PW TECHNOLOGY PARTNERS, L.P.
FINANCIAL STATEMENTS
(UNAUDITED)
SEMI ANNUAL REPORT
FOR THE PERIOD FROM JANUARY 1, 2000
THROUGH JUNE 30, 2000
<PAGE>
PW TECHNOLOGY PARTNERS, L.P.
FINANCIAL STATEMENTS
SEMI ANNUAL REPORT
FOR THE PERIOD FROM JANUARY 1, 2000
THROUGH JUNE 30, 2000
(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
<PAGE>
PW TECHNOLOGY PARTNERS, L.P.
STATEMENT OF ASSETS, LIABILITIES AND PARTNERS' CAPITAL
(UNAUDITED)
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JUNE 30, 2000
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ASSETS
Investments in funds, at value (Cost $504,650,000) $651,112,720
Cash and cash equivalents 11,447,574
Dividend receivable 58,052
Prepaid assets 12,172
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TOTAL ASSETS 662,630,518
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LIABILITIES
Payables:
Management fee 506,364
Interests repurchased, not settled 372,020
Administration expense 192,379
Professional fees 72,020
Miscellaneous fees 9,678
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TOTAL LIABILITIES 1,152,461
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NET ASSETS $661,478,057
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PARTNERS' CAPITAL - NET ASSETS
Represented by:
Capital contributions $519,914,362
Accumulated net investment loss (4,899,025)
Accumulated net unrealized appreciation on investments 146,462,720
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PARTNERS' CAPITAL - NET ASSETS $661,478,057
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1
The accompanying notes are an integral part of these financial statements.
<PAGE>
PW TECHNOLOGY PARTNERS, L.P.
STATEMENT OF OPERATIONS
(UNAUDITED)
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FOR THE PERIOD FROM JANUARY 1, 2000 THROUGH JUNE 30, 2000
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INVESTMENT INCOME
Dividends $ 150,347
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TOTAL INVESTMENT INCOME 150,347
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OPERATING EXPENSES
Management fee 2,790,375
Administration expense 276,707
Professional fees 87,375
Miscellaneous 43,597
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TOTAL OPERATING EXPENSES 3,198,054
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NET INVESTMENT LOSS (3,047,707)
--------------------------------------------------------------------------------
UNREALIZED GAIN FROM INVESTMENTS
Net change in unrealized appreciation from investments
during the period 33,895,514
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UNREALIZED GAIN FROM INVESTMENTS 33,895,514
--------------------------------------------------------------------------------
INCREASE IN PARTNERS' CAPITAL
DERIVED FROM OPERATIONS $30,847,807
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2
The accompanying notes are an integral part of these financial statements.
<PAGE>
PW TECHNOLOGY PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL - NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
PERIOD FROM
PERIOD FROM APRIL 1, 1999
JANUARY 1, 2000 (COMMENCEMENT OF
TO JUNE 30, 2000 OPERATIONS) TO
(UNAUDITED) DECEMBER 31, 1999
-------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net investment loss $ (3,047,707) $ (1,851,318)
Change in unrealized appreciation from investments 33,895,514 112,567,206
-------------------------------------------------------------------------------------------------
INCREASE IN PARTNERS' CAPITAL
DERIVED FROM OPERATIONS 30,847,807 110,715,888
-------------------------------------------------------------------------------------------------
PARTNERS' CAPITAL TRANSACTIONS
Capital contributions from Limited Partners 256,955,400 273,965,586
Capital withdrawals from Limited Partners (8,502,075) -
Capital contributions from General Partner - 1,000,000
Capital withdrawals from General Partner (3,575,388) -
Allocation to General Partner from Limited Partner withdrawals 70,839
-------------------------------------------------------------------------------------------------
INCREASE IN PARTNERS' CAPITAL DERIVED
FROM CAPITAL TRANSACTIONS 244,948,776 274,965,586
-------------------------------------------------------------------------------------------------
PARTNERS' CAPITAL AT BEGINNING OF PERIOD 385,681,474 -
-------------------------------------------------------------------------------------------------
PARTNERS' CAPITAL AT END OF PERIOD $661,478,057 $ 385,681,474
-------------------------------------------------------------------------------------------------
</TABLE>
3
The accompanying notes are an integral part of these financial statements.
<PAGE>
PW TECHNOLOGY PARTNERS,L.P.
