SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 3 (File No. 33-62407) [ ]
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 4 (File No. 811-07355) [ ]
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(Check appropriate box or boxes)
IDS LIFE VARIABLE ACCOUNT 10
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(Exact Name of Registrant)
IDS Life Insurance Company
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(Name of Depositor)
80 South 8th Street, P.O. Box 534, Minneapolis, MN 55440-0534
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(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (612) 671-3678
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Mary Ellyn Minenko, IDS Tower 10, Minneapolis, MN 55440-0010
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 1998 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(i) of Rule 485
[ ] on (date) pursuant to paragraph (a)(i) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
CROSS REFERENCE SHEET
Cross reference sheet showing location in the prospectus of the information
called for by the items enumerated in Part A and B of Form N-4.
Negative answers omitted from the prospectus and Statement of Additional
Information are so indicated.
<PAGE>
PART A
Item No. Section in Prospectus
1 Cover page
2 Key terms
3 (a) Expense Summary
(b) The Flexible Portfolio Annuity in brief
4 (a) Condensed financial information
(b) Performance information
(c) Financial statements
5 (a) Cover page; About IDS Life
(b) The variable account
(c) The funds
(d) Cover page; The funds
(e) Voting rights
(f) NA
(g) NA
6 (a) Charges
(b) Expense Summary; Charges
(c) Charges
(d) Distribution of the contracts
(e) The funds
(f) NA
7 (a) Buying your annuity; Benefits in case of death; The annuity
payout period
(b) The variable accounts; Making the most of your annuity,
Transferring money between charge accounts
(c) The funds; Charges
(d) Cover page
8 (a) The annuity payout period
(b) Buying your annuity
(c) The annuity payout period
(d) The annuity payout period
(e) The annuity payout period
(f) The annuity payout period
9 (a) Benefits in case of death
(b) Benefits in case of death
10 (a) Buying your annuity; Valuing your investment
(b) Valuing your investment
(c) Buying your annuity; Valuing your investment
(d) NA
11 (a) Surrendering your contract
(b) TSA - Special surrender provisions
(c) Surrendering your contract
(d) Buying your annuity
(e) The Flexible Portfolio Annuity in brief
12 (a) Taxes
(b) Key terms
(c) NA
13 About IDS Life
14 Table of contents of the Statement of Additional Information
PART B
Section in
Item No. Statement of Additional Information
15 (a) Cover page
(b) NA
16 Table of Contents
17 (a) NA
(b) NA
(c) About IDS Life*
18 (a) NA
(b) NA
(c) Independent Auditors
(d) NA
(e) NA
(f) Principal underwriter
19 (a) Distribution of the contracts*; About IDS Life*
(b) Charges*
20 (a) Principal underwriter
(b) Principal underwriter
(c) Principal underwriter
(d) NA
21 (a) Performance information
(b) Performance information
22 Calculating annuity payouts
23 (a) NA
(b) NA
*Designates section in the prospectus, which is hereby incorporated by reference
in this statement of Additional Information.
<PAGE>
IDS Life Flexible Portfolio Annuity
Prospectus
May 1, 1998
The Flexible Portfolio Annuity is an individual deferred fixed/variable annuity
contract offered by IDS Life Insurance Company (IDS Life), a subsidiary of
American Express Financial Corporation (AEFC). Purchase payments may be
allocated among different accounts, providing variable and/or fixed returns and
payouts. The annuity is available for qualified and nonqualified retirement
plans.
IDS Life Variable Account 10
Sold by: IDS Life Insurance Company, IDS Tower 10, Minneapolis, MN 55440-0010,
Telephone: 800-437-0602. http://www.americanexpress.com/advisors.
This prospectus contains the information about the variable account that you
should know before investing. Refer to "The variable account" in this
prospectus. As in the case of other annuities, it may not be advantageous to
purchase this annuity as a replacement for, or in addition to an existing
annuity.
The prospectus is accompanied or preceded by the following prospectuses: the IDS
Life Retirement Annuity Mutual Funds; AIM Variable Insurance Funds, Inc.; Putnam
Variable Trust; American Century Variable Portfolios, Inc.; Templeton Variable
Products Series Fund and Warburg Pincus Trust. Please read these
documents carefully and keep them for future reference.
These securities have not been approved or disapproved by the Securities and
Exchange Commission, or any state securities commission, nor has the Securities
and Exchange Commission or any state securities commission passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
IDS Life is not a bank or financial institution, and the securities it offers
are not deposits or obligations of, backed or guaranteed or endorsed by any bank
or financial institution nor are they insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other agency. Investments in this
annuity involve investment risk including the possible loss of principal.
A Statement of Additional Information (SAI) (incorporated by reference into this
prospectus) filed with the Securities and Exchange Commission (SEC), is
available for reference, along with other related materials, on the SEC Internet
website (http://www.sec.gov). The SAI is available without charge by contacting
IDS Life at the telephone number above or by completing and sending the order
form on the last page of this prospectus. The table of contents of the SAI is on
the last page of this prospectus.
<PAGE>
Table of contents
Key terms....................................................................
The Flexible Portfolio Annuity in brief......................................
Expense summary..............................................................
Condensed financial information (unaudited)..................................
Financial statements.........................................................
Performance information......................................................
The variable account.........................................................
The funds....................................................................
IDS Life Aggressive Growth Fund.........................................
IDS Life International Equity Fund......................................
IDS Life Capital Resource Fund..........................................
IDS Life Managed Fund...................................................
IDS Life Special Income Fund............................................
IDS Life Moneyshare Fund................................................
IDS Life Growth Dimensions Fund.........................................
IDS Life Global Yield Fund..............................................
IDS Life Income Advantage Fund..........................................
AIM V.I. Growth and Income Fund.........................................
Putnam VT New Opportunities Fund........................................
American Century VP Value...............................................
Templeton Developing Markets Fund: Class 1..............................
Warburg Pincus Trust/Small Company Growth Portfolio.....................
The fixed account............................................................
Buying your annuity..........................................................
The retirement date.....................................................
Beneficiary.............................................................
How to make purchase payments...........................................
Charges......................................................................
Contract administrative charge..........................................
Mortality and expense risk fee..........................................
Surrender charge........................................................
Waiver of surrender charges.............................................
Premium taxes...........................................................
Valuing your investment......................................................
Number of units.........................................................
Accumulation unit value.................................................
Net investment factor...................................................
Factors that affect variable subaccount accumulation units..............
Making the most of your annuity..............................................
Automated dollar-cost averaging.........................................
Transferring money between subaccounts..................................
Transfer policies.......................................................
How to request a transfer or a surrender................................
Surrendering your contract...................................................
Surrender policies......................................................
Receiving payment when you request a surrender TSA-special
surrender provisions....................................................
Changing ownership...........................................................
Benefits in case of death....................................................
<PAGE>
The annuity payout period....................................................
Annuity payout plans....................................................
Death after annuity payouts begin.......................................
Taxes........................................................................
Voting rights................................................................
Substitution of investments..................................................
Distribution of the contracts................................................
About IDS Life ..............................................................
Legal proceedings.......................................................
Year 2000....................................................................
Regular and special reports..................................................
Services................................................................
Table of contents of the Statement of Additional Information............
<PAGE>
Key terms
These terms can help you understand details about your annuity.
Accumulation unit - A measure of the value of each variable subaccount before
annuity payouts begin.
Annuitant - The person on whose life or life expectancy the annuity payouts are
based.
Annuity - A contract purchased from an insurance company that offers
tax-deferred growth of the investment until earnings are withdrawn, and that can
be tailored to meet the specific needs of the individual during retirement.
Annuity payouts - An amount paid at regular intervals under one of several plans
available to the owner and/or any other payee. This amount may be paid on a
variable or fixed basis or a combination of both.
Annuity unit - A measure of the value of each variable subaccount used to
calculate the annuity payouts you receive.
