<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- - SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the quarterly period ended June 30, 1998
OR
_ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission file number 33-86780
PRUCO LIFE INSURANCE COMPANY
in respect of
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
---------------------------------------------------
(Exact name of Registrant as specified in its charter)
Arizona 22-1944557
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
213 Washington Street, Newark, New Jersey 07102-2992
-----------------------------------------------------
(Address of principal executive offices) (Zip Code)
(800) 445-4571
---------------------------------------------------
(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
--- ---
<PAGE>
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
(Registrant)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
A. PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
Statements of Net Assets - June 30, 1998 and December 31, 1997 3
Statements of Operations and Changes In Net Assets -Six Months Ended June 30, 1998 and 1997 3
Notes to the Financial Statements 4
B. THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
Statements of Assets and Liabilities - June 30, 1998 and December 31, 1997 6
Statements of Operations - Six and Three Months Ended June 30, 1998
and 1997 7
Statements of Changes in Net Assets - Six Months Ended June 30, 1998
and Year Ended December 31, 1997 8
Statements of Cash Flows - Six Months Ended June 30, 1998 and 1997 9
Schedule of Investments - June 30, 1998 and December 31, 1997 10
Notes to the Financial Statements 13
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 17
Signature Page 18
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS OF
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
STATEMENTS OF NET ASSETS
JUNE 30, 1998
(UNAUDITED) DECEMBER 31, 1997
------------- -----------------
<S> <C> <C>
Investment in shares of The Prudential Variable Contract
Real Property Partnership (Note 3) $ 113,167,806 $ 109,495,293
------------- -------------
------------- -------------
NET ASSETS, representing:
Equity of Contract Owners (Note 4) $ 85,383,678 $ 86,228,329
Equity of Pruco Life Insurance Company 27,784,128 23,266,964
------------- -------------
$ 113,167,806 $ 109,495,293
------------- -------------
------------- -------------
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1998 JUNE 30, 1997
(UNAUDITED) (UNAUDITED)
------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Net Investment Income from Partnership Operations $ 3,779,702 $ 3,841,793
EXPENSES:
Charges to Contract Owners for Assuming Mortality Risk and
Expense Risk and for Administration (Note 5) 266,159 269,394
------------- -------------
NET INVESTMENT INCOME 3,513,543 3,572,399
------------- -------------
Net Change in Unrealized Gain (Loss) on Investments in Partnership (107,189) 586,856
Net Realized Gain (Loss) on Sale of Investments in Partnership 0 (1,812)
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,406,354 $ 4,157,443
------------- -------------
------------- -------------
CAPITAL TRANSACTIONS:
Net Withdrawals by Contract Owners (Note 6) (3,401,076) (4,412,382)
Net Contributions by Pruco Life Insurance Company 3,667,236 4,681,777
------------- -------------
NET INCREASE IN NET ASSETS
RESULTING FROM CAPITAL TRANSACTIONS 266,159 269,394
------------- -------------
TOTAL INCREASE IN NET ASSETS $ 3,672,513 $ 4,426,837
NET ASSETS:
Beginning of period $ 109,495,293 $ 98,385,259
------------- -------------
End of period $ 113,167,806 $ 102,812,096
------------- -------------
------------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 4 THROUGH 5
3
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
FOR THE PERIOD ENDED JUNE 30, 1998
NOTE 1: GENERAL
Pruco Life Variable Contract Real Property Account (the "Real Property Account")
was established on August 27, 1986 and commenced business September 5, 1986.
Pursuant to Arizona law, the Real Property Account was established as a separate
investment account of Pruco Life Insurance Company ("Pruco Life"), a
wholly-owned subsidiary of The Prudential Insurance Company of America
("Prudential"). The assets of the Real Property Account are segregated from
Pruco Life's other assets. The Real Property Account is used to fund benefits
under certain variable life insurance and variable annuity contracts issued by
Pruco Life. These products are Variable Appreciable Life Insurance ("VAL"),
Variable Life Insurance ("VLI"), Discovery Life ("SPVA"), and Discovery Life
Plus ("SPVL").
The assets of the Real Property Account are invested in The Prudential Variable
Contract Real Property Partnership (the "Partnership"). The Partnership is
organized under New Jersey law and is registered under the Securities Act of
1933. The Partnership is the investment vehicle for assets allocated to the
real property option under certain variable life insurance and annuity
contracts. The Real Property Account, along with The Prudential Variable
Contract Real Property Account and the Pruco Life of New Jersey Variable
Contract Real Property Account, are the sole investors in the Partnership.
The investment in the Partnership is based on the Real Property Account's
proportionate interest of the Partnership's market value. At June 30, 1998 the
Real Property Account's interest in the Partnership was 49.9% or 5,909,533
shares.
