UNITED STATES 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 December 28, 1997
Commission File Number 33-2253
MORTGAGE SECURITIES III TRUSTS A, B, C, D, E AND F
Delaware Trusts (IRS Employer Identification
No. 91-1314537)
Wilmington, DE 19890
Telephone (302) 651-1730
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>
Mortgage Securities III Trusts A, B, C, D, E and F
Table of Contents
Page No.
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..........................................................7
Report of Independent Public Accountants...........................8
Statements of Operations for the Three Years Ended
December 28, 1997
Trust A ............................................... 10
Trust B ............................................... 11
Trust C ............................................... 12
Trust D ............................................... 13
Trust E ............................................... 14
Trust F ............................................... 15
Balance Sheets as of December 28, 1997 and December 29, 1996
Trust A ............................................... 16
Trust B ............................................... 17
Trust C ............................................... 18
Trust D ............................................... 19
Trust E ............................................... 20
Trust F ............................................... 21
<PAGE>
Mortgage Securities III Trusts A, B, C, D, E and F
Table of Contents
Page No.
--------
Statements of Changes in Owner's Beneficial Interest for the
Three Years Ended December 28, 1997
Trust A ............................................... 22
Trust B ............................................... 23
Trust C ............................................... 24
Trust D ............................................... 25
Trust E ............................................... 26
Trust F ............................................... 27
Statements of Cash Flows for the Three Years Ended
December 28, 1997
Trust A ............................................... 28
Trust B ............................................... 29
Trust C ............................................... 30
Trust D ............................................... 31
Trust E ............................................... 32
Trust F ............................................... 33
Notes to Financial Statements for the Three Years Ended
December 28, 1997.............................................. 34
Schedule IV-Indebtedness to Related Parties - Not Current
Trust E ............................................... 41
Trust F ............................................... 42
Schedule XIII-Other Security Investments
Trust A ............................................... 43
Trust B ............................................... 44
Trust C ............................................... 45
Trust D ............................................... 46
Trust E ............................................... 47
Trust F ............................................... 48
INDEX TO EXHIBITS................................................49
<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 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.
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.
<TABLE>
<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 14, 1997, 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 1997, 1996 and 1995 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.
The following table outlines principal payments made by
the Trusts during 1997 to the Class 2, 3 and 4 bondholders
(in thousands). Accrued interest was added to the
principal balance of Class 4 bonds for Collateralized
Mortgage Obligation Bonds Trusts B, E and F.
<TABLE>
<CAPTION>
Class 2 Class 3 Class 4 Total
------- ------- -------- --------
<S> <C> <C> <C> <C>
Trust A $ - $ - $ 10,068 $ 10,068
Trust B - 1,014 1,751 2,765
Trust C - - 2,079 2,079
Trust D 302 2,106 N/A 2,408
Trust E - 2,681 3,902 6,583
Trust F - 1,152 9,319 10,471
</TABLE>
This rate of payment is sufficient to retire the Bonds
prior to their stated maturity.
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 28, 1997, are included herein.
- 2 -
<PAGE>
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 28, 1997.
- 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
(1) The following documents are filed as part of this report:
(a) Report of Independent Public Accountants.
(b) Financial Statements:
Statements of Operations
Trust A. for the Three Years Ended December 28,1997
Trust B. for the Three Years Ended December 28,1997
Trust C. for the Three Years Ended December 28,1997
Trust D. for the Three Years Ended December 28,1997
Trust E. for the Three Years Ended December 28,1997
Trust F. for the Three Years Ended December 28,1997
Balance Sheets
Trust A. as of December 28, 1997 and December 29,1996
Trust B. as of December 28, 1997 and December 29,1996
Trust C. as of December 28, 1997 and December 29,1996
Trust D. as of December 28, 1997 and December 29,1996
Trust E. as of December 28, 1997 and December 29,1996
Trust F. as of December 28, 1997 and December 29,1996
Statements of Changes in Owner's Beneficial Interest
Trust A. for the Three Years Ended December 28,1997
Trust B. for the Three Years Ended December 28,1997
Trust C. for the Three Years Ended December 28,1997
Trust D. for the Three Years Ended December 28,1997
Trust E. for the Three Years Ended December 28,1997
Trust F. for the Three Years Ended December 28,1997
Statements of Cash Flows
Trust A. for the Three Years Ended December 28,1997
Trust B. for the Three Years Ended December 28,1997
Trust C. for the Three Years Ended December 28,1997
Trust D. for the Three Years Ended December 28,1997
Trust E. for the Three Years Ended December 28,1997
Trust F. for the Three Years Ended December 28,1997
Notes to Financial Statements for the Three Years
Ended December 28,1997.
- 5 -
<PAGE>
(c) 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
(d) 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).
(2) Exhibits are included in Item (1)(d) above.
(3) Financial Statement Schedules required by Regulation S-X are
included in Item (1)(c) above.
- 6 -
<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 11th day of February 1998.
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/
Denise M. Geran
Financial Services Officer
- 7 -
<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 28, 1997 and
December 29, 1996, 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 29, 1997. 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
28, 1997 and December 29, 1996, and the results of their operations
and their cash flows for each of the three years in the period
ended December 28, 1997 in conformity with generally accepted
accounting principles.