Beneficiary - The person designated to receive annuity benefits in case of the
owner's or annuitant's death.
Close of business - When the New York Stock Exchange (NYSE) closes, normally 3
p.m. Central time.
Code - Internal Revenue Code of 1986, as amended.
Contract value - The total value of your annuity before any applicable surrender
charge and any contract administrative charge have been deducted.
Contract year - A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
Fixed account - An account to which you may allocate purchase payments. Amounts
allocated to this account earn interest at rates that are declared periodically
by IDS Life.
IDS Life - In this prospectus, "we," "us," "our" and "IDS Life" refer to IDS
Life Insurance Company.
Mutual funds (funds) - Mutual funds or portfolios, each with a different
investment objective. (See "The funds.") You may allocate your purchase payments
into variable subaccounts investing in shares of any or all of these funds.
Owner (you, your) - The person who controls the annuity (decides on investment
allocations, transfers, payout options, etc.). Usually, but not always, the
owner is also the annuitant. The owner is responsible for taxes, regardless of
whether he or she receives the annuity's benefits.
Purchase payments - Payments made to IDS Life for an annuity.
<PAGE>
Qualified annuity - An annuity purchased for a retirement plan that is subject
to applicable federal law and any rules of the plan itself. These plans include:
o Individual Retirement Annuities (IRAs), including Roth IRAs
o SIMPLE IRAs
o Simplified Employee Pension (SEP) Plans
o Section 401(k) plans o Custodial and trusteed pension and profit-sharing plans
o Tax-Sheltered Annuities (TSAs)
o Section 457 plans.
All other annuities are considered nonqualified annuities.
Retirement date - The date when annuity payouts are scheduled to begin. This
date is first established when you start your contract. You can change it in the
future.
Surrender charge - A deferred sales charge that may be applied if you surrender
your annuity before the retirement date.
Surrender value - The amount you are entitled to receive if you surrender your
annuity. It is the contract value minus any applicable surrender charge and
contract administrative charge.
Valuation date - Any normal business day, Monday through Friday, that the NYSE
is open. The value of each variable subaccount is calculated at the close of
business on each valuation date.
Variable account - Consists of separate subaccounts to which you may allocate
purchase payments; each invests in shares of one mutual fund. (See "The variable
account.") The value of your investment in each variable subaccount changes with
the performance of the particular fund.
The Flexible Portfolio Annuity in brief
Purpose: The Flexible Portfolio Annuity is designed to allow you to build up
funds for retirement. You do this by making one or more investments (purchase
payments) that may earn returns that increase the value of the annuity.
Beginning at a specified future date (the retirement date), the annuity provides
lifetime or other forms of payouts to you or to anyone you designate.
Ten-day free look: You may return your annuity to your financial advisor or our
Minneapolis office within 10 days after it is delivered to you and receive a
full refund of the contract value. No charges will be deducted. However, you
bear the investment risk from the time of purchase until return of the contract;
the refund amount may be more or less than the payment you made. (Exception: if
the law so requires, all of your purchase payment will be refunded.)
<PAGE>
Accounts: You may allocate your purchase payments among any or all of:
o variable subaccounts, each of which invests in a mutual fund with a
particular investment objective. The value of each variable subaccount
varies with the performance of the particular fund. We cannot guarantee
that the value at the retirement date will equal or exceed the total of
purchase payments allocated to the variable subaccounts. (p. )
o one fixed account, which earns interest at rates that are adjusted
periodically by IDS Life. (p. )
Buying your annuity: Your financial advisor will help you complete and submit an
application. Applications are subject to acceptance at our Minneapolis office.
You may buy a nonqualified annuity or a qualified annuity including an IRA.
Payment may be made either in a lump sum or installments:
o Minimum initial purchase payment - $2,000 ($1,000 for qualified
annuities) unless you pay in installments by means of a bank
authorization or under a group billing arrangement such as a payroll
deduction.
o Minimum additional purchase payment - $50.
o Minimum installment payment - $50 monthly; $23.08 biweekly (scheduled
payment plan billing).
o Maximum first-year payment(s) - $50,000 to $1,000,000 depending on
your age.
o Maximum payment for each subsequent year - $50,000 to $100,000
depending upon your age. (p. )
Transfers: Subject to certain restrictions you may redistribute your money among
accounts without charge at any time until annuity payouts begin, and once per
contract year among the variable subaccounts thereafter. You may establish
automated transfers among the fixed account and variable subaccount(s). (p. )
Surrenders: You may surrender all or part of your contract value at any time
before the retirement date. You also may establish automated partial surrenders.
Surrenders may be subject to charges and tax penalties and may have other tax
consequences; also, certain restrictions apply. (p. )
Changing ownership: You may change ownership of a nonqualified annuity by
written instruction, however, such changes of nonqualified annuities may have
federal income tax consequences. Certain restrictions apply concerning change of
ownership of a qualified annuity. (p. )
Benefits in case of death: If you or the annuitant dies before annuity payouts
begin, we will pay the beneficiary an amount at least equal to the contract
value. (p. )
Annuity payouts: The contract value of your investment can be applied to an
annuity payout plan that begins on the retirement date. You may choose from a
variety of plans to make sure that payouts continue as long as they are needed.
If you purchased a qualified annuity, the payout schedule must meet the
requirements of the qualified plan. Payouts may be made on a fixed or variable
basis, or both. Total monthly payouts may include amounts from each variable
subaccount and the fixed account. During the annuity payout period, you cannot
be invested in more than five variable subaccounts at any one time unless we
agree otherwise. (p. )
<PAGE>
Taxes: Generally, your annuity grows tax-deferred until you surrender it or
begin to receive payouts. (Under certain circumstances, IRS penalty taxes may
apply.) Even if you direct payouts to someone else, you will still be taxed on
the income if you are the owner. Roth IRAs, however, may grow tax-free, if you
meet certain distribution requirements. (p. )
Charges: Your Flexible Portfolio Annuity is subject to a $30 annual contract
administrative charge, a 1.25% mortality and expense risk charge, a surrender
charge and any applicable premium taxes that may be imposed by state or local
governments and deducted as applicable either from your purchase payments or
upon total withdrawal or when annuity payouts begin. (p. )
Expense summary
The purpose of this table is to help you understand the various costs and
expenses associated with your annuity.
You pay no sales charge when you purchase the annuity. All costs that you bear
directly or indirectly for the variable subaccounts and underlying mutual funds
are shown below. Some expenses may vary as explained under "Contract charges."
Contract Owner Expenses*
Surrender charge
(contingent deferred sales
charge as percent of purchase
payments surrendered) Contract year
7 1-3
6 4
5 5
4 6
3 7
2 8
0 After 8 years
Annual Contract Administrative Charge $30
Variable Account Annual Expense
Mortality and Expense Risk Fee
(as a percentage of daily net asset value) 1.25%
<PAGE>
Annual Operating Expenses of Underlying Mutual Funds
(as a percentage of average net assets)
<TABLE>
<CAPTION>
IDS Life IDS Life IDS Life IDS Life IDS Life
Aggressive International Capital IDS Life Special IDS Life Growth
Growth Equity Resource Managed Income Moneyshare Dimensions
<S> <C> <C> <C> <C> <C> <C> <C>
Management fees 0.60% 0.83% 0.60% 0.59% 0.60% 0.51% 0.63%
Other expenses 0.07% 0.11% 0.07% 0.05% 0.07% 0.06% 0.08%
Total 0.67%* 0.94%* 0.67%* 0.64%* 0.67%* 0.57%* 0.71%*
Warburg Pincus
Putnam Trust/Small
IDS Life IDS Life AIM V.I. VT New American Templeton Company Growth
Global Income Growth and Opportunities Century Developing (After Expense
Yield Advantage Income++ Fund VP Value Markets: Class IWaivers)
Management fees 0.84% 0.62% 0.63% 0.58% 1.00% 1.25% 0.90%
Other expenses 0.07% 0.03% 0.06% 0.05% -- 0.33% 0.24%
Total 0.91%* 0.65%* 0.69% 0.63% 1.00% 1.58% 1.14%+
</TABLE>
* Annualized operating expenses of underlying mutual funds
at Dec. 31, 1997.
