<PAGE>
PENFIELD PARTNERS, L.P.
FINANCIAL STATEMENTS
June 30, 1996
<PAGE>
PENFIELD PARTNERS, L.P.
Index to Financial Statements
June 30, 1996
PAGE(S)
Independent Accountants' Report 1
Statement of Assets and Liabilities 2
Statement of Operations 3
Statements of Changes in Partners' Capital 4-5
Schedule of Investments 6-10
Notes to Financial Statements 11-16
<PAGE>
Page 1
Independent Accountant's Report
The Partners of
Penfield Partners, L.P.
We have reviewed the accompanying Statement of Assets and
Liabilities, including the schedule of investments of Penfield
Partners, L.P. as of June 30, 1996 and the related Statements of
Operations and Changes in Partners' Capital for the six months
then ended. These financial statements are the responsibility of
the General Partners.
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information consists
principally of applying analytical procedures to financial data
and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly,
we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying interim
period financial statements for them to be in conformity with
generally accepted accounting principles.
The Statement of Changes in Partners' Capital for the year
ended December 31, 1995 was audited by us, and we expressed an
unqualified opinion on it in our report dated February 9, 1996,
but we have not performed any audit procedures since that date.
Anchin, Block & Anchin LLP
New York, N.Y.
July 17, 1996
<PAGE>
Page 2
PENFIELD PARTNERS, L.P.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1996
(Unaudited)
ASSETS
Investments in securities, at fair value $19,068,647
Cash equivalents 5,649,193
Receivable from broker 148,572
Accrued income 3,548
Organization costs 102,967
___________
TOTAL ASSETS $24,972,927
===========
LIABILITIES
Securities sold short, at fair value $ 1,662,987
Payable to broker 497,987
Accrued expenses 54,752
Payables for capital withdrawals 1,047,625
Prepaid capital contributions 925,000
___________
TOTAL LIABILITIES $ 4,188,351
PARTNERS' CAPITAL
General partners 1,486,635
Limited partners 19,297,941
___________
TOTAL PARTNERS' CAPITAL $20,784,576
TOTAL LIABILITIES AND PARTNERS' CAPITAL $24,972,927
===========
Net asset value per Limited Partners' Unit $ 25,000
===========
See Notes to Financial Statements
<PAGE>
Page 3
PENFIELD PARTNERS, L.P.
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1996
(Unaudited)
INVESTMENT GAINS
Realized gains on investments, net $ 4,961,654
Unrealized gains on investments, net 366,823
___________
Total Realized and Unrealized Investment Gains $5,328,477
LOSS FROM OPERATIONS
Income
Interest 33,349
Dividends 48,674
___________
82,023
Expenses
Administrator's fee 74,861
Independent general partners' fees 10,000
Interest 11,233
Professional fees 31,806
Amortization of organization costs 17,161
Other 5,917
___________
150,978
Loss from Operations (68,955)
________
NET INCOME $5,259,522
==========
See Notes to Financial Statements
<PAGE>
Page 4
PENFIELD PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
For the Six Months Ended June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Corporate Individual
General General Limited
Total Partner Partners Partners
___________ __________ ________ ___________
<S> <C> <C> <C> <C>
PARTNERS' CAPITAL
Beginning $16,472,679 $ 780,023 $ 8,176 $15,684,480
___________ __________ ________ ___________
CHANGES IN CAPITAL FROM
Investments and Operations
Loss from operations (68,955) (16,629) (35) (52,291)
Realized & unrealized
investment gains 5,328,477 1,284,972 2,753 4,040,752
___________ __________ ________ ___________
Net Increase 5,259,522 1,268,343 2,718 3,988,461
___________ __________ ________ ___________
Partners' Transactions
Capital contributions 100,000 75,000 - 25,000
Capital transfers - (2,528) 2,528 -
Capital withdrawals (1,047,625) (647,625) - (400,000)
___________ __________ ________ ___________
Net (Decrease)
