PAGE 1
AMERICAN EXPRESS CERTIFICATE COMPANY
(FORMERLY IDS CERTIFICATE COMPANY)
SEMIANNUAL REPORT
TO SHAREHOLDER
June 30, 2000
Report Number C-100
IDSC Reports
September 21, 2000
<PAGE>
PAGE 2
AMERICAN EXPRESS CERTIFICATE COMPANY
(formerly IDS Certificate Company)
SEMIANNUAL REPORT TO SHAREHOLDER
June 30, 2000
TABLE OF CONTENTS
Page
Balance Sheet 2-3
Statement of Operations 4-5
Statement of Comprehensive Income 6
Statement of Stockholder's Equity 7
Statement of Cash Flows 8
Notes to Financial Statements 9-19
Investment Securities Owned 20-32
<PAGE>
PAGE 3
<TABLE>
<CAPTION>
AMERICAN EXPRESS CERTIFICATE COMPANY
(formerly IDS Certificate Company)
BALANCE SHEET Unaudited
June 30, 2000
($ thousands)
--------------------------------------------------------------------------------------
ASSETS
Qualified Assets (note 2)
<S> <C>
Investments in unaffiliated issuers (notes 3 and 4):
Cash and cash equivalents $165,262
Held-to-maturity securities 416,289
Available-for-sale securities 2,756,730
First mortgage loans on real estate 365,729
Certificate loans - secured by certificate reserves 26,986
Investments in and advances to affiliates 422
-------------------
Total investments 3,731,418
-------------------
Receivables:
Dividends and interest 41,779
Investment securities sold 1,138
-------------------
Total receivables 42,917
-------------------
Other (note 9) 90,530
-------------------
Total qualified assets 3,864,865
-------------------
Other Assets
Deferred federal income taxes 48,884
Deferred distribution fees and other 10,614
-------------------
Total other assets 59,498
-------------------
Total assets $3,924,363
===================
<PAGE>
PAGE 4
AMERICAN EXPRESS CERTIFICATE COMPANY
(formerly IDS Certificate Company)
BALANCE SHEET (CONTINUED) Unaudited
June 30, 2000
($ thousands)
---------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Certificate Reserves (note 5):
Installment certificates:
Reserves to mature $236,789
Additional credits and accrued interest 8,709
Advance payments and accrued interest 741
Other 55
Fully paid certificates:
Reserves to mature 3,310,722
Additional credits and accrued interest 109,888
Due to unlocated certificate holders 302
-------------------
Total certificate reserves 3,667,206
-------------------
Accounts Payable and Accrued Liabilities:
Due to Parent (note 7A) 767
Due to Parent for federal income taxes 476
Due to other affiliates (notes 7B, through 7E) 548
Payable for investment securities purchased 82,742
Other (note 9) 35,395
-------------------
Total accounts payable and accrued liabilities 119,928
-------------------
Total liabilities 3,787,134
-------------------
Commitments (note 4)
Stockholder's Equity (notes 5B, 5C, and 6)
Common stock, $10 par - authorized and
issued 150,000 shares 1,500
Additional paid-in capital 143,844
Retained earnings:
Appropriated for predeclared additional credits/interest 2,656
Appropriated for additional interest on advance payments 10
Unappropriated 62,393
Accumulated other comprehensive loss-net of tax (note 1) (73,174)
-------------------
Total stockholder's equity 137,229
-------------------
Total liabilities and stockholder's equity $3,924,363
===================
See notes to financial statements.
<PAGE>
PAGE 5
AMERICAN EXPRESS CERTIFICATE COMPANY
(formerly IDS Certificate Company)
STATEMENT OF OPERATIONS Unaudited
Six Months Ended June 30, 2000
($ thousands)
---------------------------------------------------------------------------------------
Investment Income from Unaffiliated Investments
Interest income:
Bonds and notes $96,945
Mortgage loans on real estate 13,490
Certificate loans 761
Dividends 17,212
Other 714
-------------------
Total investment income 129,122
-------------------
Investment Expenses
Parent and affiliated company fees (note 7):
Distribution 15,858
Investment advisory and services 4,332
Transfer agency 1,677
Depository 124
Options (note 9) 19,988
Reverse repurchase agreements 99
Other 230
-------------------
Total investment expenses 42,308
-------------------
Net investment income before provision
for certificate reserves and income tax expense $86,814
-------------------
</TABLE>
<PAGE>
PAGE 6
<TABLE>
<CAPTION>
AMERICAN EXPRESS CERTIFICATE COMPANY
(formerly IDS Certificate Company)
STATEMENT OF OPERATIONS (Continued) Unaudited
Six Months Ended June 30, 2000
($ thousands)
-----------------------------------------------------------------------------------------------------
<S> <C>
Provision for Certificate Reserves (notes 5 and 9) According to the terms
of the certificates:
Provision for certificate reserves $6,243
Interest on additional credits 379
Interest on advance payments 17
Additional credits/interest authorized by AECC:
On fully paid certificates 62,204
On installment certificates 4,118
-------------------
Total provision for certificate reserves before reserve recoveries 72,961
Reserve recoveries from terminations prior to maturity (534)
-------------------
Net provision for certificate reserves 72,427
-------------------
Net investment income before income tax (expense) 14,387
Income tax (expense) (note 8) (743)
-------------------
Net investment income 13,644
-------------------
Net realized loss on investments
Securities of unaffiliated issuers before income tax benefit (8,744)
Income tax benefit (note 8) 3,060
-------------------
Net realized loss on investments (5,684)
-------------------
Net income $7,960
===================
See notes to financial statements.
<PAGE>
PAGE 7
AMERICAN EXPRESS CERTIFICATE COMPANY
(formerly IDS Certificate Company)
STATEMENT OF COMPREHENSIVE INCOME Unaudited
Six Months Ended June 30, 2000
($ thousands)
-----------------------------------------------------------------------------------------------------
Net Income $7,960
-------------------
Other Comprehensive Loss (note 1)
Unrealized losses on available-for-sale securities
Unrealized holding losses arising during period (13,534)
Income tax benefit 4,737
-------------------
Net unrealized holding losses arising during period (8,797)
Reclassification adjustment for losses included in net income 2,099
Income tax (benefit) (735)
-------------------
Net reclassification adjustment for gains included in net income 1,364
-------------------
Net other comprehensive loss (7,433)
-------------------
Total comprehensive income $527
===================
See notes to financial statements.
<PAGE>
PAGE 8
AMERICAN EXPRESS CERTIFICATE COMPANY
(formerly IDS Certificate Company)
STATEMENT OF STOCKHOLDER'S EQUITY Unaudited
Six Months Ended June 30, 2000
($ thousands)
-----------------------------------------------------------------------------------------------------
Common Stock
Balance at beginning and end of period $1,500
===================
Additional Paid-in capital
Balance at beginning and end of period $143,844
===================
Retained Earnings
Appropriated for predeclared additional
credits/interest (note 5B)
Balance at beginning of period $2,879
Transferred to unappropriated retained earnings (223)
-------------------
Balance at end of period $2,656
===================
Appropriated for additional interest on advance payments (note 5C)
Balance at beginning and end of period $10
===================
Unappropriated (note 6)
Balance at beginning of period $59,210
Net income 7,960
Transferred from appropriated retained earnings 223
Cash dividends declared (5,000)
-------------------
Balance at end of period $62,393
===================
Accumulated Other Comprehensive Income (Loss)-net of tax (note 1)
Balance at beginning of period ($65,741)
Net other comprehensive loss (7,433)
-------------------
Balance at end of period ($73,174)
===================
Total Stockholder's Equity $137,229
===================
See notes to financial statements.
<PAGE>
PAGE 9
AMERICAN EXPRESS CERTIFICATE COMPANY
(formerly IDS Certificate Company)
STATEMENT OF CASH FLOWS Unaudited
Six Months Ended June 30, 2000
($ thousands)
-----------------------------------------------------------------------------------------------------
Cash Flows from Operating Activities
Net income $7,960
Adjustments to reconcile net income to net
cash provided by operating activities:
Net provision for certificate reserves 72,427
Interest income added to certificate loans (487)
Amortization of premiums/discounts-net 19,008
Provision for deferred federal income taxes (2,292)
Net realized loss on investments before income taxes 8,744
Increase in dividends and interest receivable (195)
Decrease in deferred distribution fees 1,638
Decrease in other liabilities (4,211)
-------------------
Net cash provided by operating activities 102,592
-------------------
Cash Flows from Investing Activities Maturity and redemption of investments:
Held-to-maturity securities 48,745
Available-for-sale securities 212,013
Other investments 39,054
Sale of investments:
Available-for-sale securities 52,320
Certificate loan payments 1,735
Purchase of investments:
Held-to-maturity securities (161)
Available-for-sale securities (338,521)
Other investments (24,207)
Certificate loan fundings (1,427)
-------------------
Net cash used in investing activities (10,449)
-------------------
Cash Flows from Financing Activities
Payments from certificate owners 971,543
Certificate maturities and cash surrenders (915,510)
Payments under reverse repurchase agreements (25,000)
Dividend paid (5,000)
-------------------
Net cash provided by financing activities 26,033
-------------------
Net increase in cash and cash equivalents 118,176
Cash and cash equivalents at beginning of period 47,086
-------------------
Cash and cash equivalents at end of period $165,262
===================
Supplemental Disclosures Including Non-cash Transactions
Cash paid for income taxes $3,546
Certificate maturities and surrenders through loan reductions 2,088
See notes to financial statements.
</TABLE>
<PAGE>
PAGE 10
AMERICAN EXPRESS CERTIFICATE COMPANY
(formerly IDS Certificate Company)
Notes to Financial Statements
($ in thousands unless indicated otherwise) (Unaudited)
--------------------------------------------------------------------------------
1. Nature of Business and Summary of Significant Accounting Policies
Nature of business
American Express Certificate Company (AECC) (formerly IDS Certificate Company)
is a wholly owned subsidiary of American Express Financial Corporation (Parent),
which is a wholly owned subsidiary of American Express Company. AECC 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 AECC are not insured by any government
agency. AECC'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. AECC's Parent acts as investment advisor for AECC.
