<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 30(a) OF THE INVESTMENT COMPANY ACT OF
1940 AND SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to _____________________.
Commission file number 2-23772.
IDS Certificate Company
________________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 41-6009975
________________________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
IDS Tower 10, Minneapolis, Minnesota 55440
________________________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 671-3131
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: None Name of each exchange on which registered:None
Securities registered pursuant to Section 12(g) of the Act:
Title of class: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No _____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Aggregate market value of the voting stock held by non-affiliates of the
registrant. None
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
150,000 Common shares
CERTAIN DOCUMENTS INCORPORATED BY REFERENCE.
None
The registrant meets the conditions set forth in General Instructions I(1)(a)
and (b) of Form 10-K and is therefore filing this form with the reduced
disclosure format.
The Exhibit Index is located on sequential pages 19-21.
<PAGE>
Item 1. Business
IDS Certificate Company (IDSC) is incorporated under the laws of
Delaware. Its principal executive offices are located in the IDS Tower,
Minneapolis, Minnesota, and its telephone number is (612) 671-3131. American
Express Financial Corporation (formerly known as IDS Financial Corporation), a
Delaware corporation, IDS Tower 10, Minneapolis, Minnesota 55440-0010, owns 100%
of the outstanding voting securities of IDSC. As of January 1, 1995 IDS
Financial Corporation changed its name to American Express Financial
Corporation. American Express Financial Corporation is a wholly owned subsidiary
of American Express Company (American Express), a New York Corporation, with
headquarters at American Express Tower, World Financial Center, New York, New
York.
IDSC is a face-amount certificate investment company, registered under
the Investment Company Act of 1940 (1940 Act). IDSC is in the business of
issuing face-amount certificates. Face-amount certificates issued by IDSC
entitle the certificate owner to receive, at maturity, a stated amount of money
and interest or credits declared from time to time by IDSC, in its discretion.
IDSC is continuously engaged in new product development. IDSC currently
offers eight certificates to the public: "IDS Cash Reserve Certificate," "IDS
Flexible Savings Certificate" (formerly "IDS Variable Term Certificate"), "IDS
Installment Certificate," "IDS Preferred Investors Certificate," "IDS Stock
Market Certificate" (marketed in some channels as "American Express Stock Market
Certificate"), "American Express Investors Certificate," and "American Express
Special Deposits." The American Express Special Deposits is only offered for
sale in England and Hong Kong and is not registered for sale in the United
States. All certificates are currently sold without a sales charge. The IDS
Installment Certificate, the IDS Flexible Savings Certificate, the IDS Stock
Market Certificate, the IDS Preferred Investors Certificate, the American
Express Stock Market Certificate, the American Express Investors Certificate and
the American Express Special Deposits currently bear surrender charges for
premature surrenders. All of the above described certificates, except the
American Express Special Deposits, are distributed pursuant to a Distribution
Agreement with American Express Financial Advisors Inc. (formerly known as IDS
Financial Services Inc.), an affiliate of IDSC. With respect to the American
Express Investors Certificate and the American Express Stock Market Certificate,
American Express Financial Advisors Inc., in turn, has Selling Agent Agreements
with American Express Bank International (AEBI), a subsidiary of American
Express, and Coutts & Co. (USA) International (Coutts), a subsidiary of National
Westminster Bank PLC, for selling the certificates. With respect to the American
Express Special Deposits, IDSC has a Marketing Agreement with American Express
Bank Ltd. (AEB), a subsidiary of American Express, for marketing the
certificate. IDSC has a Distribution Agreement with American Express Service
Corporation (AESC) under which AESC can distribute the IDS Stock Market
Certificate and potentially other certificates through a direct marketing
channel of distribution known as American Express Financial Direct, but there is
no assurance that IDS certificates will be so distributed.
