<PAGE>
PAGE 1
IDS CERTIFICATE COMPANY
SEMIANNUAL REPORT
TO SHAREHOLDER
JUNE 30, 1996
Report Number C-100
IDSC Reports
August 29, 1996
<PAGE>
PAGE 2
IDS CERTIFICATE COMPANY
SEMIANNUAL REPORT TO SHAREHOLDER
JUNE 30, 1996
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............................ 9-21
Investment Securities Owned.............................. 22-32
<PAGE>
PAGE 3
<TABLE><CAPTION>
IDS CERTIFICATE COMPANY
BALANCE SHEET Unaudited
June 30, 1996
($ thousands)
ASSETS
Qualified Assets (note 2)
-----------------------------------------------------------------------------------
<S> <C>
Investments in unaffiliated issuers (notes 3 and 4):
Cash and cash equivalents...................................... $117,847
Held-to-maturity securities.................................... 900,258
Available-for-sale securities.................................. 2,004,022
First mortgage loans on real estate............................ 220,569
Certificate loans - secured by certificate reserves............ 46,243
Investments in and advances to affiliates........................ 5,749
-----------------------------------------------------------------------------------
Total investments................................................ 3,294,688
Receivables:
Dividends and interest......................................... 43,304
Investment securities sold..................................... 4,871
-----------------------------------------------------------------------------------
Total receivables................................................ 48,175
-----------------------------------------------------------------------------------
Other (note 9)................................................... 27,668
-----------------------------------------------------------------------------------
Total qualified assets........................................... 3,370,531
-----------------------------------------------------------------------------------
Other Assets
-----------------------------------------------------------------------------------
Deferred distribution fees....................................... 26,990
Other............................................................ 6
-----------------------------------------------------------------------------------
Total other assets............................................... 26,996
-----------------------------------------------------------------------------------
Total assets..................................................... $3,397,527
-----------------------------------------------------------------------------------
See notes to financial statements.
</TABLE>
<PAGE>
PAGE 4
<TABLE><CAPTION>
IDS CERTIFICATE COMPANY
BALANCE SHEET Unaudited
June 30, 1996
($ thousands)
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
-----------------------------------------------------------------------------------
<S> <C>
Certificate Reserves (note 5):
Installment certificates:
Reserves to mature.......................................... $336,565
Additional credits and accrued interest..................... 21,942
Advance payments and accrued interest....................... 1,288
Other....................................................... 56
Fully paid certificates:
Reserves to mature.......................................... 2,648,325
Additional credits and accrued interest..................... 154,402
Due to unlocated certificate holders.......................... 308
-----------------------------------------------------------------------------------
Total certificate reserves.................................... 3,162,886
-----------------------------------------------------------------------------------
Accounts Payable and Accrued Liabilities:
Due to Parent (note 7A)..................................... 1,388
Due to Parent for federal income taxes...................... 2,126
Due to affiliates (notes 7B and 7C)......................... 335
Payable for investment securities purchased................. 13,970
Accounts payable, accrued expenses and other (note 9)....... 7,922
-----------------------------------------------------------------------------------
Total accounts payable and accrued liabilities................ 25,741
-----------------------------------------------------------------------------------
Deferred federal income taxes................................. 1,109
-----------------------------------------------------------------------------------
Total liabilities............................................. 3,189,736
-----------------------------------------------------------------------------------
Stockholder's Equity (notes 5B, 5C, and 6):
-----------------------------------------------------------------------------------
Common stock, $10 par - authorized and
issued 150,000 shares....................................... 1,500
Additional paid-in capital.................................... 168,844
Retained earnings:
Appropriated for predeclared additional
credits/interest.......................................... 15,240
Appropriated for additional interest on
advance payments.......................................... 50
Unappropriated.............................................. 23,203
Unrealized holding gains (losses) on investment
securities - net (note 3A).................................. (1,046)
-----------------------------------------------------------------------------------
Total stockholder's equity.................................... 207,791
-----------------------------------------------------------------------------------
Total liabilities and stockholder's equity.................... $3,397,527
-----------------------------------------------------------------------------------
See notes to financial statements.
/TABLE
<PAGE>
PAGE 5
<TABLE><CAPTION>
IDS CERTIFICATE COMPANY
STATEMENT OF OPERATIONS Unaudited
Six Months Ended June 30, 1996
($ thousands)
-----------------------------------------------------------------------------------
<S> <C>
Investment Income:
Interest income from investments:
Bonds and notes:
Unaffiliated issuers........................................ $97,224
Mortgage loans on real estate:
Unaffiliated................................................ 10,187
Affiliated.................................................. 23
Certificate loans............................................. 1,313
Dividends....................................................... 21,804
Other........................................................... 271
-----------------------------------------------------------------------------------
Total investment income......................................... 130,822
-----------------------------------------------------------------------------------
Investment Expenses:
Parent and affiliated company fees (note 7):
Distribution.................................................. 16,561
Investment advisory and services.............................. 8,966
Depositary.................................................... 118
Interest rate caps (note 9)..................................... 1,954
Options (note 9)................................................ 4,445
Other........................................................... 113
-----------------------------------------------------------------------------------
Total investment expenses....................................... 32,157
-----------------------------------------------------------------------------------
Net investment income before provision
for certificate reserves and income tax benefit............... $98,665
-----------------------------------------------------------------------------------
See notes to financial statements.
</TABLE>
<PAGE>
PAGE 6
<TABLE><CAPTION>
IDS CERTIFICATE COMPANY
STATEMENT OF OPERATIONS (Continued) Unaudited
Six Months Ended June 30, 1996
($ thousands)
-----------------------------------------------------------------------------------
<S> <C>
Provision for Certificate Reserves (notes 5 and 9):
According to the terms of the certificates:
Provision for certificate reserves............................ $5,316
Interest on additional credits................................ 774
Interest on advance payments.................................. 32
Additional credits/interest authorized by IDSC:
On fully paid certificates.................................... 84,723
On installment certificates................................... 2,932
-----------------------------------------------------------------------------------
Total provision before reserve recoveries....................... 93,777
Reserve recoveries from terminations prior to maturitiy......... (585)
-----------------------------------------------------------------------------------
Net provision for certificate reserves.......................... 93,192
-----------------------------------------------------------------------------------
Net investment income before income tax benefit................. 5,473
Income tax benefit (note 8)..................................... 4,311
-----------------------------------------------------------------------------------
Net investment income........................................... 9,784
-----------------------------------------------------------------------------------
Realized gain (loss) on investments - net:
Securities of unaffiliated issuers............................ (3,059)
Income tax benefit (note 8)..................................... 1,070
-----------------------------------------------------------------------------------
Net realized loss on investments................................ (1,989)
-----------------------------------------------------------------------------------
Net income - wholly owned subsidiary............................ 158
-----------------------------------------------------------------------------------
Net income ..................................................... $7,953
-----------------------------------------------------------------------------------
See notes to financial statements.
</TABLE>
<PAGE>
PAGE 7
<TABLE><CAPTION>
IDS CERTIFICATE COMPANY
STATEMENT OF STOCKHOLDER'S EQUITY Unaudited
Six Months Ended June 30, 1996
($ thousands)
-----------------------------------------------------------------------------------
<S> <C>
Common Stock:
Balance at beginning and end of period.......................... $1,500
-----------------------------------------------------------------------------------
Additional Paid-in-capital:
Balance at beginning and end of period.......................... $168,844
-----------------------------------------------------------------------------------
Retained Earnings:
Appropriated for predeclared additional
credits/interest (note 5B):
Balance at beginning of period.................................. $18,878
Transferred to unappropriated retained earnings................. (3,638)
-----------------------------------------------------------------------------------
Balance at end of period........................................ $15,240
-----------------------------------------------------------------------------------
Appropriated for additional interest on advance payments (note 5C):
Balance at beginning and end of period.......................... $50
-----------------------------------------------------------------------------------
Unappropriated (note 6):
Balance at beginning of period.................................. $31,612
Net income ..................................................... 7,953
Transferred from appropriated retained earnings................. 3,638
Cash dividends declared......................................... (20,000)
-----------------------------------------------------------------------------------
Balance at end of period........................................ $23,203
-----------------------------------------------------------------------------------
Unrealized holding gains (losses) on investment
securities - net (note 3A):
Balance at beginning of period.................................. $29,423
Change during period............................................ (30,469)
-----------------------------------------------------------------------------------
Balance at end of period........................................ ($1,046)
-----------------------------------------------------------------------------------
See notes to financial statements.
