PW TECHNOLOGY PARTNERS, L.P.
FINANCIAL STATEMENTS
FOR THE PERIOD FROM APRIL 1, 1999
(COMMENCEMENT OF OPERATIONS)
TO JUNE 30, 1999
(UNAUDITED)
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PW TECHNOLOGY PARTNERS, L.P.
FINANCIAL STATEMENTS
FOR THE PERIOD FROM APRIL 1, 1999
(COMMENCEMENT OF OPERATIONS)
TO JUNE 30, 1999
(UNAUDITED)
CONTENTS
Statement of Assets, Liabilities and Partners Capital ........................ 1
Statement of Operations ...................................................... 2
Statement of Changes in Partners' Capital - Net Assets ....................... 3
Notes to Financial Statements ................................................ 4
Schedule of Investments in Funds ............................................. 8
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PW TECHNOLOGY PARTNERS, L.P.
STATEMENT OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL
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JUNE 30, 1999
(UNAUDITED)
ASSETS
Cash and cash equivalents $ 704,261
Investments in funds, at market
(identified cost - $113,000,000) 120,593,749
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TOTAL ASSETS 121,298,010
-------------
LIABILITIES
Management fee payable 210,827
Professional fees payable 26,869
Custody fee payable 1,800
Organizational fees payable 186,619
Accrued expenses 16,667
-------------
TOTAL LIABILITIES 442,782
-------------
NET ASSETS $ 120,855,228
=============
PARTNERS' CAPITAL - NET ASSETS
Represented by:
Capital contributions $ 113,704,095
Accumulated net investment loss (442,616)
Accumulated net unrealized appreciation on investments 7,593,749
-------------
PARTNERS' CAPITAL - NET ASSETS $ 120,855,228
=============
The accompanying notes are an integral part of these financial statements.
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PW TECHNOLOGY PARTNERS, L.P.
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
PERIOD FROM APRIL 1, 1999
(COMMENCEMENT OF OPERATIONS)
TO JUNE 30, 1999
(UNAUDITED)
INVESTMENT INCOME
Interest $ 3,449
-----------
OPERATING EXPENSES
Management fee 210,827
Organizational costs 189,902
Professional fees 26,869
Custody fees 1,800
Miscellaneous 16,667
-----------
TOTAL OPERATING EXPENSES 446,065
-----------
NET INVESTMENT LOSS (442,616)
-----------
UNREALIZED GAIN ON INVESTMENTS IN FUNDS:
NET CHANGE IN UNREALIZED APPRECIATION
ON INVESTMENTS IN FUNDS 7,593,749
-----------
INCREASE IN PARTNERS' CAPITAL
DERIVED FROM INVESTMENT ACTIVITIES $ 7,151,133
===========
The accompanying notes are an integral part of these financial statements.
2
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PW TECHNOLOGY PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL - NET ASSETS
- --------------------------------------------------------------------------------
PERIOD FROM APRIL 1, 1999
(COMMENCEMENT OF OPERATIONS)
TO JUNE 30, 1999
(UNAUDITED)
FROM INVESTMENT ACTIVITIES
Net investment loss $ (442,616)
Net change in unrealized appreciation
on investments in funds 7,593,749
-------------
INCREASE IN PARTNERS' CAPITAL
DERIVED FROM INVESTMENT ACTIVITIES 7,151,133
PARTNERS' CAPITAL TRANSACTIONS
General Partner's capital contribution 1,000,000
Limited Partners' capital contributions 112,704,095
-------------
INCREASE IN PARTNERS' CAPITAL DERIVED
FROM CAPITAL TRANSACTIONS 113,704,095
PARTNERS' CAPITAL AT BEGINNING OF PERIOD --
-------------
PARTNERS' CAPITAL AT END OF PERIOD $ 120,855,228
=============
The accompanying notes are an integral part of these financial statements.
