<PAGE>
PAGE 1
IDS CERTIFICATE COMPANY
SEMIANNUAL REPORT
TO SHAREHOLDER
JUNE 30, 1994
Report Number C-100
IDSC Reports
September 9, 1994
<PAGE>
PAGE 2
IDS CERTIFICATE COMPANY
SEMIANNUAL REPORT TO SHAREHOLDER
JUNE 30, 1994
TABLE OF CONTENTS
Page
Balance Sheet............................................... 3-4
Statement of Operations.................................... 5-6
Statement of Stockholder's Equity.......................... 7
Statement of Cash Flows.................................... 8
Notes to Financial Statements.............................. 9-19
Investment Securities Owned............................... 20-30
<PAGE>
PAGE 3
<TABLE>
<CAPTION>
IDS CERTIFICATE COMPANY
BALANCE SHEET Unaudited
June 30, 1994
($ thousands)
ASSETS
Qualified Assets (note 2)
- -----------------------------------------------------------------------------------
<S> <C>
Investments in unaffiliated issuers (note 3):
Cash and cash equivalents...................................... $162,613
Held-to-maturity securities.................................... 1,398,118
Available-for-sale securities.................................. 854,157
First mortgage loans on real estate............................ 263,814
Certificate loans - secured by certificate reserves............ 61,982
Investments in and advances to affiliates........................ 5,286
- -----------------------------------------------------------------------------------
Total investments................................................ 2,745,970
Receivables:
Dividends and interest......................................... 39,635
Investment securities sold..................................... 4,092
- -----------------------------------------------------------------------------------
Total receivables................................................ 43,727
- -----------------------------------------------------------------------------------
Other (notes 8 and 9)............................................ 29,941
- -----------------------------------------------------------------------------------
Total qualified assets........................................... 2,819,638
- -----------------------------------------------------------------------------------
Other Assets
- -----------------------------------------------------------------------------------
Deferred distribution fees....................................... 19,505
Deferred federal income taxes.................................... 1,332
Other............................................................ 78
- -----------------------------------------------------------------------------------
Total other assets............................................... 20,915
- -----------------------------------------------------------------------------------
Total assets..................................................... $2,840,553
- -----------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 4
<TABLE>
<CAPTION>
IDS CERTIFICATE COMPANY
BALANCE SHEET Unaudited
June 30, 1994
($ thousands)
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
- -----------------------------------------------------------------------------------
<S> <C>
Certificate Reserves (note 4):
Installment certificates:
Reserves to mature.......................................... $341,749
Additional credits and accrued interest..................... 18,717
Advance payments and accrued interest....................... 1,713
Other....................................................... 56
Fully paid certificates:
Reserves to mature.......................................... 2,171,000
Additional credits and accrued interest..................... 140,395
Due to unlocated certificate holders.......................... 396
- -----------------------------------------------------------------------------------
Total certificate reserves.................................... 2,674,026
- -----------------------------------------------------------------------------------
Accounts Payable and Accrued Liabilities:
Due to IDS (note 6A)........................................ 1,109
Due to IDS for federal income taxes......................... 8,901
Due to affiliates (notes 6B and 6C)......................... 1,619
Payable for investment securities purchased................. 267
Accounts payable, accrued expenses and other................ 5,669
- -----------------------------------------------------------------------------------
Total accounts payable and accrued liabilities................ 17,565
- -----------------------------------------------------------------------------------
Total liabilities............................................. 2,691,591
- -----------------------------------------------------------------------------------
Stockholder's Equity (notes 4B, 4C, and 5):
- -----------------------------------------------------------------------------------
Common stock, $10 par - authorized and
issued 150,000 shares....................................... 1,500
Additional paid-in capital.................................... 140,344
Retained earnings:
Appropriated for predeclared additional
credits/interest.......................................... 3,955
Appropriated for additional interest on
advance payments.......................................... 25
Unappropriated.............................................. 10,067
Unrealized holding gains and losses on investment
securities - net (note 3A).................................. (6,929)
- -----------------------------------------------------------------------------------
Total stockholder's equity.................................... 148,962
- -----------------------------------------------------------------------------------
Total liabilities and stockholder's equity.................... $2,840,553
- -----------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 5
<TABLE>
<CAPTION>
IDS CERTIFICATE COMPANY
STATEMENT OF OPERATIONS Unaudited
Six Months Ended June 30, 1994
($ thousands)
- -----------------------------------------------------------------------------------
<S> <C>
Investment Income:
Interest income from investments:
Bonds and notes:
Unaffiliated issuers........................................ $60,212
Mortgage loans on real estate:
Unaffiliated................................................ 12,610
Affiliated.................................................. 35
Certificate loans............................................. 1,750
Dividends....................................................... 28,652
Other........................................................... 597
- -----------------------------------------------------------------------------------
Total investment income......................................... 103,856
- -----------------------------------------------------------------------------------
Investment Expenses:
IDS and affiliated company fees (note 6):
Distribution.................................................. 13,335
Investment advisory and services.............................. 6,771
Depositary.................................................... 90
Interest rate caps.............................................. 4,761
Options......................................................... 4,903
Other........................................................... 245
- -----------------------------------------------------------------------------------
Total investment expenses....................................... 30,105
- -----------------------------------------------------------------------------------
Net investment income before provisions
for certificate reserves and income taxes..................... $73,751
- -----------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 6
<TABLE>
<CAPTION>
IDS CERTIFICATE COMPANY
STATEMENT OF OPERATIONS (Continued) Unaudited
Six Months Ended June 30, 1994
($ thousands)
- -----------------------------------------------------------------------------------
<S> <C>
Provision for Certificate Reserves (notes 4 and 9):
According to the terms of the certificates:
Provision for certificate reserves............................ $7,356
Interest on additional credits................................ 1,643
Interest on advance payments.................................. 32
Additional credits/interest authorized by IDSC:
On fully paid certificates.................................... 38,211
On installment certificates................................... 3,259
- -----------------------------------------------------------------------------------
Total provision before reserve recoveries....................... 50,501
Reserve recoveries from terminations prior to maturitiy......... (525)
- -----------------------------------------------------------------------------------
Net provision for certificate reserves.......................... 49,976
- -----------------------------------------------------------------------------------
Net investment income before income taxes....................... 23,775
Income tax benefit (note 7)..................................... 839
- -----------------------------------------------------------------------------------
Net investment income........................................... 24,614
- -----------------------------------------------------------------------------------
Realized gain (loss) on investments - net:
Securities of unaffiliated issuers............................ (8,591)
Other......................................................... 689
Income tax benefit (note 7)..................................... 2,766
- -----------------------------------------------------------------------------------
Net realized loss on investments................................ (5,136)
- -----------------------------------------------------------------------------------
Net income - wholly owned subsidiary............................ 75
- -----------------------------------------------------------------------------------
Net income ..................................................... $19,553
- -----------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 7
<TABLE>
<CAPTION>
IDS CERTIFICATE COMPANY
STATEMENT OF STOCKHOLDER'S EQUITY Unaudited
Six Months Ended June 30, 1994
($ thousands)
- -----------------------------------------------------------------------------------
<S> <C>
Common Stock:
Balance at beginning and end of period.......................... $1,500
- -----------------------------------------------------------------------------------
Additional Paid-in-capital:
Balance at beginning of period.................................. $147,144
Cash dividend declared.......................................... (6,800)
- -----------------------------------------------------------------------------------
Balance at end of period........................................ $140,344
- -----------------------------------------------------------------------------------
Retained Earnings:
Appropriated for predeclared additional
credits/interest (note 4B):
Balance at beginning of period.................................. $2,726
Transferred from unappropriated retained earnings............... 1,229
- -----------------------------------------------------------------------------------
Balance at end of period........................................ $3,955
- -----------------------------------------------------------------------------------
Appropriated for additional interest on advance payments (note 4C):
Balance at beginning and end of period.......................... $25
- -----------------------------------------------------------------------------------
Unappropriated (note 5):
Balance at beginning of period.................................. $9,743
Net income ..................................................... 19,553
Transferred to appropriated retained earnings................... (1,229)
Cash dividends declared......................................... (18,000)
- -----------------------------------------------------------------------------------
Balance at end of period........................................ $10,067
- -----------------------------------------------------------------------------------
Unrealized holding gains and losses on investment
securities - net (note 3A):
Balance at beginning of period.................................. $-
Adjustment due to initial application of SFAS 115............... 4,304
Decrease during period.......................................... (11,233)
- -----------------------------------------------------------------------------------
Balance at end of period........................................ ($6,929)
- -----------------------------------------------------------------------------------
See accompanying notes to financial statements.
