<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A to N/A
--- ---
Commission File No. 0-16683
TECHNOLOGY FUNDING SECURED INVESTORS II
----------------------------------------------------
(Exact name of Registrant as specified in its charter)
CALIFORNIA 94-3034262
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2000 Alameda de las Pulgas, Suite 250
San Mateo, California 94403
- -------------------------------------- --------
(Address of principal executive offices) (Zip Code)
(415) 345-2200
--------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
No active market for the units of limited partnership interests ("Units")
exists, and therefore the market value of such Units cannot be
determined.
<PAGE>
I. FINANCIAL INFORMATION
Item 1. Financial Statements
BALANCE SHEETS
- --------------
<TABLE>
<CAPTION>
(unaudited)
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
ASSETS
Investments:
Secured notes receivable, net
(cost basis of $4,057,307 and
$3,880,883 at 1997 and 1996,
respectively) $1,792,307 1,630,883
Equity investments (cost basis
of $4,166,816 and $2,399,524 at
1997 and 1996, respectively) 3,926,713 1,637,835
--------- ---------
Total investments 5,719,020 3,268,718
Cash and cash equivalents 808,105 3,243,908
Restricted cash 405,694 642,694
Other assets 29,315 12,706
--------- ---------
Total $6,962,134 7,168,026
========= =========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $ 223,633 309,815
Accrued limited partner unit repurchases 250,284 --
Due to related parties 10,453 42,869
Other liabilities 11,996 14,594
--------- ---------
Total liabilities 496,366 367,278
Commitments and contingencies
(Notes 2, 6 and 8)
Partners' capital:
Limited Partners
(Units outstanding of 149,863
and 155,671 in 1997
and 1996, respectively) 9,126,022 9,961,677
General Partners (155,153) (149,240)
Net unrealized fair value decrease
from cost:
Secured notes receivable (2,265,000) (2,250,000)
Equity investments (240,101) (761,689)
--------- ---------
Total partners' capital 6,465,768 6,800,748
--------- ---------
Total $6,962,134 7,168,026
========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF OPERATIONS (unaudited)
- -----------------------------------
<TABLE>
<CAPTION>
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
------------------------ ------------------------
1997 1996 1997 1996
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Income:
Secured notes receivable interest $ -- 44,831 22,462 97,704
Short-term investment interest 5,354 44,314 53,970 143,287
Other income 11,380 -- 25,023 --
------- ------- ------- -------
Total income 16,734 89,145 101,455 240,991
------- ------- ------- -------
Costs and expenses:
Management fees 32,488 40,470 99,249 125,793
Other investment expenses -- 64,567 190,431 104,148
Operating expenses:
Lending operations and investment
management 65,774 26,515 127,647 96,069
Administrative and investor
services 89,069 51,891 208,441 210,908
Computer services 24,180 14,279 52,159 53,796
Professional fees 17,440 8,712 36,636 36,702
------- ------- ------- -------
Total operating expenses 196,463 101,397 424,883 397,475
------- ------- ------- -------
Total costs and expenses 228,951 206,434 714,563 627,416
------- ------- ------- -------
Net operating loss (212,217) (117,289) (613,108) (386,425)
Net realized gain from sales of
equity investments 16,626 -- 21,824 48,824
Realized losses from
investment write-downs -- -- -- (125,104)
Recoveries from investments
previously written off -- 1,907 -- 113,214
------- ------- ------- -------
Net realized loss (195,591) (115,382) (591,284) (349,491)
Change in net unrealized
fair value:
Secured notes receivable -- -- (15,000) (97,000)
Equity investments 441,001 39,279 521,588 (72,716)
------- ------- ------- -------
Net income (loss) $245,410 (76,103) (84,696) (519,207)
======= ======= ======= =======
Net realized loss per Unit $ (1) (1) (4) (2)
======= ======= ======= =======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited)
- -----------------------------------
<TABLE>
<CAPTION>
For the Nine Months Ended September 30,
---------------------------------------
1997 1996
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Interest and other income received $ 101,455 235,452
Cash paid to vendors (400,377) (209,700)
Cash paid to related parties (451,991) (1,344,723)