+ Figures in "Management fees," "Other expenses" and "Total" are based on
actual expenses for the fiscal year ended Dec. 31, 1997 net of any fee
waivers or expense reimbursements. Without such waivers or
reimbursements "Other Expenses" would equal 0.25%, "Total" would equal
1.15%.
++ AIM Advisers, Inc. ("AIM") may from time to time voluntarily waive or
reduce its respective fees. Effective May 1, 1998, the Fund reimburses
AIM in an amount up to 0.25% of the average net asset value of the
Fund, for expenses incurred in providing, or assuring that
participating insurance companies provide, certain administrative
services. Currently, the fee only applies to the average net asset
value of the Fund in excess of the net asset value of the Fund as
calculated on April 30, 1998.
Example:* You would pay the following expenses on a $1,000 investment, assuming
5% annual return and surrender at the end of each time period:
<TABLE>
<CAPTION>
IDS Life IDS Life IDS Life IDS Life IDS Life
Aggressive International Capital IDS Life Special IDS Life Growth
Growth Equity Resource Managed Income Moneyshare Dimensions
<S> <C> <C> <C> <C> <C> <C> <C>
1 year $ 90.56 $ 93.33 $ 90.56 $ 90.25 $ 90.56 $ 89.54 $ 90.97
3 years 133.52 141.87 133.52 132.59 133.52 130.41 134.76
5 years 159.04 173.04 159.04 157.48 159.04 153.82 161.12
10 years 235.11 263.38 235.11 231.92 235.11 217.99 239.34
Putnam
IDS Life IDS Life AIM V.I. VT New American Templeton Warburg Pincus
Global Income Growth and Opportunities Century Developing Trust/Small
Yield Advantage Income Fund VP Value Markets: Class ICompany Growth
1 year $ 93.02 $ 90.36 $ 90.77 $ 90.15 $ 93.94 $ 99.89 $ 95.38
3 years 140.94 132.90 134.14 132.28 143.72 161.48 148.03
5 years 171.49 158.00 160.08 156.95 176.12 205.58 183.30
10 years 260.27 232.98 237.23 230.85 269.56 327.44 283.84
</TABLE>
<PAGE>
You would pay the following expenses on the same investment assuming no
surrender or the selection of an annuity payout plan at the end of each time
period:
<TABLE>
<CAPTION>
IDS Life IDS Life IDS Life IDS Life IDS Life
Aggressive International Capital IDS Life Special IDS Life Growth
Growth Equity Resource Managed Income Moneyshare Dimensions
<S> <C> <C> <C> <C> <C> <C> <C>
1 year $ 20.56 $ 23.33 $ 20.56 $ 20.25 $ 20.56 $ 18.92 $ 20.97
3 years 63.52 71.87 63.52 62.59 63.52 58.55 64.76
5 years 109.04 123.04 109.04 107.48 109.04 100.67 111.12
10 years 235.11 263.38 235.11 231.92 235.11 217.99 239.34
Putnam
IDS Life IDS Life AIM V.I. VT New American Templeton Warburg Pincus
Global Income Growth and Opportunities Century Developing Trust/Small
Yield Advantage Income Fund VP Value Markets: Class ICompany Growth
1 year $ 23.02 $ 20.36 $ 20.77 $ 20.15 $ 23.94 $ 29.89 $ 25.38
3 years 70.94 62.90 64.14 62.28 73.72 91.48 78.03
5 years 121.49 108.00 110.08 106.95 126.12 155.58 133.30
10 years 260.27 232.98 237.23 230.85 269.56 327.44 283.84
</TABLE>
This example should not be considered a representation of past or future
expenses. Actual expenses may be more or less than those shown.
* In this example, the $30 annual contract administrative charge is
approximated as a .099% charge based on the average contract size. IDS Life
has entered into certain arrangements under which it is compensated by the
funds' advisers and/or distributors for the administrative services it
provides to the funds.
<PAGE>
Condensed Financial Information (Unaudited)
The following tables give per-unit information about the financial history of
each variable subaccount.
Year Ended Dec. 31,
1997 1996
Subaccount HC1 (Investing in shares of IDS Life Capital Resource Fund)
Accumulation unit $1.03 $1.00
value at beginning
of period
Accumulation unit value $1.27 $1.03
at end of period
Number of accumulation 122,749 72,833
units outstanding at end
of period (000 omitted)
Ratio of operating 1.25% 1.25%
expense to average
net assets
Subaccount HI1 (Investing in shares of IDS Life International Equity Fund)
Accumulation unit $1.06 $1.00
value at beginning
of period
Accumulation unit value $1.08 $1.06
at end of period
Number of accumulation 115,579 52,955
units outstanding at end
of period (000 omitted)
Ratio of operating 1.25% 1.25%
expense to average
net assets
Subaccount HA1 (Investing in shares of IDS Life Aggressive Growth Fund)
Accumulation unit $1.09 $1.00
value at beginning
of period
Accumulation unit value $1.22 $1.09
at end of period
Number of accumulation 112,556 56,318
units outstanding at end
of period (000 omitted)
Ration of operating 1.25% 1.25%
expense to average
net assets
Subaccount HS1 (Investing in shares of IDS Life Special Income Fund)
Accumulation unit $1.05 $1.00
value at beginning
of period
Accumulation unit value $1.13 $1.05
at end of period
Number of accumulation 146,645 86,467
units outstanding at end
of period (000 omitted)
Ratio of operating 1.25% 1.25%
expense to average
net assets
Subaccount HM1 (Investing in shares of IDS Life Moneyshare Fund)
Accumulation unit $1.03 $1.00
value at beginning
of period
Accumulation unit value $1.07 $1.03
at end of period
Number of accumulation 150,354 111,372
units outstanding at end
of period (000 omitted)
Ratio of operating 1.25% 1.25%
expense to average
net assets
Subaccount HD1 (Investing in shares of IDS Life Managed Fund)
Accumulation unit $1.12 $1.00
value at beginning
of period
Accumulation unit value $1.32 $1.12
at end of period
Number of accumulation 150,987 50,902
units outstanding at end
of period (000 omitted)
Ratio of operating 1.25% 1.25%
expense to average
net assets
Subaccount HG2 (Investing in shares of IDS Life Growth Dimensions Fund)
Accumulation unit $1.11 $1.00
value at beginning
of period
Accumulation unit value $1.36 $1.11
at end of period
Number of accumulation 295,452 91,977
units outstanding at end
of period (000 omitted)
Ratio of operating 1.25% 1.25%
expense to average
net assets
Subaccount HY2 (Investing in shares of IDS Life Global Yield Fund)
Accumulation unit $1.07 $1.00
value at beginning
of period
Accumulation unit value $1.10 $1.07
at end of period
Number of accumulation 58,925 21,035
units outstanding at end
of period (000 omitted)
Ratio of operating 1.25% 1.25%
expense to average
net assets
Subaccount HV2 (Investing in shares of IDS Life Income Advantage Fund)
Accumulation unit $1.05 $1.00
value at beginning
of period
Accumulation unit value $1.17 $1.05
at end of period
Number of accumulation 160,046 55,065
units outstanding at end
of period (000 omitted)
Ratio of operating 1.25% 1.25%
expense to average
net assets
Subaccount HW1 (Investing in shares of Aim V.I. Growth and Income Fund)
Accumulation unit $1.12 $1.00
value at beginning
of period
Accumulation unit value $1.39 $1.12
at end of period
Number of accumulation 214,549 72,803
units outstanding at end
of period (000 omitted)
Ratio of operating 1.25% 1.25%
expense to average
net assets
Subaccount HN1 (Investing in shares of Putnam VT New Opportunities Fund)
Accumulation unit $1.02 $1.00
value at beginning
of period
Accumulation unit value $1.24 $1.02
at end of period
Number of accumulation 266,068 119,724
units outstanding at end
of period (000 omitted)
Ratio of operating 1.25% 1.25%
expense to average
net assets
Subaccount HP2 (Investing in shares of American Century VP Value)
Accumulation unit $1.11 $1.00
value at beginning
of period
Accumulation unit value $1.39 $1.11
at end of period
Number of accumulation 75,957 19,657
units outstanding at end
of period (000 omitted)
Ratio of operating 1.25% 1.25%
expense to average
net assets
Subaccount HK1 (Investing in Class 1 shares of
Templeton Developing Markets Fund)
Accumulation unit $0.93 $1.00
value at beginning
of period
Accumulation unit value $0.65 $0.93
at end of period
Number of accumulation 209,358 74,610
units outstanding at end
of period (000 omitted)
Ratio of operating 1.25% 1.25%
expense to average
net assets
Subaccount HT1 (Investing in shares of
Warburg Pincus Trust/Small Company Growth Portfolio)
Accumulation unit $1.09 $1.00
value at beginning
of period
Accumulation unit value $1.24 $1.09
at end of period
Number of accumulation 183,719 62,743
units outstanding at end
of period (000 omitted)