- 8 -
<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
Seattle, WA
February 11, 1998
- 9 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust A
Statements of Operations
For the Three Years Ended December 28, 1997
(Dollar amounts in thousands)
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Interest income $ 676 $ 1,035 $ 1,203
Interest expense 594 970 1,144
Other income 425 - -
--------- --------- ---------
Net income $ 507 $ 65 $ 59
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
- 10 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust B
Statements of Operations
For the Three Years Ended December 28, 1997
(Dollar amounts in thousands)
1997 1996 1995
-------- --------- ---------
<S> <C> <C> <C>
Interest income $ 1,573 $ 1,634 $ 1,927
Interest expense 1,481 1,573 1,870
--------- --------- ---------
Net income $ 92 $ 61 $ 57
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
- 11 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust C
Statements of Operations
For the Three Years Ended December 28, 1997
(Dollar amounts in thousands)
1997 1996 1995
-------- --------- ---------
<S> <C> <C> <C>
Interest income $ 1,312 $ 1,441 $ 1,725
Interest expense 1,426 1,490 1,761
--------- --------- ---------
Net loss $ (114) $ (49) $ (36)
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
- 12 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust D
Statements of Operations
For the Three Years Ended December 28, 1997
(Dollar amounts in thousands)
1997 1996 1995
-------- --------- ---------
<S> <C> <C> <C>
Interest income $ 1,145 $1,363 $ 1,554
Interest expense 1,198 1,357 1,538
--------- --------- ---------
Net income (loss) $ (53) $ 6 $ 16
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
- 13 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust E
Statements of Operations
For the Three Years Ended December 28, 1997
(Dollar amounts in thousands)
1997 1996 1995
-------- --------- ---------
<S> <C> <C> <C>
Interest income $ 3,994 $ 4,305 $ 4,854
Interest expense 4,716 5,195 5,387
Interest expense to affiliate 696 2,892 2,753
(Note 5)
--------- --------- ---------
Net loss $(1,418) $(3,782) $(3,286)
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
- 14 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust F
Statements of Operations
For the Three Years Ended December 28, 1997
(Dollar amounts in thousands)
1997 1996 1995
-------- --------- ---------
<S> <C> <C> <C>
Interest income $ 822 $ 1,211 $ 1,398
Interest expense 917 1,246 1,400
Interest expense to affiliate 180 1,068 1,338
(Note 5)
Other income 450 - -
--------- --------- ---------
Net income (loss) $ 175 $(1,103) $(1,340)
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
- 15 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust A
Balance Sheets
December 28, 1997 and December 29, 1996
(Dollar amounts in thousands)
1997 1996
-------- --------
<S> <C> <C>
Cash and equivalents:
Trust account $ - $ 1
Collection account (Notes 3 and 4) 2 769
2 770
Receivable from Beneficial Owner 1,263 -
Interest receivable - 85
Government National and Federal National
Mortgage Association Certificates, net
of unamortized premium of $0 and
$35 (Notes 2, 4 and 5) - 10,227
-------- --------
TOTAL ASSETS - TRUST A $ 1,265 $ 11,082
======== ========
Liabilities and Owner's Beneficial Interest
Interest payable $ - $ 305
Collateralized Mortgage Obligation bonds,
net (Notes 1, 2, 3, 4 and 5) - 10,019
Owner's Beneficial Interest:
Owner's beneficial interest 1 1
Retained earnings 1,264 757
-------- --------
Total Owner's Beneficial Interest 1,265 758
-------- --------
TOTAL LIABILITIES AND OWNER'S BENEFICIAL
INTEREST - TRUST A $1,265 $ 11,082
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
- 16 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust B
Balance Sheets
December 28, 1997 and December 29, 1996
(Dollar amounts in thousands)
1997 1996
-------- --------
<S> <C> <C>
Assets
Cash and equivalents:
Trust account $ 1 $ 1
Collection account (Notes 3 and 4) 699 897
-------- --------
700 898
Interest receivable 105 136
Government National and Federal National
Mortgage Association Certificates, net
of unamortized discount of $0 and
$197 (Notes 2, 4 and 5) 14,671 16,652
-------- --------
TOTAL ASSETS - TRUST B $ 15,476 $ 17,686
======== ========
Liabilities and Owner's Beneficial Interest
Interest payable $ 302 $ 472
Collateralized Mortgage Obligation bonds,
net (Notes 1, 2, 3, 4 and 5) 13,438 15,570
Owner's Beneficial Interest:
Owner's beneficial interest 1 1
Retained earnings 1,735 1,643
-------- --------
Total Owner's Beneficial Interest 1,736 1,644
-------- --------
TOTAL LIABILITIES AND OWNER'S BENEFICIAL
INTEREST - TRUST B $ 15,476 $ 17,686
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
- 17 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust C
Balance Sheets
December 28, 1997 and December 29, 1996
(Dollar amounts in thousands)
1997 1996
------- -------
<S> <C> <C>
Assets
Cash and equivalents:
Trust account $ 1 $ 1
Collection account (Notes 3 and 4) 889 900
------- --------
890 901
Interest receivable 87 108
Government National and Federal National
Mortgage Association Certificates, net
of unamortized discount of $0 and
$154 (Notes 2, 4 and 5) 12,238 14,182
------- --------
TOTAL ASSETS - TRUST C $ 13,215 $ 15,191
======== =========
Liabilities and Owner's Beneficial Interest
Interest payable $ 274 $ 426
Collateralized Mortgage Obligation bonds,
net (Notes 1, 2, 3, 4 and 5) 12,241 13,951
Owner's Beneficial Interest:
Owner's beneficial interest 1 1
Retained earnings 699 813
------- ---------
Total Owner's Beneficial Interest 700 814
------- ---------
TOTAL LIABILITIES AND OWNER'S BENEFICIAL
INTEREST - TRUST C $ 13,215 $ 15,191
======== =========
</TABLE>
The accompanying notes are an integral part of these statements.