</TABLE>
<PAGE>
PAGE 8
<TABLE><CAPTION>
IDS CERTIFICATE COMPANY
STATEMENT OF CASH FLOWS Unaudited
Six Months Ended June 30, 1996
($ thousands)
-----------------------------------------------------------------------------------
<S> <C>
Cash flows from operating activities:
Net income...................................................... $7,953
Adjustments to reconcile net income to net
cash provided by operating activities:
Net income of wholly owned subsidiary......................... (158)
Certificate reserves.......................................... 93,192
Interest income added to certificate loans.................... (823)
Amortization of premium/discount-net.......................... 7,184
Deferred federal income taxes................................. 227
Deferred distribution fees.................................... 1,295
Net loss on investments....................................... 3,059
Decrease in dividends and interest receivable................. 6,328
Decrease in other liabilities................................. (563)
-----------------------------------------------------------------------------------
Net cash provided by operating activities....................... 117,694
-----------------------------------------------------------------------------------
Cash flows from investing activities:
Maturity and redemption of investments:
Held-to-maturity securities................................... 115,364
Available-for-sale securities................................. 288,348
Other investments............................................. 21,810
Sale of investments:
Held-to-maturity securities................................... 314
Available-for-sale securities................................. 347,730
Certificate loan payments....................................... 3,444
Purchase of investments:
Held-to-maturity securities................................... (12,650)
Available-for-sale securities................................. (230,291)
Other investments............................................. (5,984)
Certificate loan fundings....................................... (2,463)
-----------------------------------------------------------------------------------
Net cash provided by investing activities....................... 525,622
-----------------------------------------------------------------------------------
Cash flows from financing activities:
Reserve payments by certificate holders......................... 560,796
Certificate maturities and cash surrenders...................... (1,123,138)
Dividends paid.................................................. (20,000)
-----------------------------------------------------------------------------------
Net cash used in financing activities........................... (582,342)
-----------------------------------------------------------------------------------
Net increase in cash and cash equivalents....................... 60,974
Cash and cash equivalents beginning of period................... 56,873
-----------------------------------------------------------------------------------
Cash and cash equivalents end of period......................... $117,847
-----------------------------------------------------------------------------------
Supplemental disclosures including non-cash transactions:
Cash received for income taxes.................................. $7,661
Certificate maturities and surrenders through loan reductions... 4,745
See notes to financial statements.
</TABLE>
<PAGE>
PAGE 9
IDS CERTIFICATE COMPANY
Notes to Financial Statements ($ in thousands unless indicated
otherwise) (Unaudited)
- -------------------------------------------------------------------
1. Nature of Business and Summary of Significant Accounting
Policies
IDS Certificate Company (IDSC) is a wholly owned subsidiary of
American Express Financial Corporation (Parent), which is a wholly
owned subsidiary of American Express Company. IDSC is registered
as an investment company under the Investment Company Act of 1940
("the 1940 Act") amd is in the business of issuing face-amount
investment certificates. The certificates issued by IDSC are not
insured by any government agency. IDSC's certificates are sold
primarily by American Express Financial Advisors Inc.'s (an
affiliate) field force operating in 50 states, the District of
Columbia and Puerto Rico. IDSC's Parent acts as investment advisor
for IDSC.
IDSC currently offers eight types of certificates with specified
maturities ranging from four to twenty years. Within their
specified maturity, most certificates have interest rate terms of
one to thirty-six months. In addition, one type of certificate has
interest tied, in whole or in part, to any upward movement in a
broad-based stock market index. Except for two types of
certificates, all of the certificates are available as qualified
investments for Individual Retirement Accounts or 401(k) plans and
other qualified retirement plans.
IDSC's gross income is derived primarily from interest and
dividends generated by its investments. IDSC's net income is
determined by deducting from such gross income its provision for
certificate reserves, and other expenses, including taxes, the fee
paid to Parent for investment advisory and other services, and the
distribution fees paid to American Express Financial Advisors Inc.
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 in accordance
with generally accepted accounting principles. IDSC uses the
equity method of accounting for its wholly owned unconsolidated
subsidiary, which is the method prescribed by the Securities and
Exchange Commission (SEC) for issuers of face-amount certificates.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities and the reported amounts of income and expenses during
the six months then ended. Actual results could differ from those
estimates.
<PAGE>
PAGE 10
Notes to Financial Statements (continued)
- -------------------------------------------------------------------
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.
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,
net of deferred income taxes, as a separate component of
stockholder's equity.
The basis for determining cost in computing realized gains and
losses on securities is specific identification. When there is a
decline in value that is other than temporary, the securities are
carried at estimated realizable value with the amount of adjustment
included in income.
First Mortgage Loans on Real Estate
Mortgage loans are carried at amortized cost, less reserve for
losses, which is the basis for determining any realized gains or
losses.
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 1940 Act.
<PAGE>
PAGE 11
Notes to Financial Statements (continued)
- -------------------------------------------------------------------
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 Parent 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 Parent and its
subsidiaries that Parent will reimburse a subsidiary for any tax
benefits recorded.
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 $3,149,496 at
June 30, 1996. IDSC had qualified assets of $3,358,171 at June 30,
1996, excluding net unrealized depreciation on available-for-sale
securities of $1,610 and payable for securities purchased of
$13,970.
Qualified assets are valued in accordance with such provisions of
Minnesota Statutes as are applicable to investments of life
insurance companies. Qualified assets for which no provision for
valuation is made in such statutes 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 amortized cost for qualified asset
and deposit maintenance purposes.
<PAGE>
PAGE 12
Notes to Financial Statements (continued)
- -------------------------------------------------------------------
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, 1996 were deposited as
follows:
<TABLE><CAPTION>
Required
Deposits deposits Excess
----------------------------------------------------------------------------------
<S> <C> <C> <C>
Deposits to
meet certificate
liability
requirements:
States............. $ 362 $ 331 $ 31
Central Depositary. 3,264,429 3,087,281 177,148
----------------------------------------------------------------------------------
Total.............. $3,264,791 $3,087,612 $177,179
----------------------------------------------------------------------------------
</TABLE>
The assets on deposit consisted of securities having a deposit
value of $3,028,849, mortgage loans of $220,569 and other assets of
$15,373. Mortgage loans on deposit include an affiliated mortgage
loan.
American Express Trust Company is the central depositary for IDSC.
See note 7C.
3. Investments in Securities
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, 1996
<TABLE><CAPTION>
Securities Held to Maturity
-----------------------------------------------------
Gross Gross
Amortized Fair unrealized unrealized
Cost value gains losses
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Government and
agencies obligations..... $ 362 $ 362 $ 3 $ 3
Mortgage-backed
securities............... 44,069 43,967 785 887
Corporate debt
securities............... 288,219 294,664 8,100 1,655
Stated maturity
preferred stock.......... 567,608 577,760 14,172 4,020
----------------------------------------------------------------------------------
Total $ 900,258 $ 916,753 $23,060 $6,565
----------------------------------------------------------------------------------
Securities Available for Sale
-----------------------------------------------------
Gross Gross
Amortized Fair unrealized unrealized
Cost value gains losses
----------------------------------------------------------------------------------
Mortgage-backed
securities............... $ 989,855 $ 990,470 $ 9,492 $8,877
State and municipal
obligations.............. 70,284 72,455 2,174 3
Corporate debt
securities............... 917,077 912,858 6,005 10,224
Stated maturity
preferred stock.......... 27,811 27,634 138 315
Common stock............... 605 605 - -
----------------------------------------------------------------------------------
Total $2,005,632 $2,004,022 $17,809 $19,419
----------------------------------------------------------------------------------
</TABLE>
At June 30, 1996, there were no securities classified as trading
securities.
During the six months ended June 30, 1996, debt securities
classified as available for sale were sold with proceeds of
$309,639 and gross realized gains on such sales of $330 and gross
realized losses on such sales of $5,624.
During the six months ended June 30, 1996, a held-to-maturity
security was sold with an amortized cost of $314. A loss of $14
was realized on the sale. The security was sold due to significant
credit deterioration.
There were no transfers from securities classified as held to
maturity during the six months ended June 30, 1996.<PAGE>
PAGE 14
Notes to Financial Statements (continued)
- -------------------------------------------------------------------
B) At June 30, 1996, investments in securities with fixed
maturities comprised 87% of IDSC's total invested assets.
Securities are rated by Moody's and Standard & Poor's (S&P), or by
Parent's 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...................... 39%
Aa/AA........................ 2
Aa/A......................... 2
A/A.......................... 21
A/BBB........................ 7
Baa/BBB...................... 24
Below investment grade....... 5
---------------------------------
100%
---------------------------------
Of the securities rated Aaa/AAA, 91% are U.S. Government Agency
mortgage-backed securities that are not rated by a public rating
agency. Approximately 8% of other securities with fixed maturities
are rated by Parent's Internal analysts. No investment in any one
issuer is greater than 1% of IDSC's total investment in securities
with fixed maturities.
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.
<PAGE>
PAGE 15
Notes to Financial Statements (continued)
- -------------------------------------------------------------------
4. Investments in First Mortgage Loans on Real Estate
At June 30, 1996, approximately 7% 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:
<TABLE><CAPTION>
Region Property Type
--------------------------------- -------------------------------
<S> <C> <C> <C>
South Atlantic............... 24% Apartments................. 38%
East North Central........... 23 Shopping centers........... 33
West North Central........... 20 Industrial buildings....... 13
Middle Atlantic.............. 14 Office buildings........... 7
Mountain..................... 9 Other...................... 9
West South Central........... 4
Pacific...................... 3
New England.................. 3
East South Central........... -
--------------------------------- -------------------------------
100% 100%
--------------------------------- -------------------------------
</TABLE>
Under SFAS No. 114, impairment of first mortgage loans is measured
as the excess of the loan's recorded investment over its present
value of expected principal and interest payments discounted at the
loan's effective interest rate, or the fair value of collateral.
