UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED October 31, 1998
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ______ to _______ .
Commission File Number: 0-18076
PAINEWEBBER INSURED MORTGAGE PARTNERS 1-B, L.P.
---------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-3038480
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
265 Franklin Street, Boston, Massachusetts 02110
- ------------------------------------------ -------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-8118
--------------
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>
PAINEWEBBER INSURED MORTGAGE PARTNERS 1-B, L.P.
BALANCE SHEETS
October 31, 1998 and July 31, 1998 (Unaudited)
(In thousands)
ASSETS
October 31 July 31
---------- -------
Investments in Debt Securities:
Mortgage-Backed Securities available
for sale $ 3,832 $ 4,178
Participating Insured Mortgage Loans
available for sale 18,177 18,447
--------- --------
22,009 22,625
Cash and cash equivalents 1,960 1,702
Interest and other receivables 153 156
Deferred expenses, net 310 354
--------- --------
$ 24,432 $ 24,837
========= ========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable - affiliates $ 27 $ 27
Accounts payable and accrued expenses 40 50
Partners' capital 24,365 24,760
--------- --------
$ 24,432 $ 24,837
========= ========
See accompanying notes.
<PAGE>
PAINEWEBBER INSURED MORTGAGE PARTNERS 1-B, L.P.
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the three months ended October 31, 1998 and 1997 (Unaudited)
(In thousands, except per Unit data)
1998 1997
---- ----
Revenues:
Interest income - Debt Securities $ 442 $ 475
Interest income - Money Market 26 19
------- -------
468 494
Expenses:
Management fees 49 52
General and administrative 43 43
Amortization expense 44 44
------- -------
136 139
------- -------
Net income $ 332 $ 355
Other comprehensive income (loss):
Unrealized holding gains and (losses)
on debt securities (249) 27
------- -------
Comprehensive income $ 83 $ 382
======= =======
Net income per Unit of Depositary Receipt $ 0.60 $ 0.64
====== ======
Cash distributions per Unit of
Depositary Receipt $ 0.86 $ 0.89
====== ======
The above net income and cash distributions per Unit of Depositary Receipt
are based upon the 551,604 Units outstanding for each period.
See accompanying notes.
<PAGE>
PAINEWEBBER INSURED MORTGAGE PARTNERS 1-B, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT
For the three months ended October 31, 1998 and 1997 (Unaudited)
(In thousands)
Corporate Limited
General Partner and
Partner Unitholders
------- -----------
Balance at July 31, 1997 $ (2) $ 25,905
Comprehensive income:
Net income 4 351
Net unrealized holding gains
on debt securities - 27
------- --------
4 378
Cash distributions (5) (488)
------- --------
Balance at October 31, 1997 $ (3) $ 25,795
======= ========
Balance at July 31, 1998 $ (4) $ 24,764
Comprehensive income:
Net income 3 329
Net unrealized holding losses
on debt securities - (249)
------- --------
3 80
Cash distributions (4) (474)
------- --------
Balance at October 31, 1998 $ (5) $ 24,370
======= ========
See accompanying notes.
<PAGE>
PAINEWEBBER INSURED MORTGAGE PARTNERS 1-B, L.P.
STATEMENTS OF CASH FLOWS
For the three months ended October 31, 1998 and 1997
Increase (Decrease) in Cash and Cash Equivalents (Unaudited)
(In thousands)
1998 1997
---- ----
Cash flows from operating activities:
Net income $ 332 $ 355
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization expense 44 44
Amortization of discount/premium on debt
securities 19 15
Changes in assets and liabilities:
Interest receivable 3 2
Accounts payable and accrued expenses (10) 2
--------- ---------
Total adjustments 56 63
--------- ---------
Net cash provided by operating activities 388 418
--------- ---------
Cash flows from investing activities:
Principal collections on Mortgage-Backed
Securities 326 174
Principal collections on Participating
Insured Mortgage Loans 22 20
--------- ---------
Net cash provided by investing activities 348 194
--------- ---------
Cash flows from financing activities:
Distributions to Unitholders and partners (478) (493)
--------- ---------
Net increase in cash and cash equivalents 258 119
Cash and cash equivalents, beginning of period 1,702 1,310
--------- ---------
Cash and cash equivalents, end of period $ 1,960 $ 1,429
========= =========
See accompanying notes.