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PW TECHNOLOGY PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 1999 (UNAUDITED)
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1. ORGANIZATION
PW Technology Partners, L.P. (the "Fund"), was organized as a limited
partnership under the laws of Delaware on February 28, 1999. The Fund
is registered under the Investment Company Act of 1940 (the "Act") as a
closed-end, non-diversified, management investment company. The Fund's
objective is to maximize capital appreciation over the long-term in a
variety of market conditions by allocating its assets among a select
group of portfolio managers who invest primarily in, or who have
particular knowledge within, the technology sector. Generally, such
portfolio managers conduct their investment programs through
unregistered investment partnerships, which have investors other than
the Fund, and in other registered investment companies (collectively
the "Investment Funds"). Commencement of operations began April 1,
1999.
The General Partner of the Fund is PW Fund Advisor, L.L.C. (the
"Manager"), a Delaware limited liability company. The Manager is an
indirect wholly-owned subsidiary of Paine Webber Group Inc., and is
registered as an investment adviser under the Investment Advisers Act
of 1940, as amended. The Fund's General Partner, to the fullest extent
permitted by applicable law, has irrevocably delegated to a group of
individuals (the "Directors") its rights and powers to manage and
control the business affairs of the Fund, including the exclusive
authority to oversee and to establish policies regarding the
management, conduct and operation of the Fund's business.
Initial and additional subscriptions for interests by eligible
investors may be accepted at such times as the Manager may determine.
The Fund reserves the right to reject any subscription for interests in
the Fund. Limited Partners can only transfer or assign their
partnership interests with the approval of the Manager.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Manager to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. The Manager believes that the
estimates utilized in preparing the Fund's financial statements are
reasonable and prudent; however, actual results could differ from these
estimates.
A. PORTFOLIO VALUATION
The Fund's investments in Investment Funds are carried at fair value as
determined by the Fund's pro-rata interest in the net assets of each
Investment Fund based on the respective Investment Fund's unaudited
financial statements. All valuations are net of management and
performance incentive fees or allocations payable to the Investment
Funds' managers as required by the Investment Funds' agreements.
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PW TECHNOLOGY PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 1999 (UNAUDITED) (CONTINUED)
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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
A. PORTFOLIO VALUATION (CONTINUED)
The underlying investment in each Investment Fund is accounted for at
fair value as described in each Investment Fund's financial statements.
The fair value relating to certain underlying investments of these
Investment Funds', for which there is no ready market, has been
estimated by the respective Investment Funds' management and is based
upon available information in the absence of readily ascertainable
market values and does not necessarily represent amounts that might
ultimately be realized. Because of the inherent uncertainty of
valuation, those estimated fair values may differ significantly from
the values that would have been used had a ready market for the
investments existed. These differences could be material.
Distributions received, whether in the form of cash or securities, are
applied as a reduction of the investment's cost when identified by the
Investment Funds' as a return of capital.
B. PARTNERSHIP EXPENSES
Costs incurred to organize the limited partnership were expensed. The
Partnership will bear all expenses incurred in the business of the
Partnership, including, but not limited to, the following: all costs
and expenses related to portfolio transactions and positions for the
Partnership's account; legal fees; accounting and auditing fees; costs
of insurance; registration expenses; certain offering costs; and
expenses of meetings of Directors and limited partners.
C. CASH EQUIVALENTS
For purposes of the Statements of Assets, Liabilities and Partners'
Capital, cash equivalents represents amounts invested in the RBB Sansom
Street Money Market Portfolio.
D. INCOME TAXES
No provision for the payment of federal, state or local income taxes on
the profits of the Fund will be made. The Partners are individually
liable for the income taxes on their share of the Fund's income. In
addition, the Fund invests in securities partnerships that are
primarily involved in the purchase and sale of intangible property for
their own accounts. As such, it is not deemed to be engaged in an
unincorporated business and thus is not subject to New York City
unincorporated business taxes.
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PW TECHNOLOGY PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 1999 (UNAUDITED) (CONTINUED)
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3. INVESTMENTS
As of June 30, 1999, the Fund had investments in Investment Funds, none
of which were related parties. The Fund's investments are summarized
below based on the investment objectives of the specific Investment
Funds at June 30, 1999.