The Partnership has a policy of investing at least 65% of its assets in direct
ownership interests in income-producing real estate and participating mortgage
loans.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited financial statements of the Real Property Account
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q. These
statements should be read in conjunction with the financial statements and notes
thereto for the year ended December 31, 1997 included in the Real Property
Account's Annual Report on Form 10-K for that year.
The accompanying financial statements have not been audited by independent
accountants in accordance with generally accepted auditing standards, but in the
opinion of management such financial statements include all adjustments,
consisting only of normal recurring accruals, necessary to summarize fairly the
Real Property Account's financial position and results of operations. Interim
results are not necessarily indicative of results for a full year.
NOTE 3: INVESTMENT INFORMATION FOR THE PRUDENTIAL VARIABLE CONTRACT REAL
PROPERTY PARTNERSHIP
As of June 30, 1998, the investment in the Partnership of $113,167,806 was
derived from the share value of $19.150073 and 5,909,533 shares outstanding.
The aggregate cost of investments in the Account was $63,772,991.
4
<PAGE>
NOTE 4: CONTRACT OWNER UNIT INFORMATION
Outstanding Contract owner units, unit values and total value of Contract owner
equity at June 30, 1998 were as follows:
<TABLE>
<CAPTION>
VAL VLI SPVA SPVL TOTAL
--- --- ---- ---- -----
<S> <C> <C> <C> <C> <C>
CONTRACT OWNER UNITS OUTSTANDING: 41,654,446 2,719,219 586,656 3,016,657 47,976,978
UNIT VALUE: $1.78645 $1.83914 $1.65655 $1.65655
CONTRACT OWNER EQUITY: $74,413,586 $5,001,024 $971,825 $4,997,244 $85,383,678
</TABLE>
NOTE 5: MORTALITY RISK AND EXPENSE RISK CHARGES
Mortality risk and expense charges are determined daily using an effective
annual rate of 0.6%, 0.35%, 0.9% and 0.9% for VAL, VLI, SPVA and SPVL,
respectively. Mortality risk is that life insurance contract owners may not
live as long as estimated or annuitants may live longer than estimated and
expense risk is that the cost of issuing and administering the policies may
exceed the estimated expenses. Of the $266,159 of charges to contract owners,
$255,569 represented mortality risk and expense risk charges.
NOTE 6: NET WITHDRAWALS BY CONTRACT OWNERS
Contract owner activity for the Pruco Life products for the period ended June
30, 1998, were as follows:
<TABLE>
<CAPTION>
VAL VLI SPVA SPVL TOTAL
--- --- ---- ---- -----
<S> <C> <C> <C> <C> <C>
CONTRACT OWNER NET PAYMENTS: $ 3,148,282 $ 242,930 $ (231) $ (2,714) $ 3,388,266
POLICY LOANS: (1,219,914) (55,527) 0 (132,745) (1,408,186)
POLICY LOAN REPAYMENTS AND INTEREST: 861,181 39,699 0 48,414 949,293
SURRENDERS, WITHDRAWALS, AND DEATH BENEFITS (2,227,965) (144,894) (263,706) (207,219) (2,843,784)
NET TRANSFERS FROM/TO OTHER SUBACCOUNTS
OR FIXED RATE OPTIONS: (1,581,107) (67,077) 7,921 (39,560) (1,679,822)
ADMINISTRATIVE AND OTHER CHARGES (1,696,875) (92,710) 0 (17,259) (1,806,844)
------------ --------- ---------- ---------- -----------
NET WITHDRAWALS $(2,716,399) $ (77,579) $(256,017) $(351,083) $(3,401,076)
------------ --------- ---------- ---------- -----------
------------ --------- ---------- ---------- -----------
</TABLE>
NOTE 7: UNIT ACTIVITY
Transactions in units for the period ended June 30, 1998 were as follows:
<TABLE>
<CAPTION>
VAL VLI SPVA SPVL
--- --- ---- ----
<S> <C> <C> <C> <C>
CONTRACT OWNER CONTRIBUTIONS: 2,437,296.344 164,206.271 13,017.201 37,039.055
CONTRACT OWNER REDEMPTIONS: (3,984,055.552) (207,287.660) (170,453.416) (252,204.634)
</TABLE>
5
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
JUNE 30, 1998
(UNAUDITED) DECEMBER 31, 1997
-------------- -----------------
<S> <C> <C>
ASSETS
REAL ESTATE INVESTMENTS - At estimated market value:
Real estate and improvements
(cost: 6/30/98 -- $204,467,076; 12/31/97 -- $201,670,248) $185,114,543 $181,317,624
Real estate investment trust (cost: 6/30/98 -- $10,000,005;
12/31/97 -- $10,000,005) 11,308,805 12,523,805
------------ -------------
Total real estate investments 196,423,348 193,841,429
MARKETABLE SECURITIES - At estimated market value
(cost: 6/30/98 -- $6,375,000; 12/31/97 -- $13,939,000) 6,395,215 13,971,421
CASH AND CASH EQUIVALENTS 25,636,116 12,880,560
DIVIDEND RECEIVABLE 0 146,999
ACCRUED INVESTMENT INCOME AND OTHER ASSETS
(net of allowance for uncollectible accounts: 6/30/98 --
$80,000; 12/31/97 -- $68,000) 2,107,102 1,904,726
------------ -------------
Total assets 230,561,781 222,745,135
------------ -------------
LIABILITIES
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $2,169,561 $1,842,027
DUE TO AFFILIATES 876,914 832,922
