<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 June 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)
June 30, December 31,
1997 1996
-------- ------------
<S> <C> <C>
ASSETS
Investments:
Secured notes receivable, net
(cost basis of $4,041,107 and
$3,880,883 at 1997 and 1996,
respectively) $ 1,776,107 1,630,883
Equity investments (cost basis
of $4,219,722 and $2,399,524 at
1997 and 1996, respectively) 3,538,620 1,637,835
---------- ----------
Total investments 5,314,727 3,268,718
Cash and cash equivalents 404,894 3,243,908
Restricted cash 958,722 642,694
Other assets 27,052 12,706
---------- ----------
Total $ 6,705,395 7,168,026
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $ 218,672 309,815
Due to related parties 3,299 42,869
Other liabilities 12,782 14,594
---------- ----------
Total liabilities 234,753 367,278
Commitments and contingencies
(Notes 2, 6 and 8)
Partners' capital:
Limited Partners
(Units outstanding of
155,671 for both 1997 and 1996) 9,569,941 9,961,677
General Partners (153,197) (149,240)
Net unrealized fair value decrease
from cost:
Secured notes receivable (2,265,000) (2,250,000)
Equity investments (681,102) (761,689)
---------- ----------
Total partners' capital 6,470,642 6,800,748
---------- ----------
Total $ 6,705,395 7,168,026
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF OPERATIONS (unaudited)
- -----------------------------------
<TABLE>
<CAPTION>
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
------------------------ ------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Secured notes receivable interest $ -- 19,831 22,462 52,873
Short-term investment interest 10,959 44,614 48,616 98,973
Other income 8,471 -- 13,643 --
--------- --------- --------- ---------
Total income 19,430 64,445 84,721 151,846
--------- --------- --------- ---------
Costs and expenses:
Management fees 32,757 42,638 66,761 85,323
Other investment expenses 41,600 9,581 190,431 39,581
Operating expenses:
Lending operations and investment
management 40,299 50,132 84,219 69,554
Administrative and investor
services 42,330 105,452 97,026 159,017
Computer services 11,936 26,972 27,979 39,517
Professional fees 11,335 19,026 19,196 27,990
--------- --------- ---------- ---------
Total operating expenses 105,900 201,582 228,420 296,078
--------- --------- ---------- ---------
Total costs and expenses 180,257 253,801 485,612 420,982
--------- --------- ---------- ---------
Net operating loss (160,827) (189,356) (400,891) (269,136)
Net realized gain from sales of
equity investments -- 16,049 5,198 48,824
Realized losses from
investment write-downs -- (10,000) -- (125,104)
Recoveries from investments
previously written off -- 30,071 -- 111,307
--------- --------- --------- ---------
Net realized loss (160,827) (153,236) (395,693) (234,109)
Change in net unrealized
fair value:
Secured notes receivable (15,000) (201,000) (15,000) (97,000)
Equity investments 94,975 (79,369) 80,587 (111,995)
--------- --------- --------- ---------
Net (loss) income $ (80,852) (433,605) (330,106) (443,104)
========= ========= ========= =========
Net realized loss per Unit $ (1) (1) (3) (1)
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited)
- -----------------------------------
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
---------------------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Interest and other income received $ 84,721 150,474
Cash paid to vendors (350,344) (118,847)
Cash paid to related parties (282,139) (1,211,294)
Cash paid to affiliated partnerships -- (4,713)
Reimbursement of collection expenses
from a portfolio company -- 30,045
--------- ---------
Net cash used by operating
activities (547,762) (1,154,335)
--------- ---------
Cash flows from investing activities:
Secured notes receivable issued (165,213) (168,002)
Repayments of secured notes receivable 4,989 295,099
Proceeds from sales of equity investments -- 57,574
Recoveries from investments previously
written off -- 111,307
Purchase of equity investments (1,815,000) --
--------- ---------
Net cash (used) provided by
investing activities (1,975,224) 295,978
--------- ---------
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 (2,522,986) (1,325,161)
Cash and restricted cash at
beginning of year 3,886,602 5,108,537
--------- ---------
Cash and restricted cash at June 30 $ 1,363,616 3,783,376
========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited) (continued)
- ------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
---------------------------------
1997 1996
---- ----
<S> <C> <C>
Reconciliation of net loss to net
cash used by operating activities:
Net loss $ (330,106) (443,104)
Adjustments to reconcile net loss to net
cash used by operating activities:
Net realized gain from sales of
equity investments (5,198) (48,824)
Realized losses from investment
write-downs -- 125,104
Recoveries from investments previously
written off -- (111,307)
Change in net unrealized fair value:
Secured notes receivable 15,000 97,000
Equity investments (80,587) 111,995
Other, net -- (5,678)
Changes in:
Accounts payable and accrued expenses (91,143) (5,797)
Due to/from related parties (39,570) (855,583)
Accrued interest on secured and
convertible notes receivable -- 4,306
Other assets (14,346) (18,345)
Other changes, net (1,812) (4,102)
--------- ---------
Net cash used by operating activities $ (547,762) (1,154,335)
========= =========
</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
June 30, 1997, and December 31, 1996, and the related Statements of
Operations for the three and six months ended June 30, 1997 and 1996, and
Statements of Cash Flows for the six months ended June 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 June 30, 1997, supplement those
included in the Annual Report on Form 10-K.
