PENFIELD PARTNERS, L.P.
Index to Financial Statements
June 30, 1997
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 11-15
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, 1997 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, 1996 was audited by us, and we expressed an
unqualified opinion on it in our report dated February 7, 1997,
but we have not performed any audit procedures since that date.
Anchin, Block & Anchin LLP
New York, N.Y.
July 24, 1997
Page 2
PENFIELD PARTNERS, L.P.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1997
(Unaudited)
ASSETS
Investments in securities, at fair value $26,727,988
Cash equivalents 203,164
Accrued income 4,080
Organization costs 68,645
___________
TOTAL ASSETS $27,003,877
LIABILITIES
Securities sold short, at fair value $ 2,666,673
Payable to broker 1,045,035
Accrued expenses 78,133
Payables for capital withdrawals 1,748,497
___________
TOTAL LIABILITIES $ 5,538,338
PARTNERS' CAPITAL
General partners 1,304,813
Limited partners 20,160,726
___________
TOTAL PARTNERS' CAPITAL $21,465,539
TOTAL LIABILITIES AND PARTNERS' CAPITAL $27,003,877
___________
Net asset value per Limited Partners' Unit $ 25,000
___________
See Notes to Financial Statements
Page 3
PENFIELD PARTNERS, L.P.
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1997
(Unaudited)
INVESTMENT GAINS
Realized gains on investments, net $ (249,090)
Unrealized gains on investments, net 2,897,085
___________
Total Realized and Unrealized Investment Gains $2,647,995
LOSS FROM OPERATIONS
Income
Interest 64,712
Dividends 71,780
___________
136,492
Expenses
Administrator's fee 80,433
Independent general partners' fees 10,000
Dividends on securities sold short 5,880
Interest 3,022
Professional fees 39,016
Amortization of organization costs 17,161
Other 1,622
___________
157,134
Loss from Operations (20,642)
__________
NET INCOME $2,627,353
__________
See Notes to Financial Statements
Page 4
PENFIELD PARTNERS, L.P.
<TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
For the Six Months Ended June 30, 1997
(Unaudited)
Corporate Individual
General General Limited
Total Partner Partners Partners
___________ __________ ________ ___________
<S> <C> <C> <C> <C>
PARTNERS' CAPITAL
Beginning $18,036,683 $1,268,319 $11,555 $16,756,809
___________ ___________ ________ ___________
CHANGES IN CAPITAL FROM
Investments and Operations
Realized & unrealized
investment gains 2,647,995 163,140 1,486 2,483,369
Loss from operations (20,642) (1,271) (11) (19,360)
___________ ___________ ________ ___________
Net Increase 2,627,353 161,869 1,475 2,464,009
___________ ___________ ________ ___________
Partners' Transactions
Capital contributions 2,550,000 - - 2,550,000
Capital transfers - (138,405) - 138,405
Capital withdrawals (1,748,497) - - (1,748,497)
___________ ___________ ________ ___________
Net (Increase)
Decrease 801,503 (138,405) - 939,908
___________ ___________ ________ ___________
Total Increase in
Partners Capital 3,428,856 23,464 1,475 3,403,917
___________ ___________ ________ ___________
PARTNERS' CAPITAL-
Ending $21,465,539 $1,291,783 $13,030 $20,160,726
___________ ___________ ________ ___________
Units Outstanding-
Beginning 721.47 50.73 .46 670.28
___________ ___________ ________ ___________
CHANGES IN UNITS
OUTSTANDING FROM
Units Sold 102.00 - - 102.00
Units Transferred - (5.53) - 5.53
Units Issued for
Net Income 105.09 6.47 0.06 98.56
Units Repurchased (69.94) - - (69.94)
___________ __________ ________ __________
Net Increase 137.15 0.94 0.06 136.15
___________ __________ ________ ___________
Units Outstanding-
Ending 858.62 51.67 .52 806.43
___________ __________ ________ ___________
</TABLE>
Page 5
PENFIELD PARTNERS, L.P.
<TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
For the Year Ended December 31, 1996
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 & Operations
Realized and unrealized
investment gains 2,262,781 1,081,791 902 1,180,088
Loss from operations (94,748) (18,342) (51) (76,355)
___________ ___________ ________ ____________
Net Increase 2,168,033 1,063,449 851 1,103,733
___________ ___________ ________ ____________
Partners' Transactions
Capital contributions 1,543,633 75,000 - 1,468,633
Capital transfers - (2,528) 2,528 -
Capital withdrawals (2,147,662) (647,625) - (1,500,037)
___________ ___________ ________ ____________
Net Decrease/ (604,029) (575,153) 2,528 (31,404)
Increase ___________ ___________ ________ ____________
Total Increase in
Partners' Capital 1,564,004 488,296 3,379 1,072,329
___________ ___________ ________ ____________
PARTNERS' CAPITAL-
Ending $18,036,683 $1,268,319 $11,555 $16,756,809
____________ ___________ ________ ____________
Units Outstanding-
Beginning 658.91 31.20 0.33 627.38
____________ ___________ ________ ____________
CHANGES IN UNITS
OUTSTANDING FROM
Units Sold 61.75 3.00 - 58.75
Units Transferred - (0.10) 0.10 -
Units Issued for
Net Income 86.72 42.54 0.03 44.15
Units Repurchased 85.91 (25.91) - (60.00)
________ _______ ______ ________
Net Increase 62.56 19.53 0.13 42.90
________ _______ ______ ________
Units Outstanding-
Ending 721.47 50.73 .46 670.28
________ _______ ______ ________
</TABLE>
See Notes to Financial Statements
Page 6
PENFIELD PARTNERS, L.P.
SCHEDULE OF INVESTMENTS
June 30, 1997
(Unaudited)
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
COMMON STOCKS 122.30%
AEROSPACE 5.03%
40,000 Wyman-Gordon Co. $1,080,000
AUTOMOTIVE PARTS .01%
41,240 Steel City Products, Inc. restricted 2,474
BUILDING AND HOUSING .66%
1,200,000 Contempri Homes, Inc., restricted (a) 142,500
CHEMICALS 2.46%
43,500 CPAC, Inc. 527,437
DRUGS AND HEALTHCARE 23.03%
25,000 Advanced Magnetics, Inc. 271,875
70,000 Ariad Pharmaceuticals, Inc. 450,625
9,500 Biomatrix, Inc. 180,500
178,571 Cardiac Control Systems, Inc.,
including 17,332 warrants (a) 184,151
8,953 Cardiac Control Systems, Inc.,
restricted (a) 9,233
15,000 Neose Technologies, Inc. 191,250
80,000 PLC Systems, Inc. 1,765,000
32,500 Sofamor/Danek Group, Inc. 1,486,875
21,000 Viragen Europe Ltd. 126,000
110,000 Viragen, Inc. 278,437
__________
4,943,946
ELECTRONICS .67%
37,000 Measurement Specialties, Inc. 143,375
ENERGY 7.13%
15,000 Chesapeake Energy Corp. 149,062
35,000 Chieftain International, Inc. 767,812
30,000 Giant Industries, Inc. 474,375
30,000 Offshore Energy Developement 138,750
__________
1,529,999
Page 7
PENFIELD PARTNERS, L.P.
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1997
(Unaudited)
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
COMMONS STOCKS (CONTINUED)
FINANCIAL SERVICES 5.06%
39,000 New Century Financial Corp. $ 565,500
20,000 R & G Financial Corp. 520,000
__________
1,085,500
FOOD 2.28%
70,000 Opta Food Ingredients, Inc. 490,000
HEALTHCARE SERVICES 1.77%
92,500 Accuhealth, Inc. (a) 323,750
39,528 Accuhealth, Inc. restricted (a) 55,414
__________
379,164
INDUSTRIAL AND MACHINERY 2.30%
5,000 Kuhlman Corp. 160,625
180,000 Lunn Industries, Inc., restricted 202,500
180,000 Transnational Industries, Inc.,
restricted (a) 131,250
__________
494,375
MANUFACTURING 16.74%
32,250 Blount International, Inc. 1,372,641
50,000 Mercer International, Inc. 475,000
16,100 N S Group, Inc. 191,187
22,500 Sealright Company, Inc. 270,000
45,000 Sun Hydraulics Corp. 523,125
24,000 Trinity Industries, Inc. 762,000
__________
3,593,953
MINING 2.37%
12,500 Cleveland Cliffs, Inc. 509,375
Page 8
PENFIELD PARTNERS, L.P.
