<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. 0-19221
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)
June 30, December 31,
1997 1996
-------- ------------
<S> <C> <C>
ASSETS
Investments:
Secured notes receivable, net
(cost basis of $6,628,501 and
$6,332,277 in 1997 and 1996,
respectively) $ 2,536,501 2,255,277
Equity investments (cost basis
of $6,986,907 and $3,301,907 in
1997 and 1996, respectively) 5,374,232 1,675,474
---------- ----------
Total investments 7,910,733 3,930,751
Cash and cash equivalents 1,477,129 6,414,538
Restricted cash 1,213,722 642,695
Other assets 46,930 18,313
---------- ----------
Total $10,648,514 11,006,297
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $ 227,947 309,810
Due to related parties 30,327 38,937
Other liabilities 977 3,322
---------- ---------
Total liabilities 259,251 352,069
Commitments and contingencies
(Notes 2, 5 and 7)
Partners' capital:
Limited Partners
(Units outstanding of 399,977
for both 1997 and 1996) 16,247,517 16,508,603
General Partners (153,579) (150,942)
Net unrealized fair value decrease
from cost:
Secured notes receivable (4,092,000) (4,077,000)
Equity investments (1,612,675) (1,626,433)
---------- ----------
Total partners' capital 10,389,263 10,654,228
---------- ----------
Total $10,648,514 11,006,297
========== ==========
</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 $ -- 36,279 11,497 147,751
Short-term investments interest 35,383 78,631 118,631 172,446
--------- --------- --------- ---------
Total income 35,383 114,910 130,128 320,197
Costs and expenses:
Management fees 52,513 62,886 105,762 124,175
Other investment expenses 41,600 9,581 190,431 39,581
Operating expenses:
Lending operations and investment
management 43,455 61,243 89,052 95,339
Administrative and investor
services 45,334 95,378 93,092 150,398
Computer services 13,361 27,384 28,215 39,648
Professional fees 11,321 18,745 19,181 27,190
Expenses absorbed by General
Partners (30,471) (66,094) (131,882) (143,040)
--------- --------- --------- ---------
Total operating expenses 83,000 136,656 97,658 169,535
--------- --------- --------- ---------
Total costs and expenses 177,113 209,123 393,851 333,291
--------- --------- --------- ---------
Net operating loss (141,730) (94,213) (263,723) (13,094)
Net realized gain from sales of
equity investments -- 35,378 -- 106,823
Recoveries from investments
previously written off -- -- -- 103,807
Realized losses from investment
write-downs -- (10,000) -- (125,099)
--------- --------- --------- ---------
Net realized (loss) income (141,730) (68,835) (263,723) 72,437
Change in net unrealized
fair value:
Secured notes receivable (15,000) (203,000) (15,000) (81,000)
Equity investments 39,088 (246,437) 13,758 (411,098)
--------- --------- --------- ---------
Net loss $ (117,642) (518,272) (264,965) (419,661)
========= ========= ========= =========
Net realized loss per Unit $ -- -- (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 received $ 130,128 257,694
Cash paid to vendors (351,398) (139,556)
Cash paid to related parties (163,888) (302,181)
Cash received from affiliated
partnerships -- 736
Reimbursement of collection expenses
from a portfolio company -- 24,870
--------- ---------
Net cash used by operating activities (385,158) (158,437)
--------- ---------
Cash flows from investing activities:
Secured notes receivable issued (301,213) (251,102)
Repayments of secured notes receivable 4,989 310,131
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 (3,981,224) 289,659
--------- ---------
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 (4,366,382) (260,555)
Cash and restricted cash at beginning
of year 7,057,233 7,096,622
--------- ---------
Cash and restricted cash at June 30 $ 2,690,851 6,836,067
========= =========
</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 $ (264,965) (419,661)
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 (13,758) 411,098
Amortization of discounts on secured
notes receivable -- (66,809)
Changes in:
Accrued interest on secured and
convertible notes receivable -- 4,306
Due to/from related parties
and affiliated partnerships (8,610) (45,198)
Accounts payable and accrued expenses (81,863) (7,322)
Other assets (28,617) (27,709)
Other changes, net (2,345) (2,611)
--------- ---------
Net cash used by operating
activities $ (385,158) (158,437)
========= =========
</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. Certain 1996 balances have been
reclassified to conform with the 1997 financial statement presentation.
