SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM S-1
POST-EFFECTIVE AMENDMENT NUMBER 42 TO
REGISTRATION STATEMENT NUMBER 2-55252
SERIES D-1 INVESTMENT CERTIFICATE
(FORMERLY SINGLE-PAYMENT CERTIFICATES, SERIES D-1)
UNDER
THE SECURITIES ACT OF 1933
IDS CERTIFICATE COMPANY
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(IDS Certificate Company effective April 1984)
(Exact name of registrant as specified in charter)
DELAWARE
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(State or other jurisdiction of incorporation or organization)
6725
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(Primary Standard Industrial Classification Code Number)
41-6009975
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(I.R.S. Employer Identification No.)
IDS Tower 10, Minneapolis, MN 55440, (612) 671-3131
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(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
Bruce A. Kohn - IDS Tower 10, Minneapolis, MN 55440-0010, (612) 671-2221
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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IDS Series D-1 Investment Certificate
Prospectus/April 29, 1998
This prospectus describes the Series D-1 Investment Certificate (Series D-1)
issued by IDS Certificate Company (IDSC). The Series D-1 certificate is offered
only in connection with the American Express Retirement Plan, the Career
Distributors' Retirement Plan (CDRP), and the IDS Mutual Funds Profit Sharing
Plan of the IDS MUTUAL FUND GROUP(individually a "Plan" and collectively the
"Plans") and to affiliated companies of IDSC. These Plans have been adopted for
the exclusive benefit and participation of eligible employees and personal
financial advisors of American Express Financial Corporation (AEFC) and its
subsidiary companies, and the IDS MUTUAL FUND GROUP.
IDSC offers persons who retire as full-time employees or as full- time financial
advisors or district managers of AEFC and its subsidiary companies the
opportunity to purchase the Series D-1 Certificate in Individual Retirement
Accounts (IRAs).
IDSC guarantees a specific rate of interest for each calendar quarter. IDSC also
guarantees the principal of your certificate (page --).
The Series D-1 certificate matures 20 years from its issue date. Its value at
maturity will be equal to total contributions made plus interest earned and less
any withdrawals (i.e. surrenders) (page --).
As is the case with other investment companies, these securities have not been
approved or disapproved by the Securities and Exchange Commission or any state
securities commission nor has the Securities and Exchange Commission or any
state securities commission passed upon the accuracy or adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
This certificate is backed by IDSC's investments on deposit rather than
guaranteed or insured by the government or someone else. See "Invested and
guaranteed by IDSC" and "Regulated by government" under "How your money is used
and protected."
The prospectus gives you facts about the Series D-1 certificate and describes
its terms and conditions. You should read it to decide if this certificate is
the right investment for you. Keep it with your investment records for future
reference.
IDS Certificate Company
IDS Tower 10
Minneapolis, MN 55440-0010
800-437-3463
800-846-4293 (TTY)
An American Express company
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Annual Interest Rates as of April 29, 1998
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Simple Compound
Interest Effective
Rate Yield
- ----% ----%
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These rates were in effect on the date of this prospectus. IDSC reviews and may
change its rates on new purchases each week. The interest rate paid during the
first calendar quarter the certificate is owned will be that in effect on the
date an application or investment is accepted. IDSC guarantees that when the
rate for new purchases takes effect, the rate for the first quarter will be
within a specified range of the average 12-month certificate of deposit rate
then published in the most recent BANK RATE MONITOR National IndexTM, N. Palm
Beach, FL 33408 (page ---). Interest rates for future calendar quarters are
declared at the discretion of IDSC and may be greater or less than the rates
shown here.
The Series D-1 certificate is backed 100 percent by our investments on deposit
instead of by federal insurance. There are no sales or surrender charges. There
is no minimum rate of interest. IDSC does not have a distribution agreement or
pay a distribution fee with respect to this certificate.
AVAILABLE INFORMATION ABOUT IDSC
IDSC is subject to the reporting requirements of the Securities Exchange Act of
1934. Reports and other information on IDSC are filed with the Securities and
Exchange Commission (SEC) and can be inspected and copied at the public
reference section of the SEC, Washington, D.C. and also at the following
regional offices:
Northeast Regional Office
7 World Trade Center
Suite 1300
New York, NY 10048
Midwest Regional Office
Northwestern Atrium Center
500 West Madison St.
Suite 1400
Chicago, IL 60661
Pacific Regional Office
5670 Wilshire Blvd.
11th Floor
Los Angeles, CA 90036
You can obtain copies from the Public Reference Section of the SEC, 450 5th
Street, N.W., Washington, D.C. 20549 at prescribed rates.
We are not responsible for any information about IDSC except for the information
in this prospectus, including any supplements, in any reports filed with the SEC
or in any supplemental sales material we have authorized for use in the sale of
this certificate.
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No person has authority to change the terms of this certificate or to bind IDSC
by any statement not in this prospectus.
We reserve the right to issue other securities with different terms.
SUMMARY OF CONTENTS
Listed below is a summary of items you should consider in evaluating the
certificate. These items are discussed in more detail elsewhere in the
prospectus as indicated.
About the Series D-1 Investment Certificate
Investment Amounts and Interest Rates - The Series D-1 certificate is purchased
by the trustee or custodian (page _) at the direction of Plan participants or
IRA owners using contributions to a Plan or IRA or by affiliated companies of
IDSC. IDSC will pay the trustee or custodian at maturity the face amount plus
earned interest. Interest rates are declared each calendar quarter beginning on
Jan. 1, April 1, July 1, and Oct. 1. The rate for the first calendar quarter
will be within a specified range of an average 12-month certificate of deposit
rate as published in the BANK RATE MONITOR National IndexO N. Palm Beach, FL
33408. Future interest rates are at the discretion of IDSC (page --).
Determining the Face Amount and Principal of the Series D-1 Investment
Certificate - The face amount of the certificate is the total amount invested.
The principal is the total investment plus interest compounded monthly over the
20-year life of the certificate, less withdrawals (page --).
Value at Maturity Will Exceed Face Amount - We guarantee the rate of interest on
the Series D-1 certificate for each calendar quarter. Due to interest received,
the value at maturity of a certificate held to maturity will exceed the face
amount of the certificate (page --).
Earning Interest - Interest accrues and is credited daily and will be compounded
at the end of each calendar month (page --).
Using the Series D-1 Investment Certificate
Contributions to the Certificate - Instructions to Plan participants on how to
direct contributions to the Series D-1 certificate may be obtained through the
appropriate Plan Administrator or, for IRAs, from your financial advisor or your
local American Express Financial Advisors office or by writing to American
Express Financial Advisors Inc., IDS Tower 10,
Minneapolis, MN 55440-0534 or by calling 1-800-437-3463. The Series D-1
certificate is offered only to eligible participants in connection with the
American Express Retirement Plan, the CDRP, the IDS DVP Retirement Plan, the IDS
DVP Savings Plan, the IDS Mutual Funds Profit Sharing Plan, IRAs of persons who
retire as full-time AEFC employees, financial advisors or district managers and
to affiliated companies of IDSC (page --).
Other IRAs or 401(k) Plan Accounts and Other Qualified Retirement Accounts When
a participant takes a qualifying distribution from a plan qualified under
Internal Revenue Code 401(a), the participant's Series D-1 certificate plan
account may be rolled
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over into an IRA or other qualified retirement plan account where allowed by a
Plan (page --). The Career Distributors' Retirement Plan is a nonqualified
deferred compensation plan.
Receiving Cash - A participant in a Plan (other than CDRP) or an IRA owner may
receive cash after taking an "in kind" distribution of his or her Series D-1
certificate plan account or IRA, subject to federal tax laws and the terms of
the payout options (page --).
At Maturity - If the Series D-1 certificate is held to maturity following an "in
kind" distribution, a check for the principal will be sent. Payout options also
are available (page --).
Transferring the Series D-1 Certificate Ownership - While the Series D-1
certificate is not negotiable, under limited circumstances it can, if eligible,
be transferred to a qualified plan or IRA trustee or custodian upon written
request (page --).
Giving Us Instructions - All instructions to us must be in proper written form
(page --).
Income and Taxes
Tax Treatment of this Investment - Interest earned on the Series D-1 certificate
is generally not taxable until withdrawn (page --).
How your money is used and protected
Invested and guaranteed by IDSC - IDSC, a wholly owned subsidiary of AEFC,
issues the Series D-1 certificate in the name of the custodian of the IRA,
trustee of a Plan or in the case of the CDRP of AEFC, to AEFC as the sponsor of
the plan or to an affiliated company of IDSC. This section gives basic
information about IDSC's assets and income (page --).
Regulated by Government - The Series D-1 certificate is a security and is
governed by federal and state law (page --).
Backed by our investments - Our investments, mostly debt securities, are on
deposit (page --).
Investment Policies - We do not purchase securities on margin or invest in
commodities nor do we participate on a joint basis or joint-and-several basis in
any trading account in securities. There are no restrictions on concentration of
investments in industries. We may lend securities and receive cash equal to the
market value of the securities as collateral. We also may purchase securities on
a "when-issued" basis (page --).
Relationship Between IDSC and AEFC - AEFC is our parent company. It, in turn, is
owned by American Express Company (American Express) (page --).
Capital structure and certificates issued - (page --).
Investment management and services - AEFC acts as investment advisor for our
certificates. The Investment Advisory and Services Agreement governs AEFC's
transactions on our behalf and the fees we pay AEFC for investment advisory
services.
There is no distribution fee charged (page --).
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Employment of Other American Express Affiliates - AEFC may employ other American
Express affiliates to perform certain transactions for us (page --).
Directors and officers - This section contains information about our management
and directors. (page -----).
ABOUT THE SERIES D-1 INVESTMENT CERTIFICATE
Investment Amounts and Interest Rates
The Series D-1 Certificate is a security purchased with single or multiple
payments. The amount that can be invested is determined by the provisions of the
Plans and applicable tax laws. A participant's Plan investment is the dollar
amount or its equivalent percentage contributions directed to the participant's
Plan account. The interest rate applied to the investment is the quarterly rate
then in effect. Investments earn interest from the date IDSC accepts each Plan
contribution or IRA contribution.
Interest on the Series D-1 certificate is guaranteed for each calendar quarter.
The rate paid will not change during a quarter. A calendar quarter begins each
Jan. 1, April 1, July 1, or Oct. 1. IDSC guarantees that when rates for new
purchases take effect, the rate will be within a range from 75 to 175 basis
points above the average interest rate then published for 12-month certificates
of deposit in the BANK RATE MONITOR National Index (trademark), N. Palm Beach,
FL 33408. For example, if the rate published for a given week in the BANK RATE
MONITOR National Index (trademark), N. Palm Beach, FL 33408 for 12-month
certificates is 3.25 percent, IDSC's rate in effect for new purchases would be
between 4 percent and 5 percent.
Interest rates may differ for investments of more than $1 million in one or more
Series D-1 Certificates by any affiliated company of IDSC. When rates for new
purchases by any such company take effect, the rate will be within a range from
20 basis points below to 80 basis points above the average interest rate then
published for 12-month certificates of deposit in the BANK RATE MONITOR National
Index (trademark), N.
Palm Beach, FL 33408.
The BANK RATE MONITOR National Index (trademark), N. Palm Beach, FL 33408 is an
index of rates and annual effective yields offered on various length
certificates of deposit by large banks and thrifts in large metropolitan areas.
The frequency of compounding varies among the banks and thrifts.
Certificates of deposit in the BANK RATE MONITOR National Index (trademark), N.
Palm Beach, FL 33408 are government-insured fixed-rate time deposits. The BANK
RATE MONITOR National Index (trademark), N. Palm Beach, FL 33408 is published in
the BANK RATE MONITOR, a weekly magazine published in N. Palm Beach, FL, by
Advertising News Service Inc., an independent national news organization that
collects and disseminates information about bank products and interest rates. It
is not affiliated with IDSC, AEFC, or any of their affiliates.
The publisher of the BANK RATE MONITOR distributes to national and broadcast
news media on a regular weekly basis its current index rates for various terms
of certificates of deposit of banks and thrifts.
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The BANK RATE MONITOR periodical may be available in your local library. To
obtain information on the current BANK RATE MONITOR Top Market AverageTM rates,
call the Client Service Organization at the telephone numbers listed on the back
cover between 8 a.m. and 6 p.m. your local time.
Interest is credited to the certificate daily. The rate in effect on the day the
contribution is accepted in Minneapolis will apply to the certificate. The
interest rate shown on the front of this prospectus may or may not be in effect
on the date a participant's contribution is accepted.
Interest for future calendar quarters may be greater or less than the rates for
the first quarter. The then prevailing investment climate, including 12-month
average certificate of deposit effective yields as reflected in the BANK RATE
MONITOR National Index (trademark), N. Palm Beach, FL 33408, will be a primary
consideration in deciding future rates. Nevertheless, IDSC has complete
discretion as to what interest it will declare beyond the initial quarter.
Any investments rolled over from the Series D-1 certificate to an IRA or 401(k)
plan account or other qualified retirement account will be subject to the limits
and provisions of that account or plan and applicable tax laws.
Determining the Face Amount and Principal of the Series D-1 Investment
Certificate
The face amount is the amount of the initial investment in the Series D-1
certificate. At the beginning of each quarter, all interest previously credited
to a Series D-1 certificate and not withdrawn will become part of its principal.
For example: if the initial investment in a certificate was $100,000, the face
amount would be $100,000. If the certificate earns $1,000 in interest during a
quarter and it is not withdrawn, the principal for the next quarter will be
$101,000. Your principal is guaranteed by IDSC.
Value at Maturity Will Exceed Face-Amount
The Series D-1 certificate matures in 20 years except as provided in "receiving
cash" under "Using the Series D-1 Investment Certificate." A certificate held to
maturity will have had interest declared each quarter over its life. Interest
once declared for the quarter will not be reduced. The value at maturity will
exceed the face amount.
Earning Interest
Interest is accrued and credited daily on the Series D-1 certificate. If a
withdrawal is made during a month, interest will be paid to the date of the
withdrawal. Interest is compounded at the end of each calendar month. The amount
of interest earned each month is determined by applying the daily interest rate
then in effect to the daily balance of the Series D-1 certificate. Interest is
calculated on a 360-day year basis.
USING THE SERIES D-1 INVESTMENT CERTIFICATE
Contributions to the Series D-1 Investment Certificate
A contribution will be made to the Series D-1 Certificate by the Plan sponsor as
directed by the participant. Instructions to Plan participants on how to direct
Plan contributions to
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a Series D-1 certificate may be obtained from the appropriate Plan
Administrator. The amount of contributions made on behalf of a participant or
AEFC will be limited by the terms of the Plan and applicable tax laws.
Any additional contributions in a Plan or IRA made on behalf of participants or
investors who already have a beneficial interest in or related to an IDS Series
D-1 Investment Certificate in the same Plan or IRA will be added directly to
that certificate, rather than invested in a new certificate.
The Series D-1 certificate is offered only in connection with the American
Express Retirement Plan, the CDRP, the IDS DVP Retirement Plan, the IDS DVP
Savings Plan, the IDS Mutual Funds Profit Sharing Plan, and the IRAs of persons
who retire as full-time employees, financial advisors or district managers of
AEFC, its subsidiary companies, and the IDS MUTUAL FUND GROUP and to affiliated
companies of IDSC. These Plans are for the exclusive benefit of eligible
employees and financial advisors of AEFC and its subsidiary companies and the
IDS MUTUAL FUND GROUP. Any Series D-1 certificate issued will be owned by and
issued in the name of the trustee or custodian of the IRA or Plan except that a
certificate issued in conjunction with CDRP will be issued in the name of AEFC.
Participating employees and advisors have a beneficial interest in or related to
the applicable Series D-1 certificates but are not the direct owners. The terms
of a Plan, as interpreted by the applicable Plan trustee, or AEFC in the case of
CDRP, will determine how a participant's individual account is administered.
These terms will likely differ in some aspects from those of the Series D-1
certificate. The custodian or trustee may change the ownership of any Series D-1
certificate issued to a participant in a Plan in connection with an "in kind"
distribution of benefits from a Plan as described below. Any new custodian or
trustee, including any IRA custodian, will be responsible for contacting us to
change ownership.
Other IRAs or 401(k) Plan Accounts and Other Qualified Retirement Accounts
Unless prohibited by your Plan, any Series D-1 certificate proceeds distributed
to an eligible participant in a qualifying distribution, may be invested in an
IRA or qualified retirement plan. Transfer of proceeds of the Series D-1
certificate to an IRA, or 401(k) plan account or other qualified retirement plan
account will be limited by Plan provisions and applicable federal law. Federal
tax laws may affect your ability to invest in certain types of retirement
accounts. You may wish to consult your tax advisor or your local American
Express Tax and Business Services tax professional, where available, for further
information.
In addition, under limited circumstances a Series D-1 certificate may be
transferred "in kind" to an IRA or qualified retirement account. An "in kind"
distribution will not reduce or extend the certificate's maturity. If an "in
kind" transfer is made, the terms and conditions of the Series D-1 certificate
apply to the IRA or qualified retirement account as the holder of the
certificate. The terms of the Plan, as interpreted by the Plan trustee or
administrator, will determine how a participant's individual account with the
Plan is administered. These terms may differ from the terms of the certificate.
A Series D-1 certificate may only be distributed "in kind" to an IRA or other
qualified retirement account. If you make a withdrawal from a qualified
retirement plan or IRA prior to age 59 1/2, you may be required to pay federal
early distribution penalty tax.
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IDSC will withhold federal income taxes of 10% on IRA withdrawals unless you
tell us not to. IDSC is required to withhold federal income taxes of 20% on most
qualified plan distributions, unless the distribution is directly rolled over to
another qualified plan or IRA. See your tax adviser to see how these rules apply
to you before you request a distribution from your plan or IRA.
Receiving Cash
The following sections briefly describe the limitations upon a participant's
ability to withdraw cash from the Series D-1 certificate. Any such withdrawal
could take place after the participant has taken an "in kind" distribution of
the Series D-1 certificate.
Federal Tax Limitations - The following briefly discusses certain federal tax
limitations on a participant's ability to take "in kind" distributions. You may
wish to consult your tax adviser or your local American Express Tax and Business
Services tax professional, where available, for further information.
If a Series D-1 certificate is distributed to the beneficial owner by the
trustee or custodian of a plan qualified under Section 401(a) of the Internal
Revenue Code of 1986 then, unless otherwise elected by the trustee or custodian
on a form satisfactory to IDSC:
1) the maturity date will be no later than the end of the taxable year in
which the later of the following occurs:
a) the beneficial owner attains age 70 1/2; or
b) distribution of the Series D-1 certificate is made to the
beneficial owner; and
2) the total value of the Series D-1 certificate will be paid out in equal
or substantially equal monthly, quarterly, semiannual or annual payments
over a specified period of time which does not extend beyond the life
expectancy (determined as of the maturity date) or the joint and
survivor life expectancy of the beneficial owner and his/her spouse.
If the Series D-1 certificate is issued in connection with an Individual
Retirement Account (IRA) or other qualified Plan, (1) the owner must elect a
maturity date which is no later than the taxable year in which he or she attains
age 70 1/2, and (2) the total value of the Series D-1 certificate will be paid
out in equal or substantially equal monthly, quarterly, semiannual or annual
payments over a specified period of time which does not extend beyond the
owner's life expectancy (determined as of the end of the taxable year in which
the owner attains age 70 1/2) or the joint and survivor life expectancy of the
owner and his/her spouse.
Except as noted above, each of the payout options described is subject to the
following general provisions governing payout options.
`All election(s) must be made by written notice in a form acceptable by
IDSC. The election(s) will become effective on the date(s) chosen.
`No election(s) can be made that will require IDSC to make any payment
later than 30 years from the date elected; and make any term or periodic
interest payment of less than $50.
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`After the date of the elected payout option, the owner may elect to
receive all or part of the balance left under a payout option. If done
only in part, the balance may be left under the elected option.
Payout Options - Any time after the issue date of the Series D-1 certificate if
an "in kind" distribution has occurred, including at the time of maturity, a
payout option may be elected for all or any part of a Plan investment. The
payout options are described below.
Payout options may be changed. The balance remaining in the certificate will
continue to accrue interest at the then current rate; the amount transferred to
an option will continue to accrue interest at the then current option rate. The
maturity date of the balance will not be affected. Notwithstanding the
provisions of the payout options herein described, tax laws in effect at the
time a payout option is selected and plan provisions may limit the availability
of the option.
Withdrawals - Withdrawals can be made from the certificate. To do so, a request
must be submitted in a form acceptable to IDSC at the address or phone number on
the cover of this prospectus. If proceeds from a full or partial surrender are
received directly by a participant and are not transferred to a trustee or
custodian of a qualified retirement plan, the participant may be penalized by
the IRS for this may be considered an early withdrawal.
Installment Payments - Installment payments of $50 or more may be elected. The
payment periods designated may be monthly, quarterly, semiannually or annually
over a period of more than two years but less than 30 years, but also cannot
exceed that permitted under federal tax law. Payments will begin one payment
period after the effective date of the payout option. Depending on the size of
the payment selected, these payments may include both principal and interest.
Periodic Interest Payments - Combined interest on the Series D-1 certificate may
be paid in monthly, quarterly, semiannual or annual payments of more than two
years but less than 30 years provided the payments are at least $50. The time
period selected cannot exceed that permitted under federal tax law.
Deferred Interest - At maturity or after any installment or periodic interest
payout plan has begun, all or part of the Series D-1 certificate may be left
with IDSC to continue to earn interest for an additional period of years. The
additional years elected may not exceed the earlier of 30 years from the date of
maturity or date on which the participant reaches age 70 1/2.
At its option, IDSC may defer for not more than thirty days any payment to which
the participant may become entitled prior to the Series D-1 certificate's
maturity. IDSC will pay interest on the amount deferred at the rate used in
accumulating the reserves for the Series D-1 certificate for any period of
deferment. Any payment by us also may be subject to other deferment as provided
by the rules, regulations or orders made by the Securities and Exchange
Commission.
At Maturity
If an "in kind" distribution has been taken, at the Series D-1 certificate's
maturity, a check will be sent for the remaining value of the certificate.
Instead of receiving cash, the Deferred Interest Option, or one of the payout
options explained above may be selected.
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Transferring Series D-1 Investment Certificate Ownership
When the Series D-1 certificate is owned by a trustee or custodian of a Plan or
IRA, the trustee or custodian may request a transfer of the ownership of the
Series D-1 certificate on the books of IDSC. A transfer request must be in a
form acceptable to the Plan or the IRA custodian and to IDSC and received at
IDSC's home office.
Giving Us Instructions
We must receive proper notice in writing or by telephone of any instructions
regarding a certificate.
Proper written notice must:
`be addressed to our home office,
`include sufficient information for us to carry out the request, and
`be signed and dated by all participant(s).
All amounts payable by us in connection with the Series D-1 certificate are
payable at our home office unless we advise otherwise.
To give us instructions by telephone, call the Client Service Organization at
the telephone numbers listed on the back cover between 8 a.m. and 6 p.m. your
local time.
INCOME AND TAXES
Tax Treatment of This Investment
Interest paid to the Series D-1 certificate is generally not taxable until a
participant begins to make withdrawals. For further discussion of certain
federal tax limitations, see page _.
Rules regarding Plan distributions and other aspects of the Series D-1
certificate are complicated. We recommend that participants consult their own
tax advisor or local American Express Tax and Business Services tax
professional, where available, to determine how the rules may apply to their
individual situation.
Withholding Taxes
According to federal tax laws, you must provide us with your correct certified
taxpayer identification number. This number is your Social Security number. If
you do not provide this number, we may be required to withhold a portion of your
interest income and certain other payments, including distributions from a
retirement account or qualified plan. Be sure your correct taxpayer
identification number is provided.
If you supply an incorrect taxpayer identification number, the IRS may assess a
$50 penalty against you.
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How your money is used and protected
Invested and guaranteed by IDSC
The IDS Series D-1 Certificate is issued and guaranteed by IDSC, a wholly owned
subsidiary of AEFC. We are by far the largest issuer of face amount certificates
in the United States, with total assets of more than $4.0 billion and a net
worth in excess of $239 million on Dec. 31, 1997.
We back our certificates by investing the money received and keeping the
invested assets on deposit. Our investments generate interest and dividends, out
of which we pay:
interest to certificate owners, and
various expenses, including taxes, fees to AEFC for advisory and other
services and distribution fees to American Express Financial Advisors Inc.
For a review of significant events relating to our business, see "Management's
discussion and analysis of financial condition and results of operations." Our
certificates are not rated by a national rating agency.
Most banks and thrifts offer investments known as certificates of deposit that
are similar to our certificates in many ways. Banks and thrifts generally have
federal deposit insurance for their deposits and lend much of the deposited
money to individuals, businesses and other enterprises. Other financial
institutions may offer investments with comparable combinations of safety and
return on investment.
Regulated by government
Because the IDS Series D-1 Certificate is a security, its offer and sale are
subject to regulation under federal and state securities laws. (It is a face
amount certificate -- not a bank product, an equity investment, a form of life
insurance or an investment trust.)
The federal Investment Company Act of 1940 requires us to keep investments on
deposit in a segregated custodial account to protect all of our outstanding
certificates. These investments back the entire value of your certificate
account. Their amortized cost must exceed the required carrying value of the
outstanding certificates by at least $250,000. As of Dec. 31, 1997, the
amortized cost of these investments exceeded the required carrying value of our
outstanding certificates by more than $176 million.
Backed by our investments
Our investments are varied and of high quality. This was the composition of our
portfolio as of Dec. 31, 1997:
43% corporate and other bonds
34 government agency bonds
17 preferred stocks
5 mortgages
1 municipal bonds
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As of Dec. 31, 1997, about 91% of our securities portfolio (bonds and preferred
stocks) is rated investment grade. For additional information regarding
securities ratings, please refer to Note 3B in the Financial Statements.
Most of our investments are on deposit with American Express Trust Company
(formerly IDS Trust Company), Minneapolis, although we also maintain separate
deposits as required by certain states. American Express Trust Company is a
wholly owned subsidiary of AEFC. Copies of our Dec. 31, 1997 schedule of
Investments in Securities of Unaffiliated Issuers are available upon request.
For comments regarding the valuation, carrying values and unrealized
appreciation (depreciation) of investment securities, see Notes 1, 2 and 3 to
the Financial Statements.
Investment policies
In deciding how to diversify the portfolio -- among what types of investments in
what amounts -- the officers and directors of IDSC use their best judgment,
subject to applicable law. The following policies currently govern our
investment decisions:
Debt securities -- Most of our investments are in debt securities as referenced
in the table in "Backed by our investments" under "How your money is used and
protected."
The price of bonds generally falls as interest rates increase, and rises as
interest rates decrease. The price of a bond also fluctuates if its credit
rating is upgraded or downgraded. The price of bonds below investment grade may
react more to the ability of a company to pay interest and principal when due
than to changes in interest rates. They have greater price fluctuations, are
more likely to experience a default, and sometimes are referred to as junk
bonds. Reduced market liquidity for these bonds may occasionally make it more
difficult to value them. In valuing bonds, IDSC relies both on independent
rating agencies and the investment manager's credit analysis. Under normal
circumstances, at least 85% of the securities in IDSC's portfolio will be rated
investment grade, or in the opinion of IDSC's investment advisor will be the
equivalent of investment grade. Under normal circumstances, IDSC will not
purchase any security rated below B- by Moody's Investors Service, Inc. or
Standard & Poor's Corporation. Securities that are subsequently downgraded in
quality may continue to be held by IDSC and will be sold only when IDSC believes
it is advantageous to do so.
As of Dec. 31, 1997, IDSC held about 9% of its investment portfolio (including
bonds, preferred stocks and mortgages) in investments rated below investment
grade.
Purchasing securities on margin -- We will not purchase any securities on margin
or participate on a joint basis or a joint-and-several basis in any trading
account in securities.
Commodities -- We have not and do not intend to purchase or sell commodities or
commodity contracts except to the extent that transactions described in
"Financial transactions including hedges" in this section may be considered
commodity contracts.
Underwriting -- We do not intend to engage in the public distribution of
securities issued by others. However, if we purchase unregistered securities and
later resell them, we may be considered an underwriter under federal securities
laws.
Borrowing money -- From time to time we have established a line of credit if
management believed borrowing was necessary or desirable. We may pledge some of
our assets as security. We may occasionally use repurchase agreements as a way
to borrow money. Under these agreements, we sell debt securities to our lender,
and repurchase them at the sales price plus an agreed-upon interest rate within
a specified period of time.
<PAGE>
Real estate -- We may invest in limited partnership interests in limited
partnerships that either directly, or indirectly through other limited
partnerships, invest in real estate. We may invest directly in real estate. We
also invest in mortgage loans. We expect that investments in real estate, either
directly or through a subsidiary of IDSC, will be less than five percent of
IDSC's assets.
Lending securities -- We may lend some of our securities to broker-dealers and
receive cash equal to the market value of the securities as collateral. We
invest this cash in short-term securities. If the market value of the securities
goes up, the borrower pays us additional cash. During the course of the loan,
the borrower makes cash payments to us equal to all interest, dividends and
other distributions paid on the loaned securities. We will try to vote these
securities if a major event affecting our investment is under consideration. We
expect that outstanding securities loans will not exceed 10 percent of IDSC's
assets.
When-issued securities -- Most of our investments in debt securities are
purchased on a when-issued or similar basis. It may take as long as 45 days or
more before these securities are issued and delivered to us. We generally do not
pay for these securities or start earning on them until delivery. We have
established procedures to ensure that sufficient cash is available to meet
when-issued commitments. When-issued securities are subject to market
fluctuations and they may affect IDSC's investment portfolio the same as owned
securities.
Financials transactions including hedges -- We buy or sell various types of
options contracts for hedging purposes or as a trading technique to facilitate
securities purchases or sales. We may buy interest rate caps for hedging
purposes. These pay us a return if interest rates rise above a specified level.
If interest rates do not rise above a specified level, the interest rate caps do
not pay us a return. IDSC may enter into other financial transactions, including
futures and other derivatives, for the purpose of managing the interest rate
exposures associated with IDSC's assets or liabilities. Derivatives are
financial instruments whose performance is derived, at least in part, from the
performance of an underlying asset, security or index. A small change in the
value of the underlying asset, security or index may cause a sizable gain or
loss in the fair value of the derivative. We do not use derivatives for
speculative purposes.
Illiquid securities -- A security is illiquid if it cannot be sold in the normal
course of business within seven days at approximately its current market value.
Some investments cannot be resold to the U.S. public because of their terms or
government regulations. All securities, however, can be sold in private sales,
and many may be sold to other institutions and qualified buyers or on foreign
markets. IDSC's investment advisor will follow guidelines established by the
<PAGE>
board and consider relevant factors such as the nature of the security and the
number of likely buyers when determining whether a security is illiquid. No more
than 15% of IDSC's investment portfolio will be held in securities that are
illiquid. In valuing its investment portfolio to determine this 15% limit, IDSC
will use statutory accounting under an SEC order. This means that, for this
purpose, the portfolio will be valued in accordance with applicable Minnesota
law governing investments of life insurance companies, rather than generally
accepted accounting principles.
Restrictions: There are no restrictions on concentration of investments in any
particular industry or group of industries or on rates of portfolio turnover.
How your money is managed
Relationship between IDSC and American Express Financial Corporation
IDSC was originally organized as Investors Syndicate of America, Inc., a
Minnesota corporation, on Oct. 15, 1940, and began business as an issuer of face
amount investment certificates on Jan. 1, 1941. The company became a Delaware
corporation on Dec. 31, 1977, and changed its name to IDS Certificate Company on
April 2, 1984.