OTHER LIABILITIES 620,356 538,413
------------ -------------
Total liabilities 3,666,831 3,213,362
------------ -------------
INVESTMENT COMMITMENTS
Partners' equity $226,894,950 $219,531,773
------------ -------------
TOTAL LIABILITIES AND PARTNERS' EQUITY 230,561,781 222,745,135
------------ -------------
------------ -------------
NUMBER OF SHARES OUTSTANDING AT END OF PERIOD 11,848,275 11,848,275
------------ -------------
------------ -------------
SHARE VALUE AT END OF PERIOD $19.15 $18.53
------------ -------------
------------ -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 13
6
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
---------- ---------- ---------- ----------
1998 1997 1998 1997
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Revenue from real estate and improvements $12,365,911 $11,098,098 $6,615,864 $5,567,965
Income from interest in properties 33,463 303,024 33,463 120,391
Dividend income from real estate investment trusts 167,275 0 167,275 0
Interest on short-term investments 674,152 1,267,905 395,081 676,114
----------- ----------- ----------- ----------
Total investment income 13,240,801 12,669,027 7,211,683 6,364,470
----------- ----------- ----------- ----------
EXPENSES:
Investment management fee 1,391,475 1,279,797 707,996 654,579
Real estate taxes 1,345,316 1,092,767 731,582 540,190
Administrative expense 1,014,144 917,735 589,751 483,878
Operating expense 1,911,781 1,487,928 1,013,134 762,739
Interest expense 0 188,226 0 94,113
----------- ----------- ----------- ----------
Total investment expenses 5,662,716 4,966,453 3,042,463 2,535,499
----------- ----------- ----------- ----------
NET INVESTMENT INCOME 7,578,085 7,702,574 4,169,220 3,828,971
----------- ----------- ----------- ----------
REALIZED AND UNREALIZED LOSS ON
INVESTMENTS
Less: Cost of real estate investments sold 0 3,632 0 1,407
----------- ----------- ----------- ----------
Net (loss) realized on real estate
investments sold 0 (3,632) 0 (1,407)
----------- ----------- ----------- ----------
Change in unrealized (loss) gain on real estate
investments (214,908) 1,176,610 (103,393) 760,355
----------- ----------- ----------- ----------
NET REALIZED AND UNREALIZED (LOSS)
GAIN ON INVESTMENTS (214,908) 1,172,978 (103,393) 758,948
----------- ----------- ----------- ----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $7,363,177 $8,875,552 $4,065,827 $4,587,919
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 13
7
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1997
-------------- -----------------
<S> <C> <C>
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS:
Net investment income $7,578,085 $13,789,747
Net loss realized on real estate investments sold 0 306,040
Net unrealized gain (loss) from real estate investments (214,908) 8,179,192
------------ -------------
Net increase in net assets resulting from operations 7,363,177 22,274,979
------------ -------------
NET DECREASE IN NET ASSETS RESULTING
FROM CAPITAL TRANSACTIONS:
Withdrawals by partners
(6/30/98 -- 0 shares; 12/31/97 -- 0 shares) 0 0
------------ -------------
NET INCREASE IN NET ASSETS 7,363,177 22,274,979
NET ASSETS - Beginning of period 219,531,773 197,256,794
------------ -------------
NET ASSETS - End of period $226,894,950 $219,531,773
------------ -------------
------------ -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 13
8
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1998 JUNE 30, 1997
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase in net assets resulting from operations $7,363,177 $8,875,552
Adjustments to reconcile net increase in net assets resulting
from operations to net cash flows from operating activities:
Net realized and unrealized loss (gain) on investments 214,908 (1,172,978)
Decrease (Increase) in:
Other assets (202,376) (537,506)
Dividend Receivable 146,999 0
(Decrease) Increase in:
Obligations under capital lease 0 (188,224)
Accounts payable and accrued expenses 327,534 (305,940)
Due to affiliates 43,992 28,014
Other liabilities 81,943 86,918
----------- -------------
Net cash flows from operating activities 7,976,177 6,785,836
----------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Improvements and additional costs on prior purchases:
Additions to real estate (2,796,827) (378,290)
Sale of marketable securities 7,576,206 8,493,890
----------- -------------
Net cash flows from investing activities 4,779,379 8,115,600
----------- -------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 12,755,556 14,901,436
CASH AND CASH EQUIVALENTS - Beginning of period 12,880,560 20,738,204
----------- -------------
CASH AND CASH EQUIVALENTS - End of period $25,636,116 $35,639,640
----------- -------------
