<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. 0-19221
TECHNOLOGY FUNDING SECURED INVESTORS III,
AN INCOME AND GROWTH PARTNERSHIP, L.P.
----------------------------------------------------
(Exact name of Registrant as specified in its charter)
CALIFORNIA 94-3081010
- ------------------------------ ---------------------------------
(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 resale 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 $6,652,801 and
$6,332,277 in 1997 and 1996,
respectively) $ 2,560,801 2,255,277
Equity investments (cost basis
of $6,986,907 and $3,301,907 in
1997 and 1996, respectively) 5,598,054 1,675,474
---------- ----------
Total investments 8,158,855 3,930,751
Cash and cash equivalents 1,771,931 6,414,538
Restricted cash 660,694 642,695
Other assets 51,457 18,313
---------- ----------
Total $10,642,937 11,006,297
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $ 234,606 309,810
Due to related parties 50,803 38,937
Other liabilities 978 3,322
---------- ----------
Total liabilities 286,387 352,069
Commitments and contingencies
(Notes 2, 5 and 7)
Partners' capital:
Limited Partners
(Units outstanding of 399,977
for both 1997 and 1996) 15,993,548 16,508,603
General Partners (156,145) (150,942)
Net unrealized fair value decrease
from cost:
Secured notes receivable (4,092,000) (4,077,000)
Equity investments (1,388,853) (1,626,433)
---------- ----------
Total partners' capital 10,356,550 10,654,228
---------- ----------
Total $10,642,937 11,006,297
========== ==========
</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 $ -- 13,153 11,497 160,904
Short-term investment interest 30,251 83,736 148,882 256,182
------- ------- ------- -------
Total income 30,251 96,889 160,379 417,086
Costs and expenses:
Management fees 52,121 61,712 157,883 185,887
Other investment expenses -- 64,567 190,431 104,148
Operating expenses:
Lending operations and investment
management 100,160 28,479 167,875 123,818
Administrative and investor
services 91,600 51,392 206,029 201,790
Computer services 25,924 13,326 54,139 52,974
Professional fees 16,981 8,780 36,162 35,970
Expenses absorbed by General
Partners -- -- (131,882) (143,040)
------- ------- ------- -------
Total operating expenses 234,665 101,977 332,323 271,512
------- ------- ------- -------
Total costs and expenses 286,786 228,256 680,637 561,547
------- ------- ------- -------
Net operating loss (256,535) (131,367) (520,258) (144,461)
Net realized gain from sales of
equity investments -- -- -- 106,823
Recoveries from investments
previously written off -- -- -- 103,807
Realized losses from investment
write-downs -- -- -- (125,099)
------- ------- ------- -------
Net realized loss (256,535) (131,367) (520,258) (58,930)
Change in net unrealized
fair value:
Secured notes receivable -- -- (15,000) (81,000)
Equity investments 223,822 13,325 237,580 (397,773)
------- ------- ------- -------
Net loss $(32,713) (118,042) (297,678) (537,703)
======= ======= ======= =======
Net realized loss per Unit $ (1) -- (1) --
======= ======= ======= =======
</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 received $ 160,379 350,416
Cash paid to vendors (294,901) (231,758)
Cash paid to related parties (484,562) (430,828)
Cash paid to affiliated
partnerships -- (1,930)
Reimbursement of collection expenses
from a portfolio company -- 24,870
--------- ---------
Net cash used by operating activities (619,084) (289,230)
--------- ---------
Cash flows from investing activities:
Secured notes receivable issued (325,513) (251,102)
Repayments of secured notes receivable 4,989 311,341
Proceeds from sales of equity
investments -- 126,823
Recoveries from investments previously
written off -- 103,807
Purchase of equity investments (3,685,000) --
--------- ---------
Net cash (used) provided by
investing activities (4,005,524) 290,869
--------- ---------
Cash flows from financing activities:
Distributions to General and Limited
Partners -- (391,777)
--------- --------
Net cash used by financing activities -- (391,777)
--------- --------
Net decrease in cash and cash
equivalents (4,624,608) (390,138)
Cash and restricted cash at beginning
of year 7,057,233 7,096,622
--------- ---------
Cash and restricted cash
at September 30 $2,432,625 6,706,484
========= =========
</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 $(297,678) (537,703)
Adjustments to reconcile net loss
to net cash used by operating
activities:
Net realized gain from sales of
equity investments -- (106,823)
Realized losses from investment
write-downs -- 125,099
Recoveries from investments previously
written off -- (103,807)
Change in net unrealized fair value:
Secured notes receivable 15,000 81,000
Equity investments (237,580) 397,773
Amortization of discounts on secured
notes receivable -- (66,809)
Changes in:
Due to/from related parties
and affiliated partnerships 11,866 (27,373)
Accounts payable and accrued expenses (75,204) (1,134)
Other assets (33,144) (32,687)
Other changes, net (2,344) (16,766)
-------- -------
Net cash used by operating
activities $(619,084) (289,230)
======== =======
</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. Certain
1996 balances have been reclassified to conform with the 1997 financial
statement presentation. 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 costs for the nine months ended
September 30, 1997 and 1996, were as follows:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Management fees $ 157,883 185,887
Reimbursable operating expenses 470,426 360,608
Expenses absorbed by General Partners (131,882) (143,040)
</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. At September 30, 1997, and December 31, 1996,
due to related parties for such expenses were $50,803 and $38,937,
respectively.