The amount of the impairment is recorded in a reserve for loss on
mortgage loans.
Based on management's judgement as to the ultimate collectibility
of principal, interest payments received are either recognized as
income or applied to the recorded investment in the loan until it
has been recovered.
The reserve for loss on mortgage loans is maintained at a level
that management believes is appropriate to absorb estimated credit
losses in the mortgage loan portfolio. The level of the reserve
account is determined based on several factors, including
historical experience, expected future principal and interest
payments, estimated collateral values, and current and anticipated
economic and political conditions. Management regularly evaluates
the adequacy of the reserve for loss on mortgage loans.
At June 30, 1996, IDSC's recorded investment in impaired mortgage
loans was $930 and the reserve for loss on that amount was $611.
During the first six months of 1996, the average recorded
investment in impaired mortgage loans was $961.
IDSC recognized $45 of interest income related to impaired mortgage
loans for the six months ended June 30, 1996.
There were no changes in the reserve for loss on mortgage loans
during the six months ended June 30, 1996.
<PAGE>
PAGE 16
Notes to Financial Statements (continued)
- -------------------------------------------------------------------
At June 30, 1996, there were no commitments for fundings of first
mortgage loans outstanding. If there were any commitments, IDSC
employees 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.
5. 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, 1996 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..................... $ 35,941 3.50% 1.35%
Without guaranteed rates (A).............. 300,624 - 2.98
Additional credits and accrued interest... 21,942 3.13 -
Advance payments and accrued interest (C). 1,288 3.14 1.71
Other..................................... 56 - -
Fully paid certificates:
Reserves to mature:
With guaranteed rates..................... 197,780 3.23 1.83
Without guaranteed rates (A).............. 2,450,545 - 5.07
Additional credits and accrued interest... 154,402 3.25 -
Due to unlocated certificate holders...... 308 - -
----------------------------------------------------------------------------------
$3,162,886
----------------------------------------------------------------------------------
</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.
B) On certain series of single payment certificates, additional
interest is predeclared for periods greater than one year. At June
30, 1996, $15,240 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 3.14%. IDSC has
increased the rate of accrual to 4.85% through April 30, 1997. An
appropriation of retained earnings amounting to $50 has been made,
which represents the estimated additional accrual that will result
from the increase granted by IDSC.
<PAGE>
PAGE 17
Notes to Financial Statements (continued)
- -------------------------------------------------------------------
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, 1996 was $260,279.
6. Dividend Restriction
Certain series of installment certificates outstanding provide that
cash dividends may be paid by IDSC only in calendar years for which
additional credits of at least one-half of 1% on such series of
certificates have been authorized by IDSC. This restriction has
been removed for 1996 and 1997 by action of IDSC on additional
credits in excess of this requirement.
7. Fees Paid to IDS and Affiliated Companies ($ not in thousands)
A) The basis of computing fees paid or payable to Parent for
investment advisory and services is:
The investment advisory and services agreement with Parent 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 American Express
Financial Advisors Inc. (an affiliate) for distribution services
is:
Fees payable to American Express Financial Advisors Inc. on sales
of IDSC's certificates are based upon terms of agreements giving
American Express Financial Advisors 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 18
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
the 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
American Express Trust Company (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
<PAGE>
PAGE 19
Notes to Financial Statements (continued)
- -------------------------------------------------------------------
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.
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 1.25% of the
reserves maintained for the certificates on an amount from $100,000
to $249,000, 0.80% 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.
8. Federal Income Taxes
The federal income tax rate applicable to income of IDSC for the
six months ended June 30, 1996 was based on the effective tax rate
expected to be applicable for the full fiscal year ending Dec. 31,
1996.
A reconciliation of the statutory federal income tax rate and the
expected federal income tax rate at Dec. 31, 1996 is:
<TABLE><CAPTION>
Rate
----------------------------------------------------------------------------------
<S> <C>
Statutory federal income tax rate....................... 35.0%
Tax-exempt interest..................................... (15.4)
Dividend exclusion...................................... (51.0)
----------------------------------------------------------------------------------
Expected federal income tax rate........................ (31.4)
----------------------------------------------------------------------------------
</TABLE>
9. Derivative Financial Instruments
IDSC enters into transactions involving derivative financial
instruments as an end user (nontrading). IDSC uses these
instruments to manage its exposure to interest rate risk, including
hedging specific transactions. IDSC manages risks associated with
these instruments as described below.
Market risk is the possibility that the value of the derivative
financial instrument will change due to fluctuations in a factor
from which the instrument derives its value, primarily an interest
rate or a major market index. IDSC is not impacted by market risk
related to derivatives held because derivatives are largely used to
manage risk and, therefore, the cash flows and income effects of
the derivatives are inverse to the effects of the underlying hedged
transactions.
<PAGE>
PAGE 20
Notes to Financial Statements (continued)
- -------------------------------------------------------------------
Credit exposure is the possibility that the counterparty will not
fulfill the terms of the contract. IDSC monitors credit exposure
related to derivative financial instruments through established
approval procedures, including setting concentration limits by
counterparty, reviewing credit ratings and requiring collateral
where appropriate. The majority of IDSC's counterparties to the
interest rate caps are rated A or better by nationally recognized
rating agencies. The counterparties to the call options are five
major broker/dealers.
The notional or contract amount of a derivative financial
instrument is generally used to calculate the cash flows that are
received or paid over the life of the agreement. Notional amounts
do not represent market risk or credit exposure and are not
recorded on the balance sheet.
Credit exposure related to derivative financial instruments is
measured by the replacement cost of those contracts at the balance
sheet date. The replacement cost represents the fair value of the
instrument, and is determined by market values, dealer quotes or
pricing models.
IDSC's holdings of derivative financial instruments were as follows
at June 30, 1996.
<TABLE><CAPTION>
Notional Total
or contract Carrying Fair credit
amount value value exposure
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Interest rate caps.......... $500,000 $ 962 $ 1,019 $ 1,019
Purchased call options...... 196,904 24,427 22,858 22,858
----------------------------------------------------------------------------------
Total $696,904 $25,389 $23,877 $23,877
----------------------------------------------------------------------------------
LIABILITIES:
Written call options........ $183,506 $ 5,798 $ 8,413 $ -
----------------------------------------------------------------------------------
</TABLE>
The fair values of derivative financial instruments are based on
market values, dealer quotes or pricing models. The interest rate
caps expire on various dates from 1996 to 1997. The options expire
in 1996 and 1997.
Interest rate caps and options are used to manage IDSC's exposure
to rising interest rates. These instruments are used primarily to
protect the margin between the interest rate earned on investments
and the interest accrued to related investment certificate holders.
The interest rate caps are quarterly reset caps and IDSC earns
interest 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 5% to 9%. The cost
of these caps of $962 at June 30, 1996, is being amortized over the<PAGE>
PAGE 21
Notes to Financial Statements (continued)
- -------------------------------------------------------------------
terms of the agreements on a straight line basis and is included in
other qualified assets. The amortization, net of any interest
earned, is included in investment expenses.
IDSC offers a series of certificates which pay interest based upon
the relative change in a major stock market index between the
beginning and end of the certificates' term. The certificate
holders have the option of participating in the full amount of
increase in the index during the term (subject to a specified
maximum) or a lesser percentage of the increase plus a guaranteed
minimum rate of interest. As a means of hedging its obligations
under the provisions of these certificates, IDSC purchases and
writes call options on the major market index. The options are
cash settlement options, that is, there is no underlying security
to deliver at the time the contract is closed out.
The option contracts are less than one year in term. The premiums
paid or received on these index options are reported in other
qualified assets or liabilities, as appropriate, and are amortized
into investment expenses over the life of the option. The
intrinsic value of these index options is also reported in other
qualified assets or other liabilities, as appropriate. The
unrealized gains and losses related to the changes in the intrinsic
value of these options are recognized currently in provision for
certificate reserves.