The name of the company changed on April 26, 2000, from IDS Certificate Company
to American Express Certificate Company.
AECC currently offers nine types of certificates with specified maturities
ranging from ten to 20 years. Within their specified maturity, most certificates
have interest rate terms of one to 36 months. In addition, two types of
certificates have 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.
AECC's gross income is derived primarily from interest and dividends generated
by its investments. AECC'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
accounting principles generally accepted in the United States. AECC 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.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities and the reported amounts of
income and expenses during the six months then ended. Actual results could
differ from those estimates.
Preferred stock dividend income
AECC 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.
<PAGE>
PAGE 11
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
Investment Securities
Cash equivalents are carried at amortized cost, which approximates fair value.
AECC 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 AECC has both the positive intent and ability to hold to
maturity are carried at amortized cost. Debt securities AECC 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 accumulated other
comprehensive income (loss) in stockholder's equity.
The basis for determining cost in computing realized gains and losses on
securities is specific identification. When there is a decline in value that is
other than temporary, the securities are carried at estimated realizable value
with the amount of adjustment included in income.
First mortgage loans on real estate
Mortgage loans are carried at amortized cost, less reserve for losses, which is
the basis for determining any realized gains or losses.
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.
AECC 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.
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
interest at specified percentage rates as declared by AECC. 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
<PAGE>
PAGE 12
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
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
AECC's taxable income or loss is included in the consolidated federal income tax
return of American Express Company. AECC 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.
Accounting developments
In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use." This SOP, which was effective Jan. 1,
1999, requires the capitalization of certain costs incurred to develop or obtain
software for internal use. Software utilized by AECC is owned by Parent and is
capitalized on Parent's financial statements. As a result, the new rule did not
have a material impact on AECC's results of operations or financial condition.
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities," which is
effective Jan. 1, 2001. SFAS No. 133 establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities on the balance
sheet and measure those instruments at fair value. The accounting for changes in
the fair value of a derivative depends on the intended use of the derivative and
the resulting designation. The ultimate financial impact of adoption of the new
rule will depend on the derivatives in place at adoption and cannot be estimated
at this time.
2. Deposit of Assets and Maintenance of Qualified Assets
A) Under the provisions of its certificates and the 1940 Act, AECC was required
to have qualified assets (as that term is defined in Section 28(b) of the 1940
Act) in the amount of $3,630,258 at June 30, 2000. AECC had qualified assets of
$3,894,699 at June 30, 2000, excluding net unrealized depreciation on
available-for-sale securities of $112,576 and payable for securities purchased
of $82,742.
<PAGE>
PAGE 13
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
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.
B) Pursuant to provisions of the certificates, the 1940 Act, the central
depository agreement and to requirements of various states, qualified assets of
AECC at June 30, 2000 were deposited as follows:
<TABLE>
<CAPTION>
Required
Deposits deposits Excess
--------------------------------------------------------
<S> <C> <C> <C>
Deposits to meet certificate liability requirements:
States $364 $326 $38
Central Depository 3,692,728 3,467,522 225,206
--------------------------------------------------------
Total $3,693,092 $3,467,848 $225,244
========================================================
</TABLE>
The assets on deposit consisted of securities having a deposit value of
$3,250,639, mortgage loans of $385,480 and other assets of $56,973.
American Express Trust Company is the central depository for AECC. See note 7C.
3. Investments in Securities
A) Fair values of investments in securities represent market prices and
estimated fair values when quoted prices are not available. Estimated fair
values are determined by 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. AECC's vice president - investments reports to
the board of directors on an annual basis regarding such pricing sources and
procedures to to provide assurance that fair value is being achieved.
The following is a summary of securities held to maturity and securities
available for sale at June 30, 2000:
<TABLE>
<CAPTION>
Gross Gross
Amortized Fair unrealized unrealized
Cost Value gains losses
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HELD TO MATURITY
U.S. Government and
agencies obligations $361 $362 $1 $-
Mortgage-backed
securities 14,565 14,332 42 275
Corporate debt
securities 54,763 54,651 557 669
Stated maturity
preferred stock 346,600 345,469 2,388 3,519
---------------------------------------------------------------------------
Total $416,289 $414,814 $2,988 $4,463
===========================================================================
</TABLE>
<PAGE>
PAGE 14
<TABLE>
<CAPTION>
Notes to Financial Statements (continued)
------------------------------------------------------------------------------------------------------------------
Gross Gross
Amortized Fair unrealized unrealized
Cost Value gains losses
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE
Mortgage-backed
securities $831,954 $821,360 $2,421 $13,015
State and municipal
obligations 21,067 21,047 12 32
Corporate debt
securities 1,846,404 1,749,885 1,805 98,324
Stated maturity
preferred stock 60,872 59,824 98 1,146
Perpetual preferred
stock 109,009 104,614 136 4,531
---------------------------------------------------------------------------
Total $2,869,306 $2,756,730 $4,472 $117,048
===========================================================================
</TABLE>
At June 30, 2000, there were no securities classified as trading securities.
During the six months ended June 30, 2000, debt securities classified as
available for sale were sold with proceeds of $52,504 and gross realized gains
of $815 and gross realized losses of $3,025 on such sales.
During the six months ended June 30, 2000, there were no sales of or transfers
from securities classified as held to maturity.
B) At June 30, 2000, investments in securities with fixed maturities comprised
83% of AECC's total invested assets. Securities are rated by Moody's and
Standard & Poor's (S&P), or by Parent's internal analysts, using criteria
similar to Moody's and S&P, when a public rating does not exist. A summary of
investments in securities with fixed maturities by rating of investment is as
follows:
Rating
Aaa/AAA 37 %
Aa/AA 1
Aa/A 2
A/A 15
A/BBB 4
Baa/BBB 31
Below investment grade 10
-------------------
Total 100 %
===================
Of the securities rated Aaa/AAA, 71% are U.S. Government Agency mortgage-backed
securities that are not rated by a public rating agency. Approximately 12% of
securities with fixed maturities, other than U.S. Government Agency
mortgage-backed securities, are rated by Parent's internal analysts. No one
issuer, other than U.S. Government mortgage-backed securities, is greater than
1% of IDSC's total investment in securities with fixed maturities.
C) AECC reserves freedom of action with respect to its acquisition of restricted
securities that offer advantageous and desirable investment opportunities. In a
private negotiation, AECC may purchase for its portfolio all or part of an issue
of restricted securities. Since AECC 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 AECC at a later date.
<PAGE>
PAGE 15
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
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 AECC were to be deemed to be a distributor of the restricted
securities, it is possible that AECC 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.
4. Investments in First Mortgage Loans on Real Estate
At June 30, 2000, AECC's recorded investment in impaired mortgage loans was $196
and the reserve for loss on that amount was $161. During the first six months of
2000, the average recorded investment in impaired mortgage loans was $214
AECC recognized $10 of interest income related to impaired mortgage loans for
the six months ended June 30, 2000.
During the six months ended June 30, 2000, the reserve for loss on mortgage
loans was increased by $394.
At June 30, 2000, there were no commitments for fundings of first mortgage loans
outstanding. If there were any commitments, AECC employs policies and procedures
to ensure the creditworthiness of the borrowers and that funds will be available
on the funding date. AECC's loan fundings are restricted to 80% or less of the
market value of the real estate at the time of the loan funding.
At June 30, 2000, approximately 10% of AECC'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
South Atlantic 20 %
West North Central 18
Mountain 17
East North Central 16
West South Central 12
Pacific 7
New England 5
Middle Atlantic 5
-------------------
Total 100 %
===================
Property Type
Office buildings 28 %
Retail/shopping centers 26
Apartments 18
Industrial buildings 15
Other 13
-------------------
Total 100 %
===================
<PAGE>
PAGE 16
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
5. Certificate Reserves
Reserves maintained on outstanding certificates have been computed in accordance
with the provisions of the certificates and Section 28 of the 1940 Act. The
average rates of accumulation on certificate reserves at June 30, 2000 were:
<TABLE>
<CAPTION>
Average Average
Reserve gross additional
balance accumulation credit
at June 30, rate rate
---------------------------------------------------------
<S> <C> <C> <C>
Installment certificates:
Reserves to mature:
With guaranteed rates $17,227 3.50% .50%
Without guaranteed rates (A) 219,562 - 4.97
Additional credits and accrued interest 8,709 3.16 -
Advance payments and accrued interest (C) 741 3.21 1.29
Other 55 - -
Fully paid certificates:
Reserves to mature:
With guaranteed rates 120,719 3.20 1.21
Without guaranteed rates (A) and (D) 3,190,003 - 5.89
Additional credits and accrued interest 109,888 3.14 -
Due to unlocated certificate holders 302 - -
-------------------
Total $3,667,206
===================
</TABLE>
A) There is no minimum rate of accrual on these reserves. Interest is declared
periodically, quarterly or annually, in accordance with the terms of the
separate series of certificates.
B) On certain series of single payment certificates, additional interest is
predeclared for periods greater than one year. At June 30, 2000, $2,656 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 3.21%. AECC has increased the rate of accrual
to 4.50% through April 30, 2001. An appropriation of retained earnings amounting
to $10 has been made, which represents the estimated additional accrual that
will result from the increase granted by AECC.
D) The American Express Stock Market and Market Strategy Certificates enable the
certificate owner to participate in any relative rise in a major stock market
index without risking loss of principal. Generally the certificates have a term
of 12 months and may continue for up to 14 and 19 successive terms,
respectively. The reserve balance on these certificates at June 30, 2000 was
$1,002,422.
6. Dividend restriction
Certain series of installment certificates outstanding provide that cash
dividends may be paid by AECC only in calendar years for which additional
credits of at least one-half of 1% on such series of certificates have been
authorized by AECC. This restriction has been removed for 2000 and 2001 by
AECC's declaration of additional credits in excess of this requirement.
<PAGE>
PAGE 17
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
7. Fees Paid to Parent, Affiliated Companies and Directors ($ not in thousands)
A) The basis of computing fees paid or payable to Parent for investment
advisory, joint facilities, technology support and treasury 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. 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 AECC 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 AECC'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.
