<PAGE>
AH&H PARTNERS FUND LIMITED PARTNERSHIP
Report on Financial Statements
For the year ended December 31, 1996
(Audited)
<PAGE>
AH&H PARTNERS FUND LIMITED PARTNERSHIP
Report on Financial Statements
For year ended December 31, 1996
(audited)
CONTENTS
PAGE
Report of Independent Auditors 3
Investment Portfolio
for the year ended December 31, 1996 4-5
Statement of Assets and Liabilities
for the year ended December 31, 1996 6
Statement of Operations
for the year ended December 31, 1996 7
Statement of Changes in Net Assets
for year ended December 31, 1996 8
Notes to Financial Statements 9-10
<PAGE>
To the General Partner and Limited Partners of
AH&H Partners Fund Limited Partnership
Boston, Massachusetts
REPORT OF INDEPENDENT AUDITORS
In our opinion, the accompanying statement of assets and
liabilities, including the schedule of investments, and the related
statements of operations snd of changes in net assets, present
fairly, in all material respects, the financial position of The
AH&H Partners Fund Limited Partnership (the partnership) at
December 31, 1996, the results of its operations and the changes in
its net assets for each of the periods indicated, in conformity
with generally accepted accounting principles. These financial
statements are the responsibility of the Partnership's management;
our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation.
We believe that our audits, which included confirmation of
securities at December 31, 1996 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed
above.
Creelman & Smith, P.C.
Certified Public Accountants
Boston, Massachusetts
January 1997
<PAGE>
AH&H PARTNERS FUND LIMITED PARTNERSHIP
Investment Portfolio
For the year ended December 31, 1996
<TABLE>
<CAPTION>
INDUSTRY & COMPANY Shares Value
<S> <C> <C>
EQUITY SECURITIES - COMMON STOCK 69.7%
COMMUNICATIONS 7.2%
Natural Microsystems Corp. 80,000 $2,520,000
CONSUMER 9.7%
A.T. Cross 50,000 581,250
CompUSA, Inc. 80,000 1,660,000
Opta Food Ingredients, Inc. 200,000 1,150,000
CONTRACT MANUFACTURING 6.8%
ACT Manufacturing Co. 90,000 2,373,750
DIVERSIFIED INDUSTRIES 5.3%
Nashua Corp. 155,000 1,860,000
ELECTRONIC COMPONENTS 6.8%
C.P. Clare Corp. 108,000 1,080,000
PCD, Inc. 100,000 1,300,000
ENERGY 4.7%
Energy Research Corp. 110,000 1,622,500
FACTORY AUTOMATION 10.5%
Concentra 95,000 855,000
Parametric Technology Corp. 54,600 2,805,075
INTERNET 2.9%
CMG Information Services 60,000 1,005,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
AH&H PARTNERS FUND LIMITED PARTNERSHIP
Investment Portfolio
For the year ended December 31, 1996
<TABLE>
<CAPTION>
INDUSTRY & COMPANY Shares Value
<S> <C> <C>
MEDICAL 3.9%
IMNET Systems 56,396 $1,367,603
SEMICONDUCTORS 4.7%
Aseco Corp. 139,820 1,625,407
SOFTWARE 7.2%
Datawatch Corp. 70,000 402,500
Restrac 90,000 438,750
Xionics 133,200 1,665,000
___________
Total Common Stock (Cost $18,981,305) $27,284,157
PRIVATE HOLDINGS 8.7%
Advanced UroScience, Inc. 150,000 600,000
Aimtech Corp. 188,887 566,661
Ascent Pharmaceuticals 153,846 999,999
Cerulean Technology 255,546 250,001
Marathon Technologies 31,250 250,000
Sys-Tech Solutions (Conv. Note) 900 89,986
Sys-Tech Solutions (Com. Stock) 149,965 14,996
Sys-Tech Solutions (Pfd. Stock) 2,777 277,700
__________
Total Private Holdings (Cost $2,921,573) $3,049,343
CASH & EQUIVALENTS 23.0%
Fidelity Daily Money Market Fund 1,684,133
Fidelity US Treasury Income Fund 1,309,752
State Street Repos 5,015,489
___________
Total Cash & Equivalents (Cost $8,009,374) $8,009,374
SECURITIES SOLD SHORT -1.4%
Viasoft (10,000) (472,500)
Total Securities Sold Short (Cost -$488,420) (472,500)
__________
TOTAL INVESTMENT PORTFOLIO 100% $35,010,113
(Cost $29,423,832)
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
AH&H PARTNERS FUND LIMITED PARTNERSHIP
Statement of Assets and Liabilities
For the year ended December 31, 1996
<TABLE>
<CAPTION>
Year Ended
Dec. 31, 1996
--------------
ASSETS
<S> <C>
Investments at value (Cost Basis $29,912,252) $35,370,552
Cash 100
Note & Interest Receivable 71,297
Short Sale Proceeds Receivable 488,420
Receivable for Investments Sold 508,949
-------------
Total Assets $36,439,318
-------------
-------------
LIABILITIES
Accrued management fees 89,212
Accrued incentive fees 1,233
Accrued capital withdrawals 738,189
Payable for investments purchased 282,125
Securities sold short at value 472,500
(Proceeds receivable $488,420) -------------
Total Liabilities $1,583,259
-------------
NET ASSETS $34,856,059
-------------
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
AH&H PARTNERS FUND LIMITED PARTNERSHIP
Statement of Operations
For the year ended December 31, 1996
<TABLE>
<CAPTION>
Year Ended
Dec. 31, 1996
----------------
INVESTMENT INCOME
<S> <C>
Income:
Dividends $171,893
Interest 40,505
----------------
Total Income 212,398
Expenses:
Management Fees 373,027
Other expenses 18,670
---------------
Total expenses 391,697
Net investment loss (179,299)
---------------
NET REALIZED & UNREALIZED GAIN(LOSS)
Net realized gain 983,293
Net unrealized depreciation (1,446,125)
_____________
Net loss on investments (462,832)
---------------
NET DECREASE IN NET ASSETS (642,131)
---------------