<PAGE>
AEBI and Coutts are Edge Act corporations organized under the provisions
of Section 25(a) of the Federal Reserve Act. American Express Financial Advisors
Inc. has entered into a consulting agreement with AEBI under which AEBI provides
consulting services related to any selling agent agreements between American
Express Financial Advisors Inc. and other Edge Act corporations.
IDSC also offers one certificate in connection with certain employee
benefit plans available to eligible American Express Financial Corporation
employees, financial advisors, retirees, and eligible employees of the IDS
Mutual Fund Group. This certificate is called the Series D-1 Investment
Certificate.
Except for the American Express Investors Certificate and the American
Express Special Deposits, all of the certificates are available as qualified
investments for Individual Retirement Accounts (IRAs), or 401(k) plans and other
qualified retirement plans.
The specified maturities of the certificates range from ten to twenty
years. Within that maturity period, most certificates have terms ranging from
three to thirty-six months. Interest rates change and certificate owners can
surrender their certificates without penalty at term end.
The IDS Cash Reserve Certificate is a single pay certificate that
permits additional investments and on which IDSC guarantees interest in advance
for a three-month term.
The IDS Flexible Savings Certificate is a single payment certificate
that permits a limited amount of additional payments and on which IDSC
guarantees interest in advance for a term of 6, 12, 18, 24, 30, or 36 months,
and potentially other terms, at the buyer's option.
The IDS Installment Certificate is an installment payment certificate
that declares interest in advance for a three-month period and offers bonuses in
the second through ninth years for regular investments.
The IDS Stock Market Certificate is a single payment certificate that
offers the certificate owner the opportunity to have all or part of his/her
interest tied to stock market performance, as measured by a broad stock market
index, with return of principal guaranteed by IDSC. The owner can also choose to
earn a fixed rate of interest. This certificate is sold to clients of American
Express Financial Advisors Inc. This certificate is marketed as the American
Express Stock Market Certificate by AEBI and Coutts, under selling Agent
Agreements with American Express Financial Advisors Inc., to AEBI's clients and
certain of Coutts' clients, respectively, who are neither citizens nor residents
of the United States.
<PAGE>
The American Express Investors Certificate is a single payment
certificate that generally permits additional payments within 15 days of term
renewal. Interest rates are guaranteed in advance by IDSC for a term of 1, 2, 3,
6, 12, 24, or 36 months, at the buyer's option. This certificate is currently
sold by AEBI and Coutts, under Selling Agent Agreements with American Express
Financial Advisors Inc., only to AEBI's clients and certain of Coutts' clients,
respectively, who are neither citizens nor residents of the United States.
The IDS Preferred Investors Certificate is a single payment certificate
that combines a fixed rate of return with IDSC's guarantee of principal for
investments of $250,000 to $5,000,000.
The American Express Special Deposits is a single payment certificate
that generally permits additional payments within 15 days of term renewal.
Interest rates are guaranteed in advance by IDSC for a term of 1, 2, 3, 6, 12,
24, or 36 months, at the buyer's option. This certificate is currently marketed
by AEB through its London and Hong Kong offices, under a Marketing Agreement
with IDSC, only to AEB's clients who are neither citizens nor residents of the
United States. This certificate is not registered for sale in the United States.
IDSC has filed a registration statement with the Securities and Exchange
Commission for a proposed certificate called the IDS Market Strategy
Certificate. This certificate would pay interest at a fixed rate or linked to
one-year stock market performance as measured by a broad market index, for a
series of one-year terms starting every month or at other intervals the owner
selects.
IDSC is by far the largest issuer of face-amount certificates in the
United States. However, such certificates compete with many other investments
offered by banks, savings and loan associations, mutual funds, broker-dealers
and others, which may be viewed by potential clients as offering a comparable or
superior combination of safety and return on investment. In particular, some of
IDSC's products are designed to be competitive with the types of investment
offered by banks and thrifts. Since IDSC's face-amount certificates are
securities, their offer and sale are subject to regulation under federal and
state securities laws. IDSC's certificates are backed by its qualified assets on
deposit and are not insured by any governmental agency or other entity.
