PAYMENT.
CASH PAYMENT
Cash payments will be wire transferred directly to the undersigned's
brokerage account at CIBC WM. 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 the cash
payment from such account, CIBC WM will impose such fees as it would
customarily assess upon the withdrawal of cash from such account. (Any
payment in the form of marketable securities would be made by means of
special arrangements with the tendering partner.)
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 WM. The undersigned hereby
represents and warrants that the undersigned understands
<PAGE>
that any contingent payment due pursuant to the Note will also be
deposited directly to the undersigned's brokerage account at CIBC WM, and,
upon a withdrawal of such contingent payment from such account, CIBC WM
will impose such fees as it would customarily assess upon the withdrawal
of cash from such brokerage account.
PART 4. SIGNATURE(S).
For Individual Investors
and Joint Tenants: For Other Investors:
- ------------------ --------------------
- ------------------------------------ -----------------------------------------
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)
- ------------------------------------ -----------------------------------------
Joint Tenant Signature if necessary Print Name of Signatory and Title
(SIGNATURE OF OWNER(S) EXACTLY AS
APPEARED ON SUBSCRIPTION AGREEMENT)
- ------------------------------------ -----------------------------------------
Print Name of Joint Tenant Co-signatory if necessary
(SIGNATURE OF OWNER(S) EXACTLY AS
APPEARED ON SUBSCRIPTION AGREEMENT)
-----------------------------------------
Print Name and Title of Co-signatory
Date:
-----------------
[To be provided to partners who call and request the form.]
NOTICE OF WITHDRAWAL OF TENDER
Regarding Interests in
TROON PARTNERS, L.P.
Tendered Pursuant to the Offer to Purchase
Dated December 1, 1999
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THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT, AND THIS NOTICE OF WITHDRAWAL MUST BE
RECEIVED BY THE PARTNERSHIP BY, 12:00 MIDNIGHT,
NEW YORK TIME, ON FRIDAY, DECEMBER 31, 1999,
UNLESS THE OFFER IS EXTENDED.
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Complete This Notice of Withdrawal And Return Or Deliver To:
PFPC Inc.
P.O. Box 358
Claymont, DE 19703
Attn: Karl Garrett
For additional information:
Phone: (888) 520-3280
(888) 697-9661
Fax: (302) 791-2387
(302) 791-2387
Ladies and Gentlemen:
Please withdraw the tender previously submitted by the undersigned in a
Letter of Transmittal dated .
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Such tender was in the amount of:
|_| Entire partnership interest.
|_| Portion of partnership interest expressed as a specific dollar
value.
$
-------------
|_| Portion of partnership interest in excess of the Required Minimum
Balance.
<PAGE>
SIGNATURE(S).
For Individual Investors
and Joint Tenants: For Other Investors:
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- ------------------------------------ -----------------------------------------
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)
- ------------------------------------ -----------------------------------------
Joint Tenant Signature if necessary Print Name of Signatory and Title
(SIGNATURE OF OWNER(S) EXACTLY AS
APPEARED ON SUBSCRIPTION AGREEMENT)
- ------------------------------------ -----------------------------------------
Print Name of Joint Tenant Co-signatory if necessary
(SIGNATURE OF OWNER(S) EXACTLY AS
APPEARED ON SUBSCRIPTION AGREEMENT)
-----------------------------------------
Print Name and Title of Co-signatory
Date:
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