<PAGE>
PAINEWEBBER INSURED MORTGAGE PARTNERS 1-B, L.P.
Notes to Financial Statements
(Unaudited)
1. General
-------
The accompanying financial statements, footnotes and discussion should be
read in conjunction with the financial statements and footnotes contained in the
Partnership's Annual Report for the year ended July 31, 1998. In the opinion of
management, the accompanying financial statements, which have not been audited,
reflect all adjustments necessary to present fairly the results for the interim
period. All of the accounting adjustments reflected in the accompanying interim
financial statements are of a normal recurring nature.
The accompanying financial statements have been prepared on the accrual
basis of accounting in accordance with generally accepted accounting principles
which requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities as of October 31, 1998 and July 31, 1998 and revenues and
expenses for each of the three-month periods ended October 31, 1998 and 1997.
Actual results could differ from the estimates and assumptions used.
2. Mortgage-Backed Securities
--------------------------
At October 31, 1998 and July 31, 1998, the Partnership held
non-participating mortgage-backed securities ("MBS") backed by single-family or
multi-family mortgage loans issued or originated in connection with the housing
programs of the Government National Mortgage Association ("GNMA"), and
guaranteed by GNMA, as follows (in thousands):
<TABLE>
<CAPTION>
October 31, 1998 July 31, 1998
------------------------------------- ---------------------------------------
Estimated Estimated
Market Face Amortized Market Face Amortized
Description Value Value Cost Value Valu Cost
<S> <C> <C> <C> <C> <C> <C>
9.5% GNMA Pool $ 1,266 $ 1,180 $ 1,173 $ 1,394 $ 1,294 $ 1,286
9.0% GNMA Pool 162 159 164 178 174 181
8.0% GNMA Pool 2,194 2,107 2,175 2,382 2,289 2,376
7.5% GNMA Pool 210 203 203 224 218 216
------- ------- ------- ------- ------- -------
$ 3,832 $ 3,649 $ 3,715 $ 4,178 $ 3,975 $ 4,059
======= ======= ======= ======= ======= =======
</TABLE>
The Partnership's investments in MBS are carried at fair value as of
October 31, 1998 and July 31, 1998. Investments in MBS are valued based on
quoted market prices. The amortized cost of the MBS represents the face value of
the securities net of unamortized premium or discount. Beginning in fiscal 1998,
the premiums and discounts are being amortized on a straight-line basis over the
expected remaining holding periods of the investments, of three years. Prior to
fiscal 1998, the premium and discounts were being amortized over an original
estimated holding period of fifteen years. Investments in non-participating MBS
were limited to no more than 30% of the original net offering proceeds per the
terms of the Partnership's offering prospectus.
The 9.5% MBS, which were purchased at a discount on December 14, 1988,
carry a coupon interest rate of 9.5% per annum and include loans with scheduled
maturities between June 2009 and December 2009. The 9.0% MBS, which were
purchased at a premium on November 16, 1989, carry a coupon interest rate of
9.0% per annum and include loans with scheduled maturities between June 2001 and
September 2002. The 8.0% MBS, which were purchased at a premium on July 30,
1992, carry a coupon interest rate of 8.0% per annum and include loans with
scheduled maturities in June 2022. The 7.5% MBS, which were purchased at a
discount on October 30, 1992, carry a coupon interest rate of 7.50% per annum
and include loans with scheduled maturities in March 2022. The loans included in
these GNMA pool programs may be prepaid, without penalty, at any time.