<PAGE>
For all the certificates, except for the American Express Investors
Certificate, IDS Preferred Investors Certificate, and the American Express
Special Deposits, IDSC's current policy is to re-evaluate the certificate rates
weekly to respond to marketplace changes. For the American Express Investors
Certificate, IDS Preferred Investors Certificate, and the American Express
Special Deposits, IDSC's current policy is to re-evaluate the rates on a daily
basis. For each product, IDSC refers to an independent index to set the rates
for new sales. Except for American Express Special Deposits, IDSC must set the
rates for an initial purchase of the certificate within a specified range of the
rate from such index. For renewals, IDSC uses such rates as an indication of the
competitors' rates, but is not required to set rates within a specified range.
For the IDS Flexible Savings Certificate, IDS Cash Reserve Certificate
and the IDS Series D-1 Investment Certificate, the published rates of the BANK
RATE MONITOR Top 25 Market Average tm for various length bank certificates of
deposit are used as the guide in setting rates. For the IDS Installment
Certificate, the average interest rate for money market deposit accounts, as
published by the BANK RATE MONITOR Top 25 Market Average (the BRM Average), is
used as a guide in setting rates. For the American Express Investors
Certificate, IDS Preferred Investors Certificate, and American Express Special
Deposits, the published average rates for comparable length dollar deposits
available on an interbank basis, referred to as the London Interbank Offered
Rates (LIBOR), are used as a guide in setting rates.
To compete with popular short-term investment vehicles such as
certificates of deposit, money market certificates and money market mutual funds
that offer comparable yields, liquidity and safety of principal, IDSC offers the
IDS Cash Reserve Certificate and the IDS Flexible Savings Certificate. The
yields and features on these products are designed to be competitive with such
short-term products. The American Express Investors Certificate, IDS Preferred
Investors Certificate, and American Express Special Deposits also compete with
short-term products but use LIBOR rates. The IDS Installment Certificate is
intended to help clients save systematically and may compete with passbook
savings and NOW accounts. The IDS Stock Market Certificate and American Express
Stock Market Certificate are designed to offer interest tied to a major stock
market index and principal guaranteed by IDSC. Certain banks offer certificates
of deposit that have features similar to the Stock Market Certificate.
IDSC's gross income is derived principally 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 American Express Financial Corporation for
advisory and other services, the distribution fees paid to American Express
Financial Advisors Inc., and marketing fees paid to AEB.
<PAGE>
<TABLE>
<CAPTION>
The following table shows IDSC's certificate payments received and certificate
surrenders for the three years ended December 31, 1997:
1997 1996 1995
($ in Millions)
<S> <C> <C> <C>
Single Payment Certificates
Non-Qualified
Payments through:
American Express Financial Advisors Inc. $ 860.2 $ 614.2 $1,090.0
AEBI, AEB, and Coutts 483.5 304.9 429.4
Surrenders through:
American Express Financial Advisors Inc. 733.3 1,062.9 662.0
AEBI, AEB, and Coutts 287.5 297.4 292.0
Qualified
Payments through:
American Express Financial Advisors Inc. 135.4 99.9 236.0
Surrenders through:
American Express Financial Advisors Inc. 141.0 165.4 205.5
Installment Payment Certificates
Through American Express Financial Advisors Inc.
Non-Qualified
Payments 99.5 108.3 109.5
Surrenders 103.2 98.0 112.4
Qualified
Payments 1.4 1.7 1.9
Surrenders 2.6 2.6 4.8
</TABLE>
In 1997, approximately 33% of single payment certificate payments were
through AEBI, AEB, and Coutts, and approximately 9% of single payment
certificate payments and 1% of installment certificate payments were of
tax-qualified certificates for use in IRAs, 401(k) plans and other qualified
retirement plans.
