<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, 1998
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. 814-48
TECHNOLOGY FUNDING PARTNERS III, L.P.
----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 94-3033783
- ------------------------------ ---------------------------------
(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)
(650) 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 interest ("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,
1998 1997
------------ -----------
<S> <C> <C>
ASSETS
Equity investments (cost basis
of $23,420,070 and $23,563,459 for
1998 and 1997, respectively) $21,024,150 25,545,207
Cash and cash equivalents 3,085,319 4,304,928
Other assets 6,652 5,433
---------- ----------
Total assets $24,116,121 29,855,568
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $ 50,388 66,748
Due to related parties 42,734 80,533
Other liabilities 15,142 17,009
---------- ----------
Total liabilities 108,264 164,290
Commitments, contingencies and
subsequent event (Notes 2, 3 and 5)
Partners' capital:
Limited Partners
(Units outstanding of 160,000
in both 1998 and 1997) 26,644,411 27,670,313
General Partners (240,634) 39,217
Net unrealized fair value
(decrease) increase from cost
of equity investments (2,395,920) 1,981,748
---------- ----------
Total partners' capital 24,007,857 29,691,278
---------- ----------
Total liabilities
and partners' capital $24,116,121 29,855,568
========== ==========
</TABLE>
See accompanying notes to financial statements.
STATEMENTS OF OPERATIONS (unaudited)
- -----------------------------------
<TABLE>
<CAPTION>
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
---------------------- ----------------------
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
Income:
Notes receivable interest $ 2,473 4,837 13,170 47,629
Short-term investment interest 33,675 61,076 113,098 228,237
Other income 123 -- 475 3,125
--------- --------- --------- ---------
Total income 36,271 65,913 126,743 278,991
Costs and expenses:
Management fees 70,155 77,891 216,085 248,126
Individual General Partners'
compensation 19,675 10,500 42,228 31,950
Operating expenses:
Administrative and investor services 274,777 174,676 578,719 424,924
Investment operations 88,932 114,217 284,514 245,900
Professional fees 16,664 13,889 51,556 74,150
Computer services 54,849 46,224 152,930 101,412
--------- --------- --------- ---------
Total operating expenses 435,222 349,006 1,067,719 846,386
--------- --------- --------- ---------
Total costs and expenses 525,052 437,397 1,326,032 1,126,462
--------- --------- --------- ---------
Net operating loss (488,781) (371,484) (1,199,289) (847,471)
Net realized gain (loss) from sales
of equity investments 5,537 (17,668) (204,886) 5,675,091
Realized gains from venture capital
limited partnership investments 26,698 -- 98,422 512,349
--------- --------- --------- ---------
Net realized (loss) income (456,546) (389,152) (1,305,753) 5,339,969
Change in net unrealized
fair value of equity investments (3,272,118) 3,644,579 (4,377,668) (503,404)
--------- --------- --------- ---------
Net (loss) income $(3,728,664) 3,255,427 (5,683,421) 4,836,565
========= ========= ========= =========
Net realized (loss) income per Unit $ (2) (2) (6) 30
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited)
- -----------------------------------
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
-------------------------
1998 1997
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Interest and other income received $ 112,507 231,363
Cash paid to vendors (141,956) (235,415)
Cash paid to related parties (1,241,321) (921,816)
--------- ----------
Net cash used by operating
activities (1,270,770) (925,868)
--------- ----------
Cash flows from investing activities:
Notes receivable issued (35,962) --
Purchase of equity investments (953,565) (5,404,924)
Proceeds from sales of
equity investments 542,476 9,348,066
Repayments of convertible and
other notes receivable 450,712 --
Distributions from venture capital
limited partnerships 47,500 406,641
--------- ----------
Net cash provided by
investing activities 51,161 4,349,783
--------- ----------
Cash flows from financing activities:
Distributions to Limited and General
Partners -- (4,279,267)
--------- ---------
Net cash used by financing activities -- (4,279,267)
--------- ---------
Net decrease in cash
and cash equivalents (1,219,609) (855,352)
Cash and cash equivalents at beginning
of year 4,304,928 5,317,251
--------- ----------
Cash and cash equivalents
at September 30 $3,085,319 4,461,899
========= ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited) (continued)
- -----------------------------------------------
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
------------------------
1998 1997
------ ------
<S> <C> <C>
Reconciliation of net (loss) income to net
cash used by operating activities:
Net (loss) income $(5,683,421) 4,836,565
Adjustments to reconcile net (loss) income
to net cash used by operating activities:
Net realized loss (gain) from sales of
equity investments 204,886 (5,675,091)
Realized gains from venture capital
limited partnership investments (98,422) (512,349)
Change in net unrealized fair value of
equity investments 4,377,668 503,404
Changes in:
Due to related parties (37,799) (41,810)
Other changes, net (33,682) (36,587)
--------- ---------
Net cash used by operating activities $(1,270,770) (925,868)
========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
- ----------------------------------------
1. General
-------
In the opinion of the Managing General Partners, the accompanying interim
financial statements reflect all adjustments necessary for a fair
presentation of the financial position, results of operations, and cash
flows for the interim periods presented. These statements should be read
in conjunction with the Annual Report on Form 10-K for the year ended
December 31, 1997. 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.