----------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 13
9
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
JUNE 30,1998 (UNAUDITED) DECEMBER 31,1997
------------------------------ ------------------------------
ESTIMATED ESTIMATED
MARKET MARKET
COST VALUE COST VALUE
------------------------------ ------------------------------
REAL ESTATE AND IMPROVEMENTS (PERCENT OF NET ASSETS) 81.6% 82.6%
Location Description
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lisle, IL Office Building $19,830,501 $11,824,626 $17,916,983 $10,278,959
Atlanta, GA Garden Apartments 15,465,904 15,506,000 15,446,293 15,100,000
Pomona, CA Warehouse 23,720,841 19,398,283 23,637,049 19,504,612
Roswell, GA Retail Shopping Center 32,111,090 28,129,001 31,858,198 29,547,042
Morristown, NJ Office Building 19,087,899 11,355,985 18,931,914 10,805,918
Bolingbrook, IL Warehouse 8,948,028 7,200,000 8,948,028 7,100,000
Farmington Hills, MI Garden Apartments 13,657,382 14,804,562 13,641,971 14,805,258
Raleigh, NC Garden Apartments 15,818,112 16,509,983 15,804,860 16,525,751
Nashville, TN Office Building 8,641,547 10,167,097 8,613,828 9,611,329
Oakbrook Terrace, IL Office Complex 12,725,366 15,750,000 12,725,366 14,100,000
Beaverton, OR Office Complex 10,728,617 11,200,000 10,728,285 10,700,000
Salt Lake City, UT Industrial Building 5,388,134 5,350,000 5,388,134 5,350,000
Aurora, CO Industrial Building 8,801,944 8,419,006 8,540,585 8,400,000
Brentwood, TN Office Complex 9,541,711 9,500,000 9,488,755 9,488,755
------------------------------ ------------------------------
$204,467,076 $185,114,543 $201,670,248 $181,317,624
------------------------------ ------------------------------
------------------------------ ------------------------------
REAL ESTATE INVESTMENT TRUST (PERCENT OF NET ASSETS) 5.0% 5.7%
- ---------------------------------------------------------------------------------------------------------------------------------
Meridian REIT Shares (506,894 shares) $10,000,005 $11,308,805 $ 10,000,005 $12,523,805
------------ ------------- ------------ -----------
------------ ------------- ------------ -----------
JUNE 30,1998 DECEMBER 31, 1997
----------------------------- ------------------------------
ESTIMATED ESTIMATED
FACE MARKET FACE MARKET
AMOUNT VALUE AMOUNT VALUE
----------------------------- ------------------------------
MARKETABLE SECURITIES (PERCENT OF NET ASSETS) 2.8% 6.4%
(See pages 11 to 12 for details)
Description
- ---------------------------------------------------------------------------------------------------------------------------------
Marketable Securities $6,375,000 $6,395,215 $13,939,000 $13,971,421
------------ ------------- ------------ -----------
------------ ------------- ------------ -----------
CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS) 11.3% 5.9%
(See pages 11 to 12 for details)
Description
- ---------------------------------------------------------------------------------------------------------------------------------
Commercial Paper and Cash $25,707,267 $25,636,116 $12,918,158 $12,880,560
------------ ------------- ------------ -----------
------------ ------------- ------------ -----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 13
10
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
SCHEDULE OF INVESTMENTS
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, 1998
-----------------------------------------
FACE ESTIMATED
AMOUNT MARKET VALUE
------------ -------------
<S> <C> <C>
MARKETABLE SECURITIES (PERCENT OF NET ASSETS) 2.8%
FCC National Bank, 5.55%, July 2, 1998 $1,025,000 $1,024,202
Chrysler Financial Corp., 6.28%, July 17, 1998 500,000 501,075
Corestates Bank, N.A., 5.63%, October 16, 1998 1,000,000 1,000,000
Federal Home Loan Banks, 5.76%, December 29, 1998 150,000 150,104
American Express Credit Corp., 7.375%, February 1, 1999 325,000 329,342
Canadian Imperial Bank of Commerce, 5.55%, February 10, 1999 1,000,000 999,520
Federal National Mortgage Assoc., 5.33%, February 12, 1999 100,000 99,703
International Lease Finance Corp., 7.50%, March 1, 1999 500,000 508,250
General Motors Acceptance Corp., 6.04%, March 19, 1999 1,000,000 1,003,480
International Lease Finance Corp., 6.625%, April 1, 1999 375,000 377,419
CIT Group Holdings, Inc., 6.375%, May 21, 1999 400,000 402,120
----------- ------------
TOTAL MARKETABLE SECURITIES $6,375,000 $6,395,215
----------- ------------
----------- ------------
CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS) 11.3%
General Motors Acceptance Corp., 5.57%, July 2, 1998 $335,000 $334,223
Sarah Lee Corp., 5.85%, July 2, 1998 1,450,000 1,449,293
Fortune Brands Inc., 5.80%, July 6, 1998 1,450,000 1,448,365
General Mills Inc., 5.55%, July 7, 1998 1,200,000 1,197,595