Increase (947,625) (575,153) 2,528 (375,000)
___________ __________ ________ ___________
Total Increase in
Partners Capital 4,311,897 693,190 5,246 3,613,461
___________ __________ ________ ___________
PARTNERS' CAPITAL-
Ending $20,784,576 $1,473,213 $13,422 $19,297,941
=========== ========== ======== ===========
Units Outstanding-
Beginning 658.91 31.20 .33 627.38
___________ __________ ________ ___________
CHANGES IN UNITS
OUTSTANDING FROM
Units Sold 4.00 3.00 - 1.00
Units Transferred - (0.10) .10 -
Units Issued for
Net Income 210.38 50.73 .11 159.54
Units Repurchased (41.91) (25.91) - (16.00)
___________ __________ ________ ____________
Net Increase 172.47 27.72 .21 144.54
___________ __________ ________ ____________
Units Outstanding-
Ending 831.38 58.92 .54 771.92
=========== ========== ========= ============
</TABLE>
<PAGE>
Page 5
PENFIELD PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
CORPORATE INDIVIDUAL
GENERAL GENERAL LIMITED
TOTAL PARTNER PARTNERS PARTNERS
__________ ___________ __________ ___________
<S> <C> <C> <C> <C>
PARTNERS' CAPITAL-
Beginning $23,397,789 $ 1,656,877 $ 85,836 $21,655,076
___________ ___________ __________ ___________
CHANGES IN CAPITAL FROM
Investments & Operations
Loss from operations (250,314) (24,468) (740) (225,106)
Realized and unrealized
investment gains 2,389,242 301,510 6,007 2,081,725
___________ ___________ ________ ____________
Net Increase 2,138,928 277,042 5,267 1,856,619
___________ ___________ ________ ____________
Partners' Transactions
Capital contributions 4,027,500 325,000 2,500 3,700,000
Capital transfers - (1,478,896) (71,473) 1,550,369
Capital withdrawals (13,091,538) - (13,954) (13,077,584)
___________ ___________ ________ ____________
Net Decrease (9,064,038) (1,153,896) (82,927) (7,827,215)
___________ ___________ ________ ____________
Total Decrease in
Partners' Capital (6,925,110) (876,854) (77,660) (5,970,596)
____________ ___________ ________ ____________
PARTNERS' CAPITAL-
Ending $16,472,679 $ 780,023 $ 8,176 $15,684,480
============ =========== ======== ============
Units Outstanding-
Beginning 935.91 66.27 3.44 866.20
____________ ___________ ________ ____________
CHANGES IN UNITS
OUTSTANDING FROM
Units Sold 161.10 13.00 0.10 148.00
Units Transferred - (59.16) (2.86) 62.02
Units Issued for
Net Income 85.56 11.09 .21 74.26
Units Repurchased (523.66) - (0.56) (523.10)
____________ ___________ ________ ____________
Net Increase (277.00) (35.07) (3.11) (238.82)
____________ ___________ ________ ____________
Units Outstanding-
Ending 658.91 31.20 .33 627.38
============ =========== ======== ============
</TABLE>
See Notes to Financial Statements
<PAGE>
Page 6
PENFIELD PARTNERS, L.P.
SCHEDULE OF INVESTMENTS
June 30, 1996
(Unaudited)
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
COMMON STOCKS 89.46%
AUTOMOTIVE PARTS .61%
6,000 Oakhurst Capital, Inc. restricted $ 6,937
106,000 Steel City Products, Inc. restricted 3,286
15,000 Supreme Industries, Inc., class A 117,187
__________
127,410
BUILDING AND HOUSING 1.21%
1,200,000 Contempri Homes, Inc., restricted,
including 400,000 warrants 252,000
__________
CHEMICALS 1.11%
22,500 CPAC, Inc. 230,625
__________
COSMETICS AND FRAGRANCES .83%
20,000 Jean Philippe Fragrances, Inc. 172,500
__________
DRUGS AND HEALTHCARE 14.17%
22,500 Advanced Magnetics, Inc. 410,625
55,000 Barringer Laboratories, Inc. 56,074
20,000 Candela Laser Corporation 167,500
178,571 Cardiac Control Systems, Inc. (a) 524,553
8,953 Cardiac Control Systems, Inc.,
restricted (a) 25,068
15,000 Neose Technologies, Inc. 307,500
25,000 Sofamor Danek Group, Inc. 693,750
140,000 Viragen, Inc. 761,250
__________
2,946,320
ELECTRONICS 1.40%
72,500 Measurement Specialties, Inc. 290,000
__________
ENERGY 2.81%
15,000 Energy Research Corp. 221,250
25,000 Giant Industries, Inc. 362,500
__________
583,750
<PAGE>
Page 7
PENFIELD PARTNERS, L.P.
