vestors, or to the Secretary of the Treasury (the Secretary of the Treasury may not at any one time hold more than $2.25 billion of such obligations), (2) subscriptions by the Secretary of the Treasury to FNMA preferred stock ($92.8 million was authorized in 1955, $50 million in 1957 and $65 million in 1958, making a total of $207.8 million), (3) mandatory contributions into capital incident to subscriptions for the Association's common stock by mortgage sellers and by borrowers, (4) the sale of mortgages to the investing public, (5) repayments and prepayments of mortgage principal, and (6) income from operations. Recommendations for such legislation as may be necessary or desirable to transfer ownership of the Association to the private holders of the common stock must be submitted to the Congress as promptly as practicable after all of the Treasury-held preferred stock has been retired. Meanwhile, the present interim program, financed by private as well as by Government investment funds, is treated as a trust fund. Operations are discussed in part I of this document in connection with the program's general fund financing and effect on budget expenditures. Revenue, Expense, and Retained Earnings (in thousands of dollars) aggregate of authorized 1964 1965 1966 actual estimate estimate Assets of the fund, which are largely invested in special Treasury interest-bearing securities and in policy loans, are expected to increase from $6,316 million as of June 30, 1964, to $6,711 million as of June 30, 1966. The actuarial estimate of policy obligations as of June 30, 1964, totals $6,259 million, leaving a balance of $57.3 million for con88,640 tingency reserves. 720 89,360 605,088 -46,335 -47,700 -52,140 -78,386 -81,852 -80,602 -24,107 -25,173 -24,788 -5,391,941 -5,472,061 -5,590,128 5,590, 128 5,807,200 664,630 The income of the fund derives from premium receipts, interest on investments, and payments which are made to the fund from the appropriation "Veterans insurance and indemnities," for claims (1) resulting from extra hazards of the veterans' service, and (2) arising on certain policies held by personnel on active duty. Administrative expenses are charged to the appropriation General operating expenses. In order to bolster the economy, all dividends are being disbursed in January rather than being spread throughout the calendar year. The accelerated payment of dividends advanced $99 million of dividend expenditures into 1964 from 1965 and an estimated $94.5 million into 1965 from 1966. The fund is operated on a commercial basis to the greatest possible extent consistent with law. In the program and financing statement, the noncash transactions, which are offset by other claims of the fund, are excluded from program costs in order to show obligations. The following business-type statements of revenue and expense and of financial condition include these noncash transactions relating to the status of insurance policy accounts. Revenue, Expense, and Retained Earnings (in thousands of dollars) 24 Unobligated balance available, end of year: U.S. securities (par) 5,472,061 605.088 -157,530 Revenue: Funded. Unfunded... Total revenue. Expense.... Net income or loss for the year. This fund (72 Stat. 1154) was established in 1940 as the financing mechanism for World War II servicemen's and veterans' insurance program authorized by the National Analysis of retained earnings: Retained earn Service Life Insurance Act of 1940. Over 22 million policies have been issued under this program. Because issuance of new policies ended in 1951 the insurance in force will continue to decline. The general decline in the activity of the fund is indicated in the following table (dollars in millions): ings, start of year.... |