Before IDSC was created, AEFC (formerly known as IDS Financial Corporation), our
parent company, had issued similar certificates since 1894. As of Jan. 1, 1995,
IDS Financial Corporation changed its name to AEFC. IDSC and AEFC have never
failed to meet their certificate payments.
During its many years in operation, AEFC has become a leading manager of
investments in mortgages and securities. As of Dec. 31, 1997, AEFC managed
investments, including its own, of more than $173 billion. American Express
Financial Advisors Inc., a wholly owned subsidiary of AEFC, provides a broad
range of financial planning services for individuals and businesses through its
nationwide network of more than 175 offices and more than 8,500 financial
advisors. American Express Financial Advisors' financial planning services are
comprehensive, beginning with a detailed written analysis that's tailored to
your needs. Your analysis may address one or all of these six essential areas:
financial position, protection planning, investment planning, income tax
planning, retirement planning and estate planning.
AEFC itself is a wholly owned subsidiary of American Express Company, a
financial services company with executive offices at American Express Tower,
World Financial Center, New York, NY 10285. American Express Company is a
financial services company engaged through subsidiaries in other businesses
including:
o travel related services (including American Express(R) Card and
Travelers Cheque operations through American Express Travel Related
Services Company, Inc.and its subsidiaries); and
o international banking services (through American Express Bank Ltd. and
its subsidiaries including American Express Bank International).
American Express Financial Advisors Inc. is not a bank, and the securities
offered by it, such as face amount certificates issued by IDSC, are not backed
or guaranteed by any bank, nor are they insured by the FDIC.
<PAGE>
Capital structure and certificates issued
IDSC has authorized, issued and has outstanding 150,000 shares of common stock,
par value of $10 per share. AEFC owns all of the outstanding shares.
For fiscal year ended Dec. 31, 1997, IDSC had issued (in face amount)
$165,818,152 of installment certificates and $1,470,915,530 of single payment
certificates. As of Dec. 31, 1997, IDSC had issued (in face amount)
$13,493,767,867 of installment certificates and $17,259,360,607 of single
payment certificates since its inception in 1941.
Investment management and services
Under an Investment Advisory and Services Agreement, AEFC acts as our investment
advisor and is responsible for:
o providing investment research;
o making specific investment recommendations; and
o executing purchase and sale orders according to our policy of obtaining
the best price and execution.
All these activities are subject to direction and control by our board of
directors and officers. Our agreement with AEFC requires annual renewal by our
board, including a majority of directors who are not interested persons of AEFC
or IDSC as defined in the federal Investment Company Act of 1940.
For its services, we pay AEFC a monthly fee, equal on an annual basis to a
percentage of the total book value of certain assets (included assets).
Effective Jan. 1, 1998, the fee on any amount over $1 billion was changed from
0.450% to 0.107%.
Advisory and services fee computation:
Percentage of total
Included assets book value
First $250 million 0.750%
Next 250 million 0.650
Next 250 million 0.550
Next 250 million 0.500
Any amount over 1 billion 0.107
Included assets are all assets of IDSC except mortgage loans, real estate, and
any other asset on which we pay an outside advisory or a service fee.
Advisory and services fees for the past three years were:
Percentage of
Year Total fees included assets
1997 $17,232,602 0.50%
1996 16,989,093 0.50%
1995 16,472,458 0.50%
Estimated advisory and services fees for 1998 are $9,361,000.
<PAGE>
Other expenses payable by IDSC: The Investment Advisory and Services Agreement
provides that we will pay:
o costs incurred by us in connection with real estate and mortgages;
o taxes;
o depository and custodian fees;
o brokerage commissions;
fees and expenses for services not covered by other agreements and
provided to us at our request, or by requirement, by attorneys,
auditors, examiners and professional consultants who are not officers or
employees of AEFC;
o fees and expenses of our directors who are not officers or employees of
AEFC;
o provision for certificate reserves (interest accrued on certificate
holder accounts); and
o expenses of customer settlements not attributable to any sales function.
Distribution
Under a Distribution Agreement with American Express Financial Advisors Inc. we
pay an annual fee of $100 for the distribution of this certificate.
This fee is not assessed to your certificate account.
Transfer Agent
Under a Transfer Agency Agreement, American Express Client Service Corporation
(AECSC), a wholly-owned subsidiary of AEFC, maintains certificate owner accounts
and records. IDSC pays AECSC a monthly fee of one-twelfth of $10.353 per
certificate owner account for this service.
Employment of other American Express affiliates
AEFC may employ another affiliate of American Express as executing broker for
our portfolio transactions only if:
o we receive prices and executions at least as favorable as those offered
by qualified independent brokers performing similar services;
o the affiliate charges us commissions consistent with those charged to
comparable unaffiliated customers for similar transactions; and
o the affiliate's employment is consistent with the terms of the current
Investment Advisory and Services Agreement and federal securities laws.
Directors and officers
IDSC's directors, chairman, president and controller are elected annually for a
term of one year. The other executive officers are appointed by the president.
We paid a total of $38,000 during 1997 to directors not employed by AEFC.
<PAGE>
Board of directors
David R. Hubers*
Born in 1943. Director since 1987.
President and chief executive officer of AEFC since 1993. Senior vice president
and chief financial officer of AEFC from 1984 to 1993.
Charles W. Johnson
Born in 1929. Director since 1989.
Director, Communications Holdings, Inc. Former vice president and group
executive, Industrial Systems, with Honeywell, Inc. Retired 1989.
Richard W. Kling*
Born in 1940. Director since 1996.
Chairman of the board of directors since 1996. Director of IDS Life Insurance
Company since 1984; president since 1994. Executive vice president of marketing
and products of AEFC from 1988 to 1994. Senior vice president of AEFC since
1994. Director of IDS Life Series Fund, Inc. and member of the board of managers
of IDS Life Variable Annuity Funds A and B.
Edward Landes
Born in 1919. Director since 1984.
Development consultant. Director of IDS Life Insurance Company of New York.
Director of Endowment Development, YMCA of Metropolitan Minneapolis. Vice
president for Financial Development, YMCA of Metropolitan Minneapolis from 1985
through 1995. Former sales manager - Supplies Division and district manager -
Data Processing Division of IBM Corporation. Retired 1983.
John V. Luck Ph.D.
Born in 1926. Director since 1987.
Former senior vice president - Science and Technology with General Mills, Inc.
Employed with General Mills, Inc. since 1968. Retired 1988.
James A. Mitchell*
Born in 1941. Director since 1994.
Chairman of the board of directors from 1994 to 1996. Executive vice president
marketing and products of AEFC since 1994. Senior vice president - insurance
operations of AEFC and president and chief executive officer of IDS Life
Insurance Company from 1986 to 1994.
Harrison Randolph
Born in 1916. Director since 1968.
Engineering, manufacturing and management consultant since 1978.
Gordon H. Ritz
Born in 1926. Director since 1968.
Director, Mid-America Publishing and Atrix International, Inc. Former president,
Con Rad Broadcasting Corp. Former Director, Sunstar Foods.
<PAGE>
Stuart A. Sedlacek*
Born in 1957. Director since 1994.
President since 1994. Vice president - assured assets of AEFC since 1994. Vice
president and portfolio manager from 1988 to 1994. Executive vice president -
assured assets of IDS Life Insurance Company since 1994.
*"Interested Person" of IDSC as that term is defined in Investment Company Act
of 1940.
Executive officers
Stuart A. Sedlacek
Born in 1957. President since 1994.
Timothy S. Meehan
Born in 1957. Secretary since 1995.
Secretary of AEFC and American Express Financial Advisors Inc. since 1995.
Senior counsel to AEFC since 1995. Counsel from 1990 to 1995.
Lorraine R. Hart
Born in 1951. Vice president-investments since 1994.
Vice president - insurance investments of AEFC since 1989. Vice president,
investments of IDS Life Insurance Company since 1992.
Jay C. Hatlestad
Born in 1957. Vice president and controller of IDSC since 1994. Manager of
investment accounting of IDS Life Insurance Company from 1986 to 1994.
Bruce A. Kohn
Born in 1951. Vice president and general counsel since 1993. Senior counsel to
AEFC since 1996. Counsel to AEFC from 1992 to 1996. Associate counsel from 1987
to 1992.
F. Dale Simmons
Born in 1937. Vice president - real estate loan management since 1993. Vice
president of AEFC since 1992. Senior portfolio manager of AEFC since 1989.
Assistant vice president from 1987 to 1992.
The officers and directors as a group beneficially own less than 1% of the
common stock of American Express Company.
IDSC has provisions in its bylaws relating to the indemnification of its
officers and directors against liability, as permitted by law. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers or persons controlling the registrant pursuant
to the foregoing provisions, the registrant has been informed that in the
opinion of the SEC such indemnification is against public policy as expressed in
the Act and is therefore unenforceable.
<PAGE>
Independent auditors
A firm of independent auditors audits our financial statements at the close of
each fiscal year (Dec. 31). Copies of our annual financial statements (audited)
and semiannual financial statements (unaudited) are available to any certificate
holder upon request.
Ernst & Young, LLP, Minneapolis, has audited the financial statements for each
of the years in the three-year period ended Dec. 31, 1997. These statements are
included in this prospectus. Ernst & Young, LLP, is also the auditor for
American Express, the parent company of AEFC and IDSC.
<PAGE>
Appendix
Description of corporate bond ratings
Bond ratings concern the quality of the issuing corporation. They are not an
opinion of the market value of the security. Such ratings are opinions on
whether the principal and interest will be repaid when due. A security's rating
may change which could affect its price. Ratings by Moody's Investors Service,
Inc. are Aaa, Aa, A, Baa, Ba, B, Caa, Ca and C. Ratings by Standard & Poor's
Corporation are AAA, AA, A, BBB, BB, B, CCC, CC, C and D.
Aaa/AAA - Judged to be of the best quality and carry the smallest degree of
investment risk. Interest and principal are secure.
Aa/AA - Judged to be high-grade although margins of protection for interest and
principal may not be quite as good as Aaa or AAA rated securities.
A - Considered upper-medium grade. Protection for interest and principal is
deemed adequate but may be susceptible to future impairment.
Baa/BBB - Considered medium-grade obligations. Protection for interest and
principal is adequate over the short-term; however, these obligations may have
certain speculative characteristics.
Ba/BB - Considered to have speculative elements. The protection of interest and
principal payments may be very moderate.
B - Lack characteristics of more desirable investments. There may be small
assurance over any long period of time of the payment of interest and principal.
Caa/CCC - Are of poor standing. Such issues may be in default or there may be
risk with respect to principal or interest.
Ca/CC - Represent obligations that are highly speculative. Such issues are often
in default or have other marked shortcomings.
C - Are obligations with a higher degree of speculation. These securities have
major risk exposures to default.
D - Are in payment default. The D rating is used when interest payments or
principal payments are not made on the due date.
Non-rated securities will be considered for investment. When assessing each
non-rated security, IDSC will consider the financial condition of the issuer or
the protection afforded by the terms of the security.
<PAGE>
Quick telephone reference
Client Service Organization/Transaction Line
Withdrawals, transfers, inquiries
National/Minnesota: 800-437-3133
Mpls./St. Paul area: 612-671-3800
TTY Service
For the hearing impaired
800-846-4293
American Express Easy Access Line
Account value, cash transactions information, current rate information
(automated response, Touchtone(R) phones only)
National/Minnesota: 800-862-7919
Mpls./St. Paul area: 800-862-7919
IDS Series D-1 Investment Certificate
IDS Tower 10
Minneapolis, MN 55440-0010
Distributed by American Express Financial Advisors Inc.
<PAGE>
Summary of selected financial information
The following selected financial information has been derived from the
audited financial statements and should be read in conjunction with those
statements and the related notes to financial statements. Also see Management's
Discussion and Analysis of Financial Condition and Results of Operations for
additional comments.
<TABLE><CAPTION>
Year Ended Dec. 31, 1997 1996 1995 1994 1993
($ thousands)
Statement of Operations Data:
<S> <C> <C> <C> <C> <C>
Investment income $258,232 $251,481 $256,913 $207,975 $236,859
Investment expenses 70,137 62,851 62,817 58,690 65,404
Net investment income before provision for
certificate reserves and income tax benefit 188,095 188,630 194,096 149,285 171,455
Net provision for certificate reserves 165,136 171,968 176,407 107,288 123,516
Net investment income before income
tax benefit 22,959 16,662 17,689 41,997 47,939
Income tax benefit 3,682 6,537 9,097 2,663 3,365
Net investment income 26,641 23,199 26,786 44,660 51,304
Realized gain (loss) on investments - net:
Securities of unaffiliated issuers 980 (444) 452 (7,514) (9,870)
Other - unaffiliated - 101 (120) 1,638 (418)
Net realized gain (loss) on investments
before income taxes 980 (343) 332 (5,876) (10,288)
Income tax (expense) benefit (343) 120 (117) 2,047 4,617
Net realized gain (loss) on investments 637 (223) 215 (3,829) (5,671)
Net income - wholly owned subsidiary 328 1,251 373 241 120
Net income $27,606 $24,227 $27,374 $41,072 $45,753
Cash dividends declared $- $65,000 $- $40,200 $64,500
Balance Sheet Data:
Total assets $4,053,648 $3,563,234 $3,912,131 $3,040,857 $2,951,405
Certificate loans 37,098 43,509 51,147 58,203 67,429
Certificate reserves 3,724,978 3,283,191 3,628,574 2,887,405 2,777,451
Stockholder's equity 239,510 194,550 250,307 141,852 161,138
IDS Certificate Company (IDSC) is 100% owned by American Express Financial Corporation (Parent).
</TABLE>
<PAGE>
Management's discussion and analysis of financial condition and results
of operations
Results of operations:
IDS Certificate Company's (IDSC) earnings are derived primarily from the
after-tax yield on invested assets less investment expenses and interest
credited on certificate reserve liabilities. Changes in earnings' trends occur
largely due to changes in the rates of return on investments and the rates of
interest credited to certificate owner accounts and also, the mix of fully
taxable and tax-advantaged investments in the IDSC portfolio.
During the year 1997, total assets and certificate reserves increased due
to certificate sales exceeding certificate maturities and surrenders. The excess
of certificate sales over maturities and surrenders resulted primarily from a
special introductory offer of the 7- and 13-month term Flexible Savings
certificate. The increase in total assets in 1997 reflects also, an increase of
$27 million in net unrealized appreciation on investment securities classified
as available for sale.
During the year 1996, total assets and certificate reserves decreased due
primarily to certificate maturities and surrenders exceeding certificate sales.
The excess of certificate maturities and surrenders over certificate sales
resulted primarily from lower accrual rates declared by IDSC during the year.
The decrease in total assets in 1996 reflects also, a decrease in unrealized
appreciation on investment securities classified as available for sale of $23
million and cash dividends paid to Parent of $65 million. The decrease in total
assets in 1996 was tempered by an increase in payable for securities purchased
of $62 million that settled in early 1997.
1997 Compared to 1996:
Gross investment income increased 2.7% due primarily to a higher average
balance of invested assets.
Investment expenses increased 12% in 1997. The increase resulted primarily
from higher amortization of premiums paid for index options of $4.4 million,
higher distribution fees of $1.8 million and $3.2 million of interest expense on
reverse repurchase and interest rate swap agreements entered into in 1997. These
higher expenses were partially offset by $2.3 million lower amortization of
premiums paid for interest rate caps, corridors and floors due primarily to the
expiration of the cap and corridor agreements in 1996 and early 1997.
Net provision for certificate reserves decreased 4.0% due primarily to the
net of lower accrual rates and a higher average balance of certificate reserves
during 1997.
The decrease in income tax benefit resulted primarily from a lesser portion
of net investment income before income tax benefit being attributable to
tax-advantaged income.
<PAGE>
1996 Compared to 1995:
Gross investment income decreased 2.1% due primarily to lower investment yields.
Investment expenses increased slightly in 1996. The increase resulted
primarily from higher amortization of premiums paid for index options of $2.1
million and higher investment advisory and services fee of $.5 million due to a
slightly higher average asset base on which the fee is calculated. These
increases were offset by lower distribution fees of $1.2 million due to lower
certificate sales, and lower amortization of premiums paid for interest rate
caps/corridors of $1.4 million. The lower amortization of interest rate
caps/corridors reflects the net of $8.2 million lower amortization and $6.8
million less interest earned under the cap/corridor agreements.
Net provision for certificate reserves decreased 2.5% due primarily to the
net of lower accrual rates and a slightly higher average balance of certificate
reserves during 1996.
The decrease in income tax benefit resulted primarily from a lesser portion
of net investment income before income tax benefit being attributable to
tax-advantaged income.
Liquidity and cash flow:
IDSC's principal sources of cash are payments from sales of face-amount
certificates and cash flows from investments. In turn, IDSC's principal uses of
cash are payments to certificate owners for matured and surrendered
certificates, purchase of investments and payments of dividends to its Parent.
Certificate sales remained strong in 1997 reflecting clients' ongoing
desire for safety of principal. Sales of certificates totaled $1.5 billion in
1997 compared to $1.0 billion in 1996 and $1.8 billion in 1995. The higher
certificate sales in 1997 over 1996 resulted primarily from a special
introductory promotion of IDSC's 7- and 13-month term Flexible Savings
certificate which produced sales of $238 million. Certificate sales in 1997
benefited also, from higher sales of the Preferred Investors certificate of $113
million and sales of the Special Deposits certificate of $85 million. The
Preferred Investors certificate was first offered for sale early in the last
quarter of 1996. The Special Deposits certificate was first offered for sale to
private banking clients of American Express Bank Ltd. in Hong Kong late in the
third quarter of 1997. Certificate sales in 1995 benefited from a special
introductory promotion of IDSC's 11-month term Flexible Savings certificate
which produced sales of $562 million.
The special promotion of the 7- and 13-month term Flexible Savings
certificate was offered from Sept. 10, 1997 to Nov. 25, 1997, and applied only
to sales of new certificate accounts during the promotion period. Certificates
sold during the promotion period received a special interest rate, determined on
a weekly basis, of one percentage point above the Bank Rate Monitor Top 25
Market Average(TM) of comparable length certificates of deposit.
<PAGE>
The special promotion of the 11-month term Flexible Savings certificate was
offered from May 10, 1995 to July 3, 1995, and applied only to sales of new
certificate accounts during the promotion period. Certificates sold during the
promotion period received a special interest rate of 7.0% for the 11-month term.
Certificate maturities and surrenders totaled $1.3 billion during 1997
compared to $1.7 billion in 1996 and $1.0 billion in 1995. The higher
certificate maturities and surrenders in 1996 resulted primarily from $461
million of surrenders of the 11-month Flexible Savings certificate. The
surrenders of the 11-month Flexible Savings certificate resulted primarily from
lower accrual rates declared by IDSC at term renewal, reflecting interest rates
available in the marketplace.
IDSC, as an issuer of face-amount certificates, is affected whenever there
is a significant change in interest rates. In view of the uncertainty in the
investment markets and due to the short-term repricing nature of certificate
reserve liabilities, IDSC continues to invest in securities that provide for
more immediate, periodic interest/principal payments, resulting in improved
liquidity. To accomplish this, IDSC continues to invest much of its cash flow in
mortgage-backed securities and intermediate-term bonds.
IDSC's investment program is designed to maintain an investment portfolio
that will produce the highest possible after-tax yield within acceptable risk
standards with additional emphasis on liquidity. The program considers
investment securities as investments acquired to meet anticipated certificate
owner obligations.
Under Statement of Financial Accounting Standards (SFAS) No. 115,
"Accounting for Certain Investments in Debt and Equity Securities", 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. The
available-for-sale classification does not mean that IDSC expects to sell these
securities, but that under SFAS No. 115 positive intent criteria, these
securities are available to meet possible liquidity needs should there be
significant changes in market interest rates or certificate owner demand. See
notes 1 and 3 to the financial statements for additional information relating to
SFAS No. 115.
At Dec. 31, 1997, securities classified as held to maturity and carried at
amortized cost were $.8 billion. Securities classified as available for sale and
carried at fair value were $2.9 billion. These securities, which comprise 92% of
IDSC's total invested assets, are well diversified. Of these securities, 98%
have fixed maturities of which 91% are of investment grade. Other than U.S.
Government Agency mortgage-backed securities, no one issuer represents more than
1% of total securities. See note 3 to financial statements for additional
information on ratings and diversification.
<PAGE>
During the year ended Dec. 31, 1997, IDSC sold held-to-maturity securities with
an amortized cost and fair value of $33.0 million and $33.9 million,
respectively. The securities were sold due to significant deterioration in the
issuers' creditworthiness. During the same period in 1997, securities classified
as available for sale were sold with an amortized cost and fair value of $161
million. The securities were sold in general management of the investment
portfolio.
There were no transfers of available-for-sale or held-to-maturity
securities during the years ended Dec. 31, 1997 and 1996. During the year ended
Dec. 31, 1995, investment securities, primarily municipal bonds, with an
amortized cost and fair value of $112 million and $117 million, respectively,
were reclassified from held to maturity to available for sale. The
reclassification was made on Dec. 4, 1995, as a result of IDSC adopting the FASB
Special Report, "A Guide to Implementation of Statement 115 on Accounting for
Certain Investments in Debt and Equity Securities".
Market risk and derivative financial instruments:
The sensitivity analysis of two different tests of market risk discussed
below estimate the effects of hypothetical sudden and sustained changes in the
applicable market conditions on the ensuing one year's earnings. The market
changes, assumed to occur as of Dec. 31, 1997, are a 100 basis point increase in
market interest rates and a 10% decline in a major stock market index.
Computation of the prospective effects of hypothetical interest rate and major
stock market index changes are based on numerous assumptions, including relative
levels of market interest rates and the major stock market index level, as well
as the levels of assets and liabilities. The hypothetical changes and
assumptions will be different than what actually occurs in the future.
Furthermore, the computations do not anticipate actions that may be taken by
management if the hypothetical market changes actually occurred over time. As a
result, actual earnings affects in the future will differ from those quantified
below.
IDSC primarily invests in intermediate-term and long-term fixed income
securities to provide its certificate owners with a competitive rate of return
on their certificates while managing risk. These investment securities provide
IDSC with a historically dependable and targeted margin between the interest
rate earned on investments and the interest rate credited to certificate owners'
accounts. IDSC does not invest in securities to generate trading profits for its
own account.
IDSC's Investment Committee, which comprises senior business managers,
meets regularly to review models projecting different interest rate scenarios
and their impact on IDSC's profitability. The committee's objective is to
structure IDSC's portfolio of investment securities based upon the type and
behavior of the certificates in the certificate reserve liabilities, to achieve
targeted levels of profitability and meet certificate contractual obligations
Rates credited to certificate owners' accounts are generally reset at
shorter intervals than the maturity of underlying investments. Therefore, IDSC's
margins may be negatively impacted by increases in the general level of interest
rates. Part of the committee's strategies include the purchase of derivatives,
such as interest rate caps, corridors, floors and swaps, for hedging purposes.
On a certain series of certificates, interest is credited to the certificate
owners' accounts based upon the relative change in a major stock market index
<PAGE>
between the beginning and end of the certificates' term. As a means of
hedging its obligations under the provisions of these certificates, the
committee purchases and writes call options on the major stock market index. See
note 9 to the financial statements for additional information regarding
derivative financial instruments.
The negative impact on IDSC's earnings of the 100 basis point increase in
interest rates described above would be approximately $5.9 million pretax. It
assumes repricings and customer behavior based on the application of proprietary
models to the book of business at Dec. 31, 1997. The 10% decrease in a major
stock market index level would have a minimal impact on IDSC's earnings because
the income effect is a decrease in option income and a corresponding decrease in
interest credited to the Stock Market certificate owners' accounts.
Year 2000 Issue:
The Year 2000 issue is the result of computer programs having been written
using two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of IDSC. All of the systems
used by IDSC are maintained by its Parent and are utilized by multiple
subsidiaries and affiliates of the Parent. IDSC's business is heavily dependent
upon the Parent's computer systems, and has significant interactions with
systems of third parties.
A comprehensive review of the Parent's computer systems and business
processes, including those specific to IDSC, has been conducted to identify the
major systems that could be affected by the Year 2000 issue. Steps are being
taken to resolve any potential problems including modification to existing
software and the purchase of new software. These measures are scheduled to be
completed and tested on a timely basis. The Parent's goal is to complete
internal remediation and testing of each system by the end of 1998 and to
continue compliance efforts through 1999.
The Parent is evaluating the Year 2000 readiness of advisors and other
third parties whose system failures could have an impact on IDSC's operations.
The potential materiality of any such impact is not known at this time.
Ratios:
The ratio of stockholder's equity, excluding net unrealized holding gains
on investment securities, to total assets less certificate loans and net
unrealized holding gains on investment securities at Dec. 31, 1997 and 1996 was
5.2%. IDSC's current regulatory requirement is a ratio of 5.0%.
<PAGE>
Annual Financial Information
IDS Certificate Company
Responsibility for Preparation of Financial Statements
The management of IDS Certificate Company (IDSC) is responsible for the
preparation and fair presentation of its financial statements. The financial
statements have been prepared in conformity with generally accepted accounting
principles appropriate in the circumstances, and include amounts based on the
best judgment of management. IDSC's management is also responsible for the
accuracy and consistency of other financial information included in the
prospectus.
In recognition of its responsibility for the integrity and objectivity of
data in the financial statements, IDSC maintains a system of internal control
over financial reporting. The system is designed to provide reasonable, but not
absolute, assurance with respect to the reliability of IDSC's financial
statements. The concept of reasonable assurance is based on the notion that the
cost of the internal control system should not exceed the benefits derived.
The internal control system is founded on an ethical climate and includes
an organizational structure with clearly defined lines of responsibility,
policies and procedures, a Code of Conduct, and the careful selection and
training of employees. Internal auditors monitor and assess the effectiveness of
the internal control system and report their findings to management throughout
the year. IDSC's independent auditors are engaged to express an opinion on the
year-end financial statements and, with the coordinated support of the internal
auditors, review the financial records and related data and test the internal
control system over financial reporting.
<PAGE>
Report of Independent Auditors
The Board of Directors and Security Holders
IDS Certificate Company:
We have audited the accompanying balance sheets of IDS Certificate Company,
a wholly owned subsidiary of American Express Financial Corporation, as of
December 31, 1997 and 1996, and the related statements of operations,
stockholder's equity and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the management of IDS Certificate Company. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of investments owned as of December 31, 1997 and 1996 by
correspondence with custodians and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of IDS Certificate Company at
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Minneapolis, Minnesota
February 5, 1998
<PAGE>
<TABLE><CAPTION>
Balance Sheets, Dec. 31,
Assets
<S> <C> <C>
Qualified Assets (note 2) 1997 1996
($ thousands)
Investments in unaffiliated issuers (notes 3, 4 and 10):
Cash and cash equivalents $- $111,331
Held-to-maturity securities 758,143 863,921
Available-for-sale securities 2,911,524 2,212,968
First mortgage loans on real estate 212,433 218,697
Certificate loans - secured by certificate reserves 37,098 43,509
Investments in and advances to affiliates 6,772 6,444
Total investments 3,925,970 3,456,870
Receivables:
Dividends and interest 48,817 44,013
Investment securities sold 1,635 654
Total receivables 50,452 44,667
Other (notes 9 and 10) 56,127 36,164
Total qualified assets 4,032,549 3,537,701
Other Assets
Deferred distribution fees and other 21,099 25,533
Total assets $4,053,648 $3,563,234
See notes to financial statements.
<PAGE>
Balance Sheets, Dec. 31, (continued)
Liabilities and Stockholder's Equity
Liabilities 1997 1996
($ thousands)
Certificate Reserves (notes 5 and 10):
Installment certificates:
Reserves to mature $343,219 $344,344
Additional credits and accrued interest 19,554 21,931
Advance payments and accrued interest 968 1,198
Other 56 55
Fully paid certificates:
Reserves to mature 3,186,191 2,747,690
Additional credits and accrued interest 174,699 167,673
Due to unlocated certificate holders 291 300
Total certificate reserves 3,724,978 3,283,191
Accounts Payable and Accrued Liabilities:
Due to Parent (note 7A) 1,639 1,424
Due to Parent for federal income taxes 495 1,737
Due to affiliates (note 7B, 7C and 7D) 331 279
Reverse repurchase agreements 22,000 -
Payable for investment securities purchased 19,601 61,979
Accounts payable, accrued expenses and other (notes 9 and 10) 29,919 11,977
Total accounts payable and accrued liabilities 73,985 77,396
Deferred federal income taxes (note 8) 15,175 8,097
Total liabilities 3,814,138 3,368,684
Commitments (note 4)
Stockholder's Equity (notes 5B, 5C, and 6):
Common stock, $10 par - authorized and issued 150,000 shares 1,500 1,500
Additional paid-in capital 143,844 143,844
Retained earnings:
Appropriated for predeclared additional credits/interest 6,375 11,989
Appropriated for additional interest on advance payments 50 50
Unappropriated 55,948 22,728
Unrealized holding gains on investment
securities - net (note 3A) 31,793 14,439
Total stockholder's equity 239,510 194,550
Total liabilities and stockholder's equity $4,053,648 $3,563,234
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE><CAPTION>
Statements of Operations
Year ended Dec. 31, 1997 1996 1995
($ thousands)
<S> <C> <C> <C>
Investment Income:
Interest income from investments:
Bonds and notes:
Unaffiliated issuers $191,190 $184,653 $181,902
Mortgage loans on real estate:
Unaffiliated 18,053 19,583 22,171
Affiliated - 36 56
Certificate loans 2,200 2,533 2,963
Dividends 44,543 44,100 48,614
Other 2,246 576 1,207
Total investment income 258,232 251,481 256,913
Investment Expenses:
Parent and affiliated company fees (note 7):
Distribution 34,507 32,732 33,977
Investment advisory and services 17,233 16,989 16,472
Depositary 238 228 242
Options (note 9) 14,597 10,156 8,038
Interest rate caps, corridors and floors (note 9) 35 2,351 3,725
Reverse repurchase agreements 1,217 - -
Interest rate swap agreements (note 9) 1,956 - -
Other 354 395 363
Total investment expenses 70,137 62,851 62,817
Net investment income before provision
for certificate reserves and income tax benefit $188,095 $188,630 $194,096
See notes to financial statements.
<PAGE>
Statements of Operations (continued)
Year ended Dec. 31, 1997 1996 1995
($ thousands)
Provision for Certificate Reserves (notes 5 and 9):
According to the terms of the certificates:
Provision for certificate reserves $9,796 $10,445 $11,009
Interest on additional credits 1,244 1,487 2,300
Interest on advance payments 50 61 73
Additional credits/interest authorized by IDSC:
On fully paid certificates 150,752 155,411 157,857
On installment certificates 4,323 5,637 6,288
Total provision for certificate reserves before reserve
recoveries 166,165 173,041 177,527
Reserve recoveries from terminations
prior to maturity (1,029) (1,073) (1,120)
Net provision for certificate reserves 165,136 171,968 176,407
Net investment income before income tax benefit 22,959 16,662 17,689
Income tax benefit (note 8) 3,682 6,537 9,097
Net investment income 26,641 23,199 26,786
Realized gain (loss) on investments - net:
Securities of unaffiliated issuers 980 (444) 452
Other-unaffiliated - 101 (120)
Net realized gain (loss) on investments before income taxes 980 (343) 332
Income tax (expense) benefit (note 8):
Current (304) 772 160
Deferred (39) (652) (277)
Total income tax (expense) benefit (343) 120 (117)
Net realized gain (loss) on investments 637 (223) 215
Net income - wholly owned subsidiary 328 1,251 373
Net income $27,606 $24,227 $27,374
See notes to financial statements.