Ratio of operating 1.25% 1.25%
expense to average
net assets
1 Commencement of operations was March 5, 1996.
2 Commencement of operations was May 1, 1996.
<PAGE>
Financial statements
The SAI, dated May 1, 1998, contains:
The audited financial statements of the Variable Account including:
o statements of net assets as of Dec. 31, 1997; and
o statements of operations for the year ended Dec. 31, 1997; and
o statements of changes in net assets for the year ended Dec. 31, 1997
and for the period from March 5, 1996 (commencement of operations) to
Dec. 31, 1996, except for subaccounts HG, HY, HV and HP which are for
the year ended Dec. 31, 1997 and the period May 1, 1996 (commencement
of operations) to Dec. 31, 1996.
The audited financial statements of IDS Life Insurance Company including:
o consolidated balance sheets as of Dec. 31, 1997 and Dec. 31, 1996; and
<PAGE>
o related consolidated statements of income, stockholder's equity and
cash flows for each of the three years in the period ended Dec. 31,
1997.
Performance information
Performance information for the variable subaccounts may appear from time to
time in advertisements or sales literature. In all cases, such information
reflects the performance of a hypothetical investment in a particular account
during a particular time period. We show actual performance from date the
subaccounts began investing in funds. We also show performance from the
commencement date of the funds as if the annuity had existed at that time.
Simple yield - Account HM (investing in IDS Life Moneyshare Fund): Income over a
given seven-day period (not counting any change in the capital value of the
investment) is annualized (multiplied by 52) by assuming that the same income is
received for 52 weeks. This annual income is then stated as an annual percentage
return on the investment.
Compound yield - Account HM (investing in IDS Life Moneyshare Fund): Calculated
like simple yield, except that, when annualized, the income is assumed to be
reinvested. Compounding of reinvested returns increases the yield as compared to
a simple yield.
Yield - For accounts investing in income funds: Net investment income (income
less expenses) per accumulation unit during a given 30-day period is divided by
the value of the unit on the last day of the period. The result is converted to
an annual percentage.
Average annual total return: Expressed as an average annual compounded rate of
return of a hypothetical investment over a period of one, five and ten years (or
up to the life of the account if it is less than ten years old). This figure
reflects deduction of all applicable charges, including the contract
administrative charge, mortality and expense risk fee and surrender charge,
assuming a surrender at the end of the illustrated period. Optional average
annual total return quotations may be made that do not reflect a surrender
charge deduction (assuming no surrender).
Aggregate total return: Represents the cumulative change in the value of an
investment over a specified period of time (reflecting change in a subaccount's
accumulation unit value). The calculation assumes reinvestment of investment
earnings and reflects the deduction of all applicable charges, including the
contract administrative charge, mortality and expense risk fee and surrender
charge, assuming a surrender at the end of the illustrated period. Optional
aggregate total return quotations may be made that do not reflect a surrender
charge deduction (assuming no surrender). Aggregate total return may be shown by
means of schedules, charts or graphs.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the fund in which the
subaccount invests, and the market conditions during the given time period. Such
information is not intended to indicate future performance. Because advertised
yields and total return figures include all charges attributable to the annuity,
which has the effect of decreasing advertised
<PAGE>
performance, subaccount performance should not be compared to that of mutual
funds that sell their shares directly to the public. (See the SAI for a further
description of methods used to determine yield and total return for the
subaccounts.)
If you would like additional information about actual performance, contact your
financial advisor.
The variable account
Purchase payments can be allocated to any or all of the subaccounts of the
variable account that invest in shares of the following funds:
Subaccount
IDS Life Aggressive Growth Fund HA
IDS Life International Equity Fund HI
IDS Life Capital Resource Fund HC
IDS Life Managed Fund HD
IDS Life Special Income Fund HS
IDS Life Moneyshare Fund HM
IDS Life Growth Dimensions Fund HG
IDS Life Global Yield Fund HY
IDS Life Income Advantage Fund HV
AIM V.I. Growth and Income Fund HW
Putnam VT New Opportunities Fund HN
American Century VP Value HP
Templeton Developing Markets Fund: Class 1 HK
Warburg Pincus Trust/Small Company Growth Portfolio HT
Each variable subaccount meets the definition of a separate account under
federal securities laws. Income, capital gains and capital losses of each
subaccount are credited or charged to that subaccount alone. No variable
subaccount will be charged with liabilities of any other account or of our
general business. All obligations arising under the contracts are general
obligations of IDS Life.
The variable account was established under Minnesota law on Aug. 23, 1995 and is
registered as a unit investment trust under the Investment Company Act of 1940
(the 1940 Act). This registration does not involve any supervision of our
management or investment practices and policies by the SEC.
The funds
IDS Life Aggressive Growth Fund
Objective: capital appreciation. Invests primarily in common stock of small-and
medium-size companies. The fund also may invest in warrants or debt securities
or in large, well-established companies when the portfolio manager believes such
investments offer the best opportunity for capital appreciation.
<PAGE>
IDS Life International Equity Fund
Objective: capital appreciation. Invests primarily in common stock of foreign
issuers and foreign securities convertible into common stock. The fund also may
invest in certain international bonds if the portfolio manager believes they
have a greater potential for capital appreciation than equities.
IDS Life Capital Resource Fund
Objective: capital appreciation. Invests primarily in U.S. common stocks and
other securities convertible into common stock, diversified over many different
companies in a variety of industries.
IDS Life Managed Fund
Objective: maximum total investment return. Invests primarily in U.S. common
stocks, securities convertible into common stock, warrants, fixed income
securities (primarily high-quality corporate bonds) and money-market
instruments. The fund invests in many different companies in a variety of
industries.
IDS Life Special Income Fund
Objective: high level of current income while conserving the value of the
investment for the longest time period. Invests primarily in high-quality,
lower-risk corporate bonds issued by many different companies in a variety of
industries, and in government bonds.
IDS Life Moneyshare Fund
Objective: maximum current income consistent with liquidity and conservation of
capital. Invests in high-quality money market securities with remaining
maturities of 13 months or less. The fund also will maintain a dollar-weighted
average portfolio maturity not exceeding 90 days. The fund attempts to maintain
a constant net asset value of $1 per share.
IDS Life Growth Dimensions Fund
Objective: long-term growth of capital. Invests primarily in common stocks of
U.S. and foreign companies showing potential for significant growth.
IDS Life Global Yield Fund
Objective: high total return through income and growth of capital. Invests
primarily in a non-diversified portfolio of debt securities of U.S. and foreign
issuers.
IDS Life Income Advantage Fund
Objective: high current income, with capital growth as a secondary objective.