NOTES TO FINANCIAL STATEMENTS
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JUNE 30, 2000
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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 December 28, 1998. 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. The
Fund's investment objective is to maximize capital appreciation over the
long-term. The Fund pursues its investment objective by deploying its assets
primarily 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 (collectively, the "Investment Funds"),
in which the Fund invests as a limited partner along with other investors.
Operations of the Fund commenced on April 1, 1999.
The General Partner of the Fund is PW Fund Advisor, L.L.C. (the "Manager" or
"PWFA"), 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. The
Directors have engaged the Manager to provide investment advice regarding the
selection of Investment Funds and the responsibility of the day-to-day
management of the Fund.
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. The Fund from
time to time may offer to repurchase interests pursuant to written tenders to
Partners. These repurchases will be made at such times and on such terms as
may be determined by the Directors, in their complete and exclusive
discretion. The Manager expects that generally, beginning in 2001, it will
recommend to the Directors that the Fund offer to repurchase interests from
Partners twice in each year, in June and December, and intends to recommend
the making of an offer to repurchase interests effective December 2000.
Limited Partners can only transfer or assign their partnership interests with
the approval of the Manager.
At the Fund's initial tender on March 31, 2000, Limited Partners withdrew
$8,502,075 from the Fund.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires the Manager to
make estimates and assumptions that
4
<PAGE>
PW TECHNOLOGY PARTNERS,L.P.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
JUNE 30, 2000
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2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
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.
Cash and cash equivalents consist of monies invested in money market funds
and are accounted for at cost plus accrued interest as reported by the money
market funds.
a. PORTFOLIO VALUATION
Net asset value of the Fund will be determined by or at the direction of the
Manager as of the close of business at the end of any fiscal period in
accordance with the valuation principles set forth below or as may be
determined from time to time pursuant to policies established by the
Directors.
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. All valuations utilize financial information supplied by
each Investment Fund and are net of management and performance incentive fees
or allocations payable to the Investment Funds' managers or pursuant to the
Investment Funds' agreements. The underlying investments of each Investment
Fund are accounted for at fair value as described in each Investment Fund's
financial statements.
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. FUND EXPENSES
The Fund will bear all expenses incurred in the business of the Fund,
including, but not limited to, the following: all costs and expenses related
to portfolio transactions and positions for the Fund's account; legal fees;
accounting and auditing fees; costs of insurance; registration expenses;
certain offering and organization costs; and expenses of meetings of
Directors and Limited Partners.
5
<PAGE>
PW TECHNOLOGY PARTNERS,L.P.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
JUNE 30, 2000
--------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
c. INCOME TAXES
No provision for the payment of Federal, state or local income taxes has been
provided on the profits of the Fund. Each Partner is individually required to
report on its own tax return its distributive share of the Fund's taxable
income or loss.
3. MANAGEMENT FEE, INCENTIVE ALLOCATION, RELATED PARTY TRANSACTIONS AND OTHER
PWFA provides certain management and administrative services to the Fund,
including, among other things, providing office space and other support
services. In consideration for such services, the Fund will pay PWFA a
monthly management fee at an annual rate of 1% of the Fund's net assets,
excluding assets attributable to the General Partner's capital account (the
"Fee"). The Fee is debited against the Limited Partners' capital accounts. A
portion of the Fee will be paid by PWFA to its affiliates. PaineWebber Inc.
acts as a placement agent for the Fund, without special compensation from the
Fund, and will bear its own costs associated with its activities as placement
agent.
The increase in partners' capital derived from operations is initially
allocated to the capital accounts of all Partners on a pro-rata basis. In
accordance with the Partnership Agreement, the Manager is then allocated an
amount based on the performance of the Fund (the "Performance Bonus") for the
Measurement Period, as defined in the Confidential Memorandum (i.e. the
period commencing on the admission of a Limited Partner to the Fund, and
thereafter each period commencing on the day following the last Measuring
Period and ending generally on the first to occur of (1) a fiscal year-end or
(2) a whole or partial redemption). The Performance Bonus is calculated
separately with respect to each Limited Partner. The Performance Bonus is
equal to 1% of the balance of the Limited Partner's capital account at the
end of the Measurement Period, provided that such appreciation (net of any
Performance Bonus) exceeds the Limited Partner's threshold return. The
threshold return is the amount that a Limited Partner would have earned for a
fiscal year if it had received an annualized rate of return of 20% on its
opening capital account balance, as adjusted.
The tender at March 31, 2000 generated a Performance Bonus of $70,839, which
was recorded as an increase to the General Partner's capital account.