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 $ 105,762 124,175
Reimbursable operating expenses 181,398 275,112
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 June 30, 1997, and December 31, 1996, due
to related parties for such expenses were $30,327 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 six months ended June
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 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 $3,301,907 1,675,474
--------- ---------
1997 activities:
STOCKS:
- ------
Computers and Computer Equipment
- --------------------------------
MTI Technology 04/94 20,927 Common
Corporation shares 0 30,072
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 15,094
Telecommunications
- ------------------
3Com Corporation 06/95 1,082 Common
shares 0 (31,408)
--------- ---------
Total equity investments at June 30, 1997 $6,986,907 5,374,232
========= =========
</TABLE
Marketable Equity Securities
- ----------------------------
At June 30, 1997, and December 31, 1996, marketable equity securities
had an aggregate cost of $115,495 and aggregate market values of
$230,613 and $216,855, respectively. The net unrealized gain at June
30, 1997, and December 31, 1996, included gross gains of $115,118 and
$109,458, respectively.
Celeritek, Inc.
- ---------------
At June 30, 1997, the Partnership recorded an increase in the change in
fair value of $15,094 to reflect the publicly-traded market price of its
investments.
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 June 30, 1997, the Partnership recorded an increase in the change in
fair value of $30,072 to reflect the publicly-traded market price of its
investments.
3Com Corporation
- ----------------
At June 30, 1997, the Partnership recorded a decrease in the change in
fair value of $31,408 to reflect the publicly-traded market price of its
investments.
4. Secured Notes Receivable, Net
-----------------------------
Activity from January 1 through June 30, 1997, consisted of:
</TABLE>
<TABLE>
<S> <C>
Balance at January 1, 1997 $ 2,255,277
1997 activity:
Secured notes receivable issued 301,213
Repayments of secured notes receivable (4,989)
Increase in allowance for loan losses (15,000)
---------
Total secured notes receivable,
net, at June 30, 1997 $ 2,536,501
==========
</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 June 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
$6,628,501 and $6,332,277 were on nonaccrual status due to the
uncertainty of the financial condition of certain borrowers at June 30,
1997, and December 31, 1996, respectively. The Managing General Partner
continues to monitor the progress of these companies. The fair value at
June 30, 1997, reflected the Managing General Partner's estimate of the
collectibility of these notes.
During the first quarter of 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 six months ended June 30,
1997, was 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 is currently
pending. 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. 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 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 June 30, 1997, restricted cash of $1,213,722 represented amounts held
in escrow accounts as collateral for the Ecopave note discussed above
and pending the final outcome of Quebecor-related litigation.
6. 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 $ 2,764 11,163
Money-market accounts 1,474,365 6,403,375
--------- ---------
Total $1,477,129 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. At June 30, 1997, the Partnership had unfunded
commitments of $47,087 related to term note financings to existing
borrowing companies.
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 six months ended June 30, 1997, net cash used by operating
activities totaled $385,158. The Partnership paid management fees of
$105,762 to the Managing General Partner and reimbursed related parties
for operating expenses of $58,126. In addition, other operating
expenses of $351,398 were paid and interest income of $130,128 was
received.
During the six months ended June 30, 1997, the Partnership issued
$301,213 in secured notes receivable and funded $3,685,000 in equity
investments to a portfolio company in the industrial/business automation
industry. Repayments of notes receivable provided cash of $4,989. As
of June 30, 1997, the Partnership was committed to fund up to $47,087 to
existing borrowing companies related to term note financings.