Invests primarily in long-term, high-yielding, high-risk debt securities below
investment grade issued by U.S. and foreign corporations.
AIM V.I. Growth and Income Fund
Objective: growth of capital, with current income as a secondary objective. The
fund seeks to achieve its objective by generally investing at least 65% of its
net assets in stocks of companies believed by management to have the potential
for above average growth in revenues and earnings.
Putnam VT New Opportunities Fund
Objective: long-term capital appreciation. Invests principally in common stocks
of companies in sectors of the economy that Putnam Investment Management, Inc.,
the fund's investment manager, believes possess above-average, long-term growth
potential.
<PAGE>
American Century VP Value
Objective: long-term capital growth, with income as a secondary objective.
Invests primarily in securities that management believes to be undervalued at
the time of purchase.
Templeton Developing Markets Fund: Class I
Objective: long-term capital appreciation. Invests primarily in equity
securities of issuers in countries having developing markets.
Warburg Pincus Trust/Small Company Growth Portfolio
Objective: capital growth. Invests primarily in equity securities of small-sized
domestic companies.
More comprehensive information regarding each fund is contained in the fund
prospectus. You should read the fund prospectus and consider carefully, and on a
continuing basis, which fund or combination of funds is best suited to your
long-term investment needs. There is no assurance that the investment objectives
of the funds will be attained nor is there any guarantee that the contract value
will equal or exceed the total purchase payments made. Some funds may involve
more risk than others--please monitor your investments accordingly.
All funds are available to serve as the underlying investment for variable
annuities, and some funds are available to serve as the underlying investment
for variable annuities, variable life insurance contracts and qualified plans.
It is conceivable that in the future it may be disadvantageous for variable
annuity separate accounts, variable life insurance separate accounts and/or
qualified plans to invest in the available funds simultaneously. Although IDS
Life and the funds do not currently foresee any such disadvantages, the boards
of directors or trustees of the appropriate funds will monitor events in order
to identify any material conflicts between such contract owners, policy owners
and qualified plans to determine what action, if any, should be taken in
response to a conflict. If a board were to conclude that separate funds should
be established for variable annuity, variable life insurance and qualified plan
separate accounts, the variable annuity contract holders would not bear any
expenses associated with establishing separate funds. Please refer to the fund
prospectuses for risk disclosure regarding mixed and shared funding.
The Internal Revenue Service (IRS) has issued final regulations relating to the
diversification requirements under Section 817(h) of the Code. Each mutual fund
intends to comply with these requirements.
The U.S. Treasury and the IRS have indicated that they may provide additional
guidance concerning how many variable subaccounts may be offered and how many
exchanges among variable subaccounts may be allowed before the owner is
considered to have investment control and thus is currently taxed on income
earned within variable subaccount assets. We do not know at this time what the
additional guidance will be or when action will be taken. We reserve the right
to modify the contract, as necessary, to ensure that the owner will not be
subject to current taxation as the owner of the variable subaccount assets.
We intend to comply with all federal tax laws to ensure that the contract
continues to qualify as an annuity for federal income tax purposes. We reserve
the right to modify the contract as necessary to comply with any new tax laws.
<PAGE>
The investment managers for the funds are as follows:
o IDS Life Funds - IDS Life, IDS Tower 10, Minneapolis, MN 55440.
American Express Financial Corporation is the investment advisor for
the IDS Life Funds. American Express Asset Management International,
Inc., a wholly-owned subsidiary of AEFC, is the sub-investment advisor
for IDS Life International Equity Fund;
o AIM V.I. Growth and Income Fund - A I M Advisors, Inc., 11 Greenway
Plaza, Suite 100, Houston, TX 77046-1173;
o Putnam VT New Opportunities Fund - Putnam Investment Management, Inc.,
One Post Office Square, Boston, MA 02109;
o American Century VP Value - American Century Investment Management,
Inc., American Century Tower, 4500 Main Street, Kansas City, MO 64111;
o Templeton Developing Markets Fund - Templeton Asset Management Ltd.,
Temasek Blvd., #38-03, Suntec Tower One, Singapore 038987
o Warburg Pincus Trust/Small Company Growth Portfolio - Warburg Asset
Management, 466 Lexington Avenue, New York, NY 10017-3147.
The investment managers and advisors cannot guarantee that the funds will meet
their investment objectives. Please read the prospectuses for the funds for
complete information on investment risks, deductions, expenses and other facts
you should know before investing. These prospectuses are available by contacting
IDS Life at the address or telephone number on the front of this prospectus, or
from your financial advisor.
The fixed account
Purchase payments may also be allocated to the fixed account. The cash value of
the fixed account increases as interest is credited to the account. Purchase
payments and transfers to the fixed account become part of the general account
of IDS Life, the company's main portfolio of investments. Interest is credited
daily and compounded annually. We may change the interest rates from time to
time.
Because of exemptive and exclusionary provisions, interests in the fixed account
have not been registered under the Securities Act of 1933 (1933 Act), nor is the
fixed account registered as an investment company under the 1940 Act.
Accordingly, neither the fixed account nor any interests in it are generally
subject to the provisions of the 1933 or 1940 Acts, and we have been advised
that the staff of the SEC has not reviewed the disclosures in this prospectus
that relate to the fixed account. Disclosures regarding the fixed account,
however, may be subject to certain generally applicable provisions of the
federal securities laws relating to the accuracy and completeness of statements
made in prospectuses.
<PAGE>
Buying your annuity
Your financial advisor will help you prepare and submit your application, and
send it along with your initial purchase payment to our Minneapolis office. As
the owner, you have all rights and may receive all benefits under the contract.
The annuity cannot be owned in joint tenancy, except in spousal situations. You
cannot buy an annuity or be an annuitant if you are 91 or older. Please remember
that the investment performance expenses and deduction of certain charges affect
accumulation value.
When you apply, you can select:
o the account(s) in which you want to invest;
o how you want to make purchase payments; and
o a beneficiary.
The contract provides for allocation of purchase payments to the subaccounts of
the variable account and/or to the fixed account in even 1% increments.
If your application is complete, we will process it and apply your purchase
payment to your account(s) within two business days after we receive it at our
Minneapolis office. If your application is accepted, we will send you a
contract. If we cannot accept your application within five business days, we
will decline it and return your payment. We will credit additional purchase
payments to your account(s) at the next close of business after we receive your
payments at our Minneapolis office.
The retirement date
Upon processing your application, we will establish the retirement date to the
maximum age or date as specified on the next page. You can also select a date
within the maximum limits. This date can be aligned with your actual retirement
from a job, or it can be a different future date, depending on your needs and
goals and on certain restrictions. You can also change the date, provided you
send us written instructions at least 30 days before annuity payouts begin.
For nonqualified annuities and Roth IRAs, the retirement date must be:
o no earlier than the 60th day after the contract's effective date; and
o no later than the annuitant's 85th birthday or the 10th contract
anniversary, if purchased after age 75. (In Pennsylvania, the maximum
annuity start date ranges from age 85 to 95 based on the annuitant's
age when the contract is issued. See contract for details.)
For qualified annuities except Roth IRAs, to avoid IRS penalty taxes, the
retirement date generally must be:
o on or after the date the annuitant reaches age 59 1/2; and
o for IRAs, SIMPLE IRAs and SEPs, by April 1 of the year following the
calendar year when the annuitant reaches age 70 1/2; or
o for all other qualified annuities, by April of the year following the
calendar year when the annuitant reaches age 70 1/2; or, if later,
retires; except that 5% business owners may not select a retirement
date that is later than April 1 of the year following the calendar year
when they reach age 70 1/2.
<PAGE>
If you are taking the minimum IRA or TSA distributions as required by the Code
from another tax-qualified investment, or in the form of partial surrenders from
this annuity, annuity payouts can start as late as the annuitant's 85th birthday
or the 10th contract anniversary. (In Pennsylvania, the annuity payout ranges
from age 85 to 95 based on the annuitant's age when the contract is issued. See
contract for details.)