<PAGE>
Statements of Stockholder's Equity
Year ended Dec. 31, 1997 1996 1995
($ thousands)
Common Stock:
Balance at beginning and end of year $1,500 $1,500 $1,500
Additional Paid-in Capital:
Balance at beginning of year $143,844 $168,844 $140,344
Contribution from Parent - - 28,500
Cash dividends declared - (25,000) -
Balance at end of year $143,844 $143,844 $168,844
Retained Earnings:
Appropriated for predeclared additional credits/interest (note 5B):
Balance at beginning of year $11,989 $18,878 $18,398
Transferred (to) from unappropriated retained earnings (5,614) (6,889) 480
Balance at end of year $6,375 $11,989 $18,878
Appropriated for additional interest on advance payments (note 5C):
Balance at beginning and end of year $50 $50 $50
Unappropriated (note 6):
Balance at beginning of year $22,728 $31,612 $4,718
Net income 27,606 24,227 27,374
Transferred from (to) appropriated retained earnings 5,614 6,889 (480)
Cash dividends declared - (40,000) -
Balance at end of year $55,948 $22,728 $31,612
Unrealized holding gains and losses on investment securities net (notes 1 and
3A):
Balance at beginning of year $14,439 $29,423 ($23,158)
Change during year 17,354 (14,984) 52,581
Balance at end of year $31,793 $14,439 $29,423
Total stockholder's equity $239,510 $194,550 $250,307
See notes to financial statements.
<PAGE>
Statements of Cash Flows
Year ended Dec. 31, 1997 1996 1995
($ thousands)
Cash flows from operating activities:
Net income $27,606 $24,227 $27,374
Adjustments to reconcile net income to net
cash provided by operating activities:
Net income of wholly owned subsidiary (328) (1,251) (373)
Net provision for certificate reserves 165,136 171,968 176,407
Interest income added to certificate loans (1,414) (1,631) (1,902)
Amortization of premiums/discounts-net 15,484 14,039 19,232
Provision for deferred federal income taxes (2,266) (1,124) (2,652)
Net realized (gain) loss on investments before income taxes (980) 343 (332)
(Increase) decrease in dividends and interest receivable (4,804) 5,619 (7,371)
Decrease (increase) in deferred distribution fees 4,434 2,761 (1,144)
Decrease in other assets - - 466
Increase (decrease) in other liabilities 443 (679) (1,549)
Net cash provided by operating activities 203,311 214,272 208,156
Cash flows from investing activities:
Maturity and redemption of investments:
Held-to-maturity securities 76,678 163,066 315,766
Available-for-sale securities 408,019 537,565 325,521
Other investments 79,929 52,189 46,004
Sale of investments:
Held-to-maturity securities 33,910 24,984 22,305
Available-for-sale securities 160,207 356,194 48,372
Other investments - 385 21
Certificate loan payments 4,814 6,003 6,061
Purchase of investments:
Held-to-maturity securities (4,565) (49,984) (208,140)
Available-for-sale securities (1,283,620) (617,138) (1,397,983)
Other investments (62,831) (28,617) (17,234)
Certificate loan fundings (5,021) (5,288) (7,776)
Net cash (used in) provided by investing activities ($592,480) $439,359 ($867,083)
See notes to financial statements.
<PAGE>
Statements of Cash Flows (continued)
Year ended Dec. 31, 1997 1996 1995
($ thousands)
Cash flows from financing activities:
Payments from certificate owners $1,580,013 $1,129,023 $1,577,884
Capital contribution from Parent - - 28,500
Proceeds from reverse repurchase agreements 433,000 - -
Certificate maturities and cash surrenders (1,324,175) (1,663,196) (1,030,712)
Payments under reverse repurchase agreements (411,000) - -
Dividends paid - (65,000) -
Net cash provided by (used in) financing activities 277,838 (599,173) 575,672
Net (decrease) increase in cash and cash equivalents (111,331) 54,458 (83,255)
Cash and cash equivalents beginning of year 111,331 56,873 140,128
Cash and cash equivalents end of year $- $111,331 $56,873
Supplemental disclosures including non-cash transactions:
Cash (paid) received for income taxes ($104) $7,195 $6,854
Certificate maturities and surrenders through
loan reductions 8,032 8,554 10,673
See notes to financial statements.
</TABLE>
<PAGE>
Notes to Financial Statements ($ in thousands unless indicated otherwise)
1. Nature of business and summary of significant accounting policies
Nature of business
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") and 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 ten 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 non-investment
company subsidiaries of issuers of face-amount certificates. Certain amounts
from prior years have been reclassified to conform to the current year
presentation.
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 year then ended. Actual results could differ from
those estimates.
Fair values of financial instruments
The fair values of financial instruments disclosed in the notes to
financial statements are estimates based upon current market conditions and
perceived risks, and require varying degrees of management judgment.
<PAGE>
Notes to Financial Statements ($ in thousands unless indicated otherwise)
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. Dividend income from perpetual
preferred stock is recognized on an ex-dividend basis.
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 reserves for losses,
which is the basis for determining any realized gains or losses. The estimated
fair value of the mortgage loans is determined by a discounted cash flow
analysis using mortgage interest rates currently offered for mortgages of
similar maturities.
Impairment 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 mortgage loan losses.
The reserve for mortgage loan losses is maintained at a level that
management believes is adequate to absorb estimated losses in the 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
mortgage loan losses.
IDSC generally stops accruing interest on mortgage loans for which interest
payments are delinquent more than three months. Based on Management's judgment
as to the ultimate collectibility of principal, interest payments received are
either recognized as income or applied to the recorded investment in the loan.
<PAGE>
Notes to Financial Statements ($ in thousands unless indicated otherwise)
Certificates
Investment certificates may be purchased either with a lump-sum payment or
by installment payments. Certificate owners are entitled to receive at maturity
a definite sum of money. Payments from certificate owners are credited to
investment certificate reserves. Investment certificate reserves accumulate at
specified percentage rates as declared by IDSC. Reserves also are maintained for
advance payments made by certificate owners, accrued interest thereon, and for
additional credits in excess of minimum guaranteed rates 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.
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 prior to maturity, unamortized deferred
distribution fees are recognized in expense and any related surrender charges
are recognized as a reduction in provision for certificate reserves.
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 $3,694,204 and $3,259,260 at Dec. 31, 1997 and
1996, respectively. IDSC had qualified assets of $3,964,036 at Dec. 31, 1997 and
$3,453,508 at Dec. 31, 1996, excluding net unrealized appreciation on
available-for-sale securities of $48,912 and $22,214 at Dec. 31, 1997 and 1996,
respectively and payable for securities purchased of $19,601 and $61,979 at Dec.
31, 1997 and 1996, respectively.
Qualified assets are valued in accordance with such provisions of Minnesota
Statutes as are applicable to investments of life insurance companies. Qualified
assets for which no provision for valuation is made in such statutes are valued
in accordance with rules, regulations or orders prescribed by the SEC. These
values are the same as financial statement carrying values, except for debt
securities classified as available for sale and all marketable equity
securities, which are carried at fair value in the financial statements but are
valued at amortized cost for qualified asset and deposit maintenance purposes.
<PAGE>
Notes to Financial Statements ($ in thousands unless indicated otherwise)
B) Pursuant to provisions of the certificates, the 1940 Act, the central
depositary agreement and to requirements of various states, qualified assets of
IDSC were deposited as follows:
<TABLE><CAPTION>
Dec. 31, 1997
Required
Deposits deposits Excess
<S> <C> <C> <C>
Deposits to meet certificate
liability requirements:
States $363 $328 $35
Central Depositary 3,826,505 3,650,121 176,384
Total $3,826,868 $3,650,449 $176,419
Dec. 31, 1996
Required
Deposits deposits Excess
Deposits to meet certificate
liability requirements:
States $362 $330 $32
Central Depositary 3,355,041 3,203,076 151,965
Total $3,355,403 $3,203,406 $151,997
</TABLE>
The assets on deposit at Dec. 31, 1997 and 1996 consisted of securities
having a deposit value of $3,580,866 and $3,117,715, respectively; mortgage
loans of $212,433 and $218,697, respectively; and other assets of $33,569 and
$18,991, respectively.
American Express Trust Company is the central depositary for IDSC. See note 7C.
3. Investments in securities
A) Fair values of investments in securities represent market prices or
estimated fair values when quoted prices are not available. Estimated fair
values are determined by IDSC using established procedures, involving review of
market indexes, price levels of current offerings and comparable issues, price
estimates and market data from independent brokers and financial files. The
procedures are reviewed annually. IDSC's vice president - investments reports to
the board of directors on an annual basis regarding such pricing sources and
procedures to provide assurance that fair value is being achieved.
<PAGE>
Notes to Financial Statements ($ in thousands unless indicated otherwise)
The following is a summary of securities held to maturity and securities
available for sale at Dec. 31, 1997 and Dec. 31, 1996.
<TABLE><CAPTION>
Dec. 31, 1997
Gross Gross
Amortized Fair unrealized unrealized
cost value gains losses
<S> <C> <C> <C> <C>
HELD TO MATURITY
U.S. Government and
agencies obligations $363 $369 $6 $-
Mortgage-backed securities 29,340 29,969 629 -
Corporate debt securities 242,050 248,455 6,493 88
Stated maturity preferred stock 486,390 505,522 19,332 200
$758,143 $784,315 $26,460 $288
AVAILABLE FOR SALE
Mortgage-backed securities $1,251,283 $1,274,417 $23,336 $202
State and municipal obligations 41,116 42,526 1,410 -
Corporate debt securities 1,417,668 1,438,640 22,636 1,664
Stated maturity preferred stock 63,214 64,444 1,284 54
Perpetual preferred stock 88,726 91,497 2,771 -
Common stock 605 - - 605
$2,862,612 $2,911,524 $51,437 $2,525
Dec. 31, 1996
Gross Gross
Amortized Fair unrealized unrealized
cost value gains losses
HELD TO MATURITY
U.S. Government and
agencies obligations $362 $365 $4 $1
Mortgage-backed securities 38,435 38,834 743 344
Corporate debt securities 266,642 274,235 8,447 854
Stated maturity preferred stock 558,482 576,603 19,513 1,392
$863,921 $890,037 $28,707 $2,591
AVAILABLE FOR SALE
Mortgage-backed securities $1,009,738 $1,021,603 $14,164 $2,299
State and municipal obligations 55,876 57,726 1,850 -
Corporate debt securities 1,000,316 1,008,077 10,808 3,047
Stated maturity preferred stock 52,458 52,139 109 428
Perpetual preferred stock 68,000 68,282 317 35
Common stock 4,366 5,141 775 -
$2,190,754 $2,212,968 $28,023 $5,809
</TABLE>
<PAGE>
Notes to Financial Statements ($ in thousands unless indicated otherwise)
The amortized cost and fair value of securities held to maturity and
available for sale, by contractual maturity, at Dec. 31, 1997, are shown below.
Cash flows will differ from contractual maturities because issuers may have the
right to call or prepay obligations.
<TABLE><CAPTION>
Amortized Fair
cost value
<S> <C> <C>
HELD TO MATURITY
Due within 1 year $78,343 $78,991
Due after 1 through 5 years 381,844 393,317
Due after 5 years through 10 years 168,247 175,540
Due after 10 years 100,369 106,498
728,803 754,346
Mortgage-backed securities 29,340 29,969
$758,143 $784,315
AVAILABLE FOR SALE
Due within 1 year $53,744 $54,074
Due after 1 through 5 years 785,191 794,535
Due after 5 years through 10 years 469,792 480,813
Due after 10 years 213,271 216,188
1,521,998 1,545,610
Mortgage-backed securities 1,251,283 1,274,417
Perpetual preferred stock 88,726 91,497
Common stock 605 -
$2,862,612 $2,911,524
</TABLE>
During the years ended Dec. 31, 1997 and 1996, there were no securities
classified as trading securities.
The proceeds from sales of available-for-sale securities and the gross
realized gains and gross realized losses on those sales during the years ended
Dec. 31, 1997, 1996 and 1995, were as follows:
<TABLE><CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Proceeds $161,188 $313,976 $83,970
Gross realized gains 1,292 456 36
Gross realized losses 1,637 5,836 1,854
</TABLE>
Sales of held-to-maturity securities, due to significant credit
deterioration, during the years ended Dec. 31, 1997, 1996 and 1995, were as
follows:
<TABLE><CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Amortized cost $32,969 $22,297 $22,782
Gross realized gains 1,621 3,200 2
Gross realized losses 680 513 479
</TABLE>
<PAGE>
Notes to Financial Statements ($ in thousands unless indicated otherwise)
During the years ended Dec. 31, 1997 and 1996, no securities were
reclassified from held to maturity to available for sale. During the year ended
Dec. 31, 1995, securities with an amortized cost and fair value of $111,967 and
$116,882, respectively, were reclassified from held to maturity to available for
sale. The reclassification was made on Dec. 4, 1995, as a result of adopting the
FASB Special Report, "A Guide to Implementation of Statement 115 on Accounting
for Certain Investments in Debt and Equity Securities".
B) Investments in securities with fixed maturities comprised 89% and 85% of
IDSC's total invested assets at Dec. 31, 1997 and 1996, respectively. Securities
are rated by Moody's and Standard & Poors (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 1997 1996
Aaa/AAA 44% 41%
Aa/AA 1 1
Aa/A 1 1
A/A 14 20
A/BBB 6 6
Baa/BBB 25 24
Below investment grade 9 7
100% 100%
Of the securities rated Aaa/AAA, 83% at Dec. 31, 1997 and 87% at Dec. 31,
1996 are U.S. Government Agency mortgage-backed securities that are not rated by
a public rating agency. Approximately 9% at Dec. 31, 1997 and 11% at Dec. 31,
1996 of other securities with fixed maturities are rated by Parent's internal
analysts. At Dec. 31, 1997 and 1996 no one issuer, other than U.S. Government
Agency mortgage-backed securities, 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 note 3A.
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 incurred by the issuer of the restricted securities.
<PAGE>
Notes to Financial Statements ($ in thousands unless indicated otherwise)
4. Investments in first mortgage loans on real estate
At Dec. 31, 1997 and 1996, IDSC's recorded investment in impaired mortgage
loans was $363 and $847, respectively, and the reserve for loss on those amounts
was $261 and $611, respectively. During 1997, 1996 and 1995, the average
recorded investment in impaired mortgage loans was $743, $925 and $1,052,
respectively.
IDSC recognized $37, $88 and $53 of interest income related to impaired
mortgage loans for the years ended Dec. 31, 1997, 1996 and 1995, respectively.
During the years ended Dec. 31, 1997, 1996 and 1995, there were no changes
in the reserve for loss on mortgage loans of $611.
At Dec. 31, 1997 and 1996, approximately 5% and 6%, respectively, of IDSC's
invested assets were first mortgage loans on real estate. A summary of first
mortgage loans by region and type of real estate is as follows:
Region 1997 1996
South Atlantic 23% 22%
West North Central 21 17
East North Central 18 21
Mountain 13 15
Middle Atlantic 11 14
West South Central 6 5
New England 5 3
Pacific 3 3
100% 100%
Property Type 1997 1996
Retail/shopping centers 31% 36%
Apartments 23 33
Office buildings 20 9
Industrial buildings 17 13
Other 9 9
100% 100%
<PAGE>
Notes to Financial Statements ($ in thousands unless indicated otherwise)
The carrying amounts and fair values of first mortgage loans on real estate
are as follows at Dec. 31. The fair values are estimated using discounted cash
flow analysis, using market interest rates currently being offered for loans
with similar maturities.
Dec. 31, 1997 Dec. 31, 1996
Carrying Fair Carrying Fair
amount value amount value
First mortgage loans on real estate $213,044 $216,951 $219,308 $221,253
Reserve for losses (611) - (611) -
Net first mortgage loans on
real estate $212,433 $216,951 $218,697 $221,253
At Dec. 31, 1997 and 1996, commitments for fundings of first mortgage
loans, at market interest rates, aggregated $9,375 and $9,300, respectively.
IDSC employs policies and procedures to ensure the creditworthiness of the
borrowers and that funds will be available on the funding date. IDSC's loan
fundings are restricted to 80% or less of the market value of the real estate at
the time of the loan funding. Management believes there is no fair value for
these commitments.
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 Dec. 31, 1997
and 1996 were:
1997
Average Average
Reserve gross additional
balance accumulation credit
rate rate
Installment certificates:
Reserves to mature:
With guaranteed rates $24,316 3.50 1.35%
Without guaranteed rates (A) 318,903 - 2.96
Additional credits and accrued interest 19,554 3.17 -
Advance payments and accrued interest (C) 968 3.17 1.68
Other 56 -
Fully paid certificates:
Reserves to mature:
With guaranteed rates 165,258 3.21 1.83
Without guaranteed rates (A) and (D) 3,020,933 - 5.03
Additional credits and accrued interest 174,699 3.21 -
Due to unlocated certificate holders 291 - -
$3,724,978
<PAGE>
Notes to Financial Statements ($ in thousands unless indicated otherwise)
1996
Average Average
Reserve gross additional
balance accumulation credit
rate rate
Installment certificates:
Reserves to mature:
With guaranteed rates $32,512 3.50 1.35%
Without guaranteed rates (A) 311,832 - 2.97
Additional credits and accrued interest 21,931 3.14 -
Advance payments and accrued interest 1,198 3.15 1.70
Other 55 - -
Fully paid certificates:
Reserves to mature:
With guaranteed rates 187,272 3.23 1.79
Without guaranteed rates (A) and (D) 2,560,418 - 5.03
Additional credits and accrued interest 167,673 3.23 -
Due to unlocated certificate holders 300 - -
$3,283,191
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 Dec. 31, 1997, $6,375 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 3.17%. IDSC has increased the rate of
accrual to 4.85% through April 30, 1999. 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.
D) IDS Stock Market Certificate enables the certificate owner 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 Dec. 31, 1997 and
1996 was $416,485 and $309,570, respectively.
E) The carrying amounts and fair values of certificate reserves consisted
of the following at Dec. 31, 1997 and 1996. Fair values of certificate reserves
with interest rate terms of one year or less approximated the carrying values
less any applicable surrender charges.
<PAGE>
Notes to Financial Statements ($ in thousands unless indicated otherwise)
The fair values for other certificate reserves are determined by a
discounted cash flow analysis using interest rates currently offered for
certificates with similar remaining terms, less any applicable surrender
charges.
<TABLE><CAPTION>
1997 1996
Carrying Fair Carrying Fair
amount value amount value
<S> <C> <C> <C> <C>
Reserves with terms of one year or less $3,186,971 $3,185,396 $2,637,144 $2,635,835
Other 538,007 551,988 646,047 673,772
Total certificate reserves 3,724,978 3,737,384 3,283,191 3,309,607
Unapplied certificate transactions 868 868 1,217 1,217
Certificate loans and accrued interest (37,495) (37,495) (43,980) (43,980)
Total $3,688,351 $3,700,757 $3,240,428 $3,266,844
</TABLE>
6. Dividend restriction
Certain series of installment certificates outstanding provide that cash
dividends may be paid by IDSC only in calendar years for which additional
credits of at least one-half of 1% on such series of certificates have been
authorized by IDSC. This restriction has been removed for 1998 and 1999 by
IDSC's declaration of additional credits in excess of this requirement.
7. Fees paid to Parent and affiliated companies ($ not in thousands)
A) The basis of computing fees paid or payable to Parent for investment
advisory and other general and administrative services is:
The investment advisory and services agreement with Parent provides for a
graduated scale of fees equal on an annual basis to 0.750% on the first $250
million of total book value of assets of IDSC, 0.650% on the next $250 million,
0.550% on the next $250 million, 0.500% on the next $250 million and 0.107% on
the amount in excess of $1 billion. Effective Jan. 1, 1998, the fee on the
amount in excess of $1 billion was changed from 0.450% to 0.107%. The fee is
payable monthly in an amount equal to one-twelfth of each of the percentages set
forth above. Excluded from assets for purposes of this computation are first
mortgage loans, real estate and any other asset on which IDSC pays an outside
service fee.
B) The basis of computing fees paid or payable to American Express
Financial Advisors Inc. (an affiliate) for distribution services is:
Fees payable to American Express Financial Advisors Inc. on sales of IDSC's
certificates are based upon terms of agreements giving American Express
Financial Advisors Inc. the exclusive right to distribute the certificates
covered under the agreements. The agreements provide for payment of fees over a
period of time.
<PAGE>
Notes to Financial Statements ($ in thousands unless indicated otherwise)
From time to time, IDSC may sponsor or participate in sales promotions
involving one or more of the certificates and their respective terms. These
promotions may offer a special interest rate to attract new clients or retain
existing clients. To cover the cost of these promotions, distribution fees paid
to American Express Financial Advisors may be lowered. For the promotion of
IDSC's 7-month and 13-month term Flexible Savings certificate which occurred
Sept. 10, 1997 to Nov. 25, 1997, the distribution fee for sales of these
certificates was lowered to 0.067%.
The aggregate fees payable under the agreements per $1,000 face amount of
installment certificates and a summary of the periods over which the fees are
payable are:
<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>
On sales effective April 30, 1997 $25.00 $ 2.50 $22.50 9
On sales prior to April 30, 1997(a) 30.00 6.00 24.00 4
</TABLE>
(a) At the end of the sixth through the 10th year, an additional fee of
0.5% is payable on the daily average balance of the certificate reserve
maintained during the sixth through the 10th year, respectively.
Effective April 30, 1997, fees on Cash Reserve and Flexible Savings
Certificates are paid at a rate of 0.20% of the purchase price at the time of
issuance and 0.20% of the reserves maintained for these certificates at the
beginning of the second and subsequent quarters from issue date. For
certificates sold prior to April 30, 1997, fees were paid at a rate of 0.25% of
the purchase price at the time of issuance and are paid at the rate of 0.25% of
the reserves maintained for these certificates at the beginning of the second
and subsequent quarters from issue date.
Fees on the Future Value Certificate were paid at the rate of 5% of the
purchase price at time of issuance. Effective May 1, 1997, the Future Value
Certificate is no longer being offered for sale.
Fees on the Investors Certificate are paid at an annualized rate of 1% of
the reserves maintained for the certificates. Fees are paid at the end of each
term on certificates with a one, two or three-month term. Fees are paid each
quarter from date of issuance on certificates with a six, 12, 24 or 36-month
term.
<PAGE>
Notes to Financial Statements ($ in thousands unless indicated otherwise)
Fees on the Preferred Investors Certificate are paid at an annualized rate
of 0.66% 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.
Effective April 30, 1997, fees on the IDS and American Express Stock Market
Certificates are paid at the rate of 0.70% of the purchase price on the first
day of the certificate's term and 0.70% of the reserves maintained for these
certificates at the beginning of each subsequent term. For certificates sold
prior to April 30, 1997, fees were paid at a rate of 1.25% of the purchase price
on the first day of the certificate's term and are paid at a rate of 1.25% of
the reserves maintained for these certificates at the beginning of each
subsequent term.
C) The basis of computing depositary fees paid or payable to American Express
Trust Company (an affiliate) is:
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
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 American Express 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.
E) The basis of computing transfer agent fees paid or payable to American
Express Client Service Corporation (AECSC) (an affiliate) is:
Under a Transfer Agency Agreement effective Jan. 1, 1998, AECSC will
maintain certificate owner accounts and records. IDSC will pay AECSC a monthly
fee of one-twelfth of $10.353 per certificate owner account.
<PAGE>
Notes to Financial Statements ($ in thousands unless indicated otherwise)
8. Income taxes
Income tax benefit (expense) as shown in the statement of operations for
the three years ended Dec. 31, consists of:
1997 1996 1995
Federal:
Current $1,138 $5,560 $6,285
Deferred 2,266 1,124 2,652
3,404 6,684 8,937
State (65) (27) 43
Total income tax benefit $3,339 $6,657 $8,980
Income tax benefit (expense) differs from that computed by using the U.S.
Statutory rate of 35%. The principal causes of the difference in each year are
shown below:
1997 1996 1995
Federal tax expense at U.S. statutory rate ($8,378) ($5,711) ($6,307)
Tax-exempt interest 724 1,517 3,339
Dividend exclusion 11,044 10,865 12,166
Other, net 14 13 (261)
Federal tax benefit $3,404 $6,684 $8,937
Deferred income taxes result from the net tax effects of temporary
differences. Temporary differences are differences between the tax bases of
assets and liabilities and their reported amounts in the financial statements
that will result in differences between income for tax purposes and income for
financial statement purposes in future years. Principal components of IDSC's
deferred tax assets and liabilities as of Dec. 31, are as follows.
Deferred tax assets: 1997 1996
Certificate reserves $13,488 $13,028
Investment reserves 502 540
Other, net 19 19
Total deferred tax assets $14,009 $13,587
Deferred tax liabilities: 1997 1996
Deferred distribution fees $7,382 $8,934
Investment unrealized gains 17,119 7,775
Purchased/written call options 3,557 3,429
Dividends receivable 654 745
Investments 429 714
Return of capital dividends 43 87
Total deferred tax liabilities $29,184 $21,684
Net deferred tax liabilities $15,175 $8,097
<PAGE>
Notes to Financial Statements ($ in thousands unless indicated otherwise)
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 and equity price 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.
Credit risk is the possibility that the counterparty will not fulfill the
terms of the contract. IDSC monitors credit risk related to derivative financial
instruments through established approval procedures, including setting
concentration limits by counterparty, reviewing credit ratings and requiring
collateral where appropriate. At Dec. 31, 1997, IDSC's counterparties to the
interest rate floors and swaps are rated A or better by nationally recognized
rating agencies. The counterparties to the purchased call options are seven
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 or credit risk
and are not recorded on the balance sheet.
Credit risk 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 Dec.
31, 1997 and 1996.
1997
Notional Total
or contract Carrying Fair credit
amount value value risk
Assets:
Interest rate floors $500,000 $205 $251 $251
Purchased call options 389 55,922 54,609 54,609
Total $500,389 $56,127 $54,860 $54,860
Liabilities:
Interest rate swaps $1,000,000 $416 $2,138 $-
Written call options 376 24,739 32,990 -
Total $1,000,376 $25,155 $35,128 $-
<PAGE>
Notes to Financial Statements ($ in thousands unless indicated otherwise)
1996
Notional Total
or contract Carrying Fair credit
amount value value risk
Assets:
Interest rate caps and corridors $200,000 $- $188 $188
Purchased call options 362 36,164 34,987 34,987
Total $200,362 $36,164 $35,175 $35,175
Liabilities:
Written call options $337 $9,552 $17,571 $-
The fair values of derivative financial instruments are based on market
values, dealer quotes or pricing models. The interest rate floors expire in
April of 1999 and $500,000 notional amount of the interest rate swaps expires in
May of 1998 and $500,000 expire in April of 1999. The options expire throughout
1998.
Interest rate caps, corridors, floors and swaps, and options are used to
manage IDSC's exposure to rising interest rates. These instruments are used
primarily to protect the margin between the interest earned on investments and
the interest rate credited to related investment certificate owners.
The interest rate floors are reset monthly and IDSC earns interest on the
notional amount to the extent the U.S. Treasury securities at "constant
maturity" for a period of one year exceed the reference rates specified in the
floor agreements. These reference rates range from 4.6% to 4.7%. The cost of
interest rate floors is amortized over the terms of the agreements on a straight
line basis and is included in other qualified assets. The amortization, net of
any interest earned, is included in investment expenses.
The interest rate caps and corridors were reset quarterly and IDSC earned
interest on the notional amount to the extent the London Interbank Offering Rate
exceeded the reference rates specified in the cap and corridor agreements. These
reference rates ranged from 4% to 9%. The cost of interest rate caps and
corridors is amortized over the terms of the agreements on a straight line basis
and is included in other qualified assets. The amortization, net of any interest
earned, is included in investment expenses.
The interest rate swaps are reset monthly. IDSC pays a fixed rate on the
notional amount ranging from 5.46% to 6.72% and receives a floating rate on the
notional amount tied to the U.S. Treasury securities at "constant maturity" for
a period of one year. There is no cost carried on the balance sheet. The
carrying amount shown above represents the net interest receivable/payable under
the swap agreements. Interest earned and interest expensed under the agreements
is shown net in investment expenses.
<PAGE>
Notes to Financial Statements ($ in thousands unless indicated otherwise)
IDSC offers a series of certificates which pays interest based upon the
relative change in a major stock market index between the beginning and end of
the certificates' term. The certificate owners 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.
Each purchased (written) call option contract confers upon the holder the
right (obligation) to receive (pay) an amount equal to one hundred dollars times
the difference between the level of the major stock market index on the date the
call option is exercised and the strike price of the option.
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 other
liabilities, as appropriate, and are amortized into investment expense 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.
Following is a summary of open option contracts at Dec. 31, 1997 and 1996.
1997
Contract Average Index at
amount strike price Dec.31,1997
Purchased call options $389 876 970
Written call options 376 969 970
1996
Contract Average Index at
amount strike price Dec.31,1996
Purchased call options $362 669 741
Written call options 337 736 741
10. Fair values of financial instruments
IDSC discloses fair value information for most on- and off-balance sheet
financial instruments for which it is practicable to estimate that value. The
fair value of the financial instruments presented may not be indicative of their
future fair values. The estimated fair value of certain financial instruments
such as cash and cash equivalents, receivables for dividends and interest,
investment securities sold and other trade receivables, accounts payable due to
Parent and affiliates, payable for investment securities purchased and other
accounts payable and accrued expenses are approximated to be the carrying
amounts disclosed in the balance sheets. Non-financial instruments, such as
deferred distribution fees, are excluded from required disclosure. IDSC's
off-balance sheet intangible assets, such as IDSC's name and future earnings of
the core business are also excluded. IDSC's management believes the value of
these excluded assets is significant. The fair value of IDSC, therefore, cannot
be estimated by aggregating the amounts presented.
<PAGE>
Notes to Financial Statements ($ in thousands unless indicated otherwise)
A summary of fair values of financial instruments as of Dec. 31, is as follows:
<TABLE><CAPTION>
1997 1996
Carrying Fair Carrying Fair
value value value value
<S> <C> <C> <C> <C>
Financial assets:
Assets for which carrying values
approximate fair values $49,940 $49,940 $155,396 $155,396
Investment securities (note 3) 3,669,667 3,695,839 3,076,889 3,103,005
First mortgage loans on real estate (note 4) 212,433 216,951 218,697 221,253
Derivative financial instruments (note 9) 56,127 54,860 36,164 35,175
Financial liabilities:
Liabilities for which carrying values
approximate fair values 48,255 48,255 76,040 76,040
Certificate reserves (note 5) 3,688,351 3,700,757 3,240,428 3,266,844
Derivative financial instruments (note 9) 25,155 35,128 9,552 17,571
</TABLE>
11. Year 2000 issue (Unaudited)
The Year 2000 issue is the result of computer programs having been written
using two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of IDSC. All of the systems
used by IDSC are maintained by its Parent and are utilized by multiple
subsidiaries and affiliates of the Parent. IDSC's business is heavily dependent
upon the Parent's computer systems, and has significant interactions with
systems of third parties.
A comprehensive review of the Parent's computer systems and business
processes, including those specific to IDSC, has been conducted to identify the
major systems that could be affected by the Year 2000 issue. Steps are being
taken to resolve any potential problems including modification to existing
software and the purchase of new software. These measures are scheduled to be
completed and tested on a timely basis. The Parent's goal is to complete
internal remediation and testing of each system by the end of 1998 and to
continue compliance efforts through 1999.
The Parent is evaluating the Year 2000 readiness of advisors and other
third parties whose system failures could have an impact on IDSC's operations.
