SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended Commission File
December 31, 1995 Number 33-2253
MORTGAGE SECURITIES III TRUSTS A, B, C, D, E AND F
Delaware Trusts (IRS Employer Identification
No. 91-1314537)
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by a 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 .
The Registrant meets the conditions set forth in General
Instruction J(1)(a) and (b) of Form 10-K and is therefore, filing
this form with the reduced disclosure format.
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trusts A, B, C, D, E and F
TABLE OF CONTENTS
Page
<S> <C>
PART I
Item 1. Business 1
Item 2. Properties 1
Item 3. Legal Proceedings 1
Item 4. Submission of Matters to a Vote of
Security Holders 1
PART II
Item 5. Market for the Registrant's Beneficial Interest
and Related Security Holder Matters 2
Item 6. Selected Financial Data 2
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 2
Item 8. Financial Statements and Supplementary Data 3
Item 9. Disagreements on Accounting and Financial
Disclosures 3
PART III
Item 10. Directors and Executive Officers of the
Registrant 4
Item 11. Executive Compensation 4
Item 12. Security Ownership of Certain Beneficial
Owners and Management 4
Item 13. Certain Relationships and Related Transactions 4
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 5
SIGNATURE 8
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES 9
INDEX TO EXHIBITS 55
</TABLE>
<PAGE>
PART I
Item 1. Business
Mortgage Securities III Trusts A, B, C, D, E and F (the "Trusts")
were established under the laws of Delaware by a trust agreement.
Prior to December 27, 1987, the trust agreement was among Mortgage
Securities III Corporation, Weyerhaeuser Real Estate Company and
Wilmington Trust Company. On December 27, 1987, Weyerhaeuser
Real Estate Company dividended its beneficial interests in
Mortgage Securities III Trusts A, B, C, D, E and F to Weyerhaeuser
Company. The Trusts were organized to, and are engaged to raise
funds through the issuance and sale of Collateralized Mortgage
Obligation bonds collateralized by Government National Mortgage
Association (GNMA) and Federal National Mortgage Association
(FNMA) certificates. The Trusts A, B, C, D, E and F were
established on April 8, 1986 and commenced business on June 30,
1986, September 30, 1986, December 30, 1986, February 27, 1987,
December 22, 1987 and March 30, 1988, respectively.
<TABLE>
Each Trust has issued a series of Collateralized Mortgage
Obligations (the "Bonds"). Trust A, B, C, D and F's Bonds are
collateralized by GNMA and FNMA certificates and Trust E's Bonds
are collateralized by GNMA certificates.
<CAPTION>
Trust Date Issued Bonds Issued
<S> <S> <C>
A June 30, 1986 $100,000,000
B September 30, 1986 $100,000,000
C December 30, 1986 $100,000,000
D February 27, 1987 $ 75,600,000
E December 22, 1987 $131,600,000
F March 30, 1988 $129,250,000
</TABLE>
Item 2. Properties
The Trusts A, B, C, D, E and F have no physical properties.
Item 3. Legal Proceedings
The Trusts A, B, C, D, E and F are not a party to any material
pending proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
Omitted pursuant to General Instruction J(2)(c) of Form 10-K.
-1-
<PAGE>
PART II
Item 5. Market for the Registrant's Beneficial Interest
and Related Security Holder Matters
As of March 15, 1996, the Trusts' beneficial interest is owned
by Mortgage Securities III Corporation and is not traded on any
stock exchange or on the over-the-counter market.
Item 6. Selected Financial Data
Omitted pursuant to General Instruction J(2)(a) of Form 10-K.
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Business activity during 1995, 1994 and 1993 consisted of
the collection of principal and interest by the trustee on the
GNMA and
FNMA certificates and the disbursement of the required payment
of interest and principal to the bondholders.
<TABLE>
The following table outlines principal payments made by the
Trusts during 1995 to the Class 2, 3 and 4 bondholders. Accrued
interest was added to the principal of Class 4 Bonds for
Collateralized Mortgage Obligation Bonds Trusts B, E and F.
<CAPTION>
Class 2 Class 3 Class 4 Total
<S> <C> <C> <C> <C>
Trust A $ - $ - $ 2,259,429 $ 2,259,429
Trust B - 4,068,172 (1,157,252) 2,910,920
Trust C - - 2,485,629 2,485,629
Trust D 1,780,991 - N/A 1,780,991
Trust E - 9,082,461 (3,203,217) 5,879,244
Trust F - 3,316,927 (709,667) 2,607,260
This rate of payment is sufficient to retire the Bonds prior to
their stated maturity.
</TABLE>
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<PAGE>
In December 1986, the Financial Accounting Standards Board
issued Statement No. 91, which established a new method of accounting
for nonrefundable fees and costs associated with purchasing a group
of loans and the method of recognizing interest income and
expense. This statement is applicable to all transactions entered
into for fiscal years beginning after December 15, 1987.
Retroactive application with restatement of the financial
statements for all years presented was optional. Upon evaluation
of this accounting statement and the current method of accounting,
the Company elected to adopt Statement No. 91 prospectively for
Trusts E and F. Under the new standard all discounts and hedging
costs will be recognized over the contractual life of the loan as a
yield adjustment. The Company elected not to adopt Statement No. 91
retroactively for Trusts A, B, C and D. Since no transactions have
been entered into after the effective date of this statement, the
Company will continue to use its current method, which approximates
the effective interest method, for Trusts A, B, C and D.
Item 8. Financial Statements and Supplementary Data
The financial statements of the Trusts, together with the related
Notes to Financial Statements and Report of Independent Public
Accountants, for the three years ended December 31, 1995, are
included herein.
Item 9. Disagreements on Accounting and Financial Disclosures
There was no change in accountants, nor any material disagreement
with accountants on any matter of accounting principles,
practices or financial statement disclosures, during the year
ended December 31, 1995.
-3-
<PAGE>
PART III
Item 10. Directors and Executive Officers of the
Registrant Omitted pursuant to General Instruction J(2)(c)
of Form 10-K.
Item 11. Executive Compensation
Omitted pursuant to General Instruction J(2)(c) of Form 10-
K.
Item 12. Security Ownership of Certain Beneficial Owners
and Management
Omitted pursuant to General Instruction J(2)(c) of Form 10-K.
Item 13. Certain Relationships and Related Transactions
Omitted pursuant to General Instruction J(2)(c) of Form 10-K.
-4-
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a) The following documents are filed as part of this report:
(1) Financial Statements:
Report of Independent Public Accountants.
Statements of Operations for the Three Years Ended
December 31, 1995 Trust A.
Statements of Operations for the Three Years Ended
December 31, 1995 Trust B.
Statements of Operations for the Three Years Ended
December 31, 1995 Trust C.
Statements of Operations for the Three Years Ended
December 31, 1995 Trust D.
Statements of Operations for the Three Years Ended
December 31, 1995 Trust E.
Statements of Operations for the Three Years Ended
December 31, 1995 Trust F.