/TABLE
<PAGE>
PAGE 8
<TABLE>
<CAPTION>
IDS CERTIFICATE COMPANY
STATEMENT OF CASH FLOWS Unaudited
Six Months Ended June 30, 1994
($ thousands)
- -----------------------------------------------------------------------------------
<S> <C>
Cash flows from operating activities:
Net income...................................................... $19,553
Adjustments to reconcile net income to net
cash provided by operating activities:
Net income of wholly owned subsidiary........................... (75)
Certificate reserves............................................ 49,976
Interest income added to certificate loans...................... (1,111)
Amortization of premium/discount-net............................ 11,357
Deferred federal income taxes................................... 2,234
Deferred distribution fees...................................... 110
Net loss on investments......................................... 7,902
Decrease in dividends and interest receivable................... 798
Increase in other liabilities................................... 4,162
- -----------------------------------------------------------------------------------
Net cash provided by operating activities....................... 94,906
- -----------------------------------------------------------------------------------
Cash flows from investing activities:
Maturity and redemption of investments:
Hold-to-maturity securities................................... 154,558
Available-for-sale securities................................. 86,052
Other investments............................................. 22,872
Sale of investments:
Hold-to-maturity securities................................... -
Available-for-sale securities................................. 262,341
Other investments............................................. -
Certificate loan payments....................................... 4,051
Purchase of investments:
Hold-to-maturity securities................................... -
Available-for-sale securities................................. (337,882)
Other investments............................................. (5,211)
Certificate loan fundings....................................... (3,992)
Investment in subsidiary........................................ (450)
- -----------------------------------------------------------------------------------
Net cash provided by investing activities....................... 182,339
- -----------------------------------------------------------------------------------
Cash flows from financing activities:
Reserve payments by certificate holders......................... 690,955
Certificate maturities and cash surrenders...................... (834,846)
Dividends paid.................................................. (24,800)
- -----------------------------------------------------------------------------------
Net cash used by financing activities........................... (168,691)
- -----------------------------------------------------------------------------------
Net increase in cash and cash equivalents....................... 108,554
Cash and cash equivalents beginning of period................... 54,059
- -----------------------------------------------------------------------------------
Cash and cash equivalents end of period......................... $162,613
- -----------------------------------------------------------------------------------
Supplemental disclosures including non-cash transactions:
Cash received for income taxes.................................. $8,900
Certificate maturities and surrenders through loan reductions... 6,500
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PAGE 9
IDS CERTIFICATE COMPANY
Notes to Financial Statements ($ in thousands unless indicated
otherwise)
- -------------------------------------------------------------------
1. Summary of Significant Accounting Policies
IDS Certificate Company (IDSC) is a wholly owned subsidiary of IDS
Financial Corporation (IDS), which is a wholly owned subsidiary of
American Express Company.
IDSC is in the business of issuing face-amount investment
certificates.
Described below are certain accounting policies that are important
to an understanding of the accompanying financial statements.
Basis of Financial Statement Presentation
The accompanying financial statements are presented on a historical
cost basis without adjustment of the net assets attributable to the
1984 acquisition of IDS by American Express Company. They include
only the accounts of IDSC. IDSC uses the equity method of
accounting for its investment in its wholly owned unconsolidated
subsidiary, which is the method prescribed by the Securities and
Exchange Commission (SEC) for issuers of face-amount certificates.
Preferred Stock Dividend Income
IDSC recognizes dividend income from cumulative redeemable
preferred stocks with fixed maturity amounts on an accrual basis
similar to that used for recognizing interest income on debt
securities.
Securities
Cash equivalents are carried at amortized cost, which approximates
fair value. IDSC has defined cash and cash equivalents as cash in
banks and highly liquid investments with a maturity of three months
or less at acquisition and are not interest rate sensitive.
In May 1993, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 115,
"Accounting for Certain Investments in Debt and Equity Securities,"
which IDSC adopted as of January 1, 1994. The balance of
Stockholder's Equity at June 30, 1994 was decreased by $6,929 to
reflect the net unrealized holding losses, net of deferred federal
income taxes, on securities classified as available for sale
previously carried at amortized cost or the lower of cost or
market. Under the new rules, debt securities that IDSC has both
the positive intent and ability to hold to maturity are carried at
amortized cost. Debt securities IDSC does not have the positive
intent to hold to maturity, as well as all marketable equity
securities, are classified as available for sale and carried at
fair value. Unrealized holding gains and losses on securities
classified as available for sale are carried as a separate
component of Stockholder's Equity.
<PAGE>
PAGE 10
IDS CERTIFICATE COMPANY
Notes to Financial Statements ($ in thousands unless indicated
otherwise)
- -------------------------------------------------------------------
The basis for determining realized gains and losses on securities
is the amortized cost of bonds and notes on a "first-in, first-out"
basis and the average cost of individual issues of stocks. When
there is a decline in value, that is other than temporary, the
securities are carried at estimated realizable value.
First Mortgage Loans on Real Estate
Mortgage loans are carried at amortized cost, less reserves for
losses, which is the basis for determining any realized gains or
losses. When economic evaluations of the underlying real estate
indicate a loss on a loan is likely to occur, an allowance for such
loss is recorded. IDSC generally stops accruing interest on loans
for which interest is delinquent more than three months.
Certificates
Investment certificates may be purchased either with a lump-sum
payment or by installment payments. Certificate holders are
entitled to receive at maturity a definite sum of money. Payments
from certificate holders are credited to investment certificate
reserves. Investment certificate reserves accumulate at specified
percentage rates. Reserves also are maintained for advance
payments made by certificate holders, accrued interest thereon, and
for additional credits and accrued interest thereon. On
certificates allowing for the deduction of a surrender charge, the
cash surrender values may be less than accumulated investment
certificate reserves prior to maturity dates. Cash surrender
values on certificates allowing for no surrender charge are equal
to certificate reserves. The payment distribution, reserve
accumulation rates, cash surrender values, reserve values and other
matters are governed by the Investment Company Act of 1940 ("the
1940 Act").
Deferred Distribution Fee Expense
On certain series of certificates, distribution fees are deferred
and amortized over the estimated lives of the related certificates,
which is approximately 10 years. Upon surrender, unamortized
deferred distribution fees are charged against income.
Federal Income Taxes
IDSC's taxable income or loss is included in the consolidated
federal income tax return of American Express Company. IDSC
provides for income taxes on a separate return basis, except that,
under an agreement between IDS and American Express Company, tax
benefits are recognized for losses to the extent they can be used
in the consolidated return. It is the policy of IDS and its
subsidiaries that IDS will reimburse a subsidiary for any tax
benefits recorded.
<PAGE>
PAGE 11
Notes to Financial Statements (continued)
- -------------------------------------------------------------------
2. Deposit of Assets and Maintenance of Qualified Assets
A) Under the provisions of its certificates and the 1940 Act, IDSC
was required to have qualified assets (as that term is defined in
Section 28(b) of the 1940 Act) in the amount of $2,669,820 at
June 30, 1994. IDSC had qualified assets of $2,830,299 at June 30,
1994, excluding unrealized holding losses on available-for-sale
securities of $10,660.
Qualified assets are valued in accordance with such provisions of
the Code of the District of Columbia as are applicable to life
insurance companies. Qualified assets for which no provision for
valuation is made in such Code are valued in accordance with rules,
regulations or orders prescribed by the SEC. These values are the
same as financial statement carrying values, except for debt
securities classified as available for sale and all marketable
equity securities, which are carried at fair value in the financial
statements but are valued at cost for qualified asset and deposit
maintenance purposes.
B) Pursuant to provisions of the certificates, the 1940 Act, the
central depositary agreement and to requirements of various states,
qualified assets of IDSC at June 30, 1994 were deposited as
follows:
<TABLE>
<CAPTION>
Required
Deposits deposits Excess
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Deposits to
meet certificate
liability
requirements:
States............. $ 419 $ 390 $ 29
Central Depositary. 2,729,948 2,602,965 126,983
- ----------------------------------------------------------------------------------
Total.............. $2,730,367 $2,603,355 $127,012
- ----------------------------------------------------------------------------------
</TABLE>
The assets on deposit consisted of securities having a deposit
value of $2,434,831, mortgage loans of $261,909 and other assets of
$33,627. Mortgage loans on deposit include an affiliated mortgage
loan.
IDS Trust (formerly IDS Bank & Trust) is the central depositary for
IDSC.
See note 6C.
3. Investments
A) Fair values of investments in securities represent market
prices and estimated fair values when quoted prices are not
available. Estimated fair values are determined by IDSC using
established procedures involving review of market indexes, price
levels of current offerings and comparable issues, price estimates
and market data from independent brokers and financial files. The
procedures are reviewed annually. IDSC's Vice President -
Investments reports to the Board of Directors on an annual basis
regarding such pricing sources and procedures to provide assurance
that fair value is being achieved.<PAGE>
PAGE 13
Notes to Financial Statements (continued)
- -------------------------------------------------------------------
The following is a summary of securities held to maturity and
securities available for sale at June 30, 1994.
<TABLE>
<CAPTION>
Securities Held to Maturity
-----------------------------------------------------
Gross Gross
Fair unrealized unrealized
Cost value gains losses
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Government and
agencies obligations..... $ 419 $ 426 $ 7 $ -
Mortgage-backed
securities............... 95,239 98,368 3,138 9
State and municipal
obligations.............. 161,367 171,140 9,777 4
Corporate debt
securities............... 434,101 446,012 13,349 1,438
Foreign government
bonds and obligations.... 46,897 49,514 2,617 -
Stated maturity
preferred stock.......... 660,095 673,408 18,503 5,190
- ----------------------------------------------------------------------------------
Total $1,398,118 $1,438,868 $47,391 $6,641
- ----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Securities Available for Sale
-----------------------------------------------------
Gross Gross
Fair unrealized unrealized
Cost value gains losses
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage-backed
securities............... $557,889 $550,784 $3,948 $11,053
Corporate debt
securities............... 230,651 227,738 851 3,764
Foreign government
bonds and obligations.... 10,719 10,511 832 1,040
Stated maturity
preferred stock.......... 63,138 63,135 280 283
Common stock............... 2,420 1,989 - 431
- ----------------------------------------------------------------------------------
Total $864,817 $854,157 $5,911 $16,571
- ----------------------------------------------------------------------------------
</TABLE>
At June 30, 1994, there were no securities classified as trading
securities.