<PAGE>
3. Investments in Participating Insured Mortgage Loans
---------------------------------------------------
Participating Insured Mortgage Loans secured by GNMA securities
outstanding at October 31, 1998 and July 31, 1998 are comprised of the following
(in thousands):
<TABLE>
<CAPTION>
October 31, 1998 July 31, 1998
---------------------- ----------------------
GNMA Estimated Estimated
Certificate Interest Market Amortized Market Amortized
Number Property Rate Value Cost Value Cost
------ -------- ---- ----- ---- ----- ----
<S> <C> <C> <C> <C> <C> <C>
279985 Quarter Mill 8.50% $ 7,336 $ 7,122 $ 7,403 $ 7,132
279119 Emerald Cove 8.75% 10,841 10,563 11,044 10,576
-------- ------- -------- -------
$ 18,177 $17,685 $ 18,447 $17,708
======== ======= ======== =======
</TABLE>
The Partnership's investments in Participating Insured Mortgage Loans are
carried at fair value as of October 31, 1998 and July 31, 1998. Investments in
Participating Insured Mortgage Loans, for which quoted market prices are not
available, are valued by an independent pricing service which determines the
valuations based on a comparison of recent market trades of securities with
similar characteristics. Because of the inherent uncertainty of valuations,
estimated values, as reflected herein, may differ from the values that would
have been used had a ready market for the securities existed. Descriptions of
the properties financed by the Partnership's loans and the loan agreements
themselves are summarized below:
Quarter Mill Apartments
-----------------------
The Partnership acquired a Participating Insured Mortgage Loan with
respect to a 266-unit apartment complex known as Quarter Mill Apartments located
in Richmond, Virginia (the "Virginia Project"). Construction of the Virginia
Project was completed in November of 1990. Initial closing of this Participating
Insured Mortgage loan took place on August 2, 1989. The project owner is Amurcon
Corporation. The Base Component of this Participating Insured Mortgage Loan is
coinsured by FHA and represented by GNMA Securities with an initial face value
of $7,316,600, which GNMA Securities bore interest at the rate of 10.25% during
construction of the Virginia Project and 8.50% thereafter. Effective May 1,
1991, the construction loan was converted to a permanent loan with a principal
balance of $6,525,000. On June 21, 1991 an additional $791,600 was funded,
completing the Partnership's investment of $7,316,600. Monthly payments of
principal and interest totalling approximately $53,549 are due through maturity,
on October 15, 2031. Scheduled principal repayments of $194,111 have been
received through October 31, 1998.
Emerald Cove Apartments
-----------------------
The Partnership acquired a Participating Insured Mortgage Loan with
respect to a 276-unit apartment complex known as Emerald Cove Apartments in
Charlotte, North Carolina (the "North Carolina Project"). Initial closing of
this Participating Insured Mortgage Loan took place on October 16, 1989. The
project owners are Ronald Curry and Ralph Abercia. The Base Component of this
Participating Insured Mortgage Loan is coinsured by FHA and represented by GNMA
Securities with an initial face value of $10,783,900 at closing, which GNMA
Securities bore interest at the rate of 10.25% during construction of the North
Carolina Project and 8.75% thereafter. During fiscal 1992, the Partnership
funded its remaining commitment on the investment of approximately $1,184,000
and, effective May 1, 1992, the investment was converted to a permanent loan
with a principal balance of $10,776,500. The Partnership paid a premium of
$107,840 to the GNMA issuer to obtain the original loan commitment due to the
fact that the permanent loan interest rate was higher than comparable market
rates at the time of the initial closing. Prior to fiscal 1998, the premium had
been amortized on the straight-line method over a 15-year amortization period.
Beginning in fiscal 1998, the amortization rate has been increased to reflect a
reduction in the expected remaining holding period of the investment. Monthly
payments of principal and interest totalling approximately $81,135 are due
through maturity, on August 15, 2031. Scheduled principal repayments of $258,397
have been received through October 31, 1998.
<PAGE>
4. Related Party Transactions
--------------------------
Management fees earned by the General Partner and its affiliates for
services rendered in managing the business of the Partnership aggregated $49,000
and $52,000 for the three months ended October 31, 1998 and 1997, respectively.