Balance Sheets as of December 31, 1995 and December 25,
1994 Trust A.
Balance Sheets as of December 31, 1995 and December 25,
1994 Trust B.
Balance Sheets as of December 31, 1995 and December 25,
1994 Trust C.
Balance Sheets as of December 31, 1995 and December 25,
1994 Trust D.
Balance Sheets as of December 31, 1995 and December 25,
1994 Trust E.
Balance Sheets as of December 31, 1995 and December 25,
1994 Trust F.
-5-
<PAGE>
Statements of Changes in Owner's Beneficial Interest for
the Three Years Ended December 31, 1995 Trust A.
Statements of Changes in Owner's Beneficial Interest for
the Three Years Ended December 31, 1995 Trust B.
Statements of Changes in Owner's Beneficial Interest for
the Three Years Ended December 31, 1995 Trust C.
Statements of Changes in Owner's Beneficial Interest for
the Three Years Ended December 31, 1995 Trust D.
Statements of Changes in Owner's Beneficial Interest for
the Three Years Ended December 31, 1995 Trust E.
Statements of Changes in Owner's Beneficial Interest for
the Three Years Ended December 31, 1995 Trust F.
Statements of Cash Flows for the Three Years Ended
December 31, 1995 Trust A.
Statements of Cash Flows for the Three Years Ended
December 31, 1995 Trust B.
Statements of Cash Flows for the Three Years Ended
December 31, 1995 Trust C.
Statements of Cash Flows for the Three Years Ended
December 31, 1995 Trust D.
Statements of Cash Flows for the Three Years Ended
December 31, 1995 Trust E.
Statements of Cash Flows for the Three Years Ended
December 31, 1995 Trust F.
Notes to Financial Statements for the Three Years
Ended December 31, 1995
-6-
<PAGE>
(2) Financial Statement Schedules:
Schedule IV-Indebtedness to Related Parties - Not
Current Trust E
Schedule IV-Indebtedness to Related Parties - Not
Current Trust F
Schedule XIII - Other Security Investments Trust A
Schedule XIII - Other Security Investments Trust B
Schedule XIII - Other Security Investments Trust C
Schedule XIII - Other Security Investments Trust D
Schedule XIII - Other Security Investments Trust E
Schedule XIII - Other Security Investments Trust F
(3) Exhibits:
Certificate of Incorporation of Mortgage Securities
III Corporation (incorporated by reference to
3(a) to Registration Statement on Form S-11 dated
December 18, 1985).
Bylaws of Mortgage Securities III Corporation
(incorporated by reference to Exhibit 3(b) to
Registration Statement on Form S-11 dated December 18,
1985).
Form of Indenture dated June 1, 1986 between the
Trust and Texas Commerce Bank National Association, as
Trustee, relating to GNMA and FNMA Collateralized Mortgage
Obligations (incorporated by reference to Exhibit 4(a) to
Registration Statement on Form S-11 dated December 18,
1985).
Form of Supplemental Indenture dated as of June 1,
1986 (incorporated by reference to Exhibit 4(a) to
Registration Statement on Form S-11 dated July 11, 1986).
(b) Exhibits are included in Item (a)(3) above.
(c) Financial Statement Schedules required by Regulation S-X
are included in Item (a)(2) above.
-7-
<PAGE>
SIGNATURE
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, on this 19th day of January 1996.
MORTGAGE SECURITIES III TRUSTS
A, B, C, D, E AND F
Trusts acting through Wilmington
Trust Company, not in its
individual capacity, but solely as
Owner Trustee
By:/s/ John M. Beeson, Jr.
Name: John M. Beeson, Jr.
Title: Vice President
-8-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trusts A, B, C, D, E and F
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The following financial statements are referenced in Item 8:
Page
<S> <C>
Report of Independent Public Accountants 12
Statements of Operations for the Three Years Ended
December 31, 1995 Trust A 14
Statements of Operations for the Three Years Ended
December 31, 1995 Trust B 15
Statements of Operations for the Three Years Ended
December 31, 1995 Trust C 16
Statements of Operations for the Three Years Ended
December 31, 1995 Trust D 17
Statements of Operations for the Three Years Ended
December 31, 1995 Trust E 18
Statements of Operations for the Three Years Ended
December 31, 1995 Trust F 19
Balance Sheets as of December 31, 1995 and December 25, 1994
Trust A 20
Balance Sheets as of December 31, 1995 and December 25, 1994
Trust B 21
Balance Sheets as of December 31, 1995 and December 25, 1994
Trust C 22
Balance Sheets as of December 31, 1995 and December 25, 1994
Trust D 23
Balance Sheets as of December 31, 1995 and December 25, 1994
Trust E 24
Balance Sheets as of December 31, 1995 and December 25, 1994
Trust F 25
-9-
<PAGE>
Statements of Changes in Owner's Beneficial Interest for the
Three Years Ended December 31, 1995 Trust A 26
Statements of Changes in Owner's Beneficial Interest for the
Three Years Ended December 31, 1995 Trust B 27
Statements of Changes in Owner's Beneficial Interest for the
Three Years Ended December 31, 1995 Trust C 28
Statements of Changes in Owner's Beneficial Interest for the
Three Years Ended December 31, 1995 Trust D 29
Statements of Changes in Owner's Beneficial Interest for the
Three Years Ended December 31, 1995 Trust E 30
Statements of Changes in Owner's Beneficial Interest for the
Three Years Ended December 31, 1995 Trust F 31
Statements of Cash Flows for the Three Years Ended December
31, 1995 Trust A 32
Statements of Cash Flows for the Three Years Ended December
31, 1995 Trust B 33
Statements of Cash Flows for the Three Years Ended December
31, 1995 Trust C 34
Statements of Cash Flows for the Three Years Ended December
31, 1995 Trust D 35
Statements of Cash Flows for the Three Years Ended December
31, 1995 Trust E 36
Statements of Cash Flows for the Three Years Ended December
31, 1995 Trust F 37
Notes to Financial Statements for the Three Years Ended
December 31, 1995 38
-10-
<PAGE>
Page
The following financial statement schedules are included herein:
Schedule IV-Indebtedness to Related Parties - Not Current
Trust E 47
Schedule IV-Indebtedness to Related Parties - Not Current
Trust F 48
Schedule XIII-Other Security Investments Trust A 49
Schedule XIII-Other Security Investments Trust B 50
Schedule XIII-Other Security Investments Trust C 51
Schedule XIII-Other Security Investments Trust D 52
Schedule XIII-Other Security Investments Trust E 53
Schedule XIII-Other Security Investments Trust F 54
</TABLE>
-11-
<PAGE>
Report of Independent Public Accountants
To the Beneficial Owner of Mortgage
Securities III Trusts A, B, C, D, E and F
We have audited the accompanying balance sheets of Mortgage
Securities III Trusts A, B, C, D, E and F (trusts established under
the laws of the State of Delaware) as of December 31, 1995 and
December 25, 1994, and the related statements of operations, changes
in owner's beneficial interest, and cash flows for each of the
three years in the period ended December 31, 1995. These
financial statements and the schedules referred to below are the
responsibility of the Trust's management. 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. 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
Mortgage Securities III Trusts A, B, C, D, E and F, as of December
31, 1995 and December 25, 1994, and the results of their operations
and their cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting
principles.