As set forth in the Partnership Agreement, the Partnership shall reimburse
the General Partners for operational costs incurred by the General Partners
in connection with the business of the Partnership. The Partnership may not
pay or reimburse the General Partners for operational costs that aggregate
more than 1% of total Limited Partner capital contributions per year. For
purposes of this limitation, the Partnership's operating year begins May
1st. This limitation was in effect in February and expenses absorbed by the
General Partners totaled $131,882 and $143,040 for the nine months ended
September 30, 1997 and 1996, respectively.
3. 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 -
September 30, 1997
----------------------
Investment Cost Fair
Industry/Company Date Position Basis Value
- ---------------- ---------- -------- --------- ---------
<S> <C> <C> <C> <C>
Balance at January 1, 1997 $3,301,907 1,675,474
--------- ---------
1997 activities:
STOCKS:
- ------
Computers and Computer Equipment
- --------------------------------
MTI Technology 04/94 20,927 Common
Corporation shares 0 213,455
Industrial/Business Automation
- ------------------------------
Cyclean of Long Beach, LLC 04/97 LLC Units 3,685,000 3,685,000
Microelectronics
- ----------------
Celeritek, Inc. 05/94 6,784 Common
shares 0 50,880
Telecommunications
- ------------------
3Com Corporation 06/95 1,082 Common
shares 0 (26,755)
--------- ----------
Total equity investments at September 30, 1997 $6,986,907 5,598,054
========= =========
</TABLE
Marketable Equity Securities
- ----------------------------
At September 30, 1997, and December 31, 1996, marketable equity
securities had an aggregate cost of $115,495 and aggregate market values
of $454,435 and $216,855, respectively. The net unrealized gain at
September 30, 1997, and December 31, 1996, included gross gains of
$338,940 and $109,458, respectively.
Celeritek, Inc.
- ---------------
At September 30, 1997, the Partnership recorded an increase in the
change in fair value of $50,880 to reflect the publicly-traded market
price of its investment.
Cyclean of Long Beach, LLC
- --------------------------
In April, 1997, an affiliated partnership purchased LLC units
representing 100% equity ownership of Cyclean of Long Beach, LLC for
$5,500,000. The Partnership participated in $3,685,000 of this
purchase. See Note 5 for additional information.
MTI Technology Corporation
- --------------------------
At September 30, 1997, the Partnership recorded an increase in the
change in fair value of $213,455 to reflect the publicly-traded market
price of its investments.
In October, 1997, the Partnership sold its entire investment in the
company for total proceeds of $320,384 and realized a gain of
approximately $247,000.
3Com Corporation
- ----------------
At September 30, 1997, the Partnership recorded a decrease in the change
in fair value of $26,755 to reflect the publicly-traded market price of
its investment.
4. Secured Notes Receivable, Net
-----------------------------
Activity from January 1 through September 30, 1997, consisted of:
</TABLE>
<TABLE>
<S> <C>
Balance at January 1, 1997 $ 2,255,277
1997 activity:
Secured notes receivable issued 325,513
Repayments of secured notes receivable (4,989)
Increase in allowance for loan losses (15,000)
---------
Total secured notes receivable,
net, at September 30, 1997 $2,560,801
=========
</TABLE>
Activity in the allowance for loan losses was as follows:
<TABLE>
<S> <C>
Balance at January 1, 1997 $4,077,000
Change in net unrealized fair value of secured
notes receivable 15,000
---------
Balance at September 30, 1997 $4,092,000
=========
</TABLE>
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.