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1996
(Unaudited)
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
COMMON STOCKS (CONTINUED)
FINANCIAL SERVICES 8.32%
8,000 Imperial Thrift and Loan Association $ 118,000
27,500 North Side Savings Bank 955,625
40,000 Poughkeepsie Savings Bank 200,000
228,500 Western Transmedia Co., Inc.,
including 75,000 warrants 456,563
__________
1,730,188
HEALTHCARE SERVICES 2.84%
57,500 Accuhealth, Inc. (a) 122,187
11,073 Accuhealth, Inc. restricted (a) 21,667
52,500 Matria Healthcare, Inc. 446,250
__________
590,104
INDUSTRIAL AND MACHINERY 2.36%
300,000 Lunn Industries, Inc., restricted 412,500
35,000 Transnational Industries, Inc.,
restricted (a) 78,750
__________
491,250
MANUFACTURING 8.56%
32,250 Blount International, Inc. 1,015,875
85,000 Disc Graphics, Inc. 255,000
220,000 Disc Graphics, Inc., class A warrants 103,125
30,000 Mercer International, Inc. 405,000
__________
1,779,000
MINING 2.04%
185,000 Campbell Resources, Inc. 231,250
55,000 Westmoreland Coal Company 192,500
__________
423,750
MISCELLANEOUS .31%
15,000 Arbatax International, Inc. 63,750
__________
<PAGE>
Page 8
PENFIELD PARTNERS, L.P.
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1996
(Unaudited)
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
COMMON STOCKS (CONTINUED)
PAPER PRODUCTS 1.42%
295,500 TGC Industries, Inc., restricted $ 295,500
__________
RESTAURANT, LODGING AND ENTERTAINMENT 18.34%
25,000 Bally Entertainment Corporation 687,500
17,500 Bally Grand, Inc. 743,750
100,000 Casino Data Systems 1,512,500
20,000 Grand Casinos, Inc. 515,000
60,000 NTN Communications, Inc. 352,500
__________
3,811,250
RETAILING .76%
17,500 Oshmans Sporting Goods, Inc. 157,500
__________
SERVICE 1.97%
22,500 Insurance Auto Auctions, Inc. 225,000
25,000 Intrav, Inc. 184,375
__________
409,375
TECHNOLOGY 5.05%
12,500 Asyst Technologies, Inc. 234,375
40,000 Insignia Solutions 340,000
50,000 Interlinq Software Corp. 225,000
25,000 Symantec Corporation 250,000
__________
1,049,375
TELECOMMUNICATIONS 13.47%
20,000 360 Communications Co. 480,000
40,000 Acrodyne Communications, Inc. 280,000
85,000 Atlantic Tele-Network, Inc. 2,040,000
__________
2,800,000
TRANSPORTATION 1.88%
15,000 Airborne Freight Corp. 390,000
__________
TOTAL COMMON STOCKS (COST $15,396,538) $18,593,647
See Notes to Financial Statements
<PAGE>
Page 9
PENFIELD PARTNERS, L.P.
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1996
(Unaudited)
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
PREFERRED STOCKS 2.29%
HEALTHCARE SERVICES 1.81%
187,500 Accuhealth, Inc., restricted (a) $ 375,000
INDUSTRIAL AND MACHINERY .48%
400 Transnational Industries, Inc.,
Series B, restricted (a) 100,000
__________
TOTAL PREFERRED STOCKS
(COST $475,000) 475,000
__________
TOTAL INVESTMENTS (COST $15,871,538)
91.75% $19,068,647
__________
(a) Affiliated issuer under the Investment Company Act of 1940,
in as much as the Fund owns more than 5% of the voting
securities of the issuer.