From time to time, AECC 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 Inc. may be lowered.
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
Aggregate fees payable over which
--------------------------------------------------------- subsequent
Subsequent years' fees are
Total First year years 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.
Fees on the American Express Cash Reserve Certificate (formerly IDS Cash Reserve
Certificate) 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 the certificates at the
beginning of the second and subsequent quarters from issue date.
Effective April 26, 2000, fees on the American Express Flexible Savings
Certificate (formerly IDS Flexible Savings Certificate) are paid at a rate of
0.08% of the purchase price at the time of issuance and 0.08% of the reserves
maintained for the certificates at the beginning of the second and subsequent
quarters from issue date. For certificates sold prior to April 26, 2000, fees
were 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.
<PAGE>
PAGE 18
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
Fees on the American Express Investors Certificate are paid at an annualized
rate of 1% of the reserves maintained for the certificates. Fees are paid at the
end of each term on certificates with a one-, two- or three-month term. Fees are
paid each quarter from date of issuance on certificates with a six-,12-, 24-, or
36-month term.
Fees on the American Express Preferred Investors Certificate (formerly IDS
Preferred Investors Certificate) are paid at the rate of 0.165% of the initial
payment on issue date of the certificate and 0.165% of the certificate's reserve
at the beginning of the second and subsequent quarters from issue date.
Effective April 28, 1999, fees on the American Express Stock Market Certificate
and the American Express Market Strategy Certificate (formerly IDS Stock Market
Certificate and IDS Market Strategy Certificate) sold through American Express
Financial Advisors Inc., are paid at a rate of 0.90%. For certificates sold from
April 30, 1997 to April 27, 1999, fees were paid at a 0.70%. Fees are paid on
the purchase price on the first day of the certificates' term and on the
reserves maintained for these certificates at the beginning of each subsequent
term.
Effective April 26, 2000, fees on the American Express Stock Market Certificate
sold through American Express Bank International (an affiliate), are paid at a
rate of 0.90%. For certificates sold from April 28, 1999 to April 25, 2000, fees
were paid at a rate of 1.0%. For certificates sold prior to April 28, 1999, fees
were paid at a rate of 0.70%. Fees are paid on the purchase price on the first
day of the certificate's term and on the reserves maintained for the
certificates at the beginning of each subsequent term.
Effective April 26, 2000, fees on the American Express Stock Market Certificate
sold through Securities America, Inc. (an affiliate), are paid at a rate of
0.80%. In addition, a fee of 0.08% is paid for marketing support and other
compensation. The fees are paid on the purchase price on the first day of the
certificates' term and on the reserves maintained for the certificates at the
beginning of each subsequent term. For certificates sold prior to April 26,
2000, the fee for marketing support and other compensation was 0.10%.
C) The basis of computing depository 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.
<PAGE>
PAGE 19
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
D) The basis for computing fees paid or payable to American Express Bank Ltd.
(an affiliate) for the distribution of the 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 $249,999, 0.80% on an amount from $250,000 to $499,999, 0.65% on an amount
from $500,000 to $999,999 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 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 maintains
certificate owner accounts and records. AECC pays AECSC a monthly fee of
one-twelfth of $10.353 per certificate owner account.
F) During the six months ended June 30, 2000, AECC paid $15,000 for regular
compensation to directors not employed by Parent. During the same period, no
other fees were paid to directors, members of an advisory board, officers,
or persons of whom any officer or director of AECC are affiliated persons
other than as described above.
8. Income Taxes
The federal income tax rate applicable to income of AECC for the six months
ended June 30, 2000 was based on the effective tax rate expected to be
applicable for the full fiscal year ending Dec. 31, 2000.
A reconciliation of the statutory federal income tax rate and the expected
federal income tax rate at Dec. 31, 2000 is:
Rate
---------------------------------------------------------------------
Statutory federal income tax rate 35.0%
Tax-exempt interest (1.4)
Dividend exclusion (74.7)
---------------------------------------------------------------------
Expected federal income tax rate (41.1)
---------------------------------------------------------------------
9. Derivative Financial Instruments
AECC enters into transactions involving derivative financial instruments as an
end user (nontrading). AECC uses these instruments to manage its exposure to
interest rate risk and equity price risk, including hedging specific
transactions. AECC manages risk 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. AECC is
not impacted by market risk related to derivatives held because derivatives are
largely used to manage risk and, therefore, the cash flows and income effects of
the derivatives are inverse to the effects of the underlying hedged
transactions.
<PAGE>
PAGE 20
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
Credit risk is the possibility that the counterparty will not fulfill the terms
of the contract. AECC 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 June 30, 2000, AECC's counterparties to the
purchased call options are five major broker/dealers rated A or better by
nationally recognized rating agencies.
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.
AECC's holdings of derivative financial instruments were as follows at June 30,
2000:
<TABLE>
<CAPTION>
Notional Total
or contract Carrying Fair credit
amount value value risk
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Purchased call options $485 $123,335 $102,285 $102,285
---------------------------------------------------------------------------------------------------------------
Liabilities:
Written call options $485 $61,422 $62,605 $-
---------------------------------------------------------------------------------------------------------------
</TABLE>
The fair values of derivative financial instruments are based on market values,
dealer quotes or pricing models. The purchased and written call options held at
June 30, 2000, expire in 2000 and 2001.
The purchased and written call options are used to manage AECC's exposure to