During the six months ended June 30, 1994, debt securities
classified as available for sale and marketable equity securities
were sold with proceeds of $256,366 and gross realized gains on
such sales of $449 and gross realized losses on such sales of
$9,985.
There were no securities sold or transferred from held to maturity
during the six months ended June 30, 1994.
During the six months ended June 30, 1994, net unrealized holding
gains on available-for-sale securities included in Stockholder's
Equity decreased by $11,233.
Purchases, sales and maturities of securities classified as held to
maturity and available for sale for the six months ended June 30,<PAGE>
PAGE 14
Notes to Financial Statements (continued)
- -------------------------------------------------------------------
1994, were as follows:
Hold to Available
maturity for sale
- -------------------------------------------------------------------
Purchases............................ $ - $338,149
Sales................................ $ - $265,902
Maturities........................... $153,753 $83,940
B) At June 30, 1994, investments in securities with fixed
maturities comprised 82% of IDSC's total invested assets.
Securities are rated by Moody's and Standard & Poor's (S&P), or by
IDS internal analysts, using criteria similar to Moody's and S&P,
when a public rating does not exist. A summary of investments in
securities with fixed maturities by rating of investment is as
follows:
Rating
- ---------------------------------
Aaa/AAA...................... 33%
Aa/AA........................ 4
Aa/A......................... 2
A/A.......................... 21
A/BBB........................ 3
Baa/BBB...................... 33
Below investment grade....... 4
- ---------------------------------
100%
- ---------------------------------
Of the securities rated Aaa/AAA, 88% are U.S. Government Agency
mortgage-backed securities that are not rated by a public rating
agency. Approximately 17% of other securities with fixed
maturities are rated by IDS Internal analysts. No investment in
any one issuer is greater than 1% of IDSC's total investment in
securities with fixed maturities.
At June 30, 1994, approximately 10% of IDSC's invested assets were
first mortgage loans on real estate. A summary of first mortgage
loans by type of real estate is as follows:
Region Property Type
- -------------------------- -------------------------------
South Atlantic......... 24% Apartments................. 41%
East North Central..... 24 Shopping centers........... 29
West North Central..... 18 Industrial buildings....... 12
Middle Atlantic........ 15 Office buildings........... 10
West South Central..... 7 Other...................... 8
Mountain............... 6
Pacific................. 3
New England............. 3
East South Central...... -
- -------------------------- -------------------------------
100% 100%
- -------------------------- -------------------------------
<PAGE>
PAGE 15
Notes to Financial Statements (continued)
- -------------------------------------------------------------------
At June 30, 1994, there were no commitments for fundings of first
mortgage loans outstanding. If so, IDSC employs policies and
procedures to ensure the creditworthiness of the borrowers and that
funds will be available on the funding date. IDSC's first mortgage
loan fundings are restricted to 75% or less of the market value of
the real estate at the time of the loan funding.
C) IDSC reserves freedom of action with respect to its acquisition
of restricted securities that offer advantageous and desirable
investment opportunities. In a private negotiation, IDSC may
purchase for its portfolio all or part of an issue of restricted
securities. Since IDSC would intend to purchase such securities
for investment and not for distribution, it would not be "acting as
a distributor" if such securities are resold by IDSC at a later
date.
The fair values of restricted securities are determined by the
Board of Directors using the procedures and factors described in
paragraph A of note 3.
In the event IDSC were to be deemed to be a distributor of the
restricted securities, it is possible that IDSC would be required
to bear the costs of registering those securities under the
Securities Act of 1933, although in most cases such costs would be
borne by the issuer of the restricted securities.
4. Certificate Reserves
Reserves maintained on outstanding certificates have been computed
in accordance with the provisions of the certificates and Section
28 of the 1940 Act. The average rates of accumulation on
certificate reserves at June 30, 1994 were:
<TABLE>
<CAPTION>
Average Average
Reserve gross additional
balance accumulation credit
at June 30, rate rate
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Installment certificates:
Reserves to mature:
With guaranteed rates..................... $ 52,723 3.49% .26%
Without guaranteed rates (A).............. 289,026 - 2.71
Additional credits and accrued interest... 18,717 3.10 -
Advance payments and accrued interest (C). 1,713 3.07 .44
Other..................................... 56 - -
Fully paid certificates:
Reserves to mature:
With guaranteed rates..................... 261,315 3.27 .52
Without guaranteed rates (A).............. 1,909,685 - 3.80
Additional credits and accrued interest... 140,395 3.36 -
Due to unlocated certificate holders...... 396 - -
- ----------------------------------------------------------------------------------
$2,674,026
- ----------------------------------------------------------------------------------
</TABLE>
A) There is no minimum rate of accrual on these reserves.
Interest is declared periodically, quarterly or annually, in
accordance with the terms of the separate series of certificates.
<PAGE>
PAGE 16
Notes to Financial Statements (continued)
- ------------------------------------------------------------------
B) On certain series of single payment certificates, additional
interest is predeclared for periods greater than one year. At June
30, 1994, $3,955 of retained earnings had been appropriated for the
predeclared additional interest, which represents the difference
between certificate reserves on these series, calculated on a
statutory basis, and the reserves maintained per books.
C) Certain series of installment certificates guarantee accrual of
interest on advance payments at an average of 3.07%. IDSC has
increased the rate of accrual to 3.51% through April 30, 1995. An
appropriation of retained earnings amounting to $25 has been made,
which represents the estimated additional accrual that will result
from the increase granted by IDSC.
D) IDS Stock Market Certificate enables the certificate holder to
participate in any relative rise in a major stock market index
without risking loss of principal. Generally the certificate has a
term of 12 months and may continue for up to 14 successive terms.
The reserve balance at June 30, 1994 was $336,732.
5. Dividend Restriction
Certain series of installment certificates outstanding provide that
cash dividends may be paid by IDSC only in calendar years for which
additional credits of at least one-half of 1% on such series of
certificates have been authorized by IDSC. This restriction has
been removed for 1994 and 1995 by action of IDSC on additional
credits in excess of this requirement.
6. Fees Paid to IDS and Affiliated Companies ($ not in thousands)
A) The basis of computing fees paid or payable to IDS for
investment advisory and services is:
The investment advisory and services agreement with IDS provides
for a graduated scale of fees equal on an annual basis to 0.75% on
the first $250 million of total book value of assets of IDSC, 0.65%
on the next $250 million, 0.55% on the next $250 million, 0.50% on
the next $250 million and 0.45% on the amount in excess of $1
billion. The fee is payable monthly in an amount equal to
one-twelfth of each of the percentages set forth above. Excluded
from assets for purposes of this computation are first-mortgage
loans, real estate and any other asset on which IDSC pays a service
fee.
B) The basis of computing fees paid or payable to IDS Financial
Services Inc. (an affiliate) for distribution services is:
Fees payable to IDS Financial Services Inc. on sales of IDSC's
certificates are based upon terms of agreements giving IDS
Financial Services Inc. the exclusive right to distribute the
certificates covered under the agreements. The agreements provide
for payment of fees over a period of time. The aggregate fees
payable under the agreements per $1,000 face amount of installment
certificates and $1,000 purchase price of single payments, and a
summary of the periods over which the fees are payable, shown by
series are:<PAGE>
PAGE 17
Notes to Financial Statements (continued)
- ------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of
certificate
years over
Aggregate Fees Payable which
-------------------------- subsequent
First Subsequent years' fees
Total year years are payable
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Installment certificates(a) $30.00 $ 6.00 $24.00 4
Single-payment certificates 60.00 60.00 - -
Future Value certificates.. 50.00 50.00 - -
- ----------------------------------------------------------------------------------
</TABLE>
Fees on Cash Reserve and Flexible Savings (formerly Variable Term)
certificates are paid at a rate of 0.25% of the purchase price at
time of issuance and 0.25% of the reserves maintained for these
certificates at the beginning of the second and subsequent quarters
from issue date.
Fees on the Investors Certificate are paid at an annualized rate of
1% of the reserves maintained for the certificates. Fees are paid
at the end of each term on certificates with a one, two or
three-month term. Fees are paid each quarter from date of issuance
on certificates with a six, 12, 24 or 36-month term.
Fees on the Stock Market Certificate are paid at a rate of 1.25%
of the purchase price on the first day of the certificate's term
and 1.25% of the reserves maintained for these certificates at the
beginning of each subsequent term.
(a) At the end of the sixth through the 10th year, an additional
fee is payable of 0.5% of the daily average balance of the
certificate reserve maintained during the sixth through the 10th
year, respectively.
