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)
WYNSTONE FUND, L.L.C.
(Name of Issuer)
WYNSTONE FUND, L.L.C.
(Name of Person(s) Filing Statement)
LIMITED LIABILITY COMPANY INTERESTS
(Title of Class of Securities)
Paul Belica
Wynstone Fund, L.L.C.
One World Financial Center, 31st Floor
200 Liberty Street
New York, New York 10281
(212) 667-4225
(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: $5,000,000 (a) Amount of Filing Fee: $1,000 (b)
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(a) Calculated as the aggregate maximum purchase price for limited liability
company 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 Wynstone Fund, L.L.C. (the "Fund"). The Fund
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 liability company. The principal executive
office of the Fund 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 limited liability company interests or
portions thereof in the Fund. (As used herein, the term "Interest" or
"Interests," as the context requires, shall refer to the limited liability
company interests in the Fund and portions thereof that constitute the class of
security that is the subject of this tender offer or the limited liability
company interests in the Fund or portions thereof that are tendered by members
to the Fund pursuant to the Offer to Purchase.) As of the close of business on
October 31, 1999, there was approximately $14,876,034 outstanding in capital of
the Fund held in Interests. Subject to the conditions set forth in the Offer to
Purchase, the Fund will purchase up to $5,000,000 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 Fund 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 members who tender their entire Interest, payment of the purchase price
will consist of: (1) cash and/or marketable securities (valued in accordance
with the Fund's Limited Liability Company Agreement dated as of July 1, 1999
(the "LLC Agreement")) in an aggregate amount equal to 95 percent of the
estimated unaudited net asset value of Interests tendered and accepted by the
Fund, determined as of the expiration date, which is expected to be 12:00
Midnight, New York time, 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 Fund
as of the expiration date, determined based on audited financial statements of
the Fund for 1999, over (b) the 95% Cash Payment. The Note will be delivered to
the tendering member 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 Fund.
It is anticipated that the audit of the Fund'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 Fund on an
amount, deposited by the Fund in a segregated custodial account, equal to 5
percent of the estimated unaudited net asset value of Interests tendered and
accepted by the Fund.
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Members 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 Fund has been informed by its investment adviser, CIBC Oppenheimer
Advisers, L.L.C. (the "Adviser"), that the Adviser and its affiliate, Canadian
Imperial Holdings, Inc., intend to tender the portion of the Interest each holds
as a member that represents the gain on its investment.
Although the Fund 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 Fund's Board of
Managers determines that the distribution of securities is necessary to avoid or
mitigate any adverse effect of the Offer to Purchase on the remaining members of
the Fund. 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 LLC Agreement.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The Fund expects that the purchase price for Interests acquired
pursuant to the Offer to Purchase, which will not exceed $5,000,000, 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 Fund; and/or (3) possibly
borrowings, as described in paragraph (b), below. The Fund 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 members of the Board of
Managers of the Fund, from the Adviser or from CIBC World Markets Corp., the
managing member of the Adviser.
(b) Neither the Fund nor the Adviser has determined at this time to borrow
funds to purchase Interests in connection with the Offer to Purchase. However,
depending on the dollar amount of Interests tendered and prevailing general
economic and market conditions, the Fund, 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 Fund's prime broker,
Morgan Stanley Dean Witter & Co. ("Morgan Stanley"). If the Fund 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 Fund were to fail to
repay any such amounts, Morgan Stanley would be entitled to satisfy the Fund's
obligations from the collateral deposited in the special custody account. The
Fund expects that the repayment of any amounts borrowed from Morgan Stanley
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will be financed from additional funds contributed to the Fund by existing
and/or new members, or from the proceeds of the sale of securities and portfolio
assets held by the Fund.
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 members who
hold Interests as contemplated by and in accordance with the procedures set
forth in the Fund's Confidential Memorandum dated September, 1998, as
supplemented quarterly (the "Confidential Memorandum"), and the LLC Agreement.
Interests that are tendered to the Fund in connection with the Offer to Purchase
will be retired, although the Fund 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 Fund 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 Fund nor the Adviser has any plans or proposals that relate to
or would result in: (a) the acquisition by any person of additional Interests in
the Fund (other than the Fund's intention to accept subscriptions for Interests
from time to time in the discretion of the Fund), or the disposition of
Interests in the Fund; (b) an extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the Fund; (c) a sale or
transfer of a material amount of assets of the Fund (other than as the Board of
Managers determines 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 Fund); (d) any change in
the identity of the investment adviser of the Fund, or in the management of the
Fund including, but not limited to, any plans or proposals to change the number
or the term of the members of the Board of Managers of the Fund, to fill any
existing vacancy on the Board of Managers or to change any material term of the
investment advisory agreement with the Adviser; (e) any material change in the
present distribution policy or indebtedness or capitalization of the Fund; (f)
any other material change in the Fund'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 LLC Agreement or other actions that might impede the
acquisition of control of the Fund by any person. Items (h) through (j) of this
Item 3 are not applicable to the Fund.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
There have been no transactions involving the Interests that were effected
during the past 40 business days by the Fund, the Adviser, any member of the
Fund or any person controlling the Fund or the Adviser or controlling any member
of the Fund.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE ISSUER'S SECURITIES.
The Confidential Memorandum and the LLC Agreement, which were provided to
each member in advance of subscribing for Interests, provide that the Board of
Managers have
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the discretion to determine whether the Fund will purchase Interests from
members from time to time pursuant to written tenders. The Confidential
Memorandum also states that the Adviser of the Fund expects that it will
recommend to the Board of Managers that the Fund purchase Interests from members
at the end of 1999 and twice in each year thereafter. This is the first tender
offer made by the Fund. The Fund 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 Fund and any member
of the Fund or any person controlling the Fund or controlling any member of the
Fund; 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
Fund 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 1998 are included. Also included are the unaudited
financial statements of the Fund for the six-month period ended June 30, 1999,
which the Fund has prepared and furnished to members 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 Fund is not required to and does
not file quarterly unaudited financial statements under the Securities Exchange
Act of 1934, as amended. The Fund does not have shares, and consequently does
not have earnings or book value per share information.
(b) The Fund'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 Fund does not have shares and consequently does not have earnings or book
value per share information.
ITEM 8. ADDITIONAL INFORMATION.
(a) None
(b) None
(c) Not Applicable
(d) None
(e) Reference is hereby made to the information contained in the
Offer of Purchase attached as Exhibit B, which is incorporated
herein by reference.
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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.
WYNSTONE FUND, L.L.C.
By: /s/ Paul Belica
--------------------------
December 1, 1999 Name: Paul Belica
Title: Manager
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<PAGE>
EXHIBIT INDEX
Exhibit
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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[Wynstone Fund, L.L.C. Letterhead]
December 1, 1999
Dear Member:
On December 31, 1999, Wynstone Fund, L.L.C. 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. 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 Fund. If you have any questions or require further information,
please contact your Account Executive.
Sincerely,
The Board of Managers
By: Paul Belica
Manager
WYNSTONE FUND, L.L.C.
One World Financial Center, 31st Floor
200 Liberty Street
New York, New York 10281
OFFER TO PURCHASE $5,000,000 OF OUTSTANDING
LIMITED LIABILITY COMPANY 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 Members of
Wynstone Fund, L.L.C.
Wynstone Fund, L.L.C., a closed-end, non-diversified, management investment
company organized as a Delaware limited liability company (the "Fund"), 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 $5,000,000 of interests in the Fund or portions thereof
pursuant to tenders by members 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 Fund and portions thereof
representing beneficial interests in the Fund.) This Offer is being made to all
members of the Fund 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 Fund's Limited Liability Company
Agreement dated as of July 1, 1999 (the "LLC Agreement").