2. Related Party Transactions
--------------------------
Related party costs are included in costs and expenses shown on the
Statements of Operations. Related party expenses for the nine months
ended September 30, 1998 and 1997, were as follows:
<TABLE>
<CAPTION>
1998 1997
--------- --------
<S> <C> <C>
Management fees $216,085 248,126
Individual General Partners'
compensation 42,228 31,950
Reimbursable operating expenses 945,209 599,930
</TABLE>
Certain reimbursable expenses have been accrued based upon interim
estimates prepared by the Managing General Partners and are adjusted to
actual costs periodically. There were $18,980 and $23,172 of such
expenses due to related parties at September 30, 1998, and December 31,
1997, respectively.
Amounts due to related parties for management fees were $23,754 and
$57,361 at September 30, 1998, and December 31, 1997, respectively.
The Managing General Partners allocate operating expenses incurred in
connection with the business of the Partnership based on employee hours
incurred. In the third quarter of 1998, the Managing General Partners
reevaluated allocations to the Partnership and determined that they had
not fully recovered allocable operating expenses, primarily salary and
benefits, as permitted by the Partnership Agreement. As a result, the
Partnership was charged additional operating expenses in the third
quarter of 1998 of $171,979 consisting of $21,264 for the nine months
ended September 30, 1997 and $150,715 for prior years. Had the
additional expenses been recorded in prior years, total operating
expenses for the three months ended September 30, 1998 and 1997 would
have been $263,243 and $370,270, respectively, and total operating
expenses for the nine months ended September 30, 1998 and 1997 would have
been $895,740 and $867,650, respectively.
Officers of the Managing General Partners occasionally receive stock
options as compensation for serving on the Boards of Directors of
portfolio companies. At September 30, 1998, the Partnership had an
indirect interest in Conversion Technologies, Inc., Electronic Designs,
Inc., Endocare, Inc. and PolyMedica Industries, Inc. non-transferable
options at an exercise price higher than the current market value.
3. Equity Investments
------------------
<TABLE>
A complete listing of the Partnerships equity investments at December 31, 1997 is in the 1997
Annual Report. Activity from January 1 through September 30, 1998 consisted of:
<CAPTION>
January 1 through
September 30, 1998
------------------------
Principal
Investment Amount or Cost Fair
Industry/Company Position Date Shares Basis Value
- ---------------- -------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1998 $23,563,459 25,545,207
---------- ----------
Significant changes:
Communications
- --------------
NetChannel, Series B
Inc. Preferred 10/96-
shares 05/97 2,384,983 (832,864) (1,259,473)
NetChannel, Convertible
Inc. notes various $390,372 (401,529) (401,529)
NetChannel, Escrowed sales
Inc. proceeds 06/98 $161,983 161,983 161,983
Women.com Series D
Networks Preferred
shares 06/98 121,581 400,001 400,001
Computers and Computer Equipment
- --------------------------------
Electronic Common
Designs, Inc. shares various 645,477 0 (1,413,621)
Computer Systems and Software
- -----------------------------
Geoworks Common 06/94-
Corporation shares 02/97 115,110 0 (890,491)
Electronic Design Automation
- ----------------------------
Cadence Design Common
Systems, Inc. shares 07/96 24,000 0 37,872
Synopsys, Inc. Common
shares 02/97 14,000 0 (52,528)
Environmental
- -------------
Conversion Technologies Series A
International, Inc. Preferred 08/97-
shares 09/97 236,250 0 (226,498)
Thermatrix, Common
Inc. shares 06/96 65,970 0 70,914
Medical/Biotechnology
- ---------------------
CareCentric Solutions, Convertible 04/98-