C) The basis of computing depositary fees paid or payable to IDS
Trust (formerly IDS Bank & Trust) (an affiliate) is:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
<S> <C>
Maintenance charge per account..... 5 cents per $1,000 of
assets on deposit
Transaction charge................. $20 per transaction
Security loan activity:
Depositary Trust Company
receive/deliver................ $20 per transaction
Physical receive/deliver......... 25 per transaction
Exchange collateral.............. 15 per transaction
- ----------------------------------------------------------------------------------
</TABLE>
A transaction consists of the receipt or withdrawal of securities
and commercial paper and/or a change in the security position. The
charges are payable quarterly except for maintenance, which is an
annual fee.<PAGE>
PAGE 18
Notes to Financial Statements (continued)
- ------------------------------------------------------------------
D) The basis for computing fees paid or payable to American
Express Bank Ltd. (an affiliate) for the distribution of the
IDS Special Deposits certificate on an annualized basis is
0.80% of the reserves maintained for the certificates on an
amount from $250,000 to $499,000, 0.65% on an amount from
$500,000 to $999,000 and 0.50% on an amount $1,000,000 or
more. Fees are paid at the end of each term on certificates
with a one, two or three-month term. Fees are paid at the
end of each quarter from date of issuance on certificates
with a six, 12, 24 or 36-month term.
7. Federal Income Taxes
The federal income tax rate applicable to income of IDSC for the
six months ended June 30, 1994 was based on the effective tax rate
expected to be applicable for the full fiscal year ending Dec. 31,
1994.
A reconciliation of the statutory federal income tax rate and the
expected federal income tax rate at Dec. 31, 1994 is:
<TABLE>
<CAPTION>
Rate
- ----------------------------------------------------------------------------------
<S> <C>
Statutory federal income tax rate....................... 35.0%
Tax-exempt interest..................................... (13.7)
Dividend exclusion...................................... (44.1)
- ----------------------------------------------------------------------------------
Expected federal income tax rate........................ (22.8)
- ----------------------------------------------------------------------------------
</TABLE>
8. Interest-Rate Caps
IDSC owns interest-rate caps with a notional principal amount of
$1,170,000 at June 30, 1994. These caps are quarterly reset caps
and IDSC is to be reimbursed on the notional amount to the extent
the London Interbank Offering Rate exceeds the reference rates
specified in the cap agreements. These reference rates range from
4% to 13%. The cost of these caps is being amortized over the
terms of the agreements (three to seven years) on a straight line
basis and is included in other qualified assets. The carrying
amount of interest rate caps at June 30, 1994 is $19,878.
9. Options
IDSC offers a series of certificates which pay interest based upon
the relative change in a major stock market index between the
beginning and end of the certificates' term. The certificate
holders have the option of participating in the full amount of
increase in the index during the term (subject to a specified
maximum) or a lesser percentage of the increase plus a guaranteed
minimum rate of interest. As a means of hedging its obligations
under the provisions of these certificates, IDSC purchases and
writes call options on the major market index. The options are
cash settlement options, that is, there is no underlying security
to deliver at the time the contract is closed out. There is the<PAGE>
PAGE 19
Notes to Financial Statements (continued)
- ------------------------------------------------------------------
risk that the counterparties to the purchased call option contracts
may be unable to fulfill their obligations. IDSC employs policies
and procedures to ensure the adequacy of the creditworthiness of
counterparties. Following is a summary of open option contracts at
June 30, 1994.
<TABLE>
<CAPTION>
Face Average Index at
amount strike price June 30, 1994
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Purchased call options $231,104 460 444
Written call options 221,232 506 444
- ----------------------------------------------------------------------------------
</TABLE>
The option contracts are less than one year in term and are carried
at the aggregate of the amortized cost and underlying intrinsic
value of the contracts. These carrying amounts may be different
than fair value depending on market conditions and other factors.
The amortization of the cost of purchased and the proceeds of
written call options is included net in investment expenses and the
changes in the intrinsic value of the contracts are included net in
provision for certificate reserves, in the statement of operations.
The purchased options are included in other qualified assets and
the written options are included in other liabilities. The
carrying amounts of purchased and written call options at June 30,
1994 are $7,334 and $2,099, respectively.
<PAGE>
PAGE 20
<TABLE>
<CAPTION>
IDS CERTIFICATE COMPANY SCHEDULE I
Investments in Securities of Unaffiliated Issuers
JUNE 30, 1994
($ in thousands)
Bal. held
at 6-30-94
Principal
Amount of Cost Value at
Bonds (Notes 6-30-94
Name of Issuer and Titles of Issue and Notes a & c) (Note a)
- ------------------------------------------ ----------- ---------- ----------
<S> <C> <C> <C>
BONDS AND NOTES
United States Government -
direct obligations
US TREASURY 7.625%, 1996 250 $ 250 $ 257
US TREASURY NOTE 8.500%, 1995 165 169 169
----------- ---------- ----------
415 419 426
----------- ---------- ----------
Other Bonds and Notes
United States Government Agencies
FHLMC ARM #845154 5.647%, 2022 13,160 13,711 13,489 (f)
FHLMC ARM #350190 6.500%, 2022 15,422 16,067 15,767 (f)
FHLMC GOLD E00151 7.500%, 2017 12,955 13,068 12,842 (f)
FHLMC 188537 (2) 5.750%, 1998 27 24 23 (f)
FHLMC CTF SER B-76 8.375%, 2006 390 390 384 (f)
FHLMC CTF SER A-77 8.050%, 2007 151 150 148 (f)
FHLMC CTF SER B-77 8.125%, 2007 325 323 320 (f)
FHLMC 15YR #380025 9.500%, 2003 1,607 1,598 1,673
FHLMC 15 YR #200017 11.000%, 2000 1,178 1,204 1,268