changing 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.
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
securities 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
liabilities, as appropriate, and are amortized into investment expenses over the
life of the option. The intrinsic value of these index options is also reported
in other qualified assets or other liabilities, as appropriate. Changes in the
intrinsic value of these options are recognized currently in provision for
certificate reserves.
<PAGE>
PAGE 21
<TABLE>
<CAPTION>
AMERICAN EXPRESS CERTIFICATE COMPANY
(formerly IDS Certificate Company)
Investments in Securities of Unaffiliated Issuers Schedule I
($ in thousands)
Bal Held at
6/30/2000
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 6/30/2000
Issuer Name and Issue Title # of Shares a & c) (Note a)
--------------------------- ------------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BONDS AND NOTES
United States Government-
Direct Obligations
US TREASURY NOTE 5.875% 2004 165 161 163
US TREASURY BOND 5.625% 2000 200 200 199
--------------- --------------- --------------
Total U.S. Government - Direct Obligations 365 361 362
--------------- --------------- --------------
Other Bonds and Notes
United States Government Agencies
GNMA ARM #8157 7.375% 2023 3,304 3,355 3,313 (f)
GNMA ARM #8206 7.375% 2017 825 825 827 (f)
GNMA ARM #8240 6.750% 2017 522 515 524 (f)
GNMA ARM #8251 6.750% 2017 46 46 46 (f)
GNMA ARM #8274 7.125% 2017 1,587 1,586 1,590 (f)
GNMA ARM #8283 7.125% 2017 209 208 209 (f)
GNMA ARM #8293 7.125% 2017 378 378 378 (f)
GNMA ARM #8353 6.375% 2018 672 668 674 (f)
GNMA ARM #8341 6.375% 2018 106 105 106 (f)
GNMA ARM #8365 6.375% 2018 1,174 1,173 1,177 (f)
GNMA ARM #8377 6.750% 2018 493 492 495 (f)
GNMA ARM #8428 7.125% 2018 211 211 211 (f)
GNMA ARM #8440 7.125% 2018 629 629 630 (f)
GNMA ARM #8638 6.375% 2025 4,620 4,659 4,612 (f)
FNMA 7YR 6.0 TBA JUL 6.000% 2007 25,000 23,820 23,797 (f)
FNMA 3/1 HYBRID ARM 7.000% 2030 15,000 14,791 15,000 (f)
FNMA 96-10 C CMO SEQ 6.500% 2023 4,970 4,800 4,796 (f)
FNMA 95-T2 A3 6.610% 2018 1,299 1,299 1,292 (f)
FNMA 97-2C CMO 7.000% 2020 19,219 19,226 19,125 (f)
FN 97 11 K SEQ CM0 7.125% 2023 999 1,001 996 (f)
FNMA 97-17 CMO 7.000% 2022 19,008 18,907 18,878 (f)
FNMA 97-54 CLASS B 6.500% 2022 14,458 14,234 13,978 (f)
FNMA 97-74 G SEQ CMO 6.500% 2024 5,600 5,579 5,432 (f)
FNMA 98-8 A SEQ CMO 6.500% 2024 5,980 5,982 5,814 (f)
FN 98 50 CLASS PA 6.000% 2012 15,000 15,018 14,823 (f)
FNMA 1999-51 LJ CMO 6.500% 2021 10,343 10,176 10,022 (f)
FNMA 15 YR #22271 11.000% 2000 5 5 5 (f)
FNMA 15 YR #22569 11.000% 2000 1 1 1 (f)
FNMA 15 YR #22674 11.000% 2000 2 2 2 (f)
FNMA 15 YR #2469 11.000% 2000 1 1 1 (f)
FNMA 15 YR #13548 11.000% 2000 3 3 3 (f)
FNMA 15 YR #13705 11.000% 2000 3 3 3 (f)
FNMA 15 6.0 #50973 6.000% 2009 22,493 22,078 21,610 (f)
FNMA 30 YR #52185 10.000% 2017 21 21 22 (f)
FNMA 30 YR #51617 10.000% 2017 49 50 52 (f)
<PAGE>
PAGE 22
Bal Held at
6/30/2000
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 6/30/2000
Issuer Name and Issue Title # of Shares a & c) (Note a)
--------------------------- ------------- ------- --------
FNMA 15 YR #25899 11.000% 2001 2 2 2 (f)
FNMA 30 YR #27880 9.000% 2016 26 26 27 (f)
FNMA 15 YR #34543 9.250% 2001 3 3 3 (f)
FNMA 30 YR #36225 9.000% 2016 92 93 94 (f)
FNMA 30 YR #040877 9.000% 2017 38 39 39 (f)
FNMA 15 YR #64520 11.000% 2001 6 6 6 (f)
FNMA 15 YR #64523 11.000% 2000 2 2 2 (f)
FNMA 15 YR #66458 10.000% 2004 1,260 1,267 1,276
FNMA ARM #70117 7.341% 2017 300 300 305 (f)
FNMA ARM #70007 7.211% 2017 1,080 1,080 1,100 (f)
FNMA 15 YR #70299 10.750% 2001 10 10 10 (f)
FNMA 15 YR 70694 MEG 9.500% 2005 678 682 702
FNMA #73227 MULT-FAM 6.700% 2005 2,000 2,015 1,968 (f)
FNMA ARM#105989 3X3 7.512% 2020 959 959 974 (f)
FNMA ARM#88879 3X3 7.756% 2019 1,315 1,315 1,337 (f)
FNMA ARM#89125 SEMI 7.376% 2019 3,524 3,596 3,566 (f)
FNMA ARM #97822 8.087% 2020 40 40 41 (f)
FNMA 15YR #124848 8.000% 2008 4,930 4,916 4,942 (f)
FNMA 15YR 190534 6.000% 2018 11,570 11,390 11,116
FNMA ARM#190726 SEMI 8.053% 2033 5,945 6,065 6,106 (f)
FNMA ARM #249907 8.243% 2024 4,484 4,550 4,640 (f)
FNMA 7.0 15YR 250670 7.000% 2011 3,322 3,345 3,262 (f)
FNMA 15YR #250671 7.500% 2011 9,756 9,781 9,722 (f)
FNMA 15 YR #A250857 7.000% 2012 10,216 10,193 10,025 (f)
FNMA 15YR #252259 5.500% 2014 27,633 27,145 25,615 (f)
FNMA 15YR 5.5 252344 5.500% 2014 24,537 23,942 22,712 (f)
FNMA 15YR #252381 5.500% 2014 22,885 22,291 21,201 (f)
FNMA 10YR #303115 6.500% 2004 5,873 5,688 5,754 (f)
FNMA ARM #303259 7.618% 2025 3,236 3,322 3,321 (f)
FNMA 15YR #303445 5.500% 2009 12,620 12,195 11,895 (f)
FNMA 15YR #303779 6.000% 2011 22,735 22,354 21,779 (f)
FNMA 15YR #313042 7.000% 2011 7,653 7,683 7,514 (f)
FNMA 15YR #313522 7.000% 2012 20,176 20,292 19,840 (f)
FNMA 15 YR #313561 8.000% 2012 9,468 9,649 9,579 (f)
FNMA 15YR 6% #323290 6.000% 2013 24,625 24,451 23,319 (f)
FNMA 15YR #367005 7.000% 2012 6,969 6,931 6,845 (f)
FNMA 15YR #509806 6.500% 2014 9,539 9,447 9,200 (f)
FNMA 15YR #518159 7.000% 2014 12,311 12,050 12,073 (f)
FNMA ARM 5/1 #535239 6.509% 2039 24,437 23,764 24,217 (f)
FNMA 7YR #535236 6.000% 2006 15,363 14,659 14,734 (f)
FNMA 5/1 HYBRID ARM 6.895% 2030 24,756 24,314 24,252 (f)
FNMA 15 YR #535395 7.000% 2015 15,000 14,766 14,798 (f)
FHLMC 15 #G10350 GLD 6.500% 2010 12,426 12,402 12,112 (f)
FHLMC 15YR #G10344 G 7.500% 2010 5,947 5,920 5,960 (f)
FHLMC 15YR G10364 7.000% 2010 8,696 8,653 8,590 (f)
FHLM 15 6.5 #G10369 6.500% 2010 21,727 21,494 21,155 (f)
FHLMC 15YR GOLD 6.500% 2010 10,633 10,587 10,365 (f)
FH15YR #G10439 GOLD 6.500% 2011 2,630 2,570 2,554 (f)
FHLMC 15YR G10627 6.500% 2011 17,109 16,871 16,569 (f)
FHLMC 15YR G10665 GD 7.000% 2012 41,201 41,110 40,609 (f)
FHLMC 15YR #G10949 6.500% 2014 14,013 13,827 13,514 (f)
<PAGE>
PAGE 23
Bal Held at
6/30/2000
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 6/30/2000
Issuer Name and Issue Title # of Shares a & c) (Note a)
--------------------------- ------------- ------- --------
FHLMC ARM #845154 7.387% 2022 1,389 1,429 1,420 (f)
FHLMC ARM #845523 7.247% 2023 1,688 1,736 1,727 (f)
FHLMC ARM #845654 7.721% 2024 4,557 4,622 4,690 (f)
FHLMC ARM #845730 7.757% 2024 8,210 8,468 8,425 (f)
FHLMC ARM #845733 8.064% 2024 7,829 7,959 8,041 (f)
FHLMC ARM #845973 7.646% 2024 249 249 256 (f)
FHLMC ARM #845999 7.364% 2027 106 106 108 (f)
FHLMC ARM #846072 7.456% 2022 2,529 2,589 2,590 (f)
FHLMC ARM#846107LIB 8.376% 2025 2,385 2,439 2,404 (f)
FHLMC #846752 HYBD 6.974% 2030 24,766 24,390 24,962 (f)
FHLMC ARM #350190 8.375% 2022 1,744 1,796 1,796 (f)
FHLMC GOLD E00151 7.500% 2017 2,929 3,010 2,935 (f)
FHLMC 15YR #E00383 7.000% 2010 8,591 8,578 8,475 (f)
FHLMC15YR E00388GOLD 7.000% 2010 5,608 5,533 5,525 (f)
FH GD 15YR #E00426 6.500% 2011 5,128 5,083 4,969 (f)
FHLMC GOLD #E00476 6.500% 2012 11,174 10,929 10,790 (f)
FHLMC GOLD E00484 6.500% 2012 4,743 4,640 4,593 (f)
FHLMC T-009 A2 HEL 6.430% 2013 4,150 4,150 4,116 (f)
FHLMC 2019 CLASS C 6.500% 2019 11,653 11,355 11,136 (f)