-12-
<PAGE>
Our audits were made for the purpose of forming an opinion on the
basic
financial statements taken as a whole. The schedules listed in
the index to financial statements are presented for purposes of
complying with the Securities and Exchange Commission's rules and are
not part of the basic financial statements. These schedules have
been subjected to the auditing procedures applied in our audits of
the basic financial statements and, in our opinion, fairly state in
all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Los Angeles, California
January 19, 1996
-13-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust A
Statements of Operations
For the Three Years Ended December 31, 1995
(Dollar amounts in thousands)
1995 1994 1993
<S> <C> <C> <C>
Interest income $1,203 $1,498 $2,503
Interest expense 1,144 1,504 2,613
Net income(loss) $ 59 $ (6) $ (110)
The accompanying notes are an integral part of these
statements.
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust B
Statements of Operations
For the Three Years Ended December 31, 1995
(Dollar amounts in thousands)
1995 1994 1993
<S> <C> <C> <C>
Interest income $1,927 $2,329 $3,799
Interest expense 1,870 2,346 3,993
Net income(loss) $ 57 $ (17) $ (194)
The accompanying notes are an integral part of these
statements.
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust C
Statements of Operations
For the Three Years Ended December 31, 1995
(Dollar amounts in thousands)
1995 1994 1993
<S> <C> <C> <C>
Interest income $1,725 $2,076 $3,553
Interest expense 1,761 2,225 3,973
Net loss $ (36) $ (149) $ (420)
The accompanying notes are an integral part of these
statements.
</TABLE>
-16-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust D
Statements of Operations
For the Three Years Ended December 31, 1995
(Dollar amounts in thousands)
1995 1994 1993
<S> <C> <C> <C>
Interest income $1,554 $1,780 $2,843
Interest expense 1,538 1,813 2,998
Net income(loss) $ 16 $ (33) $ (155)
The accompanying notes are an integral part of these
statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust E
Statements of Operations
For the Three Years Ended December 31, 1995
(Dollar amounts in thousands)
1995 1994 1993
<S> <C> <C> <C>
Interest income $ 4,854 $ 5,487 $ 7,971
Interest expense 5,387 6,582 10,480
Interest expense to affiliate (Note 5) 2,753 2,058 1,620
Net loss $(3,286) $(3,153) $(4,129)
The accompanying notes are an integral part of these statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust F
Statements of Operations
For the Three Years Ended December 31, 1995
(Dollar amounts in thousands)
1995 1994 1993
<S> <C> <C> <C>
Interest income $1,398 $ 1,776 $ 4,118
Interest expense 1,400 2,011 6,097
Interest expense to affiliate (Note 5) 1,338 1,000 788
Net loss $(1,340) $(1,235) $(2,767)
The accompanying notes are an integral part of these
statements.
</TABLE>
-19-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust A
Balance Sheets
December 31, 1995 and December 25, 1994
(Dollar amounts in thousands)
1995 1994
<S> <C> <C>
Assets
Cash and equivalents:
Trust account $ 1 $ 1
Collection account (Notes 3 and 4) 844 1,020
------- -------
845 1,021
Receivable from beneficial owner 1,746 1,746
Interest receivable 98 114
Government National and Federal National
Mortgage Association Certificates, net
of unamortized premium of $41 and
$48 (Notes 2, 4, 5 and 7) 11,772 13,838
------- -------
$ 14,461 $ 16,719
======= =======
Liabilities and Owner's Beneficial Interest
Interest payable $ 355 $ 424
Collateralized Mortgage Obligation bonds,
net (Notes 1, 2, 3, 4 and 5) 11,667 13,915
Owner's Beneficial Interest:
Owner's beneficial interest 1 1
Retained earnings 2,438 2,379
------- -------
Total Owner's Beneficial Interest 2,439 2,380
------- -------
$ 14,461 $ 16,719
======= =======
The accompanying notes are an integral part of these balance
sheets.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust B
Balance Sheets
December 31, 1995 and December 25, 1994
(Dollar amounts in thousands)
1995 1994
<S> <C> <C>
Assets
Cash and equivalents:
Trust account $ 1 $ 1
Collection account (Notes 3 and 4) 1,003 1,092
------- -------
1,004 1,093
Receivable from beneficial owner 370 370
Interest receivable 161 182
Government National and Federal National
Mortgage Association Certificates, net
of unamortized discount of $233 and
$267 (Notes 2, 4, 5 and 7) 19,751 22,524
------- -------
$ 21,286 $ 24,169
======= =======
Liabilities and Owner's Beneficial Interest
Interest payable $ 570 $ 656
Collateralized Mortgage Obligation bonds,
net (Notes 1, 2, 3, 4 and 5) 18,763 21,617
Owner's Beneficial Interest:
Owner's beneficial interest 1 1
Retained earnings 1,952 1,895
------- -------
Total Owner's Beneficial Interest 1,953 1,896
------- -------
$ 21,286 $ 24,169
======= =======
The accompanying notes are an integral part of these balance
sheets.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust C
Balance Sheets
December 31, 1995 and December 25,
1994
(Dollar amounts in thousands)
1995 1994
<S> <C> <C>
Assets
Cash and equivalents:
Trust account $ 1 $ 1
Collection account (Notes 3 and 4) 1,067 1,014
------- -------
1,068 1,015
Receivable from (payable to) beneficial
owner 236 236
Interest receivable 138 154
Government National and Federal National
Mortgage Association Certificates, net
of unamortized discount of $194 and
$222 (Notes 2, 4, 5 and 7) 17,721 20,285
------- -------
$ 19,163 $ 21,690
======= =======
Liabilities and Owner's Beneficial Interest
Interest payable $ 535 $ 610
Collateralized Mortgage Obligation bonds,
net (Notes 1, 2, 3, 4 and 5) 17,529 19,945
Owner's Beneficial Interest:
Owner's beneficial interest 1 1
Retained earnings 1,098 1,134
------- -------
Total Owner's Beneficial Interest 1,099 1,135
------- -------
$ 19,163 $ 21,690
======= =======
The accompanying notes are an integral part of these balance sheets.
</TABLE>
-22-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust D
Balance Sheets
December 31, 1995 and December 25, 1994
(Dollar amounts in thousands)
1995 1994
<S> <C> <C>
Assets
Cash and equivalents:
Trust account $ 1 $ 1
Collection account (Notes 3 and 4) 223 278
------- -------
224 279
Receivable from beneficial owner 1,653 1,573
Interest receivable 124 135
Government National and Federal National
Mortgage Association Certificates, net
of unamortized premium of $68 and
$75 (Notes 2, 4, 5 and 7) 17,097 18,888
------- -------
$ 19,098 $ 20,875
======= =======
Liabilities and Owner's Beneficial Interest
Interest payable $ 241 $ 266
Collateralized Mortgage Obligation bonds,
net (Notes 1, 2, 3, 4 and 5) 16,725 18,493
Owner's Beneficial Interest:
Owner's beneficial interest 1 1
Retained earnings 2,131 2,115
------- -------
Total Owner's Beneficial Interest 2,132 2,116
------- -------
$ 19,098 $ 20,875
======= =======
The accompanying notes are an integral part of these balance sheets.