If you desire to tender all or any portion of your Interest in the Fund 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 Fund in the manner
set forth below.
IMPORTANT
NONE OF THE FUND, ITS INVESTMENT ADVISER OR ITS BOARD OF MANAGERS MAKES ANY
RECOMMENDATION TO ANY MEMBER AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING
INTERESTS. MEMBERS MUST MAKE THEIR OWN DECISIONS WHETHER TO TENDER INTERESTS,
AND, IF SO, THE PORTION OF THEIR INTERESTS TO TENDER.
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
FUND AS TO WHETHER MEMBERS
<PAGE>
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 FUND.
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 Fund's service agent:
PFPC Inc.
P.O. Box 249
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..........................................................5
4. Procedure for Tenders.....................................................6
5. Withdrawal Rights.........................................................7
6. Purchases and Payment.....................................................7
7. Certain Conditions of the Offer...........................................8
8. Certain Information About the Fund........................................9
9. Certain Federal Income Tax Consequences..................................10
10. Miscellaneous...........................................................10
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 members for Interests, as contemplated by and in accordance
with the procedures set forth in the Fund's Confidential Memorandum dated
September, 1998, as supplemented quarterly (the "Confidential Memorandum"), and
the LLC Agreement. The Confidential Memorandum and the LLC Agreement, which were
provided to each member in advance of subscribing for Interests, provide that
the Board of Managers of the Fund has the discretion to determine whether the
Fund will purchase Interests from time to time from members pursuant to written
tenders. The Confidential Memorandum also states that CIBC Oppenheimer Advisers,
L.L.C., the investment adviser of the Fund (the "Adviser"), expects that it will
recommend to the Board of Managers that the Fund purchase Interests from members
at the end of 1999, and twice in each year thereafter. This is the first tender
offer made by the Fund. 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 Fund, the Board of Managers has 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 members of
the Fund in order to provide liquidity for Interests as contemplated in the
Confidential Memorandum and the LLC Agreement. The Board of Managers intends to
consider the continued desirability of the Fund making an offer to purchase
Interests at the end of each year, but the Fund 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 Fund of members who do not tender
Interests. Members who retain their Interests may be subject to increased risks
that may possibly result from the reduction in the Fund's aggregate assets
resulting from payment for the Interests tendered. These risks include the
potential for greater volatility due to decreased diversification. However, the
Fund believes that this result is unlikely given the nature of the Fund's
investment program. A reduction in the aggregate assets of the Fund may result
in members who do not tender interests bearing higher costs to the extent that
certain expenses borne by the Fund 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 members on
January 1, 2000.
Interests that are tendered to the Fund in connection with this Offer will
be retired, although the Fund 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 Fund 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 Fund will, upon the terms and subject
to the conditions of the Offer, purchase up to $5,000,000 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 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 Fund reserves
the right to extend,
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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 Fund was:
Unaudited Net Asset Value
Closing Date as of October 31, 1999
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November 1, 1998 $151,440.75
December 1, 1998 $154,933.32
January 1, 1999 $153,167.80
February 1, 1999 $156,186.66
March 1, 1999 $156,562.23
May 1, 1999 $147,094.78
July 1, 1999 $144,970.82
As of the close of business on October 31, 1999, there was approximately
$14,876,034 outstanding in capital of the Fund held in Interests (based on the
unaudited net asset value of such Interests). Members 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, members
may tender their entire Interest or a portion of their Interest. However, a
member who tenders for repurchase only a portion of such member's Interest 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 member and credited to the Special
Advisory Member Account of the Adviser on the Expiration Date (the "Incentive
Allocation") or would be so debited if the Expiration Date were 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 member tenders an
amount that would cause the member's capital account balance to fall below the
required minimum, the Fund reserves the right to reduce the amount to be
purchased from such member so that the required minimum balance is maintained.
The Offer is being made to all members of the Fund and is not conditioned on any
minimum amount of Interests being tendered.
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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
$5,000,000 (or such greater amount as the Fund may elect to purchase pursuant to
the Offer), the Fund will, on the terms and subject to the conditions of the
Offer, purchase all of the Interests so tendered unless the Fund 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 $5,000,000 of Interests
are duly tendered to the Fund prior to the expiration of the Offer and not
withdrawn pursuant to Section 5 below, the Fund 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
Fund 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 net asset value of tendered
Interests. The Offer may be extended, amended or canceled in various other
circumstances described in Section 7 below.
The Fund has been informed by the Adviser that the Adviser and its
affiliate, Canadian Imperial Holdings, Inc., intend to tender the portion of the
Interest each holds as a member that represents the gain on its investment.
4. PROCEDURE FOR TENDERS. Members 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 Fund recommends that all documents be submitted to PFPC via certified
mail, return receipt requested, or by facsimile transmission. A member choosing
to fax a Letter of Transmittal to PFPC should also send or deliver the original
completed and executed Letter of Transmittal to PFPC. Members 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 member 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 Fund, in its sole discretion, and such
determination shall be final and binding. The Fund 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
Fund, be unlawful. The Fund 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 member, and the Fund'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 Fund shall determine. Tenders will not be deemed to have been
made until the defects or irregularities have been cured or waived. None of the
Fund, the Adviser or any member of the Board of Managers of the Fund
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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 member 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 Fund 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 Fund, 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 Fund 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 member of its
election to purchase such Interest. As stated in Section 2 above, the purchase
price of an Interest tendered by any member will be the net 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 member required to be made by the LLC Agreement have been made.
For members who tender their entire Interest, payment of the purchase price
will consist of: (1) cash and/or marketable securities (valued in accordance
with the LLC Agreement) in an aggregate amount equal to 95% of the estimated
unaudited net asset value of Interests tendered and accepted by the Fund,
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 Fund as of the Expiration Date, determined based on
the audited financial statements of the Fund for 1999, over (b) the 95% Cash
Payment. The Note will be delivered to the tendering member 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
Fund for 1999. It is anticipated that the audit of the Fund'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
Fund on an amount, deposited by the Fund in a segregated custodial account,
equal to 5 percent of the estimated unaudited net asset value of Interests
tendered and accepted by the Fund. Although the Fund 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
-7-
<PAGE>
that the Board of Managers determines that the distribution of securities is
necessary to avoid or mitigate any adverse effect of the Offer on the remaining
members of the Fund.
Members 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 member'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 member's brokerage
account with CIBC WM. Any contingent payment due pursuant to the Note will also
be deposited directly to the tendering member's brokerage account with CIBC WM
and 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.
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 Fund; and/or (c) possibly
borrowings, as described below. The Fund 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 Fund
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
Fund, 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 Fund's prime broker, Morgan Stanley Dean Witter &
Co. ("Morgan Stanley"). If the Fund 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 Fund were to fail to repay any such amounts,
Morgan Stanley would be entitled to satisfy the Fund's obligations from the
collateral deposited in the special custody account. The Fund expects that the
repayment of any amounts borrowed from Morgan Stanley will be financed from
additional funds contributed to the Fund by existing and/or new members, or from
the proceeds of the sale of securities and portfolio assets held by the Fund.
7. CERTAIN CONDITIONS OF THE OFFER. The Fund 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 members of such extension. In the event that the Fund 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
-8-
<PAGE>
withdrawn will remain subject to the Offer. The Fund 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 Fund 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 members.