FHLMC 15 YR #200018 11.000%, 2000 752 768 809
FHLMC 15 YR #200020 11.000%, 2000 1,179 1,204 1,269
FHLMC 15 YR #200022 10.500%, 2000 236 239 253
FHLMC 15 YR #200035 9.000%, 2001 912 899 940
FHLMC 15 YR #200048 9.000%, 2001 1,788 1,758 1,843
FHLMC 15 YR #200064 8.000%, 2002 1,022 987 1,031
FHLMC 15 YR #212119 9.500%, 2001 507 511 528
FHLMC 15 YR #218648 9.500%, 2002 172 173 179
FHLMC 15 YR #219392 11.000%, 2001 499 510 537
FHLMC 15 YR #219679 9.500%, 2003 1,423 1,413 1,481
FHLMC 15 YR #219757 11.000%, 2003 4,994 5,153 5,376
FHLMC 15 YR #240001 9.500%, 1997 17,102 17,020 17,557
FHLMC 10 YR #490009 9.000%, 1997 3,671 3,669 3,756
FHLMC 10 YR #490011 10.000%, 1997 609 617 644
FHLMC 15 YR #500155 11.000%, 2001 913 934 983
FHLMC 15 YR #500294 11.000%, 2003 440 452 474
FHLMC 15 YR #500456 11.000%, 2002 635 651 684
FHLMC 15 YR #502175 10.500%, 2004 691 699 740
FHLMC ARM #605041 5.631%, 2019 1,195 1,195 1,213 (f)
FHLMC ARM #605048 5.458%, 2018 1,972 1,972 2,000 (f)
FHLMC ARM #605050 5.650%, 2018 1,306 1,306 1,326 (f)
/TABLE
<PAGE>
PAGE 21
<TABLE>
<CAPTION>
Bal. held
at 6-30-94
Principal
Amount of Cost Value at
Bonds (Notes 6-30-94
Name of Issuer and Titles of Issue and Notes a & c) (Note a)
- ------------------------------------------ ----------- ---------- ----------
<S> <C> <C> <C>
FHLMC ARM 605079 WAC 5.634%, 2018 2,304 2,304 2,340 (f)
FHLMC ARM 605175 WAC 5.719%, 2019 4,997 4,997 5,075 (f)
FHLMC ARM #605352 5.444%, 2018 4,582 4,582 4,647 (f)
FHLMC ARM #401587 5.250%, 2018 3,351 3,364 3,388 (f)
FHLMC ARM #630048 6.875%, 2018 320 320 322 (f)
FHLMC ARM #630074 7.250%, 2018 1,142 1,142 1,162 (f)
FHLMC ARM 840031 WAC 5.369%, 2019 949 949 987 (f)
FHLMC ARM #840035 5.570%, 2019 1,983 1,983 2,079 (f)
FHLMC ARM #840036 5.556%, 2019 3,061 3,061 3,208 (f)
FHLMC ARM #840045 5.551%, 2019 5,261 5,261 5,501 (f)
FHLMC ARM #840072 5.857%, 2019 3,826 3,826 3,962 (f)
FHLMC ARM #405014 5.534%, 2019 1,576 1,576 1,599 (f)
FHLMC ARM #405092 5.414%, 2019 2,773 2,773 2,810 (f)
FHLMC ARM #405185 5.504%, 2018 3,683 3,683 3,737 (f)
FHLMC ARM #405243 5.833%, 2019 2,057 2,057 2,092 (f)
FHLMC ARM #405249 5.983%, 2018 4,604 4,604 4,689 (f)
FHLMC ARM #405360 5.641%, 2019 1,109 1,109 1,125 (f)
FHLMC ARM #405437 5.559%, 2019 507 507 514 (f)
FHLMC ARM #405455 5.566%, 2019 2,321 2,321 2,355 (f)
FHLMC ARM #405517 5.650%, 2019 841 841 854 (f)
FHLMC ARM #405615 5.502%, 2019 1,250 1,250 1,267 (f)
FHLMC ARM #405675 5.854%, 2020 3,248 3,248 3,301 (f)
FHLMC ARM #405692 5.963%, 2020 4,533 4,533 4,600 (f)
FHLMC ARM #405744 5.614%, 2020 3,545 3,545 3,596 (f)
FHLMC ARM #605432 5.355%, 2017 1,368 1,368 1,385 (f)
FHLMC ARM #605433 5.652%, 2017 2,847 2,847 2,891 (f)
FHLMC ARM #605454 5.275%, 2017 6,544 6,544 6,624 (f)
FHLMC ARM 605853 WAC 5.806%, 2019 6,573 6,573 6,681 (f)
FHLMC ARM #605854 5.681%, 2019 4,714 4,714 4,787 (f)
FHLMC ARM #606024 5.125%, 2019 2,241 2,241 2,265 (f)
FHLMC ARM #606025 5.029%, 2019 8,013 8,013 8,095 (f)
FHLMC ARM #606151 5.694%, 2019 6,123 6,123 6,217 (f)
FHLMC ARM #635054 6.531%, 2020 565 565 560 (f)
FHLMC ARM #865008 7.985%, 2018 10,841 10,841 11,167 (f)
FHLMC LOANS #885005 9.500%, 2002 2,935 2,916 3,072 (f)
FHLMC LOANS #885008 10.000%, 2003 4,648 4,670 4,939 (f)
FHLMC 15 YR #885009 9.500%, 2003 7,499 7,462 7,850
FHLMC ARM #606301 5.975%, 2020 8,908 8,908 9,071 (f)
FHLMC 15 YR #E40290 8.500%, 2007 8,287 8,728 8,515 (f)
FHLMC ARM #845523 4.745%, 2023 14,087 14,536 14,263 (f)
FHLMC ARM #845654 3.959%, 2024 39,468 40,085 38,777 (f)
FHLMC ARM #845730 5.050%, 2024 64,448 66,745 65,112 (f)
FHLMC ARM #845733 4.693%, 2024 56,919 57,986 56,812 (f)
*CMO TR14-A1 FLOATER 4.200%, 2009 912 909 912 (f)
*CMO TR14-A2 FLOATER 17.000%, 2009 304 247 306 (f)
PRU HOME 90-09 A1 9.500%, 1997 2,478 2,470 2,504
SBH CAP SRS 85-3 CLC 8.625%, 1995 787 785 787
FNMA 1991 19 CL E 7.500%, 2017 4,084 4,083 4,073
FNMA 1991 48 G 7.800%, 2004 9,885 9,881 9,974
</TABLE>
<PAGE>
PAGE 22
<TABLE>
<CAPTION>
Bal. held
at 6-30-94
Principal
Amount of Cost Value at
Bonds (Notes 6-30-94
Name of Issuer and Titles of Issue and Notes a & c) (Note a)
------------------------------------------ ----------- ---------- ----------
<S> <C> <C> <C>
FNMA 1991 50 G 7.750%, 2004 5,681 5,662 5,724 (f)
FNMA 1991 132 CL E 8.000%, 2010 12,730 12,707 12,889
FNMA 92 12 H 6.625%, 2019 22,934 22,934 22,654 (f)
FNMA 94 34 PE CMO 5.750%, 2006 9,785 9,759 8,938 (f)
FNMA 15 YR #2469 11.000%, 2000 60 61 65
FNMA 15 YR #13157 11.000%, 2000 92 94 99
FNMA 15 YR #13548 11.000%, 2000 126 129 137
FNMA 15 YR #13705 11.000%, 2000 130 133 141
FNMA 15 YR #18275 11.000%, 2000 14 14 15
FNMA 15 YR #18745 11.000%, 2000 33 34 36
FNMA 15 YR #18986 11.000%, 2000 15 15 16
FNMA 15 YR #19070 11.000%, 2000 20 20 22
FNMA 15 YR #19261 11.000%, 2000 110 113 119
FNMA 15 YR #22271 11.000%, 2000 88 90 95
FNMA 15 YR #22405 11.000%, 2000 190 194 205
FNMA 15 YR #22569 11.000%, 2000 214 219 232
FNMA 15 YR #22674 11.000%, 2000 102 104 110
FNMA 15 YR #25899 11.000%, 2001 52 53 56
FNMA 30 YR #27880 9.000%, 2016 164 168 170
FNMA 15 YR #34543 9.250%, 2001 936 935 979
FNMA 30 YR #36225 9.000%, 2016 611 622 633
FNMA 30 YR #040877 9.000%, 2017 364 373 377
FNMA 15 YR #50682 7.000%, 2008 16,159 16,596 15,649 (f)
FNMA 15 YR #50730 6.500%, 2008 22,718 22,984 21,469 (f)
FNMA 30 YR #51617 10.000%, 2017 469 472 503
FNMA 30 YR #52185 10.000%, 2017 305 307 327
FNMA 30 YR #52596 10.000%, 2017 38 38 40
FNMA 15 YR #58405 11.000%, 2003 76 78 82
FNMA 15 YR #64520 11.000%, 2001 146 149 158
FNMA 15 YR #64523 11.000%, 2000 347 354 375
FNMA 15 YR #66458 10.000%, 2004 6,722 6,784 7,176
FNMA ARM #70007 MEGA 5.212%, 2017 3,621 3,621 3,682 (f)
FNMA ARM #70009 MEGA 5.277%, 2018 5,898 5,899 6,000 (f)
FNMA ARM #70117 5.381%, 2017 1,244 1,244 1,267 (f)
FNMA ARM #70202 5.858%, 2019 4,101 4,101 4,192 (f)
FNMA 15 YR #70299 10.750%, 2001 868 898 934
FNMA 15 YR 70694 MEG 9.500%, 2005 4,871 4,902 5,125
FNMA ARM #79384 5.665%, 2019 1,239 1,239 1,264 (f)
FNMA ARM #88879 8.134%, 2019 6,598 6,598 6,726 (f)
FNMA ARM #92069 FLEX 5.536%, 2018 5,440 5,440 5,548 (f)
FNMA ARM #93787 5.572%, 2019 5,022 5,022 5,122 (f)
FNMA ARM #97822 5.836%, 2020 1,141 1,141 1,166 (f)
FNMA ARM #105989 7.964%, 2020 2,971 3,000 3,053 (f)
FNMA 15 YR #125136 8.000%, 2007 18,038 19,009 18,224 (f)
FNMA ARM #249907 3.909%, 2024 28,064 28,493 27,555 (f)
GNMA ARM 1 YR #8157 5.500%, 2023 9,319 9,488 9,179 (f)