<PAGE>
PAGE 22
<TABLE><CAPTION>
IDS CERTIFICATE COMPANY Schedule I
Investments in Securities of Unaffiliated Issuers
June 30, 1996
($ in thousands)
Bal. held
at 6-30-96
Principal
Amount of Cost Value at
Bonds (Notes 6-30-96
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
---------------------------------- ----------- ---------- ----------
<S> <C> <C> <C>
BONDS AND NOTES
United States Government -
Direct Obligations
US TREASURY BOND 6.875%, 2000 $ 165 $ 165 $ 168
US TREASURY BOND 5.625%, 2000 200 197 194
----------- ---------- ----------
Total U.S. Government - Direct Obligations 365 362 362
----------- ---------- ----------
Other Bonds and Notes
United States Government Agencies
FHLMC 5 YR #G50152 7.000%, 1999 7,981 7,886 8,018 (f)
FHLMC 5YR*G50252 7.500%, 2000 30,900 31,071 31,064 (f)
FHLMC 5YR G50281 GOL 6.500%, 2000 22,558 22,685 22,389 (f)
FHLMC 15YR #G10336 7.500%, 2010 8,162 8,031 8,206 (f)
FHLMC 15YR #10342 7.000%, 2010 25,415 24,741 25,097 (f)
FHLMC 15YR #G10344 G 7.500%, 2010 19,591 19,501 19,695 (f)
FHLMC 15 #G10350 GLD 6.500%, 2010 25,148 25,088 24,346 (f)
FHLMC 15YR G10364 7.000%, 2010 21,768 21,651 21,496 (f)
FHLM 15 6.5 #G10369 6.500%, 2010 44,893 44,320 43,627 (f)
FHLMC 15YR GOLD 6.500%, 2010 22,771 22,656 22,045 (f)
FHLMC ARM #845154 7.908%, 2022 5,976 6,165 6,116 (f)
FHLMC ARM #845523 7.790%, 2023 8,381 8,627 8,588 (f)
FHLMC ARM #845654 7.710%, 2024 22,820 23,159 23,477 (f)
FHLMC ARM #845730 7.584%, 2024 34,155 35,289 34,886 (f)
FHLMC ARM #845733 7.451%, 2024 33,951 34,563 34,872 (f)
FHLMC ARM #845973 7.646%, 2024 11,290 11,290 11,610 (f)
FHLMC ARM #845999 7.552%, 2027 26,715 26,952 27,415 (f)
FHLMC 30YR #846072 7.732%, 2022 7,384 7,572 7,594 (f)
FHLMC ARM #846107 7.906%, 2025 11,673 11,945 11,997 (f)
FHLMC 1268 E CMO 7.400%, 2016 6,462 6,476 6,500 (f)
FHLMC ARM #350190 7.375%, 2022 7,400 7,627 7,596 (f)
FHLMC 1379 C CMO 5.600%, 2011 6,921 6,897 6,899 (f)
FHLMC GOLD E00151 7.500%, 2017 9,434 9,691 9,484 (f)
FHLMC 15YR #E00383 7.000%, 2010 22,310 22,274 22,032 (f)
FHLMC 1717B PAC CMO 5.250%, 2008 14,590 14,481 14,522 (f)
FHLMC-GNMA 40 D CMO 6.500%, 2011 20,458 19,965 20,435 (f)
FHLMC 188537 (2) 5.750%, 1998 2 2 2 (f)
FHLMC 4C CMO 8.000%, 2017 4,777 4,794 4,815 (f)
FHLMC CTF SER B-76 8.375%, 2006 140 140 130 (f)
FHLMC CTF SER B-77 8.125%, 2007 195 194 187 (f)
FHLMC 15YR #380025 9.500%, 2003 998 992 1,044
FHLMC 15 YR #200017 11.000%, 2000 630 644 664 (f)
FHLMC 15 YR #200018 11.000%, 2000 402 411 423 (f)
FHLMC 15 YR #200020 11.000%, 2000 594 607 625 (f)
FHLMC 15 YR #200022 10.500%, 2000 122 124 128 (f)
<PAGE>
PAGE 23
Bal. held
at 6-30-96
Principal
Amount of Cost Value at
Bonds (Notes 6-30-96
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
---------------------------------- ----------- ---------- ----------
FHLMC 15 YR #200035 9.000%, 2001 443 437 458 (f)
FHLMC 15 YR #200048 9.000%, 2001 982 966 1,015
FHLMC 15 YR #200064 8.000%, 2002 577 558 584 (f)
FHLMC 15 YR #212119 9.500%, 2001 194 195 203 (f)
FHLMC 15 YR #218648 9.500%, 2002 65 65 68 (f)
FHLMC 15 YR #219392 11.000%, 2001 209 214 215 (f)
FHLMC 15 YR #219679 9.500%, 2003 816 810 855 (f)
FHLMC 15 YR #219757 11.000%, 2003 2,458 2,562 2,588
FHLMC 15 YR #240001 9.500%, 1997 2,734 2,731 2,780
FHLMC 10 YR #490009 9.000%, 1997 1,887 1,886 1,946
FHLMC 10 YR #490011 10.000%, 1997 359 361 373 (f)
FHLMC 15 YR #500155 11.000%, 2001 578 591 609 (f)
FHLMC 15 YR #500294 11.000%, 2003 229 237 238 (f)
FHLMC 15 YR #500456 11.000%, 2002 301 309 312 (f)
FHLMC 15 YR #502175 10.500%, 2004 324 329 340 (f)
FHLMC ARM #605041 7.934%, 2019 637 637 655 (f)
FHLMC ARM #605048 7.565%, 2018 1,471 1,471 1,509 (f)
FHLMC ARM #605050 7.891%, 2018 507 507 521 (f)
FHLMC ARM 605079 WAC 7.737%, 2018 1,658 1,658 1,701 (f)
FHLMC ARM 605175 WAC 7.699%, 2019 3,825 3,825 3,927 (f)
FHLMC ARM #605352 7.535%, 2018 3,192 3,192 3,272 (f)
FHLMC ARM #401587 8.000%, 2018 2,327 2,327 2,394 (f)
FHLMC ARM #630048 7.750%, 2018 176 176 181 (f)
FHLMC ARM #630074 7.875%, 2018 592 592 604 (f)
FHLMC ARM 840031 WAC 7.978%, 2019 504 504 519 (f)
FHLMC ARM #840035 7.716%, 2019 1,637 1,637 1,686 (f)
FHLMC ARM #840036 7.783%, 2019 2,035 2,035 2,091 (f)
FHLMC ARM #840045 7.742%, 2019 4,142 4,142 4,252 (f)
FHLMC ARM #840072 7.475%, 2019 2,177 2,177 2,238 (f)
FHLMC ARM #405014 7.709%, 2019 1,074 1,074 1,103 (f)
FHLMC ARM #405092 7.632%, 2019 1,813 1,813 1,862 (f)
FHLMC ARM #405185 7.515%, 2018 2,583 2,583 2,649 (f)
FHLMC ARM #405243 7.161%, 2019 1,110 1,110 1,137 (f)
FHLMC ARM #405249 7.587%, 2018 3,524 3,524 3,617 (f)
FHLMC ARM #405360 7.696%, 2019 977 977 1,004 (f)
FHLMC ARM #405437 7.795%, 2019 291 291 299 (f)
FHLMC ARM #405455 7.770%, 2019 1,595 1,595 1,639 (f)
FHLMC ARM #405517 7.895%, 2019 643 643 661 (f)
FHLMC ARM #405615 7.486%, 2019 992 992 1,018 (f)
FHLMC ARM #405675 8.116%, 2020 2,100 2,100 2,162 (f)
FHLMC ARM #405692 8.384%, 2020 2,651 2,651 2,734 (f)
FHLMC ARM #405744 8.153%, 2020 1,675 1,675 1,725 (f)
FHLMC ARM #605432 7.635%, 2017 766 766 785 (f)
FHLMC ARM #605433 7.302%, 2017 2,044 2,044 2,094 (f)
FHLMC ARM #605454 7.801%, 2017 5,307 5,307 5,444 (f)
FHLMC ARM 605853 WAC 7.724%, 2019 4,192 4,192 4,305 (f)
FHLMC ARM #605854 7.548%, 2019 3,590 3,590 3,684 (f)
FHLMC ARM #606024 6.830%, 2019 1,616 1,617 1,654 (f)
FHLMC ARM #606025 6.956%, 2019 6,250 6,250 6,394 (f)
FHLMC ARM #606151 7.841%, 2019 5,051 5,051 5,193 (f)
FHLMC ARM #635054 7.953%, 2020 331 331 343 (f)
FHLMC ARM #785363 6.985%, 2025 15,154 15,358 15,528 (f)
<PAGE>
PAGE 24
Bal. held
at 6-30-96
Principal
Amount of Cost Value at
Bonds (Notes 6-30-96
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
---------------------------------- ----------- ---------- ----------