2. Related Party Transactions
--------------------------
Related party costs are included in costs and expenses shown on the
Statements of Operations. Related party costs for the six months ended
June 30, 1997 and 1996, were as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Management fees $ 66,761 85,323
Reimbursable operating expenses 175,808 270,388
</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 June 30, 1997, and December 31, 1996,
due to related parties for such expenses were $3,299 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 six months ended June 30, 1997 and 1996
of 155,671 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 June 30, 1997, consisted of
<TABLE>
January 1 -
June 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 30,073
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 0 105,063
Telecommunications
- ------------------
3Com Corporation 06/95 1,490 Common
shares 0 (43,232)
-------- ---------
Total significant changes 1,820,198 1,906,904
Other changes, net 0 (6,119)
--------- ---------
Total equity investments at June 30, 1997 $4,219,722 3,538,620
========= =========
</TABLE
Marketable Equity Securities
- ----------------------------
At June 30, 1997, and December 31, 1996, marketable equity securities had
aggregate costs of $387,958 and aggregate fair values of $801,630 and
$715,845, respectively. The net unrealized gains at June 30, 1997, and
December 31, 1996, included gross gains of $418,709 and $339,223,
respectively.
Celeritek, Inc.
- ---------------
The Partnership recorded an increase in fair value of $105,063 to reflect
the market price of the unrestricted shares at June 30, 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.
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 $30,073 to reflect
the market price of the unrestricted shares at June 30, 1997.
3Com Corporation
- ----------------
The Partnership recorded a fair value decrease of $43,232 to reflect the
market price of the unrestricted shares at June 30, 1997.
5. Secured Notes Receivable, Net
-----------------------------
Activity from January 1 through June 30, 1997, consisted of:
</TABLE>
<TABLE>
<S> <C>
Balance at January 1, 1997 $1,630,883
1997 activity:
Secured notes receivable issued 165,213
Repayments of secured notes receivable (4,989)
Increase in allowance for loan losses (15,000)
---------
Total secured notes receivable, net,
at June 30, 1997 $1,776,107
=========
</TABLE>
The Partnership had accrued interest of $4,306 December 31, 1996. There
was no accrued interest at June 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 June 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 June 30, 1997 and December 31, 1996. The Managing General
Partner continues to monitor the progress of these companies. The fair
value at June 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 rate on notes issued during the six months ended June 30, 1997 was
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 is currently pending.
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.
Unless Quebecor is granted the right to a rehearing, the suit will be
terminated. The Managing General Partner believes the Partnership has
adequate defenses and no amounts have been provided in the accompanying
financial statements for any possible negative outcome for this matter.
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 improves the Partnership's ability to recover its secured notes
receivable.
At June 30, 1997, restricted cash of $958,722 represented amounts held in
escrow accounts as collateral for the Ecopave note discussed above and
pending the final outcome of Quebecor-related litigation.
7. Cash and Cash Equivalents
-------------------------
At June 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 404,136 3,235,921
--------- ---------
Total $ 404,894 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. At June 30, 1997, the Partnership had unfunded commitments of
$38,987 related to term note financings to an existing borrowing company.
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 six months ended June 30, 1997, net cash used by operating
activities totaled $547,762. The Partnership paid management fees of
$66,761 to the Managing General Partner and reimbursed related parties
for operating expenses of $215,378. In addition, other operating
expenses of $350,344 were paid and $84,721 in interest and other income
was received.
During the six months ended June 30, 1997, the Partnership funded a
$1,815,000 equity investment and a $165,213 investment in secured notes
receivable to a portfolio company in the industrial/business automation
industry. Repayments of secured notes receivable were $4,989. At June 30,
1997, the Partnership was committed to fund $38,987 to existing borrowing
companies on term note financings.
Cash and restricted cash at June 30, 1997, were $1,363,616. Future
distributions will be dependent upon loan repayments from borrowing
companies 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 losses were $80,852 and $433,605 for the quarters ended June 30,
1997 and 1996, respectively. The decrease in net loss was primarily due
to increases of $174,344 and $186,000 in the change in net unrealized fair
value of equity investments and secured notes receivable, respectively, and
a $95,682 decrease in operating expenses. These changes were partially
offset by a $45,015 decrease in total income, a $32,019 increase in other
investment expenses and a $30,071 decrease in recoveries from investments
previously written off.