The Fund may cancel the Offer, amend the Offer or postpone the acceptance
of tenders made pursuant to the Offer if: (a) the Fund would not be able to
liquidate portfolio securities in a manner that is orderly and consistent with
the Fund's investment objectives and policies in order to purchase Interests
tendered pursuant to the Offer; (b) there is, in the judgment of the Board of
Managers, any (i) legal action or proceeding instituted or threatened
challenging the Offer or otherwise materially adversely affecting the Fund, (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 Fund, (iii) limitation imposed by Federal or state authorities
on the extension of credit by lending institutions, (iv) suspension of trading
on any organized exchange or over-the-counter market where the Fund 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 Fund, (vi) material decrease in the net asset
value of the Fund from the net asset value of the Fund as of commencement of the
Offer, or (vii) other event or condition that would have a material adverse
effect on the Fund or its members if Interests tendered pursuant to the Offer
were purchased; or (c) the Board of Managers determines that it is not in the
best interest of the Fund to purchase Interests pursuant to the Offer. However,
there can be no assurance that the Fund 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 FUND. The Fund 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 liability company. The principal office of the Fund 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 LLC Agreement.
The Fund 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 Fund's intention to accept subscriptions for Interests from time to time in
the discretion of the Fund) or the disposition of Interests; (b) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Fund; (c) a sale or transfer of a material amount of
assets of the Fund (other than as the Board of Managers determines 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 Fund); (d) any change in the identity of the
investment adviser of the Fund, or in the management of the Fund including, but
not limited to,
-9-
<PAGE>
any plans or proposals to change the number or the term of the members of the
Board of Managers, to fill any existing vacancy on the Board of Managers or to
change any material term of the investment advisory agreement with the Adviser;
(e) any material change in the present distribution policy or indebtedness or
capitalization of the Fund; (f) any other material change in the Fund'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 LLC Agreement or other actions
that may impede the acquisition of control of the Fund by any person.
The Adviser of the Fund is entitled under the terms of the LLC Agreement to
receive, subject to certain limitations, the Incentive Allocation, as specified
in the LLC 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 Fund from members pursuant to the Offer. Members should consult
their own tax advisers for a complete description of the tax consequences to
them of a purchase of their Interests by the Fund pursuant to the Offer.
In general, a member from whom an Interest is purchased by the Fund will be
treated as receiving a distribution from the Fund. Such member 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 member exceeds such
member's then adjusted tax basis in such member's Interest. A member's basis in
such member's Interest will be reduced (but not below zero) by the amount of
consideration received by the member from the Fund in connection with the
purchase of such Interest. A member's basis in such member's Interest will be
adjusted for income, gain or loss allocated (for tax purposes) to such member
for periods prior to the purchase of such Interest. Cash distributed to a member
in excess of the adjusted tax basis of such member's Interest is taxable as
capital gain or ordinary income, depending on the circumstances. A member whose
entire Interest is purchased by the Fund may recognize a loss, but only to the
extent that the amount of consideration received from the Fund is less than the
member's then adjusted tax basis in such member's Interest.
10. MISCELLANEOUS. The Offer is not being made to, nor will tenders be
accepted from, members in any jurisdiction in which the Offer or its acceptance
would not comply with the securities or Blue Sky laws of such jurisdiction. The
Fund 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 Fund reserves the right to exclude members from the Offer in any
jurisdiction in which it is asserted that the Offer cannot lawfully be made. The
Fund believes such exclusion is permissible under applicable laws and
regulations, provided the Fund makes a good faith effort to comply with any
state law deemed applicable to the Offer.
The Fund 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 Fund by contacting
-10-
<PAGE>
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>
WYNSTONE PARTNERS, L.P.
FINANCIAL STATEMENTS
WITH REPORT OF INDEPENDENT AUDITORS
PERIOD FROM NOVEMBER 16, 1998
(COMMENCEMENT OF OPERATIONS)
TO DECEMBER 31, 1998
<PAGE>
WYNSTONE PARTNERS, L.P.
FINANCIAL STATEMENTS
PERIOD FROM NOVEMBER 16, 1998 (COMMENCEMENT OF OPERATIONS)
TO 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
Schedule of Securities Sold, Not Yet Purchased............................. 16
Schedule of Written Options................................................ 17
<PAGE>
[ERNST & YOUNG LETTERHEAD]
REPORT OF INDEPENDENT AUDITORS
To the Partners of
Wynstone Partners, L.P.
We have audited the accompanying statement of assets, liabilities and partners'
capital of Wynstone Partners, L.P., including the schedules of portfolio
investments, securities sold, not yet purchased, and written options, as of
December 31, 1998, and the related statements of operations and changes in
partners' capital - net assets for the period from November 16, 1998
(commencement of operations) to December 31, 1998. 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 Wynstone Partners, L.P. at
December 31, 1998, the results of its operations, and the changes in its
partners' capital - net assets for the period from November 16, 1998 to December
31, 1998, in conformity with generally accepted accounting principles.
/S/ ERNST & YOUNG LLP
New York, New York
February 12, 1999
<PAGE>
WYNSTONE PARTNERS, L.P.
STATEMENT OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL (IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1998
ASSETS ------------------
<S> <C>
Cash $ 6,230
Investments in securities, at market (identified cost - $5,542) 5,704
Dividends receivable 14
Interest receivable 5
--------
TOTAL ASSETS 11,953
--------
LIABILITIES
Due to broker 788
Securities sold, not yet purchased, at market (proceeds of sales - $163) 195
Outstanding options written, at value (premiums received - $125) 114
Administration fee payable 9
Accrued expenses 99
--------
TOTAL LIABILITIES 1,205
--------
NET ASSETS $ 10,748
========
PARTNERS' CAPITAL - NET ASSETS
Represented by:
Capital contributions $ 10,675
Accumulated net investment loss (72)
Accumulated net realized gain on investments 5
Accumulated net unrealized appreciation on investments 140
--------
PARTNERS' CAPITAL - NET ASSETS $ 10,748
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
WYNSTONE PARTNERS, L.P.
STATEMENT OF OPERATIONS (IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD FROM
NOVEMBER 16, 1998
(COMMENCEMENT OF
OPERATIONS) TO
DECEMBER 31, 1998
-------------------
<S> <C>
INVESTMENT INCOME
Interest $ 27
Dividends 16
----------
43
----------
EXPENSES
OPERATING EXPENSES:
Professional fees 75
Investor servicing and accounting fee 12
Administration fee 10
Insurance expense 8
Individual General Partners' fees and expenses 6
Custodian fees 1
Miscellaneous 3
----------
TOTAL EXPENSES 115
----------
NET INVESTMENT LOSS (72)
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
REALIZED GAIN ON INVESTMENTS: 4
Investment securities 1
Written options 4
----------
NET REALIZED GAIN ON INVESTMENTS 5
----------
NET CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS 140
----------
NET REALIZED AND UNREALIZED GAIN 145
----------
INCREASE IN PARTNERS' CAPITAL DERIVED FROM INVESTMENT ACTIVITIES $ 73
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
WYNSTONE PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL - NET ASSETS (IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD FROM
NOVEMBER 16, 1998
(COMMENCEMENT OF
OPERATIONS) TO
DECEMBER 31, 1998
<S> <C>
FROM INVESTMENT ACTIVITIES
Net investment loss $ (72)
Net realized gain on investments 5
Net change in unrealized appreciation on investments 140
--------
INCREASE IN PARTNERS' CAPITAL
DERIVED FROM INVESTMENT ACTIVITIES 73
PARTNERS' CAPITAL TRANSACTIONS
Capital contributions 10,675
--------
INCREASE IN PARTNERS' CAPITAL DERIVED
FROM CAPITAL TRANSACTIONS 10,675
PARTNERS' CAPITAL AT BEGINNING OF PERIOD 0
--------
PARTNERS' CAPITAL AT END OF PERIOD $ 10,748
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
WYNSTONE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENT - DECEMBER 31, 1998
- --------------------------------------------------------------------------------
1. ORGANIZATION
Wynstone Partners, L.P. (the "Partnership") was organized under the
Delaware Revised Uniform Limited Partnership Act on August 13, 1998.