GNMA ARM #8206 5.750%, 2017 2,047 2,047 2,023 (f)
GNMA ARM #8240 6.000%, 2017 1,527 1,500 1,531 (f)
GNMA ARM #8251 6.375%, 2017 125 125 127 (f)
</TABLE>
<PAGE>
PAGE 23
<TABLE>
<CAPTION>
Bal. held
at 6-30-94
Principal
Amount of Cost Value at
Bonds (Notes 6-30-94
Name of Issuer and Titles of Issue and Notes a & c) (Note a)
------------------------------------------ ----------- ---------- ----------
<S> <C> <C> <C>
GNMA ARM #8274 5.750%, 2017 4,020 4,009 3,974 (f)
GNMA ARM #8283 5.750%, 2017 529 525 523 (f)
GNMA ARM #8293 5.750%, 2017 932 927 921 (f)
GNMA ARM #8341 6.500%, 2018 224 222 230 (f)
GNMA ARM #8353 6.500%, 2018 1,819 1,805 1,871 (f)
GNMA ARM #8365 6.500%, 2018 3,332 3,331 3,427 (f)
GNMA ARM #8377 6.375%, 2018 1,433 1,426 1,456 (f)
GNMA ARM #8428 5.750%, 2018 620 620 612 (f)
GNMA ARM #8440 5.750%, 2018 1,521 1,521 1,504 (f)
GNMA PL 2480 5.250%, 1997 40 39 39
----------- ---------- ----------
644,569 653,128 649,152
----------- ---------- ----------
Municipal Bonds
Alabama
AL CORRECTIONS INST 7.300%, 1999 1,500 1,497 1,614 (b)
AL CORRECTIONS INST 7.400%, 2000 1,500 1,497 1,616 (b)
Alaska
ANCHORAGE AK WTR RV 7.100%, 2000 785 782 836 (b)
California
SOUTHERN CA PUB PWR 6.900%, 1999 1,000 989 1,057 (b)
SOUTHERN CA PUB PWR 7.000%, 2000 1,215 1,200 1,284 (b)
Colorado
CHERRY CREEK CO SCH 7.900%, 1997 1,000 1,000 1,053 (b)
CHERRY CREEK CO SCH 8.000%, 1998 3,375 3,375 3,559 (b)
CHERRY CREEK CO SCH 8.100%, 1999 1,700 1,701 1,795 (b)
Delaware
NEW CASTLE CNTY DE 8.100%, 1999 2,000 2,000 2,137 (b)
Florida
FLORIDA STATE COMMUN 13.500%, 2013 3,000 3,162 3,215 (b)
FLORIDA MUNI POWER 7.200%, 2000 3,450 3,424 3,710 (b)
JACKSONVILLE FL ELEC 8.000%, 1996 300 300 318 (b)
JACKSONVILLE FL ELEC 8.100%, 1997 1,000 1,000 1,060 (b)
JACKSONVILLE FL ELEC 8.250%, 1998 1,700 1,700 1,800 (b)
ORLANDO FL UTL 10-94 10.500%, 2014 4,000 4,147 4,191 (b)
ORLANDO FL EXPWY REV 8.200%, 1997 1,785 1,794 1,821 (b)
ORLANDO FL EXPWY REV 8.200%, 1998 1,925 1,932 1,964 (b)
Georgia
ATLANTA GA REC AUTH 8.000%, 1997 1,000 998 1,030 (b)
MUNI ELEC AUTH GA 7.500%, 1999 1,000 1,000 1,065 (b)
MUNI ELEC AUTH GA 7.600%, 2000 1,000 1,000 1,067 (b)
MUNI ELEC AUTH GA 7.700%, 2001 1,330 1,324 1,420 (b)
</TABLE>
<PAGE>
PAGE 24
<TABLE>
<CAPTION>
Bal. held
at 6-30-94
Principal
Amount of Cost Value at
Bonds (Notes 6-30-94
Name of Issuer and Titles of Issue and Notes a & c) (Note a)
------------------------------------------ ----------- ---------- ----------
<S> <C> <C> <C>
MET ATLANTA GA RTA 8.000%, 1996 2,000 1,997 2,102 (b)
MET ATLANTA GA RTA 8.200%, 1997 2,800 2,795 2,972 (b)
MET ATLANTA GA RTA 8.375%, 1998 2,000 1,996 2,127 (b)
Illinois
CHICAGO IL SAN DIST 9.250%, 2000 1,000 1,101 1,190 (b)
*CHIC IL GAS SPY SRC 7.500%, 2015 4,500 4,500 4,830 (b)
CHICAGO IL BLDG REV 8.000%, 1997 3,000 2,991 3,222 (b)
CHICAGO IL BLDG COMM 8.000%, 1998 1,800 1,788 1,972 (b)
ROSEMOUNT IL GO BNDS 8.300%, 1997 1,520 1,517 1,622 (b)
ROSEMOUNT IL GO BNDS 8.400%, 1998 1,000 998 1,066 (b)
Indiana
INDIANAPOLIS IN ARPT 7.900%, 1995 635 635 657 (b)
INDIANAPOLIS IN ARPT 8.100%, 1996 375 375 399 (b)
INDIANAPOLIS IN ARPT 8.300%, 1997 1,100 1,100 1,189 (b)
INDIANAPOLIS IN ARPT 8.500%, 1998 750 750 811 (b)
INDIANAPOLIS IN REV 7.600%, 1999 1,000 997 1,064 (b)
INDIANAPOLIS IN REV 7.700%, 2000 1,000 997 1,073 (b)
Louisiana
LAFAYETTE LA PUB 1MP 7.300%, 1999 975 975 1,043 (b)
LOUISIANA GO BONDS 7.375%, 2000 4,900 4,884 5,246 (b)
LOUISIANA CORREC FAC 7.300%, 1999 925 927 987 (b)
LOUISIANA CORREC FAC 7.400%, 2000 500 501 534 (b)
Michigan
DETROIT MI CONV FAC 8.300%, 1998 4,900 4,889 5,108 (b)
Minnesota
MPLS MN TAX INCR BDS 7.800%, 2000 900 898 930 (b)
MPLS MN TAX INCR BDS 7.500%, 1997 500 499 512 (b)
MPLS MN TAX INCR BDS 7.600%, 1998 1,600 1,598 1,641 (b)
MPLS MN TAX INCR BDS 7.700%, 1999 1,800 1,797 1,847 (b)
UNIV OF MINN REV REF 8.750%, 1995 1,000 1,003 1,030 (b)
WEST MN MUNI POWER 10.250%, 2015 3,120 3,499 3,761 (b)
New Jersey
OCEAN COUNTY NJ UTIL 8.150%, 1997 400 399 432 (b)
OCEAN COUNTY NJ UTIL 8.250%, 1998 500 499 538 (b)
OCEAN COUNTY NJ UTIL 8.300%, 1999 4,000 3,991 4,308 (b)
New York
N Y MUNI ASSIS CORP 7.000%, 2000 2,100 2,060 2,241 (b)
NEW YORK CITY GO 9.750%, 1996 8,000 7,985 8,557 (b)
NEW YORK CITY NT GO 7.750%, 2000 1,700 1,700 1,786 (b)
NEW YORK PWER AUTH 9.500%, 2001 530 557 596 (b)
</TABLE>
<PAGE>
PAGE 25
<TABLE>
<CAPTION>
Bal. held
at 6-30-94
Principal
Amount of Cost Value at
Bonds (Notes 6-30-94
Name of Issuer and Titles of Issue and Notes a & c) (Note a)
------------------------------------------ ----------- ---------- ----------
<S> <C> <C> <C>
North Carolina
NC EAST MUNI POWER 7.500%, 2000 3,245 3,202 3,465 (b)
NC MUNI POWER 8.300%, 1996 900 900 946 (b)
NC MUNI POWER 8.400%, 1997 2,000 2,000 2,142 (b)
NC MUNI POWER 8.500%, 1998 2,000 2,000 2,157 (b)
Pennsylvania
WY VALLEY PA SWR 5.125%, 2007 160 160 155 (b)
South Carolina
PIEDMONT SC MUNI PWR 11.000%, 2025 3,540 3,704 3,776 (b)
Tennessee
KNOXVILLE TN GO BNDS 7.150%, 2000 3,490 3,481 3,724 (b)
NASHVILLE CTY TN SE 7.800%, 1996 835 835 874 (b)
NASHVILLE CTY TN SE 7.900%, 1997 710 710 761 (b)
NASHVILLE CTY TN SE 8.000%, 1998 1,000 1,000 1,073 (b)
Texas
AUSTIN TX UTILITY 10.750%, 2015 3,735 4,370 4,772 (b)
DALLAS TX CIVIC CENT 10.900%, 1996 850 883 924 (b)
DALLAS TX CIVIC CENT 8.100%, 1997 925 924 973 (b)
DALLAS TX CIVIC CENT 8.200%, 1998 1,025 1,024 1,077 (b)
EANES TX ISD TAX REF 9.000%, 1999 3,000 3,018 3,159 (b)
HARRIS CNTY TX TOLL 10.375%, 2014 5,300 5,777 6,234 (b)
HARRIS COUNTY TX GO 9.100%, 1999 3,500 3,539 3,711 (b)
PLANO TX ISD TAX REF 9.200%, 1996 1,000 1,007 1,034 (b)
WACO TX WTR & SEWER 8.300%, 1995 1,000 1,002 1,046 (b)
District of Columbia
DIST OF COLUMBIA GO 7.600%, 1997 4,900 4,889 5,200 (b)
DIST OF COLUMBIA GO 7.300%, 1995 2,100 2,105 2,154 (b)
DIST OF COLUMBIA GO 7.600%, 1997 1,950 1,996 2,076 (b)
DIST OF COLUMBIA GO 7.750%, 2000 1,000 1,003 1,079 (b)
Washington
KENT SCH DIST 415 WA 7.100%, 1997 1,320 1,318 1,399 (b)
KENT SCH DIST 415 WA 7.200%, 1998 1,620 1,616 1,721 (b)
PIERCE CTY WA SE REV 8.000%, 1996 3,035 3,035 3,205 (b)
PORT OF SEATTLE WA 8.250%, 1998 2,000 1,996 2,162 (b)
PORT OF SEATTLE WA 8.250%, 1999 2,000 1,996 2,156 (b)
REDMOND WA GO BDS 7.300%, 1999 1,210 1,207 1,263 (b)
REDMOND WA GO BDS 7.400%, 2000 650 648 679 (b)
VANCOUVER WA SE REV 8.800%, 1995 1,000 1,002 1,038 (b)
----------- ---------- ----------
