PENFIELD PARTNERS, L.P.
Index to Financial Statements
June 30, 1998
PAGE(S)
Independent Accountants' Report 1
Statement of Assets and Liabilities 2
Statement of Operations 3
Statements of Changes in Partners' Capital 4
Schedule of Investments 6
Notes to Financial Statements 11
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, 1998 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, 1997 was audited by us, and we expressed an
unqualified opinion on it in our report dated February 11, 1998,
but we have not performed any audit procedures since that date.
Anchin, Block & Anchin LLP
New York, N.Y.
July 17, 1998
Page 2
PENFIELD PARTNERS, L.P.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998
(Unaudited)
ASSETS
Investments in securities, at fair value $25,608,290
Cash equivalents 5,038,661
Receivable from broker 321,270
Accrued income 7,096
Organization costs 34,323
___________
TOTAL ASSETS $31,009,640
LIABILITIES
Securities sold short, at fair value $ 4,370,294
Payable to broker 982,318
Accrued expenses 96,542
Payable for capital withdrawals 1,597,153
___________
TOTAL LIABILITIES $ 7,046,307
PARTNERS' CAPITAL
General partners 1,839,342
Limited partners 22,123,991
___________
TOTAL PARTNERS' CAPITAL $23,963,333
TOTAL LIABILITIES AND PARTNERS' CAPITAL $31,009,640
___________
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, 1998
(Unaudited)
INVESTMENT GAINS
Realized gains on investments, net $ 198,736
Unrealized gains on investments, net 1,377,443
___________
Total Realized and Unrealized Investment Gains $1,576,179
LOSS FROM OPERATIONS
Income
Interest 43,103
Dividends 88,984
___________
132,087
Expenses
Administrator's fee 96,354
Independent general partners' fees 10,000
Interest 71,895
Professional fees 31,190
Amortization of organization costs 17,161
Other 7,396
___________
233,996
Loss from Operations (101,909)
__________
NET INCOME $1,474,270
__________
See Notes to Financial Statements
Page 4
PENFIELD PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
For the Six Months Ended June 30, 1998
(Unaudited)
<TABLE>
Corporate Individual
General General Limited
Total Partner Partners Partners
___________ __________ ________ ___________
<S> <C> <C> <C> <C>
PARTNERS' CAPITAL
Beginning $22,661,216 $1,563,270 $13,930 $21,084,016
___________ ___________ ________ ___________
CHANGES IN CAPITAL FROM
Investments and Operations
Realized & unrealized
investment gains 1,576,179 391,588 730 1,183,861
Loss from operations (101,909) (25,318) (48) (76,543)
___________ ___________ ________ ___________
Net Increase 1,474,270 366,270 682 1,107,318
___________ ___________ ________ ___________
Partners' Transactions
Capital contributions 1,425,000 - - 1,425,000
Capital transfers - (104,810) - 104,810
Capital withdrawals (1,597,153) - - (1,597,153)
___________ ___________ ________ ___________
Net Decrease (172,153) (104,810) - 67,343
___________ ___________ ________ ___________
Total Increase in
Partners Capital 1,302,117 261,460 682 1,039,975
___________ ___________ ________ ___________
PARTNERS' CAPITAL-
Ending $23,963,333 $1,824,730 $14,612 $22,123,991
___________ ___________ ________ ___________
Units Outstanding-
Beginning 906.45 62.53 .56 843.36
___________ ___________ ________ ___________
CHANGES IN UNITS
OUTSTANDING FROM
Units Sold 57.00 - - 57.00
Units Transferred - (4.19) - 4.19
Units Issued for
Net Income 58.97 14.65 0.03 44.29
Units Repurchased (63.89) - - (63.89)
___________ __________ ________ __________
Net Increase 52.08 10.46 0.03 41.59
___________ __________ ________ ___________
Units Outstanding-
Ending 958.53 72.99 .59 884.95
___________ __________ ________ ___________
</TABLE>
See Notes to Financial Statements
Page 5
PENFIELD PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
For the Year Ended December 31, 1997
<TABLE>
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 & Operations
Realized and unrealized
investment gains 4,595,981 548,737 2,488 4,044,756
Loss from operations (218,218) (40,381) (113) (177,724)
___________ ___________ ________ ____________
Net Increase 4,377,763 508,356 2,375 3,867,032
Decrease ___________ ___________ ________ ____________
Partners' Transactions
Capital contributions 2,700,000 - - 2,700,000
Capital transfers - (138,405) - 138,405
Capital withdrawals (2,453,230) (75,000) - (2,378,230)
___________ ___________ ________ ____________
Net Increase/ 246,770 (213,405) - 460,175
Decrease ___________ ___________ ________ ____________
Total Increase in
Partners' Capital 4,624,533 294,951 2,375 4,327,207
___________ ___________ ________ ____________
PARTNERS' CAPITAL-
Ending $22,661,216 $1,563,270 $13,930 $21,084,016
____________ ___________ ________ ____________
Units Outstanding-
Beginning 721.47 50.73 0.46 670.28
____________ ___________ ________ ____________
CHANGES IN UNITS
OUTSTANDING FROM
Units Sold 108.00 - - 108.00
Units Transferred - (5.53) - 5.53
Units Issued for
Net Income 175.11 20.33 0.10 154.68
Units Repurchased 98.13 (3.00) - (95.13)
________ _______ ______ ________
Net Increase 184.98 11.80 0.10 173.08
________ _______ ______ ________
UNITS OUTSTANDING-
ENDING 906.45 62.53 .56 843.36
________ _______ ______ ________
</TABLE>
See Notes to Financial Statements
Page 6
PENFIELD PARTNERS, L.P.