The Partnership is registered under the Investment Company Act of 1940
(the "Act") as a closed-end, non-diversified management investment
company. The Partnership's term is perpetual unless the Partnership is
otherwise terminated under the terms of the Limited Partnership
Agreement. The Partnership's investment objective is to achieve
capital appreciation. The Partnership pursues this objective by
investing principally in equity securities of U.S. companies engaged
in the financial services industry, but it may also invest up to 25%
of the value of its total assets in the securities of foreign issuers,
including depository receipts relating to foreign securities. Except
during periods of adverse market conditions in the financial services
industry or in the U.S. equity market generally, the Partnership will
invest more than 25% of the value of its total assets in issuers
engaged in the financial services industry. The Partnership's
investments may include long and short positions in equity securities,
fixed-income securities, and various derivatives, including options on
securities and stock index options.
There are three "Individual General Partners" and an "Adviser." CIBC
Oppenheimer Advisers, L.L.C. serves as the investment adviser of the
Partnership and is responsible for managing the Partnership's
investment portfolio. CIBC Oppenheimer Corp. ("CIBC Opco") is the
managing member and controlling person of the Adviser and KBW Asset
Management Inc. ("KBWAM") is a non-managing member of the Adviser.
Investment professionals employed by KBWAM will manage the
Partnership's investment portfolio of behalf of the Adviser under the
supervision of CIBC Opco.
The acceptance of initial and additional contributions is subject to
approval by the Individual General Partners. 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 Adviser expects that
generally it will recommend to the Individual General Partners that
the Partnership repurchase interests from Partners twice each year
effective at the end of the second fiscal quarter and again at the end
of the year.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Adviser to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. The Adviser believes that
-5-
<PAGE>
WYNSTONE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENT - DECEMBER 31, 1998 (CONTINUED)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
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.
-6-
<PAGE>
WYNSTONE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENT - DECEMBER 31, 1998 (CONTINUED)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. PORTFOLIO VALUATION (CONTINUED)
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. 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. ADMINISTRATION FEE, RELATED PARTY TRANSACTIONS AND OTHER
CIBC Opco provides certain 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 administration fee of .08333%
(1% on an annualized basis) of the Partnership's net assets determined
as of the beginning of the month.
During the period ended December 31, 1998, CIBC Opco earned no
brokerage commissions from portfolio transactions executed on behalf
of the Partnership. Keefe, Bruyette & Woods, Inc., an affiliated
broker of KBWAM, earned $2,586 in brokerage commissions from portfolio
transactions executed on behalf of the Partnership.
The Adviser of the Partnership will serve as the Special Advisory
Limited Partner of the
-7-
<PAGE>
WYNSTONE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENT - DECEMBER 31, 1998 (CONTINUED)
- --------------------------------------------------------------------------------
3. ADMINISTRATION FEE, RELATED PARTY TRANSACTIONS AND OTHER (CONTINUED)
Partnership. In such capacity, the Adviser will be entitled to receive
an incentive allocation (the "Incentive Allocation"), charged to the
capital account of each Limited Partner as of the last day of each
allocation period, of 20% of the amount by which net profits, if any,
exceed the positive balance in the Limited Partner's "loss recovery
account." The Incentive Allocation will be credited to the Special
Advisory Account of the Adviser. During the period ended December 31,
1998, Incentive Allocation to the Special Advisory Account was
$21,899.
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 November 16, 1998 to December 31, 1998, fees paid
to the Individual General Partners (including meeting fees and a
pro-rata annual retainer) and expenses totaled $5,686.
The Chase Manhattan Bank serves as Custodian of the Partnership's
assets.
PFPC Inc. serves as Investor Services 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 November 16, 1998 to
December 31, 1998, amounted to $5,919,533 and $382,480, 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 $139,860, consisting of $268,723 gross
unrealized appreciation and $128,863 gross unrealized depreciation.
Due to broker primarily represents receivables and payables from
unsettled security trades and short sales.
-8-
<PAGE>
WYNSTONE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENT - DECEMBER 31, 1998 (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, 1998 and for the period then ended, the Partnership had
no margin borrowings. 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
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 sales of securities not yet purchased.
Generally, these financial instruments represent future commitments to
purchase or sell other financial instruments at specific terms at
specified future dates. Each of these financial instruments contains
varying degrees of off-balance sheet risk whereby changes in the
market value of the securities underlying the financial instruments
may be in excess of the amounts recognized in the statement of assets,
liabilities and partners' capital.
The Partnership 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.
Securities sold, not yet purchased represent obligations of the
Partnership to deliver specified securities and thereby creates a
liability to purchase such securities in the market at prevailing
prices. Accordingly, these transactions result in off-balance sheet
risk as the Partnership's ultimate obligation to satisfy the sale of
securities sold, not yet purchased may exceed the amount indicated in
the statement of assets, liabilities and partners' capital.
-9-
<PAGE>
WYNSTONE 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)
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. As of and for the period ended December 31,
1998, the Partnership purchased 20 put option contracts at a cost of
$4,060.
When the Partnership writes an option, the premium received by the
Partnership is recorded as a liability and is subsequently adjusted to
the current market value of the option written. If a call option is
exercised, the premium is added to the proceeds from the sale of the
underlying security or currency in determining whether the Partnership
has realized a gain or loss. In writing an option, the Partnership
bears the market risk of an unfavorable change in the price of the
security or currency underlying the written option.
Exercise of an option written by the Partnership could result in the
Partnership selling or buying a security or currency at a price
different from the current market value.
Transactions in written options were as follows:
CALL OPTIONS PUT OPTIONS
------------------------- ------------------------
NUMBER AMOUNT NUMBER AMOUNT
OF CONTRACTS OF PREMIUM OF CONTRACTS OF PREMIUM
------------ ---------- ------------ ----------
Beginning balance 0 $ 0 0 $ 0
Options purchased 50 14,037 775 124,144
Options closed (21) (5,318) (10) (3,970)
Expired options (0) (0) (30) (4,160)
--------- --------- --------- ---------
Options outstanding at
December 31, 1998 29 $ 8,719 735 $ 116,014
========= ========= ========= =========
-10-
<PAGE>
WYNSTONE 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
FOR THE PERIOD ENDED
DECEMBER 31, 1998
----------------------
Equity securities $129,441
Equity options 690
Written options 14,703
--------
$144,834
========
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, 1998 DECEMBER 31, 1998
----------------- --------------------
ASSETS:
Equity options $4,750 $2,375
LIABILITIES:
Written options (114,190) ( 68,439)
Average market values presented above are based upon month-end market
values during the period ended December 31, 1998.
-11-
<PAGE>
WYNSTONE 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 period indicated:
NOVEMBER 16, 1998
(COMMENCEMENT OF
OPERATIONS) TO
DECEMBER 31, 1998
-----------------
Ratio of net investment loss to average net assets (8.39%) *
Ratio of operating expenses to average net assets 13.39% *
Portfolio turnover rate 10.75%
Average commission rate paid $0.0600 **
Total return (1.40%) ***
* 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 Special Advisory Limited Partner, 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 $2,000,000.