The potential materiality of any such impact is not known at this time.
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item
Number
Item 13. Other Expenses of Issuance and Distribution.
The expenses in connection with the issuance and distribution
of the securities being registered are to be borne by the
registrant.
Item 14. Indemnification of Directors and Officers.
The By-Laws of IDS Certificate Company provide that it shall
indemnify any person who was or is a party or is threatened to
be made a party, by reason of the fact that he was or is a
director, officer, employee or agent of the company, or is or
was serving at the direction of the company, or any
predecessor corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture,
trust or other enterprise, to any threatened, pending or
completed action, suit or proceeding, wherever brought, to the
fullest extent permitted by the laws of the state of Delaware,
as now existing or hereafter amended.
The By-Laws further provide that indemnification questions
applicable to a corporation which has been merged into the
company relating to causes of action arising prior to the date
of such merger shall be governed exclusively by the applicable
laws of the state of incorporation and by the by-laws of such
merged corporation then in effect.
See also Item 17.
Item 15. Recent Sales of Unregistered Securities.
(a) Securities Sold
Period of sale Title of securities Amount sold
1994 IDS Special Deposits $ 18,013,424.38
1995 IDS Special Deposits 56,855,953.53
1996 IDS Special Deposits* 41,064,846.74
1997 American Express Special Deposits 182,788,631.00
* Renamed American Express Special Deposits in April 1996.
(b) Underwriters and other purchasers
American Express Special Deposits are marketed by American Express Bank Ltd.
(AEB), an affiliate of IDS Certificate Company, to private banking clients of
AEB in the United Kingdom and Hong Kong.
(c) Consideration
All American Express Special Deposits were sold for cash. The aggregate offering
price was the same as the amount sold in the table above. Aggregate marketing
fees to AEB were $88,686.14 in 1994, $172,633.41 in 1995, $301,946.44 in 1996
and $592,068.70 in 1997.
<PAGE>
(d) Exemption from registration claimed
American Express Special Deposits are marketed, pursuant to the exemption in
Regulation S under the Securities Act of 1933, by AEB in the United Kingdom and
Hong Kong to persons who are not U.S. persons, as defined in Regulation S.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
1. (a) Copy of Distribution Agreement dated November 18, 1988, between
Registrant and IDS Financial Services Inc., filed electronically
as Exhibit 1(a) to the Registration Statement for the American
Express International Investment Certificate (now called the IDS
Investors Certificate), is incorporated herein by reference.
2. Not Applicable.
3. (a) Certificate of Incorporation, dated December 31, 1977, filed
electronically as Exhibit 3(a) to Post-Effective Amendment No. 10
to Registration Statement No. 2-89507, is incorporated herein by
reference.
(b) Certificate of Amendment, dated April 2, 1984, filed
electronically as Exhibit 3(b) to Post-Effective Amendment No. 10
to Registration Statement No. 2-89507, is incorporated herein by
reference.
(c) By-Laws, dated December 31, 1977, filed electronically as Exhibit
3(c) to Post-Effective Amendment No. 10 to Registration Statement
No. 2-89507, are incorporated herein by reference.
4. Not Applicable.
5. An opinion and consent of counsel as to the legality of the securities
being registered is filed electronically herewith.
6. through 9. -- None.
10. (a) Investment Advisory and Services Agreement between Registrant and
IDS/American Express Inc. dated January 12, 1984, filed as
Exhibit 10(a) to Registration Statement No. 2-89507, is
incorporated herein by reference.
(b) Depositary and Custodial Agreement dated September 30, 1985
between IDS Certificate Company and IDS Trust Company, filed as
Exhibit 10(b) to Registrant's Post-Effective Amendment No. 3 to
Registration Statement No. 2-89507, is incorporated herein by
reference.
<PAGE>
(c) Foreign Deposits Agreement dated November 21, 1990, between IDS
Certificate Company and IDS Bank & Trust, filed electronically as
Exhibit 10(h) to Post-Effective Amendment No. 5 to Registration
Statement No. 33-26844, is incorporated herein by reference.
(d) Copy of Distribution Agreement dated March 29, 1996 between
Registrant and American Express Service Corporation filed
electronically as Exhibit 1(b) to Post-Effective Amendment No. 17
to Registration Statement No. 2-95577, is incorporated herein by
reference.
(e) Selling Agent Agreement dated June 1, 1990, between American
Express Bank International and IDS Financial Services Inc. for
the American Express Investors and American Express Stock Market
Certificates, filed electronically as Exhibit 1(c) to the
Post-Effective Amendment No. 5 to Registration Statement No.
33-26844, is incorporated herein by reference.
(f) Marketing Agreement dated October 10, 1991, between Registrant
and American Express Bank Ltd., filed electronically as Exhibit
1(d) to Post-Effective Amendment No. 31 to Registration Statement
2-55252, is incorporated herein by reference.
(g) Amendment to the Selling Agent Agreement dated December 12, 1994,
between IDS Financial Services Inc. and American Express Bank
International, filed electronically as Exhibit 16(d) to
Post-Effective Amendment No. 13 to Registration Statement No.
2-95577, is incorporated herein by reference.
(h) Selling Agent Agreement dated December 31, 1994, between IDS
Financial Services Inc. and Coutts & Co. (USA) International,
filed electronically as Exhibit 16(e) to Post-Effective Amendment
No. 13 to Registration Statement No. 2-95577, is incorporated
herein by reference.
(i) Consulting Agreement dated December 12, 1994, between IDS
Financial Services Inc. and American Express Bank International,
filed electronically as Exhibit 16(f) to Post-Effective Amendment
No. 13 to Registration Statement No. 2-95577 incorporated herein
by reference.
(j) Letter amendment dated January 9, 1997 to the Marketing Agreement
dated October 10, 1991, between Registrant and American Express
Bank Ltd. filed electronically as Exhibit 16(j) to Post-Effective
Amendment No. 40 to Registration Statement No. 2-55252.
<PAGE>
(k) Form of Letter amendment dated April 7, 1997 to the Selling Agent
Agreement dated June 1, 1990 between American Express Financial
Advisors Inc. and American Express Bank International, filed
electronically herewith as Exhibit 10 (j) to Post-Effective
Amendment No. 14 to Registration Statement 33-26044, is
incorporated herein by reference.
11. through 22. -- None.
23. Consent of Independent Auditors Report is filed electronically
herewith.
24. (a) Officers' Power of Attorney, dated May 17, 1994, filed
electronically as Exhibit 25(a) to Post-Effective Amendment No.
37 to Registration Statement No. 2-55252 is incorporated herein
by reference.
(b) Directors' Power of Attorney, dated February 29, 1996,
electronically as Exhibit 24(b) to Post-Effective Amendment No.
39 to Registration Statement No. 2-55252 is incorporated herein
by reference.
(c) Officer's Power of Attorney, dated February 17, 1998 is filed
electronically herewith.
25. through 27. -- None.
(b) The financial statement schedules for IDS Certificate Company are filed
electronically herewith.
I. Investments in Securities of Unaffiliated Issuers December 31, 1997.
II. Investments in and Advances to Affiliates and Income Thereon, December
31, 1997, 1996 and 1995.
III. Mortgage Loans on Real Estate and Interest Earned on Mortgages - Year
ended December 31, 1997.
V. Qualified Assets on Deposit - December 31, 1997.
VI. Certificate Reserves - Year ended December 31, 1997.
VII. Valuation and Qualifying Accounts - Years ended December 31, 1997,
1996 and 1995.
Schedule III and Schedule VI for the year ended Dec. 31, 1996 are
incorporated by reference to Post-Effective Amendment No. 40 to
Registration Statement No. 2-55252 for Series D-1 Investment Certificate.
Schedule VI for the year ended Dec. 31, 1995, is incorporated by reference
to Post-Effective Amendment No. 38 to Registration Statement No. 2-55252.
<PAGE>
Item 17. Undertakings.
Without limiting or restricting any liability on the part of the other,
American Express Financial Advisors Inc. (formerly, IDS Financial Services
Inc.), as underwriter, will assume any actionable civil liability which may
arise under the Federal Securities Act of 1933, the Federal Securities
Exchange Act of 1934 or the Federal Investment Company Act of 1940, in
addition to any such liability arising at law or in equity, out of any
untrue statement of a material fact made by its agents in the due course of
their business in selling or offering for sale, or soliciting applications
for, securities issued by the Company or any omission on the part of its
agents to state a material fact necessary in order to make the statements
so made, in the light of the circumstances in which they were made, not
misleading (no such untrue statements or omissions, however, being admitted
or contemplated), but such liability shall be subject to the conditions and
limitations described in said Acts. American Express Financial Advisors
Inc. will also assume any liability of the Company for any amount or
amounts which the Company legally may be compelled to pay to any purchaser
under said Acts because of any untrue statements of a material fact, or any
omission to state a material fact, on the part of the agents of IDS
Financial Services Inc. to the extent of any actual loss to, or expense of,
the Company in connection therewith. The By-Laws of the Registrant contain
a provision relating to Indemnification of Officers and Directors as
permitted by applicable law.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Minneapolis and State of Minnesota, on
the 17th day of March, 1998.
IDS CERTIFICATE COMPANY
By: /s/ Stuart A. Sedlacek*
Stuart A. Sedlacek, President
Pursuant to the requirements of the Securities Act of 1933, this amendment has
been signed below by the following persons in the capacities on the 17th day of
March, 1998.
Signature Capacity
/s/ Stuart A. Sedlacek* ** President and Director
Stuart A. Sedlacek (Principal Executive Officer)
/s/ Jeffrey S. Horton*** Vice President and Treasurer
Jeffrey S. Horton (Principal Accounting Officer)
/s/ Jay C. Hatlestad* Vice President and Controller
Jay C. Hatlestad (Principal Accounting Officer)
/s/ David R. Hubers** Director
David R. Hubers
/s/ Charles W. Johnson** Director
Charles W. Johnson
/s/ Richard W. Kling** Director
Richard W. Kling
/s/ Edward Landes** Director
Edward Landes
/s/ John V. Luck** Director
John V. Luck
/s/ James A. Mitchell** Chairman of the Board
James A. Mitchell of Directors and Director
<PAGE>
/s/ Harrison Randolph** Director
Harrison Randolph
/s/Gordon H. Ritz** Director
Gordon H. Ritz
*Signed pursuant to Officers' Power of Attorney dated May 17, 1994, filed
electronically as Exhibit 25(a) to Post-Effective Amendment No. 37 to
Registration Statement No. 2-55252, incorporated herein by reference.
- -------------------------.
Bruce A. Kohn
**Signed pursuant to Directors' Power of Attorney dated February 29, 1996, filed
electronically as Exhibit 24(b) to Post-Effective Amendment No. 39 to
Registration Statement No. 2-55252, incorporated herein by reference.
- -------------------------.
Bruce A. Kohn
***Signed pursuant to Officer's Power of Attorney dated February 17, 1998 filed
electronically as Exhibit 24 (c) herewith.
- ---------------------------
Bruce A. Kohn
<PAGE>
CONTENTS OF THIS POST-EFFECTIVE AMENDMENT NO. 42 TO
REGISTRATION STATEMENT NO. 2-55252
Cover Page
Prospectus
Auditor's Report
Financial Statements
Part II Information
Signatures
Exhibits
EXHIBIT INDEX
Exhibit 5: Opinion and Consent of Counsel
Exhibit 16 (b): Financial Statement Schedules for IDS Certificate
Company
Exhibit 23: Consent of Independent Auditors
Exhibit 24 (c): Officer's Power of Attorney dated February 17, 1998
March 17, 1998
IDS Certificate Company
IDS Tower 10
Minneapolis, MN 55440-0010
Ladies and Gentlemen:
Reference is made to your Registration Statement, No. 2-55252, Form S-1 under
the Securities Act of 1933, registering an indefinite number of face-amount
certificates pursuant to Rule 24f-2 under the Securities Act of 1933.
I have examined the Certificate of Incorporation and the By-Laws of IDS
Certificate Company (the "Company") and all necessary certificates, permits,
minute books, documents and records of the Company, and the applicable statutes
of the State of Delaware and such other matters of fact and law as I have deemed
necessary, and it is my opinion:
(a) That the Company is a corporation duly organized and existing under the
laws of the State of Delaware.
(b) That the face-amount certificates issued by the Company since Dec. 31,
1996, were legal and non-assessable when sold in accordance with
applicable federal and state securities laws and except for face-amount
certificates of the installment type, were fully paid, and that such
face-amount certificates were binding obligations of the Company.
I hereby consent that the foregoing opinion may be used in connection with
this Post-Effective Amendment.
Very truly yours,
Bruce A. Kohn
Vice President and General Counsel
(612) 671-2221
BAK/lal
IDS CERTIFICATE COMPANY Schedule I
Investments in Securities of Unaffiliated Issuers
December 31, 1997
($ in thousands)
<TABLE>
<CAPTION>
Bal. held
at 12-31-97
Principal
Amount of Cost Value at
Bonds (Notes 12-31-97
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
BONDS AND NOTES
United States Government -
Direct Obligations
<S> <C> <C> <C> <C> <C>
US TREASURY BOND 6.875%, 2000 165 165 169
US TREASURY BOND 5.625%, 2000 200 198 200
Total U.S. Government - Direct Obligations 365 363 369
Other Bonds and Notes
United States Government Agencies
FHLMC 5 YR #G50152 7.000%, 1999 1,991 1,991 1,996 (f)
FHLMC 5YR*G50252 7.500%, 2000 20,503 20,577 20,900 (f)
FHLMC 15YR #G10336 7.500%, 2010 6,424 6,327 6,597 (f)
FHLMC 15YR #10342 7.000%, 2010 20,130 19,639 20,451 (f)
FHLMC 15YR #G10344 G 7.500%, 2010 14,808 14,740 15,206 (f)
FHLMC 15 #G10350 GLD 6.500%, 2010 20,759 20,715 20,811 (f)
FHLMC 15YR G10364 7.000%, 2010 17,342 17,257 17,619 (f)
FHLM 15 6.5 #G10369 6.500%, 2010 37,102 36,668 37,353 (f)
FHLMC 15YR GOLD 6.500%, 2010 18,842 18,755 18,889 (f)
FH15YR #G10439 GOLD 6.500%, 2011 4,527 4,422 4,542 (f)
FHLMC 15YR G10627 6.500%, 2011 29,196 28,785 29,294 (f)
FHLMC 15YR G10665 GD 7.000%, 2012 79,783 79,606 81,055 (f)
FHLMC ARM #845154 7.976%, 2022 3,845 3,964 4,005 (f)
FHLMC ARM #845523 7.781%, 2023 5,718 5,882 5,951 (f)
FHLMC ARM #845654 8.068%, 2024 13,036 13,226 13,567 (f)
FHLMC ARM #845730 7.801%, 2024 24,086 24,867 25,214 (f)
FHLMC ARM #845733 7.825%, 2024 21,848 22,233 22,714 (f)
FHLMC ARM #845973 7.938%, 2024 7,216 7,216 7,505 (f)
FHLMC ARM #845999 7.699%, 2027 20,077 20,250 21,019 (f)
FHLMC 30YR #846072 7.779%, 2022 5,116 5,243 5,311 (f)
FHLMC ARM #846107 8.241%, 2025 7,041 7,201 7,290 (f)
FH GD 7YR BLN N97208 7.000%, 2003 13,707 13,841 13,922 (f)
FHLMC ARM #350190 8.000%, 2022 5,359 5,518 5,584 (f)
FHLMC GOLD E00151 7.500%, 2017 7,021 7,214 7,210 (f)
FHLMC 15YR #E00383 7.000%, 2010 17,995 17,968 18,282 (f)
FHLMC15YR E00388GOLD 7.000%, 2010 11,882 11,725 12,071 (f)
FH GD 15YR #E00426 6.500%, 2011 8,612 8,534 8,638 (f)
FHLMC GOLD #E00476 6.500%, 2012 17,042 16,647 17,084 (f)
FHLMC GOLD E00484 6.500%, 2012 7,242 7,076 7,260 (f)
FHLMC T-009 AZ HEL 6.430%, 2013 10,000 10,000 10,000 (f)
FHLMC-GNMA 40 D CMO 6.500%, 2011 20,458 20,239 20,539 (f)
FHLMC 4C CMO 8.000%, 2017 712 712 709 (f)
FHLMC CTF SER B-77 8.125%, 2007 143 143 146 (f)
<PAGE>
Bal. held
at 12-31-97
Principal
Amount of Cost Value at
Bonds (Notes 12-31-97
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
FHLMC 15YR #380025 9.500%, 2003 594 592 627
FHLMC 15 YR #200022 10.500%, 2000 63 64 67 (f)
FHLMC 15 YR #200035 9.000%, 2001 259 257 269 (f)
FHLMC 15 YR #200048 9.000%, 2001 574 568 597
FHLMC 15 YR #200064 8.000%, 2002 344 336 353 (f)
FHLMC 15 YR #212119 9.500%, 2001 104 105 110 (f)
FHLMC 15 YR #218648 9.500%, 2002 42 42 44 (f)
FHLMC 15 YR #219679 9.500%, 2003 477 474 503 (f)
FHLMC 15 YR #219757 11.000%, 2003 1,308 1,365 1,383
FHLMC 15 YR #502175 10.500%, 2004 145 148 154 (f)
FHLMC 15YR 11.000%, 2003 1,527 1,561 1,614 (f)
FHLMC ARM #605041 7.988%, 2019 242 242 254 (f)
FHLMC ARM #605048 7.566%, 2018 1,049 1,049 1,098 (f)
FHLMC ARM #605050 7.862%, 2018 357 357 374 (f)
FHLMC ARM 605079 WAC 7.774%, 2018 1,222 1,222 1,281 (f)
FHLMC ARM 605175 WAC 7.773%, 2019 3,201 3,201 3,354 (f)
FHLMC ARM #605352 7.568%, 2018 2,197 2,197 2,300 (f)
FHLMC ARM #401587 7.875%, 2018 1,946 1,946 2,039 (f)
FHLMC ARM #630048 7.750%, 2018 23 23 23 (f)
FHLMC ARM #630074 7.750%, 2018 421 421 432 (f)
FHLMC ARM 840031 WAC 7.808%, 2019 346 346 362 (f)
FHLMC ARM #840035 7.646%, 2019 1,029 1,029 1,065 (f)
FHLMC ARM #840036 7.722%, 2019 1,134 1,134 1,188 (f)
FHLMC ARM #840045 7.740%, 2019 3,648 3,648 3,822 (f)
FHLMC ARM #840072 7.756%, 2019 1,492 1,492 1,555 (f)
FHLMC ARM #405014 7.689%, 2019 805 805 842 (f)
FHLMC ARM #405092 7.587%, 2019 1,510 1,510 1,581 (f)
FHLMC ARM #405185 7.587%, 2018 2,090 2,090 2,187 (f)
FHLMC ARM #405243 7.706%, 2019 777 777 813 (f)
FHLMC ARM #405249 7.923%, 2018 2,970 2,970 3,113 (f)
FHLMC ARM #405360 7.763%, 2019 873 873 914 (f)
FHLMC ARM #405437 7.693%, 2019 221 221 231 (f)
FHLMC ARM #405455 7.720%, 2019 1,284 1,284 1,344 (f)
FHLMC ARM #405517 7.875%, 2019 405 405 424 (f)
FHLMC ARM #405615 7.590%, 2019 969 969 1,014 (f)
FHLMC ARM #405675 8.118%, 2020 1,475 1,475 1,546 (f)
FHLMC ARM #405692 8.236%, 2020 2,299 2,299 2,412 (f)
FHLMC ARM #405744 8.153%, 2020 1,131 1,131 1,186 (f)
FHLMC ARM #605432 7.609%, 2017 652 652 683 (f)
FHLMC ARM #605433 7.572%, 2017 1,467 1,467 1,535 (f)
FHLMC ARM #605454 7.736%, 2017 4,310 4,310 4,514 (f)
FHLMC ARM 605853 WAC 7.930%, 2019 2,912 2,912 3,053 (f)
FHLMC ARM #605854 7.767%, 2019 2,940 2,940 3,079 (f)
FHLMC ARM #606024 7.155%, 2019 1,318 1,318 1,376 (f)
FHLMC ARM #606025 7.110%, 2019 4,726 4,726 4,937 (f)
FHLMC ARM #606151 7.851%, 2019 3,614 3,614 3,787 (f)
FHLMC ARM #635054 8.168%, 2020 247 247 256 (f)
FHLMC ARM #785363 7.227%, 2025 8,066 8,173 8,469 (f)
FHLMC ARM #785601 6.472%, 2026 12,071 12,174 12,191 (f)
FHLMC ARM #785615 6.691%, 2026 13,602 13,526 13,806 (f)
FH 3X1 ARM #785619 6.675%, 2026 6,747 6,783 6,890 (f)
FHLMC ARM 3X1 6.782%, 2026 16,172 16,226 16,526 (f)
<PAGE>
Bal. held
at 12-31-97
Principal
Amount of Cost Value at
Bonds (Notes 12-31-97
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
FHLMC ARM 785672 6.727%, 2026 8,813 8,854 8,905 (f)
FHLMC ARM #865008 8.455%, 2018 6,368 6,368 6,644 (f)
FHLMC LOANS #885005 9.500%, 2002 1,169 1,163 1,233 (f)
FHLMC LOANS #885008 10.000%, 2003 1,971 1,981 2,082 (f)
FHLMC 15 YR #885009 9.500%, 2003 2,802 2,788 2,955
FHLMC ARM #606301 8.089%, 2020 5,714 5,714 5,993 (f)
FHLMC ARM #606903 7.318%, 2022 1,346 1,358 1,377 (f)
FNMA 92 12 H 6.625%, 2019 1,286 1,286 1,282 (f)
FNMA 1992-5 C 7.000%, 2016 43 43 43 (f)
FNMA 92-21D VANILLA 6.650%, 2018 354 353 353 (f)
FNMA 92 203 E CMO 6.250%, 2005 8,048 7,952 8,042 (f)
FNMA 93-62 B CMO 6.500%, 2017 4,378 4,273 4,369 (f)
FNMA 95 2 T CMO 8.500%, 2021 5,317 5,313 5,395 (f)
FANNIEMAE GR TRST 6.610%, 2018 10,000 9,996 10,081 (f)
FNMA 96-10 C CMO SEQ 6.500%, 2023 8,288 8,015 8,261 (f)
FNMA 97-2C CMO 7.000%, 2020 35,534 35,553 36,015 (f)
FN 97 11 K SEQ CM0 7.125%, 2023 18,152 18,219 18,372 (f)
FNMA 97-17 CMO 7.000%, 2022 50,000 49,624 50,500 (f)
FNMA 97-74 G SEQ CMO 6.500%, 2024 9,848 9,808 9,814 (f)
FNMA 15 YR #2469 11.000%, 2000 17 17 18 (f)
FNMA 15 YR #13157 11.000%, 2000 13 13 13 (f)
FNMA 15 YR #13548 11.000%, 2000 36 36 38 (f)
FNMA 15 YR #13705 11.000%, 2000 41 41 43 (f)
FNMA 15 YR #18275 11.000%, 2000 7 7 7 (f)
FNMA 15 YR #18745 11.000%, 2000 9 9 10 (f)
FNMA 15 YR #18986 11.000%, 2000 8 8 8 (f)
FNMA 15 YR #19070 11.000%, 2000 6 6 7 (f)
FNMA 15 YR #19261 11.000%, 2000 15 15 16 (f)
FNMA 15 YR #22271 11.000%, 2000 32 33 34 (f)
FNMA 15 YR #22405 11.000%, 2000 33 34 35 (f)
FNMA 15 YR #22569 11.000%, 2000 57 58 60 (f)
FNMA 15 YR #22674 11.000%, 2000 23 24 25 (f)
FNMA 15 YR #25899 11.000%, 2001 13 14 14 (f)
FNMA 30 YR #27880 9.000%, 2016 104 107 110 (f)
FNMA 15 YR #34543 9.250%, 2001 167 167 178 (f)
FNMA 30 YR #36225 9.000%, 2016 302 308 321 (f)
FNMA 30 YR #040877 9.000%, 2017 186 190 198 (f)
FNMA 15 6.0 #50973 6.000%, 2009 37,208 36,413 36,855 (f)
FNMA 30 YR #51617 10.000%, 2017 119 120 130 (f)
FNMA 30 YR #52185 10.000%, 2017 72 72 78 (f)
FNMA 30 YR #52596 10.000%, 2017 9 9 9 (f)
FNMA 15 YR #58405 11.000%, 2003 27 28 29 (f)
FNMA 15 YR #64520 11.000%, 2001 48 49 51 (f)
FNMA 15 YR #64523 11.000%, 2000 65 66 69 (f)
FNMA 15 YR #66458 10.000%, 2004 3,443 3,465 3,649
FNMA ARM #70007 MEGA 7.324%, 2017 2,005 2,005 2,093 (f)
FNMA ARM #70009 MEGA 7.357%, 2018 3,093 3,093 3,229 (f)
FNMA ARM #70117 7.395%, 2017 709 709 740 (f)
FNMA ARM #70202 7.779%, 2019 2,309 2,309 2,427 (f)
FNMA 15 YR #70299 10.750%, 2001 156 159 165 (f)
FNMA 15 YR 70694 MEG 9.500%, 2005 1,720 1,733 1,815
FNMA #73227 MULT-FAM 6.700%, 2005 2,688 2,717 2,677 (f)
<PAGE>
Bal. held
at 12-31-97
Principal
Amount of Cost Value at
Bonds (Notes 12-31-97
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
FNMA ARM #79384 8.290%, 2019 1,040 1,040 1,096 (f)
FNMA ARM #88879 8.629%, 2019 2,218 2,218 2,327 (f)
FNMA ARM #89125 7.002%, 2019 5,945 6,071 6,186 (f)
FNMA ARM #92069 FLEX 7.839%, 2018 2,898 2,898 3,048 (f)
FNMA ARM #93787 7.753%, 2019 2,558 2,558 2,689 (f)
FNMA ARM #97822 7.634%, 2020 504 504 529 (f)
FNMA ARM #105989 8.429%, 2020 2,001 2,001 2,099 (f)
FNMA 15YR #124848 8.000%, 2008 12,598 12,563 13,039 (f)
FNMA 15YR 190534 6.000%, 2018 19,125 18,829 18,943