- 18 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust D
Balance Sheets
December 28, 1997 and December 29, 1996
(Dollar amounts in thousands)
1997 1996
-------- ---------
<S> <C> <C>
Assets
Cash and equivalents:
Trust account $ 1 $ 1
Collection account (Notes 3 and 4) 120 239
-------- ---------
121 240
Receivable from beneficial owner 28 45
Interest receivable 88 107
Government National and Federal National
Mortgage Association Certificates, net
of unamortized premium of $0 and
$60 (Notes 2, 4 and 5) 12,697 15,095
-------- --------
TOTAL ASSETS - TRUST D $ 12,934 $ 15,487
======== ========
Liabilities and Owner's Beneficial Interest
Interest payable $ 90 $ 213
Collateralized Mortgage Obligation bonds,
net (Notes 1, 2, 3, 4 and 5) 12,494 14,801
Owner's Beneficial Interest:
Owner's beneficial interest 1 1
Retained earnings 349 472
-------- --------
Total Owner's Beneficial Interest 350 473
-------- --------
TOTAL LIABILITIES AND OWNER'S BENEFICIAL
INTEREST - TRUST D $12,934 $ 15,487
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
- 19 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust E
Balance Sheets
December 28, 1997 and December 29, 1996
(Dollar amounts in thousands)
1997 1996
-------- --------
<S> <C> <C>
Assets
Cash and equivalents:
Trust account $ 1 $ 1
Collection account (Notes 3 and 4) 2,312 2,120
-------- --------
2,313 $ 2,121
Interest receivable 281 336
Government National Mortgage Association
Certificates net of unamortized discount
of $0 and $339 (Notes 2, 4 and 5) 42,071 47,636
Deferred hedging costs (Note 2) - 320
---------- ---------
TOTAL ASSETS - TRUST E $44,665 $50,413
========== =========
Liabilities and Owner's Beneficial Interest
Interest payable $ 858 $ 986
Collateralized Mortgage Obligation bonds,
net (Notes 1, 2, 3, 4 and 5) 35,819 40,717
Payable to Weyerhaeuser Mortgage Company - 35,597
(Note 5)
Owner's Beneficial Interest:
Owner's beneficial interest 36,294 1
Accumulated deficit (28,306) (26,888)
---------- ---------
Total Owner's Beneficial Interest 7,988 (26,887)
---------- ---------
TOTAL LIABILITIES AND OWNER'S BENEFICIAL
INTEREST - TRUST E $44,665 $50,413
========= ========
</TABLE>
The accompanying notes are an integral part of these statements.
- 20 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust F
Balance Sheets
December 28, 1997 and December 29, 1996
(Dollar amounts in thousands)
1997 1996
------- -------
<S> <C> <C>
Assets
Cash and equivalents:
Trust account $ - $ 1
Collection account (Notes 3 and 4) 2 648
------- -------
2 649
Receivable from beneficial owner 2,832 -
Interest receivable - 90
Government National and Federal National
Mortgage Association Certificates, net
of unamortized discount of $0
and $25 (Notes 2, 4 and 5) - 11,949
Deferred hedging costs (Note 2) - 85
------- -------
TOTAL ASSETS - TRUST F $ 2,834 $ 12,773
======= =======
Liabilities and Owner's Beneficial Interest
Interest payable $ - $ 304
Collateralized Mortgage Obligation bonds,
net (Notes 1, 2, 3, 4 and 5) - 9,990
Payable to Weyerhaeuser Mortgage Company
(Note 5) - 9,194
Owner's Beneficial Interest:
Owner's beneficial interest 9,375 1
Accumulated deficit (6,541) (6,716)
------- -------
Total Owner's Beneficial Interest 2,834 (6,715)
------- -------
TOTAL LIABILITIES AND OWNER'S BENEFICIAL
INTEREST - TRUST F $ 2,834 $ 12,773
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
- 21 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust A
Statements of Changes in Owner's Beneficial Interest
For the Three Years Ended December 28, 1997
(Dollar amounts in thousands)
Owners
Beneficial Retained
Interest Earnings Total
--------- --------- --------
<S> <C> <C> <C>
Balance at December 25, 1994 $ 1 $ 2,379 $2,380
Net income - 59 59
--------- --------- --------
Balance at December 31, 1995 1 2,438 2,439
Dividends paid - (1,746) (1,746)
Net income - 65 65
--------- --------- --------
Balance at December 29, 1996 1 757 758
Net income - 507 507
--------- --------- --------
Balance at December 28, 1997 $ 1 $ 1,264 $1,265
</TABLE>
The accompanying notes are an integral part of these statements.