Each Director, who is not an "interested person" of the Fund, as defined by
the 1940 Act, receives an annual retainer of $5,000 plus a fee for each
meeting attended. Any Director who is an "interested person" does not receive
any annual or other fee from the Fund. All Directors are reimbursed by the
Fund for all reasonable out-of-pocket expenses incurred by them in performing
their duties.
6
<PAGE>
PW TECHNOLOGY PARTNERS,L.P.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
JUNE 30, 2000
--------------------------------------------------------------------------------
3. MANAGEMENT FEE, INCENTIVE ALLOCATION, RELATED PARTY TRANSACTIONS AND OTHER
(CONTINUED)
PFPC Trust Company (an affiliate of PNC Bank, NA) serves as custodian of the
Fund's assets and provides custodial services for the Fund. PFPC Inc. (also
an affiliate of PNC Bank, NA) serves as Administrator and Accounting Agent to
the Fund and in that capacity provides certain accounting, record keeping,
tax and investor related services. The Fund pays a monthly fee to the
Administrator based primarily upon average net assets, subject to a minimum
monthly fee, and will reimburse certain of the Administrator's expenses.
4. SECURITIES TRANSACTIONS
Aggregate purchases of Investment Funds for the period ended June 30, 2000,
amounted to $231,640,000.
At June 30, 2000, the cost of investments for Federal income tax purposes was
substantially the same as the cost for financial reporting purposes. At June
30, 2000, accumulated net unrealized appreciation on investments was
$146,462,720, consisting of $146,462,720 gross unrealized appreciation.
5. INVESTMENTS
As of June 30, 2000, 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,
2000.
Investment Objective Cost Fair Value
-------------------- ---- ----------
Long/Short Equity $504,650,000 $651,112,720
The following table lists the Fund's investments in Investment Funds as of
June 30, 2000. The agreements related to investments in Investment 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. The Investment
Funds provide for periodic redemptions, with lock up provisions ranging from
one to two years from initial investment.
7
<PAGE>
PW TECHNOLOGY PARTNERS,L.P.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
JUNE 30, 2000
--------------------------------------------------------------------------------
5. INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
% of Fund's
Cost Income Fair Value Capital
Investment Fund:
<S> <C> <C> <C> <C>
Bowman Technology Fund, LP * $114,950,000 $ 30,697,000 $145,647,000 22.0
Camelot Capital, LP 66,840,000 10,489,572 77,329,572 11.7
Galleon Partners II, LP 119,250,000 33,757,884 153,007,884 23.1
Intrepid Capital, LP 4,000,000 184,044 4,184,044 0.6
Owenoke Associates, LP 23,000,000 9,157,000 32,157,000 4.9
PAW Partners, LP 81,000,000 24,726,974 105,726,974 16.0
Pequot Technology Perennial Fund, LP 95,610,000 37,450,246 133,060,246 20.1
------------ ------------ ------------ ----
Total $504,650,000 $146,462,720 $651,112,720 98.4
Other Assets, less Liabilities 10,365,337 1.6
------------ -----
Partners' Capital - Net Assets $661,478,057 100.0
<FN>
* Bowman Technology Fund, LP's name changed during the period from Spinnaker
Technology Fund, LP
</FN>
</TABLE>
6. 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.
8
<PAGE>
PW TECHNOLOGY PARTNERS,L.P.
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
JUNE 30, 2000
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7. FINANCIAL HIGHLIGHTS
The following represents the ratios to average net assets and other
supplemental information for the period indicated:
<TABLE>
<CAPTION>
PERIOD ENDED PERIOD ENDED
JUNE 30, 2000 DECEMBER 31, 1999
------------- -----------------
<S> <C> <C>
Ratio of net investment loss to average net assets -1.14* -1.38%*
Ratio of expenses to average net assets 1.19%* 1.41%*
Total return 9.05%** 50.96%**
<FN>
* Annualized.
** Total return assumes a purchase of a limited partnership interest in the Fund
at the beginning of the period and a sale of the Fund interest on the last
day of the period noted, after Performance Bonus to the Manager, and does not
reflect the deduction of placement fees, if any, incurred when subscribing to
the Fund. Total returns for a period of less than a full year is not
annualized.
</FN>
</TABLE>
8. SUBSEQUENT EVENTS
Effective July 1, 2000, the Fund received capital contributions from existing
partners of approximately $2,795,490 and initial capital contributions of
approximately $9,977,541.
9