Cash paid to affiliated partnerships -- (2,047)
Reimbursement of collection expenses
from a portfolio company -- 30,045
--------- ---------
Net cash used by operating
activities (750,913) (1,290,973)
--------- ---------
Cash flows from investing activities:
Secured notes receivable issued (181,413) (168,002)
Repayments of secured notes receivable 4,989 296,309
Proceeds from sales of equity investments 69,534 57,574
Recoveries from investments previously
written off -- 113,214
Purchase of equity investments (1,815,000) --
--------- ---------
Net cash (used) provided by
investing activities (1,921,890) 299,095
--------- ---------
Cash flows from financing activities:
Distributions to Limited and General
Partners -- (466,804)
--------- ---------
Net cash used by financing
activities -- (466,804)
--------- ---------
Net decrease in cash and
restricted cash (2,672,803) (1,458,682)
Cash and restricted cash at
beginning of year 3,886,602 5,108,537
--------- ---------
Cash and restricted cash at September 30 $1,213,799 3,649,855
========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited) (continued)
- ------------------------------------------------
<TABLE>
<CAPTION>
For the Nine Months Ended September 30,
---------------------------------------
1997 1996
---------- ---------
<S> <C> <C>
Reconciliation of net loss to net
cash used by operating activities:
Net loss $ (84,696) (519,207)
Adjustments to reconcile net loss to net
cash used by operating activities:
Net realized gain from sales of
equity investments (21,824) (48,824)
Realized losses from investment
write-downs -- 125,104
Recoveries from investments previously
written off -- (113,214)
Change in net unrealized fair value:
Secured notes receivable 15,000 97,000
Equity investments (521,588) 72,716
Other, net -- (5,678)
Changes in:
Accounts payable and accrued expenses (86,182) 399
Due to/from related parties (32,416) (865,737)
Accrued interest on secured and
convertible notes receivable -- 139
Other changes, net (19,207) (33,671)
-------- ---------
Net cash used by operating activities $(750,913) (1,290,973)
======== =========
Non-cash financing activities:
Limited Partners unit repurchases $ 250,284 100,776
======== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
- ----------------------------------------
1. General
-------
In the opinion of the Managing General Partner, the Balance Sheets as of
September 30, 1997, and December 31, 1996, and the related Statements of
Operations for the three and nine months ended September 30, 1997 and 1996,
and Statements of Cash Flows for the nine months ended September 30, 1997
and 1996, reflect all adjustments which are necessary for a fair
presentation of the financial position, results of operations and cash
flows for such periods. These statements should be read in conjunction
with the Annual Report on Form 10-K for the year ended December 31, 1996.
The following notes to financial statements for activity through September
30, 1997, supplement those included in the Annual Report on Form 10-K.
Allocation of income and loss to Limited and General Partners is based on
cumulative income and loss. Adjustments, if any, are reflected in the
current quarter balances.
Withdrawal of Capital
---------------------
Each June, Limited Partners may tender their Units for repurchase by the
Partnership. The price paid for any Units tendered is subject to the
restrictions stated in the Partnership Agreement. As of September 30,
1997, requests to repurchase 5,808 limited partner units had been received.
These unit repurchases will be made in the fourth quarter of 1997.
2. Related Party Transactions
--------------------------
Related party costs are included in costs and expenses shown on the
Statements of Operations. Related party costs for the nine months ended
September 30, 1997 and 1996, were as follows:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Management fees $ 99,249 125,793
Reimbursable operating expenses 320,326 355,240
</TABLE>
Certain reimbursable expenses have been allocated and accrued based upon
interim estimates prepared by the Managing General Partner and are adjusted
to actual cost periodically. As of September 30, 1997, and December 31,
1996, due to related parties for such expenses were $10,453 and $42,869,
respectively.