</TABLE>
-23-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust E
Balance Sheets
December 31, 1995 and December 25, 1994
(Dollar amounts in thousands)
1995 1994
<S> <C> <C>
Assets
Cash and equivalents:
Trust account $ 1 $ 1
Collection account (Notes 3 and 4) 2,716 2,711
------- -------
2,717 2,712
Receivable from beneficial owner 1,662 1,662
Interest receivable 389 427
Government National Mortgage Association
Certificates, net of unamortized
discount of $488 and $613
(Notes 2, 4, 5 and 7) 54,032 59,945
Deferred hedging costs (Note 2) 460 578
------- -------
$ 59,260 $ 65,324
======= =======
Liabilities and Owner's Beneficial Interest
Interest payable $ 1,143 $ 1,275
Collateralized Mortgage Obligation bonds,
net (Notes 1, 2, 3, 4 and 5) 46,855 52,253
Payable to Weyerhaeuser Mortgage Company 32,705 29,953
(Note 5)
Owner's Beneficial Interest:
Owner's beneficial interest 1 1
Accumulated deficit (21,444) (18,158)
------- -------
Total Owner's Beneficial Interest (21,443) (18,157)
------- -------
$ 59,260 $ 65,324
======= =======
The accompanying notes are an integral part of these balance sheets.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust F
Balance Sheets
December 31, 1995 and December 25, 1994
(Dollar amounts in thousands)
1995 1994
<S> <C> <C>
Assets
Cash and equivalents:
Trust account $ 1 $ 1
Collection account (Notes 3 and 4) 684 1,236
------- -------
685 1,237
Receivable from beneficial owner 1,937 1,937
Interest receivable 111 128
Government National and Federal National
Mortgage Certificates, net of unamortized
discount of $54 and $68
(Notes 2, 4, 5 and 7) 14,604 16,561
Deferred hedging costs (Note 2) 178 222
------- -------
$ 17,515 $ 20,085
======= =======
Liabilities and Owner's Beneficial Interest
Interest payable $ 389 $ 464
Collateralized Mortgage Obligation bonds,
net (Notes 1, 2, 3, 4 and 5) 12,676 15,169
Payable to Weyerhaeuser Mortgage Company (Note 5) 15,899 14,561
Owner's Beneficial Interest:
Owner's beneficial interest 1 1
Accumulated deficit (11,450) (10,110)
------- -------
Total Owner's Beneficial Interest (11,449) (10,109)
------- -------
$ 17,515 $ 20,085
======= =======
The accompanying notes are an integral part of these balance sheets.
</TABLE>
-25-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust A
Statements of Changes in Owner's Beneficial Interest
For the Three Years Ended December 31, 1995
(Dollar amounts in thousands)
Owner's
Beneficial Retained
Interest Earnings Total
<S> <C> <C> <C>
Balance at December 27, 1992 $1 $2,495 $2,496
Net loss - (110) (110)
Balance at December 26, 1993 1 2,385 2,386
Net loss - (6) (6)
Balance at December 25, 1994 1 2,379 2,380
Net income - 59 59
Balance at December 31, 1995 $1 $2,438 $2,439
The accompanying notes are an integral part of these statements.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust B
Statements of Changes in Owner's Beneficial Interest
For the Three Years Ended December 31, 1995
(Dollar amounts in thousands)
Owner's
Beneficial Retained
Interest Earnings Total
<S> <C> <C> <C>
Balance at December 27, 1992 $1 $2,106 $2,107
Net loss - (194) (194)
Balance at December 26, 1993 1 1,912 1,913
Net loss - (17) (17)
Balance at December 25, 1994 1 1,895 1,896
Net income - 57 57
Balance at December 31, 1995 $1 $1,952 $1,953
The accompanying notes are an integral part of these statements.
</TABLE>
-27-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust C
Statements of Changes in Owner's Beneficial Interest
For the Three Years Ended December 31, 1995
(Dollar amounts in thousands)
Owner's
Beneficial Retained
Interest Earnings Total
<S> <C> <C> <C>
Balance at December 27, 1992 $1 $1,703 $1,704
Net loss - (420) (420)
Balance at December 26, 1993 1 1,283 1,284
Net loss - (149) (149)
Balance at December 25, 1994 1 1,134 1,135
Net loss - (36) (36)
Balance at December 31, 1995 $1 $1,098 $1,099
The accompanying notes are an integral part of these statements.
</TABLE>
-28-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust D
Statements of Changes in Owner's Beneficial Interest
For the Three Years Ended December 31, 1995
(Dollar amounts in thousands)
Owner's
Beneficial Retained
Interest Earnings Total
<S> <C> <C> <C>
Balance at December 27, 1992 $1 $2,303 $2,304
Net loss - (155) (155)
Balance at December 26, 1993 1 2,148 2,149
Net loss - (33) (33)
Balance at December 25, 1994 1 2,115 2,116
Net income - 16 16
Balance at December 31, 1995 $1 $2,131 $2,132
The accompanying notes are an integral part of these statements.
</TABLE>
-29-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust E
Statements of Changes in Owner's Beneficial Interest
For the Three Years Ended December 31, 1995
(Dollar amounts in thousands)
Owner's
Beneficial Accumulated
Interest Deficit Total
<S> <C> <C> <C>
Balance at December 27, 1992 $1 $(10,876) $(10,875)
Net loss - (4,129) (4,129)
Balance at December 26, 1993 1 (15,005) (15,004)
Net loss - (3,153) (3,153)
Balance at December 25, 1994 1 (18,158) (18,157)
Net loss - (3,286) (3,286)
Balance at December 31, 1995 $1 $(21,444) $(21,443)
The accompanying notes are an integral part of these statements.
</TABLE>
-30-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust F
Statements of Changes in Owner's Beneficial Interest
For the Three Years Ended December 31, 1995
(Dollar amounts in thousands)
Owner's
Beneficial Accumulated
Interest Deficit Total
<S> <C> <C> <C>
Balance at December 27, 1992 $1 $ (6,108) $ (6,107)
Net loss - (2,767) (2,767)
Balance at December 26, 1993 1 (8,875) (8,874)
Net loss - (1,235) (1,235)
Balance at December 25, 1994 1 (10,110) (10,109)
Net loss - (1,340) (1,340)
Balance at December 31, 1995 $1 $(11,450) $(11,449)
The accompanying notes are an integral part of these statements.