FNMA ARM #190726 7.769%, 2033 12,506 12,757 13,014 (f)
FNMA 7YR 190778 BALN 6.000%, 2001 45,312 44,937 45,130 (f)
FNMA ARM #249907 8.000%, 2024 12,733 12,922 13,270 (f)
FNMA 7.0 15YR 250670 7.000%, 2011 6,453 6,500 6,556 (f)
FNMA 15YR #250671 7.500%, 2011 22,895 22,953 23,503 (f)
FNMA 15 YR #A250857 7.000%, 2012 19,021 18,980 19,312 (f)
FNMA 10YR #303115 6.500%, 2004 13,910 13,169 14,096 (f)
FNMA ARM #303259 7.815%, 2025 6,692 6,874 6,954 (f)
FNMA 15YR #303445 5.500%, 2009 19,252 18,480 18,566 (f)
FNMA 7YR #303448 BLN 6.500%, 2002 20,763 20,784 20,953 (f)
FNMA 15YR #303779 6.000%, 2011 35,776 35,140 35,217 (f)
FNMA 15YR #313042 7.000%, 2011 14,375 14,433 14,606 (f)
FNMA 15YR #313522 7.000%, 2012 37,829 38,041 38,435 (f)
FNMA 15 YR #313561 8.000%, 2012 22,254 22,679 23,024 (f)
FNMA ARM #359161 6.615%, 2026 17,227 17,280 17,130 (f)
FNMA 15YR #367005 7.000%, 2012 13,909 13,835 14,117 (f)
FNMA ARM #368121 5X1 6.769%, 2025 25,593 25,961 25,991 (f)
GNMA ARM 1 YR #8157 7.000%, 2023 6,034 6,139 6,188 (f)
GNMA ARM #8206 7.000%, 2017 1,368 1,368 1,405 (f)
GNMA ARM #8240 7.000%, 2017 916 905 940 (f)
GNMA ARM #8251 7.000%, 2017 79 79 81 (f)
GNMA ARM #8274 6.875%, 2017 2,718 2,716 2,789 (f)
GNMA ARM #8283 6.875%, 2017 342 341 351 (f)
GNMA ARM #8293 6.875%, 2017 632 632 648 (f)
GNMA ARM #8341 7.375%, 2018 141 140 145 (f)
GNMA ARM #8353 7.375%, 2018 1,169 1,162 1,205 (f)
GNMA ARM #8365 7.375%, 2018 2,034 2,034 2,096 (f)
GNMA ARM #8377 7.000%, 2018 894 892 918 (f)
GNMA ARM #8428 6.875%, 2018 383 383 393 (f)
GNMA ARM #8440 6.875%, 2018 987 987 1,012 (f)
GNMA ARM #8638 7.375%, 2025 16,729 16,866 17,207 (f)
Total United States Government Agencies 1,282,944 1,280,623 1,304,386
Municipal Bonds
California
CAL HSG FIN 1996-M 7.890%, 2016 8,810 8,810 9,051 (b)(f)
CAL HSG 95-O TAX MUN 7.740%, 2016 10,645 10,645 10,975 (b)(f)
<PAGE>
Bal. held
at 12-31-97
Principal
Amount of Cost Value at
Bonds (Notes 12-31-97
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
Illinois
CHICAGO IL BLDG COMM 8.000%, 1998 1,800 1,800 1,800 (b)(f)
*CHIC IL GAS SPY SRC 7.500%, 2015 4,500 4,500 4,874 (b)(f)
CHICAGO IL SAN DIST 9.250%, 2000 1,000 1,041 1,100 (b)(f)
Minnesota
WEST MN MUNI POWER 10.250%, 2015 3,120 3,215 3,319 (b)(f)
New York
NEW YORK CITY NT GO 7.750%, 2000 335 335 340 (b)(f)
NEW YORK PWR AUTH 9.500%, 2001 270 284 291 (b)(f)
Pennsylvania
WY VALLEY PA SWR 5.125%, 2007 125 125 129 (b)(f)
Texas
HARRIS CNTY TX TOLL 10.375%, 2014 5,300 5,313 5,329 (b)(f)
DALLAS TX CIVIC CENT 8.200%, 1998 1,025 1,025 1,025 (b)(f)
AUSTIN TX UTILITY 10.750%, 2015 3,735 4,023 4,293 (b)(f)
Total Municipal Bonds 40,665 41,116 42,526
Public Utility
AES CORP SNR SUB NTS 8.375%, 2007 5,000 4,977 5,000 (b)(d)(f)
AVON ENERGY 6.730%, 2002 4,750 4,750 4,775 (b)(d)(f)
BAROID CORP 8.000%, 2003 5,000 4,988 5,187
BARRETT RESOURCES 7.550%, 2007 3,000 3,004 3,105 (f)
BELL ATLANTIC FINL 5.300%, 1998 5,000 4,944 4,979 (f)
CMS ENERGY 144A 7.375%, 2000 4,700 4,696 4,684 (d)(f)
CAL ENERGY CO INC 9.500%, 2006 4,000 4,031 4,360 (f)
CROSS TIMBERS OIL CO 8.750%, 2009 3,000 3,000 3,049 (d)(f)
DETROIT EDISON 6.280%, 2000 7,000 6,965 7,030 (f)
EL PASO ELEC CO 7.250%, 1999 2,000 2,000 2,011 (f)
ENRON CORP 6.625%, 2003 5,000 5,032 5,055 (f)
ENRON CORP 6.450%, 2001 10,000 10,000 10,050 (f)
GTE CORP 8.850%, 1998 3,000 3,006 3,012 (f)
HANNA M A 9.000%, 1998 5,000 5,024 5,082
INTL SPECIALTY PROD 9.000%, 1999 15,000 15,128 15,181
JERSEY CENTRAL P&L 6.040%, 2000 5,000 5,000 4,991
KANSAS CITY P&L 7.340%, 1999 10,000 10,000 10,193
MCN INV`T CORP MTN 6.890%, 2002 9,000 9,040 9,122 (f)
NEW PARK RESOURCES 8.625%, 2007 2,500 2,531 2,541 (f)
NORAM ENERGY CORP 7.500%, 2000 5,000 4,985 5,122 (f)
OCCIDENTAL PETROLEUM 6.410%, 2000 5,000 4,969 5,036 (f)
ORYX ENERGY 8.650%, 1999 15,000 15,000 15,333
PDV AMERICA 7.250%, 1998 3,000 2,998 3,027 (f)
PUB SERVICE ELEC GAS 6.740%, 2001 12,000 12,000 12,090 (f)
PACIFIC GAS TRANS 6.640%, 2000 5,000 5,000 5,043 (f)
PAGING NETWORK 10.000%, 2008 2,000 2,000 2,080 (f)
PRAXAIR INC 6.750%, 2003 5,000 4,784 5,093 (f)
PUBLIC SERV E&G CAP 6.800%, 2002 10,000 10,031 10,080 (f)
<PAGE>
Bal. held
at 12-31-97
Principal
Amount of Cost Value at
Bonds (Notes 12-31-97
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
SALTON SEA CL A 6.690%, 2000 4,183 4,183 4,209 (f)
SMITH INT`L INC 7.240%, 2001 10,000 10,000 10,244 (b)(d)(f)
TELEPORT COMM 9.875%, 2006 4,000 4,074 4,510 (f)
TEXAS UTILITIES 6.370%, 2000 10,000 10,000 10,051 (f)
TOSCO CORP 7.000%, 2000 5,000 4,996 5,102 (f)
USX CORP 7.200%, 2004 13,000 13,379 13,451 (f)
USA WASTE SERVICES 6.500%, 2002 10,000 9,996 10,004 (b)(f)
WILLIAMS CO INC 6.500%, 2002 12,000 11,990 12,053 (f)
CSW INVESTMENTS 144A 6.950%, 2001 10,000 9,990 10,184 (b)(d)(f)
NORCEN ENERGY RES 6.800%, 2002 10,000 9,982 10,189 (f)
NOVACOR CHEMICALS 6.500%, 2000 10,000 9,978 10,053 (f)
Total Public Utility 268,133 268,451 272,361
Finance
ICI INVESTMENTS EMTN 6.750%, 2002 10,000 10,085 10,115 (f)
AT&T CAPITAL CORP 6.900%, 2002 15,000 14,892 15,186 (f)
ALCO CAPITAL RES 7.330%, 1998 10,000 10,000 10,033 (f)
ARISTAR FINL 7.875%, 1999 3,000 2,998 3,059 (f)
ARISTAR INC 6.300%, 2002 10,000 9,971 9,987 (f)
BANKAMERICA CORP 9.750%, 2000 10,000 10,243 10,818
BANPONCE FIN CORP 6.580%, 2003 5,000 4,985 5,028 (f)
CA INF BK SDG E1 A2 6.040%, 2002 1,500 1,500 1,503 (f)
CAPITAL ONE BANK 7.350%, 2000 5,000 4,998 5,100 (f)
CARCO AUTO 97-1 6.689%, 2004 12,000 12,000 12,156 (f)
CATERPILLAR FINANCE 6.960%, 1998 5,000 4,993 5,025 (f)
CCMSC 1997-2 CLSS A1 6.450%, 2029 5,000 5,002 5,013 (f)
COMDISCO INC 7.250%, 1998 10,000 9,998 10,038
COMMERCIAL CREDIT 8.250%, 2001 9,000 8,927 9,637 (f)
CONTI FINANCIAL CORP 8.375%, 2003 5,000 4,988 5,274 (f)
CONTI MTG HEL TRTA-6 6.690%, 2016 10,000 9,999 10,061 (f)
COUNTRYWIDE FUNDING 8.420%, 1999 19,700 19,691 20,247
COUNTRYWIDE HOME MTN 6.380%, 2002 7,000 6,997 7,022 (f)
EQCC 97-3 A6 ABS HEL 6.610%, 2021 5,000 5,014 5,017 (f)
FDIC 96-1C CLASS 1A 6.750%, 2026 7,893 7,890 7,941 (f)
FIRST NATIONWIDE 9.125%, 2003 4,000 3,882 4,180 (f)
FULB 97-C1 A-1 MBS 7.150%, 2004 10,114 10,304 10,395 (f)
FULB 97-C2 CLASS A1 6.479%, 2004 9,916 9,964 9,976 (f)
FIRST USA DEP NT 6.375%, 2000 5,000 4,991 5,032 (f)
FIRSTAR CORP 7.150%, 2000 12,000 12,000 12,077 (f)
GATX CAP CORP MTN 6.360%, 2002 5,000 4,934 4,983 (f)
GATX CAPITAL CORP 6.500%, 2000 5,000 5,000 5,013 (f)
GMAC 96-C1 COMM MBS 6.790%, 2003 4,786 4,804 4,841 (f)
GMAC 97-C2 A CMBS 6.451%, 2027 5,000 5,025 5,017 (f)
GS-96PROTECT LIFE A1 7.020%, 2027 8,417 8,543 8,515 (f)
GMAC 7.750%, 1999 20,000 19,954 20,350 (f)
GREAT WESTERN FINL 6.375%, 2000 3,000 2,994 3,011 (f)
GREENPOINT BANK 6.700%, 2002 5,000 4,996 5,029 (f)
HELLER FINANCIAL 8.000%, 1998 15,000 14,992 15,273
HELLER FINANCIAL 6.500%, 2000 8,000 8,001 8,075 (f)
HELLER FINANCIAL 6.440%, 2002 5,000 4,980 5,034 (f)
HOMESIDE LENDING 6.875%, 2002 10,000 9,997 10,206 (f)
<PAGE>
Bal. held
at 12-31-97
Principal
Amount of Cost Value at
Bonds (Notes 12-31-97
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
HOUSEHOLD FIN MTN 7.100%, 2002 10,000 9,993 10,310 (f)
INTL LEASE FINANCE 7.950%, 1999 12,000 11,996 12,249 (f)
IROQUOIS TRUST 97-1A 7.000%, 2006 10,000 10,006 10,162 (d)(f)
IROQUOIS TRUST 97-2A 6.752%, 2007 15,000 14,984 15,225 (d)(f)
KEYCORP SENIOR 7.430%, 2000 4,000 3,997 4,107 (f)
LONG ISL SAV BK 7.000%, 2002 5,000 4,990 5,099 (f)
MBNA AMER BANK NA 7.540%, 2001 10,000 9,994 10,355
MBNA CORP 6.500%, 2000 5,000 4,999 5,024 (f)
MARGARETTEN FIN'L 6.750%, 2000 15,250 15,349 15,423 (f)
MELLON FINANCIAL 6.300%, 2000 10,000 9,972 10,050 (f)
MERIDIAN BANCORP 6.625%, 2000 5,000 5,033 5,060 (f)
MONEYSTORE 97-A 7.210%, 2021 4,000 4,000 4,126 (f)
JPMS 96-C2 CL A 6.470%, 2027 4,570 4,594 4,589 (f)
MS CAP 1996-WFI MBS 7.220%, 2028 10,000 10,132 10,338 (f)
MS CAP 1 1997-XL A-1 6.590%, 2030 14,957 15,027 15,114 (f)
MS CAPI 97-ALIC A1 A 6.300%, 2028 10,000 9,999 9,997 (f)
MCF 96-MC2 CLS A1 6.758%, 2004 9,619 9,696 9,757 (f)
NORWEST FINANCIAL 7.250%, 2000 4,500 4,495 4,616
ORIX CR ALL 144A MTN 6.640%, 2002 16,000 16,000 16,080 (d)(f)
PENSKE TRUCK LEASING 7.750%, 1999 3,000 3,031 3,070 (f)
PROVIDENT BANK 6.125%, 2000 5,000 4,992 4,988
PROVIDIAN 97-4-A CRD 6.250%, 2007 10,500 10,482 10,540 (f)
PHMS 1993-39 A8 SUPP 6.500%, 2008 10,056 9,643 9,951 (f)
SL CMBS 97-C1 CLS A 6.875%, 2004 16,407 16,555 16,712 (f)
SBMS VII 91-1 B1 9.700%, 2006 822 822 822 (f)
SANWA BUS CREDIT MTN 7.250%, 2001 10,000 9,993 10,340 (b)(d)(f)
SAXON 95-1 BA2 ARM 7.873%, 2025 2,365 2,398 2,409 (f)
SEARS ROEBUK ACC 6.500%, 2000 5,000 5,013 5,047 (f)
SASCO96-CL1 AIC 5.944%, 2028 8,631 8,631 8,558 (f)
TRANS OCEAN CRP 144A 6.670%, 2007 11,030 10,976 11,108 (d)(f)
TRANSAMERICA FINANCE 9.260%, 1998 5,000 5,000 5,018
UCFC 95 BA-2 ASSET B 6.600%, 2009 4,380 4,389 4,389 (f)
UCFC 95 CA2 ASSET BK 6.575%, 2011 6,947 6,955 6,966 (f)
UCFC 97-B CL A-4 ABS 6.940%, 2023 7,000 6,992 7,028 (f)
UNIFRAX INVESTMENT 10.500%, 2003 5,000 5,036 5,175 (f)
WELLSFORD RESID PROP 7.250%, 2000 5,000 4,982 5,108 (f)
XEROX CREDIT 6.840%, 2000 5,000 5,004 5,062 (f)
Total Finance 596,360 596,682 605,239
Industrial
AAF MCQUAY 8.875%, 2003 10,000 10,135 9,937 (f)
AGCO CORP 8.500%, 2006 5,000 4,966 5,137 (f)
AK STEEL CORP 9.125%, 2006 3,000 3,060 3,090 (f)
AMERICAN STANDARD 10.875%, 1999 1,000 1,037 1,058 (f)
AMERISERVE FOOD SER 10.125%, 2007 4,000 4,115 4,200 (f)
APPLIED MATERIALS 6.650%, 2000 5,000 5,000 5,055 (f)
ARGO-TECH CORP 8.625%, 2007 2,000 2,000 2,000 (d)(f)
A.H. BELO 6.875%, 2002 5,500 5,490 5,624 (f)
BANK POPULAR N.A. 6.625%, 2002 12,000 11,989 12,123 (f)
BISTRO TRST 1997-100 6.350%, 2002 7,000 6,983 6,983 (f)
BLACK & DECKER 7.500%, 2003 10,000 10,358 10,473 (f)
<PAGE>
Bal. held
at 12-31-97
Principal
Amount of Cost Value at
Bonds (Notes 12-31-97
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
BOYD GAMING CORP 9.250%, 2003 5,000 4,983 5,262 (f)
BROWN GROUP 8.600%, 1999 5,000 5,000 5,034
BURLINGTON NORTHERN 6.375%, 2005 5,000 4,998 4,974
CSX CORP 7.050%, 2002 10,000 9,994 10,225 (f)
CSX 9.230%, 1998 13,500 13,500 13,538
CAPSTAR HOTEL 8.750%, 2007 3,000 2,996 3,097 (f)
CHAMPION INTL 9.800%, 1998 10,000 10,000 10,025
CHIQUITA BRANDS INTL 10.250%, 2006 3,000 2,984 3,285 (f)
CHRYSLER FINANCE 7.700%, 1998 10,000 9,978 10,130 (f)
CHRYSLER FINANCE 7.590%, 2000 5,000 5,001 5,157 (f)
CINCINNATI MILACRON 7.875%, 2000 5,000 5,063 5,086 (f)
COLUMBIA/HCA HLTHCRE 6.410%, 2000 10,000 10,016 9,964 (f)
COMCAST CABLE 8.125%, 2004 10,000 9,992 10,782 (f)
CONTAINER CORP AMER 9.750%, 2003 4,000 3,979 4,320 (f)
CONT'L CABLEVISION 8.300%, 2006 4,000 3,989 4,399
COX COMMUNICATIONS 6.375%, 2000 25,000 24,932 25,114 (f)
CROWN CORK & SEAL 6.750%, 2003 14,950 15,015 15,213 (f)
DAYTON HUDSON 6.400%, 2003 10,000 9,976 10,003 (f)
DAYTON HUDSON CO 6.800%, 2001 5,000 5,000 5,080 (f)
DELTA AIRLINES 9.875%, 1998 8,100 8,100 8,101
DOMAN INDUSTRIES LTD 9.250%, 2007 3,000 3,015 2,925 (b)(d)(f)
BERGEN BRUNSWIG(DUR) 7.000%, 2006 20,000 20,045 20,119 (f)
ERAC USA 144A 6.950%, 2004 9,000 9,130 9,215 (d)(f)
ENTERPRIS RENT-A-CAR 8.750%, 1999 5,000 4,999 5,218 (d)
ENTERPRIS RENT-A-CAR 7.875%, 1998 5,000 5,000 5,018 (d)(f)
ENTERP RENT-A-CARMTN 6.350%, 2001 10,000 9,999 10,009 (d)(f)
EX IM BK KOREA 6.500%, 2002 10,000 9,754 8,251 (f)
EXIDE CORP 10.750%, 2002 5,000 5,263 5,294 (f)
EXTENDICARE HLTH SER 9.350%, 2007 1,000 1,000 1,025 (d)(f)
FEDDERS N. AMERICA 9.375%, 2007 3,000 3,018 3,067 (d)(f)
FEDERAL-MOGUL 8.800%, 2007 4,000 3,988 4,288 (f)
FORD MOTOR CREDIT 6.375%, 2000 10,000 10,077 10,078
FORD MOTOR CR MTN 7.060%, 2001 5,000 4,986 5,141 (f)
GATC 6.320%, 2000 10,000 9,989 9,991 (f)
GE CAPITAL CORP 8.125%, 1999 12,000 12,075 12,284 (f)
GENESIS ELDER CARE 9.000%, 2007 4,000 4,014 3,930 (d)(f)
GENESIS HEALTHCARE 9.250%, 2006 5,000 5,000 5,100 (f)
GIANT INDUSTRIES 9.000%, 2007 5,000 5,000 4,988 (d)(f)
HMH PROPERTIES INC 8.875%, 2007 4,000 4,078 4,220 (f)
HAYES WHEELS INT'L 9.125%, 2007 3,000 3,007 3,112 (f)
HAYES WHEELS INT`L 9.125%, 2007 1,000 1,000 1,038 (f)
HERITAGE MEDIA 8.750%, 2006 4,500 4,567 4,826 (f)
HOWMET INC 10.000%, 2003 3,000 3,161 3,326 (f)
ITT CORP 6.250%, 2000 5,000 4,896 4,993 (f)
INTEGON CORP 9.500%, 2001 2,000 1,984 2,275
JOHNS MANVILLE INTL 10.875%, 2004 5,000 5,349 5,550 (f)
K-III COMM PUT/96 8.500%, 2006 5,000 4,982 5,125 (f)
KAUFMAN & BROAD HOME 7.750%, 2004 3,000 2,977 2,970 (f)
KROGER CO 8.150%, 2006 4,000 4,005 4,340 (f)
LTV CORPORATION 144A 8.200%, 2007 5,000 4,970 4,900 (d)(f)
LA QUINTA MOTOR 9.250%, 2003 2,000 2,077 2,075 (f)
LAMAR ADVERTISING 8.625%, 2007 5,000 5,007 5,144 (f)
<PAGE>
Bal. held
at 12-31-97
Principal
Amount of Cost Value at
Bonds (Notes 12-31-97
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
LGETT&PLATT MTN SERD 7.185%, 2002 10,000 9,958 10,335 (f)
LIFE STYLE FURN 10.875%, 2006 3,000 3,028 3,345 (d)(f)
MARK IV IND INC 8.750%, 2003 2,000 1,855 2,120
MARK IV 144A 7.500%, 2007 3,000 2,985 3,037 (d)(f)
MAXXIM MEDICAL 10.500%, 2006 4,000 4,033 4,340 (f)
MURRIN-MURRIN 144A 8.843%, 2005 4,000 4,000 3,940 (d)(f)
NEWS AMER HLDGS 7.500%, 2000 10,000 9,975 10,247 (f)
NORFOLK SOUTHERN 6.950%, 2002 15,000 15,204 15,447 (f)
NORTEK INC 9.125%, 2007 2,500 2,524 2,563 (f)
OUTDOOR SYSTEMS INC 9.375%, 2006 5,000 5,000 5,338 (f)
O`N`E` LOAN TRUST 97 7.906%, 2007 14,075 14,075 14,075 (f)
PARACELSUS HEALTH 10.000%, 2006 5,000 5,056 5,138 (f)
PARAMOUNT COMMUN 5.875%, 2000 5,350 5,255 5,251 (f)
PARK OHIO INDUSTRIES 9.250%, 2007 1,000 1,004 1,026 (d)(f)
PENNEY J.C. & CO 7.250%, 2002 10,000 9,996 10,362 (f)
PILLOWTEX CORP 9.000%, 2007 4,000 4,061 4,095 (d)(f)
PRINTPACK INC 9.875%, 2004 2,500 2,500 2,663 (f)
QUAKER OATS 6.940%, 2003 1,500 1,503 1,525 (f)
QUAKER OATS 6.470%, 2000 10,000 10,026 10,029 (f)
QUALITY FOOD CENTERS 8.700%, 2007 5,000 5,000 5,425 (f)
RAYTHEON COM 6.450%, 2002 5,000 5,034 5,041 (f)
REGALCINEMA 144A 8.500%, 2007 3,000 3,018 2,989 (d)(f)
REPAP WISCONSIN 9.250%, 2002 15,000 15,765 15,975 (f)
RITE AID CORP 6.700%, 2001 5,000 4,999 5,081 (f)
ROLLINS TRUCK 6.875%, 2001 5,000 4,999 5,095 (f)
RYDER SYSTEM 7.910%, 2000 5,000 5,023 5,179 (f)
RYERSON TULL 8.500%, 2001 5,000 5,000 5,181 (f)
SCOTSMAN GROUP INC 8.625%, 2007 3,500 3,491 3,509 (f)
SEARS 7.420%, 1998 10,000 10,000 10,025 (f)
SERVICE CORP INTL 6.375%, 2000 10,500 10,495 10,566 (f)
SHOP VAC CORP 10.625%, 2003 2,000 2,000 2,178 (f)
SHOWBOAT INC 9.250%, 2008 4,000 3,791 4,320
STANDARD COMMERCIAL 8.875%, 2005 4,000 4,000 4,035 (b)(d)(f)
SUNAMERICA 9.000%, 1999 20,000 20,000 20,607
SUPERVALU INC 6.500%, 2000 5,000 4,997 5,042 (f)
SUPERVALU INC 7.250%, 1999 8,000 7,974 8,117 (f)
S C INTERNATIONAL 9.250%, 2007 5,000 5,026 5,163 (d)(f)
TCW GEM II 144A FLT 7.188%, 2012 25,000 23,754 23,750 (f)
TENET HEALTHCARE CO 8.625%, 2003 7,000 6,981 7,263 (f)
TITAN WHEEL INT`L IN 8.750%, 2007 4,100 4,080 4,305 (f)
TRICO MARINE SERVICE 8.500%, 2005 3,000 2,985 3,041 (d)(f)
TYSON FOODS 6.410%, 2000 10,000 10,006 10,072 (f)
UNION TANK CAR 6.500%, 2008 7,107 7,096 7,173 (f)
UNITED AIR 1991A-1 9.200%, 2008 4,466 4,188 5,012
US WEST CAP 6.850%, 2002 15,500 15,493 15,788 (f)
UNIVERSAL OUTDOOR 9.750%, 2006 5,000 4,971 5,625 (f)
VENCOR INC 8.625%, 2007 4,000 4,012 4,010 (f)
VIACOM INC 6.750%, 2003 5,000 4,996 4,946
WALBRO 144A 10.125%, 2007 3,000 3,040 3,060 (f)
WHITMAN CORP 6.250%, 2000 5,000 4,960 5,016 (f)
WYMAM GORDON CO 8.000%, 2007 1,000 993 1,014 (f)
ANTENNA TV SA 144A 9.000%, 2007 5,000 4,905 5,006 (d)(f)
<PAGE>
Bal. held
at 12-31-97
Principal
Amount of Cost Value at
Bonds (Notes 12-31-97
Name of Issuer and Titles of Issue and Notes a and c) (Note a)
REYNOLDS METALS CAN 6.625%, 2002 19,500 19,649 19,662 (f)
COTT CORPORATION 8.500%, 2007 2,500 2,518 2,541 (f)
FIBERGLASS CAD INC 9.800%, 1998 5,000 5,028 5,103 (d)
ISPMEX 144A LIQUID 10.125%, 2003 5,000 5,000 5,150 (d)(f)
REPAP NEW BRUNSWICK 9.875%, 2000 7,000 7,093 7,105 (f)
STENA AB 10.500%, 2005 3,000 3,000 3,285
TARKETT 9.00 9.000%, 2002 3,650 3,721 3,700 (f)
TEEKAY SHIPPING CORP 8.320%, 2008 3,000 3,030 3,060 (f)
TELEWEST PLC 9.625%, 2006 2,000 2,000 2,100
Total Industrial 794,298 795,190 809,495
Total Other Bonds and Notes 2,982,400 2,982,062 3,034,007
Total Bonds and Notes 2,982,765 2,982,425 3,034,376
Bal. Held
at 12-31-97 Cost Value at
Number of (Notes 12-31-97
Name of Issuer and Titles of Issue Shares a and c) (Note a)
Preferred Stock
Public Utility
ALLTEL 7.75 $100 PAR 7.750%, 2005 21,234 2,139 2,145 (d)
AMERICAN WTRWRKS $25 8.500%, 2000 800,000 20,000 21,000 (b)(d)
AMERITECH NZ A $100 7.040%, 2001 40,000 4,157 4,270 (d)(f)
APPALACHIAN PWR $100 6.850%, 2004 30,000 3,004 3,174
APPALACHIAN PWR $100 5.900%, 2008 10,000 997 1,047 (f)
APPALACHIAN PWR $100 5.920%, 2008 11,000 1,089 1,106
ARIZONA PUB SVC $100 10.000%, 2001 91,034 9,496 9,695
ATLANTIC CITY EL 100 7.800%, 2006 90,000 8,988 9,703
ATLANTIC CITY EL 100 8.200%, 2000 16,500 1,649 1,675
BALTIMORE G&E $100 8.625%, 2000 19,328 1,933 1,975
BELL ATLANTIC NZ144A 7.080%, 2001 25,000 2,634 2,737 (d)(f)
BELL ATL NZ$100 144A 5.800%, 2004 100,000 10,000 10,275 (d)
BOSTON EDISON $100 8.000%, 2001 90,000 9,000 9,709
CENTRAL ILL LT $100 5.850%, 2008 65,000 6,509 6,711
COMMWLTH ED $100 PVT 8.200%, 2002 52,556 5,151 5,308 (d)
COMMONWEALTH EDISON 8.850%, 2003 58,500 5,926 6,025 (b)(d)
CON EDISON $100 SR J 6.125%, 2002 150,000 15,036 15,469
CON EDISON 7.2 SER I 7.200%, 2007 32,550 3,274 3,420
DUKE ENERGY $100 V 6.400%, 2002 30,000 3,000 3,103
DUKE ENRGY $100 SR U 6.300%, 2001 30,000 3,000 3,073
DUKE ENRGY $100 SR T 6.200%, 2000 30,000 3,000 3,060
DUKE ENRGY 1992D $25 6.200%, 2001 200,000 5,004 5,100
DUKE ENRGY 1992C $25 6.100%, 2000 250,000 6,263 6,344
DUKE ENRGY 1992B $25 5.950%, 1999 15,000 377 379 (f)
EASTERN EDISON $100 6.625%, 2008 210,000 20,925 22,155
ENTERGY ARKANSAS $25 9.920%, 2002 77,285 1,998 2,048
ENTERGY LA INC PFD 8.000%, 2001 70,000 7,000 7,267
ENTERGY LA $100 7.000%, 1999 80,000 8,001 8,130
GREEN MTN PWR CL-D/3 8.625%, 2000 42,000 4,200 4,281 (b)(d)
<PAGE>
Bal. Held
at 12-31-97 Cost Value at
Number of (Notes 12-31-97
Name of Issuer and Titles of Issue Shares a and c) (Note a)
HAWAII ELEC $100 8.500%, 2005 50,000 5,124 5,238 (b)(d)
MAUI ELEC $100 8.500%, 2005 50,000 5,101 5,238 (b)(d)
INDIANA MICH POWER 6.300%, 2009 52,250 5,222 5,349
IND MICH POWER $100 6.250%, 2009 20,000 2,006 2,041 (f)
INDIANA MICHIGAN PWR 5.900%, 2009 32,500 3,118 3,260
JERSEY CENTRAL P&L 8.650%, 2005 110,400 11,274 11,758
JERSEY CENTRAL P & L 8.480%, 2000 17,000 1,703 1,740
LONG ISL LGT SER AA 7.940%, 2000 273,600 6,882 7,148
LOUISVILLE G&E PFD 5.875%, 2008 12,000 1,197 1,235 (f)
MAINE YANKEE $100 7.480%, 2001 29,103 2,845 2,881
MIDAMERICAN ENERGY 7.800%, 2006 73,300 7,573 8,058
MN P & L 144A $100 7.125%, 2002 50,000 4,978 5,049 (b)(d)
MN P&L 144A 6.70 6.700%, 2002 100,000 10,000 10,450 (b)(d)
NJ NATL GAS 100 144A 7.720%, 2001 200,000 20,000 20,200 (d)
NO IND PUB SERV $100 8.850%, 2003 31,500 3,162 3,196 (b)(d)
NO IND PUB SERV $100 6.500%, 2002 114,750 11,945 11,891 (f)
NORTHWEST NAT GA 100 6.950%, 2002 170,000 17,107 18,424
OHIO POWER CO $100 5.900%, 2009 36,000 3,531 3,719
OHI PWR CO $100 6.020%, 2008 10,000 990 1,043
OHIO PWR CO $100 6.350%, 2008 5,000 507 534
OTTER TAIL PWR $100 6.300%, 2007 180,000 18,000 18,484
PECO ENERGY 6.120%, 2003 150,300 14,965 15,443
PACIFIC GAS & ELEC 6.300%, 2009 112,200 2,751 2,917 (f)
PACIFIC GAS & ELEC 6.570%, 2007 717,500 18,067 18,745
PACIFICORP $100 PAR 7.700%, 2001 150,000 15,000 16,106
POTOMAC ELEC PWR $50 6.800%, 2007 160,800 7,949 8,844
POTOMAC ELECTRIC 7.780%, 2006 160,000 8,006 8,320
PRAXAIR INC 7.480%, 2000 70,000 7,064 6,930
PUB SERV COLO $100 7.500%, 2009 173,368 16,764 17,640 (b)(d)
PUBLIC SER ELEC & GA 5.970%, 2008 6,000 613 669 (f)
PUGET SOUND P&L $100 8.000%, 2004 1,666 166 171
ROCHESTER G&E $100 6.600%, 2009 52,500 5,182 5,555
ROCHESTER G & E $100 7.650%, 1999 20,000 2,000 2,040
ROCHESTER G & E $100 7.550%, 1998 67,000 6,702 6,813
SAN DIEGO G&E $25 1.762%, 2008 59,500 1,587 1,640 (f)
SO CA EDISON $100 6.050%, 2008 45,000 4,502 4,660 (f)
SO CA EDISON $100 6.450%, 2002 202,250 20,373 21,085
SO INDIANA G&E 100 6.500%, 2002 75,000 7,500 7,434 (b)(d)
TEXAS UTILITIES 6.375%, 2008 54,000 5,431 5,576
TEXAS UTIL $100 PAR 6.980%, 2008 50,000 5,000 5,460
UBS PRIVATE SER H 5.040%, 2002 15 15,000 15,225 (b)(d)(f)
VIRGINIA ELEC & PWR 5.580%, 2000 17,500 1,764 1,766 (f)
VIRGINIA ELEC & PWR 6.350%, 2000 201,200 20,158 20,711
WASHINGTON WATER 8.625%, 2000 16,232 1,625 1,661
WASHINGTON WTR POWER 6.950%, 2007 57,500 5,765 6,307
WESTERN RESOURCES 7.580%, 2007 76,000 7,850 7,904
Total Public Utility 7,049,921 517,799 536,942
Finance
ABN AMRO NA FRAP 5.940% 15,000 15,000 15,495 (d)(f)
COMERICA FRAP 6.840% 150,000 7,796 8,006 (f)
EURO AMER BANK FRAP 5.840% 10,000 10,000 10,275 (f)
FLEET FIN 6.59% FRAP 6.590% 130,000 6,662 7,215 (f)
<PAGE>
Bal. Held
at 12-31-97 Cost Value at
Number of (Notes 12-31-97
Name of Issuer and Titles of Issue Shares a and c) (Note a)
MORGAN STANLEY GROUP 5.910% 100,000 5,000 5,190 (f)
PNC BK FRAP SERF 6.050% 440,000 22,160 22,582 (f)
WELLS FRGO FRAP SERH 6.590% 432,000 22,108 22,734 (f)
Total Finance 1,277,000 88,726 91,497
Industrial
NORTHBROOK HLDG 1000 6.600%, 2001 10,000 10,000 10,119 (b)(d)(f)
WHIRLPOOL FIN $100 B 6.550%, 2008 180,000 18,121 19,057 (d)
WHIRLPL FINL PFD144A 6.090%, 2002 37,000 3,684 3,848 (b)(d)(f)
Total Industrial 227,000 31,805 33,024
Total Preferred Stock 8,553,921 638,330 661,463
Other
Indutrial
MRS FIELDS 20,176,717 605 0 (f)
Total Investments in Securities of Unaffiliated Issuers 3,621,360 3,695,839
Total Reserve for Possible Losses on Corporate Issues 605
$3,620,755 $3,695,839
</TABLE>
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 $3,620,013.
(d) Securities acquired in private negotiation which may require registration
under federal securities laws if they were to be publicly sold. Also see
note 3B to financial statements.
(e) Non-income producing securities.
(f) Securities classified as available for sale and carried at fair value on
the balance sheet. Also see notes 1 and 3A to financial statements.