Potomac Electric Power Co., 5.6%, July 7, 1998 1,450,000 1,446,842
BBL North America, Inc., 5.80%, July 8, 1998 285,000 284,382
General Mills Inc., 5.38%, July 8, 1998 250,000 249,238
GTE Corp., 5.66%, July 8, 1998 750,000 748,231
GTE Corp., 5.68%, July 8, 1998 563,000 561,845
H.J. Heinz Co., 5.56%, July 8, 1998 1,400,000 1,396,973
Abbott Laboratories, 5.68%, July 9, 1998 800,000 798,359
Ameritech Corp., 5.8%, July 9, 1998 1,127,000 1,125,184
IBM Credit Corp., 5.5%, July 9, 1998 1,346,000 1,340,036
Paccar Financial Corp., 5.5%, July 9, 1998 1,200,000 1,194,500
Paccar Financial Corp., 5.6%, July 9, 1998 250,000 249,378
John Hancock Capital Corp., 5.6%, July 10, 1998 525,000 523,612
J.P. Morgan and Co., Inc., 5.55%, July 13, 1998 1,450,000 1,445,753
Dresser Industries, Inc., 5.55%, July 14, 1998 210,000 209,126
E.I. DuPont De Nemours & Co., Inc., 5.6%, July 14, 1998 408,000 407,111
Lehman Brothers Holdings, Inc., 5.65%, July 15, 1998 1,000,000 997,646
Lehman Brothers Holdings, Inc., 5.62%, July 17, 1998 98,000 97,633
Bank of New York Co., Inc., 5.53%, July 21, 1998 1,398,000 1,387,477
General Electric Capital Corp., 5.6%, July 22, 1998 1,050,000 1,046,243
Colonial Pipeline Co., 5.6%, July 24, 1998 156,000 155,248
Bell Atlantic Fin. Services Inc., 5.55%, July 27, 1998 1,470,000 1,462,748
Commercial Credit Co., 5.58%, July 28, 1998 1,450,000 1,442,808
----------- ------------
TOTAL CASH EQUIVALENTS 23,071,000 22,999,849
CASH 2,636,267 2,636,267
----------- ------------
TOTAL CASH AND CASH EQUIVALENTS $25,707,267 $25,636,116
----------- ------------
----------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 13
11
<PAGE>
THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------------------------
FACE ESTIMATED
AMOUNT MARKET VALUE
----------- --------------
MARKETABLE SECURITIES (PERCENT OF NET ASSETS) 6.4%
<S> <C> <C>
International Lease Finance Corp., 5.92%, January 15, 1998 $500,000 $499,083
Smith Barney Holding Inc., 5.70%, January 28, 1998 1,304,000 1,285,475
Suntrust Banks, 8.875%, February 1, 1998 1,500,000 1,517,880
Chase Manhattan Bank, 5.75%, February 10, 1998 2,000,000 2,000,000
Beneficial Corp., 9.125%, February 15, 1998 700,000 705,948
Citicorp, 10.15%, February 15, 1998 200,000 207,324
General Motors Acceptance Corp., 5.9%, February 19, 1998 985,000 994,545
General Motors Acceptance Corp., 5.9875%, February 23, 1998 1,300,000 1,299,363
American General Finance Corp., 7.25%, March 1, 1998 500,000 507,880
Commercial Credit Co., 5.7%, March 1, 1998 375,000 375,199
Associates Corp. of North America, 7.3%, March 15, 1998 400,000 406,635
International Lease Finance Corp., 5.75%, March 15, 1998 400,000 399,940
Morgan Guaranty Trust Co., 5.85%, March 16, 1998 500,000 499,855
Royal Bank of Canada, 5.91%, June 17, 1998 2,000,000 1,998,853
FCC National Bank, 5.75281%, July 2, 1998 1,025,000 1,024,202
General Mills Inc., 5.38%, July 8, 1998 250,000 249,238
----------- ------------
TOTAL MARKETABLE SECURITIES $13,939,000 $13,971,421
----------- ------------
----------- ------------
CASH AND CASH EQUIVALENTS (PERCENT OF NET ASSETS) 5.9%
Barnett Bank, Inc., 6.70%, January 2, 1998 $1,235,000 $1,234,540
American Greetings Corp., 6.26%, January 5, 1998 1,250,000 1,247,179
Xerox Capital, 5.85%, January 6, 1998 1,000,000 995,775
Nike Inc., 6.10%, January 8, 1998 1,215,000 1,213,353
Paccar Financial Corp., 5.85%, January 9, 1998 1,000,000 996,100
Pitney Bowes Credit Corp., 6.00%, January 13, 1998 750,000 747,375
Merrill Lynch & Co., Inc. 5.85%, January 15, 1998 1,000,000 994,313
Bank of Montreal, 5.90%, January 16, 1998 1,000,000 1,000,000
Countrywide Home Loan, Inc., 5.85%, January 22, 1998 1,000,000 993,175
General Electric Capital Corp., 5.74%, February 9, 1998 1,000,000 990,593
----------- ------------
TOTAL CASH EQUIVALENTS 10,450,000 10,412,402
CASH 2,468,158 2,468,158
----------- ------------
TOTAL CASH AND CASH EQUIVALENTS $12,918,158 $12,880,560
----------- ------------
----------- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGE 13
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF
PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
JUNE 30, 1998
(UNAUDITED)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements included herein have been prepared in accordance with
generally accepted accounting principles for interim financial information. In
the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
Operating results for the six months ended June 30, 1998 are not necessarily
indicative of the results that may be expected for the year ended December 31,
1998. For further information, refer to the financial statements and notes
thereto included in each Partner's December 31, 1997 Annual Report on Form 10K.