- 22 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust B
Statements of Changes in Owner's Beneficial Interest
For the Three Years Ended December 28, 1997
(Dollar amounts in thousands)
Owners
Beneficial Retained
Interest Earnings Total
--------- --------- --------
<S> <C> <C> <C>
Balance at December 25, 1994 $ 1 $ 1,895 $1,896
Net income - 57 57
--------- --------- --------
Balance at December 31, 1995 1 1,952 1,953
Dividends paid - (370) (370)
Net income - 61 61
--------- --------- --------
Balance at December 29, 1996 1 1,643 1,644
Net income - 92 92
--------- --------- --------
Balance at December 28, 1997 $ 1 $ 1,735 $1,736
</TABLE>
The accompanying notes are an integral part of these statements.
- 23 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust C
Statements of Changes in Owner's Beneficial Interest
For the Three Years Ended December 28, 1997
(Dollar amounts in thousands)
Owners
Beneficial Retained
Interest Earnings Total
--------- --------- --------
<S> <C> <C> <C>
Balance at December 25, 1994 $ 1 $ 1,134 $1,135
Net loss - (36) (36)
--------- --------- --------
Balance at December 31, 1995 1 1,098 1,099
Dividends paid - (236) (236)
Net loss - (49) (49)65
--------- --------- --------
Balance at December 29, 1996 1 813 814
Net loss - (114) (114)
--------- --------- --------
Balance at December 28, 1997 $ 1 $ 699 $ 700
</TABLE>
The accompanying notes are an integral part of these statements.
- 24 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust D
Statements of Changes in Owner's Beneficial Interest
For the Three Years Ended December 28, 1997
(Dollar amounts in thousands)
Owners
Beneficial Retained
Interest Earnings Total
--------- --------- --------
<S> <C> <C> <C>
Balance at December 25, 1994 $ 1 $ 2,115 $2,116
Net income - 16 16
--------- --------- --------
Balance at December 31, 1995 1 2,131 2,132
Dividends paid - (1,665) (1,665)
Net income - 6 6
--------- --------- --------
Balance at December 29, 1996 1 472 473
Dividends paid - (70) (70)
Net loss - (53) (53)
--------- --------- --------
Balance at December 28, 1997 $ 1 $ 349 $ 350
</TABLE>
The accompanying notes are an integral part of these statements.
- 25 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust E
Statements of Changes in Owner's Beneficial Interest
For the Three Years Ended December 28, 1997
(Dollar amounts in thousands)
Owners
Beneficial Accumulated
Interest Deficit Total
---------- ----------- --------
<S> <C> <C> <C>
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)
Dividends paid - (1,662) (1,662)
Net loss - (3,782) (3,782)
---------- ----------- --------
Balance at December 29, 1996 1 (26,888) (26,887)
Contribution 36,293 - 36,293
Net loss - (1,418) (1,418)
---------- ----------- --------
Balance at December 28, 1997 $ 36,294 $(28,306) $ 7,988
</TABLE>
The accompanying notes are an integral part of these statements.
- 26 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust F
Statements of Changes in Owner's Beneficial Interest
For the Three Years Ended December 28, 1997
(Dollar amounts in thousands)
Owners
Beneficial Accumulated
Interest Deficit Total
---------- ----------- --------
<S> <C> <C> <C>
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)
Contribution - 5,837 5,837
Net loss - (1,103) (1,103)
---------- ----------- --------
Balance at December 29, 1996 1 (6,716) (6,715)
Contribution 9,374 - 9,374
Net income - 175 175
---------- ----------- --------
Balance at December 28, 1997 $ 9,375 $ (6,541) $ 2,834
</TABLE>
The accompanying notes are an integral part of these statements.
- 27 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust A
Statements of Cash Flows
For the Three Years Ended December 28, 1997
(Dollar amounts in thousands)
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operations:
Net income $ 507 $ 65 $ 59
Non-cash charges to income:
Amortizations 3 13 19
Write-offs 81 - -
Changes in:
Interest receivable 85 13 16
Receivable from beneficial owner (1,263) 1,746 -
Interest payable (305) (50) (69)
-------- -------- --------
Net cash flows from operations (892) 1,787 25
-------- -------- --------
Cash flows from investing
activities:
Sale of/collections on mortgage
backed certificates 10,192 1,539 2,059
Cash flows from financing
activities:
Dividends paid - (1,746) -
Payments on collateralized
mortgage obligation bonds. (10,068) (1,655) (2,260)
-------- -------- --------
Cash flows from financing activities (10,068) (3,401) (2,260)
-------- -------- --------
Net increase (decrease) in cash and
equivalents (768) (75) (176)
Cash and equivalents at beginning
of year 770 845 1,021
-------- -------- --------
Cash and equivalents at end of year $ 2 $ 770 $ 845
======== ======== ========
Supplemental disclosure:
Cash paid during the year for
interest $ 850 $1,012 $ 1,201
</TABLE>
The accompanying notes are an integral part of these statements.