<PAGE>
The certificates offered by American Express Financial Advisors Inc. are
sold pursuant to a distribution agreement which is terminable on 60 days' notice
and is subject to annual approval by IDSC's Board of Directors, including a
majority of the directors who are not "interested persons" of American Express
Financial Advisors Inc. or IDSC as that term is defined in the 1940 Act. The
agreement provides for the payment of distribution fees to American Express
Financial Advisors Inc. for services provided thereunder. American Express
Financial Advisors Inc. is a wholly owned subsidiary of American Express
Financial Corporation. For the distribution of the American Express Investors
Certificate, American Express Financial Advisors Inc., in turn, has Selling
Agent Agreements with AEBI and Coutts. For the distribution of the IDS Stock
Market Certificate through American Express Financial Direct, IDSC has a
distribution agreement with American Express Service Corporation. For marketing
American Express Special Deposits, IDSC has a Marketing Agreement with AEB.
These agreements are terminable upon 60 days' notice and subject to annual
review by directors who are not "interested persons" of American Express
Financial Advisors Inc. or IDSC.
IDSC receives advice, statistical data and recommendations with respect
to the acquisition and disposition of securities for its portfolio from American
Express Financial Corporation, under an investment management agreement which is
subject to annual review by IDSC's Board of Directors, including a majority of
the directors who are not "interested persons" of American Express Financial
Corporation or IDSC.
IDSC is required to maintain "qualified investments" meeting the
standards of Section 28(b) of the 1940 Act, as modified by an order of the
Securities and Exchange Commission. The amortized cost of said investments must
be at least equal to IDSC's net liabilities on all outstanding face-amount
certificates plus $250,000. IDSC's qualified assets consist of cash and cash
equivalents, first mortgage loans on real estate, U.S. government and government
agency securities, municipal bonds, corporate bonds, preferred stocks and other
securities meeting specified standards. IDSC is subject to annual examination
and supervision by the State of Minnesota, Department of Commerce (Banking
Division).
Distribution fees on sales of certain certificates are deferred and
amortized over the estimated lives of the related certificates, which is
approximately 10 years. Upon surrender, unamortized deferred distribution fees
and any related surrender charges are recognized in income. Thus, these
certificates must remain in effect for a period of time to permit IDSC to
recover such costs.
Various forward-looking statements have been made in this Form 10-K Annual
Report. Forward-looking statements may also be made by IDSC in other documents.
In addition, from time to time, IDSC through its management may make oral
forward-looking statements. Forward-looking statements are subject to
uncertainties that could cause actual results to differ materially from such
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date on which they are
made. IDSC undertakes no obligation to update publicly or revise any
forward-looking statements.
<PAGE>
Item 2. Properties
None.
Item 3. Legal Proceedings
Registrant has no material pending legal proceedings other than ordinary
routine litigation incidental to its business.
Item 4. Submission of Matters to a Vote of Security Holders
Item omitted pursuant to General Instructions I(2)(c) of Form 10-K.
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters
There is no market for the Registrant's common stock since it is a
wholly owned subsidiary of American Express Financial Corporation and,
indirectly, of American Express. Frequency and amount of cash dividends declared
during the past two years are as follows:
Dividend Payable Date
For the year ended December 31, 1997: $ NONE
Dividend Payable Date
For the year ended December 31, 1996:
February 9, 1996 $10,000,000
June 17, 1996 10,000,000
August 30, 1996 20,000,000
November 8, 1996 25,000,000
$65,000,000
Restriction on the Registrant's present or future ability to pay
dividends:
Certain series of installment certificates outstanding provide that cash
dividends may be paid by IDSC only in calendar years for which additional
credits of at least 1/2 of 1% on such series of certificates have been
authorized by IDSC. This restriction has been removed for 1998 and 1999 by
IDSC's declaration of additional credits in excess of this requirement.