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1997
(Unaudited)
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
COMMON STOCKS (CONTINUED)
RESTAURANT, LODGING AND ENTERTAINMENT 5.68%
8,000 Bally Grand, Inc. $ 408,000
55,000 Grand Casinos, Inc. 811,250
__________
1,219,250
SERVICE 3.25%
50,000 Insurance Auto Auctions, Inc. 475,000
20,000 Western Staff Services, Inc. 222,500
__________
697,500
TECHNOLOGY 38.65%
20,000 ASM Lithography Holding 1,170,000
80,000 Align-Rite International, Inc. 1,040,000
88,500 Aseco Corp. 1,006,690
15,000 Asyst Technologies, Inc. 660,000
10,000 Centennial Technologies, Inc. 23,700
35,000 Cognitronics Corp. 406,875
15,000 Helix Technology, Corp. 607,500
40,000 Inso Corp. 822,500
5,000 Presstek, Inc. 433,750
20,000 Pri Automation, Inc. 758,750
10,000 Radisys Corp. 397,500
165,000 TII Industries, Inc. 969,375
__________
8,296,640
TELECOMMUNICATIONS 3.44%
25,000 360 Communications Co. 428,125
55,000 Acrodyne Communications, Inc. 309,375
__________
8,296,640
UTILITIES 1.77%
40,000 Northeast Utilities 380,000
__________
TOTAL COMMON STOCKS (COST $22,311,178) $26,252,988
Page 9
PENFIELD PARTNERS, L.P.
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1997
(Unaudited)
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
PREFERRED STOCKS 2.21%
HEALTHCARE SERVICES 1.75%
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 $22,786,178)
$26,727,988
___________
(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
Page 10
PENFIELD PARTNERS, L.P.
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1997
(Unaudited)
SECURITIES SOLD SHORT
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
COMMON STOCKS 12.42%
BIOTECH .54%
10,000 Cephalon, Inc. $ 115,000
DRUGS AND HEALTHCARE 3.33%
17,500 Biovail Corporation International 528,281
5,000 Steris Corp. 186,875
__________
715,156
ENERGY .69%
15,000 Chesapeake Energy Corp. 149,067
FOOD 2.39%
6,000 Kellogg Co. 513,750
MISCELLANEOUS .35%
10,000 Nutrition for Life International, Inc. 75,000
TECHNOLOGY 3.98%
10,000 Centennial Technologies, Inc. 23,700
5,000 Presstek Inc. 433,750
10,000 Radisys Corp. 397,500
_________
854,950
TELECOMMUNICATIONS, INC. 1.14%
15,000 C D Radio, Inc. 243,750
__________
TOTAL SECURITIES SOLD SHORT
(PROCEEDS $3,145,377) $2,666,673
All percentages are relative to Partners' Capital
Page 11
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Information Subsequent to December 31, 1996 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 12
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Information Subsequent to December 31, 1996 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 22, 1997, the Fund offered to repurchase up
to 25% of the outstanding units of the Fund.
Partners holding 7.53% of the units outstanding on
June 30, 1997 equal to $1,748,497 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 13
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Information Subsequent to December 31, 1996 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, 1997 is
$102,967.
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 consist principally of a balance
EQUIVALENTS held in a brokerage account with Furman Selz LLC.
AND CUSTODY The Securities Investors Protection Corporation
CONCENTRATIONS (SIPC) insures cash balances up to $100,000 and
securities up to $500,000. Securities in excess
of these limits are covered by additional isurance
maintained by the broker in the amount of $99.5
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
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
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 is 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. For
the period ended June 30, 1997, the Fund had a net
loss carryover of $464,136.
Page 14
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Information Subsequent to December 31, 1996 is Unaudited)
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 $40,515 and $10,000, respectively.
At June 30, 1997 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 $231,250.
PURCHASES AND Purchases and sales of securities aggregated
SALES OF $22,265,344 and $16,856,704, respectively.
SECURITIES
Page 15
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
(Information Subsequent to December 31, 1996 is Unaudited)
<TABLE>
SELECTED
FINANCIAL
INFORMATION
Six Months
Ended Years Ended
June 30, December 31,
_______________________________________
1997 1996 1995 1994
<S> <C> <C> <C> <C>
Ratio of Total
Expenses to
Average Net Assets 1.47%* 1.53% 2.18% 1.23%
Ratio of Loss from
Operations to
Average Net Assets (.19)%* (0.48)% (1.12)% (0.48)%
Ratio of Net Income to
Average Net Assets 24.65%* 10.89% 9.59% .65%
Portfolio Turnover
Rate 0.80 1.82 1.19 1.87
Total Return 12.76% 13.41% 10.14% .53%
Average Commission
Rate Paid $.0532 $.0448 (a) (a)
(a) This disclosure is not required prior to 1996.
* Annualized
</TABLE>