3. Net Realized Income (Loss) Per Unit
-----------------------------------
Net realized income (loss) per Unit is calculated by dividing total net
realized income (loss) allocated to the Limited Partners by the average
number of Units outstanding for the nine months ended September 30, 1997
and 1996 of 154,682 and 157,829, respectively.
4. Equity Investments
------------------
A complete listing of the Partnership's equity investments at December 31,
1996, is included in the 1996 Annual Report. Activity from January 1
through September 30, 1997, consisted of
<TABLE>
January 1 through
September 30, 1997
-----------------------
Investment Cost Fair
Industry/Company Date Position Basis Value
- ---------------- ---------- -------- --------- ----------
<S> <C> <C> <C> <C>
Balance at January 1, 1997 $2,399,524 1,637,835
--------- ---------
Significant changes:
WARRANTS:
- --------
Medical
- -------
Hemocleanse, Inc. 01/92 12,474 Common
shares at $.50;
exercised 01/97 0 (31,185)
STOCKS:
- ------
Computers and Computer Equipment
- --------------------------------
MTI Technology Corporation 04/94 20,928 Common
shares 0 213,465
Industrial/Business Automation
- ------------------------------
Cyclean of Long Beach, LLC 04/97 LLC Units 1,815,000 1,815,000
Medical
- -------
Hemocleanse, Inc. 01/97 10,395 Common
shares 5,198 31,185
Microelectronics
- ----------------
Celeritek, Inc. 05/94 47,219 Common
shares 0 354,143
Elantec Inc. Various 11,590 Common
shares (52,906) (54,508)
Telecommunications
- ------------------
3Com Corporation 06/95 1,490 Common
shares 0 (36,825)
--------- ---------
Total significant changes 1,767,292 2,291,275
Other changes, net 0 (2,397)
--------- ---------
Total equity investments at September 30, 1997 $4,166,816 3,926,713
========= =========
</TABLE
Marketable Equity Securities
- ----------------------------
At September 30, 1997, and December 31, 1996, marketable equity securities
had aggregate costs of $335,052 and $387,958, respectively and aggregate
fair values of $1,192,120 and $715,845, respectively. The net unrealized
gains at September 30, 1997, and December 31, 1996, included gross gains of
$857,068 and $339,223, respectively.
Celeritek, Inc.
- ---------------
The Partnership recorded an increase in fair value of $354,143 to reflect
the market price of the unrestricted shares at September 30, 1997.
Subsequent to quarter end, the fair value of the Partnership's investment
decreased by $78,478 as a result of a decrease in the publicly traded
market price at November 10, 1997.
Cyclean of Long Beach, LLC
- --------------------------
In April, 1997, the Partnership purchased LLC units representing 100%
ownership of Cyclean of Long Beach, LLC for $5,500,000. The Partnership
funded $1,815,000 of this purchase with the balance being participated to
an affiliated partnership. See Note 6 for additional information.
Elantec, Inc.
- -------------
In August of 1997, the Partnership sold its entire investment in the
company for total proceeds of $69,534 and a realized gain of $16,626.
Hemocleanse, Inc.
- -----------------
In January of 1997, the Partnership exercised its warrant for common shares
without cash and received 10,395 shares of common stock and realized a gain
of $5,198.
MTI Technology Corporation
- --------------------------
The Partnership recorded an increase in fair value of $213,465 to reflect
the market price of the unrestricted shares at September 30, 1997.
In October, 1997 the Partnership sold its entire investment in the company
for total proceeds of $320,384 and realized a gain of $247,136.
3Com Corporation
- ----------------
The Partnership recorded a fair value decrease of $36,825 to reflect the
market price of the unrestricted shares at September 30, 1997.