<PAGE>
IDS CERTIFICATE COMPANY SCHEDULE II
Investments in and Advances to Affiliates and Income Thereon
December 31, 1997, 1996 and 1995
($ in thousands)
Balance December 31, 1997
Interest
Dividends
Principal Carrying Credited
Amount or Cost Value to Income
Name of Issuer and Title of Issue No. of Shares (a)&(c) (b) (d)
Wholly Owned Subsidiary (b):
Real Estate Investment Company:
Investors Syndicate Development Corporation:
Capital Stock...................... 100 $2,998 $6,722 $0
Other Controlled Company:
Real Estate Development Company:
Mankato Ventures, First Mortgage Loan.. $0 0 0 0
Other Affiliates (as defined in Sec. 2(a)(3) of the
Investment Company Act of 1940).......... $0 0 0 0
Total affiliates...................................$2,998 $6,722 $0
<PAGE>
IDS CERTIFICATE COMPANY SCHEDULE II
Investments in and Advances to Affiliates and Income Thereon
December 31, 1997, 1996 and 1995
($ in thousands)
Balance December 31, 1996
Interest
Dividends
Principal Carrying Credited
Amount or Cost Value to Income
Name of Issuer and Title of Issue No. of Shares (a)&(c) (b) (d)
Wholly Owned Subsidiary (b):
Real Estate Investment Company:
Investors Syndicate Development Corporation:
Capital Stock...................... 100 $2,998 $6,444 $0
Other Controlled Company:
Real Estate Development Company:
Mankato Ventures, First Mortgage Loan.. $0 0 0 36
Other Affiliates (as defined in Sec. 2(a)(3) of the
Investment Company Act of 1940).......... $0 0 0 0
Total affiliates...................................$2,998 $6,444 $36
<PAGE>
IDS CERTIFICATE COMPANY SCHEDULE II
Investments in and Advances to Affiliates and Income Thereon
December 31, 1997, 1996 and 1995
($ in thousands)
Balance December 31, 1995
Interest
Dividends
Principal Carrying Credited
Amount or Cost Value to Income
Name of Issuer and Title of Issue No. of Shares (a)&(c) (b) (d)
Wholly Owned Subsidiary (b):
Real Estate Investment Company:
Investors Syndicate Development Corporation:
Capital Stock...................... 100 $2,998 $5,193 $0
Other Controlled Company:
Real Estate Development Company:
Mankato Ventures, First Mortgage Loan.. $462 462 462 56
Other Affiliates (as defined in Sec. 2(a)(3) of the
Investment Company Act of 1940).......... $0 0 0 0
Total affiliates...................................$3,460 $5,655 $56
<PAGE>
IDS CERTIFICATE COMPANY SCHEDULE II
Investments in and Advances to Affiliates and Income Thereon
December 31, 1997, 1996 and 1995
($ in thousands)
NOTES:
(a) The aggregate cost for federal income tax purposes at December 31, 1997,
1996 and 1995 was $6,776 $5,159 and $5,526 respectively, subject to
possible adjustment in certain circumstances under consolidated income tax
return regulations.
(b) Investments in stocks of wholly owned subsidiaries are carried at cost
adjusted for equity in undistribute net income since organization or
acquisition of the subsidiaries.
(c) Changes in investment in affiliate during the three years ended December
31, 1997 are summarized below:
<TABLE>
<CAPTION>
Cost at Additions (Deductions) Cost at
Name of Issuer and Dec. 31, Dec. 31,
<S> <C> <C> <C> <C> <C>
Title of Issue 1994 1995 1996 1997 1997
---------------------------- ----------- ------- ------- ------ -------
Mankato Ventures,
First Mortgage
Loan $580 (118) (462) 0 $0
</TABLE>
(d) There were no dividends or interest earned which were not credited to
income.
<PAGE>
<TABLE>
<CAPTION>
IDS CERTIFICATE COMPANY SCHEDULE III
Mortgage Loans on Real Estate and Interest Earned on Mortgages
Year Ended December 31, 1997
($ in thousands)
Part 1 - Mortgage loans on real estate at end of period
Amount of principal
unpaid at end of period
Carrying Subject Amount
amount of to of
Number Prior mortgages delinquent mortgages
of liens (c),(g),(h) interest being
Description (a) loans (b) and (i) Total (d) forclosed
<S> <C> <C> <C> <C> <C> <C>
First mortgages:
Insured by Federal Housing Administration - liens on:
Residential - under $100 0 0 0 0 0
Apartment and business - under $100 0 0 0 0 0
Total 0 0 0 0 0
Partially guaranteed under Servicemen's Readjustment Act of 1944, as amended
- liens on:
Residential - under $100 0 0 0 0 0
Apartment and business - under $100 0 0 0 0 0
Total 0 0 0 0 0
Other - liens on:
Residential 0 0 0 0 0
Apartment and business:
Under $100 2 190 190 0 0
$100 to $150 0 0 0 0 0
$150 to $200 1 163 163 0 0
$200 to $250 2 442 442 0 0
$250 to $300 0 0 0 0 0
$300 to $350 2 624 624 0 0
$350 to $400 4 1,240 1,501 0 0
$400 to $450 0 0 0 0 0
$450 to $500 0 0 0 0 0
Over $500:
Loan No. Mortgagor Property Location
20-00001 NSP, LTD Bloomington, MN 1 586 586 0 0
20-00002 CCH-Space Center Austin, TX 1 1,961 1,961 0 0
21-47106 1225 No. County Road 18 LTPlymouth, MN 1 1,634 1,634 0 0
21-47110 Lloyd Engelsma Brooklyn Park, MN 1 2,210 2,210 0 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Part 1 - Mortgage loans on real estate at end of period
Amount of principal
unpaid at end of period
Carrying Subject Amount
Description (a) amount of to of
Number Prior mortgages delinquent mortgages
Over $500: of liens (c),(g),(h) interest being
Loan No. Mortgagor Property Location loans (b) and (i) Total (d) forclosed
<S> <C> <C> <C> <C> <C> <C>
21-47116 McCaughey Dev. AssociationMadison, WI 1 1,131 1,131 0 0
21-47128 Century Income Properties Brookfield,WI 1 1,819 1,819 0 0
21-47139 Treasurer's Island Inc. Eagan, MN 1 1,487 1,487 0 0
21-47140 Harbour Run LTD MentorOnTheLake,OH 1 4,057 4,057 0 0
21-47141 John E. Smith Lafayette, IN 1 3,479 3,479 0 0
21-47142 34th Street Properties ParGainsville, FL 1 9,981 9,981 0 0
21-47144 Turnquist, Inc. Brooklyn Park, MN 1 4,016 4,016 0 0
21-47147 Columbus Real Estate Co. Hilliard, OH 1 7,551 7,551 0 0
21-47150 Bircain Apartment Company Gladstone, MO 1 2,408 2,408 0 0
21-47152 Richard D. Fownes Trustee Boston, MA 1 3,245 3,245 0 0
21-47154 Kenneth Grandberg Trustee Randolph, MA 1 3,084 3,084 0 0
21-47157 John A. Belanich Tampa, FL 1 3,566 3,566 0 0
21-47158 Grande Associates South River, NJ 1 4,081 4,081 0 0
21-47159 Grande Associates Marlton, NJ 1 3,647 3,647 0 0
21-47160 James Esshaki DBA Taylor MI 1 5,963 5,963 0 0
21-47164 K & M Hamilton DevelopmentHalmilton, OH 1 5,689 5,689 0 0
21-47165 Bowling Freen Partnership Sussex, WI 1 2,604 2,604 0 0
21-47167 Wilder Corp of Delaware Ruskin, FL 1 5,453 5,453 0 0
21-47168 Wilder Corp of Delaware Riverview, FL 1 3,010 3,010 0 0
21-47172 Dial Reit Inc. Fremont, NE 1 2,904 2,904 0 0
21-47173 Cinram Associates Fairfield, NJ 1 3,811 3,811 0 0
21-47179 Morrestown Office Center Morrestown, NJ 1 2,671 2,671 0 0
21-47181 Westlake #1 Limited PartnCharlotte, NC 1 2,276 2,276 0 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Part 1 - Mortgage loans on real estate at end of period
Amount of principal
unpaid at end of period
Carrying Subject Amount
Description (a) amount of to of
Number Prior mortgages delinquent mortgages
Over $500: of liens (c),(g),(h) interest being
Loan No. Mortgagor Property Location loans (b) and (i) Total (d) forclosed
<S> <C> <C> <C> <C> <C> <C>
21-47184 Mcnab Commerce Center AssPompano Beach, FL 1 2,135 2,135 0 0
21-47186 Mack Edison Company Edison, NJ 1 6,495 6,495 0 0
21-47187 Industrial Development AsMebane, NC 1 2,481 2,481 0 0
21-47190 Dial Reit Inc. Davenport, IA 1 4,021 4,021 0 0
21-47191 SSC Associates Ltd PtnshpSt. Claire Shores, 1 6,051 6,051 0 0
21-47192 Tree Trail Village AssociNorcross, GA 1 6,542 6,542 0 0
21-47194 Briar Development CompanyTacoma, WA 1 4,082 4,082 0 0
21-47195 Tipotex Inc. Pharr, TX 1 1,809 1,809 0 0
21-47196 Wilder Corporation Pharr, TX 1 3,930 3,930 0 0
21-47197 Wilder Corporation Alamo, TX 1 927 927 0 0
21-47198 Investors Real Estate TruGrand Forks, ND 1 4,037 4,037 0 0
21-47199 Warren and Kelso Company Cheltenham Twsp, P 1 2,804 2,804 0 0
21-47201 Oakland Park Festival CtrOakland Park, FL 1 4,200 4,200 0 0
21-47202 Lakewood West Ltd PartnerLakewood, CO 1 4,070 4,070 0 0
21-47204 Fort Walton Mary Esther, FL 1 3,011 3,011 0 0
21-47205 Kavanaugh Tucson, AZ 1 3,746 3,746 0 0
21-47206 Hicker Albequerque, NM 1 5,617 5,617 0 0
21-47207 Newport VII Albequerque, NM 1 2,503 2,503 0 0
21-47208 Newport VI Albequerque, NM 1 981 981 0 0
21-47209 Fountain Lake Brandeton, FL 1 4,751 4,751 0 0
21-47210 Orion West Haven, CT 1 4,439 4,439 0 0
21-47211 Plaza 7000 Greenwood Village, 1 2,474 2,474 0 0
21-47212 Howard Lake-Maple Plain Howard Lake, MN 1 1,385 1,385 0 0
21-47213 Crec-Plymouth Plymouth, MN 1 989 989 0 0
21-47214 West Health Inc. Plymouth, MN 1 10,735 10,735 0 0
21-47215 Invespro Urbandale, IA 1 3,496 3,496 0 0
21-47216 Invespro Urbandale, IA 1 2,753 2,753 0 0
21-47217 Airport Tempe, AZ 1 5,365 5,365 0 0
21-47218 D&R Northpoin Sterling, VA 1 1,984 1,984 0 0
21-47219 NewPort IX Albequerque, NM 1 2,696 2,696 0 0
21-47223 Westwood Plaza Houston, TX 1 3,850 3,850 0 0
0-3027654 DFB Associates Costa Mesa, CA 1 940 940 0 0
0-3031967 Special Partnership St. Anthony, MN 1 501 501 0 0
71 212,783 213,044 0 0
Total Other 71 212,783 213,044 0 0
Unallocated Reserve for Losses 350
Total First Mortgage Loans on Real Estate 71 212,433 213,044 0 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Part 2 -
Interest earned on mortgages
Average
gross rate
Interest of interest
due and on mortgages
accrued held at end
at end of of period
Description (a) period (e) (f)
<S> <C> <C>
First mortgages:
Insured by Federal Housing Administration - liens on:
Residential - under $100 0.000%
Apartment and business - under $100 0.000%
Total 0.000%
Partially guaranteed under Servicemen's Readjustment Act of 1944, as amended
- liens on:
Residential - under $100 0.000%
Apartment and business - under $100 0.000%
Total 0.000%
Other - liens on:
Residential 0.000%
Apartment and business:
Under $100 9.520%
$100 to $150 0.000%
$150 to $200 8.750%
$200 to $250 9.819%
$250 to $300 0.000%
$300 to $350 10.584%
$350 to $400 8.873%
$400 to $450 0.000%
$450 to $500 0.000%
Over $500:
Loan No. Mortgagor Property Location
20-00001 NSP, LTD Bloomington, MN 8.750%
21-46978 Kraus Anderson Burnsville, MN 8.000%
21-47106 1225 No. County Road 18 LTD Plymouth, MN 8.000%
21-47110 Lloyd Engelsma Brooklyn Park, MN 8.750%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Part 2 -
Interest earned on mortgages
Average
gross rate
Interest of interest
Description (a) due and on mortgages
accrued held at end
Over $500: at end of of period
Loan No. Mortgagor Property Location period (e) (f)
<S> <C> <C>
21-47116 McCaughey Dev. Association Madison, WI 8.500%
21-47128 Century Income Properties Fund Brookfield,WI 8.250%
21-47139 Treasurer's Island Inc. Eagan, MN 8.625%
21-47140 Harbour Run LTD MentorOnTheLake,OH 9.000%
21-47141 John E. Smith Lafayette, IN 10.000%
21-47142 34th Street Properties Partnership Gainsville, FL 7.050%
21-47144 Turnquist, Inc. Brooklyn Park, MN 8.875%
21-47147 Columbus Real Estate Co. Hilliard, OH 7.500%
21-47150 Bircain Apartment Company LP Gladstone, MO 7.250%
21-47152 Richard D. Fownes Trustee Boston, MA 8.000%
21-47154 Kenneth Grandberg Trustee Randolph, MA 8.250%
21-47157 John A. Belanich Tampa, FL 8.750%
21-47158 Grande Associates South River, NJ 7.500%
21-47159 Grande Associates Marlton, NJ 7.500%
21-47160 James Esshaki DBA Taylor MI 8.500%
21-47164 K & M Hamilton Development Co. Halmilton, OH 8.125%
21-47165 Bowling Freen Partnership Sussex, WI 8.625%
21-47167 Wilder Corp of Delaware Ruskin, FL 9.625%
21-47168 Wilder Corp of Delaware Riverview, FL 9.625%
21-47172 Dial Reit Inc. Fremont, NE 9.250%
21-47173 Cinram Associates Fairfield, NJ 9.125%
21-47179 Morrestown Office Center Morrestown, NJ 8.625%
21-47181 Westlake #1 Limited Partnership Charlotte, NC 8.250%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Part 2 -
Interest earned on mortgages
Average
gross rate
Interest of interest
Description (a) due and on mortgages
accrued held at end
Over $500: at end of of period
Loan No. Mortgagor Property Location period (e) (f)
<S> <C> <C>
21-47184 Mcnab Commerce Center Association Pompano Beach, FL 8.250%
21-47186 Mack Edison Company Edison, NJ 8.000%
21-47187 Industrial Development Association Mebane, NC 8.125%
21-47190 Dial Reit Inc. Davenport, IA 8.000%
21-47191 SSC Associates Ltd Ptnshp St. Claire Shores, MI 7.125%
21-47192 Tree Trail Village Association Norcross, GA 8.250%
21-47194 Briar Development Company Tacoma, WA 8.750%
21-47195 Tipotex Inc. Pharr, TX 9.125%
21-47196 Wilder Corporation Pharr, TX 9.125%
21-47197 Wilder Corporation Alamo, TX 9.125%
21-47198 Investors Real Estate Trust Grand Forks, ND 7.625%
21-47199 Warren and Kelso Company Cheltenham Twsp, PA 8.125%
21-47201 Oakland Park Festival Ctr Oakland Park, FL 7.750%
21-47202 Lakewood West Ltd Partnership Lakewood, CO 7.750%
21-47204 Fort Walton Mary Esther, FL 8.125%
21-47205 Kavanaugh Tucson, AZ 8.000%
21-47206 Hicker Albequerque, NM 8.250%
21-47207 Newport VII Albequerque, NM 8.125%
21-47208 Newport VI Albequerque, NM 8.125%
21-47209 Fountain Lake Brandeton, FL 8.375%
21-47210 Orion West Haven, CT 7.875%
21-47211 Plaza 7000 Greenwood Village,CO 7.625%
21-47212 Howard Lake-Maple Plain Howard Lake, MN 7.750%
21-47213 Crec-Plymouth Plymouth, MN 7.750%
21-47214 West Health Inc. Plymouth, MN 7.750%
21-47215 Invespro Urbandale, IA 8.375%
21-47216 Invespro Urbandale, IA 8.375%
21-47217 Airport Tempe, AZ 8.375%
21-47218 D&R Northpoin Sterling, VA 8.500%
21-47219 NewPort IX Albequerque, NM 7.850%
21-47223 Westwood Plaza Houston, TX 7.500%
0-3027654 DFB Associates Costa Mesa, CA 9.500%
0-3031967 Special Partnership St. Anthony, MN 9.250%
8.212%
Total Other 8.212%
Unallocated Reserve for Losses
Total First Mortgage Loans on Real Estate 8.212%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Part 3 - Location of mortgaged properties
($ in thousands)
Amount of principal
unpaid at end of period
Carrying Subject
State in amount of to Amount of
which mortgaged Number Prior mortgages delinquent mortgages
property of liens (c), (g), interest being
is located loans (b) (h) and (i) Total (d) foreclosed
<S> <C> <C> <C>
Arizona 2 9,111 9,111
California 3 1,382 1,382
Colorado 2 6,544 6,544
Connecticut 1 4,439 4,439
Florida 8 36,107 36,107
Georgia 1 6,542 6,542
Indiana 1 3,479 3,479
Iowa 3 10,270 10,270
Massachusetts 2 6,329 6,329
Michigan 2 12,014 12,014
Minnesota 11 23,962 23,962
Missouri 1 2,408 2,408
Nebraska 1 2,904 2,904
New Jersey 6 21,086 21,086
New Mexico 4 11,798 11,798
North Carolina 2 4,757 4,757
North Dakota 1 4,037 4,037
Ohio 3 17,297 17,297
Oklahoma 3 864 864
Pennsylvania 1 2,804 2,804
South Dakota 1 358 358
Texas 7 12,671 12,932
Virginia 1 1,984 1,984
Washington 1 4,082 4,082
Wisconsin 3 5,554 5,554
71 212,783 213,044 0 0
Unallocated Reserve
for Losses 350
Total 71 212,433 213,044 0 0
</TABLE>
<PAGE>
NOTES:
(a) The classification "residential" includes single dwellings only.
Residential multiple dwellings are included in "apartment and
business".
(b) Real estate taxes and easements, which in the opinion of the Company
are not undue burden on the properties, have been excluded from the
determination of "prior liens".
(c) In this schedule III, carrying amount of mortgage loans represents
unpaid principal balances plus unamortized premiums less unamortized
discounts and reserve for loss.
(d) Interest in arrears for less than three months has been disregarded in
computing the total amount of principal subject to delinquent interest.
The amounts of mortgage loans being forclosed are also included in
amounts subject to delinquent interest.
(e) Information as to interest due and accrued at the end of the period is
shown by type of mortgage loan. Information as to interest due and
accrued for the various classes within the types of mortgage loans is
not readily available and the obtaining thereof would involve
unreasonable effort and expense.
The Company does not accrue interest on loans which are over three
months delinquent.
(f) Information as to interest income by type and class of loan has been
omitted because it is not readily available and the obtaining thereof
would involve unreasonable effort and expense. I lieu thereof, the
average gross interest rates (exclusive of amortization of discounts
and premiums) on mortgage loans held at December 31, 1997 are shown by
type and class of loan.
The average gross interest rates on mortgage loans held at December 31,
1997, 1996 and 1995 are summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1997 1996 1995
First mortgages:
Insured by Federal Housing Administration 0.000% 0.000% 0.000%
Partially guaranteed under Servicemen's
Readjustment Act of 1944, as am 0.00 0.00 0.000
Other 8.21 8.45 8.901
Combined average 8.212% 8.450% 8.901%
</TABLE>
<PAGE>
(g) Following is a reconciliation of the carrying amount of mortgage loans
for the years ended December 31, 1997, 1996 and 1995.
<TABLE><CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Balance at beginning of period $218,697 $233,394 $253,968
Additions during period:
New loans acquired:
Nonaffiliated companies 45,200 18,301 9,000
Amortization of discount/ premium 0 0 0
Total additions 45,200 18,301 9,000
263,897 251,695 262,968
Deductions during period:
Collections of principal 51,464 32,998 29,533
Cost of mortgages sold 0 0 41
Total deductions 51,464 32,998 29,574
Balance at end of period $212,433 $218,697 $233,394
</TABLE>
(h) The aggregate cost of mortgage loans for federal income tax purposes
at December 31, 1997 was $213,044.
(i) At December 31, 1997, a reserve for loss of $611 is recorded which
represents $261 on impaired mortgage loans and $350 of unallocated
reserves.
(j) New loans acquired during 1996 include $2,000 of proceeds received from
sale of real estate in lieu of cash.
<PAGE>
<TABLE><CAPTION>
IDS CERTIFICATE COMPANY SCHEDULE V
Qualified Assets on Deposit
December 31, 1997
($ thousands)
Investment Securities
Bonds and Mortgage
Notes Stocks Loans Other
Name of Depositary (a) (b) (c) (d) Total
<S> <C> <C> <C> <C> <C>
Deposits with states or their
depositaries to meet requirements
of statutes and agreements:
Illinois - Secretary of
State of Illinois $50 $0 $0 $0 $50
New Jersey - Commissioner
of Banking and Insurance
of New Jersey 49 0 0 0 49
Pennsylvania - Treasurer
of the State of
Pennsylvania 149 0 0 0 149
Texas - Treasurer of the
State of Texas 115 0 0 0 115
Total deposits with states or their
depositaries to meet requirements
of statues and agreements 363 0 0 0 363
Central depositary - American
Express Trust Company 2,941,567 638,936 212,433 33,569 3,826,505
Total $2,941,930 $638,936 $212,433 $33,569 $3,826,868
Notes:
(a) Represents amortized cost of bonds and notes.
(b) Represents average cost of individual issues of stocks.
(c) Represents unpaid principal balance of mortgage loans less unamortized
discounts and reserve for losses.
(d) Represents amortized cost of purchased call options and interest rate
floors of $33,364 and $205, respectively.
</TABLE>
<PAGE>
<TABLE>
<CAPTION> Schedule VI
IDS CERTIFICATE COMPANY
Certificate Reserves
Part 1 - Summary of Changes
Year ended December 31, 1997 Balance at beginning of period
($ in thousands) Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
<S> <C> <C> <C>
Installment certificates:
Reserves to mature:
Series 15, includes extended maturities 2.40 Inst/2.50 Ext. 0 $ 0 0
" 20, " " " 2.52 Inst/2.50 Ext. 21 256 224
" 15A, " " " 2.66 Inst/3.04 Ext. 14 341 314
" 22A, " " " 3.09 1,545 29,381 23,187
" I-76, " " " 3.35 822 19,231 8,788
" Reserve Plus Flexible Payment (note a) 372 3,475 1,735
" IC-Q-Installment (note a) 142 1,436 631
" IC-Q-Ins (note a) 14,496 180,394 79,289
" IC-Q-Ins Emp (note a) 73 914 338
" IC-1 (note a) 61,488 1,103,589 219,654
" IC-1-Emp (note a) 425 7,490 1,546
" Inst (note a) 0 0 0
" Inst-Emp (note a) 0 0 0
" RP-Q-Installment (note a) 250 3,368 2,109
" RP-Q-Flexible Payment (note a) 22 300 118
" RP-Q-Ins (note a) 403 8,093 2,733
" RP-Q-Ins Emp (note a) 5 176 26
" RP-1 (note a) 494 15,371 3,366
" RP-1-Emp (note a) 5 1,292 14
" Inst-R (note a) 0 0 0
" Inst-R-Emp (note a) 0 0 0
Total 80,577 1,375,107 344,072
Payments made in advance of certificate
year requirements and accrued interest
thereon:
Series 15, includes extended maturities 2 Not Not 0
" 20, " " " 2 Readily Applicable 12
" 15A, " " " 3 Available 15
" 22A, " " " 3 798
" I-76, " " " 3.5 373
Total 1,198
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Additions
Charged
Yield Charged Reserve to other
to maturity to profit payments by accounts
on an annual and loss certificate (per
Description payment basis or income holders part 2)
<S> <C> <C> <C>
Installment certificates:
Reserves to mature:
Series 15, includes extended maturities 2.40 Inst/2.50 Ext. 0 0 0
" 20, " " " 2.52 Inst/2.50 Ext. 5 1 2
" 15A, " " " 2.66 Inst/3.04 Ext. 4 1 2
" 22A, " " " 3.09 607 324 2,566
" I-76, " " " 3.35 286 318 36
" Reserve Plus Flexible Payment (note a) 0 255 48
" IC-Q-Installment (note a) 0 86 17
" IC-Q-Ins (note a) 0 9,109 1,760
" IC-Q-Ins Emp (note a) 0 54 10
" IC-1 (note a) 0 91,361 7,043
" IC-1-Emp (note a) 0 701 61
" Inst (note a) 0 1,843 12
" Inst-Emp (note a) 0 6 0
" RP-Q-Installment (note a) 0 43 61
" RP-Q-Flexible Payment (note a) 0 2 3
" RP-Q-Ins (note a) 0 152 62
" RP-Q-Ins Emp (note a) 0 1 1
" RP-1 (note a) 0 1,152 106
" RP-1-Emp (note a) 0 1 0
" Inst-R (note a) 0 42 0
" Inst-R-Emp (note a) 0 0 0
Total 902 105,452 11,790
Payments made in advance of certificate
year requirements and accrued interest
thereon:
Series 15, includes extended maturities 2 0 0 0
" 20, " " " 2 0 1 0
" 15A, " " " 3 1 0 0
" 22A, " " " 3 32 202 72
" I-76, " " " 3.5 17 34 3
Total 50 237 75
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Deductions
Credited
Yield Cash to other
to maturity surrenders accounts
on an annual prior to (per
Description payment basis Maturities maturity part 2)
<S> <C> <C> <C>
Installment certificates:
Reserves to mature:
Series 15, includes extended maturities 2.40 Inst/2.50 Ext. 0 0 0
" 20, " " " 2.52 Inst/2.50 Ext. 33 39 36
" 15A, " " " 2.66 Inst/3.04 Ext. 81 127 75
" 22A, " " " 3.09 2,863 1,490 6,286
" I-76, " " " 3.35 0 1,081 237
" Reserve Plus Flexible Payment (note a) 150 522 0
" IC-Q-Installment (note a) 37 205 0
" IC-Q-Ins (note a) 4,057 38,179 15
" IC-Q-Ins Emp (note a) 37 158 0
" IC-1 (note a) 0 60,054 0
" IC-1-Emp (note a) 0 595 0
" Inst (note a) 0 48 0
" Inst-Emp (note a) 0 0 0
" RP-Q-Installment (note a) 113 341 33
" RP-Q-Flexible Payment (note a) 2 27 0
" RP-Q-Ins (note a) 122 1,060 0
" RP-Q-Ins Emp (note a) 0 14 0
" RP-1 (note a) 0 1,193 0
" RP-1-Emp (note a) 0 6 0
" Inst-R (note a) 0 0 0
" Inst-R-Emp (note a) 0 0 0
Total 7,495 105,139 6,682
Payments made in advance of certificate
year requirements and accrued interest
thereon:
Series 15, includes extended maturities 2 0 0 0
" 20, " " " 2 2 1 3
" 15A, " " " 3 4 0 2
" 22A, " " " 3 85 46 365
" I-76, " " " 3.5 0 61 23
Total 91 108 393
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Balance at close of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
<S> <C> <C> <C>
Installment certificates:
Reserves to mature:
Series 15, includes extended maturities 2.40 Inst/2.50 Ext. 0 0 0
" 20, " " " 2.52 Inst/2.50 Ext. 11 134 124
" 15A, " " " 2.66 Inst/3.04 Ext. 5 48 38
" 22A, " " " 3.09 1,020 21,961 16,045
" I-76, " " " 3.35 695 16,407 8,110
" Reserve Plus Flexible Payment (note a) 286 2,605 1,366
" IC-Q-Installment (note a) 104 1,132 492
" IC-Q-Ins (note a) 8,748 106,483 47,907
" IC-Q-Ins Emp (note a) 39 511 207
" IC-1 (note a) 55,233 983,323 258,004
" IC-1-Emp (note a) 360 6,142 1,713
" Inst (note a) 3,134 66,052 1,807
" Inst-Emp (note a) 17 255 6
" RP-Q-Installment (note a) 199 2,729 1,726
" RP-Q-Flexible Payment (note a) 18 236 94
" RP-Q-Ins (note a) 244 5,083 1,765
" RP-Q-Ins Emp (note a) 3 84 14
" RP-1 (note a) 412 12,663 3,431
" RP-1-Emp (note a) 3 1,182 9
" Inst-R (note a) 18 4,788 42
" Inst-R-Emp (note a) 0 0 0
Total 70,549 1,231,818 342,900
Payments made in advance of certificate
year requirements and accrued interest
thereon:
Series 15, includes extended maturities 2 Not Not 0
" 20, " " " 2 Readily Applicable 7
" 15A, " " " 3 Available 10
" 22A, " " " 3 608
" I-76, " " " 3.5 343
Total 968
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Balance at beginning of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
<S> <C> <C> <C>
Additional credits and accrued interest
thereon:
Series 15, includes extended maturities 2.5 0
" 20, " " " 2.5 Not Not 47
" 15A, " " " 3 Readily Applicable 48
" 22A, " " " 3 Available 4,922
" I-76, " " " 3.5 2,021
" Reserve Plus Flexible Payment (note a) 0
" IC-Q-Installment (note a) 0
" IC-Q-Ins (note a) 0
" IC-Q-Ins Emp (note a) 0
" IC-1 (note a) 266
" IC-1-Emp (note a) 2
" Inst (note a) 0
" Inst-Emp (note a) 0
" RP-Q-Installment (note a) 0
" RP-Q-Flexible Payment (note a) 0
" RP-Q-Ins (note a) 0
" RP-Q-Ins Emp (note a) 0
" RP-1 (note a) 4
" RP-1-Emp (note a) 0
" Inst-R (note a) 0
" Inst-R-Emp (note a) 0
Total 7,310
Reserve for accrued extra contribution 3rd year 14,412
Reserve for accrued extra contribution 6th year 282
Accrued interest on reserves in default I-76 3.5 2
Reserve for additional credits to be allowed Not Not
Installment Certificates-Special Additional Readily Applicable
Credits I-76 Available 0
Accrued for additional credits to be allowed at
next anniversary 199
Reserve for death and disability refund options 0
Reserve for reconversion of paid-up certificates 53
Total installment certificates 367,528
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Additions
Charged
Yield Charged Reserve to other
to maturity to profit payments by accounts
on an annual and loss certificate (per
Description payment basis or income holders part 2)
<S> <C> <C> <C>
Additional credits and accrued interest
thereon:
" 15, includes extended maturities 2.5 0 0
" 20, " " " 2.5 1 Not 2
" 15A, " " " 3 0 Applicable 2
" 22A, " " " 3 121 773
" I-76, " " " 3.5 65 90
" Reserve Plus Flexible Payment (note a) 48 0
" IC-Q-Installment (note a) 17 0
" IC-Q-Ins (note a) 1,762 0
" IC-Q-Ins Emp (note a) 10 0
" IC-1 (note a) 7,091 0
" IC-1-Emp (note a) 62 0
" Inst (note a) 14 0
" Inst-Emp (note a) 0 0
" RP-Q-Installment (note a) 61 0
" RP-Q-Flexible Payment (note a) 3 0
" RP-Q-Ins (note a) 62 0
" RP-Q-Ins Emp (note a) 1 0
" RP-1 (note a) 106 0
" RP-1-Emp (note a) 0 0
" Inst-R (note a) 0 0
" Inst-R-Emp (note a) 0 0
Total 9,424 867
Reserve for accrued extra contribution 3rd year 3,934 (4,457) 0
Reserve for accrued extra contribution 6th year 59 (331) 0
Accrued interest on reserves in default I-76 3.5 6 0 0
Reserve for additional credits to be allowed
Installment Certificates-Special Additional
Credits I-76 0 0 0
Accrued for additional credits to be allowed at
next anniversary 330 0 0
Reserve for death and disability refund options 0 0 0
Reserve for reconversion of paid-up certificates 1 0 0
Total installment certificates 14,706 100,901 12,732
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Deductions
Credited
Yield Cash to other
to maturity surrenders accounts
on an annual prior to (per
Description payment basis Maturities maturity part 2)
<S> <C> <C> <C>
Additional credits and accrued interest
thereon:
Series 15, includes extended maturities 2.5 0 0 0
" 20, " " " 2.5 8 8 7
" 15A, " " " 3 16 15 14
" 22A, " " " 3 582 325 1,309
" I-76, " " " 3.5 0 248 55
" Reserve Plus Flexible Payment (note a) 0 0 48
" IC-Q-Installment (note a) 0 0 17
" IC-Q-Ins (note a) 0 0 1,762
" IC-Q-Ins Emp (note a) 0 0 10
" IC-1 (note a) 0 0 7,045
" IC-1-Emp (note a) 0 0 61
" Inst (note a) 0 0 12
" Inst-Emp (note a) 0 0 0
" RP-Q-Installment (note a) 0 0 61
" RP-Q-Flexible Payment (note a) 0 0 3
" RP-Q-Ins (note a) 0 0 62
" RP-Q-Ins Emp (note a) 0 0 1
" RP-1 (note a) 0 0 106
" RP-1-Emp (note a) 0 0 0
" Inst-R (note a) 0 0 0
" Inst-R-Emp (note a) 0 0 0
Total 606 596 10,573
Reserve for accrued extra contribution 3rd year 0 0 0
Reserve for accrued extra contribution 6th year 0 0 0
Accrued interest on reserves in default I-76 3.5 0 0 6
Reserve for additional credits to be allowed
Installment Certificates-Special Additional
Credits I-76 0 0 0