The secured notes receivable portfolio with a total cost basis of
$6,652,801 and $6,332,277 were on nonaccrual status due to the
uncertainty of the financial condition of certain borrowers at September
30, 1997, and December 31, 1996, respectively. The Managing General
Partner continues to monitor the progress of these companies. The fair
value at September 30, 1997, reflected the Managing General Partner's
estimate of the collectibility of these notes.
During 1996, the Partnership received approximately $35,000 from a
portfolio company in the medical industry to pay off its principal
balance. In addition, the Partnership was reimbursed $24,870 for legal,
consulting, and other costs incurred in prior periods in the defense of
the Partnership's secured note rights through bankruptcy court. The
reimbursement was recorded as a reduction to lending operations and
investment management expense.
All notes are secured by specific assets of the borrowing companies.
The interest rate on notes issued during the nine months ended September
30, 1997, ranged from 12% to 18%.
5. Litigation and Other Investment Expenses
----------------------------------------
Other investment expenses in 1997 of $190,431 reflect the cost of the
following legal actions:
The case between an affiliated partnership and a portfolio company in
the retail/consumer products industry against Quebecor has been resolved
in favor of the Partnership. The Partnership participated in
investments to the portfolio company with the affiliated partnership. In
March of 1997, the affiliated 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 was not granted the right to a
rehearing, and the suit was terminated. The Partnership is seeking to
recover certain costs related to this litigation.
In March of 1996, the an affiliated 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"). The Partnership participated in secured
note investments to Cyclean with the affiliated partnership. In January
of 1997, a counter claim was filed by Ecopave and Vance against the
affiliated partnership.
As a result of a settlement conference, these lawsuits were resolved
effective April 1, 1997. The affiliated partnership, through Cyclean of
Long Beach, LLC, purchased Ecopave and Vance's interest in Ecopave for
$5.5 million and set up an escrow account for $750,000 as collateral for
a note payable of Ecopave. The Partnership participated in $3,685,000 of
this purchase. (See Notes 3 and 7 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 September 30, 1997, restricted cash of $660,694 represented amounts
held in escrow accounts as collateral for the Ecopave note discussed
above and for payments to be made related to the Quebecor litigation.
6. 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 $ 1,405 11,163
Money-market accounts 1,770,526 6,403,375
--------- ---------
Total $1,771,931 6,414,538
========= =========
</TABLE>
7. 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 $502,500.
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 $619,084. The Partnership paid management
fees of $157,883 to the Managing General Partner and reimbursed related
parties for operating expenses of $326,679. In addition, other
operating expenses of $294,901 were paid and interest income of $160,379
was received.
During the nine months ended September 30, 1997, the Partnership issued
$325,513 in secured notes receivable and funded $3,685,000 in equity
investments to portfolio companies in the industrial/business automation
and computer and computer equipment industries. Repayments of notes
receivable provided cash of $4,989.
Cash and restricted cash at September 30, 1997, were $2,432,625. 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 investment sale proceeds,
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 $32,713 and $118,042 for the quarters ended September
30, 1997 and 1996, respectively. The decrease in net loss was
substantially due to an increase of $210,497 in the change in the net
unrealized fair value of equity investments and a $64,567 decrease in
other investment expenses. These changes were partially offset by a
$132,658 increase in operating expenses and a $66,638 decrease in total
income.
During the quarter ended September 30, 1997, the increase in equity
investment fair value of $223,822 was primarily due to increases in
portfolio companies in the computer and computer equipment industry.
During the same period in 1996, the increase in fair value of $13,325
was mainly due to a portfolio company in the telecommunications
industry.
Other investment expenses were $64,567 for the quarter ended September
30, 1996. There were no related expenses for the quarter ended
September 30, 1997. The decrease was due to legal expenses related to
the settlement of the lawsuits discussed in Note 5 to the financial
statements.
Total operating expenses were $234,665 and $101,977 for the quarters
ended September 30, 1997 and 1996, respectively. The increase was mainly
due to higher lending operations and investment management expenses from
increased portfolio management activities 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.