Inc. notes (1) 06/98 $96,250 99,791 99,791
CardioTech Common
International, shares
Inc. 06/96 195,600 0 (268,950)
CV Therapeutics, Common
Inc. shares various 33,724 0 (95,844)
Endocare, Common 08/96-
Inc. shares 01/97 309,000 0 (271,164)
Endocare, Common
Inc. shares 04/98 71,248 250,002 181,682
Lifecell Common
Corporation shares various 351,060 0 (294,890)
Neurex Common
Corporation shares 09/96 3,379 (70,959) (45,448)
Matrix Common
Pharmaceuticals, shares
Inc. various 321,633 0 (200,055)
Oxford GlycoSciences, Common
Plc. shares 08/93 106,772 0 (137,742)
Pharmadigm, Series A
Inc. Preferred 04/93-
shares 12/94 268,546 0 59,140
Pharmadigm, Series D
Inc. Preferred
shares 06/98 82,438 199,500 199,500
Venture Capital Limited Partnership Investments
- -----------------------------------------------
Various Limited
Partnership
Interests various $3,962,658 (40,230) (190,124)
---------- ----------
Total significant changes during the nine months
ended September 30, 1998 (234,305) (4,537,474)
Other changes, net 90,916 16,417
---------- ----------
Total equity investments at September 30, 1998 $23,420,070 21,024,150
========== ==========
(1) Convertible notes include accrued interest. The interest rate on notes issued in 1998 was
10%
</TABLE>
Marketable Equity Securities
- ----------------------------
At September 30, 1998, and December 31, 1997, marketable equity securities
had aggregate costs of $8,196,481 and $9,469,098, respectively, and
aggregate fair values of $5,689,983 and $9,080,006, respectively. The net
unrealized losss at September 30, 1998, and December 31, 1997, included
gross gains of $621,863 and $1,898,488, respectively.
CareCentric Solutions, Inc.
- ---------------------------
In the second quarter of 1998, the Partnership issued $96,250 in
convertible notes receivable to the company.
Endocare, Inc.
- --------------
In April 1998, the Partnership purchased 71,248 common shares for $250,002
in a private placement. At September 30, 1998, the Partnership recorded a
$388,422 decrease in the fair value of its total investment in the company
based on the publicly-traded market price of the company's common shares.
NetChannel, Inc.
- ----------------
In June 1998, America Online, Inc., completed its acquisition of the
company. The Partnership recorded a realized loss of $201,349 on the
completion of the sale transaction. Proceeds of $469,533 and $450,712
were received from the sale of the Partnership's preferred shares and
repayment of convertible and other notes receivable. An amount of $161,983
in future sale proceeds will remain in escrow through December 1999
pending final resolution of the sale.
Neurex Corporation
- ------------------
In February 1998, the Partnership sold 3,379 common shares for total
proceeds of $61,884 and realized a loss of $9,075.
Oxford GlycoSciences, Plc
- -------------------------
The company completed its initial public offering on the London Stock
Exchange in April, 1998 at 280 pence per common share. The Partnership's
preferred shares were converted to 106,772 common shares.
Pharmadigm, Inc.
- ----------------
In June 1998, the Partnership made an additional investment in the company
by purchasing 82,438 Series D Preferred shares for $199,500. The pricing
of this round, in which third parties participated, indicated a $76,419
increase in the fair value of the Partnership's total investment.
Women.com Networks (formerly Wire Networks, Inc.)
- -----------------------------------------------
In February 1998, the company changed its name from Wire Networks, Inc. to
Women.com Networks. In June 1998, the Partnership made an additional
investment in the company by purchasing 121,581 Series D Preferred shares
for $400,001. The pricing of this round, in which third parties
participated, indicated a $106,378 increase in the fair value of the
Partnership's total investment.