Appropriated retained earnings resulting from the predeclaration of
additional credits to IDSC's certificate owners are not available for the
payment of dividends by IDSC. In addition, IDSC will discontinue issuance of
certificates subject to the predeclaration of additional credits and will make
no further predeclaration as to outstanding certificates if at any time the
capital and unappropriated retained earnings of IDSC should be less than 5% of
net certificate reserves (certificate reserves less certificate loans). At
December 31, 1997, the capital and unappropriated retained earnings amounted to
5.46% of net certificate reserves.
<PAGE>
Item 6. Selected Financial Data
Summary of selected financial information
The following selected financial information has been derived from the
audited financial statements and should be read in conjunction with those
statements and the related notes to financial statements. Also see Management's
Discussion and Analysis of Financial Condition and Results of Operations for
additional comments.
<TABLE><CAPTION>
Year Ended Dec. 31, 1997 1996 1995 1994 1993
($ 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>
Item 7.
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>
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Although Registrant is not required to provide this information,
Registrant has elected to disclose the information in its Managements discussion
and analysis of financial condition and results of operation. See Item 7.
Item 8. Financial Statements and Supplementary Data
1. Financial Statements and Schedules Required under Regulation S-X
Index to Financial Statements and Schedules
<TABLE>
<CAPTION>
Page
Financial Statements:
<S> <C>
Responsibility for Preparation of Financial Statements 24
Report of Independent Auditors 25
Balance Sheets, Dec. 31, 1997 and 1996 26 - 27
Statements of Operations, year ended Dec. 31, 1997, 1996 and 1995 28 - 29
Statements of Stockholder's Equity, year ended Dec. 31, 1997, 1996 and 1995 30
Statements of Cash Flows, year ended Dec. 31, 1997, 1996 and 1995 31 - 32
Notes to Financial Statements 33 - 51
</TABLE>
Schedules:
I - Investments in Securities of Unaffiliated Issuers, Dec. 31, 1997
II - Investments in and Advances to Affiliates and Income Thereon,
Dec. 31, 1997, 1996, and 1995
III - Mortgage Loans on Real Estate and Interest earned on Mortgages,
year ended Dec. 31, 1997
V - Qualified Assets on Deposit, Dec. 31, 1997
VI - Certificate Reserves, year ended Dec. 31, 1997
VII - Valuation and Qualifying Accounts, year ended Dec. 31, 1997, 1996
and 1995
Schedule III and Schedule VI for the year ended Dec. 31, 1996, and
Schedule VI for the year ended Dec. 31, 1995, are included in
Registrant's Annual Reports on Form 10-K for the fiscal years ended
Dec. 31, 1996 and Dec. 31, 1995, respectively, Commission file
2-23772, and are incorporated herein by reference.
2. Supplementary Data
None
<PAGE>
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
None
PART III
Items omitted pursuant to General Instructions I(2)(c) of Form 10-K.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) List the following documents filed as a part of the report:
1. All financial statements. See Item 8.
2. Financial statement schedules. See Item 8.
3. Exhibits.
(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.
(3)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.
(3)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, is incorporated herein by reference.
(10)a. The 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.
(10)b. The Distribution Agreement dated March 29, 1996, between Registrant
and American Express Service Corporation, filed electronically as Exhibit
1(b) to Post-Effective Amendment No. 38 to Registration Statement No.
2-55252 for the D-1 Investment Certificate, is incorporated herein by
reference.
<PAGE>
(10)c. Selling Agent Agreement dated June 1, 1990, between American Express
Bank International and IDS Financial Services Inc., for the IDS Investors
and IDS Stock Market Certificates, filed electronically as Exhibit 1(c) to
the Post-Effective Amendment No. 5 to Registration Statement No. 33-26844
for the IDS Investors Certificate, is incorporated herein by reference.
(10)d. Marketing Agreement dated October 10, 1991, between Registrant and
American Express Bank Ltd., filed electronically as Exhibit 1(d) to the
Post-Effective Amendment No. 31 to Registration Statement No. 2-55252 for
the Series D-1 Investment Certificate, is incorporated herein by reference.