FHLMC 2149 CLASS DK 6.000% 2026 17,940 17,520 17,009 (f)
FHLMC 2185 CL A CMO 6.000% 2024 19,197 18,583 18,066 (f)
FHLMC 2184 CL TA CMO 6.500% 2026 9,164 9,021 8,924 (f)
FHLMC 2235 VM CMO 7.000% 2030 11,363 11,123 11,207 (f)
FHLMC 15YR #380025 9.500% 2003 199 199 202
FHLMC 15 YR #200022 10.500% 2000 5 5 5 (f)
FHLMC 15 YR #200035 9.000% 2001 36 36 36 (f)
FHLMC 15 YR #200048 9.000% 2001 102 101 102
FHLMC 15 YR #200064 8.000% 2002 74 73 74 (f)
FHLMC 15 YR #212119 9.500% 2001 28 28 29 (f)
FHLMC 15 YR #218648 9.500% 2002 8 8 8 (f)
FHLMC 15 YR #219679 9.500% 2003 99 98 99 (f)
FHLMC 15 YR #219757 11.000% 2003 106 107 107
FHLMC 15 YR #502175 10.500% 2004 17 17 17 (f)
FHLMC 15YR 11.000% 2003 106 107 106 (f)
FHLMC ARM #605352 7.232% 2018 4 4 4 (f)
FHLMC ARM #605041 7.430% 2019 216 216 222 (f)
FHLMC ARM #605048 7.236% 2018 717 717 730 (f)
FHLMC ARM #605050 7.312% 2018 238 238 244 (f)
FHLMC ARM #605079 7.482% 2018 2 2 2 (f)
FHLMC ARM #605175 7.745% 2019 6 6 7 (f)
FHLMC ARM #401587 6.750% 2018 4 4 4 (f)
FHLMC ARM #630048 7.375% 2018 11 11 11 (f)
FHLMC ARM #630074 6.625% 2018 317 317 317 (f)
FHLMC ARM 840031 7.127% 2019 191 191 196 (f)
FHLMC ARM #840035 7.393% 2019 329 329 334 (f)
FHLMC ARM #840036 7.217% 2019 572 572 589 (f)
FHLMC ARM #840045 7.545% 2019 177 177 181 (f)
FHLMC ARM #840072 7.832% 2019 937 937 950 (f)
FHLMC ARM #405360 7.588% 2019 535 535 551 (f)
FHLMC ARM #405014 7.339% 2019 438 438 450 (f)
FHLMC ARM #405092 7.327% 2019 585 585 600 (f)
<PAGE>
PAGE 24
Bal Held at
6/30/2000
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 6/30/2000
Issuer Name and Issue Title # of Shares a & c) (Note a)
--------------------------- ------------- ------- --------
FHLMC ARM #405185 7.469% 2018 803 803 823 (f)
FHLMC ARM #405243 8.168% 2019 507 507 520 (f)
FHLMC ARM #405249 6.970% 2018 1 1 1 (f)
FHLMC ARM #405437 7.171% 2019 211 211 217 (f)
FHLMC ARM #405455 7.194% 2019 520 520 535 (f)
FHLMC ARM #405517 7.500% 2019 58 58 59 (f)
FHLMC ARM #405615 7.217% 2019 512 512 523 (f)
FHLMC ARM #405675 7.364% 2020 393 393 407 (f)
FHLMC ARM #405692 6.889% 2020 77 77 80 (f)
FHLMC ARM #405744 7.002% 2020 1 1 1 (f)
FHLMC ARM #605432 7.065% 2017 391 391 399 (f)
FHLMC ARM #605433 7.835% 2017 891 891 908 (f)
FHLMC ARM #605454 6.590% 2017 2,307 2,307 2,342 (f)
FHLMC ARM#605853 7.158% 2019 124 124 127 (f)
FHLMC ARM #605854 7.755% 2019 4 4 4 (f)
FHLMC ARM #606024 7.134% 2019 854 854 863 (f)
FHLMC ARM #606025 6.884% 2019 3,066 3,066 3,080 (f)
FHLMC ARM #606151 7.523% 2019 6 6 6 (f)
FHLMC ARM #635054 7.280% 2020 142 142 143 (f)
FHLMC ARM#785363 3X1 7.949% 2025 1,721 1,743 1,765 (f)
FHLMC ARM#785619 3X1 7.125% 2026 1,315 1,322 1,329 (f)
FHLMC ARM#785615 3X1 6.976% 2026 109 109 112 (f)
FHLMC ARM#785634 3X1 7.396% 2026 3,671 3,684 3,750 (f)
FHLMC ARM#785672 3X1 7.592% 2026 62 62 63 (f)
FHLMC ARM#865008 3X3 7.929% 2018 3,369 3,369 3,392 (f)
FHLMC LOANS #885005 9.500% 2002 360 359 363 (f)
FHLMC LOANS #885008 10.000% 2003 624 626 632 (f)
FHLMC 15 YR #885009 9.500% 2003 821 819 827
FHLMC ARM #606301 7.874% 2020 79 79 82 (f)
FHLMC ARM #606903 7.365% 2022 212 214 213 (f)
--------------- --------------- --------------
Total United States Government Agencies 856,348 846,519 835,692
--------------- --------------- --------------
Municipal Bonds
California
CAL HSG 95-O TAX MUN 7.740% 2016 7,445 7,445 7,444 (b) (f)
CAL HSG FIN 1996-M 7.890% 2016 5,675 5,675 5,685 (b) (f)
Colorado
CO HLTH-POUDRE TAXAB 6.950% 2003 7,500 7,496 7,466 (b) (f)
New York
NEW YORK CITY NT GO 7.750% 2000 335 335 337 (b) (f)
NEW YORK PWR AUTH 9.500% 2001 15 16 15 (b) (f)
Pennsylvania
WY VALLEY PA SWR 5.125% 2007 100 100 100 (b) (f)
--------------- --------------- --------------
Total Municipal Bonds 21,070 21,067 21,047
--------------- --------------- --------------
<PAGE>
PAGE 25
Bal Held at
6/30/2000
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 6/30/2000
Issuer Name and Issue Title # of Shares a & c) (Note a)
--------------------------- ------------- ------- --------
Public Utility
AES CORP SNR SUB NTS 8.375% 2007 5,000 4,981 4,550 (b)(d) (f)
ALABAMA POWER 7.850% 2003 7,000 6,983 7,041 (f)
ALLIED WASTE 7.375% 2004 2,800 2,728 2,537 (f)
AVON ENERGY 6.730% 2002 4,750 4,750 4,628 (d)(f)
BAROID CORP 8.000% 2003 5,000 4,993 5,048
BARRETT RESOURCES 7.550% 2007 3,000 3,003 2,819 (f)
CMS ENERGY 7.375% 2000 4,700 4,699 4,684 (f)
CSW INVESTMENTS 144A 6.950% 2001 10,000 9,997 9,950 (d)(f)
SPPC 99-1A ABS 6.400% 2011 6,895 6,892 6,570 (f)
CALPINE CORP 7.750% 2009 3,500 3,498 3,303 (f)
CINERGY CORP 6.125% 2004 4,000 3,995 3,720 (f)
CONOCO INC GLOBAL 5.900% 2004 7,500 7,492 7,134 (f)
CROSS TIMBERS OIL CO 8.750% 2009 3,000 3,000 2,850 (f)
CYTEC INDUSTRIES INC 6.500% 2003 10,500 10,494 9,953 (f)
DYNEGY CORP 6.875% 2002 3,000 2,998 2,944 (f)
ENRON CORP 6.625% 2003 5,000 5,020 4,854 (f)
ENRON CORP 6.450% 2001 10,000 10,000 9,868 (f)
GLOBAL CROSSING HLDG 9.500% 2009 1,500 1,461 1,447 (f)
INTERMEDIA COMM 9.500% 2009 3,000 2,987 2,850 (f)
KN ENERGY INC 6.450% 2003 8,000 7,992 7,747 (f)
LIMESTONE ELCTN 144A 8.625% 2003 5,000 5,000 5,041 (d)(f)
MCN INV`T CORP MTN 6.890% 2002 9,000 9,014 8,906 (f)
NRG ENERGY P/C 144A 8.700% 2005 8,000 7,991 7,954 (d)(f)
NEW PARK RESOURCES 8.625% 2007 2,500 2,523 2,194 (f)
NEXTEL COMMUNICATION 9.375% 2009 2,000 1,931 1,910 (f)
NIAGARA MHWK PWR 7.375% 2003 3,000 3,068 2,958 (f)
NORAM ENERGY CORP 7.500% 2000 5,000 4,999 5,001 (f)
NORCEN ENERGY RES 6.800% 2002 10,000 9,991 9,778 (f)
NOVACOR CHEMICALS 6.500% 2000 10,000 9,998 9,976 (f)
OCCIDENTAL PETROLEUM 6.410% 2000 5,000 4,999 4,978 (f)
PP&L CAPITAL FDG MTN 7.750% 2005 3,000 2,997 2,955 (f)
PUBLIC SERV E&G CAP 6.800% 2002 10,000 10,015 9,820 (d)(f)
PUB SERVICE ELEC GAS 6.740% 2001 12,000 12,000 11,933 (d)(f)
PACIFIC GAS TRANS 6.640% 2000 5,000 5,000 5,000 (f)
PRAXAIR INC 6.750% 2003 5,000 4,878 4,850 (f)
QWEST COMMUNICATION 7.250% 2008 3,000 3,000 2,867 (f)
REPUBLIC SERVICES 6.625% 2004 5,000 4,979 4,653 (f)
ROHM & HAAS 6.950% 2004 10,000 9,997 9,843 (f)
SANTA FE SNYDER 8.050% 2004 2,000 1,980 1,961 (f)
SMITH INT`L INC 7.240% 2001 10,000 10,000 9,972 (b)(d) (f)
SPRINT CORP 8.125% 2002 5,000 5,081 5,036 (f)
TELEPORT COMM 9.875% 2006 4,000 4,071 4,177 (f)
TEXAS UTILITIES 6.370% 2000 10,000 10,000 9,972 (f)
TOSCO CORP 7.000% 2000 5,000 5,000 4,993 (f)
USX CORP 7.200% 2004 13,000 13,242 12,810 (f)
USA WASTE SERVICES 6.500% 2002 10,000 9,998 9,277 (f)
US WEST CAP FDG 6.875% 2001 10,000 9,993 9,931 (f)
VODAFONE AIRTCH 144A 7.625% 2005 5,000 4,993 5,020 (d)(f)
WILLIAMS COMM 10.875% 2009 500 496 490 (f)
WILLIAMS CO INC 6.500% 2002 12,000 11,995 11,707 (f)
<PAGE>
PAGE 26
Bal Held at
6/30/2000
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 6/30/2000
Issuer Name and Issue Title # of Shares a & c) (Note a)
--------------------------- ------------- - ------- --------
WORLDCOM INC 7.875% 2003 9,500 9,458 9,581 (f)
--------------- --------------- --------------
Total Public Utility 316,645 316,650 310,041
--------------- --------------- --------------
Finance
AG CAP SR NT FLT A 7.019% 2004 20,000 19,986 19,075 (b)(d) (f)