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 January 1,
2000. This is commonly known as the "Year 2000 Issue."
-12-
<PAGE>
WYNSTONE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENT - DECEMBER 31, 1998 (CONTINUED)
- --------------------------------------------------------------------------------
10. YEAR 2000 (UNAUDITED) (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 period 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>
WYNSTONE PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1998
MARKET VALUE
SHARES ------------------
<S> <C> <C>
COMMON STOCKS - 53.02%
COMMERCIAL BANKS - CENTRAL US - 12.46%
10,000 Associated Banc-Corp $ 341,880
2,800 Cullen/Frost Bankers, Inc. (a) 153,650
14,000 First Midwest Bancorp, Inc. 532,882
18,000 Prime Bancshares, Inc. (a) 310,500
---------------------
1,338,912
---------------------
COMMERCIAL BANKS - EASTERN US - 6.31%
20,000 North Fork Bancorporation, Inc. (a) 478,760
10,000 People's Heritage Financial Group, Inc. 200,000
---------------------
678,760
---------------------
COMMERCIAL BANKS - SOUTHERN US - 3.00%
1,900 Colonial BancGroup, Inc. 22,800
3,800 Compass Bancshares, Inc. (a) 144,639
3,500 First American Corp. (a) 155,313
---------------------
322,752
---------------------
COMMERCIAL BANKS - WESTERN US - 0.74%
3,400 First Security Corp. (a) 79,475
---------------------
S&L/THRIFTS - CENTRAL US - 6.54%
20,000 Charter One Financial, Inc. 555,000
6,400 Commercial Federal Corp. (a) 148,403
---------------------
703,403
---------------------
S&L/THRIFTS - EASTERN US - 14.48%
13,500 First Essex Bancorp, Inc. (a) 243,000
17,500 Reliance Bancorp, Inc. 486,728
25,000 Seacoast Financial Services Corp. * (a) 256,250
40,000 Sovereign Bancorp, Inc. (a) 570,000
---------------------
1,555,978
---------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-14-
<PAGE>
WYNSTONE PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1998
MARKET VALUE
SHARES -----------------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
SUPER - REGIONAL BANKS - US - 9.49%
4,400 Banc One Corp. $ 224,677
10,000 Keycorp 320,000
7,000 U.S. Bancorp 248,500
5,000 Union Planters Corp. 226,565
---------------------
1,019,742
---------------------
TOTAL COMMON STOCKS (COST $5,537,865) 5,699,022
=====================
NUMBER
OF CONTRACTS
PUT OPTIONS - 0.05%
COMMERCIAL BANKS - CENTRAL US - 0.05%
20 Firstar Corp., 1/16/99, $90.00 4,750
---------------------
TOTAL PUT OPTIONS (COST $4,060) 4,750
=====================
TOTAL INVESTMENTS (COST $5,541,925) - 53.07% 5,703,772
=====================
OTHER ASSETS, LESS LIABILITIES - 46.93% 5,044,697
---------------------
NET ASSETS - 100% $ 10,748,469
=====================
</TABLE>
(a) Partially or wholly held in a pledged account by the Custodian as collateral
for open written options.
* Non-income producing security.
The accompanying notes are an integral part of these financial statements.
-15-
<PAGE>
WYNSTONE PARTNERS, L.P.
SCHEDULE OF SECURITIES SOLD, NOT YET PURCHASED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DECEMBER 31, 1998
MARKET VALUE
SHARES -----------------
<S> <C> <C>
SHORT COMMON STOCK - (1.82%)
COMMERCIAL BANKS - CENTRAL US - (1.82%)
2,100 Firstar Corp. $ (195,300)
---------------------
TOTAL SHORT COMMON STOCK (PROCEEDS $162,770) $ (195,300)
=====================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-16-
<PAGE>
WYNSTONE PARTNERS, L.P.
SCHEDULE OF WRITTEN OPTIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER DECEMBER 31, 1998
OF CONTRACTS MARKET VALUE
- ------------ -----------------
<S> <C> <C>
WRITTEN CALL OPTIONS - (0.49%)
COMMERCIAL BANKS - CENTRAL US - (0.49%) $ (52,200)
29 Firstar Corp., 1/16/99, $75.00 $ (52,200)
---------------------
TOTAL WRITTEN CALL OPTIONS (PROCEEDS $8,719) (52,200)
=====================
WRITTEN PUT OPTIONS - (0.58%)
COMMERCIAL BANKS - EASTERN US - (0.28%) $20.00 (1,875)
50 North Fork Bancorporation, Inc., 2/20/99, $20.00 (1,875)
200 People's Heritage Financial Group, Inc., 2/20/99, $20.00 (23,760)
135 Summit Bancorp, 1/16/99, $40.00 (4,226)
---------------------
(29,861)
---------------------
COMMERCIAL BANKS - SOUTHERN US - (0.03%)
50 Colonial Bancgroup, Inc., 1/16/99, $12.50 (3,440)
---------------------
SUPER - REGIONAL BANKS - US - (0.27%)
20 Banc One Corp., 1/16/99, $50.00 (1,250)
100 Fleet Financial Group, Inc., 1/16/99, $40.00 (1,250)
50 Keycorp, 3/20/99, $30.00 (7,500)
50 U.S. Bancorp, 1/16/99, $35.00 (3,750)
30 U.S. Bancorp, 3/20/99, $30.00 (2,439)
50 U.S. Bancorp, 3/20/99, $35.00 (12,500)
---------------------
(28,689)
---------------------
TOTAL WRITTEN PUT OPTIONS (PROCEEDS $116,014) (61,990)
=====================
TOTAL OPTIONS WRITTEN (PROCEEDS $124,733) $ (114,190)
=====================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-17-
<PAGE>
WYNSTONE PARTNERS, L.P.
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED
JUNE 30, 1999
(UNAUDITED)
<PAGE>
WYNSTONE 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
Results of Special Meeting................................................ 12
Schedule of Portfolio Investments......................................... 13
Schedule of Written Options............................................... 16
<PAGE>
WYNSTONE PARTNERS, L.P.
STATEMENT OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL (IN THOUSANDS)
- --------------------------------------------------------------------------------
JUNE 30, 1999
ASSETS (UNAUDITED)
--------------
Cash $ 3,840
Investments in securities, at market (identified cost - $10,866) 11,682
Due from broker 305
Dividends receivable 18
Interest receivable 3
Prepaid expenses 7
--------
TOTAL ASSETS 15,855
--------
LIABILITIES
Outstanding options written, at value (premiums received - $436) 404
Management fee payable 12
Payable to affiliate 40
Accrued expenses 207
--------
TOTAL LIABILITIES 663
--------
NET ASSETS $ 15,192
========
PARTNERS' CAPITAL - NET ASSETS
Represented by:
Capital contributions - net $ 14,203
Accumulated net investment loss (193)
Accumulated net realized gain on investments 334
Accumulated net unrealized appreciation 848
--------
PARTNERS' CAPITAL - NET ASSETS $ 15,192
========
The accompanying notes are an integral part of these financial statements.
-1-
<PAGE>
WYNSTONE PARTNERS, L.P.