Venture Capital Limited Partnerships
- ------------------------------------
The Partnership made additional investments totaling $7,812 in venture
capital limited partnerships during the nine months ended September 30,
1998. The Partnership received cash distributions of $47,500 from
Batterson, Johnson and Wang, L.P., Delphi Ventures, L.P., and Trinity
Ventures IV, L.P. The Partnership also received stock distributions of
PRI Automation, Inc., Hybridon, Inc., Neurex Corporation, NewsEDGE
Corporation and OraVax, Inc. with fair values of $1,740, $42,161, $5,522,
$46,882 and $2,659, respectively. Distributions totaling $98,422 were
recorded as realized gains and distributions totaling $48,042 were
recorded as returns of capital.
The Partnership recorded a $190,124 decrease in fair value as a result of
a net decrease in the fair value of the underlying investments of the
partnerships, caused, in part, by distributions received from such
partnerships.
Other Equity Investments
- ------------------------
Other significant changes reflected above relate to market value
fluctuations or the elimination of a discount relating to selling
restrictions for publicly-traded portfolio companies. Portions of the
Partnership's Conversion Technologies International, Inc., Electronic
Designs, Inc., and Thermatrix, Inc. investments are restricted.
Effective October 26, 1998, Electronic Designs, Inc. merged with Bowmar
Instruments Corporation to become White Electronic Designs Corporation.
The Partnership will receive 822,983 shares in the new company.
4. Cash and Cash Equivalents
-------------------------
Cash and cash equivalents at September 30, 1998, and December 31, 1997,
consisted of:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Demand accounts $ 52,300 60,609
Money-market accounts 3,033,019 4,244,319
--------- ---------
Total $3,085,319 4,304,928
========= =========
</TABLE>
5. 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 commitments for future equity investment fundings, venture capital
limited partnership investments, 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 September 30, 1998, the
Partnership had unfunded commitments as follows:
<TABLE>
<CAPTION>
Type
- ----
<S> <C>
Equity investments $337,750
Venture capital limited partnership investments 7,805
-------
$345,555
=======
</TABLE>
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, 1998, net cash used by
operating activities totaled $1,270,770. The Partnership paid management
fees of $249,692 to the Managing General Partners and reimbursed related
parties for operating expenses of $949,401. In addition, $42,228 was paid
to the Individual General Partners as compensation for their services.
Other operating expenses of $141,956 were paid and $112,507 in interest
and other income was received.
During the nine months ended September 30, 1998, the Partnership funded
equity investments of $953,565 primarily to portfolio companies in the
communications and medical/biotechnology industries and issued $35,962 in
notes receivable to a portfolio company in the communications industry.
Proceeds from equity investment sales were $542,476 and repayments of
convertible and other notes receivable provided $450,712. Cash
distributions of $47,500 were received from venture capital limited
partnership investments. As of September 30, 1998, the Partnership was
committed to fund additional investments totaling $345,555 as discussed in
Note 5 of the financial statements.
Cash and cash equivalents at September 30, 1998, were $3,085,319. Cash
reserves, interest income on short-term investments, and future proceeds
from equity investment sales are expected to be adequate to fund
Partnership operations and future investments through the next twelve
months.
Results of Operations
- ---------------------
Current quarter compared to corresponding quarter in the preceding year
- -----------------------------------------------------------------------
Net loss was $3,728,664 for the three months ended September 30, 1998, as
compared to net income of $3,255,427 for the three months ended September
30, 1997. The change was primarily due to a $6,916,697 decrease in the
net unrealized fair value of equity investments and an $86,216 increase in
operating expenses.
The Partnership recorded a decrease in fair value of equity investments of
$3,272,118 during the quarter ended September 30, 1998 due to decreases in
the Partnership's public portfolio companies in all industry segments.
During the same period in 1997, the increase in fair value of equity
investments of $3,644,579 was substantially attributable to increases in
portfolio companies in the computer systems and software, computer and
computer equipment, medical/biotechnology and communications industries.
Operating expenses were $435,222 for the quarter ended September 30, 1998,
compared to $349,006 for the same period in 1997. As disclosed in Note 2
to the financial statements, operating expenses for the three months ended
September 30, 1998 include additional expenses of $171,979 related to
prior years which were not previously charged to the Partnership. Had the
additional expenses been recorded in prior years, operating expenses for
the quarters ended September 30, 1998 and 1997 would have been $263,243
and $370,270, respectively. The decrease is attributable to decreased
administrative and investor services and investment operations expenses
due to a decreased level of investment activity.