---------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
AH&H PARTNERS FUND LIMITED PARTNERSHIP
Statement of Changes in Net Assets
For the year ended December 31, 1996
<TABLE>
<CAPTION>
Year Ended Dec. 31,
1996 1995
________ _________
INCREASE IN NET ASSETS
<S> <C>
Operations:
Net investment (loss) $(179,299) 193,503
Net realized gain from investment
transactions 983,293 4,716,800
Net unrealized appreciation(depreciation)
on investment transactions during the
period (1,446,125) 2,478,320
----------- ----------
Net increase(decrease) in net assets
resulting from operations (642,131) 7,388,623
----------- ---------
Contributions to capital 2,244,244 5,461,500
Withdrawals from capital (7,304,835) (3,994,412)
----------- -----------
INCREASE (DECREASE) IN NET ASSETS (1,702,722) 8,855,711
Net assets at beginning of period 36,558,781 27,703,070
----------- -----------
NET ASSETS AT END OF PERIOD $34,856,059 36,558,781
____________ ___________
____________ ___________
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
AH&H PARTNERS FUND LIMITED PARTNERSHIP
Notes to Financial Statements
For the year ended December 31, 1996
1 - SIGNIFICANT ACCOUNTING POLICIES
The AH&H Partners Fund Limited Partnership(the "Partnership")was
organized June 8,1990 as a Massachusetts limited partnership and
is registered with the Securities and Exchange Commission as a
closed-end, non-diversified management investment company. The
Agreement of Limited Partnership was amended and restated on
September 13,1990, April 1,1992 and January 1,1996. The Partner-
ship operates under the Investment Company Act of 1940(the "1940 Act")
as an interval fund. The Partnership's interests are not registered
under the Securities Act of 1933.
Adams, Harkness & Hill, Inc., a Massachusetts Corporation, serves as
Managing General Partner. The Managing General Partner must maintain
a capital account balance equal to the lesser of 1% of the sum of all
the positive capital account balances of all the Partners or the
greater of $500,000 or 0.2% of the sum of the positive capital account
balances of all the Partners.
The policies described below are followed consistently by the Partner-
ship in preparation of its financial statements in conformity with
generally accepted accounting principles.
Security Valuation
Portfolio securities which are traded on U.S. stock exchanges are
valued at the most recent sale price reported on the exchange on
which the security is traded most extensively. If no sale occurred,
the security is valued at the mean between the closing bid and asked
prices. Securities for which market quotations are not readily
available are valued at "fair value" as determined in good faith by
the general partner.
Securities Sold Short
The Partnership is engaged in selling securities short, which
obligates the Partnership to replace a security borrowed by purchas-
ing the same security at current market value. The Partnership would
incur a loss if the price of the security increases between the date
of the short sale and the date on which the Partnership replaces the
borrowed security. The Partnership would realize a gain if the price
of the security declines between those dates.
Securities Transactions and Investment Income
Securities transactions are recorded on a trade-date basis. Securities
gains or losses are determined on the identified cost basis. Dividend
income is recorded on the ex-dividend date. Interest income, includ-
ing original issue discount, where applicable, is recorded on an accrual
basis, except for bonds trading "flat", in which case interest is recorded
when received.
9
<PAGE>
AH&H PARTNERS FUND LIMITED PARTNERSHIP
Notes to Financial Statements
For the year ended December 31, 1996
1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Federal and State Income Taxes
No federal or state income tax is imposed on the Partnership
as an entity. The Partnership's income, gains, losses, deductions
and credits flow through to the Partners. Each partner must
include his or her share of partnership income in his or her
tax returns.
2 - INVESTMENT ADVISORY AGREEMENTS & TRANSACTIONS WITH AFFILIATED PERSONS
The Partnership has an investment advisory agreement with the
Managing General Partner. Certain individuals who are executive
officers and directors of the Managing General Partner are also
Limited Partners of the Partnership.
For the year ended December 31, 1996, the Managing
General Partner received fees of $373,027 for investment and
advisory services under the agreement. The fee is paid quarterly
with an annual fee basis of 1%. In addition, the Partnership
Agreement provides for a performance allocation from the Limited
Partners to the General Partner, equal to 15% of the return which
exceeds a cumulative 6% annual return. There was no performance
allocation for the year ended December 31, 1996.
3 - INVESTMENT TRANSACTIONS
Purchases and proceeds from sales of investment securities (excluding
short term investments) for the year ended December 31,1996
aggregated $28,724,126 and $37,329,246, respectively.
4 - SIGNIFICANT SUBSEQUENT EVENT
The Partnership agreement provides for a Partnership termination
date of December 31, 2050.
10