- 28 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust B
Statements of Cash Flows
For the Three Years Ended December 28, 1997
(Dollar amounts in thousands)
1997 1996 1995
-------- -------- ---------
<S> <C> <C> <C>
Cash flows from operations:
Net income $ 92 $ 61 $ 57
Non-cash charges to income:
Amortizations 3 30 23
Write-offs 99 - -
Accretion of interest 334 1,265 1,157
Changes in:
Interest receivable 31 25 21
Receivable from beneficial owner - 370 -
Interest payable (170) (98) (86)
-------- -------- ---------
Net cash flows from operations 389 1,653 1,172
-------- -------- ---------
Cash flows from investing
activities:
Collections on mortgage backed
certificates 2,178 3,135 2,807
Cash flows from financing
activities:
Dividends paid - (370) -
Payments on collateralized
mortgage obligation bonds (2,765) (4,524) (4,068)
-------- -------- ---------
Cash flows from financing activities (2,765) (4,894) (4,068)
-------- -------- ---------
Net decrease in cash and equivalents (198) (106) (89)
Cash and equivalents at beginning
of year 898 1,004 1,093
-------- -------- ---------
Cash and equivalents at end of year $ 700 $ 898 $ 1,004
-------- -------- ---------
Supplemental disclosure:
Cash paid during the year for
interest $ 1,353 $ 340 $ 741
</TABLE>
The accompanying notes are an integral part of these statements.
- 29 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust C
Statements of Cash Flows
For the Three Years Ended December 28, 1997
(Dollar amounts in thousands)
1997 1996 1995
------- -------- --------
<S> <C> <C> <C>
Cash flows from operations:
Net loss $ (114) $ (49) $ (36)
Non cash charges:
Amortizations 13 55 41
Write-offs 202 - -
Changes in:
Interest receivable 21 30 16
Receivable from beneficial owner - 236 -
Interest payable (152) (109) (75)
------- -------- --------
Net cash flows from operations (30) 163 (54)
------- -------- --------
Cash flows from investing activities
Collections on mortgage backed
certificates 2,098 3,579 2,592
Cash flows from financing
activities:
Dividends paid - (236) -
Payments on collateralized
mortgage obligation bonds (2,079) (3,673) (2,485)
------- -------- --------
Cash flows from financing activities (2,079) (3,909) (2,485)
------- -------- --------
Net increase (decrease) in cash and
equivalents (11) (167) 53
Cash and equivalents at beginning
of year 901 1,068 1,015
------- -------- --------
Cash and equivalents at end of year $ 890 $ 901 $ 1,068
======= ======== ========
Supplemental disclosure:
Cash paid during the year for
interest $ 1,207 $1,504 $ 1,767
</TABLE>
The accompanying notes are an integral part of these statements.
- 30 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust D
Statements of Cash Flows
For the Three Years Ended December 28, 1997
(Dollar amounts in thousands)
1997 1996 1995
-------- --------- --------
<S> <C> <C> <C>
Cash flows from operations:
Net income(loss) $ (53) $ 6 $ 16
Non-cash charges:
Amortizations 7 19 20
Write-offs 154 - -
Changes in:
Interest receivable 19 17 12
Receivable from beneficial owner 17 1,608 (81)
Interest payable (123) (28) (25)
-------- --------- --------
Net cash flows from operations 21 1,622 (58)
-------- --------- --------
Cash flows from investing
activities:
Collections on mortgage backed
certificates 2,338 1,994 1,784
Cash flows from financing
activities:
Dividends paid (70) (1,665) -
Payments on collateralized
mortgage obligation bonds (2,408) (1,935) (1,781)
-------- --------- --------
Cash flows from financing activities (2,478) (3,600) (1,781)
-------- --------- --------
Net increase (decrease) in cash
and equivalents (119) 16 (55)
Cash and equivalents at beginning
of year 240 224 279
-------- --------- --------
Cash and equivalents at end of year $ 121 $ 240 $ 224
======== ========= ========
Supplemental disclosure:
Cash paid during the year for
interest $ 1,220 $ 1,372 $ 1,551
</TABLE>
The accompanying notes are an integral part of these statements.