Total Municipal Bonds 159,395 161,367 171,140
=========== ---------- ----------
</TABLE>
<PAGE>
PAGE 26
<TABLE>
<CAPTION>
Bal. held
at 6-30-94
Principal
Amount of Cost Value at
Bonds (Notes 6-30-94
Name of Issuer and Titles of Issue and Notes a & c) (Note a)
------------------------------------------ ----------- ---------- ----------
<S> <C> <C> <C>
Public Utility
BAROID CORP 8.000%, 2003 5,000 4,983 5,063
BOSTON EDISON 8.875%, 1995 10,000 9,987 10,312
CABOT 9.875%, 1994 2,000 2,003 2,028
CHEVRON-HOWARD BELL 7.700%, 1997 416 413 421 (b)(d)
HANNA M A 9.000%, 1998 5,000 5,127 5,181
INTL SPECIALTY PROD 9.000%, 1999 15,000 15,447 14,812
ORYX ENERGY 8.650%, 1999 15,000 15,000 14,438
PDV AMERICA 7.250%, 1998 3,000 2,990 2,711 (f)
PDV AMERICA 7.750%, 2000 7,000 7,023 6,256 (f)
PENNSYLVANIA P & L 8.000%, 1996 443 442 453 (b)(d)
PENN POWER CO 9.000%, 1996 5,000 4,992 5,231
TENNECO INC 9.625%, 1994 8,500 8,500 8,606
PETRO MEXICANOS 144A 11.430%, 1995 10,000 10,000 10,673 (b)(d)
----------- ---------- ----------
Total Public Utility 86,359 86,907 86,185
=========== ---------- ----------
Finance
AMERICAN GEN FIN COR 9.400%, 1995 10,000 10,000 10,212 (d)
AMERICAN GEN FIN 9.600%, 1995 10,000 9,991 10,450
ARISTAR FINL 7.875%, 1999 3,000 2,994 3,041 (f)
AVCO FIN 2YR CMT MTN 5.190%, 1999 7,000 6,929 6,920 (f)
BANK OF AMERICA 9.750%, 2000 10,000 10,584 10,950
CHASE 90-F CL A-6 9.500%, 2006 1,112 1,111 1,135
COUNTRYWIDE FUNDING 8.420%, 1999 19,700 19,665 20,389
FIDELITY ACCEPTANCE 6.670%, 1997 15,000 15,000 14,621 (b)(d)(f)
1ST NATL BK ST PAUL 12.650%, 1994 6,415 6,492 6,627
FLEET FINANCIAL CORP 9.800%, 1995 15,000 15,000 15,649 (b)(d)
FLEET NORTHSTAR FINL 10.150%, 1995 15,000 15,000 15,675
HELLER FINANCIAL 8.000%, 1998 15,000 14,966 15,300
HOUSEHOLD FINANCE 9.910%, 1996 5,000 5,000 5,244
HOUSEHOLD FINANCE 9.250%, 1995 6,500 6,494 6,549
HOUSEHOLD FINANCE 9.000%, 1995 7,000 6,950 7,210
ITT FINANCIAL 11.000%, 1995 9,950 10,103 10,510
MARGARETTEN FIN'L 6.750%, 2000 11,250 11,372 10,842 (f)
NCB CAPITAL SER A 8.180%, 1997 8,000 8,000 8,170 (b)(d)
NAVISTAR FINL CORP 9.750%, 1995 8,500 8,483 8,553
ORIX CREDIT ALLIANCE 8.040%, 1997 10,000 10,000 10,053 (b)(d)
SBH MTG 91-1 VII 9.000%, 2006 3,103 3,103 3,103 (f)
SALOMON INC INDEX AM 7.070%, 2000 25,000 25,000 24,250 (f)
TRANSAMERICA FINANCE 9.260%, 1998 5,000 4,989 5,344
TRAVELERS MTG 90-09 9.000%, 2005 4,547 4,541 4,636
USL CAPITAL 9.400%, 1996 15,000 14,993 15,637
FIRST BANK SYS FRN 7.938%, 1996 15,000 13,986 15,454
----------- ---------- ----------
Total Finance Bonds 261,077 260,746 266,524
=========== ---------- ----------
</TABLE>
<PAGE>
PAGE 27
<TABLE>
<CAPTION>
Bal. held
at 6-30-94
Principal
Amount of Cost Value at
Bonds (Notes 6-30-94
Name of Issuer and Titles of Issue and Notes a & c) (Note a)
------------------------------------------ ----------- ---------- ----------
<S> <C> <C> <C>
Industrial
DENMARK KNGM FRN 10% 10.000%, 1995 10,000 10,111 10,220
BROWN GROUP 8.600%, 1999 5,000 5,000 5,058
CSX 9.230%, 1998 13,500 13,500 14,361
CAT FIN 2YR CMT MTN 4.810%, 1999 10,350 10,242 10,228 (f)
CENTEX CORP 9.050%, 1996 10,000 10,000 10,213
CHAMPION INT'L 9.650%, 1995 10,000 10,000 10,350
CHAMPION INT'L 9.800%, 1998 10,000 9,993 10,700
COMDISCO 9.070%, 1994 10,000 10,000 10,025
CONTAINER CORP AMERI 14.000%, 2001 5,000 5,000 5,506
DARLING DELAWARE 13.750%, 2000 3,308 3,385 3,337 (b)(f)
DART KRAFT FIN 7.750%, 1998 1,000 1,042 1,013 (f)
DELTA AIRLINES 9.875%, 1998 8,100 8,100 8,373
DURR FILLAUER 7.000%, 2006 20,000 20,084 20,006 (f)
FIGGIE INT'L 9.875%, 1999 6,500 7,185 6,281 (f)
FLEMING CO 9.450%, 1995 15,000 14,993 15,394
FORT HOWARD LIBOR D 8.063%, 2000 10,000 10,000 10,000 (b)(d)
FOUNDATION HLTH CORP 7.750%, 2003 4,500 4,483 4,269 (f)
GEN AMER TRANS TR#15 9.200%, 1994 10,000 10,000 10,013
GMAC 7.650%, 1997 10,000 9,978 10,088 (f)
GMAC 7.750%, 1999 20,000 19,823 20,250 (f)
GREYHOUND FIN 2YRMTN 5.650%, 1998 15,000 14,874 14,854 (f)
HERTZ CORP 9.770%, 1996 10,000 9,997 10,475
HERTZ CORP 9.750%, 1996 5,000 4,996 5,238
INTL LEASE FINANCE 7.950%, 1999 12,000 11,980 12,240 (f)
LONE STAR INDUSTRIES 10.000%, 2003 650 625 618 (b)(f)
MATTEL INC 6.875%, 1997 15,000 14,930 14,888 (f)
MISSOURRI PACIFIC RR 15.000%, 1995 463 478 486 (b)(d)
NEWS AMER HLDGS 7.500%, 2000 10,000 9,943 9,712 (f)
REYNOLDS METALS 9.750%, 1996 10,000 9,988 10,575
ROSEBUD HOLDINGS INC 10.000%, 1997 1,235 1,153 1,161 (b)(f)
RYDER SYSTEM 8.950%, 1994 5,000 5,000 5,006
SEALED AIR 12.625%, 1999 1,400 1,445 1,468
SEALY CORP 9.500%, 2003 4,275 4,323 4,083
SUN AMERICA 9.000%, 1999 20,000 20,000 21,025
TIME WARNER INC 7.450%, 1998 10,000 10,189 9,912 (f)
TRANSAMERICA CORP 9.470%, 1995 15,000 14,993 15,638
VF CORP 9.400%, 1996 7,125 7,039 7,187
WAXMAN IND LIBOR 7.625%, 1998 7,500 7,411 7,238 (b)(d)(f)
XEROX 2 YR FLTR CMT 5.470%, 1999 10,000 9,913 9,900 (f)
BROWNING FERRIS CVT 6.750%, 2005 7,345 6,182 7,014 (f)
CHRYSLER FIN PUT/91 13.250%, 1994 7,600 7,639 7,838
</TABLE>
<PAGE>
PAGE 28
<TABLE>
<CAPTION>
Bal. held
at 6-30-94
Principal
Amount of Cost Value at
Bonds (Notes 6-30-94
Name of Issuer and Titles of Issue and Notes a & c) (Note a)
------------------------------------------ ----------- ---------- ----------
<S> <C> <C> <C>
FIBERGLASS CAD INC# 9.800%, 1998 5,000 5,161 5,329
TIPHOOK FINANCE 7.125%, 1998 4,570 4,537 3,496 (f)
----------- ---------- ----------
Total Industrial Bonds 376,421 375,715 381,066
=========== ---------- ----------
Total Other Bonds and Notes 1,537,863 1,554,067
---------- ----------
Total Bonds and Notes 1,538,282 1,554,493
---------- ----------
Bal. Held
at 6-30-94 Cost Value at
Number of (Notes 6-30-94
Name of Issuer and Title of Issue Shares a & c) (Note a)
------------------------------------------ ----------- ---------- ----------
PREFERRED STOCK
Public Utility
AMERICAN WTRWRKS $25 8.500%, 2000 800,000 20,000 21,214 (b)(d)
ARIZONA PUB SVC $100 10.00 %, 2001 50,000 5,000 5,518
ARIZONA $100 8.48 %, 1997 30,000 2,970 3,036
ARIZONA PUB SERVICE 8.500%, 1994 50,000 5,000 5,000 (b)(d)
ARKANSAS P & L $25 9.920%, 2002 206,911 5,446 5,354
ATLANTIC CITY EL 100 7.80 %, 2006 90,000 8,985 9,724
ATLANTIC CITY EL 100 8.20 %, 2000 82,500 8,238 8,955
ATLANTIC CITY ELEC 8.53 %, 1998 101,600 10,156 10,659
BALTIMORE G&E $100 8.625%, 2000 97,500 9,750 10,454
BALTIMORE G&E $100 8.25 %, 1999 66,300 6,629 7,020