</TABLE>
-31-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust A
Statements of Cash Flows
For the Three Years Ended December 31,
1995
(Dollar amounts in thousands)
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operations:
Net income(loss) $ 59 $ (6) $ (110)
Adjustments to reconcile net
loss to net cash provided
by operations:
Amortization, net 19 58 135
Accretion of interest - 470 1,775
Changes in:
Interest receivable 16 59 122
Interest payable (69) (256) (513)
Net cash provided by operations 25 325 1,409
Cash flows from investing:
Mortgage-backed certificates--
Collections on principal 2,059 6,653 14,447
Cash flows from financing:
Collateralized Mortgage
Obligation bonds --
Payments on principal (2,260) (9,391) (19,288)
Net increase (decrease) in cash and
equivalents (176) (2,413) (3,432)
Cash and equivalents at beginning
of year 1,021 3,434 6,866
Cash and equivalents at end of year $ 845 $ 1,021 $ 3,434
Supplemental disclosure:
Cash paid during the year for
interest $ 1,201 $ 1,255 $ 1,267
The accompanying notes are an integral part of these statements.
</TABLE>
-32-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust B
Statements of Cash Flows
For the Three Years Ended December 31, 1995
(Dollar amounts in thousands)
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operations:
Net income(loss) $ 57 $ (17) $ (194)
Adjustments to reconcile net
loss to net cash provided
by operations:
Amortization, net 23 62 189
Accretion of interest 1,157 1,059 968
Changes in:
Interest receivable 21 71 151
Interest payable (86) (330) (629)
Net cash provided by operations 1,172 845 485
Cash flows from investing:
Mortgage-backed certificates--
Collections on principal 2,807 7,644 18,513
Cash flows from financing:
Collateralized Mortgage
Obligation bonds --
Payments on principal (4,068) (13,132) (22,804)
Net increase (decrease) in cash
and equivalents (89) (4,643) (3,806)
Cash and equivalents at beginning
of year 1,093 5,736 9,542
Cash and equivalents at end of year $ 1,004 $ 1,093 $ 5,736
Supplemental disclosure:
Cash paid during the year for
interest $ 741 $ 1,466 $ 3,249
The accompanying notes are an integral part of these statements.
</TABLE>
-33-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust C
Statements of Cash Flows
For the Three Years Ended December 31, 1995
(Dollar amounts in thousands)
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operations:
Net loss $ (36) $ (149) $ (420)
Adjustments to reconcile net
loss to net cash provided
by operations:
Amortization, net 41 121 347
Accretion of interest - 1,332 1,631
Changes in:
Interest receivable 16 69 144
Interest payable (75) (312) (607)
Net cash provided by operations (54) 1,061 1,095
Cash flows from investing:
Mortgage-backed certificates --
Collections on principal 2,592 7,505 19,070
Cash flows from financing:
Collateralized Mortgage
Obligation bonds --
Payments on principal (2,485) (12,714) (22,363)
Net increase (decrease) in cash and
equivalents 53 (4,148) (2,198)
Cash and equivalents at beginning
of year 1,015 5,163 7,361
Cash and equivalents at end of year $ 1,068 $ 1,015 $ 5,163
Supplemental disclosure:
Cash paid during the year for
interest $ 1,767 $ 1,004 $ 2,397
The accompanying notes are an integral part of these statements.
</TABLE>
-34-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust D
Statements of Cash Flows
For the Three Years Ended December 31, 1995
(Dollar amounts in thousands)
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operations:
Net income(loss) $ 16 $ (33) $ (155)
Adjustments to reconcile net
loss to net cash used in
operations:
Amortization, net 20 60 177
Changes in:
Interest receivable 12 41 122
Receivable from beneficial
owner (81) (79) (125)
Interest payable (25) (99) (235)
Net cash used in operations (58) (110) (216)
Cash flows from investing:
Mortgage-backed certificates --
Collections on principal 1,784 5,586 16,418
Cash flows from financing:
Collateralized Mortgage
Obligation bonds --
Payments on principal (1,781) (6,900) (16,479)
Net increase (decrease) in cash
and equivalents (55) (1,424) (277)
Cash and equivalents at beginning
of year 279 1,703 1,980
Cash and equivalents at end of year $ 224 $ 279 $ 1,703
Supplemental disclosure:
Cash paid during the year for
interest $ 1,551 $ 1,874 $ 3,122
The accompanying notes are an integral part of these statements.
</TABLE>
-35-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust E
Statements of Cash Flows
For the Three Years Ended December 31, 1995
(Dollar amounts in thousands)
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operations:
Net loss $ (3,286) $ (3,153) $ (4,129)
Adjustments to reconcile net
loss to net cash provided
by operations:
Amortization, net 475 891 2,090
Accretion of interest 3,203 2,930 2,681
Changes in:
Interest receivable 38 113 180
Receivable from beneficial
owner - - (188)
Interest payable (133) (447) (518)
Interest payable to
an affiliate (Note 5) 2,752 2,058 1,620
Net cash provided by operations 3,049 2,392 1,736
Cash flows from investing:
Mortgage-backed certificates --
Collections on principal 6,038 13,047 25,029
Cash flows from financing:
Collateralized Mortgage
Obligation bonds --
Payments on principal (9,082) (22,819) (25,705)
Net (decrease) increase in cash
and equivalents 5 (7,380) 1,060
Cash and equivalents at beginning
of year 2,712 10,092 9,032
Cash and equivalents at end of year $ 2,717 $ 2,712 $ 10,092
Supplemental disclosure:
Cash paid during the year for
interest $ 1,716 $ 3,055 $ 5,543
The accompanying notes are an integral part of these statements.
</TABLE>
-36-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust F
Statements of Cash Flows
For the Three Years Ended December 31, 1995
(Dollar amounts in thousands)
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operations:
Net loss $ (1,340) $ (1,235) $ (2,767)
Adjustments to reconcile net loss
to net cash provided by/(used
in) operations:
Amortization, net 144 323 1,921
Accretion of interest 710 649 594
Changes in:
Interest receivable 17 97 248
Interest payable (75) (455) (1,023)
Interest payable to
an affiliate (Note 5) 1,338 1,000 788
Net cash provided by/(used in)
operations 794 379 (239)
Cash flows from investing:
Mortgage-backed certificates--
Collections on principal 1,971 9,769 31,720
Cash flows from financing:
Collateralized Mortgage
Obligation bonds --
Payments on principal (3,317) (17,602) (35,526)
Net increase (decrease) in cash and
equivalents (552) (7,454) (4,045)
Cash and equivalents at beginning
of year 1,237 8,691 12,736
Cash and equivalents at end of year $ 685 $ 1,237 $ 8,691
Supplemental disclosure:
Cash paid during the year for
interest $ 606 $ 1,455 $ 4,274
The accompanying notes are an integral part of these statements.