NOTE 2: COMMITMENT FROM PARTNER
On January 9, 1990, Prudential committed to fund up to $100 million to enable
the Partnership to take advantage of opportunities to acquire attractive real
property investments whose cost is greater than the Partnership's then available
cash. Contributions to the Partnership under this commitment are utilized for
property acquisitions and returned to Prudential on an ongoing basis from
Contract owners' net contributions. Also, the amount of the commitment is
reduced by $10 million for every $100 million in estimated market value net
assets of the Partnership. The amount available under this commitment for
property purchases as of June 30, 1998 is approximately $45 million.
NOTE 3: RELATED PARTY TRANSACTIONS
Pursuant to an investment management agreement, Prudential charges the
Partnership a daily investment management fee at an annual rate of 1.25% of the
average daily gross asset valuation of the Partnership. For the six months
ended June 30, 1998 and 1997 management fees incurred by the Partnership were
$1,391,475 and $1,279,797 respectively.
The Partnership also reimburses Prudential for certain administrative services
rendered by Prudential. The amounts incurred for the six months ended June 30,
1998, and 1997 were $58,064 and $57,281, respectively, and are classified as
Administrative Expenses in the Statements of Operations.
NOTE 4: ACCRUED INVESTMENT INCOME AND OTHER ASSETS
Cash of $116,775 and $128,089 at June 30, 1998 and December 31, 1997,
respectively, was maintained by the properties for tenant security deposits and
is included in Accrued Investment Income and Other Assets on the Statement of
Assets and Liabilities.
13
<PAGE>
PER SHARE INFORMATION (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
01/01/98 03/31/98 01/01/97 01/01/96 01/01/95 01/01/94 01/01/93
TO TO TO TO TO TO TO
6/30/98 6/30/98 12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Rent from properties $ 1.0437 $ 0.5584 $ 1.8216 $ 1.9173 $ 1.6387 $ 1.2754 $ 1.1659
Income from interest in properties $ 0.0029 $ 0.0029 $ 0.0367 $ 0.0510 $ 0.0527 $ 0.1838 $ 0.2139
Interest on mortgage loans $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0082 $ 0.0755
Dividend income from real estate
investment trusts $ 0.0141 $ 0.0141 $ 0.0134 $ 0.0000 $ 0.0000 $ 0.0000 $ 0.0000
Interest from short-term investments $ 0.0569 $ 0.0333 $ 0.1946 $ 0.1795 $ 0.2199 $ 0.1226 $ 0.0549
--------- --------- --------- --------- --------- --------- ---------
INVESTMENT INCOME $ 1.1176 $ 0.6087 $ 2.0663 $ 2.1478 $ 1.9113 $ 1.5900 $ 1.5102
--------- --------- --------- --------- --------- --------- ---------
Investment management fee $ 0.1173 $ 0.0595 $ 0.2229 $ 0.2097 $ 0.1936 $ 0.1786 $ 0.1673
Real estate tax expense $ 0.1135 $ 0.0617 $ 0.1864 $ 0.1991 $ 0.1602 $ 0.1399 $ 0.1465
Administrative expenses $ 0.0856 $ 0.0498 $ 0.1963 $ 0.1569 $ 0.1484 $ 0.1103 $ 0.1187
Operating expenses $ 0.1614 $ 0.0856 $ 0.2782 $ 0.2442 $ 0.1546 $ 0.1332 $ 0.1209
Interest expense $ 0.0000 $ 0.0000 $ 0.0186 $ 0.0412 $ 0.0381 $ 0.0255 $ 0.0236
--------- --------- --------- --------- --------- --------- ---------
EXPENSES $ 0.4779 $ 0.2567 $ 0.9024 $ 0.8511 $ 0.6949 $ 0.5875 $ 0.5770
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
NET INVESTMENT INCOME $ 0.6397 $ 0.3520 $ 1.1639 $ 1.2967 $ 1.2164 $ 1.0025 $ 0.9332
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Net realized loss on investments sold $ 0.0000 $ 0.0000 $ 0.0258 $ (0.1323) $ 0.0000 $ (0.0966) $ (0.1816)
Net unrealized gain/(loss)
on investments $ (0.0081) $ (0.0087) $ 0.6903 $ (0.2695) $ 0.0581 $ 0.2169 $ 0.0152
--------- --------- --------- --------- --------- --------- ---------
NET REALIZED AND UNREALIZED
GAIN/(LOSS) ON INVESTMENTS $ (0.0081) $ (0.0087) $ 0.7162 $ (0.4018) $ 0.0581 $ 0.1203 $ (0.1664)
--------- --------- --------- --------- --------- --------- ---------