FHLMC ARM #865008 7.978%, 2018 8,035 8,035 8,220 (f)
FHLMC LOANS #885005 9.500%, 2002 1,757 1,745 1,839 (f)
FHLMC LOANS #885008 10.000%, 2003 2,909 2,926 3,046 (f)
FHLMC 15 YR #885009 9.500%, 2003 4,385 4,359 4,590
FHLMC ARM #606301 8.013%, 2020 6,969 6,969 7,170 (f)
FHLMC ARM #606903 6.962%, 2022 2,343 2,364 2,378 (f)
FNMA 92 12 H 6.625%, 2019 9,420 9,420 9,412 (f)
FNMA 1992-5 C 7.000%, 2016 3,374 3,358 3,381 (f)
FNMA 92-21D VANILLA 6.650%, 2018 2,365 2,330 2,363 (f)
FNMA 92 203 E CMO 6.250%, 2005 10,000 9,742 9,921 (f)
FNMA 93-62 B CMO 6.500%, 2017 7,520 7,239 7,449 (f)
FNMA 93-163 PB CMO 4.750%, 2008 1,663 1,663 1,657 (f)
FNMA 95 2 T CMO 8.500%, 2021 10,000 9,988 10,249 (f)
FNMA 95-T2 A3 CMO 6.610%, 2018 10,000 9,995 9,597 (f)
FNMA 15 YR #2469 11.000%, 2000 32 33 34 (f)
FNMA 15 YR #13157 11.000%, 2000 27 27 28 (f)
FNMA 15 YR #13548 11.000%, 2000 76 77 80 (f)
FNMA 15 YR #13705 11.000%, 2000 97 99 103 (f)
FNMA 15 YR #18275 11.000%, 2000 10 11 11 (f)
FNMA 15 YR #18745 11.000%, 2000 17 17 18 (f)
FNMA 15 YR #18986 11.000%, 2000 11 12 12 (f)
FNMA 15 YR #19070 11.000%, 2000 10 10 10 (f)
FNMA 15 YR #19261 11.000%, 2000 38 38 40 (f)
FNMA 15 YR #22271 11.000%, 2000 46 46 48 (f)
FNMA 15 YR #22405 11.000%, 2000 112 114 118 (f)
FNMA 15 YR #22569 11.000%, 2000 127 130 134 (f)
FNMA 15 YR #22674 11.000%, 2000 37 38 39 (f)
FNMA 15 YR #25899 11.000%, 2001 28 29 30 (f)
FNMA 30 YR #27880 9.000%, 2016 107 110 112 (f)
FNMA 15 YR #34543 9.250%, 2001 429 429 452 (f)
FNMA 30 YR #36225 9.000%, 2016 314 319 327 (f)
FNMA 30 YR #040877 9.000%, 2017 195 200 203 (f)
FNMA 15 6.0 #50973 6.000%, 2009 45,835 44,766 43,386 (f)
FNMA 30 YR #51617 10.000%, 2017 284 287 308 (f)
FNMA 30 YR #52185 10.000%, 2017 73 74 79 (f)
FNMA 30 YR #52596 10.000%, 2017 19 19 21 (f)
FNMA 15 YR #58405 11.000%, 2003 33 34 35 (f)
FNMA 15 YR #64520 11.000%, 2001 71 73 76 (f)
FNMA 15 YR #64523 11.000%, 2000 130 132 138 (f)
FNMA 15 YR #66458 10.000%, 2004 4,772 4,816 5,020
FNMA ARM #70007 MEGA 7.282%, 2017 2,659 2,659 2,734 (f)
FNMA ARM #70009 MEGA 7.235%, 2018 4,096 4,096 4,213 (f)
FNMA ARM #70117 7.209%, 2017 900 900 925 (f)
FNMA ARM #70202 7.393%, 2019 2,937 2,937 3,024 (f)
FNMA 15 YR #70299 10.750%, 2001 325 334 344 (f)
FNMA 15 YR 70694 MEG 9.500%, 2005 2,696 2,717 2,832
FNMA #73227 MULT-FAM 6.700%, 2005 3,042 3,079 2,879 (f)
FNMA ARM #79384 8.290%, 2019 1,067 1,067 1,105 (f)
FNMA ARM #88879 8.783%, 2019 2,919 2,919 3,014 (f)
FNMA ARM #89125 7.125%, 2019 7,662 7,832 7,825 (f)
FNMA ARM #92069 FLEX 7.862%, 2018 3,828 3,828 3,966 (f)
FNMA ARM #93787 7.697%, 2019 3,516 3,516 3,639 (f)
<PAGE>
PAGE 25
Bal. held
at 6-30-96
Principal
Amount of Cost Value at
Bonds (Notes 6-30-96
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
---------------------------------- ----------- ---------- ----------
FNMA ARM #97822 7.444%, 2020 687 687 708 (f)
FNMA ARM #105989 8.416%, 2020 2,559 2,559 2,639 (f)
FNMA 15YR #124848 8.000%, 2008 17,439 17,388 17,804 (f)
FNMA 15YR 190534 6.000%, 2018 23,403 23,040 22,152
FNMA ARM #190726 7.334%, 2033 16,634 16,975 17,216 (f)
FNMA 7YR 190778 BALN 6.000%, 2001 58,546 57,874 56,406 (f)
FNMA ARM #249907 7.725%, 2024 19,911 20,214 20,524 (f)
FNMA 10YR #303115 6.500%, 2004 19,447 18,310 19,161 (f)
FNMA ARM #303259 7.651%, 2025 8,927 9,177 9,200 (f)
FNMA 15YR #303445 5.500%, 2009 22,957 21,944 21,257 (f)
FNMA 7YR #303448 BLN 6.500%, 2002 26,283 26,319 25,799 (f)
GNMA ARM 1 YR #8157 6.500%, 2023 7,625 7,760 7,678 (f)
GNMA ARM #8206 6.500%, 2017 1,641 1,641 1,650 (f)
GNMA ARM #8240 7.250%, 2017 1,227 1,211 1,238 (f)
GNMA ARM #8251 7.250%, 2017 97 97 98 (f)
GNMA ARM #8274 7.000%, 2017 3,267 3,264 3,294 (f)
GNMA ARM #8283 7.000%, 2017 422 420 425 (f)
GNMA ARM #8293 7.000%, 2017 742 742 748 (f)
GNMA ARM #8341 7.375%, 2018 174 172 175 (f)
GNMA ARM #8353 7.375%, 2018 1,399 1,390 1,412 (f)
GNMA ARM #8365 7.375%, 2018 2,477 2,477 2,500 (f)
GNMA ARM #8377 7.250%, 2018 1,136 1,133 1,145 (f)
GNMA ARM #8428 7.000%, 2018 485 485 489 (f)
GNMA ARM #8440 7.000%, 2018 1,202 1,202 1,212 (f)
GNMA ARM #8638 6.000%, 2025 28,243 28,481 27,951 (f)
GNMA POOL #2480 5.250%, 1997 1 1 1 (f)
CSFBMSC95-FHA1 A1CMO 6.665%, 2025 9,828 9,828 9,729 (f)
----------- ---------- ----------
Total United States Government Agencies 1,035,408 1,033,924 1,034,437
----------- ---------- ----------
Municipal Bonds
California
CA HSG FIN 1996-M 7.890%, 2016 8,925 8,925 8,925 (b)(f)
SOUTHERN CA PUB PWR 6.900%, 1999 1,000 993 1,027 (b)(f)
SOUTHERN CA PUB PWR 7.000%, 2000 1,215 1,204 1,248 (b)(f)
Florida
FLORIDA MUNI POWER 7.200%, 2000 3,450 3,431 3,550 (b)(f)
Georgia
ATLANTA GA REC AUTH 8.000%, 1997 1,000 999 1,018 (b)(f)
MET ATLANTA GA RTA 8.000%, 1996 2,000 2,000 2,001 (b)(f)
Illinois
CHICAGO IL GAS SPY SRC 7.500%, 2015 4,500 4,500 4,892 (b)(f)
CHICAGO IL SAN DIST 9.250%, 2000 1,000 1,069 1,146 (b)(f)
CHICAGO IL BLDG REV 8.000%, 1997 3,000 2,998 3,065 (b)(f)
CHICAGO IL BLDG COMM 8.000%, 1998 1,800 1,794 1,906 (b)(f)
Indiana
INDIANAPOLIS IN ARPT 8.100%, 1996 375 375 375 (b)(f)
<PAGE>
PAGE 26
Bal. held
at 6-30-96
Principal
Amount of Cost Value at
Bonds (Notes 6-30-96
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
---------------------------------- ----------- ---------- ----------
INDIANAPOLIS IN ARPT 8.300%, 1997 1,100 1,100 1,122 (b)(f)
INDIANAPOLIS IN ARPT 8.500%, 1998 750 750 765 (b)(f)
INDIANAPOLIS IN REV 7.600%, 1999 1,000 998 1,038 (b)(f)
INDIANAPOLIS IN REV 7.700%, 2000 1,000 998 1,042 (b)(f)
Minnesota
WEST MN MUNI POWER 10.250%, 2015 3,120 3,345 3,542 (b)(f)
New Jersey
OCEAN COUNTY NJ UTIL 8.150%, 1997 400 400 409 (b)(f)
New York
NY MUNI ASSIST CORP 7.000%, 2000 2,100 2,071 2,143 (b)(f)