</TABLE>
-37-
<PAGE>
Mortgage Securities III Trusts A, B, C, D, E and F
Notes to Financial Statements
For the Three Years Ended December 31, 1995
(Dollar amounts in thousands)
Note 1. Description of business:
Mortgage Securities III Trusts A, B, C, D, E and F
(the "Trusts") were established under the laws of Delaware
by a trust agreement. Prior to December 27, 1987,
the trust agreement was among Mortgage Securities III
Corporation, Weyerhaeuser Real Estate Company and Wilmington
Trust Company. On December 27, 1987, Weyerhaeuser Real
Estate Company dividended its beneficial interests in
Mortgage Securities III Trusts A, B, C, D, E and F to
Weyerhaeuser Company which in turn contributed its
beneficial interests in the Trusts to Weyerhaeuser
Financial Services, Inc., a wholly-owned subsidiary
of Weyerhaeuser Company. The Trusts were organized to, and
are engaged to raise funds through the issuance and sale
of Collateralized Mortgage Obligation bonds
collateralized by Government National Mortgage
Association (GNMA) and Federal National Mortgage
Association (FNMA) certificates. The Trusts A, B, C, D, E
and F were established on April 8, 1986 and commenced
business on June 30, 1986, September 30, 1986, December
30, 1986, February 27, 1987, December 22, 1987 and March
30, 1988, respectively.
<TABLE>
Each Trust has issued a series of Collateralized
Mortgage Obligations (the "Bonds"). Trust A, B, C, D and
F's Bonds are collateralized by GNMA and FNMA certificates
and Trust E's Bonds are collateralized by GNMA
certificates.
-38-
<PAGE>
<CAPTION>
Trust Date Issued Bonds Issued
<S> <S> <C>
A June 30, 1986 $100,000
B September 30, 1986 $100,000
C December 30, 1986 $100,000
D February 27, 1987 $ 75,600
E December 22, 1987 $131,600
F March 30, 1988 $129,250
</TABLE>
Activity during 1995, 1994 and 1993, consisted of
the collection of principal and interest on the GNMA and
FNMA certificates and disbursement of the required
payment of principal and interest to the bondholders.
Note 2. Accounting policies:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that effect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Trust A, B, C and D's GNMA and FNMA certificates are
carried at par value adjusted for any unamortized
premiums or discounts. These premiums and discounts are
amortized using a method approximating the effective
interest method over the estimated life of the underlying
mortgage loans. The Bonds are carried at par value less unamortized
discounts. These discounts are amortized using a method approx-
imately the effective interest method over the estimated life
of the Bonds. Due to prepayments on the underlying
mortgage loans, revisions are made each quarter to the
remaining period to maturity of the certificates and the
Bonds. The amortization described above reflects these
revisions.
Trust E's GNMA certificates and Trust F's GNMA and
FNMA certificates are carried at par value less
unamortized discounts. These discounts are amortized using
an interest method which computes a constant effective
yield and includes
estimates of future prepayments on the certificates in
the calculation of the constant effective yield. Hedging
costs related to holding GNMA and FNMA certificates
have been deferred and are also being amortized using
the interest method and includes estimates of future
prepayments on the certificates in the calculation of
the constant effective yield. The Bonds are carried at
par value less unamortized
-39-
<PAGE>
discounts. These discounts are amortized using the
interest method and include estimates of future
prepayments on the Bonds in the calculation of the
constant effective yield. Semi-annually differences
between anticipated future prepayments and actual
prepayments are calculated. The effective yield is
then recalculated to reflect actual prepayments
to date and anticipated future prepayments. The
unamortized discounts and accumulated hedging amortization
are adjusted (with a corresponding charge or credit to
interest income/expense) to reflect the amount that would
have existed had the new effective yield been applied since
the purchase of certificates and/or issuance of Bonds.
In December 1986, the Financial Accounting Standards
Board issued Statement No. 91, which established a new
method of accounting for nonrefundable fees and costs
associated with purchasing a group of loans and the
method of recognizing interest income and expense. This
statement must be applied prospectively to all
transactions entered into for fiscal years beginning
after December 15, 1987. Retroactive application with
restatement of the financial statements for all years
presented was optional. Upon evaluation of this
accounting statement and the current method of accounting,
the Company elected to adopt Statement No. 91
prospectively for Trusts E and F. Under the new
standard, all discounts and hedging costs are recognized
over the contractual life of the loan as a yield
adjustment. The Company elected not to adopt Statement No.
91 retroactively for Trusts A, B, C and D. Since no
transactions have been entered into after the
effective date of this statement, the Company will continue
to use its current method, which approximates the
effective interest method, for Trusts A, B, C and D.
-40-
<PAGE>
Cash and equivalents include cash held in the
collection accounts and invested in short term investments
with original maturities of less than three months.
Note 3. Collateralized Mortgage Obligation Bonds:
<TABLE>
Bonds at December 31, 1995 and December 25, 1994 consist
of the following:
<CAPTION>
1995 1994
<S> <C> <C>
Collateralized Mortgage Obligation
Bonds, Trust A:
Class 4 - 9.20%, stated maturity
July 1, 2016 $ 11,723 $ 13,983
Unamortized discount (56) (68)
------- -------
$ 11,667 $ 13,915
======= =======
Collateralized Mortgage Obligation
Bonds, Trust B:
Class 3 - 9.00%, stated maturity
April 1, 2010 $ 5,538 $ 9,606
Class 4 - 9.00%, stated maturity
October 1, 2016 13,590 12,432
Unamortized discount (365) (421)
------- -------
$ 18,763 $ 21,617
======= =======
Collateralized Mortgage Obligation
Bonds, Trust C:
Class 4 - 9.00%, stated maturity
January 1, 2017 $ 17,994 $ 20,479
Unamortized discount (465) (534)
------- -------
$ 17,529 $ 19,945
======= =======
-41-
<PAGE>
<CAPTION>
1995 1994
<S> <C> <C>
Collateralized Mortgage Obligation
Bonds, Trust D:
Class 2 - 8.55%, stated maturity
December 1, 2014 $ 2,237 $ 4,018
Class 3 - 8.60%, stated maturity
March 1, 2017 14,600 14,600
(112) (125)
------- -------
$ 16,725 $ 18,493
======= =======
Collateralized Mortgage Obligation
Bonds, Trust E:
Class 3 - 9.00%, stated maturity
January 1, 2006 $ 13,186 $ 22,269
Class 4 - 9.00%, stated maturity
January 1, 2018 37,616 34,412
Unamortized discount (3,947) (4,428)
------- -------
$ 46,855 $ 52,253
======= =======
Collateralized Mortgage Obligation
Bonds, Trust F:
Class 3 - 9.00%, stated maturity
January 1, 2014 $ 4,736 $ 8,053
Class 4 - 9.00%, stated maturity
April 1, 2018 8,334 7,624
Unamortized discount (394) (508)
------- -------
$ 12,676 $ 15,169
======= =======
</TABLE>
The stated maturity is the date such class will be fully
paid, assuming that scheduled interest and principal
payments (with no prepayments) on the certificates are
timely received.