5. Secured Notes Receivable, Net
-----------------------------
Activity from January 1 through September 30, 1997, consisted of:
</TABLE>
<TABLE>
<S> <C>
Balance at January 1, 1997 $1,630,883
1997 activity:
Secured notes receivable issued 181,413
Repayments of secured notes receivable (4,989)
Increase in allowance for loan losses (15,000)
---------
Total secured notes receivable, net,
at September 30, 1997 $1,792,307
=========
</TABLE>
The Partnership had accrued interest of $4,306 December 31, 1996. There
was no accrued interest at September 30, 1997.
Changes in the allowance for loan losses were as follows:
<TABLE>
<S> <C>
Balance at January 1, 1997 $2,250,000
Increase in provision for loan losses 15,000
---------
Balance at September 30, 1997 $2,265,000
=========
</TABLE>
The Partnership's secured notes receivable portfolio was on nonaccrual
status due to the uncertainty of the financial condition of certain
borrowers at September 30, 1997 and December 31, 1996. The Managing
General Partner continues to monitor the progress of these companies. The
fair value at September 30, 1997, recognizes the Managing General Partner's
estimate of collectibility of these notes.
The allowance for loan losses is adjusted quarterly based upon changes to
the portfolio size and risk profile. Although the allowance is established
by evaluating individual debtor repayment ability, the allowance represents
the Managing General Partner's assessment of the portfolio as a whole.
All notes are secured by specific assets of the borrowing company. The
interest rates on notes issued during the nine months ended September 30,
1997 ranged from 12% to 18%.
6. Litigation and Other Investment Expenses
----------------------------------------
Other investment expenses in 1997 of $190,431 reflect the cost of the
following legal actions:
The case between the Partnership and a portfolio company in the
retail/consumer products industry against Quebecor has been resolved in
favor of the Partnership.
In March of 1997, the Partnership and the portfolio company obtained a
favorable judgment in its appeal of a prior trial court ruling that
declared the assets of the portfolio company, for a sum not certain, are
available to satisfy certain claims of Quebecor. Quebecor's subsequent
appeal to the North Carolina Supreme Court was denied in July of 1997.
Quebecor's request for a rehearing was denied and the suit has been
terminated. The Partnership is seeking to recover certain costs of this
litigation.
In March of 1996, the Partnership filed a lawsuit in the United States
District Court, Northern District of California against Cyclean, Inc.
("Cyclean"), Ecopave, L.P. ("Ecopave"), Ecopave Corp. and Stephen M. Vance
("Vance") to protect its interest in certain assets which were a security
interest on a secured loan extended by the Partnership to Cyclean. In
January of 1997, a counter claim was filed by Ecopave and Vance.
As a result of a settlement conference, these lawsuits were resolved
effective April 1, 1997. The Partnership, through Cyclean of Long Beach,
LLC, indirectly purchased Ecopave and Vance's interest in Ecopave for $5.5
million, of which $3,685,000 was participated to an affiliated partnership,
and set up an escrow account for $750,000 as collateral for a note payable
of Ecopave. (See Notes 4 and 8 for additional disclosure). The settlement
of this claim should not result in any material negative impact to the
Partnership as the Managing General Partner believes that the fair value of
this additional investment is equal to or greater than the purchase price
and the Partnership has improved its ability to recover its secured notes
receivable.
At September 30, 1997, restricted cash of $405,694 represented amounts held
in escrow accounts as collateral for the Ecopave note discussed above and
pending payments to be made as a result of the termination of the Quebecor
litigation.
7. Cash and Cash Equivalents
-------------------------
At September 30, 1997, and December 31, 1996, cash and cash equivalents
consisted of:
<TABLE>
<CAPTION>
1997 1996
-------- ---------
<S> <C> <C>
Demand and brokerage accounts $ 758 7,987
Money market accounts 807,347 3,235,921
------- ---------
Total $808,105 3,243,908
======= =========
</TABLE>
8. Commitments and contingencies
-----------------------------
The Partnership is a party to financial instruments with off-balance-sheet
risk in the normal course of its business. Generally, these instruments
are equipment financing commitments or accounts receivable lines of credit
that are outstanding but not currently fully utilized by a borrowing
company. As they do not represent current outstanding balances, these
unfunded commitments are properly not recognized in the financial
statements. The Partnership had no unfunded commitments as of September 30,
1997.