SCHEDULE OF INVESTMENTS
June 30, 1998
(Unaudited)
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
COMMON STOCKS 106.86%
AUTOMOTIVE PARTS .01%
41,240 Steel City Products, Inc. restricted 1,287
DRUGS AND HEALTHCARE 8.43%
133,571 Cardiac Control Systems, Inc.,
including 17,332 warrants (a) 51,425
8,953 Cardiac Control Systems, Inc.,
restricted (a) 3,447
20,000 Sofamor/Danek Group, Inc. 1,731,250
125,000 Viragen, Inc. 234,375
__________
2,020,497
ENERGY 7.12%
15,000 Chesapeake Energy Corp. 60,000
35,000 Chieftain International, Inc. 829,060
15,000 Energy Research Corp. 296,250
30,000 Giant Industries, Inc. 521,250
__________
1,706,560
FINANCIAL SERVICES 8.76%
47,500 PacificAmerica Money Center Inc. $ 730,312
72,000 R & G Financial Corp. 1,368,000
__________
2,098,312
HEALTHCARE SERVICES 3.00%
105,000 Accuhealth, Inc. (a) 177,187
50,064 Accuhealth, Inc. restricted (a) 77,915
17,500 Datascope Corp. 464,844
__________
719,946
INDUSTRIAL AND MACHINERY 1.34%
50,000 Transnational Industries Inc. (a) 203,125
31,760 Transnational Industries, Inc.,
restricted (a) 117,600
__________
320,725
See Notes of Financial Statements
Page 7
PENFIELD PARTNERS, L.P.
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1998
(Unaudited)
COMMON STOCKS (CONTINUED)
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
MANUFACTURING 23.34%
64,500 Blount International, Inc. 1,838,250
40,000 CTB International Corp. 542,500
45,000 Mercer International, Inc. 448,594
20,000 Mueller Industries, Inc. 742,500
55,000 Sun Hydraulics Corp. 880,000
27,500 Trinity Industries, Inc. 1,141,250
__________
5,593,094
MINING 4.47%
20,000 Cleveland Cliffs, Inc. 1,072,500
RESTAURANT, LODGING AND ENTERTAINMENT 6.49%
20,000 Carmike Cinemas Inc. 538,750
500,000 Casino Magic Corp. 1,015,625
__________
1,554,375
RETAILING 3.79%
21,875 99 Cents Only Stores 907,812
SERVICE 6.95%
60,000 Emcon 285,000
20,000 Iron Mountain Inc. 895,000
54,000 Nobel Education Dynamics Inc. 486,000
__________
1,666,000
TECHNOLOGY 12.79%
20,000 Asyst Technologies, Inc. 252,500
10,000 Centennial Technologies, Inc. 12,187
45,000 Cognitronics Corp. 624,375
27,500 Data Transmission Network Corp. 1,100,000
40,000 Interlinq Software Corp. 285,000
45,000 Mecon Inc. 466,875
85,000 Media 100 Inc. 324,060
__________
3,064,997
See Notes to Financial Statements
Page 8
PENFIELD PARTNERS, L.P.
SCHEDULE OF INVESTMENT (CONTINUED)
June 30, 1998
(Unaudited)
INVESTMENT IN SECURITIES
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS 4.63%
105,000 Relm Wireless Corp. $ 321,560
20,000 Telephone & Data Systems, Inc. 787,500
__________
1,109,060
TRANSPORTATION 11.35%
20,000 Ryanair Holdings PLC 712,500
52,500 Sea Containers Ltd. 2,008,125
__________
2,720,625
UTILITIES 2.83%
40,000 Northeast Utilities 677,500
__________
TOTAL COMMON STOCKS (COST $20,556,670) $25,233,290
See Notes to Financial Statements
Page 9
PENFIELD PARTNERS, L.P.
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1998
(Unaudited)
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
PREFERRED STOCKS 1.56%
HEALTHCARE SERVICES 1.56%
187,500 Accuhealth, Inc., restricted (a) $ 375,000
(COST $375,000)
TOTAL INVESTMENTS IN SECURITIES
(COST $20,931,670) $25,608,290
(a) Affiliated issuer under the Investment Company Act of 1940,
inasmuch 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 10
PENFIELD PARTNERS, L.P.