All collections on the certificates pledged as security for
the Bonds will be remitted directly to a collection account
(the "Collection Account") established with the Trustee and
together with the reinvestment earnings thereon, will be
available for application to the payment of principal and
interest on the bonds on the following payment date.
-42-
<PAGE>
Each Trust's Bonds are subject to a special redemption,
in whole or in part, if , as a result of substantial
payments of principal on the underlying mortgage loans
and/or low reinvestment yields, the Trusts determine that
the amount of cash anticipated to be on deposit in the
Collection Accounts on the next payment date might be
insufficient to make required payments on the Bonds. Any
such redemption would not exceed the principal amount of
Bonds that would otherwise be required to be paid on the
next payment date. As a result, a special redemption of
Bonds will not result in a payment to bondholders more
than two months earlier than the payment date on which such
payment would otherwise have been received. The Bonds are
not otherwise subject to call at the option of the Trusts
except that the Class 1, Class 2 and Class 3 Bonds may,
in the case of each such class, be redeemed in whole,
but not in part, at the Trusts' option on any payment
date if the aggregate outstanding principal amount of
the Bonds of the class to be redeemed is less than 10
percent of its aggregate initial principal amount.
Trust A, B, C, E and F's Class 4 Bonds may be redeemed
in whole, but not in part, at the Trusts' option on any
payment date on or after July 1, 2001, October 1, 2001,
January 1, 2002, January 1, 2003 and April 1, 2003,
respectively, if only the Class 4 Bonds are then
outstanding (or on any earlier payment date if only the
Class 4 Bonds are then outstanding and the current
principal amount of Trust A, B, C, E and F's Class 4
Bonds are less than $10,560, $6,100, $10,500, $13,160 and
$12,925, respectively).
Trust D's Class 1 and Class 2 Bonds may be redeemed in
whole, but not in part, at the Trust's option on any payment
date on or after March 1, 1997 and the Class 3 Bonds may be
redeemed in whole, but not in part, at the Trust's
option on any payment date on or after March 1, 2002.
-43-
<PAGE>
Any such redemptions at the option of the Trusts shall be
at a price equal to 100 percent of the unpaid principal
amount of such Bonds plus such accrued interest.
<TABLE>
The maturities of the Collateralized Mortgage
Obligation Bonds are based on the prepayment speed
(liquidations) on the GNMA and FNMA certificates
collateralizing the Bonds and the reinvestment of
scheduled distributions at the assumed reinvestment
rates. Maturities for the succeeding five years
which estimates liquidations based on current market interest
rates are as follows:
<CAPTION>
Trust A Trust B Trust C Trust D Trust E Trust F
<S> <C> <C> <C> <C> <C> <C>
1996 $ 2,220 $ 3,062 $ 2,758 $ 2,325 $ 7,580 $ 2,899
1997 1,861 2,677 2,381 2,030 6,700 2,435
1998 1,564 2,345 2,056 1,770 5,934 2,055
1999 1,318 2,059 1,775 1,544 5,267 1,745
2000 1,116 1,813 1,534 1,345 4,689 1,494
</TABLE>
Note 4. Assets pledged:
<TABLE>
Trust A, B, C, D and F's Bonds are collateralized by the
Trusts' GNMA and FNMA certificates and the Collection Accounts
(see Note 3). Trust E Bonds are collateralized by Trust E's
GNMA certificates. Collections on the certificates are used
to meet the quarterly Bond interest payments and to reduce the
outstanding principal balance on the Bonds. As of December
31, 1995, certificates are guaranteed by the Government
National Mortgage Association and the Federal National
Mortgage Association as follows:
<CAPTION>
Government National Federal National
Mortgage Association Mortgage Association
<S> <C> <C>
Trust A $ 7,794 $ 3,937
Trust B 17,004 2,980
Trust C 12,596 5,319
Trust D 14,215 2,814
Trust E 54,520 N/A
Trust F 3,261 11,397
</TABLE>
-44-
<PAGE>
Note 5. Related parties:
Trusts A, B, C and D purchased from an affiliate,
Weyerhaeuser Mortgage Company, GNMA and FNMA certificates
which were used to collateralize the Bonds. The purchases
were at par value, plus Trust A and D's purchase premiums and less
Trust B and C's purchase discounts. The purchases were
financed with market-rate short-term debt from this affiliate
until proceeds from the bond issuance were obtained.
Trust E purchased from an affiliate, Weyerhaeuser
Mortgage Company, GNMA certificates which were used to
collateralize the Bonds. Trust F purchased from an
affiliate, Weyerhaeuser Mortgage Company, GNMA and FNMA
certificates which were used to collateralize the Bonds.
The purchases were at par value, less the purchase discounts.
The purchases were financed with the proeeds received from the bond
issuances and notes due to Weyerhaeuser Mortgage Company. The notes
bear interest at Bank of America's prime rate and interest shall
be compounded annually. The principal balances and all
accrued interest shall be due on each note on January 1,
2018 ("Maturity"). The principal and accrued interest on
the notes will be paid by the Trusts with the proceeds of a
capital contribution from Weyerhaeuser Financial Services,
Inc., to the extent that residual payments from the
GNMA and FNMA certificates are insufficient to retire the
debt and related interest.
The receivable from beneficial owner, Mortgage Securities
III Corporation, represents cash received from GNMA and
FNMA certificates in excess of bond principal and interest
payments required on Class 1 bonds which has been
advanced to the beneficial owner. This amount is non-
interest bearing and has no fixed repayment terms.
Certain ongoing administrative and accounting functions
are provided by the beneficial owner at no cost to each
Trust.
-45-
<PAGE>
Note 6. Results of operations:
All results of operations will be transferred to
the beneficial owner of the Trusts. Mortgage
Securities III Corporation will be responsible for all
tax liabilities incurred relating to the Trusts' operations.
Note 7. Investment securities:
<TABLE>
All investment securities held by the Trusts are classified
as "held to maturity". The amortized cost and estimated
market values of investments in debt securities are as
follows:
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Held to Maturity:
Mortgage-backed
Securities
Trust A $ 11,772 $ 717 $ - $ 12,489
Trust B 19,751 1,245 - 20,996
Trust C 17,721 1,089 - 18,810
Trust D 17,097 755 - 17,852
Trust E 54,032 2,631 - 56,663
Trust F 14,604 808 - 15,412
Per the terms of the prospectus, the Trusts are
legally precluded from selling the investments in debt
securities, except in the case of a call of the
Collateralized Mortgage Obligation bonds as discussed in
Note 3.
</TABLE>
-46-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust E
Schedule IV - Indebtedness to Related Parties - Not Current
December 31, 1995
(Dollar amounts in thousands)
Name of December 25, Indebtedness to December 31,
Related Party 1994 Additions Deductions 1995
<S> <C> <C> <C> <C>
Weyerhaeuser
Mortgage Company $29,953 $2,752 $ - $32,705
On December 22, 1987, the Trust purchased from an
affiliate, Weyerhaeuser Mortgage Company, GNMA certificates
which were used to collateralize the Bonds. The
purchase was financed with the proceeds received from the
bond issuance and an interest bearing note due to
Weyerhaeuser Mortgage Company.