INVESTMENT OBJECTIVE COST FAIR VALUE
-------------------- ------ ----------
Long/Short Equity $113,000,000 $120,593,749
The agreements related to investments in Funds provide for compensation
to the general partners/managers in the form of management fees of 1%
to 2% (per annum) of net assets and performance incentive fees or
allocations of 20% of net profits earned.
4. MANAGEMENT FEE, PROFIT ALLOCATION, RELATED PARTY TRANSACTIONS AND OTHER
Certain administrative and operational support services are provided to
the Fund by entities related to the Manager. Pursuant to the
Partnership Agreement, the Fund pays a monthly management fee equal to
.083% (1% per annum) of the capital account of each Limited Partner, to
PW Alternative Asset Management Inc. ("PWAAM"), a wholly owned
subsidiary of PaineWebber Group Inc. and managing member of the General
Partner.
In accordance with the Partnership Agreement, the Manager is allocated
an amount based on the performance of the Fund (the "Performance
Bonus"), which is calculated separately with respect to each Limited
Partner.
The General Partner's capital account balance at June 30, 1999 was
$1,078,392.
PFPC Inc. serves as Administrator and Accounting Agent to the Fund, and
in that capacity provides certain accounting, record keeping, tax and
investor related services.
PFPC Trust Company serves as custodian of the Fund's assets.
5. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
In the normal course of business, the Investment Funds in which the
Fund invests trade various financial instruments and enter into various
investment activities with off-balance sheet risk. These include, but
are not limited to, short selling activities, writing option contracts,
contracts for differences, and equity swaps.
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PW TECHNOLOGY PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 1999 (UNAUDITED) (CONTINUED)
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6. SELECTED FINANCIAL RATIOS
The following represents the ratios to average net assets and other
supplemental information for the period indicated:
FOR THE PERIOD FROM
APRIL 1, 1999
(COMMENCEMENT OF OPERATIONS)
TO JUNE 30, 1999
----------------
Ratio of net investment loss
to average net assets (2.26%)*
Ratio of operating expenses
to average net assets 2.28%*
Ratio of interest expense
to average net assets N/A
Portfolio turnover rate 0.00%
Rate of return 7.46%**
Average debt ratio N/A
* Annualized.
** Rate of return assumes a purchase of a limited partnership interest
in the Fund on the first day and a sale of the limited partnership
interest on the last day of the period noted, after incentive
allocation to the Manager, if any. Rate of return calculations for a
period of less than a full year are not annualized.
7. YEAR 2000
Like other investment companies, financial and business organizations
around the world, the Fund could be adversely affected if the computer
systems it uses and those used by the Fund's 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 Fund has assessed its computer systems and the systems compliance
issues of its other major service providers. The Fund 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
assurances that comparable steps are being taken by its 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 Fund 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 Fund's operations. Management
will continue to monitor the status of and its exposure to this issue.
For the period ending June 30, 1999, the Fund incurred no Year 2000
related expenses, and it does not expect to incur significant Year 2000
expenses in the future.
The Fund is in the process of establishing a contingency plan to
address recovery from unavoided or unavoidable Year 2000 problems, if
any.
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PW TECHNOLOGY PARTNERS, L.P.
SCHEDULE OF INVESTMENTS IN FUNDS AT JUNE 30, 1999 (UNAUDITED)
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FUND NAME COST FAIR VALUE REVENUES
- -------------------------- ------------- ------------ -----------
Galleon Partners II, LP $ 23,950,000 $ 26,693,013 $ 2,743,013
Owenoke Associates, LP 17,200,000 18,829,000 1,629,000
PAW Partners, LP 23,950,000 25,719,926 1,769,926
Pequot Perennial Fund, LP 23,950,000 25,295,285 1,345,285
Spinnaker Technology Fund, LP 23,950,000 24,056,525 106,525
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TOTAL $ 113,000,000 120,593,749 $ 7,593,749
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OTHER ASSETS, LESS LIABILITIES 261,479
-------------
PARTNERS' CAPITAL - NET ASSETS $ 120,855,228
=============
The accompanying notes are an integral part of these financial statements.
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