Net increase/(decrease) in share value $ 0.6215 $ 0.3432 $ 1.8800 $ 0.8949 $ 1.2745 $ 1.1228 $ 0.7668
Share Value at beginning of period $ 18.5286 $ 18.8069 $ 16.6486 $ 15.7537 $ 14.4792 $ 13.3564 $ 12.5896
--------- --------- --------- --------- --------- --------- ---------
Share Value at end of period $ 19.1501 $ 19.1501 $ 18.5286 $ 16.6486 $ 15.7537 $ 14.4792 $ 13.3564
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Ratio of expenses to average net assets 2.55% 1.35% 5.16% 5.26% 4.62% 4.27% 4.44%
Ratio of net investment income to
average net assets 3.41% 1.86% 6.66% 8.01% 8.08% 7.29% 7.17%
Number of shares outstanding at
end of period (000's) 11,848 11,848 11,848 11,848 12,037 12,241 13,031
</TABLE>
ALL CALCULATIONS ARE BASED ON AVERAGE MONTH-END SHARES OUTSTANDING WHERE
APPLICABLE.
PER SHARE INFORMATION PRESENTED HEREIN IS SHOWN ON A BASIS CONSISTENT WITH THE
FINANCIAL STATEMENTS AS DISCUSSED IN NOTE 1 .
14
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
All of the assets of Pruco Life Variable Contract Real Property Account ("the
Account") are invested in the Pruco Life Variable Contract Real Property
Partnership ("the Partnership"). Correspondingly, the liquidity, capital
resources and results of operations for the Real Property Account are contingent
upon the Partnership. Therefore, all of management's discussion of these items
is at the Partnership level. The partners in the Partnership are the Prudential
Insurance Company of America, Pruco Life Insurance Company, and Pruco Life
Insurance Company of New Jersey (collectively, "the Partners").
(a) Liquidity and Capital Resources
As of June 30, 1998, the Partnership's liquid assets consisting of cash, cash
equivalents and marketable securities (excluding the Partnership's shares in
Meridian Industrial Trust REIT) were $32 million; an increase of $5.1 million
from $26.9 million as of December 31, 1997. The increase is due primarily to
cash received from the operations of the Partnership's properties and interest
income received from short-term investments.
Prudential has committed to fund up to $100 million to enable the Partnership to
acquire real estate investments. Contributions to the Partnership under this
commitment are utilized for property acquisitions and returned to Prudential on
an ongoing basis from Contract owners' net contributions. The amount of the
commitment is reduced by $10 million for every $100 million in current value net
assets of the Partnership. The amount available for future investment is
approximately $45 million as of June 30, 1998.
The Partnership will generally invest 10-15% of its assets in cash and
short-term obligations to maintain liquidity; however, its investment policy
allows up to 30% investments in cash and short-term obligations. At June 30,
1998, 13.89% of the Partnership's assets consisted of cash, cash equivalents and
marketable securities (excluding the REIT shares).
Withdrawals from cash may be made during the remainder of 1998 based upon the
needs of the Partnership including potential property acquisitions and
dispositions and capital expenditures. As of June 30, 1998 the Partnership
has adequate liquidity.
(b) Results of Operations
The Partnership's net investment income for the first six months of 1998 was
$7.6 million, level with $7.7 million for the corresponding period of 1997.
Net investment income from property operations for office buildings for the
first six months of 1998 increased 10.3% or $0.3 million from the prior year.
This was primarily due to an increase in income generated by the acquisition
of the Brentwood, TN office building in the fourth quarter of 1997, and an
increase in income at the Morristown, NJ office building due to a tenant
lease buyout. Net investment income from industrial properties decreased 23%
or $0.3 million from the prior year due to the sale of the Partnership's
investments of four Jacksonville, FL warehouses in September, 1997.