- 31 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust E
Statements of Cash Flows
For the Three Years Ended December 28, 1997
(Dollar amounts in thousands)
1997 1996 1995
-------- --------- ---------
<S> <C> <C> <C>
Cash flows from operations:
Net loss $(1,418) $(3,782) $(3,286)
Non-cash charges:
Amortizations 758 858 474
Write-offs (17) - -
Accretion of interest 925 3,501 3,203
Changes in:
Interest receivable 55 53 38
Receivable from beneficial owner - 1,662 -
Interest payable (128) (157) (133)
Interest payable to
Weyerhaeuser Mortgage Company (18,656) 2,892 2,753
(Note 5)
-------- --------- ---------
Net cash flows from operations (18,481) 5,027 3,049
-------- --------- ---------
Cash flows from investing
activities:
Collections on mortgage backed
certificates 5,904 6,544 6,038
Cash flows from financing
activities:
Contribution 36,293 - -
Dividends paid - (1,662) -
Payments on collateralized
mortgage obligation bonds (6,583) (10,505) (9,082)
Payments to Weyerhaeuser
Mortgage Company - (16,941) -
-------- --------- ---------
Cash flows from financing activities: 12,769 (12,167) (9,082)
-------- --------- ---------
Net (decrease) increase in cash
and equivalents 192 (596) 5
Cash and equivalents at beginning
of year 2,121 2,717 2,712
-------- --------- ---------
Cash and equivalents at end of year $ 2,313 $ 2,121 $ 2,717
======== ========= =========
Supplemental disclosure:
Cash paid during the year for
interest $23,118 $ 845 $ 1,716
</TABLE>
The accompanying notes are an integral part of these statements.
- 32 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust F
Statements of Cash Flows
For the Three Years Ended December 28, 1997
(Dollar amounts in thousands)
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operations:
Net income (loss) $ 175 $(1,103) $(1,340)
Non-cash charges to income:
Amortizations 71 187 144
Write-offs 260 - -
Accretion of interest 415 776 710
Changes in:
Interest receivable 90 21 17
Interest payable (304) (85) (75)
Receivable from beneficial owner (2,832) 1,937 -
Interest payable to
Weyerhaeuser Mortgage
Company (Note 5) (8,570) 1,068 1,338
-------- -------- --------
Net cash flows from operations (10,695) 2,801 794
-------- -------- --------
Cash flows from investing
activities:
Sale of/collections on mortgage
backed certificates 11,974 2,684 1,971
Cash flows from financing
activities:
Contribution 9,374 5,837 -
Payments on Weyerhaeuser
Mortgage Company note (624) (7,773) -
Payments on collateralized
mortgage obligation bonds (10,676) (3,585) (3,317)
-------- -------- --------
Cash flows from financing activities (1,926) (5,521) (3,317)
-------- -------- --------
Net increase (decrease) in cash
and equivalents (647) (36) (552)
Cash and equivalents at beginning
of year 649 685 1,237
-------- -------- --------
Cash and equivalents at end of year $ 2 $ 649 $ 685
-------- -------- --------
Supplemental disclosure:
Cash paid during the year for
interest $ 9,616 $ 339 $ 606
</TABLE>
The accompanying notes are an integral part of these statements.
- 33 -
<PAGE>
Mortgage Securities III Trusts A, B, C, D, E and F
Notes to Financial Statements
For the Three Years Ended December 28, 1997
(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.
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.
- 34 -
<PAGE>
<TABLE>
<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 1997, 1996 and 1995, primarily 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 affect
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.
In 1997, the bonds in Trusts A and F were called and any
remaining discounts were written off. The bond discounts
on Trusts B, C, and D were written off as management
intends to prepay the bonds at the earliest allowable
prepayment date and the amounts are no longer material.
The bond discount for Trust E is amortized on a straight
line basis over the remaining life of the instruments.
Cash and equivalents include cash held in the collection
accounts and invested in short term investments with
original maturities of less than three months.
The amortized cost and estimated market values of
investments in debt securities are as follows:
- 35 -
<PAGE>
<TABLE>
<CAPTION>
Gross Gross Estimated
Unrealized Unrealized Market
Held to Maturity: Cost Gains Losses Value
-------- -------- -------- ---------
Mortgage-backed
Securities
<S> <C> <C> <C> <C>
Trust A $ N/A $ N/A $ N/A $ N/A
Trust B 14,671 800 - 15,471
Trust C 12,238 654 - 12,892
Trust D 12,697 632 - 13,329
Trust E 42,071 1,517 - 43,588
Trust F N/A N/A N/A N/A
</TABLE>
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.
Note 3.Collateralized Mortgage Obligation Bonds:
<TABLE>
<CAPTION>
Collateralized Mortgage Obligation Bonds at December 28,
1997 and December 29, 1996 consist of the following:
1997 1996
Trust A: -------- -------
--------
<S> <C> <C>
Class 4 - 9.20%, stated maturity
July 1, 2016 (repaid October 1,1997) $ - $10,068
Unamortized discount - (49)
-------- -------
- $10,019
Trust B:
--------
Class 3 - 9.00%, stated maturity
April 1, 2010 (repaid April 1, 1997) $ - $ 1,014
Class 4 - 9.00%, stated maturity
October 1, 2016 13,438 14,855
Unamortized discount (299)
-------- -------
$13,438 $15,570
Trust C:
--------
Class 4 - 9.00%, stated maturity
January 1, 2017 $12,241 $14,320
Unamortized discount (369)
-------- -------
$12,241 $13,951
Trust D:
--------
Class 2 - 8.55%, stated maturity
December 1, 2014 (repaid March 3,1997) $ - $ 302
Class 3 - 8.60%, stated maturity
March 1, 2017 12,494 14,600
Unamortized discount (101)
-------- -------
$12,494 $14,801
- 36 -
<PAGE>
Trust E:
--------
Class 3 - 9.00%, stated maturity
January 1, 2006 (repaid April 1,1997) $ - $ 2,681
Class 4 - 9.00%, stated maturity
January 1, 2018 38,140 41,117
Unamortized discount (2,321) (3,081)
-------- -------
$35,819 $40,717
</TABLE>
<TABLE>
Trust F:
--------
<S> <C> <C>
Class 3 - 9.00%, stated maturity
January 1, 2014 (repaid July 1,1997) $ $1,152
Class 4 - 9.00%, stated maturity
April 1, 2018 (repaid October 1,1997) 9,109
Unamortized discount (271)
-------- -------
$ - $9,990
</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.