Certain restrictions on retirement dates apply to participants in the Texas
Optional Retirement Program. (See "Special surrender provisions.")
Beneficiary
If death benefits become payable before the retirement date, your named
beneficiary will receive all or part of the contract value. If there is no named
beneficiary, then you or your estate will be the beneficiary. (See "Benefits in
case of death" for more about beneficiaries.)
Minimum purchase payment
If single payment:
Nonqualified: $2,000
Qualified: $1,000
o Minimum additional purchase payment: $50
If installment payments:
o Minimum installment payment(s): $50 monthly; $23.08
biweekly (scheduled payment plan billing)
Installments must total at least $600 in the first year.*
* If you make no purchase payments for 24 months, and your previous
payments total $600 or less, we have the right to give you 30 days'
written notice and pay you the total value of your contract in a lump
sum. This right does not apply to contracts sold to New Jersey
residents.
Maximum first-year payment(s):
This maximum is based on your age or age of the annuitant (whomever is older) on
the effective date of the contract.
Up to age 75 $ 1 million
76 to 85 $ 500,000
86 to 90 $ 50,000
o Maximum payment for each subsequent year:**
$100,000 Up to age 85
$50,000 Ages 86-90
<PAGE>
** These limits apply in total to all IDS Life annuities you own. We
reserve the right to increase maximum limits. For qualified annuities
the qualified plan's limits on annual contributions also apply.
How to make purchase payments
1 By letter
Send your check along with your name and account number to:
Regular mail:
IDS Life Insurance Company
Box 74
Minneapolis, MN 55440-0074
Express mail:
IDS Life Insurance Company
733 Marquette Avenue
Minneapolis, MN 55402
2 By scheduled payment plan
Your financial advisor can help you set up:
o an automatic payroll deduction, salary reduction or other group billing
arrangement; or
o a bank authorization.
Charges
Contract administrative charge
This fee is for establishing and maintaining your records. We deduct $30 from
the contract value on your contract anniversary. This $30 charge is waived if
your contract value, or total purchase payments less any payments surrendered,
equals or exceeds $25,000 on your contract anniversary.
If you surrender your contract, the charge will be deducted at the time of
surrender regardless of the contract value or purchase payments made. The charge
cannot be increased and does not apply after annuity payouts begin.
Mortality and expense risk fee
This fee is to cover the mortality risk and expense risk and is applied daily to
the variable subaccounts and reflected in the unit values of the subaccounts.
The subaccounts pay this fee at the time that dividends are distributed from the
funds in which they invest. Annually the fee totals 1.25% of the subaccounts'
average daily net assets. Approximately two-thirds of this amount is for our
assumption of mortality risk, and one-third is for our assumption of expense
risk. This fee does not apply to the fixed account.
<PAGE>
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific annuitant lives and no matter how long the entire
group of IDS Life annuitants live. If, as a group, IDS Life annuitants outlive
the life expectancy we have assumed in our actuarial tables, then we must take
money from our general assets to meet our obligations. If, as a group, IDS Life
annuitants do not live as long as expected, we could profit from the mortality
risk fee. Expense risk arises because the contract administrative charge cannot
be increased and may not cover our expenses. Any deficit would have to be made
up from our general assets.
We may use any profits realized from the mortality and expense risk fee for any
proper corporate purpose, including, among others, payment of distribution
(selling) expenses. We do not expect that the surrender charge, discussed in the
following paragraphs, will cover sales and distribution expenses.
Surrender charge
A surrender charge applies to all purchase payments surrendered in the first
eight contract years. The surrender amount you request is determined by drawing
from your total contract value in the following order:
o First, we surrender any contract earnings (contract value minus all
purchase payments received and not previously surrendered). There is no
surrender charge on contract earnings. Note: Contract earnings are
determined by looking at the entire contract value, not the earnings of
any particular variable subaccount or the fixed account.
o If necessary, we surrender amounts representing purchase payments not
previously surrendered. The surrender charge rate on these purchase
payments is as follows:
Surrender charges as
percent of purchase
payments surrendered Contract year
- -------------------------------------- -------------------------
7 1-3
6 4
5 5
4 6
3 7
2 8
0 After 8 years
The surrender charge is calculated so that the total amount surrendered, minus
any surrender charge, equals the amount you request.
Waiver of surrender charges There are no surrender charges for:
o contract earnings;
o minimum required distributions after you reach age 70 1/2; (for
qualified plans)
o contracts settled using an annuity payout plan; and
o death benefits.
<PAGE>
If your contract includes a "Waiver of Surrender Charges for Nursing Home
Confinement" Annuity Endorsement, we will waive surrender charges that are
normally assessed upon full or partial surrender if you provide proof
satisfactory to us that, as of the date you request the surrender, you or your
spouse (except in New Jersey) are confined to a nursing home and have been for
the prior 90 days.
To qualify, the nursing home must meet the following criteria:
o be licensed by an appropriate licensing agency to provide nursing care;
o provide 24-hour-a-day nursing services;
o have a doctor available for emergency situations;
o have a nurse on duty or on call at all times;
o maintain clinical records; and
o have appropriate methods for administering drugs.
To the extent permitted by state law, this endorsement is included in contracts
issued when the owner is under age 76 on the date that we issue the contract.
Other information on charges: AEFC makes certain custodial services available to
some custodial and trusteed pension and profit sharing plans and 401(k) plans
funded by IDS Life annuities. Fees for these services start at $30 per calendar
year per participant. A termination fee for owners under age 59 1/2 will be
charged (fee waived in case of death or disability).
Possible group reductions: In some cases (for example, an employer making the
annuity available to employees), lower sales and administrative expenses may be
incurred due to the size of the group, the average contribution and the use of
group enrollment procedures. In such cases, we may be able to reduce or
eliminate the contract administrative and surrender charges. However, we expect
this to occur infrequently.
Premium taxes
Certain state and local governments impose premium taxes (up to 3.5%). These
taxes are dependent upon the state of residence or the state in which the
contract was sold and are deducted as applicable. In some cases, premium taxes
are deducted from your purchase payments before they are allocated. In other
cases, the deduction is made when you surrender your contract or when annuity
payouts begin.
Valuing your investment
Here is how your accounts are valued:
Fixed account: The amounts allocated to the fixed account are valued directly in
dollars and equal the sum of your purchase payments, plus interest earned, less
any amounts surrendered or transferred and any contract administrative charge
assessed.
Variable subaccounts: Amounts allocated to the variable subaccounts are
converted into accumulation units. Each time you make a purchase payment or
transfer amounts into one of the variable subaccounts, a certain number of
accumulation units are credited to your contract for that subaccount.
Conversely, each time you take a partial surrender, transfer amounts out of a
variable subaccount, or are assessed a contract administrative charge, a certain
number of accumulation units are subtracted from your contract.
<PAGE>
The accumulation units are the true measure of investment value in each
subaccount during the accumulation period. They are related to, but not the same
as, the net asset value of the underlying fund. The dollar value of each
accumulation unit can rise or fall daily depending on the performance of the
underlying mutual fund and on certain fund expenses. Here is how unit values are
calculated:
Number of units
To calculate the number of accumulation units for a particular subaccount, we
divide your investment, after deduction of any premium taxes, by the current
accumulation unit value.
Accumulation unit value
The current accumulation unit value for each variable subaccount equals the last
value times the subaccount's current net investment factor.
Net investment factor
o Determined each business day by adding the underlying mutual fund's current
net asset value per share, plus per share amount of any current dividend or
capital gain distribution; then
o dividing that sum by the previous net asset value per share; and
o subtracting the percentage factor representing the mortality and expense
risk fee from the result.
Because the net asset value of the underlying mutual fund may fluctuate, the
unit value may increase or decrease. You bear this investment risk in a variable
subaccount.