Included in both of these amounts is $9,000 representing additional asset
management fees paid to PWPI which are based on the Partnership's cash
distributions of operating income, as discussed further in the Partnership's
Annual Report. Accounts payable affiliates at both October 31, 1998 and July 31,
1998 consist of $27,000 of management fees payable to the General Partner and
its affiliates.
Included in general and administrative expenses for the three months ended
October 31, 1998 and 1997 is $24,000 and $23,000, respectively, representing
reimbursements to an affiliate of the General Partner for providing certain
financial, accounting and investor communication services to the Partnership.
Also included in general and administrative expenses for the three-month
periods ended October 31, 1998 and 1997 is $2,000 and $1,000, respectively,
representing fees earned by an affiliate, Mitchell Hutchins Institutional
Investors, Inc., for managing the Partnership's cash assets.
<PAGE>
PAINEWEBBER INSURED MORTGAGE PARTNERS 1-B, L.P.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Information Relating to Forward-Looking Statements
- --------------------------------------------------
The following discussion of financial condition includes forward-looking
statements which reflect management's current views with respect to future
events and financial performance of the Partnership. These forward-looking
statements are subject to certain risks and uncertainties, including those
identified in Item 7 of the Partnership's Annual Report on Form 10-K for the
year ended July 31, 1998 under the heading "Certain Factors Affecting Future
Operating Results", which could cause actual results to differ materially from
historical results or those anticipated. The words "believe," "expect,"
"anticipate," and similar expressions identify forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which were made based on facts and conditions as they existed as of
the date of this report. The Partnership undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
Liquidity and Capital Resources
- -------------------------------
The Partnership is currently analyzing potential disposition strategies
for its remaining investments. As part of these efforts, the Partnership is
evaluating the current economic benefits it would receive if the owners of the
Emerald Cove Apartments and the Quarter Mill Apartments were to prepay their
participating loans by the end of calendar year 1999. The current strength of
the national real estate market for the sale or refinancing of multi-family
apartment properties has increased the likelihood of one or both of the
Partnership's participating loans being prepaid in the near term. In addition,
while the Partnership cannot require either of the owners to prepay their loans
for the next several years, the Partnership could possibly sell one or both of
the participating loans and some or all of the non-participating mortgage-backed
securities pools in the near term. In this regard, a key consideration is the
strength of the buying markets for these types of investments. Also, as part of
any sale of its two participating mortgage loans, the Partnership would expect
to receive fair value for its entitlement to participate in potential cash flow
increases and capital appreciation from each property as well as for its
entitlement to receive prepayment penalties if either of the participating loans
were prepaid by the property owners. As discussed further below, as of the
present date the amounts of the prepayment penalties which could be received on
the two remaining participating loans range from 6% to 2% of the outstanding
loan balances depending on the date of the prepayment. Although no assurances
can be given, it is currently contemplated that sales or prepayments of the
Partnership's remaining investments could be completed within the next year. The
disposition of all of the Partnership's investments would be followed by a
formal liquidation of the Partnership.
The Partnership's non-participating MBS have coupon interest rates ranging
from 7.5% to 9.5%. Based on current market interest rate levels, the aggregate
market value of these securities at the present time is above both the aggregate
face value and amortized cost, which includes any unamortized discounts or
premiums. As of October 31, 1998, the Partnership's two remaining participating
loans, which carry coupon interest rates of 8.5% and 8.75%, had estimated market
values which were higher than their face values due to a variety of factors,
including the participation features. However, during the quarter ended October
31, 1998 a reduction in the liquidity in the credit markets reduced the premiums
at which securities comparable to the Partnership's Participating Insured
Mortgage Loans were trading in the secondary market. Increases in market
interest rates and/or deterioration in general real estate market conditions in
the near term could cause the aggregate market value of the participating loans
and the portfolio of non-participating MBS investments to fall below face value
and/or amortized cost. In the event that such circumstances were to occur,
management is not prohibited from selling any security at a loss and may do so
if it is believed that such a sale would be in the best interests of the
Partnership.