</TABLE>
-47-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust F
Schedule IV - Indebtedness to Related Parties - Not Current
December 31, 1995
(Dollar amounts in thousands)
Name of December 25, Indebtedness to December 31,
Related Party 1994 Additions Deductions 1995
<S> <C> <C> <C> <C>
Weyerhaeuser
Mortgage Company $14,561 $1,338 $ - $15,899
On March 30, 1988, the Trust purchased from an
affiliate, Weyerhaeuser Mortgage Company, GNMA and FNMA
certificates which were used to collateralize the Bonds. The
purchase was financed with the proceeds received from the
bond issuance and an interest bearing note due to
Weyerhaeuser Mortgage Company.
</TABLE>
-48-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust A
Schedule XIII - Other Security Investments
December 31, 1995
(Dollar amounts in thousands)
Number of
Certificates Market
Type of Security Held Cost1<F1> Value2<F2>
<S> <C> <C> <C>
Government National
Mortgage Association
Certificates 28 $ 7,794 $ 8,302
Federal National
Mortgage Association
Certificates 14 3,937 4,187
-- ------ ------
42 11,731 12,489
Plus: Unamortized
premium - 41 -
-- ------- -------
42 $11,772 $12,489
== ======= =======
<FN>
<F1>
1 Cost represents the uncollected principal balance of the
mortgage loans underlying the certificates. Investments
are grouped and are carried at cost plus
unamortized premium on the balance sheet.
<F2>
2 Market value is an estimate based on the most current
information available.
</FN>
</TABLE>
-49-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust B
Schedule XIII - Other Security Investments
December 31, 1995
(Dollar amounts in thousands)
Number of
Certificates Market
Type of Security Held Cost1<F1> Value2<F2>
<S> <C> <C> <C>
Government National
Mortgage Association
Certificates 33 $17,004 $17,851
Federal National
Mortgage Association
Certificates 26 2,980 3,145
-- ------- -------
59 19,984 20,996
Less: Unamortized
discount - (233) -
-- ------- -------
59 $19,751 $20,996
== ======= =======
<FN>
<F1>
1 Cost represents the uncollected principal balance of the
mortgage loans underlying the certificates. Investments
are grouped and are carried at cost less unamortized
discount on the balance sheet.
<F2>
2 Market value is an estimate based on the most current
information available.
</FN>
</TABLE>
-50-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust C
Schedule XIII - Other Security Investments
December 31, 1995
(Dollar amounts in thousands)
Number of
Certificates Market
Type of Security Held Cost1<F1> Value2<F2>
<S> <C> <C> <C>
Government National
Mortgage Association
Certificates 26 $ 12,596 $13,208
Federal National
Mortgage Association
Certificates 29 5,319 5,602
-- ------- -------
55 17,915 18,810
Less: Unamortized
discount - (194) -
-- -------- -------
55 $ 17,721 $18,810
== ======== =======
<FN>
<F1>
1 Cost represents the uncollected principal balance of the
mortgage loans underlying the certificates. Investments
are grouped and are carried at cost less unamortized
discount on the balance sheet.
<F2>
2 Market value is an estimate based on the most current
information available.
</FN>
</TABLE>
-51-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust D
Schedule XIII - Other Security Investments
December 31, 1995
(Dollar amounts in thousands)
Number of
Certificates Market
Type of Security Held Cost1<F1> Value2<F2>
<S> <C> <C> <C>
Government National
Mortgage Association
Certificates 23 $14,215 $14,888
Federal National
Mortgage Association
Certificates 16 2,814 2,964
-- ------- -------
39 17,029 17,852
Plus: Unamortized
premium - 68 -
-- ------- -------
39 $17,097 $17,852
== ======= =======
<FN>
<F1>
1 Cost represents the uncollected principal balance of the
mortgage loans underlying the certificates. Investments
are grouped and are carried at cost plus
unamortized premium on the balance sheet.
<F2>
2 Market value is an estimate based on the most current
information available.
</FN>
</TABLE>
-52-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust E
Schedule XIII - Other Security Investments
December 31, 1995
(Dollar amounts in thousands)
Number of
Certificates Market
Type of Security Held Cost1<F1> Value2<F2>
<S> <C> <C> <C>
Government National
Mortgage Association
Certificates 76 $54,520 $56,663
Less: Unamortized
discount - (488) -
-- ------- -------
76 $54,032 $56,663
== ======= =======
<FN>
<F1>
1 Cost represents the uncollected principal balance of the
mortgage loans underlying the certificates. Investments
are grouped and are carried at cost less unamortized
discount on the balance sheet.
<F2>
2 Market value is an estimate based on the most current
information available.
</FN>
</TABLE>
-53-
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust F
Schedule XIII - Other Security Investments
December 31, 1995
(Dollar amounts in thousands)
Number of
Certificates Market
Type of Security Held Cost1<F1> Value2<F2>
<S> <C> <C> <C>
Government National
Mortgage Association
Certificates 8 $ 3,261 $ 3,462
Federal National
Mortgage Association
Certificates 46 11,397 11,950
-- ------ -------
54 14,658 15,412
Less: Unamortized
discount - (54) -
-- -------- --------
54 $ 14,604 $ 15,412
== ======== ========
<FN>
<F1>
1 Cost represents the uncollected principal balance of the
mortgage loans underlying the certificates. Investments
are grouped and are carried at cost less unamortized
discount on the balance sheet.
<F2>
2 Market value is an estimate based on the most current
information available.
</FN>
</TABLE>
-54-
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibits
Page
3(a) Certificate of Incorporation of the Mortgage
Securities III Corporation (incorporated by
reference to Exhibit 3(a) to Registration
Statement on Form S-11 dated December 18, 1985). *
3(b) Bylaws of Mortgage Securities III Corporation
(incorporated by reference to Exhibit 3(b) to
Registration Statement on Form S-11 dated
December 18, 1985). *
4(a) Form of Indenture dated June 1, 1986 between
the Trust and Texas Commerce Bank National
Association, as trustee, relating to GNMA and
FNMA Collateralized Mortgage Obligations
(incorporated by reference to Exhibit 4(a) to
Registration Statement on Form S-11 dated
December 18, 1985). *
4(a) Form of Supplemental Indenture dated as of
June 1, 1986 (incorporated by reference to
Exhibit 4(a) to Registration Statement on
Form S-11 dated July 11, 1986). *
*Incorporated by reference.
-55-
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 6543
<SECURITIES> 0
<RECEIVABLES> 9625
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 150783
<CURRENT-LIABILITIES> 0
<BONDS> 124215
<COMMON> 0
0
0
<OTHER-SE> (25269)
<TOTAL-LIABILITY-AND-EQUITY> 150783
<SALES> 0
<TOTAL-REVENUES> 12661
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17191
<INCOME-PRETAX> (4530)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4530)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