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 (a) Trust B,
C, and E's Class 4 Bonds may be redeemed in whole, but not
in part, at the Trusts' option on any payment date on or
- 37 -
<PAGE>
after October 1, 2001, January 1, 2002 and January 1, 2003,
respectively, (or on any earlier payment date if the
current principal amount of Trust B, C and E's Class 4
Bonds are less than $6,100, $10,500 and $13,160,
respectively) and (b) Trust D's 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, or on any
earlier 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.
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 accrued interest.
The maturities of the Collateralized Mortgage Obligation
Bonds are based on the prepayment speed (liquidation's) 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:
<TABLE>
<CAPTION>
Trust Trust Trust Trust Trust Trust
A B C D E F
<S> <C> <C> <C> <C> <C>
1998 N/A 2,598 2,825 2,482 5,339 N/A
1999 N/A 2,223 2,213 1,253 4,827 N/A
2000 N/A 1,907 1,733 1,437 4,374 N/A
2001 N/A 1,632 1,358 1,203 3,976 N/A
2002 N/A 1,400 1,043 988 3,605 N/A
</TABLE>
- 38 -
<PAGE>
Note 4. Assets pledged:
Trust B, C and D's Bonds are collateralized by the Trusts'
GNMA and FNMA certificates and the Collection Accounts (see
Note 3). Trust E's 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 28, 1997, certificates are guaranteed by the
Government National Mortgage Association and the Federal
National Mortgage Association as follows:
<TABLE>
<CAPTION>
Government National Federal National
Mortgage Association Mortgage Association
<S> <C> <C>
Trust A $ N/A $ N/A
Trust B 12,648 2,023
Trust C 8,712 3,526
Trust D 11,126 1,571
Trust E 42,071 N/A
Trust F N/A N/A
</TABLE>
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 proceeds received from the
Bond issuances and notes due to Weyerhaeuser Mortgage
Company. The notes accrued interest at Bank of America's
prime rate and compounded interest annually. Both the
principal and interest related to the Weyerhaeuser Mortgage
Company payables were paid off by Weyerhaeuser Financial
Services, Inc. (Beneficial Owner) in March 1997, in
anticipation of the sale of Weyerhaeuser Mortgage Company to
an unrelated third party by Weyerhaeuser Financial Services,
Inc. and the Weyerhaeuser Company. In August 1997,
Weyerhaeuser Financial Services, Inc. contributed capital to
Trusts E & F, increasing beneficial owner's interest.
The Beneficial Owner advanced funds to Trusts A and F during
the third quarter. The funds were repaid during the fourth
quarter. No interest was charged as the advances were
treated as a current payable.
- 39 -
<PAGE>
Certain ongoing administrative and accounting functions are
provided by the Beneficial Owner at no cost to each Trust.
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.
- 40 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust E
Schedule IV - Indebtedness to Related Parties - Not Current
December 28, 1997
(Dollar amounts in thousands)
Name of December 29, Indebtedness to December 28,
Related Party 1996 Additions Deductions 1997
------------- ------------ ----------- ---------- ------------
<S> <C> <C> <C> <C>
Weyerhaeuser
Mortgage Company $35,597 $ 696 $36,293 $ 0
Weyerhaeuser
Financial Services, $ 0 $36,293 $36,293 $ 0
Inc.
</TABLE>
On December 22, 1987, Trust E purchased from an affiliate,
Weyerhaeuser Mortgage Company, GNMA certificates which were used to
collateralize the Bonds. The purchases were at par value, less the
purchase discounts. The purchases were financed with the proceeds
received from the Bond issuances and a note due to Weyerhaeuser
Mortgage Company. The note accrued interest at Bank of America's
prime rate and compounded interest annually. Both the principal and
interest related to the Weyerhaeuser Mortgage Company payable were
paid off in March 1997, in anticipation of the sale of Weyerhaeuser
Mortgage Company to an unrelated third party by Weyerhaeuser
Financial Services, Inc. and Weyerhaeuser Company. In August 1997,
Weyerhaeuser Financial Services, Inc. (Beneficial Owner) contributed
capital to Trusts E, increasing Beneficial Owner's interest.