As previously reported, generally low market interest rates have prompted
a high level of refinancing activity over the past several years, resulting in
significant prepayments on the Partnership's non-participating mortgage-backed
securities. Such prepayments had the effect of reducing the Partnership's
investment income and cash flows from operating activities and increasing the
outstanding balance of the Partnership's cash reserves. Since it was deemed
unlikely that there would be a default on either of the Partnership's two
remaining multi-family participating loans, and since the current rates of
return available on non-participating mortgage-backed security investments did
not warrant reinvestment by the Partnership, management concluded during fiscal
1997 that it would be in the best interests of the Unitholders to return the
portion of the Partnership's cash reserves which exceeded expected future
requirements. Consequently, the Partnership distributed $2,600,000 of its excess
reserves, or $47.13 per original $1,000 investment, in a special distribution
made on March 14, 1997. Regular quarterly distributions are comprised of
investment income and return of capital which results from the scheduled
amortization of mortgage principal on all of the debt securities as well as
principal prepayments from the non-participating GNMA mortgage-backed
securities. Such principal prepayments are unpredictable and, as noted above,
have been high during recent years but declined during fiscal 1997, resulting in
a reduction in cash flows from investing activities. Based on this decline in
the rate of principal prepayments and the expectation that this decline would
continue in the future, the Partnership had reduced the regular quarterly
distribution rate effective for the payment made on June 13, 1997 for the third
quarter of fiscal 1997. The distribution rate declined from 8.25% per annum to
6.5%. During fiscal 1998, however, actual principal prepayment levels were
higher than projected resulting in an increase in cash flows from investing
activities. As a result, the Partnership made a special capital distribution of
excess cash totalling approximately $552,000, or $10.00 per original $1,000
investment, to the Limited Partners on March 13, 1998, concurrent with the
regular quarterly distribution for the period ended January 31, 1998.
Distributions are expected to continue to be made at a rate of 6.5% per annum on
remaining invested capital during fiscal 1999, and the Partnership's cash
reserve levels will be reviewed again in early calendar year 1999 to determine
whether another special capital distribution will be made in March 1999.
The Partnership's two remaining Participating Insured Mortgage Loans are
secured by the Emerald Cove and Quarter Mill apartment complexes. The occupancy
level at Emerald Cove averaged 96% for the quarter ended October 31, 1998,
unchanged from the fourth quarter of fiscal 1998. As discussed further in the
Annual Report, due to the increased competition from several newly developed
properties in the local Charlotte, North Carolina submarket, the use of rental
concessions had been necessary at Emerald Cove to maintain the property's
occupancy levels. However, because the property's occupancy level stabilized in
the mid-90% range over the past year, the property's leasing team has
discontinued offering rental concessions on both new and renewal leases. The
property's rental rates and occupancy levels remain comparable to those of
directly competitive properties in the local market. Prepayment of the
Partnership's Emerald Cove Participating Insured Mortgage Loan was restricted
through March 1997 and then requires a prepayment penalty which declines
ratably, from 5% to 2%, over the next four years. During the quarter ended April
30, 1998, the Emerald Cove owner informed the Partnership that the property was
being actively marketed for sale and asked that the Partnership specify the
terms upon which it would accept prepayment of the participating loan. During
the quarter ended July 31, 1998, the owner of the Emerald Cove Apartments
approached the Partnership regarding a prepayment of the participating mortgage
loan as part of a potential sale of the Emerald Cove property. However, during
the current quarter, the Partnership was informed that the potential buyer and
the owner were not able to agree on final terms and that a sale would not occur.
As previously reported, the owner of the Emerald Cove Apartments has initiated
discussions of prepayment on several occasions over the past four years, but
none of those discussions have resulted in a prepayment transaction. As a
result, as noted above, the Partnership is presently reviewing other potential
disposition options for its Participating Insured Mortgage Loan investments.
The Quarter Mill Apartments continued its strong operating performance
during the first quarter of fiscal 1999, with an average occupancy level of 98%,
unchanged from the fourth quarter of 1998. Because the Quarter Mill Apartments
participates in the Low Income Housing Tax Credit Program, its rental rates are
based on the metropolitan area's median family income, rather than on market
rent levels. Average rental rates on new leases being signed are up 3.75% from
one year ago. A strong local rental market, combined with below market rental
rates at Quarter Mill, has resulted in consistently high occupancy levels at the
property. Property operations continue to generate small amounts of excess cash
flow, a portion of which is payable to the Partnership as Contingent Interest.