Total income was $30,251 and $96,889 for the quarters ended September
30, 1997 and 1996, respectively. The decrease was primarily due to
lower cash and cash equivalents balances resulting from cash used for
new investments as well as lower secured notes receivable interest
income from notes placed 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 totaled $297,678 and $537,703 for the nine months ended
September 30, 1997 and 1996, respectively. The decrease in net loss was
primarily due to a $635,353 increase in the change in the net unrealized
fair value of equity investments, a $125,099 decrease in realized losses
from investment write-downs, and a $66,000 increase in the change in the
net unrealized fair value of secured notes receivable. These changes
were partially offset by a $256,707 decrease in total income, a $106,823
decrease in net realized gain from sales of equity investments, a
$103,807 decrease in recoveries from investments previously written off,
and an $86,283 increase in other investment expenses.
During the nine months ended September 30, 1997, the increase in equity
investment fair value of $237,580 was primarily due to increases in
portfolio companies in the computer and computer equipment industry.
During the same period in 1996, the decrease of $397,773 was primarily
due to portfolio companies in the industrial/business automation and
computer software and systems industries.
The Partnership did not record any realized losses from investment
write-downs during the nine months ended September 30, 1997. During the
same period in 1996, realized losses of $125,099 related to a portfolio
company in the computers and computer equipment industry.
The Partnership recorded a $15,000 and an $81,000 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.
Total income was $160,379 and $417,086 during the nine months ended
September 30, 1997 and 1996, respectively. The decrease was primarily
due to lower cash and cash equivalents balances resulting from cash used
for new investments as well as lower secured notes receivable interest
income from notes being placed on nonaccrual status in 1997.
The Partnership has not sold any equity investments in 1997. In 1996,
net realized gain of $106,823 related to the sales of Allegiant
Physicians Services, Inc., and Hybridon, Inc.
During the nine months ended September 30, 1997, the Partnership made no
recoveries from investments previously written off. During the same
period in 1996, the Partnership recognized recoveries of $103,807,
related to a portfolio company in the medical industry.
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 5 to the financial statements.
Total operating expenses were $332,323 and $271,512 for the nine months
ended September 30, 1997 and 1996, respectively. As explained in Note 2
to the financial statements, the General Partners absorbed $131,882 and
$143,040, respectively, for the nine months ended September 30, 1997 and
1996. Had the limitation not been in effect, total operating expenses
for 1997 and 1996 would have been $464,204 and $414,552, respectively.
The increase was mainly due to higher lending operations and investment
management expenses from increased portfolio management activities.
II. OTHER INFORMATION
Item 1. Legal Proceedings
The lawsuit an affiliated partnership filed in the United States
District Court, Northern District of California, against Cyclean Inc.,
et al, and the related counter claims, previously reported in the 1996
Form 10-K, have been resolved effective April 1, 1997. The Partnership
participated in investments to Cyclean with the affiliated partnership.
See Note 5 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 III,
AN INCOME AND GROWTH PARTNERSHIP, L.P.
By: TECHNOLOGY FUNDING INC.
Managing General Partner
Date: November 14, 1997 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, 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> 13,639,708
<INVESTMENTS-AT-VALUE> 8,158,855
<RECEIVABLES> 0
<ASSETS-OTHER> 51,457
<OTHER-ITEMS-ASSETS> 2,432,625
<TOTAL-ASSETS> 10,642,937
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 286,387
<TOTAL-LIABILITIES> 286,387
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 15,837,403
<SHARES-COMMON-STOCK> 399,977
<SHARES-COMMON-PRIOR> 399,977
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (5,480,853)
<NET-ASSETS> 10,356,550
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 160,379
<OTHER-INCOME> 0
<EXPENSES-NET> 680,637
<NET-INVESTMENT-INCOME> (520,258)
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 222,580
<NET-CHANGE-FROM-OPS> (297,678)
<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> (297,678)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 157,883
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 681,986
<AVERAGE-NET-ASSETS> 10,505,389
<PER-SHARE-NAV-BEGIN> 41
<PER-SHARE-NII> (1)
<PER-SHARE-GAIN-APPREC> 0 <F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 40
<EXPENSE-RATIO> 6.5
<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>