The Partnership's income unrelated to specific properties (which is mainly
interest income from short-term investments) for the period ended June 30, 1998
amounted to $0.7 million compared to $1.3 million in the corresponding period in
1997. This was due to a smaller balance held in Cash and Cash Equivalents
through the first six months of 1998 compared to the corresponding period in
1997.
The Partnership experienced a net unrealized loss for the first six months in
1998 of $0.2 million, a decrease of $1.4 million from the unrealized gain of
$1.2 million in the corresponding period of the prior year. In 1998, the
office sector of the portfolio had a net unrealized gain of $2.7 million due
to generally higher market rental rates in four of the portfolios' office
centers. This gain was offset by an unrealized loss of $1.7 million at the
Atlanta, GA retail center due to differing appraisal assumptions regarding
the general investment market for this asset, as well as the unrealized loss
of $1.2 million from the portfolio's holdings
15
<PAGE>
in Meridian Industrial Trust which is a self-administered and self-managed
equity real estate investment trust.
(c) Contingent Transactions
The Farmington, MI office complex and the Pomona, CA industrial complex are
currently being marketed for sale.
16
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Contract owners participating in the Real Property Account have no
voting rights with respect to the Real Property Account.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
4.1 Variable Life Insurance Contract, filed as Exhibit 1.A.(5)(a) to
Pre-Effective Amendment No. 1 to Form S-6, Registration Statement
No. 2-80513, filed February 17, 1983, and incorporated herein by
reference.
4.2 Revised Variable Appreciable Life Insurance Contract with fixed
death benefit, filed as Exhibit 1.A.(5)(f) to Post-Effective
Amendment No. 5 to Form S-6, Registration Statement No. 2-89558,
filed July 10, 1986, and incorporated herein by reference.
4.3 Revised Variable Appreciable Life Insurance Contract with
variable death benefit, filed as Exhibit 1.A.(5)(g) to
Post-Effective Amendment No. 5 to Form S-6, Registration
Statement No. 2-89558, filed July 10, 1986, and incorporated
herein by reference.
4.4 Single Premium Variable Annuity Contract, filed as Exhibit 4(i)
to Form N-4, Registration Statement No. 2-99616, filed August 13,
1985, and incorporated herein by reference.
4.5 Flexible Premium Variable Life Contract, filed as Exhibit 1.A.(5)
to Form S-6, Registration Statement No. 2-99260, filed July 29,
1985, and incorporated herein by reference.
17
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
PRUCO LIFE INSURANCE COMPANY
in respect of
Pruco Life Variable
Contract Real Property Account
------------------------------------------------------------
Date: August 14, 1998 By: /s/ Esther H. Milnes
------------------------- -----------------------------------
Esther H. Milnes
President and Director
Date: August 14, 1998 By: /s/ James Schlomann
------------------------- -----------------------------------
James Schlomann
Vice President, Comptroller and
Chief Accounting Officer
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
STATEMENTS OF NET ASSETS
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
</LEGEND>
<CIK> 0000801348
<NAME> PRUCO LIFE
<SERIES>
<NUMBER> 001
<NAME> PRUCO LIFE VARIABLE CONTRACT REAL PROPERTY ACCOUNT
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 5,909,534
<SHARES-COMMON-PRIOR> 5,909,534
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 113,167,806
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 266,159
<NET-INVESTMENT-INCOME> 3,513,543
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (107,189)
<NET-CHANGE-FROM-OPS> 3,406,354
<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> 3,672,513
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 18.529
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> (0.018)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.150
<EXPENSE-RATIO> 0.002
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STATEMENTS
OF ASSETS & LIABILITIES; STATEMENTS OF OPERATIONS; STATEMENTS OF CHANGES IN NET
ASSETS; STATEMENTS OF CASH FLOWS; PER SHARE TABLE; SCHEDULE OF INVESTMENTS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 002
<NAME> THE PRUDENTIAL VARIABLE CONTRACT REAL PROPERTY PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 214,467,081
<INVESTMENTS-AT-VALUE> 196,423,348
<RECEIVABLES> 2,107,102
<ASSETS-OTHER> 32,031,331
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 230,561,781
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 3,666,831
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 11,848,275
<SHARES-COMMON-PRIOR> 11,848,275
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 226,894,950
<DIVIDEND-INCOME> 167,275
<INTEREST-INCOME> 707,615
<OTHER-INCOME> 12,365,911
<EXPENSES-NET> 5,662,716
<NET-INVESTMENT-INCOME> 7,578,085
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (214,908)
<NET-CHANGE-FROM-OPS> 7,363,177
<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> 7,363,177
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,391,475
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,662,716
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 18.529
<PER-SHARE-NII> 0.639
<PER-SHARE-GAIN-APPREC> (0.018)
<PER-SHARE-DIVIDEND> 0.022
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.150
<EXPENSE-RATIO> 0.025
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