BALTIMORE G & E $100 6.95 %, 1995 70,000 6,971 6,946
BOSTON EDISON $100 8.00 %, 2001 90,000 9,000 8,672
CENTRAL ILL LT $100 5.85 %, 2008 50,000 5,000 4,825
CINCINNATI G&E $100 7.875%, 2004 200,000 20,000 20,800
COMMWLTH ED $100 PVT 8.200%, 2002 94,605 9,199 9,744 (d)
COMMONWEALTH EDISON 8.85S%, 2003 97,500 10,028 10,042 (d)
CONN LT & PWR $50 5.30 P%, 003 95,300 4,743 4,169
CON EDISON $100 SR J 6.125%, 2002 150,000 15,057 14,550
DUKE POWER $100 SR V 6.40 %, 2002 30,000 3,000 3,052
DUKE POWER $100 SR U 6.30 %, 2001 30,000 3,000 3,053
DUKE POWER $100 SR T 6.20 %, 2000 30,000 3,000 3,053
DUKE POWER 1992D $25 6.20 %, 2001 200,000 5,008 5,000
DUKE POWER 1992C $25 6.10 %, 2000 250,000 6,285 6,250
GTE $50 PFD 7.75 %, 2008 141,401 7,087 7,281 (b)(d)
GTE CORP $50 PFD 7.85 %, 2007 152,889 7,523 7,852 (b)(d)
GOODRICH BF CO $100 7.85 %, 1998 16,685 1,630 1,700
GREEN MTN PWR CL-D/3 8.625%, 2000 70,000 7,000 7,280 (b)(d)
HAWAII ELEC $100 8.500%, 2005 20,000 1,992 2,133 (b)(d)
MAUI ELEC $100 8.50 %, 2005 25,000 2,490 2,667 (b)(d)
</TABLE>
<PAGE>
PAGE 29
<TABLE>
<CAPTION>
Bal. Held
at 6-30-94 Cost Value at
Number of (Notes 6-30-94
Name of Issuer and Title of Issue Shares a & c) (Note a)
------------------------------------------ ----------- ---------- ----------
<S> <C> <C> <C>
HOUSTON LTG $100 8.500%, 1997 59,911 5,998 6,034
HOUSTON LT PWR $100 9.375%, 1999 155,000 15,595 16,178 (d)
ILLINOIS PWR SER P 8.000%, 1997 57,460 5,704 5,976
IOWA ILLINOIS EL$100 7.800%, 2006 73,300 7,636 7,964
JERSEY CENTRAL P&L 8.650%, 2005 75,000 7,500 8,272
JERSEY CENTRAL P & L 8.480%, 2000 75,000 7,488 8,152
KN ENERGY PFD 8.500%, 1996 2,000 200 200 (b)(d)
LONG ISL LGT SER AA 7.95 %, 2000 800,000 20,276 18,800
LONG ISLAND LIGHTING 8.500%, 1997 9,199 896 937 (b)(d)
LOUISIANA P&L $100 7.00 %, 1999 80,000 8,011 8,160
LOUISIANA P & L $100 8.000%, 2001 150,000 15,000 15,487
MAINE YANKEE $100 7.48 %, 2001 46,527 4,486 4,816
MN P & L 144A $100 7.125%, 2002 50,000 4,965 4,956 (b)(d)
MN P&L 144A 6.70 6.70 %, 2002 100,000 10,000 9,963 (b)(d)
MISS P&L $100 9.76 %, 1997 39,508 3,950 4,155
MISS P & L $100 9.00 %, 1995 31,082 3,097 3,182
NO IND PUB SERV $100 8.750%, 1996 250,000 25,428 26,031 (b)(d)
NJ NATL GAS 100 144A 7.72P%, 2001 200,000 20,000 20,100 (d)
NIAGARA MOHAWK $25 8.375%, 1998 63,000 1,552 1,596 (b)(d)
NIAGARA MOHAWK POWER 8.750%, 1996 126,243 3,159 3,409
NIAGARA MOHAWK $25 B 7-16.%, 2024 288,113 7,203 7,203 (f)
NIAGARA MOHAWK $25 9.75 %, 1996 25,054 633 633 (b)(d)
NO IND PUB SERV $100 8.85 %, 2003 47,250 4,766 4,847 (b)(d)
NORTHWEST NAT GA 100 6.95 %, 2002 150,000 15,000 15,300
ORANGE ROCKLAND$100 8.125%, 1997 26,171 2,631 2,686 (d)
OTTER TAIL PWR $100 6.35 %, 2007 180,000 18,000 18,135
PECO ENERGY 6.12 %, 2003 54,300 5,422 5,159
PECO ENERGY PE,T 9.875%, 1997 62,606 6,252 6,511
PACIFIC ENT $100000 7.50P%, 1994 200,000 20,000 20,000
PACIFIC GAS & ELEC 6.57P%, 2007 525,000 13,082 12,534
PACIFICORP $100 PAR 7.70 %, 2001 150,000 15,000 15,750
PENN GAS & WTR $100 8.90 %, 1998 40,000 3,741 4,055 (b)(d)
PENN PWR & LT $100 6.33 %, 2008 50,000 5,000 4,668
POTOMAC ELEC PWR $50 6.80 %, 2007 160,800 7,934 7,889
POTOMAC ELECTRIC 7.78P%, 2006 160,000 8,008 7,830
PUB SERV COLO $100 7.50 %, 2009 173,368 16,697 17,338 (b)(d)
PUGET SOUND P&L $100 8.00 %, 2004 6,566 656 672
ROCHESTER G & E $100 7.65P%, 1999 20,000 2,000 2,085
ROCHESTER G & E $100 7.55P%, 1998 62,000 6,200 6,467
ROCHESTER G & E $100 7.45P%, 1997 52,500 5,250 5,486
SIERRA PAC PWR SER G 8.240%, 1998 109,396 5,497 5,581
SO CA EDISON $100 6.45 %, 2002 147,250 14,784 14,799
SOUTHWEST GAS 9.50P%, 1999 3,275 331 337 (b)(d)
SO INDIANA G&E 100 6.50 %, 2002 75,000 7,500 7,275 (d)
TENNECO SRS B $100 7.400%, 1998 68,998 6,715 6,926
TEXACO PFD C VR RATE 7.600%, 1994 556,195 27,810 28,088 (f)
TEXAS UTIL $100 PAR 6.98 %, 2008 50,000 5,000 4,825 (b)
TEXAS UTILITY $100 9.64 %, 1998 100,000 10,068 10,138 (b)(d)
TRANSCONT'L GAS PIPE 8.750%, 1996 86,250 8,623 8,625 (b)(d)
UNITED TELECOM $100 7.75 %, 2008 39,914 3,816 3,991 (b)(d)
UNITED TEL FL $10 5.25S%, 2000 11,550 109 104 (b)(d)
VIRGINIA ELEC & PWR 6.35P%, 2000 121,400 12,224 12,231
WASHINGTON WATER 8.625%, 2000 80,000 8,016 8,383
WASHINGTON WTR POWER 6.95P%, 2007 50,000 5,000 4,850
WEST TEXAS UTIL $100 7.25 %, 1995 10,265 1,027 1,027
----------- ---------- ----------
9,774,642 661,123 672,799
=========== ---------- ----------
/TABLE
<PAGE>
PAGE 30
<TABLE>
<CAPTION>
Bal. Held
at 6-30-94 Cost Value at
Number of (Notes 6-30-94
Name of Issuer and Title of Issue Shares a & c) (Note a)
------------------------------------------ ----------- ---------- ----------
<S> <C> <C> <C>
Industrial
ALLTEL 7.75 $100 PAR 7.75P%, 2005 8,560 862 865 (d)
BOWATER $50 VAR RATE 7.04P%, 1998 251,800 11,961 11,677 (f)
COMBUSTION ENG $100 9.125%, 1999 200,000 20,000 20,925 (b)(d)
HARTFD FIRE S2 $50 7.175%, 1995 326,600 16,164 16,167 (f)
HARTFORD FIRE CL-C 7.50 %, 1997 39,872 1,988 2,043
JAMES RVR SR D $100 8.75 %, 1997 2,950 300 297 (b)
XEROX CORP $50 PAR 7.375%, 1998 220,008 10,835 11,770
----------- ---------- ----------
1,049,790 62,110 63,744
=========== ---------- ----------
Total Preferred Stocks 723,233 736,543
---------- ----------
OTHER
Industrial
LONE STAR INDUSTRIES 90,000 1,665 1,350 (f)
MRS FIELDS 20,176,717 605 605 (f)
WAXMAN IND WARRANTS EXP 1996 150,000 150 34 (f)
----------- ---------- ----------
Total Other 20,416,717 2,420 1,989
=========== ---------- ----------
Total Investments in Securities
of Unaffiliated Issuers 2,263,935 2,293,025
Less reserve for Possible Losses
on Corporate Issues 1,000
---------- ----------
$2,262,935 $2,293,025
========== ==========
NOTES
(a) See notes 1 and 3 to financial statements regarding determination of cost
and fair values.
(b) Securities valued by IDS Certificate Company at fair value in the absence
of market quotations.
(c) The aggregate cost of investments in securities of unaffiliated issuers
for federal income tax purposes was $2,259,646.
(d) Securities acquired in private negotiation which may require registration
under federal securities laws if they were to be publicly sold. Also see
note 3B to financial statements.
(e) Non-income producing securities.
(f) Securities classified as available for sale and carried at fair value in
the balance sheet. Also see notes 1 and 3A to financial statements.
</TABLE>