NEW YORK CITY GO 9.750%, 1996 8,000 7,999 8,030 (b)(f)
NEW YORK CITY NT GO 7.750%, 2000 335 335 344 (b)(f)
NEW YORK PWR AUTH 9.500%, 2001 355 377 385 (b)(f)
North Carolina
NC MUNI POWER 8.400%, 1997 2,000 2,000 2,042 (b)(f)
Pennsylvania
WY VALLEY PA SWR 5.125%, 2007 145 145 142 (b)(f)
Texas
AUSTIN TX UTILITY 10.750%, 2015 3,735 4,183 4,513 (b)(f)
DALLAS TX CIVIC CENT 8.100%, 1997 925 925 943 (b)(f)
DALLAS TX CIVIC CENT 8.200%, 1998 1,025 1,024 1,046 (b)(f)
HARRIS CNTY TX TOLL 10.375%, 2014 5,300 5,526 5,810 (b)(f)
District of Columbia
DIST OF COLUMBIA GO 7.600%, 1997 4,900 4,897 5,008 (b)(f)
DIST OF COLUMBIA GO 7.600%, 1997 1,950 1,986 1,995 (b)(f)
Washington
KY SCH DIST 415 WA 7.100%, 1997 1,320 1,319 1,339 (b)(f)
KY SCH DIST 415 WA 7.200%, 1998 1,620 1,618 1,644 (b)(f)
----------- ---------- ----------
Total Municipal Bonds 69,345 70,284 72,455
----------- ---------- ----------
Public Utility
BAROID CORP 8.000%, 2003 5,000 4,986 5,406
BELL ATLANTIC FINL 5.300%, 1998 5,000 4,756 4,883 (f)
CHEVRON-HOWARD BELL 7.700%, 1997 149 149 150 (b)(d)
COLUMBIA GAS SYS 6.390%, 2000 10,000 10,037 9,797 (f)
DETROIT EDISON 6.280%, 2000 7,000 6,944 6,864 (f)
EL PASO ELEC CO 7.250%, 1999 2,000 2,000 1,967 (f)
GTE CORP 8.850%, 1998 3,000 3,053 3,114 (f)
HANNA M A 9.000%, 1998 5,000 5,072 5,187
INTL SPECIALTY PROD 9.000%, 1999 15,000 15,275 15,146
JERSEY CENTRAL P&L 6.040%, 2000 5,000 5,001 4,856
KANSAS CITY P&L 7.340%, 1999 10,000 10,000 10,126
NORAM ENERGY CORP 7.500%, 2000 5,000 4,978 5,069 (f)
<PAGE>
PAGE 27
Bal. held
at 6-30-96
Principal
Amount of Cost Value at
Bonds (Notes 6-30-96
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
---------------------------------- ----------- ---------- ----------
OCCIDENTAL PETROLEUM 6.410%, 2000 5,000 4,954 4,900 (f)
ORYX ENERGY 8.650%, 1999 15,000 15,000 15,262
PDV AMERICA 7.250%, 1998 3,000 2,994 2,984 (f)
PACIFIC GAS TRANS 6.640%, 2000 5,000 5,000 4,957 (f)
PENN POWER CO 9.000%, 1996 5,000 4,999 5,062
PRAXAIR INC 6.750%, 2003 5,000 4,735 4,905 (f)
PUBLIC SERVICE E & G 7.100%, 1997 5,000 5,001 5,033 (f)
SALTON SEA CL A 6.690%, 2000 7,982 7,982 7,871 (b)(d)(f)
SMITH INT`L INC 7.240%, 2001 10,000 10,000 10,000 (b)(d)(f)
SW BELL CAPITAL CORP 7.900%, 1996 9,000 8,999 9,075
TEXAS UTILITIES 6.370%, 2000 10,000 10,000 9,800 (f)
TOSCO CORP 7.000%, 2000 5,000 4,994 4,977 (f)
NOVACOR CHEMICALS 6.500%, 2000 10,000 9,967 9,790 (b)(d)(f)
----------- ---------- ----------
Total Public Utility 167,131 166,876 167,181
----------- ---------- ----------
Finance
AT&T CAPITAL CORP 6.990%, 1996 7,000 6,998 7,023 (f)
AT&T CAPITAL 6.200%, 2000 5,000 4,992 4,880 (f)
ALCO CAPITAL RES 7.330%, 1998 10,000 10,000 10,144 (f)
AMERICAN GEN FINANCE 7.850%, 1997 2,000 2,002 2,038 (f)
AMERICAN GENERAL FIN 6.470%, 2000 10,000 10,078 9,869 (f)
ARISTAR FINL 7.875%, 1999 3,000 2,997 3,091 (f)
ARISTAR INC 6.300%, 2000 15,000 14,988 14,718 (f)
BANK OF AMERICA 9.750%, 2000 10,000 10,401 11,018
BENEFICIAL CORP 9.250%, 1996 5,000 5,000 5,033 (f)
BENEFICIAL CORP 6.450%, 2000 10,000 10,051 9,897 (f)
CIT GROUP HOLDINGS 7.000%, 1997 5,000 4,980 5,051 (f)
CAPITAL ONE BANK 7.350%, 2000 5,000 4,996 5,035 (f)
COMDISCO INC 7.250%, 1998 10,000 9,986 10,131
COMMERCIAL CREDIT 8.250%, 2001 9,000 8,904 9,545 (f)
CONTI MTG HEL TRTA-6 6.690%, 2016 10,000 9,999 9,312 (f)
COUNTRYWIDE FUNDING 8.420%, 1999 19,700 19,679 20,569
DART KRAFT FIN 7.750%, 1998 1,000 1,025 1,025 (f)
JOHN DEERE CAPITAL 6.250%, 2000 2,500 2,504 2,451 (f)
JOHN DEERE CAPITAL 6.280%, 2000 5,000 5,017 4,903 (f)
FIDELITY ACCEPTANCE 6.670%, 1997 15,000 15,000 14,977 (b)(d)(f)
FINOVA CAPL CORP 6.840%, 2000 3,000 3,003 2,997 (f)
FIRST SEC BANK UTAH 6.880%, 1996 10,000 9,996 10,017 (f)
FIRST USA DEP NT 6.375%, 2000 5,000 4,986 4,885 (f)
FIRSTAR CORP 7.150%, 2000 12,000 12,000 12,086 (f)
GE CAPITAL CORP 8.125%, 1999 12,000 12,223 12,469 (f)
GREAT WESTERN FINL 6.375%, 2000 3,000 2,991 2,954 (f)
GREENTREE FIN94-1 A1 5.600%, 2019 6,337 6,260 6,321 (f)
GREENTREE FIN94-4 A1 6.550%, 2019 6,635 6,622 6,662 (f)
GREENTREE FIN94-5 A1 6.600%, 1998 7,974 7,973 7,996 (f)
GREENTREE FIN95-5 A1 5.950%, 2025 8,682 8,680 8,685 (f)
HELLER FINANCIAL 8.000%, 1998 15,000 14,980 15,470
HELLER FINANCIAL 6.500%, 2000 8,000 8,002 7,866 (f)
HOUSEHOLD FINANCE 6.375%, 2000 6,775 6,792 6,676 (f)
HUNTINGTON NATL BANK 4.480%, 1996 12,000 11,906 11,946 (f)
INTL LEASE FINANCE 7.950%, 1999 12,000 11,989 12,387 (f)
<PAGE>
PAGE 28
Bal. held
at 6-30-96
Principal
Amount of Cost Value at
Bonds (Notes 6-30-96
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
---------------------------------- ----------- ---------- ----------
INTL LEASE FINANCE 6.375%, 1996 6,000 5,993 6,012 (f)
KEYCORP SENIOR 7.430%, 2000 4,000 3,994 4,085 (f)
MBNA 7.540%, 2001 10,000 9,992 10,199
MBNA CORP 6.500%, 2000 5,000 4,998 4,911 (f)
MARGARETTEN FIN'L 6.750%, 2000 15,250 15,402 15,187 (f)
MELLON FINANCIAL 6.300%, 2000 10,000 9,957 9,843 (f)
MERIDIAN BANCORP 6.625%, 2000 5,000 5,050 4,956 (f)
JPMS 96-C2 CL A 6.470%, 2027 4,965 4,998 4,755 (f)
NCB CAPITAL SER A 8.180%, 1997 8,000 8,000 8,116 (b)(d)
NATIONSBANK TEXAS 6.750%, 2000 12,000 12,042 11,973 (f)
NATIONSBANK CORP 7.500%, 1997 5,000 4,999 5,051 (f)
NORWEST FINANCIAL 7.250%, 2000 4,500 4,493 4,578
ORIX CREDIT ALLIANCE 8.040%, 1997 10,000 10,000 10,125 (b)(d)
ORIX CREDIT ALLIANCE 7.560%, 1997 5,000 5,000 5,092 (b)(d)(f)
PENSKE TRUCK LEASING 6.670%, 2000 13,000 13,007 12,937 (f)
PENSKE TRUCK LEASING 7.750%, 1999 3,000 3,063 3,092 (f)
PROVIDENT BANK 6.125%, 2000 5,000 4,989 4,857
PRU HOME 90-09 A1 9.500%, 1997 366 366 366
SBMS VII 91-1 B1 9.700%, 2006 1,571 1,571 1,571 (f)
SALOMON INC INDEX AM 7.070%, 2000 25,000 25,000 24,970 (f)