STATEMENT OF OPERATIONS (IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999
(UNAUDITED)
-----------------
<S> <C>
INVESTMENT INCOME
Interest $ 108
Dividends 65
----------
173
----------
EXPENSES
OPERATING EXPENSES:
Professional fees 101
Administration fees 70
Investor servicing and accounting fees 63
Insurance expense 33
Individual General Partners' fees and expenses 13
Custodian fees 7
Miscellaneous 6
----------
TOTAL OPERATING EXPENSES 293
Dividends on securities sold, not yet purchased 1
----------
TOTAL EXPENSES 294
----------
NET INVESTMENT LOSS (121)
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
REALIZED GAIN (LOSS) ON INVESTMENTS:
Investment securities 23
Purchased options 55
Written options 279
Securities sold, not yet purchased (28)
----------
NET REALIZED GAIN ON INVESTMENTS 329
----------
NET CHANGE IN UNREALIZED APPRECIATION ON INVESTMENTS 708
----------
NET REALIZED AND UNREALIZED GAIN 1,037
----------
INCREASE IN PARTNERS' CAPITAL DERIVED FROM INVESTMENT ACTIVITIES $ 916
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
WYNSTONE PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL - NET ASSETS (IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS PERIOD FROM
ENDED NOVEMBER 16, 1998
JUNE 30, 1999 (COMMENCEMENT OF OPERATIONS)
(UNAUDITED) TO DECEMBER 31, 1998
------------- ----------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net investment loss $ (121) $ (72)
Net realized gain on investments 329 5
Net change in unrealized appreciation on
investments 708 140
---------- ----------
INCREASE IN PARTNERS' CAPITAL DERIVED
FROM INVESTMENT ACTIVITIES 916 73
---------- ----------
PARTNERS' CAPITAL TRANSACTIONS
Capital contributions 3,550 10,675
Capital withdrawals (22) (0)
---------- ----------
INCREASE IN PARTNERS' CAPITAL
DERIVED FROM CAPITAL TRANSACTIONS 3,528 10,675
PARTNERS' CAPITAL AT BEGINNING OF PERIOD 10,748 0
---------- ----------
PARTNERS' CAPITAL AT END OF PERIOD $ 15,192 $ 10,748
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
WYNSTONE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION
Wynstone Partners, L.P. (the "Partnership") was organized under the
Delaware Revised Uniform Limited Partnership Act on August 13, 1998.
The Partnership is registered under the Investment Company Act of 1940
(the "Act") as a closed-end, non-diversified management investment
company. The Partnership's term is perpetual unless the Partnership is
otherwise terminated under the terms of the Limited Partnership
Agreement dated as of September 2, 1998.
The Partnership's investment objective is to achieve capital
appreciation. The Partnership pursues this objective by investing
principally in equity securities of U.S. companies engaged in the
financial services industry, but it may also invest up to 25% of the
value of its total assets in the securities of foreign issuers,
including depository receipts relating to foreign securities. Except
during periods of adverse market conditions in the financial services
industry or in the U.S. equity market generally, the Partnership will
invest more than 25% of the value of its total assets in issuers
engaged in the financial services industry. The Partnership's
investments may include long and short positions in equity securities,
fixed-income securities, and various derivatives, including options on
securities and stock index options.
There are four "Individual General Partners", who serve as the
governing board of the Partnership, and an "Adviser." CIBC Oppenheimer
Advisers, L.L.C. (the "Adviser") serves as the investment adviser of
the Partnership and is responsible for managing the Partnership's
investment portfolio. CIBC World Markets Corp. (formerly CIBC
Oppenheimer Corp.) is the managing member and controlling person of
the Adviser, and KBW Asset Management, Inc. ("KBWAM") is a
non-managing member of the Adviser. Investment professionals employed
by KBWAM manage the Partnership's investment portfolio on behalf of
the Adviser under the supervision of CIBC World Markets Corp. ("CIBC
WM").
The acceptance of initial and additional contributions is subject to
approval by the Individual General Partners. 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 Adviser expects that it
will recommend to the Individual General Partners that the Partnership
offer to repurchase interests from Partners at the end of 1999.
Thereafter, the Adviser expects that generally it will recommend to
the Individual General Partners that the Partnership offer to
repurchase interests from Partners twice each year, effective at the
end of the second fiscal quarter and again at the end of the year.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally
accepted accounting principles
-4-
<PAGE>
WYNSTONE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1999 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
requires the Adviser to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying notes.
The Adviser believes that the estimates utilized in the preparing of
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.
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 at their bid
prices (or asked prices in the case of listed options held short) 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 in accordance with procedures adopted in good faith by 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
-5-
<PAGE>
WYNSTONE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1999 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. PORTFOLIO VALUATION (CONTINUED)
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 in
accordance with procedures adopted in good faith by the Individual
General Partners.
B. 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. ADMINISTRATION FEE, RELATED PARTY TRANSACTIONS AND OTHER
CIBC WM provides certain 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 administration fee of .08333%
(1% on an annualized basis) of the Partnership's net assets determined
as of the beginning of the month.
Payable to affiliate represents insurance expense in the amount of
$40,170 paid on behalf of the Partnership by CIBC WM.
During the six months ended June 30, 1999, CIBC WM earned no brokerage
commissions from portfolio transactions executed on behalf of the
Partnership. Keefe, Bruyette & Woods, Inc., an affiliated broker of
KBWAM, earned $5,570 in brokerage commissions from portfolio
transactions executed on behalf of the Partnership.
The Adviser of the Partnership will serve as the Special Advisory
Limited Partner of the Partnership. In such capacity, the Adviser will
be entitled to receive an incentive allocation (the "Incentive
Allocation"), charged to the capital account of each Limited Partner
as of the last day of each allocation period, of 20% of the amount by
which net profits, if any, exceed the positive balance in the Limited
Partner's "loss recovery account". The Incentive Allocation will be
credited to the Special Advisory Account of the Adviser.
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
-6-
<PAGE>
WYNSTONE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1999 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
3. ADMINISTRATION FEE, RELATED PARTY TRANSACTIONS AND OTHER (CONTINUED)
from the Partnership. All Individual General Partners are reimbursed
by the Partnership for all reasonable out-of-pocket expenses incurred
by them in performing their duties. For the six months ended June 30,
1999, fees (including meeting fees and an annual retainer) and
expenses paid to the Individual General Partners totaled $19,500.
Chase Manhattan Bank serves as Custodian of the Partnership's assets.
PFPC Inc. serves as Investor Services and Accounting Agent to the
Partnership, and in that capacity provides certain accounting,
recordkeeping, tax and investor related services.
4. SECURITIES TRANSACTIONS
Aggregate purchases and sales of investment securities, excluding
short-term securities, for the six months ended June 30, 1999,
amounted to $12,679,320 and $7,444,072, 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 $848,360, consisting of $1,013,877
gross unrealized appreciation and $165,517 gross unrealized
depreciation.
Due from broker represents receivables and payables from unsettled
security trades and securities sold, not yet purchased.
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
June 30, 1999 and for the period then ended, the Partnership had no
margin borrowings. 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 and for the period then ended, the Partnership had no
outstanding margin borrowings.
-7-
<PAGE>
WYNSTONE 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
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.
Securities sold, not yet purchased represent obligations of the
Partnership to deliver specified securities and thereby creates a
liability to purchase such securities in the market at prevailing
prices. Accordingly, these transactions result in off-balance sheet
risk as the Partnership's ultimate obligation to satisfy the sale of
securities sold, not yet purchased may exceed the amount indicated 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 counter party not perform under the contract. Put and
call options purchased are accounted for in the same manner as
investment securities. As of and for the six months ended June 30,
1999, the Partnership purchased 28 call option contracts at a cost of
$69,384.
When the Partnership writes an option, the premium received by the
Partnership is recorded as a liability and is subsequently adjusted to
the current market value of the option written. If a call option is
exercised, the premium is added to the proceeds from the sale of the
underlying security or currency in determining whether the Partnership
has realized a gain or loss. In writing an option, the Partnership
bears the market risk of an unfavorable change in the price of the
security or currency underlying the written option.
Exercise of an option written by the Partnership could result in the
Partnership selling or buying a security or currency at a price
different from the current market value.