Accrued for additional credits to be allowed at
next anniversary 0 0 381
Reserve for death and disability refund options 0 0 0
Reserve for reconversion of paid-up certificates 0 0 0
Total installment certificates 8,192 105,843 18,035
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Balance at close of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
<S> <C> <C> <C>
Additional credits and accrued interest
thereon:
Series 15, includes extended maturities 2.5 0
" 20, " " " 2.5 Not Not 27
" 15A, " " " 3 Readily Applicable 5
" 22A, " " " 3 Available 3,600
" I-76, " " " 3.5 1,873
" Reserve Plus Flexible Payment (note a) 0
" IC-Q-Installment (note a) 0
" IC-Q-Ins (note a) 0
" IC-Q-Ins Emp (note a) 0
" IC-1 (note a) 312
" IC-1-Emp (note a) 3
" Inst (note a) 2
" Inst-Emp (note a) 0
" RP-Q-Installment (note a) 0
" RP-Q-Flexible Payment (note a) 0
" RP-Q-Ins (note a) 0
" RP-Q-Ins Emp (note a) 4
" RP-1-Emp (note a) 0
" Inst-R (note a) 0
" Inst-R-Emp (note a) 0
Total 5,826
Reserve for accrued extra contribution 3rd year 13,889
Reserve for accrued extra contribution 6th year 10
Accrued interest on reserves in default I-76 3.5 2
Reserve for additional credits to be allowed
Installment Certificates-Special Additional Not Not
Credits I-76 Readily Applicable 0
Accrued for additional credits to be allowed at Available
next anniversary 148
Reserve for death and disability refund options 0
Reserve for reconversion of paid-up certificates 54
Total installment certificates 363,797
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Balance at beginning of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
<S> <C> <C> <C>
Fully paid certificates:
Single-payment certificates:
SP 74 3.5 1 8 8
SP 75 3.5 2 57 57
SP 76 3.5 111 871 867
SP 77 3.5 385 2,696 2,628
SP 78 3.5 455 3,391 3,200
SP 79 3.5 522 4,020 3,671
SP 80 3.5 502 4,086 3,597
SP 81A 3.5 402 2,372 2,013
SP 82A 3.5 362 3,606 2,962
SP 82B 3.5 643 5,702 4,630
SP 83A 3.5 110 933 747
SP 83B 3.5 265 2,445 1,925
IC-2-84 3.5 1,029 9,884 7,533
IC-2-85 3.5 560 5,788 5,630
IC-2-86 3.5 290 3,229 2,842
IC-2-87 3.5 371 4,569 3,741
IC-2-88 3.5 728 10,661 7,902
Reserve Plus Single Payment (note a) 1,207 5,678 8,880
Cash Reserve Single Payment (note b) 48 231 196
IC-Flexible Savings (formerly Variable Term) (note d) 93,070 561,761 622,101
IC-Flexible Savings Emp (formerly Variable Term) (note d) 1,514 14,554 16,801
IC-Preferred Investors (note d) 25 23,523 23,592
IC-Investors (note d) 529 585,856 619,860
IC-Special Deposits (note d) 75 72,990 75,698
IC-1-84 (note c) 72 464 502
Cash Reserve Variable Payment (note b) 655 3,098 3,992
Cash Reserve Variable Payment-3mo. (note e) 50,579 231,063 242,261
IC-Future Value (note f) 19,246 214,452 214,452
IC-Future Value Emp (note f) 377 4,065 4,065
IC-Stock Market (note g) 66,983 238,765 260,128
IC-AEBI Stock Market (note g) 22 3,543 3,770
Total 241,140 2,024,361 2,150,251
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Additions
Charged
Yield Charged Reserve to other
to maturity to profit payments by accounts
on an annual and loss certificate (per
Description payment basis or income holders part 2)
<S> <C> <C> <C>
Fully paid certificates:
Single-payment certificates:
SP 74 3.5 0 0 0
SP 75 3.5 0 0 0
SP 76 3.5 4 0 0
SP 77 3.5 62 0 0
SP 78 3.5 102 0 0
SP 79 3.5 117 0 0
SP 80 3.5 116 0 0
SP 81A 3.5 66 0 0
SP 82A 3.5 96 0 0
SP 82B 3.5 150 0 0
SP 83A 3.5 24 0 0
SP 83B 3.5 63 0 0
IC-2-84 3.5 239 0 0
IC-2-85 3.5 0 0 253
IC-2-86 3.5 0 0 126
IC-2-87 3.5 0 0 170
IC-2-88 3.5 0 0 340
Reserve Plus Single Payment (note a) 0 1 332
Cash Reserve Single Payment (note b) 0 0 7
IC-Flexible Savings (formerly Variable Term) (note d) 0 340,088 28,442
IC-Flexible Savings Emp (formerly Variable Term) (note d) 0 2,843 847
IC-Preferred Investors (note d) 0 120,448 2,672
IC-Investors (note d) 0 300,689 34,653
IC-Special Deposits (note d) 0 182,511 6,238
IC-1-84 (note c) 0 0 21
Cash Reserve Variable Payment (note b) 0 474 147
Cash Reserve Variable Payment-3mo. (note e) 0 249,770 9,532
IC-Future Value (note f) 0 2,858 0
IC-Future Value Emp (note f) 0 96 0
IC-Stock Market (note g) 0 143,624 24,437
IC-AEBI Stock Market (note g) 0 300 343
Total 1,039 1,343,702 108,560
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Deductions
Credited
Yield Cash to other
to maturity surrenders accounts
on an annual prior to (per
Description payment basis Maturities maturity part 2)
<S> <C> <C> <C>
Fully paid certificates:
Single-payment certificates:
SP 74 3.5 0 0 0
SP 75 3.5 725 0 57
SP 76 3.5 1,696 10 136
SP 77 3.5 0 351 160
SP 78 3.5 0 531 0
SP 79 3.5 0 622 9
SP 80 3.5 0 579 9
SP 81A 3.5 0 273 0
SP 82A 3.5 0 683 0
SP 82B 3.5 0 661 8
SP 83A 3.5 0 209 0
SP 83B 3.5 0 276 0
IC-2-84 3.5 0 1,282 0
IC-2-85 3.5 0 1,201 0
IC-2-86 3.5 0 488 0
IC-2-87 3.5 0 611 0
IC-2-88 3.5 0 1,507 0
Reserve Plus Single Payment (note a) 0 1,638 5
Cash Reserve Single Payment (note b) 0 25 0
IC-Flexible Savings (formerly Variable Term) (note d) 0 244,119 0
IC-Flexible Savings Emp (formerly Variable Term) (note d) 0 4,272 0
IC-Preferred Investors (note d) 0 75,704 0
IC-Investors (note d) 0 213,763 0
IC-Special Deposits (note d) 0 69,128 0
IC-1-84 (note c) 0 97 0
Cash Reserve Variable Payment (note b) 0 1,140 0
Cash Reserve Variable Payment-3mo. (note e) 0 277,387 0
IC-Future Value (note f) 10,325 15,134 0
IC-Future Value Emp (note f) 311 192 0
IC-Stock Market (note g) 0 81,641 0
IC-AEBI Stock Market (note g) 0 1,697 0
Total 13,057 995,221 384
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Balance at close of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
<S> <C> <C> <C>
Fully paid certificates:
Single-payment certificates:
SP 74 3 1 8 8
SP 75 3.5 0 0 0
SP 76 3.5 0 0 0
SP 77 3.5 64 485 483
SP 78 3.5 391 2,838 2,771
SP 79 3.5 448 3,340 3,157
SP 80 3.5 424 3,430 3,125
SP 81A 3.5 344 2,056 1,806
SP 82A 3.5 300 2,793 2,375
SP 82B 3.5 542 4,890 4,111
SP 83A 3.5 93 678 562
SP 83B 3.5 222 2,101 1,712
IC-2-84 3.5 840 8,234 6,490
IC-2-85 3.5 440 4,580 4,682
IC-2-86 3.5 243 2,699 2,480
IC-2-87 3.5 292 3,853 3,300
IC-2-88 3.5 598 8,681 6,735
Reserve Plus Single Payment 3.5 979 4,640 7,570
Cash Reserve Single Payment (note a) 39 218 178
IC-Flexible Savings (formerly Variable Term) (note b) 99,887 683,370 746,512
IC-Flexible Savings Emp (formerly Variable Term) (note d) 1,409 13,702 16,219
IC-Preferred Investors (note d) 63 70,037 71,008
IC-Investors (note d) 568 691,996 741,439
IC-Special Deposits (note d) 138 189,063 195,319
IC-1-84 (note d) 57 405 426
Cash Reserve Variable Payment (note c) 535 2,687 3,473
Cash Reserve Variable Payment-3mo. (note b) 48,811 213,126 224,176
IC-Future Value (note e) 17,346 191,851 191,851
IC-Future Value Emp (note f) 328 3,658 3,658
IC-Stock Market (note g) 92,416 312,493 346,548
IC-AEBI Stock Market (note g) 16 2,401 2,716
Total 267,834 2,430,313 2,594,890
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Balance at beginning of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
<S> <C> <C> <C>
Additional credits and accrued interest thereon:
SP 74 3.5 Not Not 10
SP 75 3.5 Applicable Applicable 73
SP 76 3.5 1,009
SP 77 3.5 2,882
SP 78 3.5 3,146
SP 79 3.5 3,336
SP 80 3.5 2,984
SP 81A 3.5 1,365
SP 82A 3.5 1,966
SP 82B 3.5 2,906
SP 83A 3.5 370
SP 83B 3.5 889
IC-2-84 3.5 3,540
IC-2-85 3.5 104
IC-2-86 3.5 46
IC-2-87 3.5 66
IC-2-88 3.5 139
Reserve Plus Single Payment (note a) 0
Cash Reserve Single Payment (note b) 0
IC-Flexible Savings (formerly Variable Term) (note d) 1,278
IC-Flexible Savings Emp (formerly Variable Term) (note d) 40
IC-Preferred Investors (note d) 52
IC-Investors (note d) 1,343
IC-Special Deposits (note d) 130
IC-1-84 (note c) 11
Cash Reserve Variable Payment (note b) 0
Cash Reserve Variable Payment-3mo. (note e) 404
IC-Future Value (note f) 49,445
IC-Future Value Emp (note f) 952
IC-Stock Market (note g) 1,275
IC-AEBI Stock Market (note g) 55
Total 79,816
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Additions
Charged
Yield Charged Reserve to other
to maturity to profit payments by accounts
on an annual and loss certificate (per
Description payment basis or income holders part 2)
<S> <C> <C> <C>
Additional credits and accrued interest thereon:
SP 74 3.5 0 0 0
SP 75 3.5 0 0 0
SP 76 3.5 5 0 26
SP 77 3.5 68 0 69
SP 78 3.5 102 0 79
SP 79 3.5 107 0 85
SP 80 3.5 97 0 80
SP 81A 3.5 46 0 39
SP 82A 3.5 63 0 63
SP 82B 3.5 96 0 88
SP 83A 3.5 12 0 12
SP 83B 3.5 30 0 33
IC-2-84 3.5 116 0 135
IC-2-85 3.5 177 0 0
IC-2-86 3.5 93 0 0
IC-2-87 3.5 123 0 0
IC-2-88 3.5 256 0 0
Reserve Plus Single Payment (note a) 334 0 0
Cash Reserve Single Payment (note b) 8 0 0
IC-Flexible Savings (formerly Variable Term) (note d) 32,338 0 0
IC-Flexible Savings Emp (formerly Variable Term) (note d) 2,868 0 0
IC-Peferred Investors (note d) 983 0 0
IC-Investors (note d) 37,838 0 0
IC-Special Deposits (note d) 6,700 0 0
IC-1-84 (note c) 22 0 1
Cash Reserve Variable Payment (note b) 154 0 0
Cash Reserve Variable Payment-3mo. (note e) 9,657 0 0
IC-Future Value (note f) 18,191 0 0
IC-Future Value Emp (note f) 382 0 0
IC-Stock Market (note g) 2,653 0 0
IC-AEBI Stock Market (note g) 105 0 0
Total 113,624 0 710
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Deductions
Credited
Yield Cash to other
to maturity surrenders accounts
on an annual prior to (per
Description payment basis Maturities maturity part 2)
<S> <C> <C> <C>
Additional credits and accrued interest thereon:
SP 74 3.5 0 0 0
SP 75 3.5 0 73 0
SP 76 3.5 789 12 239
SP 77 3.5 1,913 400 177
SP 78 3.5 0 540 0
SP 79 3.5 0 560 9
SP 80 3.5 0 489 7
SP 81A 3.5 0 193 0
SP 82A 3.5 0 490 0
SP 82B 3.5 0 410 5
SP 83A 3.5 0 105 0
SP 83B 3.5 0 129 0
IC-2-84 3.5 0 620 0
IC-2-85 3.5 0 11 186
IC-2-86 3.5 0 5 93
IC-2-87 3.5 0 5 126
IC-2-88 3.5 0 19 256
Reserve Plus Single Payment (note a) 0 0 334
Cash Reserve Single Payment (note b) 0 0 8
IC-Flexible Savings (formerly Variable Term) (note d) 0 3,584 28,457
IC-Flexible Savings Emp (formerly Variable Term) (note d) 0 104 2,672
IC-Preferred Investors (note d) 0 137 847
IC-Investors (note d) 0 2,795 34,653
IC-Special Deposits (note d) 0 179 6,237
IC-1-84 (note c) 0 2 23
Cash Reserve Variable Payment (note b) 0 7 147
Cash Reserve Variable Payment-3mo. (note e) 0 156 9,535
IC-Future Value (note f) 8,060 3,874 0
IC-Future Value Emp (note f) 152 50 0
IC-Stock Market (note g) 0 97 2,345
IC-AEBI Stock Market (note g) 0 3 114
Total 10,914 15,049 86,470
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Balance at close of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
<S> <C> <C> <C>
Additional credits and accrued interest thereon:
SP 74 3.5 Not Not 10
SP 75 3.5 Applicable Applicable 0
SP 76 3.5 0
SP 77 3.5 529
SP 78 3.5 2,787
SP 79 3.5 2,959
SP 80 3.5 2,665
SP 81A 3.5 1,257
SP 82A 3.5 1,602
SP 82B 3.5 2,675
SP 83A 3.5 289
SP 83B 3.5 823
IC-2-84 3.5 3,171
IC-2-85 3.5 84
IC-2-86 3.5 41
IC-2-87 3.5 58
IC-2-88 3.5 120
Reserve Plus Single Payment (note a) 0
Cash Reserve Single Payment (note b) 0
IC-Flexible Savings (formerly Variable Term) (note d) 1,575
IC-Flexible Savings Emp (formerly Variable Term) (note d) 144
IC-Preferred Investors (note d) 39
IC-Investors (note d) 1,733
IC-Special Deposits (note d) 414
IC-1-84 (note c) 9
Cash Reserve Variable Payment (note b) 0
Cash Reserve Variable Payment-3mo. (note e) 370
IC-Future Value (note f) 55,702
IC-Future Value Emp (note f) 1,132
IC-Stock Market (note g) 1,486
IC-AEBI Stock Market (note g) 43
Total 81,717
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Balance at beginning of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
<S> <C> <C> <C>
Accrued for additional credits to be allowed at next anniversaries:
SP 74 Not Not 0
SP 75 Applicable Applicable 0
SP 76 23
SP 77 35
SP 78 38
SP 79 43
SP 80 40
SP 81A 21
SP 82A 20
SP 82B 52
SP 83A 7
SP 83B 16
IC-2-84 63
IC-2-85 35
IC-2-86 16
IC-2-87 23
IC-2-88 45
IC-Stock Market 16,768
IC-AEBI Stock Market 91
Total 17,336
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Additions
Charged
Yield Charged Reserve to other
to maturity to profit payments by accounts
on an annual and loss certificate (per
Description payment basis or income holders part 2)
<S> <C> <C> <C>
Accrued for additional credits to be allowed at next anniversaries:
SP 74 0 0 0
SP 75 0 0 0
SP 76 3 0 0
SP 77 46 0 0
SP 78 78 0 0
SP 79 85 0 0
SP 80 79 0 0
SP 81A 41 0 0
SP 82A 61 0 0
SP 82B 90 0 0
SP 83A 12 0 0
SP 83B 33 0 0
IC-2-84 137 0 0
IC-2-85 64 0 0
IC-2-86 34 0 0
IC-2-87 44 0 0
IC-2-88 83 0 0
IC-Stock Market 24,013 0 0
IC-AEBI Stock Market 201 0 0
Total 25,104 0 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Deductions
Credited
Yield Cash to other
to maturity surrenders accounts
on an annual prior to (per
Description payment basis Maturities maturity part 2)
<S> <C> <C> <C>
Accrued for additional credits to be allowed at next anniversaries:
SP 74 0 0 0
SP 75 0 0 0
SP 76 0 0 26
SP 77 0 0 69
SP 78 0 0 79
SP 79 0 0 85
SP 80 0 0 80
SP 81A 0 0 39
SP 82A 0 0 63
SP 82B 0 0 88
SP 83A 0 0 12
SP 83B 0 0 33
IC-2-84 0 0 135
IC-2-85 0 0 66
IC-2-86 0 0 34
IC-2-87 0 0 44
IC-2-88 0 0 85
IC-Stock Market 0 362 22,101
IC-AEBI Stock Market 0 0 228
Total 0 362 23,267
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Balance at close of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
<S> <C> <C> <C>
Accrued for additional credits to be allowed at next anniversaries:
SP 74 Not Not 0
SP 75 Applicable Applicable 0
SP 76 0
SP 77 12
SP 78 37
SP 79 43
SP 80 39
SP 81A 23
SP 82A 18
SP 82B 54
SP 83A 7
SP 83B 16
IC-2-84 65
IC-2-85 33
IC-2-86 16
IC-2-87 23
IC-2-88 43
IC-Stock Market 18,318
IC-AEBI Stock Market 64
Total 18,811
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Balance at beginning of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
<S> <C> <C> <C>
R Series Single-Payment certificates:
R-76 3.5 14 142 115
R-77 3.5 55 603 479
R-78 3.5 94 981 716
R-79 3.5 118 1,309 936
R-80 3.5 159 2,046 1,382
R-81 3.5 64 751 443
R-82A 3.5 279 2,196 1,160
RP-Q (note a) 744 1,334 2,967
R-II 3.5 216 2,150 864
RP-84 3.5 639 8,043 3,077
RP-85 3.5 188 847 1,008
RP-86 3.5 68 573 519
RP-87 3.5 135 861 699
RP-88 3.5 171 1,091 802
Cash Reserve RP (note b) 12 51 92
IC-Flexible Savings RP (note d) 15,504 122,693 140,300
RP-Preferred Investors (note d) 1 853 853
Cash Reserve RP-3 mo. (note e) 3,362 29,175 30,481
IC-Flexible Savings RP Emp (note d) 422 4,512 5,386
RP-Future Value (note f) 12,266 188,622 188,622
RP-Future Value Emp (note f) 287 5,120 5,120
RP-Stock Market (note g) 7,883 40,098 45,672
D-1 (note a) 230 37,064 42,054
Total 42,911 451,115 473,747
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Additions
Charged
Yield Charged Reserve to other
to maturity to profit payments by accounts
on an annual and loss certificate (per
Description payment basis or income holders part 2)
<S> <C> <C> <C>
R Series Single-Payment certificates:
R-76 3.5 0 0 6
R-77 3.5 0 0 22
R-78 3.5 0 0 33
R-79 3.5 0 0 45
R-80 3.5 0 0 63
R-81 3.5 0 0 21
R-82A 3.5 0 0 54
RP-Q (note a) 0 0 109
R-II 3.5 0 0 39
RP-84 3.5 0 0 138
RP-85 3.5 0 0 47
RP-86 3.5 0 0 16
RP-87 3.5 0 0 30
RP-88 3.5 0 0 36
Cash Reserve RP (note b) 0 0 2
IC-Flexible Savings RP (formally Variable Term RP) (note d) 0 54,367 6,806
RP-Preferred Investors (note d) 0 3,828 110
Cash Reserve RP-3 mo. (note e) 0 43,613 1,287
IC-Flexible Savings RP Emp (form. Var Term RP Emp) (note d) 0 839 295
RP-Future Value (note f) 0 1,753 0
RP-Future Value Emp (note f) 0 268 0
RP-Stock Market (note g) 0 29,274 4,368
D-1 (note a) 0 1,468 1,892
Total 0 135,410 15,419
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Deductions
Credited
Yield Cash to other
to maturity surrenders accounts
on an annual prior to (per
Description payment basis Maturities maturity part 2)
<S> <C> <C> <C>
R Series Single-Payment certificates:
R-76 3.5 0 43 0
R-77 3.5 0 76 0
R-78 3.5 0 198 0
R-79 3.5 0 184 0
R-80 3.5 0 596 0
R-81 3.5 0 113 0
R-82A 3.5 0 234 0
RP-Q (note a) 0 672 0
R-II 3.5 0 190 0
RP-84 3.5 0 689 0
RP-85 3.5 0 397 0
RP-86 3.5 0 211 0
RP-87 3.5 0 202 0
RP-88 3.5 0 229 0
Cash Reserve RP (note b) 0 60 0
IC-Flexible Savings RP (formally Variable Term RP) (note d) 0 49,720 0
RP-Preferred Investors (note d) 0 1,659 0
Cash Reserve RP-3 mo. (note e) 0 45,794 0
IC-Flexible Savings RP Emp (form. Var Term RP Emp) (note d) 0 1,130 0
RP-Future Value (note f) 11,087 10,431 0
RP-Future Value Emp (note f) 282 71 0
RP-Stock Market (note g) 0 12,093 0
D-1 (note a) 3 11,139 0
Total 11,372 136,131 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Balance at close of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
<S> <C> <C> <C>
R Series Single-Payment certificates:
R-76 3.5 9 92 78
R-77 3.5 42 506 425
R-78 3.5 74 721 551
R-79 3.5 100 1,068 797
R-80 3.5 119 1,211 849
R-81 3.5 50 572 351
R-82A 3.5 228 1,778 980
RP-Q (note a) 590 1,042 2,404
R-II 3.5 169 1,696 713
RP-84 3.5 515 6,321 2,526
RP-85 3.5 152 650 658
RP-86 3.5 49 344 324
RP-87 3.5 110 624 527
RP-88 3.5 140 789 609
Cash Reserve RP (note b) 8 18 34
IC-Flexible Savings RP (formally Variable Term RP) (note d) 14,722 134,813 151,753
RP-Preferred Investors (note d) 4 3,046 3,132
Cash Reserve RP-3 mo. (note e) 3,127 28,298 29,587
IC-Flexible Savings RP Emp (form. Var Term RP Emp) (note d) 393 4,455 5,390
RP-Future Value (note f) 10,988 168,857 168,857
RP-Future Value Emp (note f) 258 5,035 5,035
RP-Stock Market (note g) 10,285 59,553 67,221
D-1 (note a) 211 28,044 34,272
Total 42,343 449,533 477,073
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Balance at beginning of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
<S> <C> <C> <C>
Additional Interest on R-Series Single
Payment Reserves:
R-76 3.5 Not Not 5
R-77 3.5 Applicable Applicable 9
R-78 3.5 22
R-79 3.5 23
R-80 3.5 37
R-81 3.5 10
R-82A 3.5 47
RP-Q (note a) 0
R-II 3.5 27
RP-84 3.5 84
RP-85 3.5 31
RP-86 3.5 12
RP-87 3.5 19
RP-88 3.5 23
Cash Reserve RP (note b) 0
IC-Flexible Savings RP (formally Variable Term RP) (note d) 303
RP-Preferred Investors (note d) 0
Cash Reserve RP-3 mo. (note e) 48
IC-Flexible Savings RP Emp (form. Var Term RP Emp) (note d) 11
RP-Future Value (note f) 52,721
RP-Future Value Emp (note f) 1,555
RP-Stock Market (note g) 259
D-1 (note a) 0
Total 55,246
Accrued for additional credits to be allowed
at next anniversaries
RP-Stock Market 2,938
Total single payment 2,779,334
Paid-up certificates:
Series 15 and 20 3.25 24 236 218
" 15A and 22A 3.5 1,074 10,915 9,918
" I-76 3.5 687 3,468 2,197
Total 1,785 14,619 12,333
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Additions
Charged
Yield Charged Reserve to other
to maturity to profit payments by accounts
on an annual and loss certificate (per
Description payment basis or income holders part 2)
<S> <C> <C> <C>
Additional Interest on R-Series Single
Payment Reserves:
R-76 3.5 5 0 0
R-77 3.5 23 0 0
R-78 3.5 31 0 0
R-79 3.5 43 0 0
R-80 3.5 59 0 0
R-81 3.5 20 0 0
R-82A 3.5 54 0 0
RP-Q (note a) 109 0 0
R-II 3.5 38 0 0
RP-84 3.5 135 0 0
RP-85 3.5 39 0 0
RP-86 3.5 17 0 0
RP-87 3.5 29 0 0
RP-88 3.5 34 0 0
Cash Reserve RP (note b) 2 0 0
IC-Flexible Savings RP (formally Variable Term RP) (note d) 7,547 0 0
RP-Preferred Investors (note d) 115 0 0
Cash Reserve RP-3 mo. (note e) 1,299 0 0
IC-Flexible Savings RP Emp (form. Var Term RP Emp) (note d) 330 0 0
RP-Future Value (note f) 17,024 0 0
RP-Future Value Emp (note f) 559 0 0
RP-Stock Market (note g) 534 0 0
D-1 (note a) 2,030 0 0
Total 30,076 0 0
Accrued for additional credits to be allowed at next anniversaries:
RP-Stock Market 4,630 0 0
Total single payment 174,473 1,479,112 124,689
Paid-up certificates:
Series 15 and 20 3.25 5 0 18
" 15A and 22A 3.5 304 0 1,633
" I-76 3.5 73 0 297
Total 382 0 1,948
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Deductions
Credited
Yield Cash to other
to maturity surrenders accounts
on an annual prior to (per
Description payment basis Maturities maturity part 2)
<S> <C> <C> <C>
Additional Interest on R-Series Single
Payment Reserves:
R-76 3.5 0 1 6
R-77 3.5 0 3 22
R-78 3.5 0 4 33
R-79 3.5 0 1 45
R-80 3.5 0 8 63
R-81 3.5 0 0 21
R-82A 3.5 0 5 54
RP-Q (note a) 0 0 109
R-II 3.5 0 2 40
RP-84 3.5 0 8 138
RP-85 3.5 0 3 47
RP-86 3.5 0 4 16
RP-87 3.5 0 3 30
RP-88 3.5 0 5 35
Cash Reserve RP (note b) 0 0 2
IC-Flexible Savings RP (formally Variable Term RP) (note d) 0 715 6,806
RP-Preferred Investors (note d) 0 0 110
Cash Reserve RP-3 mo. (note e) 0 13 1,287
IC-Flexible Savings RP Emp (form. Var Term RP Emp) (note d) 0 35 295
RP-Future Value (note f) 10,460 3,447 0
RP-Future Value Emp (note f) 322 23 0
RP-Stock Market (note g) 0 32 452
D-1 (note a) 0 138 1,892
Total 10,782 4,450 11,503
Accrued for additional credits to be allowed at next anniversaries:
RP-Stock Market 0 55 3,916
Total single payment 46,125 1,151,268 125,540
Paid-up certificates:
Series 15 and 20 3.25 86 16 31
" 15A and 22A 3.5 1,818 792 1,607
" I-76 3.5 0 456 17
Total 1,904 1,264 1,655
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Balance at close of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
<S> <C> <C> <C>
Additional Interest on R-Series Single
Payment Reserves:
R-76 3.5 Not Not 3
R-77 3.5 Applicable Applicable 7
R-78 3.5 16
R-79 3.5 20
R-80 3.5 25
R-81 3.5 9
R-82A 3.5 42
RP-Q (note a) 0
R-II 3.5 23
RP-84 3.5 73
RP-85 3.5 20
RP-86 3.5 9
RP-87 3.5 15
RP-88 3.5 17
Cash Reserve RP (note b) 0
IC-Flexible Savings RP (formally Variable Term RP) (note d) 329
RP-Preferred Investors (note d) 5
Cash Reserve RP-3 mo. (note e) 47
IC-Flexible Savings RP Emp (form. Var Term RP Emp) (note d) 11
RP-Future Value (note f) 55,838
RP-Future Value Emp (note f) 1,769
RP-Stock Market (note g) 309
D-1 (note a) 0
Total 58,587
Accrued for additional credits to be allowed at next anniversaries:
RP-Stock Market 3,597
Total single payment 3,234,675
Paid-up certificates:
Series 15 and 20 3.25 14 123 108
" 15A and 22A 3.5 662 8,525 7,638
" I-76 3.5 648 3,194 2,094
Total 1,324 11,842 9,840
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Balance at beginning of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
<S> <C> <C> <C>
Additional credits and accrued interest thereon:
Series 15 and 20 2.5 Not Not 9
" 15A and 22A 3 Applicable Applicable 421
" Series I-76 3.5 162
Total 592
Accrued for additional credits to be allowed
at next anniversaries 55
Total paid-up 1,785 14,619 12,980
Optional settlement certificates:
Series 1, IST&G 3 13 7
Other series and conversions from Single
Payment certificates 2.5-3-3-3.5 9,173 107,469
Series R-76 thru R-82A 3 59 232
Series R-II & RP-2-84 thru 88 3.5 49 810
Reserve Plus Single-Payment (note a) 175 1,630
Reserve Plus Flex-Pay & IC-Q-Inst (note a) 21 109
Series R-Installment (note a) 85 393
Series R-Single-Payment (note a) 38 99
Additional credits and accrued interest thereon 2.5-3 Not Not 11,390
Additional credits and accrued int. thereon-IST&G 2.5-3 Applicable Applicable 0
Accrued for additional credits to be allowed
at next anniversaries 903
Accrued for additional credits to be allowed
at next anniversaries-R-76 thru R-82A & R-II 7
Accrued for additional credits to be allowed
at next anniversaries-IST&G 0
Total optional settlement 9,613 123,049
Not
Due to unlocated certificate holders Applicable 300
Total certificate reserves 3,283,191
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Additions
Charged
Yield Charged Reserve to other
to maturity to profit payments by accounts
on an annual and loss certificate (per
Description payment basis or income holders part 2)
<S> <C> <C> <C>
Additional credits and accrued interest thereon:
Series 15 and 20 2.5 0 0 2
" 15A and 22A 3 10 0 63
" Series I-76 3.5 6 0 20
Total 16 0 85
Accrued for additional credits to be allowed
at next anniversaries 71 0 0
Total paid-up 469 0 2,033
Optional settlement certificates:
Series 1, IST&G 3 0 0 0
Other series and conversions from Single
Payment certificates 2.5-3-3-3.5 3,134 0 6,341
Series R-76 thru R-82A 3 6 0 3
Series R-II & RP-2-84 thru 88 3.5 25 0 8
Reserve Plus Single-Payment (note a) 63 0 5
Reserve Plus Flex-Pay & IC-Q-Inst (note a) 3 0 15
Series R-Installment (note a) 10 0 33
Series R-Single-Payment (note a) 4 0 0
Additional credits and accrued interest thereon 2.5-3 299 0 1,822
Additional credits and accrued int. thereon-IST&G 2.5-3 0 0 0
Accrued for additional credits to be allowed
at next anniversaries 1,807 0 0
Accrued for additional credits to be allowed
at next anniversaries-R-76 thru R-82A & R-II 11 0 0
Accrued for additional credits to be allowed
at next anniversaries-IST&G 0 0 0
Total optional settlement 5,362 0 8,227
Not
Due to unlocated certificate holders Applicable 179
Total certificate reserves 195,010 1,580,013 147,860
Provision for certificate reserves and additional
credits per Statement of Operations 166,165
Provision for reconversion applied against reserve
recoveries from terminations prior to maturity in
Statement of Operations 1
Income (loss) from purchased and written call options
included in provision for certificate reserves
in Statement of Operations 28,844
195,010
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Deductions
Credited
Yield Cash to other
to maturity surrenders accounts
on an annual prior to (per
Description payment basis Maturities maturity part 2)
<S> <C> <C> <C>
Additional credits and accrued interest thereon:
Series 15 and 20 2.5 5 2 1
" 15A and 22A 3 145 26 50
" Series I-76 3.5 0 23 0
Total 150 51 51
Accrued for additional credits to be allowed
at next anniversaries 0 0 84
Total paid-up 2,054 1,315 1,790
Optional settlement certificates:
Series 1, IST&G 3 1 0 0
Other series and conversions from Single
Payment certificates 2.5-3-3-3.5 7,690 7,915 0
Series R-76 thru R-82A 3 49 19 0
Series R-II & RP-2-84 thru 88 3.5 109 270 0
Reserve Plus Single-Payment (note a) 76 193 0
Reserve Plus Flex-Pay & IC-Q-Inst (note a) 12 10 0
Series R-Installment (note a) 73 62 0
Series R-Single-Payment (note a) 25 6 0
Additional credits and accrued interest thereon 2.5-3 1,082 776 514
Additional credits and accrued int. thereon-IST&G 2.5-3 0 0 0
Accrued for additional credits to be allowed
at next anniversaries 21 1 1,828
Accrued for additional credits to be allowed
at next anniversaries-R-76 thru R-82A & R-II 2 0 12
Accrued for additional credits to be allowed
at next anniversaries-IST&G 0 0 0
Total optional settlement 9,140 9,252 2,354
Not
Due to unlocated certificate holders Applicable 188
Total certificate reserves 65,511 1,267,678 147,907
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Balance at close of period
Number
of
Yield accounts Amount
to maturity with of Amount
on an annual security maturity of
Description payment basis holders value reserves
<S> <C> <C> <C>
Additional credits and accrued interest thereon:
Series 15 and 20 2.5 Not Not 3
" 15A and 22A 3 Applicable Applicable 273
" Series I-76 3.5 165
Total 441
Accrued for additional credits to be allowed
at next anniversaries 42
Total paid-up 1,324 11,842 10,323
Optional settlement certificates:
Series 1, IST&G 3 13 6
Other series and conversions from Single
Payment certificates 2.5-3-3-3.5 8,329 101,339
Series R-76 thru R-82A 3 46 173
Series R-II & RP-2-84 thru 88 3.5 29 464
Reserve Plus Single-Payment (note a) 146 1,429
Reserve Plus Flex-Pay & IC-Q-Inst (note a) 18 105
Series R-Installment (note a) 59 301
Series R-Single-Payment (note a) 27 72
Additional credits and accrued interest thereon 2.5-3 Not Not 11,139
Additional credits and accrued int. thereon-IST&G 2.5-3 Applicable Applicable 0
Accrued for additional credits to be allowed
at next anniversaries 860
Accrued for additional credits to be allowed
at next anniversaries-R-76 thru R-82A & R-II 4
Accrued for additional credits to be allowed
at next anniversaries-IST&G 0
Total optional settlement 8,667 115,892
Not
Due to unlocated certificate holders Applicable 291
Total certificate reserves 3,724,978
</TABLE>
<PAGE>
Notes:
(a) On these series of certificates, there is no minimum rate of accrual of
interest. Interest is declared for a quarter or quarters by IDSC and
credited to the reserves maintained at the end of each calendar quarter.