During fiscal 1998, 1997 and 1996, the Partnership received approximately
$54,000, $49,000 and $46,000, respectively, representing its 30% share of the
surplus cash, as defined. The Quarter Mill Participating Insured Mortgage Loan
became open to prepayment in February 1996 with a specified prepayment penalty
which declines ratably, from 10% to 2%, over a period of five years. During
fiscal 1998, the Partnership and the owner of Quarter Mill engaged in very
preliminary discussions concerning a potential prepayment of the Participating
Insured Mortgage Loan. However, to date no proposals to prepay the loan have
been received from the owner of Quarter Mill.
At October 31, 1998, the Partnership had cash and cash equivalents of
approximately $1,960,000. Such amounts will be utilized for distributions to the
Unitholders, as discussed further above, and for the working capital
requirements of the Partnership. The source of future liquidity and
distributions to the Unitholders is expected to be primarily through interest
income and principal repayments from the Partnership's mortgage securities,
money-market interest income from invested cash reserves, and to a lesser extent
from Contingent Interest from Participating Insured Mortgage Loans and Net
Project Residuals from the sale or refinancing of the properties securing such
investments.
As noted above, the Partnership expects to be liquidated within the next
year. Notwithstanding this, the Partnership believes that it has made all
necessary modifications to its existing systems to make them year 2000 compliant
and does not expect that additional costs associated with year 2000 compliance,
if any, will be material to the Partnership's results of operations or financial
position.
<PAGE>
Results of Operations
Three Months Ended October 31, 1998
- -----------------------------------
The Partnership reported net income of $332,000 for the three months ended
October 31, 1998, as compared to net income of $355,000 for the same period in
the prior year. This decrease in net income for the first quarter of fiscal 1999
resulted from a decrease in total revenues of $26,000, which was partially
offset by a decrease in total expenses of $3,000. The decrease in revenues was
the result of a $33,000 decline in interest income from debt securities, which
was offset by an increase of $7,000 in money market interest income. The
decrease in interest income from debt securities resulted from a reduction in
the average outstanding principal balances of Participating Insured Mortgage
Loans and non-participating MBS due to scheduled principal amortization on all
of the debt securities and prepayments on the MBS. The increase in money market
interest income resulted from an increase in the average outstanding balance of
the Partnership's invested cash reserves. The decrease in total expenses was the
result of a reduction in management fee expense. Management fee expense declined
due to a decrease in the outstanding balances of debt securities upon which such
fees are based.
<PAGE>
PART II
Other Information
Item 1. through 5. NONE
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: NONE
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed by the registrant during the quarter
for which this report is filed.
<PAGE>
PAINEWEBBER INSURED MORTGAGE PARTNERS 1-B, L.P.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Partnership has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
PAINEWEBBER INSURED MORTGAGE PARTNERS 1-B, L.P.
By: FIRST INSURED MORTGAGE PARTNERS, INC.
------------------------------------
Managing General Partner
Date: December 8, 1998 By: /s/ Walter V. Arnold
--------------------
Walter V. Arnold
Senior Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Partnership's unaudited financial statements for the quarter ended October 31,
1998 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Jul-31-1999
<PERIOD-END> Oct-31-1998
<CASH> 1,960
<SECURITIES> 22,009
<RECEIVABLES> 153
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,113
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 24,432
<CURRENT-LIABILITIES> 67
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 24,365
<TOTAL-LIABILITY-AND-EQUITY> 24,432
<SALES> 0
<TOTAL-REVENUES> 468
<CGS> 0
<TOTAL-COSTS> 136
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 332
<INCOME-TAX> 0
<INCOME-CONTINUING> 332
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 332
<EPS-PRIMARY> 0.60
<EPS-DILUTED> 0.60
</TABLE>