AT&T CAPITAL CORP 6.900% 2002 15,000 14,963 14,911 (f)
ADVANTA MTG 98-1 A2 6.250% 2014 1,459 1,459 1,451 (f)
AERCO LDT S-1A CL C1 8.001% 2023 13,378 13,247 12,776 (f)
O`N`E` LOAN TRUST 97 7.233% 2007 25,000 27,792 27,792 (b)(d) (f)
ATHENA CBO FLT AAA 6.841% 2010 10,000 9,969 10,050 (d)(f)
BANK OF AMERICA GBL 6.625% 2004 5,000 4,992 4,845 (f)
BANPONCE FIN CORP 6.580% 2003 5,000 4,991 4,846 (f)
BISTRO TRST 1997-100 6.350% 2002 7,000 6,991 6,862 (d)(f)
BISTRO TRT 98-1000 6.580% 2001 14,000 14,000 13,700 (d)(f)
CAITHNESS COSO FUND 6.800% 2001 821 821 796 (f)
CAPITAL ONE BANK 6.375% 2003 5,500 5,490 5,249 (f)
CAPITAL ONE BANK 7.711% 2003 12,000 12,000 11,993 (f)
CARAVELLE INV B FLTG 7.530% 2005 17,500 17,500 16,732 (f)
CARCO AUTO 97-1 6.689% 2004 6,114 6,114 6,091 (f)
CATERPILLER FINANCE 6.875% 2004 5,000 4,984 4,916 (f)
CCMSC 1997-2 CLSS A1 6.450% 2004 4,020 4,021 3,918 (f)
CHASE 1999-AS2A H1 6.500% 2029 9,168 9,190 8,782 (f)
CHASE 99-S13 A1 CMO 6.500% 2014 9,500 9,191 9,109 (f)
COMMERCIAL CREDIT 8.250% 2001 9,000 8,972 9,096 (f)
CONTI FINANCIAL CORP 8.375% 2003 4,913 4,905 540 (e)(f)
CONTI MTG HEL TRTA-6 6.690% 2016 10,000 9,999 9,869 (f)
CONTI 98-1 CLASS A5 6.430% 2016 10,000 9,999 9,808 (f)
DLJ CMC 99-CG3 A1-A 7.120% 2008 9,648 9,693 9,559 (f)
ML CLO SR98 DELANO-1 7.461% 2009 10,500 10,479 8,145 (f)
DEUTSCHE TELEKOM INT 7.750% 2005 15,000 14,974 15,087 (f)
DUKE REALTY 7.300% 2003 7,500 7,495 7,356 (f)
ECH FUNDING 98-1 A-2 7.334% 2010 19,000 19,000 16,720 (d)(f)
EQUICREDIT 97-3 A6 6.610% 2021 5,000 5,007 4,923 (f)
ELAN PHARMACEUTICAL 8.430% 2002 10,000 10,000 9,987 (b)(d) (f)
FDIC 96-1C CLASS 1A 6.750% 2026 2,258 2,257 2,248 (f)
FMAC LLC 98-D CL A-1 6.111% 2019 4,027 4,040 3,927 (d)(f)
FINOVA CAP C MTN 6.190% 2000 3,000 3,006 2,927 (f)
FBMS 93-2 CL B1 CMO 7.500% 2033 5,723 5,854 5,684 (f)
FIRST DOMINION CBO 1 7.391% 2013 19,000 19,000 17,798 (d)(f)
FIRST UNION CORP 6.625% 2004 3,000 2,992 2,871 (f)
FULB 97-C1 A-1 MBS 7.150% 2004 6,991 7,063 6,965 (f)
FULB 97-C2 CLASS A1 6.479% 2004 6,174 6,193 6,089 (f)
FIRST USA DEP NT 6.375% 2000 5,000 4,999 4,989 (f)
FIRSTPLUS 98-A-A NIM 2.000% 2023 5,818 5,818 5,420 (b) (f)
GATX CAPITAL CORP 6.500% 2000 5,000 5,000 4,987 (f)
GATX CAP CORP MTN 6.360% 2002 5,000 4,965 4,831 (f)
GECMS 1998-4 A5 6.750% 2028 12,712 12,337 12,483 (f)
GECMS 99-15 A1 6.750% 2029 8,883 8,613 8,635 (f)
GMAC 96-C1 COMM MBS 6.790% 2003 3,490 3,497 3,457 (f)
GMAC 97-C2 A CMBS 6.451% 2004 4,163 4,175 4,039 (f)
<PAGE>
PAGE 27
Bal Held at
6/30/2000
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 6/30/2000
Issuer Name and Issue Title # of Shares a & c) (Note a)
--------------------------- ------------- - ------- --------
GS-96PROTECT LIFE A1 7.020% 2027 4,414 4,484 4,358 (f)
GREAT WESTERN FINL 6.375% 2000 3,000 3,000 3,000 (f)
GREENTREE EQ 96-B 7.700% 2018 7,424 7,519 7,104 (f)
GREENPOINT BANK 6.700% 2002 9,250 9,270 9,033 (f)
HELLER FINANCIAL 6.440% 2002 5,000 4,989 4,857 (f)
HELLER FIN 7.875% 2003 5,000 4,992 4,985 (f)
HOMESIDE LENDING 6.875% 2002 10,000 9,999 9,877 (f)
HOUSEHOLD FIN MTN 7.100% 2002 10,000 9,997 9,918 (f)
MSC 2000-HG C 7.826% 2005 2,500 2,500 2,502 (d)(f)
INDOSUEZ CAP B-2 CLO 7.440% 2010 16,500 16,500 15,348 (d)(f)
IROQUOIS TRUST 97-1A 7.000% 2006 2,374 2,375 2,357 (d)(f)
IROQUOIS TRUST 97-2A 6.752% 2007 8,440 8,432 8,256 (d)(f)
LBCMT 98-C1 A-1 CMBS 6.330% 2004 3,254 3,264 3,172 (f)
LBCMT 98-C4 A1A CMBS 5.870% 2006 4,559 4,576 4,340 (f)
LONG ISL SAV BK 7.000% 2002 5,000 4,995 4,912 (f)
MBNA AMER BANK NA 7.540% 2001 10,000 9,999 9,987
MBNA CORP 6.500% 2000 5,000 5,000 4,990 (f)
ML CBO14 98-E&P-1 FL 7.754% 2010 11,000 11,000 3,850 (d)(f)
MERCANTLE SAFE BK CD 7.400% 2002 7,500 7,500 7,500 (f)
ML CLO 98 PILG-3 7.741% 2010 7,500 7,453 5,865 (f)
ML CBO 98 AIG-2 B-1 7.654% 2010 6,500 6,477 2,600 (f)
MONEYSTORE 97-A A6 7.210% 2021 3,670 3,670 3,659 (f)
JPMS 96-C2 CL A 6.470% 2027 2,521 2,531 2,453 (f)
JPM 98-C6 A1 CMBS 6.373% 2030 2,927 2,936 2,863 (f)
JPMC 99-C7 A1 CMBS 6.180% 2035 9,427 9,469 9,006 (f)
JPMC 2000-C9 A1 7.590% 2032 4,924 4,946 4,966 (f)
MS CAP 1996-WFI MBS 7.233% 2006 10,000 10,085 10,004 (f)
MS CAP 1 1997-XL A-1 6.590% 2030 13,798 13,840 13,497 (f)
MS CAP 98-WF1 CMBS 6.250% 2007 2,204 2,212 2,133 (f)
MCF 96-MC2 CLS A1 6.758% 2004 8,075 8,107 7,960 (f)
NSCOR 99-23 A1 7.000% 2029 11,117 10,866 10,908 (f)
ORIX CR ALL 144A MTN 6.640% 2002 16,000 16,000 15,640 (d)(f)
OSPREY TRUST 144A 8.310% 2003 5,000 5,000 5,011 (d)(f)
PAMCOIII CLO 98-1 B2 7.741% 2010 19,000 19,000 13,615 (d)(f)
BANK POPULAR N.A. 6.625% 2002 12,000 11,995 11,680 (f)
PROVIDENT BANK 6.125% 2000 5,000 4,999 4,975
PROVIDIAN 97-4-A CRD 6.250% 2007 10,500 10,491 10,309 (f)
PROVIDIAN NATL BANK 6.700% 2003 13,000 12,994 12,432 (f)
PHMS 1993-39 A8 SUPP 6.500% 2008 6,504 6,398 6,353 (f)
RFMSI 1998-S23 CL A1 6.000% 2028 11,195 11,240 10,996 (f)
RFMSI 98-S13 CL A23 6.750% 2028 4,250 4,209 4,146 (f)
RASC 99-KS1 AI4 ABS 6.390% 2027 5,000 4,985 4,717 (f)
SASCO 98-C3 CLASS B 7.360% 2001 4,912 4,894 4,921 (d)(f)
SL CMBS 97-C1 CLS A 6.875% 2004 10,904 10,967 10,764 (d)(f)
SBM7 2000-C1 A1 7.460% 2033 10,000 9,951 9,987 (f)
SBMS VII 91-1 B1 9.700% 2006 107 107 106 (f)
SANWA BUS CREDIT MTN 7.250% 2001 10,000 9,997 10,014 (b)(d) (f)
SAXON 98-1 AF3 HEL 6.450% 2024 1,239 1,239 1,230 (f)
SAXON 95-1 BA2 ARM 7.664% 2025 908 922 917 (f)
STRATG HOTEL99-C1 C 8.140% 2004 5,000 5,000 5,000 (b) (f)
SIMSBURY IV FLTR CLO 8.887% 2011 4,500 4,500 4,455 (b) (f)
<PAGE>
PAGE 28
Bal Held at
6/30/2000
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 6/30/2000
Issuer Name and Issue Title # of Shares a & c) (Note a)
--------------------------- ------------- - ------- --------
SOMERS CBO FLT 7.000% 2012 11,000 10,933 11,028 (d)(f)
SOVEREIGN BANCORP 10.250% 2004 1,000 1,000 988 (f)
SOVEREIGN BANK 144A 10.200% 2005 4,750 4,750 4,750 (d)(f)
GMPT 99-C1 D CMBS 7.573% 2004 3,000 3,000 3,013 (d)(f)
TCW GEM II 144A FLT 7.810% 2012 25,000 23,882 20,477 (d)(f)
TRANS OCEAN CRP 144A 6.670% 2007 8,216 8,184 8,086 (d)(f)
UCFC 97-B CL A-4 ABS 6.940% 2023 6,107 6,105 6,053 (f)
UNIFRAX INVESTMENT 10.500% 2003 5,000 5,019 4,675 (f)
US BANCORP MTN J 7.500% 2003 10,000 10,000 9,979 (f)
VAN KAMPEN CLOII LMT 7.420% 2008 5,000 5,000 3,738 (d)(f)
VANDERBILT 98-A A2 6.140% 2006 1,839 1,839 1,827 (f)
WESTO 2000-A A4 7.410% 2007 10,000 9,998 10,073 (f)
WASHINGTON MUTUAL 7.500% 2006 1,400 1,392 1,360 (f)
WAYLAND FUND 7.790% 2004 5,000 5,000 4,992 (b)(d) (f)
WELLSFORD RESID PROP 7.250% 2000 5,000 4,999 4,994 (f)
ICI INVESTMENTS EMTN 6.750% 2002 10,000 10,042 9,841 (f)
--------------- --------------- --------------
Total Finance 876,469 877,047 831,736
--------------- --------------- --------------
Industrial
AAF MCQUAY 8.875% 2003 10,000 10,076 8,600 (f)
AGCO CORP 8.500% 2006 5,000 4,974 4,612 (f)
AK STEEL CORP 9.125% 2006 3,000 3,055 2,872 (f)
ADELPHIA COMM CORP 7.875% 2009 1,600 1,600 1,344 (f)
ADVANCED LIGHTING 8.000% 2008 1,000 1,007 700 (b)(d) (f)
AMER AIRLINES LESSEE 6.400% 2008 2,209 2,209 2,209 (b)(d) (f)