Factors that affect variable subaccount accumulation units
Accumulation units may change in two ways; in number and in value. Here are the
factors that influence those changes:
The number of accumulation units you own may fluctuate due to:
o additional purchase payments allocated to the variable subaccount(s);
o transfers into or out of the variable subaccount(s);
o partial surrenders;
o surrender charges; and/or
o contract administrative charges.
Accumulation unit values will fluctuate due to:
o changes in underlying mutual fund(s) net asset value;
o dividends distributed to the variable subaccount(s);
o capital gains or losses of underlying mutual funds;
o mutual fund operating expenses; and/or
o mortality and expense risk fees.
<PAGE>
Making the most of your annuity
Automated dollar-cost averaging
You can use automated transfers to take advantage of dollar-cost averaging
(investing a fixed amount at regular intervals). For example, you might have a
set amount transferred monthly from a relatively conservative variable
subaccount to a more aggressive one, or to several others, or from the fixed
account to one or more variable accounts. There is no charge for dollar-cost
averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market value(s) of the underlying
mutual fund(s). Since you invest the same amount each period, you automatically
acquire more units when the market value falls, fewer units when it rises. The
potential effect is to lower the average cost per unit. For specific features
contact your financial advisor.
How dollar-cost averaging works
Amount Accumulation` Number of
Month invested unit value units purchased
Jan $100 $20 5.00
Feb 100 18 5.56
March 100 17 5.88
April 100 15 6.67
May 100 16 6.25
June 100 18 5.56
July 100 17 5.88
Aug 100 19 5.26
Sept 100 20 4.76
Oct 100 21 5.00
(footnotes to table) By investing an equal number of dollars each month...
(arrow in table pointing to April) you automatically buy more units when the per
unit market price is low...
(arrow in table pointing to September) and fewer units when the per unit market
price is high.
You have paid an average price of only $17.91 per unit over the 10 months, while
the average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any variable subaccount will gain
in value, nor will it protect against a decline in value if market prices fall.
Because this strategy involves continuous investing, your success with
dollar-cost averaging will depend upon your willingness to continue to invest
regularly through periods of low price levels. Dollar-cost averaging can be an
effective way to help meet your long-term goals.
<PAGE>
Transferring money between subaccounts
You may transfer money from any one subaccount, or the fixed account, to another
subaccount before annuity payouts begin. If we receive your request before the
close of business, we will process it that day. Requests received after the
close of business will be processed the next business day. There is no charge
for transfers. Before making a transfer, you should consider the risks involved
in switching investments.
Certain restrictions apply to transfers involving the fixed account. We may
suspend or modify transfer privileges at any time. Excessive trading activity
can disrupt mutual fund management strategy and increase expenses, which are
borne by all contract owners participating in the fund regardless of their
transfer activity. We may apply modifications or restrictions in any manner
reasonably designed to prevent any use of the transfer right we consider to be
to the disadvantage of other contract owners.
Transfer policies
o Before annuity payouts begin, you may transfer contract values between
the variable subaccounts, or from the variable subaccount(s) to the
fixed account at any time. However, if you have made a transfer from
the fixed account to the variable subaccount(s), you may not make a
transfer (including automated transfers) from any variable subaccount
back to the fixed account until the next contract anniversary.
o You may transfer contract values from the fixed account to the variable
subaccount(s) once a year during a 31-day transfer period starting on
each contract anniversary (except for automated transfers, which can be
set up at any time for certain transfer periods subject to certain
minimums).
o If we receive your transfer request within 30 days before the contract
anniversary date, the transfer from the fixed account to the variable
subaccount(s) will be effective on the anniversary.
o If we receive your request on or within 30 days after the contract
anniversary date, the transfer from the fixed account to the variable
subaccount(s) will be effective on the day we receive it.
o We will not accept requests for transfers from the fixed account
at any other time.
o Once annuity payouts begin, no transfers may be made to or from the
fixed account, but transfers may be made once per contract year among
the variable subaccounts. During the annuity payout period, you cannot
be invested in more than five variable subaccounts at any one time
unless we agree otherwise.
<PAGE>
How to request a transfer or a surrender
1 By letter
Send your name, account number, Social Security Number or Taxpayer
Identification Number and signed request for a transfer or surrender to:
Regular mail:
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
Express mail:
IDS Life Insurance Company
733 Marquette Avenue
Minneapolis, MN 55402
Minimum amount
Mail transfers: $250 or entire account balance
Mail surrenders: $250 or entire account balance
Maximum amount
Mail transfers: None (up to contract value)
Mail surrenders: None (up to contract value)
2 By phone
Call between 7 a.m. and 6 p.m. Central time:
1-800-437-0602 (toll free) or
(612) 671-4738 (Minneapolis/St. Paul area)
TTY service for the hearing impaired:
1-800-285-8846 (toll free)
Minimum amount
Phone transfers: $250 or entire account balance
Phone surrenders: $250 or entire account balance
Maximum amount
Phone transfers: None (up to contract value)
Phone surrenders: $50,000
We answer phone requests promptly, but you may experience delays when the call
volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or surrender request believed to be
authentic and will use reasonable procedures to confirm that they are. This
includes asking identifying questions and tape recording calls. A telephone
surrender will not be allowed within 30 days of a phoned-in address change. As
long as the procedures are followed, neither IDS Life nor its affiliates will be
liable for any loss resulting from fraudulent requests.
<PAGE>
Telephone transfers or surrenders are automatically available. You may request
that telephone transfers or surrenders not be authorized from your account by
writing IDS Life.
3 By automated transfers and automated partial surrenders
Your financial advisor can help you set up automated transfers among your
subaccount or fixed account or partial surrenders from the accounts.
You can start or stop this service by written request or other method acceptable
to IDS Life. You must allow 30 days for IDS Life to change any instructions that
are currently in place.
o Automated transfers from the fixed account to any one of the variable
subaccount(s) may not exceed an amount that, if continued, would
deplete the fixed account within 12 months.
o Automated surrenders may be restricted by applicable law under
some contracts.
o You may not make additional purchase payments if automated
partial surrenders are in effect.
o Automated partial surrenders may result in IRS taxes and penalties on
all or part of the amount surrendered.
Minimum amount
Automated transfers or surrenders: $50
Maximum amount
Automated transfers or surrenders: None (except for automated
transfers from the fixed account)
Surrendering your contract
As owner, you may surrender all or part of your contract at any time before
annuity payouts begin by sending a written request or calling IDS Life. For
total surrenders we will compute the value of your contract at the close of
business after we receive your request. We may ask you to return the contract.
You may have to pay surrender charges (see "Surrender charge") and IRS taxes and
penalties (see "Taxes"). No surrenders may be made after annuity payouts begin.
Surrender policies
If you have a balance in more than one account and request a partial surrender,
we will withdraw money from all your accounts in the same proportion as your
value in each account correlates to your total contract value, unless you
request otherwise. The minimum contract value after partial surrender is $600.
<PAGE>
Receiving payment when you request a surrender
By regular or express mail:
o Payable to owner;
o Mailed to address of record;
o Special payee and/or addressee.
NOTE: You will be charged a fee if you request express mail delivery.
By wire:
o Request that payment be wired to your bank;
o Bank account must be in the same ownership as your contract;
o Pre-authorization required. For instructions, contact your
financial advisor.
Payment normally will be sent within seven days after receiving your request.
However, we may postpone the payment if:
- - the surrender amount includes a purchase payment check that has not
cleared;
- - the NYSE is closed, except for normal holiday and weekend closings;
- - trading on the NYSE is restricted, according to SEC rules;
- - an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- - the SEC permits us to delay payment for the protection of security holders.