- 41 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust F
Schedule IV - Indebtedness to Related Parties - Not Current
December 28, 1997
(Dollar amounts in thousands)
Name of December 29, Indebtedness to December 28,
Related Party 1996 Additions Deductions 1997
------------- ------------ ----------- ---------- ------------
<S> <C> <C> <C> <C>
Weyerhaeuser
Mortgage Company $ 9,194 $ 180 $ 9,374 $ 0
Weyerhaeuser
Financial Services, $ 0 $9,374 $ 9,374 $ 0
Inc.
</TABLE>
On March 30, 1988, 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 proceeds received from the Bond issuances and notes due to
Weyerhaeuser Mortgage Company. The notes accrued interest at Bank
of America's prime rate and compounded interest annually. Both the
principal and interest related to the Weyerhaeuser Mortgage Company
payables were paid off in March 1997, in anticipation of the sale
of Weyerhaeuser Mortgage Company to an unrelated third party by
Weyerhaeuser Financial Services, Inc. and Weyerhaeuser Company. In
August 1997, Weyerhaeuser Financial Services, Inc. (Beneficial
Owner) contributed capital to Trusts F, increasing Beneficial
Owner's interest.
- 42 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust A
Schedule XIII - Other Security Investments
December 28, 1997
(Dollar amounts in thousands)
Number of
Certificates Market
Type of Security Held Cost Value
------------ ----------- ----------
<S> <C> <C> <C>
Government National
Mortgage Association
Certificates - - -
Federal National
Mortgage Association
Certificates - - -
<FN>
<F1>
The GNMA and FNMA certificates held in the trust were sold to a
third party in October 1997. The proceeds were used to pay off
the related bond obligation.
</FN></TABLE>
- 43 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust B
Schedule XIII - Other Security Investments
December 28, 1997
(Dollar amounts in thousands)
Number of
Certificates Market
Type of Security Held Cost Value
------------ ----------- ----------
<S> <C> <C> <C>
Government National
Mortgage Association
Certificates 33 $12,648 $13,325
Federal National
Mortgage Association
Certificates 25 2,023 2,146
------------ ----------- ----------
58 $14,671 $15,471
<FN>
<F1>
1. Cost represents the uncollected principal balance of the
mortgage loans underlying the certificates. Investments are
grouped and are carried at cost.
<F2>
2. Market value is an estimate based on the most current
information available.
</FN></TABLE>
- 44 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust C
Schedule XIII - Other Security Investments
December 28, 1997
(Dollar amounts in thousands)
Number of
Certificates Market
Type of Security Held Cost Value
------------ ----------- ----------
<S> <C> <C> <C>
Government National
Mortgage Association
Certificates 25 $ 8,712 $ 9,147
Federal National
Mortgage Association
Certificates 25 3,526 3,745
------------ ----------- ----------
50 $12,238 $12,892
<FN>
<F1>
1. Cost represents the uncollected principal balance of the
mortgage loans underlying the certificates. Investments are
grouped and are carried at cost.
<F2>
2. Market value is an estimate based on the most current
information available.
</FN>
</TABLE>
- 45 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust D
Schedule XIII - Other Security Investments
December 28, 1997
(Dollar amounts in thousands)
Number of
Certificates Market
Type of Security Held Cost Value
------------ ----------- ----------
<S> <C> <C> <C>
Government National
Mortgage Association
Certificates 23 $11,126 $11,667
Federal National
Mortgage Association
Certificates 14 1,571 1,662
------------ ----------- ----------
37 $12,697 $13,329
<FN>
<F1>
1. Cost represents the uncollected principal balance of the
mortgage loans underlying the certificates. Investments are
grouped and are carried at cost.
<F2>
2. Market value is an estimate based on the most current
information available.
</FN>
</TABLE>
- 46 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust E
Schedule XIII - Other Security Investments
December 28, 1997
(Dollar amounts in thousands)
Number of
Certificates Market
Type of Security Held Cost Value
------------ ----------- ----------
<S> <C> <C> <C>
Government National
Mortgage Association
Certificates 75 $42,071 $43,588
<FN>
<F1>
<F1>
1. Cost represents the uncollected principal balance of the
mortgage loans underlying the certificates. Investments are
grouped and are carried at cost.
<F2>
2. Market value is an estimate based on the most current
information available.
</FN>
</TABLE>
- 47 -
<PAGE>
<TABLE>
<CAPTION>
Mortgage Securities III Trust F
Schedule XIII - Other Security Investments
December 28, 1997
(Dollar amounts in thousands)
Number of
Certificates Market
Type of Security Held Cost Value
------------ ----------- ----------
<S> <C> <C> <C>
Government National
Mortgage Association
Certificates - - -
Federal National
Mortgage Association
Certificates - - -
<FN>
<F1>
The GNMA and FNMA certificates held in the trust were sold to a
third party in October 1997. The proceeds were used to pay off
the related bond obligation.
</FN>
</TABLE>
- 48 -
<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.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> CT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-END> DEC-28-1997
<TOTAL-ASSETS> 90,389
0
0
<COMMON> 0
<OTHER-SE> 12,552
<TOTAL-LIABILITY-AND-EQUITY> 90,389
<TOTAL-REVENUES> 10,397
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,132)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