AMER AIRLINES LESSEE 6.400% 2008 1,888 1,888 1,888 (b)(d) (f)
AMER AIRLINES LESSEE 6.400% 2008 2,127 2,127 2,127 (b)(d) (f)
AMER AIRLINES LESSEE 6.400% 2008 2,317 2,317 2,317 (b)(d) (f)
AMER AIRLINES LESSEE 6.400% 2008 565 565 565 (b)(d) (f)
AMER AIRLINES LESSEE 6.400% 2008 564 564 564 (b)(d) (f)
AMER AXLE & MFG INC 9.750% 2009 2,000 1,986 1,905 (f)
AMERICAN STANDARD 7.375% 2008 2,000 1,903 1,825 (f)
AMERICAN STANDARD 7.375% 2005 1,000 984 926 (f)
AMERISERVE FOOD SER 10.125% 2007 3,000 3,075 90 (e)(f)
ANTENNA TV SA 9.000% 2007 5,000 4,922 4,544 (f)
AON CORP 6.900% 2004 3,000 2,997 2,883 (f)
APPLIED MATERIALS 6.650% 2000 5,000 5,000 4,995 (f)
ARGO-TECH CORP 8.625% 2007 2,000 2,000 1,400 (f)
AVIATION SALES 8.125% 2008 2,000 1,996 1,160 (e)(f)
BALL CORPORATION 7.750% 2006 2,000 1,999 1,870 (f)
BECKMAN INSTRUMENTS 7.100% 2003 5,000 5,000 4,778 (f)
A.H. BELO 6.875% 2002 17,885 18,108 17,382 (f)
BLACK & DECKER 7.500% 2003 10,000 10,203 9,891 (f)
BURLINGTON NORTHERN 6.375% 2005 5,000 4,998 4,697
CSC HOLDINGS INC 7.875% 2007 1,500 1,389 1,451 (f)
CSX CORP 7.050% 2002 10,000 9,997 9,837 (f)
CSX CORP MTN 7.365% 2002 5,000 4,998 4,997 (f)
REYNOLDS METALS CAN 6.625% 2002 11,700 11,743 11,581 (f)
CANANDAIGUA BRANDS 8.500% 2009 1,000 1,000 928 (f)
CANANDAIGUA WINE 8.625% 2006 1,000 988 988 (f)
<PAGE>
PAGE 29
Bal Held at
6/30/2000
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 6/30/2000
Issuer Name and Issue Title # of Shares a & c) (Note a)
--------------------------- ------------- - ------- --------
CAPSTAR HOTEL 8.750% 2007 3,000 2,997 2,662 (f)
CHARTER COMM HLDGS 8.250% 2007 2,000 1,995 1,770 (f)
CHIQUITA BRANDS INTL 10.250% 2006 3,000 2,987 2,340 (f)
CINEMARK USA INC 8.500% 2008 2,000 1,996 930 (f)
CLEAR CHANNEL COMM 7.312% 2002 5,000 5,000 5,000 (f)
COLTEC INDUSTRIES 7.500% 2008 2,000 1,997 1,885 (f)
COMCAST CABLE 8.125% 2004 10,000 9,994 10,235 (f)
COMDISCO CORP 5.950% 2002 10,000 9,999 9,492 (f)
CONTAINER CORP AMER 9.750% 2003 4,000 3,988 3,980 (f)
CONT'L CABLEVISION 8.300% 2006 4,000 3,991 4,096 (b)(d)
COX ENTERPRISES 144A 6.625% 2002 25,000 24,960 24,584 (b)(d) (f)
CROWN CORK & SEAL 6.750% 2003 14,950 14,987 13,933 (f)
DR HORTON 8.000% 2009 2,000 1,990 1,720 (f)
DAIMLERCHRYSLER HLDG 7.125% 2003 10,000 9,991 9,953 (f)
TARGET CORP 6.400% 2003 10,000 9,987 9,806 (f)
TARGET CORP 6.800% 2001 5,000 5,000 4,974 (f)
DIAGEO CAPITAL PLC 6.625% 2004 6,000 5,995 5,841 (f)
DOMAN INDUSTRIES LTD 9.250% 2007 3,000 3,011 2,190 (f)
DOMINO`S INC 10.375% 2009 2,000 2,013 1,855 (f)
DURA OPERATING CO 9.000% 2009 3,000 3,040 2,647 (f)
BERGEN BRUNSWIG(DUR) 7.000% 2006 20,000 20,010 16,124 (f)
ERAC USA 144A 6.950% 2004 9,000 9,084 8,600 (d)(f)
EMMIS COMM CORP 8.125% 2009 2,000 2,017 1,820 (f)
ENERGIZER HOLDINGS 7.860% 2005 7,000 7,000 6,688 (b)(d) (f)
EXIDE CORP 10.000% 2005 3,000 3,019 2,655 (f)
EXTENDICARE HLTH SER 9.350% 2007 1,000 1,000 420 (f)
EYE CARE CENTERS 10.593% 2008 2,000 2,000 1,140 (f)
FEDDERS N. AMERICA 9.375% 2007 3,000 3,013 2,816 (f)
FEDERAL-MOGUL 8.800% 2007 4,000 3,991 3,063 (f)
FORD MOTOR CREDIT 6.375% 2000 10,000 10,008 9,983
FORD MTR CRED-GLOBAL 6.700% 2004 5,000 4,993 4,844 (f)
GATC 6.320% 2000 10,000 10,000 9,966 (f)
GENESIS HEALTHC 9.25 0.000% 2006 5,000 5,000 550 (e)(f)
GIANT INDUSTRIES 9.000% 2007 5,000 5,000 4,500 (f)
GOODYEAR TIRE 8.125% 2003 5,000 5,016 5,029 (f)
GRAHAM PACKAGING FLT 9.224% 2008 1,500 1,500 1,260 (f)
HASBRO INC 7.950% 2003 15,000 14,969 15,054 (f)
HAYES WHEELS INT'L 9.125% 2007 3,000 3,005 2,677 (f)
HAYES WHEELS INT`L 9.125% 2007 1,000 1,000 905 (f)
HERITAGE MEDIA 8.750% 2006 4,500 4,566 4,432 (f)
ITT CORP 6.250% 2000 5,000 4,985 4,954 (f)
ISPMEX 144A LIQUID 10.125% 2003 3,298 3,298 3,232 (d)(f)
INTEGON CORP 9.500% 2001 2,000 1,994 2,040
INT`L GAME TECH 7.875% 2004 2,000 1,985 1,920 (f)
INTL PAPER CO 144A 8.000% 2003 10,000 9,976 10,053 (d)(f)
INT`L SHIPHOLDING 7.750% 2007 2,000 1,992 1,700 (f)
INTERPOOL INC 6.625% 2003 12,500 12,491 11,393 (f)
JONES APPAREL 7.500% 2004 3,000 2,994 2,927 (f)
JONES APPAREL 7.875% 2006 2,000 1,994 1,921 (f)
K-III COMM PUT/96 8.500% 2006 5,000 4,986 4,712 (f)
KAUFMAN & BROAD HOME 7.750% 2004 3,000 2,984 2,715 (f)
<PAGE>
PAGE 30
Bal Held at
6/30/2000
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 6/30/2000
Issuer Name and Issue Title # of Shares a & c) (Note a)
--------------------------- ------------- ------- --------
KROGER CO 8.150% 2006 4,000 4,004 3,988 (f)
LTV CORPORATION 8.200% 2007 4,000 3,980 2,920 (b)(d) (f)
LAMAR MEDIA CORP 8.625% 2007 5,000 5,005 4,800 (f)
LGETT&PLATT MTN SERD 7.185% 2002 10,000 9,977 10,031 (d)(f)
MJD COMMUNICATIONS 10.800% 2008 3,000 3,000 2,827 (f)
MARK IV 7.500% 2007 3,000 2,988 2,296 (f)
MEDIAONE GROUP INC 6.850% 2002 15,500 15,497 15,328 (f)
FRED MEYERS INC 7.150% 2003 5,000 4,994 4,895 (f)
MULTICARE CO 9.000% 2007 4,000 4,010 240 (e)(f)
MURRIN-MURRIN 144A 9.125% 2005 1,520 1,520 1,319 (b)(d) (f)
MURRIN-MURRIN 144A 9.125% 2005 2,280 2,280 1,978 (b)(d) (f)
NCI BUILDING SYSTEMS 9.250% 2009 2,000 2,027 1,860 (f)
NEWPORT NEWS CORP 8.625% 2006 1,000 995 980 (f)
NORFOLK SOUTHERN 6.950% 2002 15,000 15,093 14,792 (f)
NORTEK INC 9.125% 2007 2,500 2,518 2,325 (f)
OFFSHORE LOGISTICS 7.875% 2008 2,000 2,004 1,800 (f)
ORANGE PLC 8.000% 2008 1,000 1,041 990 (f)
PACKAGING CORP 9.625% 2009 2,000 2,015 1,992 (f)
PARACELSUS HEALTH 10.000% 2006 5,000 5,042 1,100 (e)(f)
PARAMOUNT COMMUN 5.875% 2000 5,350 5,348 5,341 (f)
PARK-OHIO INDUSTRIES 9.250% 2007 1,000 1,003 880 (f)
PARK PLACE ENTERTAIN 7.875% 2005 1,000 954 940 (f)
PENNEY J.C. & CO 7.250% 2002 10,000 9,998 9,540 (f)
PILLOWTEX CORP 9.000% 2007 1,750 1,772 612 (f)
PRINTPACK INC 9.875% 2004 2,500 2,500 2,387 (f)
PULTE CORP 9.500% 2003 13,000 13,000 13,036 (d)(f)
QUAKER OATS 6.940% 2003 1,500 1,502 1,477 (f)
RITE AID CORP 6.700% 2001 5,000 5,000 4,450 (f)
ROLLINS TRUCK 6.875% 2001 5,000 5,000 4,941 (f)
RYERSON TULL INC 8.500% 2001 5,000 5,000 4,954 (f)
S C INTERNATIONAL 9.250% 2007 5,000 5,020 4,600 (f)
SAFECO CORPORATION 7.875% 2003 7,000 6,981 6,985 (f)
SAKS INC 7.000% 2004 5,000 4,980 4,486 (f)
SCOTTS COMPANY 144A 8.625% 2009 2,000 1,932 1,900 (d)(f)
SEA CONTAINERS LTD 7.875% 2008 2,000 2,000 1,260 (f)
SEQUA CORP 9.000% 2009 2,000 1,987 1,920 (f)
SMITHFIELD FOODS INC 7.625% 2008 2,000 1,994 1,790 (f)
STENA AB 10.500% 2005 3,000 3,000 2,910
SUN MICROSYSTEMS INC 7.000% 2002 4,000 3,999 3,973 (f)
SUPERVALU INC 7.625% 2004 5,000 4,995 4,977 (f)
SUPERVALU INC 6.500% 2000 5,000 5,000 4,994 (f)
TTX COMPANY 144A 7.020% 2001 10,000 10,000 10,025 (b)(d) (f)
TEEKAY SHIPPING CORP 8.320% 2008 3,000 3,023 2,760 (f)
TELEWEST PLC 9.625% 2006 2,000 2,000 1,870
TEMBEC INC 8.625% 2009 1,500 1,503 1,425 (f)
TENET HEALTHCARE CO 8.625% 2003 3,000 2,995 2,955 (f)
TEXTRON INC 6.375% 2004 3,000 2,987 2,861 (f)
TITAN WHEEL INT`L IN 8.750% 2007 4,100 4,084 2,542 (f)
TRICO MARINE SERVICE 8.500% 2005 2,250 2,242 2,115 (f)
TYCO INT`L P/C 6.250% 2003 10,000 9,970 9,548 (f)
TYSON FOODS 6.410% 2000 10,000 10,000 9,985 (f)
<PAGE>
PAGE 31
Bal Held at