Cash and restricted cash at June 30, 1997, were $2,690,851. Future
distributions will be dependent upon loan repayments from borrowing
companies 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 $117,642 and $518,272 for the quarters ended June 30,
1997 and 1996, respectively. The decrease in net loss was substantially
due to increases of $285,525 and $188,000 in the change in the net
unrealized fair value of equity investments and secured notes
receivable, respectively. These changes were partially offset by a
$79,527 decrease in total income.
During the quarter ended June 30, 1997, the increase in equity
investment fair value was $39,088. During the same period in 1996, the
decrease in fair value of $246,437 was mainly due to portfolio companies
in the industrial/business automation industry.
The Partnership recorded decreases of $15,000 and $203,000 in secured
notes receivable fair values for the quarters ended June 30, 1997 and
1996, respectively, based upon the levels of loan loss reserves deemed
adequate by the Managing General Partner at the respective quarter ends.
Total income was $35,383 and $114,910 for the quarters ended June 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.
Total operating expenses were $83,000 and $136,656 for the quarters
ended June 30, 1997 and 1996, respectively. For the three months ended
June 30, 1997 and 1996, the General Partners absorbed $30,471 and
$66,094, respectively, as explained in Note 2 to the financial
statements. Had the limitation not been in effect, total operating
expenses for the three months ended June 30, 1997 and 1996 would have
been $113,471 and $202,750, respectively. The decrease was mainly due
to lower administrative and investor services as well as lending
operations and investment management expenses from reduced overall
portfolio activities.
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 5 to the
financial statements.
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 totaled $264,965 and $419,661 for the six months ended June
30, 1997 and 1996, respectively. The decrease in net loss was primarily
due to a $424,856 increase in the change in the net unrealized fair
value of equity investments and a $125,099 decrease in realized losses
from investment write-downs. These changes were partially offset by a
$190,069 decrease in total income, a $106,823 decrease in net realized
gain from sales of equity investments and a $103,807 decrease in
recoveries from investments previously written off.
During the six months ended June 30, 1997, the increase in equity
investment fair value was $13,758. During the same period in 1996, the
decrease of $411,098 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 six months ended June 30, 1997. During the same
period in 1996, realized losses of $125,099 mostly related to a
portfolio company in the computers and computer equipment industry.
Total income was $130,128 and $320,197 during the six months ended June
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 six months ended June 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.
Total operating expenses were $97,658 and $169,535 for the six months
ended June 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 six months ended June 30, 1997 and 1996.
Had the limitation not been in effect, total operating expenses for 1997
and 1996 would have been $229,540 and $312,575, respectively. The
decrease was mainly due to lower administrative and investor services as
well as lending operations and investment management expenses from
reduced 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 5 to
the financial statements.
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 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 III,
AN INCOME AND GROWTH PARTNERSHIP, L.P.
By: TECHNOLOGY FUNDING INC.
Managing General Partner
Date: August 12, 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 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> 13,615,408
<INVESTMENTS-AT-VALUE> 7,910,733
<RECEIVABLES> 0
<ASSETS-OTHER> 46,930
<OTHER-ITEMS-ASSETS> 2,690,851
<TOTAL-ASSETS> 10,648,514
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 259,251
<TOTAL-LIABILITIES> 259,251
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 16,093,938
<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> (5,704,675)
<NET-ASSETS> 10,389,263
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 130,128
<OTHER-INCOME> 0
<EXPENSES-NET> 393,851
<NET-INVESTMENT-INCOME> (263,723)
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (1,242)
<NET-CHANGE-FROM-OPS> (264,965)
<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> (264,965)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 105,762
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 434,514
<AVERAGE-NET-ASSETS> 10,521,746
<PER-SHARE-NAV-BEGIN> 41
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0 <F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 41
<EXPENSE-RATIO> 3.7
<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>