During the quarter ended June 30, 1997, the $94,975 increase in equity
investment fair value was primarily due to increases in the
microelectronics industry. In the corresponding quarter of 1996 the
$79,369 decrease was mostly due to decreases in the industrial/business
automation industry, partially offset by increases in the medical and
microelectronics industries.
The Partnership recorded a $15,000 decrease in net unrealized fair value of
secured notes receivable for the quarter ended June 30, 1997. During the
same period in 1996, the Partnership recorded a decrease in fair value of
$210,000, based upon the level of loan loss reserves deemed adequate by the
Managing General Partner.
Total operating expenses were $105,900 and $201,582 for the three months
ended June 30, 1997 and 1996, respectively. The decrease was mostly
attributable to the decreased level of overall portfolio activities of the
Partnership.
Total income was $19,430 and $64,445 during the three months ended June
30, 1997 and 1996, respectively. The decrease was mostly attributable
to lower cash and cash equivalent balances in 1997.
Other investment expenses were $41,600 and $9,581 for the quarters
ended June 30, 1997 and 1996, respectively. The increase was due to
higher legal expenses related to the lawsuits as discussed in Note 6 to
the financial statements.
During the quarter ended June 30, 1996, the recovery of $30,071 related
to portfolio companies in the semiconductor equipment industry. There were
no such recoveries for the same period in 1997.
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 six months compared to corresponding six months in the preceding
- ------------------------------------------------------------------------
year
- ----
Net losses were $330,106 and $443,104 for the six months ended June 30,
1997 and 1996, respectively. The decrease in net loss was substantially
due to a $192,582 increase in the change in net unrealized fair value of
equity investments, a $112,000 increase in the net unrealized fair value of
secured notes receivable, a $125,104 decrease in realized losses from
investment write-downs, and a $67,658 decrease in operating expenses.
These changes were partially offset by a $150,850 increase in other
investment expenses, a $111,307 decrease in recoveries from investments
previously written off, a $67,125 decrease in interest and other income,
and a $43,626 decrease in gains from sales of equity investments.
During the six months ended June 30, 1997, the increase in equity
investment fair value of $80,587 primarily related to increases in
portfolio companies in the microelectronics industry. In the corresponding
period of 1996, the $111,995 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 $97,000 decrease in the net
unrealized fair value of secured notes receivable for the six months ended
June 30, 1997 and 1996, respectively, based upon the level of loan loss
reserves deemed adequate by the Managing General Partner.
During the six months ended June 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.
Total operating expenses were $228,420 and $296,078 for the six months
ended June 30, 1997, and 1996, respectively. The decrease was primarily
attributable to lower levels of overall portfolio activities.
Other investment expenses were $190,431 and $39,581 for the six months
ended June 30, 1997 and 1996, respectively. The increase was due to
higher legal expenses related to the lawsuits as discussed in Note 6 to
the financial statements.
In the six months ended June 30, 1996, a $111,307 recovery was recorded
related to investments previously written off. There were no recoveries in
1997.
Interest and other income was $84,721 and $151,846 for the six months ended
June 30, 1997 and 1996, respectively. The decrease is due to lower cash
and cash equivalent balances and loans on nonaccrual status.
During the six months ended June 30, 1996, the Partnership realized a gain
of $48,824 from sales of Hybridon, Inc. and Allegiant Physicians Services,
Inc.
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 June 30, 1997.
(b) Financial Data Schedule for the six months ended and as of June 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: August 8, 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 JUNE 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> JUN-30-1997
<PERIOD-TYPE> 6-MOS
<INVESTMENTS-AT-COST> 8,260,829
<INVESTMENTS-AT-VALUE> 5,314,727
<RECEIVABLES> 0
<ASSETS-OTHER> 27,052
<OTHER-ITEMS-ASSETS> 1,363,616
<TOTAL-ASSETS> 6,705,395
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 234,753
<TOTAL-LIABILITIES> 234,753
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9,416,744
<SHARES-COMMON-STOCK> 155,671
<SHARES-COMMON-PRIOR> 155,671
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2,946,102)
<NET-ASSETS> 6,470,642
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 71,078
<OTHER-INCOME> 13,643
<EXPENSES-NET> 485,612
<NET-INVESTMENT-INCOME> (400,891)
<REALIZED-GAINS-CURRENT> 5,198
<APPREC-INCREASE-CURRENT> 65,587
<NET-CHANGE-FROM-OPS> (330,106)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (330,106)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 66,761
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 489,162
<AVERAGE-NET-ASSETS> 6,635,695
<PER-SHARE-NAV-BEGIN> 63
<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> 60
<EXPENSE-RATIO> 7.3
<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>