All percentages are relative to Partners' Capital
See Notes to Financial Statements
<PAGE>
Page 10
PENFIELD PARTNERS, L.P.
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1996
(Unaudited)
SECURITIES SOLD SHORT
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
COMMON STOCKS 8.00%
DRUGS AND HEALTHCARE 3.74%
12,500 Biovail Corporation International $ 390,625
19,550 Norland Medical System, Inc. 386,112
__________
776,737
MISCELLANEOUS 1.48%
20,500 Nutrition for Life International, Inc. 307,500
__________
SERVICE 1.89%
12,500 Employee Solutions, Inc. 393,750
__________
TECHNOLOGY .89%
10,000 USData Corp. 185,000
__________
TOTAL SECURITIES SOLD SHORT
(PROCEEDS $1,815,884) $1,662,987
All percentages are relative to Partners' Capital
See Notes to Financial Statements
<PAGE>
Page 11
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
(Information Subsequent to December 31, 1995 is Unaudited)
ORGANIZATION The Partnership ("Fund") was organized in November
1988 in the State of Delaware as a limited
partnership for the purpose of trading in
securities. The Fund will continue until December
31, 2028 unless sooner terminated as provided for
in the Partnership Agreement. The Fund's
investment objective is to seek long-term capital
appreciation by investing and trading primarily in
equity securities and securities with equity
features of publicly listed companies.
Effective July 1, 1994, the Fund registered under
the Investment Company Act of 1940 ("1940 Act") to
operate as a nondiversified, management company
and a closed-end interval fund.
REPURCHASE The Fund, as a closed-end interval fund, has
POLICIES adopted certain policies for its repurchase of
units from partners as fundamental policies which,
under Rule 23c-3 promulgated under the 1940 Act,
may not be changed without the vote of the holders
of a majority of the outstanding units (as
determined under the 1940 Act). These repurchase
policies are as follows:
(a) The Fund will offer to repurchase units at
intervals of six months in accordance with the
Fund's Amended and Restated Agreement of Limited
Partnership ("Partnership Agreement")
(b) The Fund will allow its partners to submit
requests for repurchases of units by June 16th and
December 17th of each year.
(c) The Fund will establish a maximum of
fourteen days between each deadline for
repurchase requests and the applicable repurchase
date such that repurchases of units shall occur on
June 30th and December 31st of each year.
<PAGE>
Page 12
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
(Information Subsequent to December 31, 1995 is Unaudited)
The Individual General Partners are authorized
under the Partnership Agreement to establish
other policies relating to repurchases of units
that are consistent with the 1940 Act. The
repurchase of units by the Fund allows partners to
redeem units semi-annually, subject to the terms
and limitations set forth in the Partnership
Agreement.
On May 23, 1996, the Fund offered to repurchase up
to 25% of the outstanding units of the Fund.
Partners holding 4.80% of the units outstanding on
June 30, 1996 equal to $1,047,625 elected to
tender their units to the Fund for repurchase.
FINANCIAL The preparation of financial statements in
STATEMENT conformity with generally accepted accounting
ESTIMATES principles may require management to make
estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date
of the financial statements and the reported
amounts of revenues and expenses during the
reporting period. Actual results could differ
from those estimates.
VALUATION OF Purchases and sales of securities are recorded on
SECURITIES a trade date basis.
Investments in securities and securities sold
short which are traded on a national securities
exchange or listed on NASDAQ are valued at the
last reported sales price on the last business day
of the year. Investments in securities and
securities sold short which are traded in the
over-the-counter market are valued at the average
of the bid and asked prices on the last trade
date.
Securities for which market quotations are not
readily available are valued at their fair value
as determined in good faith by the Individual
General Partners.
<PAGE>
Page 13
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
(Information Subsequent to December 31, 1995 is Unaudited)
ORGANIZATION Organization costs are being amortized on a
COSTS straight-line basis over a period of 60 months.
Accumulated amortization at June 30, 1996 is
$68,645.