SAXON 95-1 A2 ARM 7.731%, 2025 3,421 3,469 3,497 (f)
SEARS ROEBUK ACC 6.500%, 2000 5,000 5,020 4,938 (f)
SOCIETY NAT'L CLEV 6.875%, 1996 9,700 9,690 9,715 (f)
SASCO96-CL1 AIC 5.944%, 2028 9,800 9,800 9,359 (f)
SASCO 96-CL-A2B 6.759%, 2028 5,000 5,091 4,902 (f)
TRANSAMERICA FINANCE 9.260%, 1998 5,000 4,995 5,210
UCFC 95 BA-2 ASSET B 6.600%, 2009 10,000 10,032 9,978 (f)
UCFC 95 CA2 ASSET BK 6.575%, 2011 10,000 10,024 9,947 (f)
WELLSFORD RESID PROP 7.250%, 2000 5,000 4,974 5,078 (f)
XEROX CREDIT 6.840%, 2000 5,000 5,017 4,942 (f)
----------- ---------- ----------
Total Finance 508,176 509,026 510,369
----------- ---------- ----------
Industrial
AAF MCQUAY 8.875%, 2003 10,000 10,165 9,512 (f)
ADT OPERATIONS INC 8.250%, 2000 5,000 5,058 5,106 (f)
AMERICAN STANDARD 10.875%, 1999 1,000 1,073 1,066 (f)
APPLIED MATERIALS 6.650%, 2000 5,000 5,000 4,962 (f)
BAUSCH & LOMB 6.800%, 1996 3,500 3,499 3,512 (f)
BELL & HOWELL OPER 9.250%, 2000 4,425 4,532 4,519 (f)
BROWN GROUP 8.600%, 1999 5,000 5,000 4,807
BURLINGTON NORTHERN 6.375%, 2005 5,000 4,997 4,662
CSX 9.230%, 1998 13,500 13,500 14,049
CATERPILLAR FINANCE 6.960%, 1998 5,000 4,950 5,047 (f)
CATERPILLAR FINANCE 4.640%, 1996 5,000 5,000 4,989 (f)
CHAMPION INTL 9.800%, 1998 10,000 9,996 10,470
CHRYSLER FINANCE 7.700%, 1998 10,000 9,922 10,262 (f)
CHRYSLER FINANCE 7.590%, 2000 5,000 5,001 5,129 (f)
CINCINNATI MILACRON 7.875%, 2000 5,000 5,099 5,013 (b)(d)(f)
COLUMBIA/HCA HLTHCRE 6.410%, 2000 10,000 10,025 9,870 (f)
CONT'L CABLEVISION 8.300%, 2006 4,000 3,988 4,080 (b)(d)
COOPER INDUSTRIES 7.750%, 1996 10,000 10,018 10,049 (f)
<PAGE>
PAGE 29
Bal. held
at 6-30-96
Principal
Amount of Cost Value at
Bonds (Notes 6-30-96
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
---------------------------------- ----------- ---------- ----------
COX COMMUNICATION 6.375%, 2000 25,000 24,896 24,569 (f)
DARLING DELAWARE 11.000%, 2000 3,308 3,318 3,279 (f)
DAYTON HUDSON 6.400%, 2003 10,000 9,971 9,538 (f)
DELTA AIRLINES 9.875%, 1998 8,100 8,100 8,449
BERGEN BRUNSWIG(DUR) 7.000%, 2006 20,000 20,063 19,517 (f)
ENTERPRISE RENT-A-CAR 8.750%, 1999 5,000 4,998 5,261 (b)(d)
ENTERPRISE RENT-A-CAR 7.875%, 1998 5,000 4,999 5,103 (b)(d)(f)
ENTERPRISE RENT-A-CAR 6.350%, 2001 10,000 9,998 9,695 (f)
EXIDE CORP 10.750%, 2002 5,000 5,443 5,100 (f)
FORD MOTOR CREDIT 6.375%, 2000 10,000 10,113 9,844
FOUNDATION HLTH CORP 7.750%, 2003 4,500 4,486 4,586 (f)
GATC 6.320%, 2000 10,000 9,983 9,740 (f)
GMAC 7.650%, 1997 10,000 9,997 10,108 (f)
GMAC 7.750%, 1999 20,000 19,893 20,542 (f)
HERITAGE MEDIA 8.750%, 2006 4,500 4,567 4,191 (f)
ILLINOIS CENTRAL 6.270%, 1998 5,000 5,003 4,975 (f)
INTEGON CORP 9.500%, 2001 2,000 1,979 2,113
KIII COMM 144APUT/96 8.500%, 2006 5,000 4,980 4,562 (b)(d)(f)
KAUFMAN & BROAD HOME 10.375%, 1999 1,000 996 1,016
LA QUINTA MOTOR 9.250%, 2003 2,000 2,105 2,050 (f)
LONE STAR INDUSTRIES 10.000%, 2003 657 637 661 (f)
MGM GRAND HOTEL FIN 11.750%, 1999 2,000 2,095 2,120 (f)
MARK IV IND INC 8.750%, 2003 2,000 1,826 1,987
MATTEL INC 6.875%, 1997 15,000 14,974 15,075 (f)
NEWS AMER HLDGS 7.500%, 2000 10,000 9,961 10,151 (f)
PACCAR FIN SER 3 7.940%, 1997 8,250 8,244 8,353 (f)
PARAMOUNT COMMUN 5.875%, 2000 5,350 5,206 5,040 (f)
QUAKER OATS 6.940%, 2003 1,500 1,504 1,491 (f)
QUAKER OATS 6.470%, 2000 10,000 10,042 9,890 (f)
REYNOLDS METALS 9.750%, 1996 10,000 9,998 10,139
RYDER SYSTEM 5.530%, 1997 7,500 7,410 7,481 (f)
RYDER SYSTEM 7.910%, 2000 5,000 5,037 5,169 (f)
RYDER SYSTEMS INC 7.330%, 2000 5,000 5,095 5,088 (f)
SEALY CORP 9.500%, 2003 4,275 4,312 4,179
SEARS 7.620%, 1997 5,000 4,984 5,090 (f)
SEARS 7.420%, 1998 10,000 10,007 10,166 (f)
SERVICE CO INTL 6.375%, 2000 10,500 10,493 10,314 (f)
SERVICE MERCHANDISE 8.375%, 2001 1,000 865 941
SHOWBOAT INC 9.250%, 2008 1,000 837 1,015
SUNAMERICA 9.000%, 1999 20,000 20,000 20,995
SUPERVALU INC 6.500%, 2000 5,000 4,995 4,930 (f)
SUPERVALU INC 7.250%, 1999 8,000 7,952 8,118 (f)
TEEKAY SHIPPING CORP 8.320%, 2008 3,000 3,034 2,820 (f)
TENET HEALTHCARE CO 8.625%, 2003 7,000 6,978 7,096 (f)
TYSON FOODS 6.410%, 2000 10,000 10,009 9,860 (f)
UNITED AIR 1991A-1 9.200%, 2008 4,610 4,267 4,797
US WEST CAP FDG INC 8.000%, 1996 16,785 16,846 16,882 (f)
U.S. WEST CAP FUNDING 6.200%, 2000 5,000 4,992 4,845 (f)
VIACOM INC 6.750%, 2003 5,000 4,995 4,757
WMX TECHNOLOGIES 6.250%, 2000 3,500 3,504 3,432 (f)
WHITMAN CORP 6.250%, 2000 5,000 4,937 4,914 (f)
WHITMAN CORP 8.110%, 1997 12,500 12,499 12,647 (f)
<PAGE>
PAGE 30
Bal. held
at 6-30-96
Principal
Amount of Cost Value at
Bonds (Notes 6-30-96
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
---------------------------------- ----------- ---------- ----------
RYERSON TULL 8.500%, 2001 5,000 5,000 5,000 (f)
FIBERGLASS CAD INC 9.800%, 1998 5,000 5,090 5,271 (b)(d)
ISPMEX 144A LIQUID 10.125%, 2003 5,000 5,000 5,075 (f)
REPAP NEW BRUNSWICK 9.875%, 2000 7,000 7,147 6,904 (f)
STENA AB 10.500%, 2005 3,000 3,000 2,978
TARKETT 9.000%, 2002 1,000 1,021 1,014 (b)(d)(f)
TELEWEST PLC 9.625%, 2006 2,000 2,000 1,945
----------- ---------- ----------
Total Industrial 529,260 529,504 529,972
----------- ---------- ----------
Total Other Bonds and Notes 2,309,320 2,309,614 2,314,414
----------- ---------- ----------
Total Bonds and Notes $ 2,309,685 2,309,976 2,314,776
----------- ---------- ----------
Bal. Held
at 6-30-96 Cost Value at
Number of (Notes 6-30-96
Shares a and c) (Note a)
----------- ---------- ----------
Preferred Stock
Public Utility
ALLTEL 7.75 $100 PAR 7.750%, 2005 24,140 2,436 2,438 (b)(d)
AMERICAN WTRWRKS $25 8.500%, 2000 800,000 20,000 20,968 (b)(d)
APPALACHIAN PWR $100 6.850%, 2004 30,000 3,004 3,131
APPALACHIAN PWR $100 5.900%, 2008 10,000 997 960 (f)