-8-
<PAGE>
WYNSTONE 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)
Transactions in written options were as follows:
<TABLE>
<CAPTION>
CALL OPTIONS PUT OPTIONS
--------------------------- ---------------------------
NUMBER AMOUNT OF NUMBER AMOUNT OF
OF CONTRACTS PREMIUM OF CONTRACTS PREMIUM
------------ ------- ------------ -------
<S> <C> <C> <C> <C>
Beginning balance 29 $ 8,719 735 $ 116,014
Options written 1,711 484,578 1,964 616,036
Options closed (1,032) (335,504) (1,439) (326,297)
Expired options 0 0 (673) (127,618)
--------- --------- --------- ---------
Options outstanding at
June 30, 1999 708 $ 157,793 587 $ 278,135
========= ========= ========= =========
</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
FOR THE SIX MONTHS ENDED
JUNE 30, 1999
------------------------
Equity securities $ 663,790
Equity options 73,410
Written options 300,278
----------
Total $1,037,478
==========
The following table presents the market values of derivative financial
instruments and the average market values of those instruments:
AVERAGE MARKET VALUE FOR
MARKET VALUE AT THE SIX MONTHS ENDED
JUNE 30, 1999 JUNE 30, 1999
-------------- ----------------------
Assets:
Equity options $ 88,550 $ 56,233
Liabilities:
Written options ($ 403,969) ($ 320,982)
Average market values presented above are based upon month-end market
values during the six months ended June 30, 1999.
-9-
<PAGE>
WYNSTONE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1999 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
8. SELECTED FINANCIAL RATIOS AND OTHER SUPPLEMENTAL INFORMATION
The following represents the ratios to average net assets and other
supplemental information for the period indicated:
<TABLE>
<CAPTION>
NOVEMBER 16, 1998
SIX MONTHS (COMMENCEMENT OF
ENDED OPERATIONS) TO
JUNE 30, 1999 DECEMBER 31, 1998
----------------- -------------------------
<S> <C> <C>
Ratio of net investment loss to average net assets (1.79%)* (8.39%)*
Ratio of operating expenses to average net assets 4.35%* 13.39%*
Portfolio turnover rate 76.00% 10.75%
Average commission rate paid $ 0.0583** $ 0.0600**
Total return 6.20%*** (1.40%)***
</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 Special Advisory Limited Partner, 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."
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.
-10-
<PAGE>
WYNSTONE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1999 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
9. YEAR 2000 (CONTINUED)
The Partnership intends to develop contingency plans designed to
ensure that third party non-compliance will not materially affect the
Partnership's operations.
-11-
<PAGE>
WYNSTONE PARTNERS, L.P.
RESULTS OF SPECIAL MEETING
- --------------------------------------------------------------------------------
The Partnership held a Special Meeting of the Limited Partners on June
25, 1999. The purpose of the meeting was to vote on proposals to
convert Wynstone Partners, L.P. from a Delaware limited partnership to
a Delaware limited liability company and to adopt the proposed limited
liability company agreement. A total of 21 partners, representing
$10,288,490 of interests in Wynstone Partners, L.P. and 67.78% of the
votes eligible to be cast at the Special Meeting, voted to approve the
conversion and adopt the agreement. The limited partners also elected
four persons to serve as Managers of the limited liability company and
ratified the selection of Ernst & Young LLP to serve as the
independent accountant for the Partnership for the year ending
December 31, 1999. The following provides information concerning the
matters voted on at the meeting:
I. PROPOSALS TO CONVERT WYNSTONE PARTNERS, L.P. FROM A DELAWARE LIMITED
PARTNERSHIP TO A DELAWARE LIMITED LIABILITY COMPANY AND TO ADOPT THE
PROPOSED LIMITED LIABILITY COMPANY AGREEMENT
VOTES FOR VOTES AGAINST VOTES ABSTAINED
--------- -------------- ---------------
$ 10,288,490 $ 0 $ 0
Effective July 1, 1999, the conversion was completed and the
Partnership changed its name to Wynstone Fund, L.L.C.
II. ELECTION OF MANAGERS OF LIMITED LIABILITY COMPANY
NOMINEE VOTES FOR VOTES WITHHELD
------- --------- --------------
Jesse H. Ausubel $ 3,859,471 $ 6,429,019
Paul Belica $ 3,859,471 $ 6,429,019
Charles F. Barber $ 3,859,471 $ 6,429,019
Thomas W. Brock $ 3,859,471 $ 6,429,019
III. RATIFICATION OF ERNST & YOUNG LLP AS THE INDEPENDENT ACCOUNTANT OF THE
PARTNERSHIP
VOTES FOR VOTES AGAINST VOTES ABSTAINED
--------- -------------- ---------------
$ 10,288,490 $ 0 $ 0
-12-
<PAGE>
WYNSTONE PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1999
SHARES MARKET VALUE
------ -------------------------
<S> <C> <C>
COMMON STOCKS - 76.32%
COMMERCIAL BANKS - CENTRAL U.S. - 6.42%
10,000 Cullen/Frost Bankers, Inc. (a) $ 275,630
14,000 First Midwest Bancorp, Inc. (a) 556,500
10,700 Sterling Bancshares, Inc. 143,112
-------------------------
975,242
-------------------------
COMMERCIAL BANKS - EASTERN U.S. - 15.09%
10,914 Chittenden Corp. 341,063
1,000 Independent Bank Corp. 15,750
8,240 Investors Financial Services Corp. 329,600
530 M & T Bank Corp. 291,500
27,000 Peoples Heritage Financial Group, Inc. (a) 507,951
7,100 Summit Bancorp 296,872
5,500 U.S. Trust Corp. 508,750
-------------------------
2,291,486
-------------------------
COMMERCIAL BANKS - SOUTHERN U.S. - 10.90%
300 CCB Financial Corp. 15,788
7,600 Centura Banks, Inc. 428,450
16,300 Colonial BancGroup, Inc. 227,189
13,199 Compass Bancshares, Inc. (a) 359,673
10,300 First American Corp. (a) 428,099
9,000 National Commerce Bancorp 196,875
-------------------------
1,656,074
-------------------------
COMMERCIAL BANKS - WESTERN U.S. - 6.80%
4,500 City National Corp. 168,471
16,400 First Security Corp. (a) 446,900
3,850 UCBH Holdings, Inc. * 69,061
8,000 Western Bancorp 348,000
-------------------------
1,032,432
-------------------------
FINANCE - CREDIT CARD - 2.56%
2,400 Capital One Fnancial Corp. 133,651
6,200 MBNA Corp. 189,875
700 Providian Financial Corp. 65,275
-------------------------
388,801
-------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-13-
<PAGE>
WYNSTONE PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1999
SHARES MARKET VALUE
------ -------------------------
<S> <C> <C>
COMMON STOCKS - (CONTINUED)
MONEY CENTER BANKS - 1.93%
8,000 Bank of New York Co., Inc. (a) $ 293,504
-------------------------
S&L/THRIFTS - CENTRAL U.S. - 4.12%
6,400 Commercial Federal Corp. (a) 148,403
18,730 St. Paul Bancorp, Inc. 477,615
-------------------------
626,018
-------------------------
S&L/THRIFTS - EASTERN U.S. - 7.18%
10,000 Reliance Bancorp, Inc. 276,250
29,000 Seacoast Financial Services Corp. * (a) 329,875
40,000 Sovereign Bancorp, Inc. (a) 485,000
-------------------------
1,091,125
-------------------------
SUPER-REGIONAL BANKS - U.S. - 21.32%
11,400 Bank One Corp. (a) 679,018
4,200 Comerica, Inc. 249,640
23,400 KeyCorp (a) 751,725
28,000 Mellon Bank Corp. (a) 1,018,500
11,500 U.S. Bancorp (a) 383,813
3,500 Union Planters Corp. 156,408
-------------------------
3,239,104
-------------------------
TOTAL COMMON STOCKS (COST $10,796,551) $ 11,593,786
=========================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-14-
<PAGE>
WYNSTONE PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF JUNE 30, 1999
CONTRACTS MARKET VALUE
--------- --------------------------
<S> <C> <C>
CALL OPTIONS - 0.58%
SUPER-REGIONAL BANKS- U.S. - 0.58%
28 SunTrust Banks,Inc., 01/22/00, $40.00 $ 88,550
-------------------------
TOTAL CALL OPTIONS (COST $69,384) 88,550
=========================
TOTAL INVESTMENTS (COST $10,865,935) - 76.90% 11,682,336
=========================
OTHER ASSETS, LESS LIABILITIES - 23.10% 3,509,767
-------------------------
NET ASSETS - 100% $ 15,192,103
=========================
</TABLE>
(a) Partially or wholly held in a pledged account by the Custodian as
collateral for open written options
* Non-income producing security.