(10)e. 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 10(j) to Post-Effective Amendment No. 40 to
Registration Statement No. 2-55252 is incorporated herein by reference.
(10)f. 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.
(10)g. Selling Agent Agreement dated December 12, 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.
(10)h. 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.
(10)i. Second amendment to Selling Agent Agreement between American Express
Financial Advisors Inc. and American Express Bank International dated as of
May 2, 1995, filed electronically as Exhibit (1) to Registrant's June 30,
1995, Quarterly Report on Form 10-Q, is incorporated herein by reference.
(10)j. The Investment Advisory and Services Agreement between Registrant
and IDS/American Express Inc. dated January 12, 1984, filed electronically
as Exhibit 10(a) to Registration Statement No. 2-89507 is incorporated
herein by reference.
<PAGE>
(10)k. Depository and Custodial Agreement dated September 30, 1985, between
IDS Certificate Company and IDS Trust Company, filed electronically as
Exhibit 10(b) to Registrant's Post-Effective Amendment No. 3 to
Registration Statement No. 2-89507 is incorporated herein by reference.
(10)l. Foreign Deposit 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.
(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.
(24)b. 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, is incorporated herein by reference.
(24)c. Officers' Power of Attorney dated February 17, 1998, filed
electronically as Exhibit 24(c) to Post-Effective Amendment No. 42 to
Registration Statement No. 2-55252, is incorporated herein by reference.
(b) Reports on Form 8-K filed during the last quarter of the period covered
by this report:
None
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
REGISTRANT IDS Certificate Company
/s/ Stuart A. Sedlacek
BY BRUCE A. KOHN
NAME AND TITLE Stuart A. Sedlacek, * President
DATE March 30, 1998
Pursuant to the requirements of the Securities and Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
BY BRUCE A. KOHN
NAME AND TITLE Stuart A. Sedlacek, * * * President and Director
(Principal Executive Officer)
DATE March 30, 1998
BY BRUCE A. KOHN
NAME AND TITLE Jeffrey S. Horton, *** Vice President and Treasurer
(Principal Financial Officer)
DATE March 30, 1998
BY BRUCE A. KOHN
NAME AND TITLE Jay C. Hatlestad, * Vice President and Controller
(Principal Accounting Officer)
DATE March 30, 1998
BY BRUCE A. KOHN
NAME AND TITLE David R. Hubers, * * Director
DATE March 30, 1998
BY BRUCE A. KOHN
NAME AND TITLE Charles W. Johnson, * * Director
DATE March 30, 1998
BY BRUCE A. KOHN
NAME AND TITLE Richard W. Kling, * * Chairman of the Board
of Directors and Director
DATE March 30, 1998
<PAGE>
BY BRUCE A. KOHN
NAME AND TITLE Edward Landes, * * Director
DATE March 30, 1998
BY BRUCE A. KOHN
NAME AND TITLE John V. Luck, * * Director
DATE March 30, 1998
BY BRUCE A. KOHN
NAME AND TITLE James A. Mitchell, * * Director
DATE March 30, 1998
BY BRUCE A. KOHN
NAME AND TITLE Harrison Randolph, * * Director
DATE March 30, 1998
BY BRUCE A. KOHN
NAME AND TITLE Gordon H. Ritz, * * Director
DATE March 30, 1998
* 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 Officers' Power of Attorney dated February 17,
1998, filed electronically as Exhibit 24(c) to Post-Effective Amendment No. 42
to Registration Statement No. 2-5252, incorporated herein by reference.
________________________________________________________________________________
Bruce A. Kohn
<PAGE>
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 this Form
10-K.
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, 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. Our audits also included the financial statement
schedules listed in the index at Item 8. These financial statements and
schedules are the responsibility of the management of IDS Certificate Company.
Our responsibility is to express an opinion on these financial statements and
schedules 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. Also, in our opinion, the related
financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
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>
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>