In April, 1997, the Partnership together with an affiliated partnership,
deposited $750,000 into an escrow account as collateral for a note payable
of Ecopave. The Partnership's share of the deposit is $247,500. While the
Partnership expects Ecopave to repay the note, if the company fails to do
so, the note holder may assume the escrow account.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
- -------------------------------
During the nine months ended September 30, 1997, net cash used by operating
activities totaled $750,913. The Partnership paid management fees of
$99,249 to the Managing General Partner and reimbursed related parties for
operating expenses of $352,742. In addition, other operating expenses of
$400,377 were paid and $101,455 in interest and other income was received.
During the nine months ended September 30, 1997, the Partnership funded a
$1,815,000 equity investment and a $181,413 investment in secured notes
receivable to portfolio companies in the industrial/business automation and
computers and computer equipment industries. Proceeds from sales of equity
investments were $69,534. Repayments of secured notes receivable were
$4,989.
Cash and restricted cash at September 30, 1997, were $1,213,799. Future
distributions will be dependent upon loan repayments from borrowing
companies, future proceeds from equity investment sales, and available
cash. Operating cash reserves combined with proceeds from the sale of
investments, interest income received on short-term investments and
repayments of secured notes receivable are expected to be sufficient to
fund Partnership operations and loan requirements of existing borrowing
companies through the next twelve months.
Results of Operations
- ---------------------
Current quarter compared to corresponding quarter in the preceding year
- -----------------------------------------------------------------------
Net income was $245,410 for the quarter ended September 30, 1997 as
compared to a net loss of $76,103 for the quarter ended September 30, 1996.
The increase in net income was primarily due to increases of $401,722 in
the change in net unrealized fair value of equity investments and a $64,567
decrease in other investment expenses. These changes were partially offset
by a $95,066 increase in operating expenses and a $72,411 decrease in
interest and other income.
During the quarter ended September 30, 1997, the $441,001 increase in
equity investment fair value was primarily due to increases in the
microelectronics and computers and computer equipment industries. In the
corresponding quarter of 1996 the $39,279 increase was mostly due to
increases in the microelectronics and telecommunications industries.
Other investment expenses were $64,567 for the quarter ended September 30,
1996. The decrease was due to legal expenses related to the settlement of
the lawsuits discussed in Note 6 to the financial statements. There were
no related expenses for the quarter ended September 30, 1997.
Total operating expenses were $196,463 and $101,397 for the three months
ended September 30, 1997 and 1996, respectively. The increase was mostly
attributable to higher lending operations and investment management
expenses due to increased levels of portfolio management and higher
administrative and investor services expenses. In the third quarter of
1997, the Partnership's administrative and investor service operations were
relocated to Santa Fe, New Mexico. This relocation is expected to lower
the future operational costs of the Partnership sufficient to recoup the
initial relocation expenses incurred, and provide a meaningful reduction in
ongoing operational costs.
Interest and other income was $16,734 and $89,145 during the three months
ended September 30, 1997 and 1996, respectively. The decrease was mostly
attributable to lower cash and cash equivalent balances in 1997 and loans
on nonaccrual status.
Given the inherent risk associated with the business of the Partnership,
the future performance of the portfolio company investments may
significantly impact future operations.
Current nine months compared to corresponding nine months in the preceding
- ---------------------------------------------------------------------------
year
- ----
Net losses were $84,696 and $519,207 for the nine months ended September
30, 1997 and 1996, respectively. The decrease in net loss was
substantially due to a $594,304 and an $82,000 increase in the change in
net unrealized fair value of equity investments and secured notes
receivable, respectively, and a $125,104 decrease in realized losses from
investment write-downs. These changes were partially offset by a $139,536
decrease in interest and other income, a $113,214 decrease in recoveries
from investments previously written off and a $86,283 increase in other
investment expenses.