The accompanying notes are an integral part of these financial statements.
-15-
<PAGE>
WYNSTONE PARTNERS, L.P.
SCHEDULE OF WRITTEN OPTIONS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF JUNE 30, 1999
CONTRACTS MARKET VALUE
- --------- --------------------------
<S> <C> <C>
WRITTEN CALL OPTIONS - (1.01%)
COMMERCIAL BANKS - EASTERN U.S. - (0.15%)
71 Summit Bancorp, 01/22/00, $42.50 $ (23,075)
-------------------------
COMMERCIAL BANKS - SOUTHERN U.S. - (0.19%)
20 Compass Bancshares, Inc., 07/17/99, $23.38 (12,750)
86 Hibernia Corp., 10/16/99, $17.50 (9,675)
90 National Commerce Bancorp, 07/17/99, $22.50 (6,192)
-------------------------
(28,617)
-------------------------
COMMERCIAL BANKS - WESTERN U.S. - (0.06%)
45 City National Corp., 11/20/99, $40.00 (8,438)
-------------------------
FINANCE - CREDIT CARDS - (0.28%)
41 MBNA Corp., 01/22/00, $26.63 (42,281)
-------------------------
S&L/THRIFTS - EASTERN U.S. - (0.16%)
25 Sovereign Bancorp, Inc., 01/22/00, $12.50 (4,845)
200 Sovereign Bancorp, Inc., 01/22/00, $15.00 (18,760)
70 Sovereign Bancorp, Inc., 07/17/99, $15.00 (875)
-------------------------
(24,480)
-------------------------
SUPER-REGIONAL BANKS- U.S. - (0.17%)
60 Bank One Corp., 01/22/00, $65.00 (26,250)
-------------------------
TOTAL WRITTEN CALL OPTIONS (PREMIUMS $157,793) (153,141)
=========================
WRITTEN PUT OPTIONS - (1.65%)
COMMERCIAL BANKS - SOUTHERN U.S. - (0.35%)
40 First American Corp., 09/18/99, $40.00 (7,000)
40 First American Corp., 09/18/99, $45.00 (19,000)
52 Mercantile Bank, 12/18/99, $55.00 (17,550)
70 National Commerce Bank, 07/17/99, $22.50 (9,625)
-------------------------
(53,175)
-------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
-16-
<PAGE>
WYNSTONE PARTNERS, L.P.
SCHEDULE OF WRITTEN OPTIONS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF JUNE 30, 1999
CONTRACTS MARKET VALUE
- --------- --------------------------
<S> <C> <C>
WRITTEN PUT OPTIONS - (CONTINUED)
FINANCE - CREDIT CARD - (0.46%)
33 Capital One Financial Corp., 09/18/99, $46.63 $ (3,920)
30 Capital One Financial Corp., 09/18/99, $58.38 (22,875)
30 Capital One Financial Corp., 12/18/99, $56.67 (21,000)
50 Capital One Financial Corp., 12/18/99, $51.63 (22,500)
-------------------------
(70,295)
-------------------------
MONEY CENTER BANKS - (0.08%)
23 Bank of America Corp., 08/21/99, $70.00 (5,320)
20 Chase Manhattan Corp., 09/18/99, $80.00 (6,500)
-------------------------
(11,820)
-------------------------
SUPER-REGIONAL BANKS - U.S. - (0.76%)
28 Bank One Corp., 08/21/99, $60.00 (9,100)
26 Comerica, Inc., 07/17/99, $60.00 (4,875)
125 U.S. Bancorp, 01/22/00, $40.00 (95,313)
20 Wachovia Corp., 08/21/99, $85.00 (6,250)
-------------------------
(115,538)
-------------------------
TOTAL WRITTEN PUT OPTIONS (PREMIUMS $278,135) (250,828)
=========================
TOTAL OPTIONS WRITTEN (PREMIUMS $435,928) $ (403,969)
=========================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-17-
LETTER OF TRANSMITTAL
Regarding
Interests
in
WYNSTONE FUND, L.L.C.
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 FUND 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 249
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 Wynstone Fund, L.L.C., a closed-end,
non-diversified, management investment company organized under the laws of the
State of Delaware (the "Fund"), the limited liability company interest in the
Fund 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 FUND TO REJECT
<PAGE>
ANY AND ALL TENDERS DETERMINED BY IT, IN ITS SOLE DISCRETION, NOT TO BE IN THE
APPROPRIATE FORM.
The undersigned hereby sells to the Fund the limited liability company
interest in the Fund or portion thereof tendered hereby pursuant to the Offer.
The undersigned hereby warrants that the undersigned has full authority to sell
the limited liability company interest in the Fund or portion thereof tendered
hereby and that the Fund 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 Fund may not be required to purchase any of the limited liability
company interests in the Fund or portions thereof tendered hereby.
Payment of the cash portion of the purchase price for the limited liability
company interest in the Fund 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
member's brokerage account, upon a withdrawal of such cash payment from such
account, CIBC WM will subject such withdrawal to any fees that CIBC WM 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 member in the sole discretion of the Board of
Managers of the Fund.) 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 member's brokerage account with 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 limited liability company interest of the Fund 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 Fund's financial
statements for 1999, which is anticipated to be completed not later than 60 days
after the Fund'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 member:
---------------------------------
Social Security No.
or Taxpayer
Identification No.:
-----------------------------
Telephone Number: ( )
--- -------------------------
PART 2. AMOUNT OF LIMITED LIABILITY COMPANY INTEREST IN THE FUND TO BE
TENDERED:
|_| Entire limited liability company interest.
|_| Portion of limited liability company interest expressed as a
specific dollar value. (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,
must be maintained (the "Required Minimum Balance").)*
$
--------
|_| Portion of limited liability company interest in excess of the
Required Minimum Balance.*
*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 Fund 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 member'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 arrangements with the tendering member.)
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 that any
contingent payment due pursuant to the Note will also be deposited directly
to
-3-
<PAGE>
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:
-------------
-4-
[To be provided to members who call and request the form.]
NOTICE OF WITHDRAWAL OF TENDER
Regarding Interests in
WYNSTONE FUND, L.L.C.
Tendered Pursuant to the Offer to Purchase
Dated December 1, 1999
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT, AND THIS NOTICE OF WITHDRAWAL MUST BE
RECEIVED BY THE FUND BY, 12:00 MIDNIGHT NEW YORK TIME,
ON FRIDAY, DECEMBER 31, 1999, UNLESS THE OFFER IS
EXTENDED.
- --------------------------------------------------------------------------------
Complete This Notice of Withdrawal And Return Or Deliver To:
PFPC Inc.
P.O. Box 249
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:
Please withdraw the tender previously submitted by the undersigned in a
Letter of Transmittal dated .
---------------
Such tender was in the amount of:
|_| Entire limited liability company interest.
|_| Portion of limited liability company interest expressed as a
specific dollar value.
$
---------
|_| Portion of limited liability company interest in excess of the
Required Minimum Balance.
<PAGE>
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:
----------------
-2-