6/30/2000
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 6/30/2000
Issuer Name and Issue Title # of Shares a & c) (Note a)
--------------------------- ------------- ------- --------
U. S. CAN CORP 10.125% 2006 1,000 1,005 1,029 (f)
US INDUSTRIES 7.125% 2003 6,000 5,987 5,867 (f)
UNION PACIFIC CORP 7.328% 2002 12,000 12,000 11,989 (f)
UNION TANK CAR 6.500% 2008 4,407 4,401 4,222 (f)
UNITED AIR 1991A-1 9.200% 2008 3,950 3,783 4,134
UNITED STATIONERS 8.375% 2008 1,000 1,000 915 (f)
VIACOM INC 6.750% 2003 5,000 4,998 4,911
WCI STEEL INC 10.000% 2004 2,000 2,008 1,860 (f)
WESTINGHOUSE AIR 9.375% 2005 2,250 2,304 2,171 (f)
WESTPOINT STEVENS 7.875% 2005 4,000 4,084 3,340 (f)
AMER AIRLINES LESSE 6.400% 2008 1,122 1,122 1,122 (b)(d) (f)
AMER AIRLINES LESSE 6.400% 2008 1,122 1,122 1,122 (b)(d) (f)
AMER AIRLINES LESSE 6.400% 2008 1,122 1,122 1,122 (b)(d) (f)
AMER AIRLINES LESSE 6.400% 2008 586 586 586 (b)(d) (f)
AMER AIRLINES LESSE 6.400% 2008 587 587 587 (b)(d) (f)
AMER AIRLINES LESSE 6.400% 2008 789 789 789 (b)(d) (f)
AMER AIRLINES LESSE 6.400% 2008 788 788 788 (b)(d) (f)
AMER AIRLINES LESSE 6.400% 2008 789 789 789 (b)(d) (f)
WORLD COLOR PRESS 8.375% 2008 3,000 3,000 2,898 (f)
ASTRON CBO FLT BAA3 8.283% 2010 17,500 17,500 15,706 (d)(f)
--------------- --------------- --------------
Total Industrial 715,865 716,190 662,759
--------------- --------------- --------------
Total Other Bonds and Notes 2,786,397 2,777,473 2,661,275
--------------- --------------- --------------
TOTAL BONDS AND NOTES 2,786,762 2,777,834 2,661,637
--------------- --------------- --------------
PREFERRED STOCK
Public Utility
AMERICAN WTRWRKS $25 8.500% 2000 800 20,000 20,200 (b)(d)
AMERITECH NZ A $100 7.040% 2001 40 4,047 4,071 (d)(f)
APPALACHIAN PWR $100 6.850% 2004 30 3,002 3,047
APPALACHIAN PWR $100 5.900% 2008 10 997 990 (f)
APPALACHIAN PWR $100 5.920% 2008 11 1,091 1,094
ATLANTIC CITY EL 100 7.800% 2006 90 8,991 9,101
AVISTA CORP PFD 6.95 6.950% 2007 58 5,762 5,772
BELL ATLANTIC NZ144A 7.080% 2001 25 2,576 2,601 (d)(f)
BELL ATL NZ$100 144A 5.800% 2004 100 10,000 9,959 (d)
BOSTON EDISON $100 8.000% 2001 90 9,000 9,259
CENTRAL ILL LT $100 5.850% 2008 65 6,505 6,098
CON EDISON $100 SR J 6.125% 2002 150 15,017 14,986
DUKE ENERGY $100 V 6.400% 2002 30 3,000 2,962
DUKE ENRGY $100 SR U 6.300% 2001 30 3,000 2,978
DUKE ENRGY $100 SR T 6.200% 2000 30 3,000 3,010
DUKE ENRGY 1992D $25 6.200% 2001 200 5,000 4,969
DUKE ENRGY 1992C $25 6.100% 2000 250 6,250 6,289
EASTERN EDISON $100 6.625% 2008 210 20,926 20,042
ENTERGY LA INC PFD 8.000% 2001 70 7,000 7,079
<PAGE>
PAGE 32
Bal Held at
6/30/2000
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 6/30/2000
Issuer Name and Issue Title # of Shares a & c) (Note a)
--------------------------- ------------- ------- --------
GREEN MTN PWR CL-D/3 8.625% 2000 14 1,400 1,400 (b)(d)
INDIANA MICH POWER 6.300% 2009 52 5,223 5,013
IND MICH POWER $100 6.250% 2009 20 2,004 1,914 (f)
INDIANA MICHIGAN PWR 5.900% 2009 33 3,140 3,025
JERSEY CENTRAL P&L 8.650% 2005 110 11,210 11,392
LOUISVILLE G&E PFD 5.875% 2008 12 1,198 1,194 (f)
MIDAMERICAN ENERGY 7.800% 2006 73 7,536 7,543
MN P&L 144A 6.70 6.700% 2002 100 10,000 10,025 (b)(d)
NIAGARA MOHAWK $50 6.905% 2004 100 5,000 4,881 (f)
NO IND PUB SERV $100 8.850% 2003 16 1,574 1,581 (b)(d)
NO IND PUB SERV $100 6.500% 2002 115 11,715 11,475 (f)
NORTHWEST NAT GA 100 6.950% 2002 170 17,057 17,335
OHIO POWER CO $100 5.900% 2009 36 3,543 3,428
OHI PWR CO $100 6.020% 2008 10 992 960
OHIO PWR CO $100 6.350% 2008 5 504 492
OTTER TAIL PWR $100 6.300% 2007 180 18,000 17,218
PECO ENERGY 6.120% 2003 96 9,607 9,513
PACIFIC GAS & ELEC 6.300% 2009 120 2,965 2,986 (f)
PACIFIC GAS & ELEC 6.570% 2007 718 17,986 18,005
PACIFICORP $100 PAR 7.700% 2001 150 15,000 15,469
POTOMAC ELEC PWR $50 6.800% 2007 161 7,967 8,181
PUBLIC SER ELEC & GA 5.970% 2008 6 610 551 (f)
ROCHESTER G&E $100 6.600% 2009 100 10,090 10,088
SAN DIEGO G&E $25 1.7625% 2008 60 1,568 1,370 (f)
SO CA EDISON $100 6.050% 2008 45 4,499 4,402 (f)
SO CA EDISON $100 6.450% 2002 220 22,110 21,810
SO INDIANA G&E 100 6.500% 2002 75 7,500 7,500 (b)(d)
TXU ELECTRIC CO 6.375% 2008 54 5,419 5,351
TXU ELECTRIC CO 6.980% 2008 50 5,000 5,016
UBS PRIVATE SER H 5.040% 2002 15 15,000 14,625 (b)(d) (f)
VIRGINIA ELEC & PWR 6.350% 2000 201 20,122 20,227
--------------- --------------- --------------
Total Public Utility 5,405 380,706 378,472
--------------- --------------- --------------
Finance
ABN AMRO NA FRAP 5.940% 15 15,000 12,379 (d)(f)
CHASE MANHAT FRAP 4.960% 150 7,500 7,130 (f)
CITIGROUP FRAP 5.86% 5.680% 150 7,782 7,359 (f)
COMERICA FRAP 6.840% 150 7,797 7,589 (f)
EURO AMER BANK FRAP 5.840% 10 10,000 10,034 (f)
FLEET FIN 6.59% FRAP 6.590% 130 6,662 6,529 (f)
MORGAN STANLEY GROUP 5.910% 100 5,000 4,938 (f)
PNC FINL SERV GROUP 6.050% 440 22,160 22,014 (f)
WELLS FRGO FRAP SERH 6.590% 432 22,108 21,762 (f)
--------------- --------------- --------------
Total Finance 1,577 104,009 99,733
--------------- --------------- --------------
<PAGE>
PAGE 33
Bal Held at
6/30/2000
Principal Amt
of Bonds & Notes Cost Value at
or (Notes 6/30/2000
Issuer Name and Issue Title # of Shares a & c) (Note a)
--------------------------- ------------- ------- --------
Industrial
NORTHBROOK HLDG 1000 6.600% 2001 10 10,000 9,944 (b)(d) (f)
WHIRLPOOL FIN $100 B 6.550% 2008 180 18,074 18,056 (d)
WHIRLPOOL FINL PFD 6.090% 2002 37 3,693 3,702 (b)(d) (f)
--------------- --------------- --------------
Total Industrial 227 31,767 31,703
--------------- --------------- --------------
TOTAL PREFERRED STOCK 7,208 516,481 509,907
--------------- --------------- --------------
TOTAL Investments in Securities of Unaffiliated Issuers 3,294,315 3,171,544
TOTAL Reserve for Possible Losses on Corporate Issues 8,720 0
--------------- --------------
3,285,595 3,171,544
=============== ==============
</TABLE>
NOTES:
a) See Notes 1 and 3 to the financial statements regarding determination of cost
and fair values.
b) In the absence of market quotations, securities are valued by American
Express Certificate Company at fair value.
c) Aggregate cost of investment in securities of unaffiliated issuers for
federal income tax purposes was $3,293,706.
d) Securities acquired in private negotiation which may require registration
under federal securities law 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>
September 21, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Attn: Document Control - EDGAR
Washington, D.C. 20549-1004
RE: American Express Certificate Company
2000 Semi-Annual Report
Ladies and Gentlemen:
On behalf of the above-referenced registrant, I am filing electronically the
2000 Semiannual Report for the six-month period ended June 30, 2000.
This report is being filed with the Commission consistently with Section 30(e)
of the Investment Company Act of 1940 and Rule 30b2-1.
If you have any questions, please contact me at (612) 671-4085.
Thank you.
Sincerely,
/s/ Monica P Vickman
Monica P Vickman
General Counsel
MPV/lal