APPALACHIAN PWR $100 5.920%, 2008 11,000 1,089 1,046
ARIZONA PUB SER V 7.875%, 2007 7,500 786 794 (f)
ARIZONA PUB SVC $100 10.000%, 2001 120,400 12,770 13,102
ATLANTIC CITY EL 100 7.800%, 2006 90,000 8,987 9,836
ATLANTIC CITY EL 100 8.200 %, 2000 82,500 8,241 8,774
BALTIMORE G&E $100 8.625%, 2000 97,500 9,750 10,347
BALTIMORE G&E $100 8.250 %, 1999 39,956 3,995 4,050
BELL ATL NZ$100 144A 5.800 %, 2004 100,000 10,000 9,562 (b)(d)
BOSTON EDISON $100 8.000%, 2001 90,000 9,000 9,297
CBI INDUSTRIES 100 7.480%, 2000 70,000 7,102 7,022
CENTRAL IL LT $100 5.850%, 2008 50,000 5,000 4,900
CINCINNATI G&E $100 7.875%, 2004 200,000 20,000 21,000
COMMWLTH ED $100 PVT 8.200%, 2002 73,580 7,192 7,579 (b)(d)
COMMONWEALTH EDISON 8.850%, 2003 78,000 7,943 8,034 (b)(d)
CONN LT & PWR $50 5.300%, 2003 115,300 5,673 5,261
CON EDISON $100 SER J 6.125%, 2002 150,000 15,045 15,225
CON EDISON 7.2 SER I 7.200%, 2007 32,550 3,286 3,438
DUKE POWER $100 SER V 6.400%, 2002 30,000 3,000 3,109
DUKE POWER $100 SER U 6.300%, 2001 30,000 3,000 3,109
DUKE POWER $100 SER T 6.200%, 2000 30,000 3,000 3,109
DUKE POWER 1992D $25 6.200%, 2001 200,000 5,006 5,050
DUKE POWER 1992C $25 6.100%, 2000 250,000 6,273 6,312
DUKE POWER 1992B $25 5.950%, 1999 15,000 381 379 (f)
DUKE POWER CO SER R 7.500%, 2017 3,000 314 316 (f)
EASTERN EDISON $100 6.625%, 2008 210,000 20,924 21,026
<PAGE>
PAGE 31
Bal. Held
at 6-30-96 Cost Value at
Number of (Notes 6-30-96
Shares a and c) (Note a)
----------- ---------- ----------
ENTERGY ARKANSAS $25 9.920%, 2002 129,188 3,371 3,504
ENTERGY LA INC PFD 8.000%, 2001 70,000 7,000 7,298
ENTERGY LA $100 7.000%, 1999 80,000 8,006 8,370
ENTERGY MISS $100 9.760%, 1997 13,403 1,340 1,344
FLORIDA POWER $100 7.08 %, 2010 22,099 2,192 2,254
GREEN MTN PWR CL-D/3 8.625%, 2000 70,000 7,000 7,202 (b)(d)
HAWAII ELEC $100 8.500%, 2005 20,000 1,994 2,095 (b)(d)
MAUI ELEC $100 8.500%, 2005 25,000 2,492 2,619 (b)(d)
HOUSTON LT PWR $100 9.375%, 1999 31,000 3,105 3,188 (b)(d)
INDIANA MICH POWER 6.300%, 2009 52,250 5,222 5,127
IND MICH POWER $100 6.250%, 2009 20,000 2,007 1,957 (f)
INDIANA MICHIGAN PWR 5.900%, 2009 32,500 3,106 2,963
JERSEY CENTRAL P&L 8.650%, 2005 75,000 7,500 8,269
JERSEY CENTRAL P & L 8.480%, 2000 51,000 5,113 5,356
LONG ISL LGT SER AA 7.950%, 2000 273,600 6,905 6,532
MAINE YANKEE $100 7.480%, 2001 34,918 3,389 3,579
MIDAMERICAN ENERGY 7.800%, 2006 73,300 7,592 7,788
MN P & L 144A $100 7.125%, 2002 50,000 4,972 4,963 (b)(d)
MN P&L 144A 6.70 6.700%, 2002 100,000 10,000 10,025 (b)(d)
NJ NATL GAS 100 144A 7.720%, 2001 200,000 20,000 20,750 (b)(d)
NO IND PUB SERV $100 8.850%, 2003 36,750 3,700 3,743 (b)(d)
NORTHWEST NAT GA 100 6.950%, 2002 150,000 15,000 15,469
OHIO POWER CO $100 5.900%, 2009 36,000 3,525 3,429
OHI PWR CO $100 6.020%, 2008 10,000 989 964
OHIO PWR CO $100 6.350%, 2008 5,000 509 496
ORANGE ROCKLAND$100 8.125%, 1997 13,098 1,314 1,323 (b)(d)
OTTER TAIL PWR $100 6.350%, 2007 180,000 18,000 18,158
PECO ENERGY 6.120%, 2003 90,300 8,938 9,098
PACIFIC GAS & ELEC 6.300%, 2009 24,000 611 573 (f)
PACIFIC GAS & ELEC 6.570%, 2007 567,500 14,152 13,194
PACIFICORP $100 PAR 7.700%, 2001 150,000 15,000 15,112
PA P & L PFD $100 6.150%, 2003 28,000 2,665 2,800
PA P & L PFD $100 6.125%, 2008 60,000 5,953 5,868
PA P & L PFD $100 6.330%, 2008 93,000 9,115 9,224
POTOMAC ELEC PWR $50 6.800%, 2007 160,800 7,939 8,276
POTOMAC ELECTRIC 7.780%, 2006 160,000 8,007 7,900
PUB SERV COLO $100 7.500%, 2009 173,368 16,721 17,640 (b)(d)
PUGET SOUND P&L $100 8.000%, 2004 3,305 330 338
ROCHESTER G&E $100 6.600%, 2009 20,000 1,901 2,005
ROCHESTER G & E $100 7.650%, 1999 20,000 2,000 2,137
ROCHESTER G & E $100 7.550%, 1998 67,000 6,705 7,133
ROCHESTER G & E $100 7.450%, 1997 52,500 5,250 5,290
SAN DIEGO G&E $25 1.762%, 2008 59,500 1,598 1,543 (f)
SO CA EDISON $100 6.050%, 2008 20,000 2,002 1,893 (f)
SO CA EDISON $100 6.450%, 2002 202,250 20,415 20,488
SO INDIANA G&E 100 6.500%, 2002 75,000 7,500 7,232 (b)(d)
TENNECO SRS B $100 7.400%, 1998 37,973 3,749 3,807
TEXAS UTILITY $100 9.640%, 1998 58,325 5,854 5,984 (b)(d)
TEXAS UTILITIES 6.375%, 2008 54,000 5,437 5,258
TEXAS UTIL $100 PAR 6.980%, 2008 50,000 5,000 5,181
VIRGINIA ELEC & PWR 5.580%, 2000 10,000 1,017 993 (f)
VIRGINIA ELEC & PWR 6.350%, 2000 195,200 19,550 20,032
WASHINGTON WATER 8.625%, 2000 48,696 4,876 5,053
WASHINGTON WTR POWER 6.950%, 2007 57,500 5,767 5,865
<PAGE>
PAGE 32
Bal. Held
at 6-30-96 Cost Value at
Number of (Notes 6-30-96
Shares a and c) (Note a)
----------- ---------- ----------
WESTERN RESOURCES 7.580%, 2007 23,000 2,402 2,418
----------- ---------- ----------
Total Public Utility 7,455,749 549,991 560,274
----------- ---------- ----------
Finance
HOUSEHLD FIN$100 92A 7.250%, 1997 90,500 9,185 9,344
Industrial
BOWATER $50 VAR RATE VAR% , 1998 167,869 8,098 8,226 (f)
WHIRLPOOL FIN $100 B 6.550%, 2008 180,000 18,145 17,550 (b)(d)
NORTHBROOK HLDG 1000 6.000%,2001 10,000 10,000 10,000 (b)(d)(f)
----------- ---------- ----------
Total Industrial 357,869 36,243 35,776
----------- ---------- ----------
Total Preferred Stock 7,904,118 595,419 605,394
----------- ---------- ----------
Other
Industrial
MRS FIELDS 20,177 605 605 (f)
----------- ---------- ----------
Total Industrial 20,177 605 605
----------- ---------- ----------
Total Other 20,177 605 605
----------- ---------- ----------
Total Investments in Securities
of Unaffiliated Issuers 2,906,000 2,920,775
Total Reserve for Possible Losses
on Corporate Issues 110
---------- ----------
$2,905,890 $2,920,775
========== ==========
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 $2,904,328.
(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>