SCHEDULE OF INVESTMENTS (CONTINUED)
June 30, 1998
(Unaudited)
SECURITIES SOLD SHORT
NUMBER FAIR
OF SHARES DESCRIPTION VALUE
COMMON STOCKS 18.23%
BIOTECH .92%
10,000 Zonagen Inc. $ 219,375
DRUGS AND HEALTHCARE 2%
15,000 Biovail Corporation International 480,000
ENERGY 3.24%
15,000 Chesapeake Energy Corp. 60,000
20,000 Triton Energy Corp. 717,500
__________
777,500
INDUSTRIAL AND MACHINERY .73%
20,000 C3 Inc. 175,000
MANUFACTURING 1.67%
10,000 Pillowtex Corp. 401,250
RESTAURANT LODGING AND ENTERTAINMENT 2.08%
27,500 Landrys Seafood Restaurants, Inc. 497,580
SHOES AND APPAREL 4.06%
35,000 Ashworth, Inc. 485,625
10,000 Nike Inc. 486,875
__________
972,500
TECHNOLOGY 3.53%
10,000 Centennial Technologies, Inc. 12,189
20,000 MRV Communications 415,000
11,700 Newcom Inc. 111,150
20,000 Schick Technologies, Inc. 308,750
_________
847,089
TOTAL SECURITIES SOLD SHORT
(PROCEEDS $5,561,368) $4,370,294
All percentages are relative to Partners' Capital
See Notes to Financial Statements
Page 11
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
(Information Subsequent to December 31, 1997 is Unaudited)
ORGANIZATION Penfield Partners, L.P.("the 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 has adopted certain policies for its
POLICIES 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.
The Individual General Partners are authorized
under the Partnership Agreement to establish other
policies relating to
Page 12
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
(Information Subsequent to December 31, 1997 is Unaudited)
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 21, 1998, the Fund offered to repurchase up
to 25% of the outstanding units of the Fund.
Partners holding 6.25% of the units outstanding on
June 30, 1998 equal to $1,597,153 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.
ORGANIZATION Organization costs are being amortized on a
COSTS straight-line basis over a period of 60 months.
Accumulated amortization at June 30, 1998 is
$137,289.
Page 13
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
(Information Subsequent to December 31, 1997 is Unaudited)
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 $5,034,547
CONCENTRATIONS Money market fund 4,114
__________
$5,038,661
Balance at broker consists principally of a
brokerage account with ING Baring Furman Selz LLC.
The Securities Investor Protection Corporation
(SIPC) insures the brokerage account to the
extent of $500,000 (including up to $100,000 for
cash). Securities in excess of these limits are
covered by additional insurance 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
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.
DERIVATIVE Derivative financial instruments traded by the
FINANCIAL Partnership (the value of which is based upon an
INSTRUMENTS underlying assets, index or reference rate)
consist of stock options.
Derivatives are used for trading purposes and for
managing risks associated with the portfolio of
investments. They are subject to various risks
similar to those related to the underlying
financial instruments, including market risks.
The notional amount of derivatives is not recorded
on the balance sheet.
Page 14
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
(Information Subsequent to December 31, 1997 is Unaudited)
Such amount does not measure the exposure of the
Partnership, nor the amounts exchanged by the
parties. The amounts exchanged are calculated on
the basis of the notional amounts and the other
terms of the derivatives, which relate to security
prices, or financial or other indices. There were
no options held as of June 30, 1998.
Market risk is the potential for changes in the
value of derivative financial instruments due to
market changes and fluctuations in security
prices.
The partnership had trading gains of approximately
$9,900 on options purchased. The average value of
these option contracts for the period was
approximately $22,000.
ALLOCATIONS The net income of the Fund 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 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. Income
for the six months ended June 30, 1998 was
allocated in accordance with the 20% - 80%
formula.
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 is adjusted
to equal the partner's capital account divided by
$25,000.
RELATED The Administrative Agreement provides for fees
PARTY payable to the Fund's administrator, the general
TRANSACTIONS 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).
Page 15
PENFIELD PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
(Information Subsequent to December 31, 1997 is Unaudited)
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 of $49,145.
At June 30, 1998 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 $320,725.
PURCHASES AND Purchases and sales of securities aggregated
SALES OF $21,605,020 and $24,217,511, respectively.
SECURITIES
<TABLE>
SELECTED Three
FINANCIAL Months
INFORMATION Ended Years Ended
June 30, December 31,
____________________________________________
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Ratio of Total
Expenses to
Average Net Assets 1.83%* 1.94% 1.53% 2.18% 1.23%
Ratio of Loss from
Operations to
Average Net Assets (.80)%* (.96)% (0.48)% (1.12)% (0.48)%
Ratio of Net Income to
Average Net Assets 11.58%* 19.28% 10.89% 9.59% .65%
Portfolio Turnover
Rate .77 2.10 1.82 1.19 1.87
Total Return 4.90% 21.89% 13.41% 10.14% .53%
Average Commission
Rate Paid $.0479 $.0515 $.0448 (a) (a)
</TABLE>
(a) This disclosure is not required prior to 1996.
* Annualized