During the nine months ended September 30, 1997, the increase in equity
investment fair value of $521,588 primarily related to increases in
portfolio companies in the microelectronics and computers and computer
equipment industries. In the corresponding period of 1996, the $72,716
decrease primarily related to decreases in portfolio companies in the
industrial/business automation and computer software and systems
industries.
The Partnership recorded a $15,000 and a $97,000 decrease in the net
unrealized fair value of secured notes receivable for the nine months ended
September 30, 1997 and 1996, respectively, based upon the level of loan
loss reserves deemed adequate by the Managing General Partner.
During the nine months ended September 30, 1996, the Partnership realized a
$125,104 loss related to the write-downs of investments related to a
company in the computers and computer equipment industry. There were no
such write-downs in 1997.
Interest and other income was $101,455 and $240,991 for the nine months
ended September 30, 1997 and 1996, respectively. The decrease is due to
lower cash and cash equivalent balances and loans on nonaccrual status.
In the nine months ended September 30, 1996, a $113,214 recovery was
recorded related to investments previously written off. There were no
recoveries in 1997.
Other investment expenses were $190,431 and $104,148 for the nine months
ended September 30, 1997 and 1996, respectively. The increase was due to
higher legal expenses related to the settlement of the lawsuits discussed
in Note 6 to the financial statements.
Total operating expenses were $424,883 and $397,475 for the nine months
ended September 30, 1997, and 1996, respectively. The increase is
primarily attributable to higher lending operations and investment
management expenses due to increased levels of portfolio management.
II. OTHER INFORMATION
Item 1. Legal Proceedings
The lawsuit the Partnership filed in the United States District Court,
Northern District of California, against Cyclean Inc., et al, and the
related counter claims, which were previously reported in the 1996 Form 10-
K, have been resolved effective April 1, 1997. See Note 6 to the financial
statements for additional disclosure.
Item 6. Exhibits and Reports on Form 8-K
(a) No reports on Form 8-K were filed by the Partnership during the
quarter ended September 30, 1997.
(b) Financial Data Schedule for the nine months ended and as of September
30, 1997 (Exhibit 27).
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
TECHNOLOGY FUNDING SECURED INVESTORS II
By: TECHNOLOGY FUNDING INC.
Managing General Partner
Date: November 14, 1997 By: /s/Michael R. Brenner
------------------------------------
Michael R. Brennner
Controller
<TABLE> <S> <C>
<ARTICLE>6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE FORM 10-Q AS OF SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER>1
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<PERIOD-TYPE> 9-MOS
<INVESTMENTS-AT-COST> 8,224,123
<INVESTMENTS-AT-VALUE> 5,719,020
<RECEIVABLES> 0
<ASSETS-OTHER> 29,315
<OTHER-ITEMS-ASSETS> 1,213,799
<TOTAL-ASSETS> 6,962,134
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 496,366
<TOTAL-LIABILITIES> 496,366
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8,970,869
<SHARES-COMMON-STOCK> 149,863
<SHARES-COMMON-PRIOR> 155,671
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2,505,101)
<NET-ASSETS> 6,465,768
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 76,432
<OTHER-INCOME> 25,023
<EXPENSES-NET> 714,563
<NET-INVESTMENT-INCOME> (613,108)
<REALIZED-GAINS-CURRENT> 21,824
<APPREC-INCREASE-CURRENT> 506,588
<NET-CHANGE-FROM-OPS> (84,696)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 5,808
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (334,980)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 99,249
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 718,763
<AVERAGE-NET-ASSETS> 6,633,258
<PER-SHARE-NAV-BEGIN> 64
<PER-SHARE-NII> (3)
<PER-SHARE-GAIN-APPREC> 0 <F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 61
<EXPENSE-RATIO> 10.8
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>
A zero value is used since the change in net unrealized fair value is not
allocated to General Partners and Limited Partners as it is not taxable.
Only taxable gains or losses are allocated in accordance with the
Partnership Agreement.
</FN>
</TABLE>