(b) On these series of certificates, there is no minimum rate of accrual of
interest. Interest is declared for a quarter or quarters by IDSC and
credited to the reserves maintained or paid in cash at the end of each
calendar month.
(c) On these series of certificates, there is no minimum rate of accrual of
interest. Interest is declared by IDSC for the first four certificate
quarters, then annually thereafter, and credited to the reserves
maintained at the end of each certificate year.
(d) On this series of certificates, there is no minimum rate of accrual of
interest. Interest is declared for the term selected and credited to the
reserves maintained or paid in cash at the end of each certificate month.
(e) On this series of certificates, there is no minimum rate of accrual of
interest. Interest is declared by IDSC for a three-month term and
credited to the reserves maintained or paid in cash at the end of each
certificate month.
(f) On this series of certificates, there is no minimum rate of accrual of
interest. Interest is declared by IDSC for a four, five, six, seven,
eight, nine or ten year maturity and credited to the reserves maintained
at maturity.
(g) On this series of certificates, the certificate holder may elect to
receive minimum interest only or minimum interest plus participation
interest. Minimum interest is declared by IDSC for a twelve-month term
and is credited to the reserves maintained at the end of each certificate
term. Participation interest is determined at the end of each
certificate term by multiplying the market participation rate in effect
at the beginning of the certificate term for each certificate times any
total percentage appreciation in a broad stock market indicator subject
to specified maximums. Participation interest is credited to the
reserves maintained at the end of each certificate term.
<PAGE>
<TABLE>
<CAPTION>
Part 2 - Description of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Year ended December 31, 1997
($ in thousands)
Additions to reserves charged to other accounts
Transfers of
maturities to
Reconversions extended
of paid-up maturities-
certificate charged to
charged Charged reserves to
to paid-up to mature, addi-
reserves and advance tional credits/
reserve for payments interest and
reconversions reserve advance payments Total
<S> <C> <C> <C> <C>
Reserves to mature installment
certificates:
Series 15, including extended
maturities 0 0 0 0
Series 20, including extended
maturities 0 2 0 2
Series 15A, including extended
maturities 0 2 0 2
Series 22A, including extended
maturities 134 188 2,244 2,566
Series I-76 14 22 0 36
Series Reserve Plus Flexible
Payment 0 0 48 48
Series IC-Q-Installment 0 0 17 17
Series IC-Q-Ins 0 0 1,760 1,760
Series IC-Q-Ins Emp 0 0 10 10
Series IC-1 0 0 7,043 7,043
Series IC-1 Emp 0 0 61 61
Series Inst 0 0 12 12
Series Inst-Emp 0 0 0 0
Series RP-Q-Installment 0 0 61 61
Series RP-Q-Flexible Payment 0 0 3 3
Series RP-Q-Ins 0 0 62 62
Series RP-Q-Ins Emp 0 0 1 1
Series RP-1 0 0 106 106
Series RP-1 Emp 0 0 0 0
Total 148 214 11,428 11,790
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Part 2 - Description of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Year ended December 31, 1997
($ in thousands)
Deductions from reserves credited to other accounts
Conversions
to optional Maturities
settlement transferred
Conversions certificates- to extended
to paid-up credited maturities-
certificates- to optional credited to
credited settlement reserves to
to paid-up reserves and mature-
surrender surrender extended
income income maturities Total
<S> <C> <C> <C> <C>
Reserves to mature installment
certificates:
Series 15, including extended
maturities 0 0 0 0
Series 20, including extended
maturities 15 21 0 36
Series 15A, including extended
maturities 9 66 0 75
Series 22A, including extended
maturities 1,332 2,710 2,244 6,286
Series I-76 237 0 0 237
Series Reserve Plus Flexible
Payment 0 0 0 0
Series IC-Q-Installment 0 0 0 0
Series IC-Q-Ins 0 15 0 15
Series IC-Q-Ins Emp 0 0 0 0
Series IC-1 0 0 0 0
Series IC-1 Emp 0 0 0 0
Series Inst 0 0 0 0
Series Inst-Emp 0 0 0 0
Series RP-Q-Installment 0 33 0 33
Series RP-Q-Flexible Payment 0 0 0 0
Series RP-Q-Ins 0 0 0 0
Series RP-Q-Ins Emp 0 0 0 0
Series RP-1 0 0 0 0
Series RP-1 Emp 0 0 0 0
Total 1,593 2,845 2,244 6,682
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Part 2 - Description of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Year ended December 31, 1997
($ in thousands)
Additions to reserves charged to other accounts
Additions Additions to
to advance reserves to
Reconversions payments- mature-extended
of paid-up charged to maturities
Payments made in advance certificates- default charged to
of current certificate charged to interest reserves to
year requirements and paid-up on late mature from
accrued interest thereon: reserves payments maturity Total
<S> <C> <C> <C> <C>
Series 15, including extended
maturities 0 0 0 0
Series 20, including extended
maturities 0 0 0 0
Series 15A, including extended
maturities 0 0 0 0
Series 22A, including extended
maturities 5 0 67 72
Series I-76 2 1 0 3
Series Reserve Plus Flexible
Payment 0 0 0 0
Series IC-Q-Installment 0 0 0 0
Series IC-Q-Ins 0 0 0 0
Series IC-Q-Ins Emp 0 0 0 0
Series IC-1 0 0 0 0
Series IC-1 Emp 0 0 0 0
Series RP-Q-Installment 0 0 0 0
Series RP-Q-Flexible Payment 0 0 0 0
Series RP-Q-Ins 0 0 0 0
Series RP-Q-Ins Emp 0 0 0 0
Series RP-1 0 0 0 0
Series RP-1 Emp 0 0 0 0
Total 7 1 67 75
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Part 2 - Description of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Year ended December 31, 1997
($ in thousands)
Deductions from reserves credited to other accounts
Maturities
Conversions transferred
Applied to to optional to extended
certificates- settlement maturities- Conversions
credited to certificates- credited to to paid-up
Payments made in advance reserves to credited reserves certificates-
of current certificate mature, to optional to mature- credited to
year requirements and loading settlement extended paid-up
accrued interest thereon: and insurance reserves maturities reserves Total
<S> <C> <C> <C> <C> <C>
Series 15, including extended
maturities 0 0 0 0 0
Series 20, including extended
maturities 2 1 0 0 3
Series 15A, including extended
maturities 2 0 0 0 2
Series 22A, including extended
maturities 188 110 67 0 365
Series I-76 22 0 0 1 23
Series Reserve Plus Flexible
Payment 0 0 0 0 0
Series IC-Q-Installment 0 0 0 0 0
Series IC-Q-Ins 0 0 0 0 0
Series IC-Q-Ins Emp 0 0 0 0 0
Series IC-1 0 0 0 0 0
Series IC-1 Emp 0 0 0 0 0
Series RP-Q-Installment 0 0 0 0 0
Series RP-Q-Flexible Payment 0 0 0 0 0
Series RP-Q-Ins 0 0 0 0 0
Series RP-Q-Ins Emp 0 0 0 0 0
Series RP-1 0 0 0 0 0
Series RP-1 Emp 0 0 0 0 0
Total 214 111 67 1 393
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Certificate Reserves
($ in thousands)
Part 2 - Descriptions of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
<S> <C>
Additional credits on installment certificates and accrued interest thereon:
Other additions represent:
Transfers from accruals for additional credits to be allowed at next anniversaries $ 381
Reconversions of paid-up certificates-charged to paid-up reserves 31
Transfers from maturities to extended maturities 455
$ 867
Other deductions represent:
Transfers to reserves on a quarterly basis for Reserve Plus Flexible-
Payment, IC-Q-Installment and R-Flexible-Payment $ 9,187
Conversions to optional settlement certificates-credited to optional
settlement reserves 581
Conversions to paid-up certificates-credited to paid-up reserves 350
Transfers to extended maturities at maturity 455
$ 10,573
Accrual for additional credits to be allowed on installment certificates at next anniversaries:
Other deductions represent:
Transfers to reserves for additional credits on installment $ 381
Reserve for death and disability refund options:
Other deductions represent:
Payments, in excess of installment reserves, made to certificate holders
who exercised the death and disability refund options. $ 0
Reserve for reconversions of paid-up certificates:
The amount shown as charged to profit and loss has been deducted from
reserve recoveries in the accompanying Statement of Operations $ 0
Other deductions represent:
Amounts credited to installment certificate reserves to mature, on
reconversions of paid-up certificates. $ 0
Paid-up certificates:
Other additions represent:
Conversions from installment certificates (charged to installment reserves
less surrender charges) $ 1,948
Transfers from accrual for additional credits to be allowed at next
anniversaries 85
$ 2,033
Other deductions represent:
Transfers credited to installment reserves on reconversions to installment
certificates $ 185
Transfers for accrual for additional credits and accrued interest thereon 84
Transfers to settlement options 1,521
$ 1,790
<PAGE>
Certificate Reserves
($ in thousands)
Part 2 - Descriptions of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Default interest on installment certificates:
Other additions represent:
Reconversions of paid-up certificates charged to paid-up reserves $ 0
Other deductions represent:
Conversions to paid-up certificates - credited to paid-up reserves $ 5
Transfers to advance payments as late payments are credited to
certificates 1
$ 6
Optional settlement certificates:
Other additions represent:
Transfers from installment certificate reserves (less surrender charges),
single-payment and Series D certificate reserves upon election of optional
settlement privileges $ 4,884
Transfers from paid-up certificate reserves 1,521
Transfers from accruals for additional credits to be allowed at next
anniversaries 1,822
$ 8,227
Other deductions represent:
Transfers to reserve for additional credits and accrued interest thereon $ 1,828
Transfers to optional settlement reserves 526
$ 2,354
Single-Payment certificates:
Other additions represent:
Transfers from accruals for additional credits to be allowed at next
anniversaries $ 710
Transfers from accruals on a quarterly basis on:
Reserve Plus Single-Payment 332
Cash Reserve Single-Payment 7
Flexible Savings 28,442
Flexible Savings-Emp 847
Preferred Investors 2,672
Investors 34,653
Special Deposits 6,238
Cash Reserve 147
Cash Reserve-3mo 9,532
Stock Market 24,437
AEBI Stock Market 343
R82-B 109
Cash Reserve-RP 2
Cash Reserve-RP-3mo 1,287
Flexible Savings-RP 6,806
Flexible Savings-RP-3mo 295
Preferred Investors-RP 110
Stock Market-RP 4,368
Transfers from accruals at anniversaries maintained in a separate
reserve account. 3,352
$ 124,689
<PAGE>
Certificate Reserves
($ in thousands)
Part 2 - Descriptions of Additions to Reserves Charged to Other
Accounts and Deductions from Reserves Credited to Other Accounts
Single-Payment certificates continued:
Other deductions represent:
Transfers to optional settlement reserves:
Single-Payment $ 821
R Single-Payment 0
Transfers to reserves for additional credits and accrued interest thereon 3,352
Transfers to a separate reserve account from the accrual account 710
Transfers to reserves on a quarterly basis:
Reserve Plus Single-Payment 332
Cash Reserve Single-Payment 8
Flexible Savings 28,442
Flexible Savings-Emp 847
Preferred Investors 2,672
Investors 34,653
Special Deposits 6,237
Cash Reserve 147
Cash Reserve-3mo 9,531
Stock Market 24,436
AEBI Stock Market 342
R82-B 109
Cash Reserve-RP 2
Cash Reserve-RP-3mo 1,287
Flexible Saving-RP 6,806
Flexible Savings-RP-Emp 295
Preferred Investors-RP 110
Stock Market-RP 4,368
Transfers to Federal tax withholding 33
$125,540
Due to unlocated certificate holders:
Other additions represent:
Amounts equivalent to payments due certificate holders who could
not be located $ 179
Other deductions represent:
Payments to certificate holders credited to cash $ 188
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 1997
Deductions from Reserves
Number of Cash
Accounts with Amount of Amount of Surrenders
Months Certificate Holders Maturity Value Reserves Prior to
Certificate Series Paid December 31, December 31, December 31, Maturity Other
1996 1997 1996 1997 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C>
20, including extended
maturities 169-180 1 0 6 0 4 0 0 0
181-192 0 0 0 0 0 0 0 4
193-204 0 0 0 0 0 0 0 0
205-216 1 0 20 0 17 0 17 0
217-228 1 0 8 0 7 0 0 0
229-240 (a) 0 1 0 8 0 7 0 0
241-252 0 0 0 0 0 0 0 0
253-264 0 0 0 0 0 0 0 0
265-276 0 0 0 0 0 0 0 0
277-288 1 0 9 0 6 0 6 0
289-300 0 0 0 0 0 0 0 0
301-312 1 1 14 14 11 11 0 0
313-324 3 0 47 0 39 0 16 12
325-336 4 1 46 14 40 12 0 0
337-348 4 4 53 46 48 42 0 0
349-360 (a) 5 4 53 52 52 52 0 20
Total 21 11 256 134 224 124 39 36
15A, including
extended maturities 97-108 1 0 17 0 8 0 0 0
109-120 0 0 0 17 0 10 0 0
121-132 0 1 0 0 0 0 0 0
133-144 0 0 0 0 0 0 0 0
145-156 0 0 0 0 0 0 0 0
157-168 0 0 0 0 0 0 0 0
169-180 (a) 2 0 132 0 127 0 127 0
181-192 0 0 0 0 0 0 0 0
193-204 1 0 7 0 5 0 0 0
205-216 1 1 10 7 8 6 0 0
217-228 1 1 5 10 5 9 0 0
229-240 2 1 79 5 71 5 0 0
241-252 6 1 91 9 90 8 0 75
Total 14 5 341 48 314 38 127 75
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 1997
Deductions from Reserves
Number of Cash
Accounts with Amount of Amount of Surrenders
Months Certificate Holders Maturity Value Reserves Prior to
Certificate Series Paid December 31, December 31, December 31, Maturity Other
1996 1997 1996 1997 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C>
22A, including
extended maturities 61-72 2 1 30 19 5 3 0 2
73-84 1 0 13 0 3 0 0 0
85-96 0 1 0 13 0 3 0 0
97-108 2 1 34 19 10 6 0 0
109-120 2 1 56 15 19 5 0 0
121-132 2 3 37 75 14 29 0 0
133-144 3 1 75 19 33 8 0 0
145-156 1 4 19 94 9 45 0 0
157-168 1 0 19 0 9 0 0 19
169-180 2 1 37 19 21 11 0 0
181-192 9 2 392 131 242 84 12 0
193-204 13 8 315 270 214 182 13 13
205-216 12 10 234 266 173 195 4 8
217-228 21 13 364 266 288 212 18 18
229-240 18 19 585 345 500 295 0 22
241-252 108 17 1,804 542 1,659 498 48 187
253-264 (a) 506 91 8,299 1,954 8,022 1,680 725 4,837
265-276 136 114 3,650 3,347 2,175 1,999 43 293
277-288 126 118 3,067 2,916 1,964 1,852 35 166
289-300 118 118 2,588 2,869 1,744 1,946 125 134
301-312 121 107 2,306 2,296 1,644 1,640 78 93
313-324 99 103 1,819 1,916 1,370 1,444 83 136
325-336 91 82 1,361 1,569 1,084 1,248 114 117
337-348 76 80 1,205 1,130 1,013 950 92 110
349-360 39 68 611 1,062 541 940 32 56
361-372 31 30 403 468 374 436 39 43
373-384 5 27 58 341 57 334 29 32
Total 1,545 1,020 29,381 21,961 23,187 16,045 1,490 6,286
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 1997
Deductions from Reserves
Number of Cash
Accounts with Amount of Amount of Surrenders
Months Certificate Holders Maturity Value Reserves Prior to
Certificate Series Paid December 31, December 31, December 31, Maturity Other
1996 1997 1996 1997 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C>
I-76 61-72 1 1 62 62 6 6 0 0
73-84 0 0 0 0 0 0 0 0
85-96 0 0 0 0 0 0 0 0
97-108 2 0 43 0 8 0 0 0
109-120 1 0 46 0 10 0 12 2
121-132 2 1 68 46 16 11 0 0
133-144 2 2 40 68 10 17 0 0
145-156 3 3 68 52 20 15 0 0
157-168 7 2 172 55 55 18 0 0
169-180 41 3 1,033 86 374 30 39 29
181-192 106 31 2,783 793 1,076 313 125 20
193-204 127 89 3,143 2,359 1,315 991 157 83
205-216 128 107 2,943 2,706 1,329 1,225 114 33
217-228 173 110 3,531 2,519 1,722 1,227 209 28
229-240 151 148 3,534 3,069 1,864 1,610 203 25
241-252 78 127 1,765 2,962 983 1,676 197 17
253-264 0 71 0 1,630 0 971 25 0
Total 822 695 19,231 16,407 8,788 8,110 1,081 237
Reserve Plus Flexible
Payment 145-156 60 0 642 0 239 0 0 0
157-168 169 50 1,499 510 869 209 73 0
169-180 143 138 1,334 1,169 627 694 259 0
181-192 0 98 0 926 0 463 190 0
Total 372 286 3,475 2,605 1,735 1,366 522 0
IC-Q-Installment 121-132 21 0 193 0 109 0 0 0
133-144 72 15 759 150 259 93 15 0
145-156 49 49 484 588 263 185 106 0
157-168 0 40 0 394 0 214 84 0
Total 142 104 1,436 1,132 631 492 205 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 1997
Deductions from Reserves
Number of Cash
Accounts with Amount of Amount of Surrenders
Months Certificate Holders Maturity Value Reserves Prior to
Certificate Series Paid December 31, December 31, December 31, Maturity Other
1996 1997 1996 1997 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IC-Q-Ins 37-48 1 0 6 0 4 0 0 0
49-60 1,951 1 26,694 12 10,537 6 0 0
61-72 4,295 1,450 55,985 18,833 24,774 8,872 3,775 0
73-84 2,648 2,495 32,068 31,597 14,471 13,737 14,697 0
85-96 2,227 1,620 25,326 19,313 11,427 8,652 7,544 0
85-108 2,417 1,499 29,384 16,776 13,138 7,701 5,116 0
109-120 937 1,618 10,734 19,301 4,857 8,717 5,441 11
121-132 20 48 197 472 81 149 1,577 4
133-144 0 17 0 179 0 73 29 0
Total 14,496 8,748 180,394 106,483 79,289 47,907 38,179 15
IC-Q-Ins Emp 49-60 12 0 174 0 59 0 0 0
61-72 25 9 258 96 118 61 11 0
73-84 12 10 96 126 59 64 77 0
85-96 5 7 45 63 11 45 29 0
97-108 13 5 227 45 46 11 4 0
109-120 6 8 114 181 45 26 27 0
121-132 0 0 0 0 0 0 10 0
Total 73 39 914 511 338 207 158 0
IC-1 1-12 13,607 4,757 253,057 89,119 14,547 7,336 967 0
13-24 15,443 10,813 276,635 193,840 41,395 28,085 4,973 0
25-36 14,526 13,109 267,364 233,170 60,291 54,541 10,251 0
37-48 11,601 11,764 200,810 213,507 62,621 64,318 18,773 0
49-60 6,311 9,583 105,723 165,479 40,800 63,685 15,551 0
61-72 0 5,207 0 88,208 0 40,039 9,539 0
Total 61,488 55,233 1,103,589 983,323 219,654 258,004 60,054 0
IC-1 Emp 1-12 94 39 2,640 456 141 50 73 0
13-24 113 69 1,676 1,869 271 221 111 0
25-36 100 94 1,368 1,422 380 324 65 0
37-48 71 71 1,130 953 397 394 186 0
49-60 47 53 676 892 357 419 96 0
61-72 0 34 0 550 0 305 64 0
Total 425 360 7,490 6,142 1,546 1,713 595 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 1997
Deductions from Reserves
Number of Cash
Accounts with Amount of Amount of Surrenders
Months Certificate Holders Maturity Value Reserves Prior to
Certificate Series Paid December 31, December 31, December 31, Maturity Other
1996 1997 1996 1997 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Inst 1-12 0 3,134 0 66,052 0 1,807 48 0
Inst-Emp 1-12 0 17 0 255 0 6 0 0
R Flexible Payment 133-144 45 0 688 0 373 0 0 0
145-156 29 43 446 662 211 377 12 0
157-168 81 21 1,099 337 616 155 81 0
169-180 95 70 1,135 960 909 571 51 1
181-192 0 65 0 770 0 623 197 32
Total 250 199 3,368 2,729 2,109 1,726 341 33
RP-Q-Installment 121-132 14 0 197 0 78 0 0 0
133-144 8 10 103 133 40 53 27 0
145-152 0 8 0 103 0 41 0 0
Total 22 18 300 236 118 94 27 0
RP-Q-Ins 49-60 29 0 590 0 231 0 0 0
61-72 79 19 1,979 255 666 148 103 0
73-84 78 42 2,229 905 441 327 375 0
85-96 72 52 1,457 1,808 544 283 177 0
97-108 107 49 1,389 997 673 411 176 0
109-120 37 78 439 1,084 176 580 160 0
121-132 1 3 10 24 2 13 69 0
133-144 0 1 0 10 0 3 0 0
Total 403 244 8,093 5,083 2,733 1,765 1,060 0
RP-Q-Ins Emp 49-60 3 0 150 0 10 0 0 0
61-72 1 2 6 78 4 10 1 0
73-84 0 1 0 6 12 4 0 0
85-96 1 0 20 0 0 0 0 0
97-108 0 0 0 0 0 0 13 0
Total 5 3 176 84 26 14 14 0
RP-1 1-12 76 39 3,196 1,738 179 120 53 0
13-24 119 54 2,991 1,763 525 289 51 0
25-36 117 90 4,079 2,452 848 605 193 0
37-48 99 83 2,693 2,710 1,139 782 465 0
49-60 83 84 2,412 2,574 675 1,076 153 0
61-72 0 62 0 1,426 0 559 278 0
Total 494 412 15,371 12,663 3,366 3,431 1,193 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Part 3 - Information Regarding Installment Certificates
Classified by Age Groupings
($ in thousands)
Year ended December 31, 1997
Deductions from Reserves
Number of Cash
Accounts with Amount of Amount of Surrenders
Months Certificate Holders Maturity Value Reserves Prior to
Certificate Series Paid December 31, December 31, December 31, Maturity Other
1996 1997 1996 1997 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RP-1-Emp 1-12 1 0 600 0 5 0 0 0
13-24 2 1 56 600 2 1 0 0
25-36 0 1 0 6 0 2 3 0
37-48 2 0 636 0 7 0 0 0
49-60 0 1 0 576 0 6 3 0
Total 5 3 1,292 1,182 14 9 6 0
Inst-R 1-12 0 18 0 4,788 0 42 0 0
Total All Series 80,577 70,549 1,375,107 1,231,818 344,072 342,900 105,139 6,682
(a) Includes accounts on which all payments necessary to mature have been made,
but additional time must elapse before the certificate maturity year is
completed. Also includes accounts for which maturity election has been made, but
no further payments have been received.
</TABLE>
<PAGE>
Part 4 - Amounts Periodically Credited to Certificate Holders' A to Accumulate
the Maturity Amount of Installment Certificates.
Information as to (1) amounts periodically credited to each class of
security holders' accounts from installment payments and (2) such other
amounts periodically credited to accumulate the maturity amount of the
certificate (on a $1,000 face-amount certificate basis for the term of
the certificate), is filed in Part 4 of Schedule IX as part of Post-
effective Amendment No. 9 to Registration Statement No. 2-17681, Post-
effective Amendment No. 1 to Registration Statement No. 2-23772 and
Post-effective Amendment No. 1 to Registration Statement No. 2-258081
and is incorporated herein by reference.
<PAGE>
<TABLE><CAPTION>
IDS CERTIFICATE COMPANY SCHEDULE VII
Valuation and Qualifying Accounts
Years ended December 31, 1997, 1996 and 1995
($ thousands)
Year ended December 31, 1997
Additions
Reserves Balance Charged Balance
deducted from at to costs Deductions at
assets to beginning and from end
which they apply of period expenses Other reserves of period
<S> <C> <C> <C> <C> <C>
Allowance for losses:
Securities $715 $0 $0 $110 (a) $605
Conventional first
mortgage loans 611 0 0 0 611
Year ended December 31, 1996
Additions
Reserves Balance Charged Balance
deducted from at to costs Deductions at
assets to beginning and from end
which they apply of period expenses Other reserves of period
Allowance for losses:
Securities $110 $605 $0 $0 $715
Conventional first
mortgage loans 611 0 0 0 611
Other assets 2,468 0 0 2,468 (b) 0
Year ended December 31, 1995
Additions
Reserves Balance Charged Balance
deducted from at to costs Deductions at
assets to beginning and from end
which they apply of period expenses Other reserves of period
Allowance for losses:
Securities $1,000 $0 $0 $890 (a) $110
Conventional first
mortgage loans 611 0 0 0 611
Other assets 2,368 100 0 0 2,468
a) Applicable to reversal on securities sold.
b) Applicable to reversal on other assets sold.
</TABLE>
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Auditors" and to the
use of our report dated February 5, 1998, in the Post-Effective Amendment Number
42 to Registration Statement Number 2-55252 on Form S-1 and related prospectus
of IDS Certificate Company for the registration of its Series D-1 Investment
Certificate.
Our audits also included the financial statements schedules of IDS Certificate
Company listed in Item 16(b) of this Registration Statement. These schedules are
the responsibility of the management of the IDS Certificate Company. Our
responsibility is to express an opinion based on our audits. In our opinion, the
financial statement schedules referred to above, when considered in relation to
the basic financial statements taken as a whole, present fairly in all material
respects the information set forth therein.
Minneapolis, Minnesota
March 17, 1998
IDS CERTIFICATE COMPANY
POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
The undersigned as an officer of IDS Certificate Company, a face-amount
certificate company registered under the Investment Company Act of 1940, hereby
constitutes and appoints James A. Mitchell, Stuart A. Sedlacek, Jay C.
Hatlestad, Timothy S. Meehan and Bruce A. Kohn, or any one of them, as his
attorney-in fact and agent, to sign for him in his name, place and stead any and
all registration statements and amendments thereto (with all exhibits and other
documents required or desirable in connection therewith) that may be prepared
from time to time in connection with said Company's existing or future
face-amount certificate products, and periodic reports on Form 10-K, Form 10-Q
and Form 8-K required pursuant to provisions of the Securities Exchange Act of
1934, and any necessary or appropriate states or other jurisdictions, and grants
to any or all of them the full power and authority to do and perform each and
every act required or necessary or appropriate in connection with such
signatures or filings.
Signed on this 17th day of February, 1998.
/s/Jeffrey S. Horton
Jeffrey S. Horton