INCOME TAXES The Fund is not subject to income taxes. The
partners report their distributive share of
realized income or loss on their own tax returns.
CASH Cash equivalents include:
EQUIVALENTS
AND CUSTODY Balance at broker $4,711,244
CONCENTRATIONS Money market funds at brokers 937,949
__________
$5,649,193
Balance at broker consists of a brokerage account
with Furman Selz LLC. The Securities Investors
Protection Corporation (SIPC) insures cash
balances up to $100,000 and securities up to
$500,000. Securities in excess of these limits
are covered by additional insurance maintained by
the broker in the amount of $25 million. Amounts
in excess of insurance coverages are secured by
the good faith and credit of the broker.
SECURITIES The fund is subject to certain inherent risks
SOLD SHORT arising from its activities of selling securities
short. The ultimate cost to the Fund to acquire
these securities may exceed the liability
reflected in the financial statements. In
addition, the Fund is required to maintain
collateral with the broker to secure these short
positions.
ALLOCATIONS The net income of the Partnership is allocated
OF INCOME semiannually on June 30th and December 31st, 20%
(LOSS) to the Corporate General Partner and 80% to all
partners in proportion of the number of units held
by each. A net loss will be allocated among the
partners in proportion to the number of units
owned by each. If there is a loss for an
accounting period, the 20% allocation to the
Corporate General Partner will not apply to future
periods until the loss has been recovered.
<PAGE>
Page 14
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
(Information Subsequent to December 31, 1995 is Unaudited)
The 20% income allocation was suspended from
January 21, 1995 through June 30, 1995 due to the
death of the general partner of the Corporate
General Partner. The allocation was reinstated
effective July 1, 1995 on the approval by the
partners of the current investment advisory
agreement. The allocation for the period from
July 1, to December 31, 1995 amounted to $168,714.
All net income allocated to partners is
reinvested. In order to maintain a $25,000 price
per unit, the number of units held by each partner
at the close of each semiannual period will be
adjusted to equal the partner's capital account
divided by $25,000.
RELATED PARTY The Administration Agreement provides for fees
TRANSACTIONS payable to the Fund's administrator, the general
partner of the Corporate General Partner. The
administrator's fee is calculated at a rate of
.0625% of the net asset value of the Fund at the
beginning of each month (.75% per annum).
A fee is payable to each of the Independent
Individual General Partners at $10,000 per annum,
plus out-of-pocket expenses incurred by them in
performing their duties under the Partnership
Agreement.
The accompanying Statement of Assets and
Liabilities includes unpaid fees to the
administrator and the Independent General Partners
of $40,901 and $10,000, respectively.
<PAGE>
Page 15
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
(Information Subsequent to December 31, 1995 is Unaudited)
At June 30, 1996 the Fund has an investment in
Transnational Industries, a private placement
security in which an Individual General Partner is
a director and an investor through another entity.
The investment is valued at $178,750.
PURCHASES AND Purchases and sales of securities aggregated
SALES OF $13,794,618 and $18,775,968, respectively.
SECURITIES
<TABLE>
SELECTED
FINANCIAL
INFORMATION
<CAPTION> Six Months
Ended Years Ended
June 30, December 31,
1996 1995 1994
_______________________________
(Unaudited)
<S> <C> <C> <C>
Ratio of Total
Expenses to
Average Net Assets *1.55% 2.18% 1.23%
Ratio of Loss from
Operations to
Average Net Assets *(.71)% (1.12)% (0.48)%
Ratio of Net Income to
Average Net Assets *54.03% 9.59% 0.65%
Portfolio Turnover
Rate 0.73 1.19 1.87
Total Return 31.74% 10.14% 0.53%
Average Commission
Rate Paid $.0478
</TABLE>
* Annualized
<PAGE>
Page 16
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
(Information Subsequent to December 31, 1995 is Unaudited)
SUBSEQUENT Effective July 1, 1996 partners' capital of
CAPITAL $1,443,633 (57.75 units) was contributed to the
TRANSACTIONS fund, including $925,000 received prior to July
30, 1996, which is shown as prepaid capital
contributions in the accompanying Statement of
Assets and Liabilities.