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 loss was $5,683,421 for the nine months ended September 30, 1998, as
compared to net income of $4,836,565 for the nine months ended September
30, 1997. The decrease was primarily due to a $5,879,977 decrease in net
realized gain from sales of equity investments, a $3,874,264 decrease in
the change in net unrealized fair value of equity investments, a $413,927
decrease in realized gains from venture capital limited partnership
investments, a $221,333 increase in operating expenses, and a $152,248
decrease in total income.
Net realized loss from sales of equity investments was $204,886 for the
nine months ended September 30, 1998 as compared to a net realized gain of
$5,675,091 for the nine months ended September 30, 1997. The loss in 1998
primarily related to the sale of NetChannel, Inc. The gain in 1997
primarily related to sales of Geoworks Corporation, PolyMedica Industries,
Inc., TheraTx, Inc., and Systemix, Inc.
During the nine months ended September 30, 1998, the decrease in fair
value of equity investments of $4,377,668 was due to decreases in the
Partnership's public portfolio companies in all industry segments. During
the comparable period of 1997, the decrease of $503,404 was substantially
attributable to the sales of Geoworks common stock, as the gain was
realized.
Realized gains from venture capital limited partnership investments were
$98,422 and $512,349 for the nine months ended September 30, 1998 and
1997, respectively.
Operating expenses for the nine months ended September 30, 1998 and 1997
were $1,067,719 and $846,386, respectively. As disclosed in Note 2 to the
financial statements, operating expenses for the nine months ended
September 30, 1998 include additional expenses of $171,979 related to
prior years which were not previously charged to the Partnership. Had the
additional expenses been recorded in prior years, operating expenses for
the nine months ended September 30, 1998 and 1997 would have been $895,740
and $867,650 respectively.
Total income for the nine months ended September 30, 1998 decreased to
$126,743 from $278,991 for the nine months ended September 30, 1997. The
decrease is primarily due to a decrease in interest earned on short-term
investments due to lower cash balances.
The Year 2000
- -------------
The widespread use of computer programs that rely on two-digit date
programs to perform computations and decision-making functions may cause
computer systems to malfunction in the year 2000 and lead to significant
business delays and disruptions.
The Managing General Partners have completed a preliminary assessment of
the internal financial, information and operating systems which it
provides to the Partnership. Implementation and testing of necessary
system modifications is in progress and will be completed well before
December 31, 1999. The Managing General Partners are also monitoring the
progress of software vendors and third-party processors on which they
rely, as well as the progress of portfolio companies in which the
Partnership has made significant investments.
The Managing General Partners do not expect the cost of the internal
system modifications to be material to the Partnership's financial
statements.
II. OTHER INFORMATION
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, 1998.
b) Financial Data Schedule for the nine months ended and as of September
30, 1998 (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 PARTNERS III, L.P.
By: TECHNOLOGY FUNDING INC.
Managing General Partner
Date: November 12, 1998 By: /s/Michael R. Brenner
------------------------------------
Michael R. Brenner
Controller
<TABLE> <S> <C>
<ARTICLE>6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE FORM 10-Q AS OF SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER>1
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<PERIOD-TYPE> 9-MOS
<INVESTMENTS-AT-COST> 23,420,070
<INVESTMENTS-AT-VALUE> 21,024,150
<RECEIVABLES> 0
<ASSETS-OTHER> 6,652
<OTHER-ITEMS-ASSETS> 3,085,319
<TOTAL-ASSETS> 24,116,121
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 108,264
<TOTAL-LIABILITIES> 108,264
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 26,403,777
<SHARES-COMMON-STOCK> 160,000
<SHARES-COMMON-PRIOR> 160,000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2,395,920)
<NET-ASSETS> 24,007,857
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 126,268
<OTHER-INCOME> 475
<EXPENSES-NET> 1,326,032
<NET-INVESTMENT-INCOME> (1,199,289)
<REALIZED-GAINS-CURRENT> (106,464)
<APPREC-INCREASE-CURRENT> (4,377,668)
<NET-CHANGE-FROM-OPS> (5,683,421)
<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> (5,683,421)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 216,085
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,333,507
<AVERAGE-NET-ASSETS> 26,849,567
<PER-SHARE-NAV-BEGIN> 173
<PER-SHARE-NII> (6)
<PER-SHARE-GAIN-APPREC> 0 <F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 167
<EXPENSE-RATIO> 4.9
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
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>