TSA-special surrender provisions
Participants in Tax-Sheltered Annuities: The Code imposes certain restrictions
on your right as owner to receive early distributions from a TSA:
o Distributions attributable to salary reduction contributions made after
Dec. 31, 1988, plus the earnings on them, or to transfers or rollovers of
such amounts from other contracts, may be made from the TSA only if: - you
have attained age 59 1/2; - you have become disabled as defined in the
Code; - you have separated from the service of the employer who purchased
the annuity; or - the distribution is made to your beneficiary because of
your death.
o If you encounter a financial hardship (within the meaning of the Code), you
may receive a distribution of all contract values attributable to salary
reduction contributions made after Dec.
31, 1988, but not the earnings on them.
o Even though a distribution may be permitted under the above rules, it still
may be subject to IRS taxes and penalties. (See "Taxes.")
<PAGE>
o The above restrictions on the right to receive a distribution do not affect
the availability of the amount credited to the contract as of Dec. 31,
1988. The restrictions do not apply to transfers or exchanges of contract
value within the annuity, or to another registered variable annuity
contract or investment vehicle available through the employer.
o If the contract has a loan provision, the right to receive a loan from your
fixed account is described in detail in your contract. You may borrow from
the contract value allocated to the fixed account.
o For certain types of contributions under a TSA contract to be excluded from
taxable income, the employer must comply with certain nondiscrimination
requirements. You should consult your employer to determine whether the
nondiscrimination rules apply to you.
Participation in the Portland Public Schools TSA program: IDS Life will
guarantee that your fixed account surrender value will not be less than the
purchase payments paid, less any amounts previously surrendered, provided:
o all purchase payments under the contract have been allocated only to
the fixed account; and
o there have been no transfers of fixed account contract values to any
variable subaccount. If payments are allocated to a variable subaccount or
monies are transferred from the fixed account to a variable subaccount, the
guarantee does not apply.
Participants in the Texas Optional Retirement Program: You cannot receive any
distribution before retirement unless you become totally disabled or end your
employment at a Texas college or university.
This restriction affects your right to:
o surrender all or part of your annuity at any time; and
o move up your retirement date.
If you are in the program for only one year, the portion of the purchase
payments made by the state of Texas will be refunded to the state with no
surrender charge. These restrictions are based on an opinion of the Texas
Attorney General interpreting Texas law.
Changing ownership
You may change ownership of your nonqualified annuity at any time by filing a
change of ownership with us at our Minneapolis office. The change will become
binding upon us when we receive and record it. We will honor any change of
ownership request believed to be authentic and will use reasonable procedures to
confirm that it is. If these procedures are followed, we take no responsibility
for the validity of the change.
If you have a nonqualified annuity, you may lose your tax advantages by
transferring, assigning or pledging any part of it. (See "Taxes.")
<PAGE>
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose to any person except IDS
Life. However, if the owner is a trust or custodian, or an employer acting in a
similar capacity, ownership of a contract may be transferred to the annuitant.
Benefits in case of death
If you or the annuitant dies (or, for qualified annuities, if the annuitant
dies) before annuity payouts begin, we will pay the beneficiary as follows:
For contracts issued in all states except Texas:
If death occurs before the annuitant's 75th birthday, the beneficiary receives
the greatest of:
o the contract value;
o the contract value as of the most recent sixth contract anniversary, minus
any surrenders since that anniversary; or
o purchase payments, minus any surrenders.
If death occurs on or after the annuitant's 75th birthday, the beneficiary
receives the greater of:
o the contract value; or
o the contract value as of the most recent sixth contract anniversary, minus
any surrenders since that anniversary.
For contracts issued in Texas:
If death occurs before the annuitant's 75th birthday, the beneficiary receives
the greater of:
o purchase payments minus any surrenders; or
o the contract value.
If death occurs on or after the annuitant's 75th birthday, the beneficiary
receives the contract value.
If your spouse is sole beneficiary under a nonqualified annuity and you die
before the retirement date, your spouse may keep the annuity as owner. To do
this your spouse must, within 60 days after we receive proof of death, give us
written instructions to keep the contract in force.
Under a qualified annuity, if the annuitant dies before the retirement date, and
the spouse is the only beneficiary, the spouse may keep the annuity in force
until the date on which the annuitant would have reached age 70 1/2 or any other
date permitted by the Code. To do this, the spouse must give us written
instructions within 60 days after we receive proof of death.
Payments: We will pay the beneficiary in a single sum unless you have given us
other written instructions, or the beneficiary may receive payouts under any
annuity payout plan available under this contract if:
<PAGE>
o the beneficiary asks us in writing within 60 days after we receive proof of
death;
o payouts begin no later than one year after death, or other date as
permitted by the Code; and
o the payout period does not extend beyond the beneficiary's life or
life expectancy.
When paying the beneficiary, we will determine the contract's value at the next
close of business after our death claim requirements are fulfilled. Interest, if
any, will be paid from the date of death at a rate no less than required by law.
We will mail payment to the beneficiary within seven days after our death claim
requirements are fulfilled. (See "Taxes.")
The annuity payout period
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below, or we will mutually agree on other payout
arrangements. The amount available for payouts under the plan you select is the
contract value on your retirement date. No surrender charges are deducted under
the payout plans listed below.
You also decide whether annuity payouts are to be made on a fixed or variable
basis, or a combination of fixed and variable. Amounts of fixed and variable
payouts depend on:
o the annuity payout plan you select;
o the annuitant's age and, in most cases, sex;
o the annuity table in the contract;
o the amounts you allocated to the account(s) at settlement.
In addition, for variable payouts only, amounts depend on the investment
performance of the subaccount(s) you select. These payouts will vary from month
to month because the performance of the underlying mutual funds will fluctuate.
(In the case of fixed annuities, payouts remain the same from month to month.)
For information with respect to transfers between accounts after annuity payouts
begin, see "Transfer policies."
Annuity payout plans
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are to be used to purchase
the payout plan.
o Plan A - Life annuity - no refund: Monthly payouts are made until the
annuitant's death. Payouts end with the last payout before the annuitant's
death; no further payouts will be made. This means that if the annuitant dies
after only one monthly payout has been made, no more payouts will be made.
o Plan B - Life annuity with five, ten or 15 years certain: Monthly payouts are
made for a guaranteed payout period of five, ten or 15 years that the annuitant
elects. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period has expired.
The guaranteed payout period is calculated from the retirement date. If the
annuitant outlives the elected guaranteed payout period, payouts will continue
until the annuitant's death.
<PAGE>
o Plan C - Life annuity - installment refund: Monthly payouts are made until the
annuitant's death, with our guarantee that payouts will continue for some period
of time. Payouts will be made for at least the number of months determined by
dividing the amount applied under this option by the first monthly payout,
whether or not the annuitant is living.
o Plan D - Joint and last survivor life annuity - no refund: Monthly payouts are
made while both the annuitant and a joint annuitant are living. If either
annuitant dies, monthly payouts continue at the full amount until the death of
the surviving annuitant. Payouts end with the death of the second annuitant.
o Plan E - Payouts for a specified period: Monthly payouts are made for a
specific payout period of 10 to 30 years that you elect. Payouts will be made
only for the number of years specified whether the annuitant is living or not.
Depending on the time period selected, it is foreseeable that an annuitant can
outlive the payout period selected. In addition, a 10% IRS penalty tax could
apply under this payout plan. (See "Taxes.")
Restrictions for some qualified plans: If you purchased a qualified annuity, you
must select a payout plan that provides for payouts:
o over the life of the annuitant;
o over the joint lives of the annuitant and a designated beneficiary;
o for a period not exceeding the life expectancy of the annuitant; or
o for a period not exceeding the joint life expectancies of the annuitant
and a designated beneficiary.
If we do not receive instructions: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
If monthly payouts would be less than $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum.
Death after annuity payouts begin
If you or the annuitant dies after annuity payouts begin, any amount payable to
the beneficiary will be provided in the annuity payout plan in effect.
Taxes
Generally, under current law, any increase in your contract value is taxable to
you only when you receive a payout or surrender. (See detailed discussion
below.) Any portion of the annuity payouts and any surrenders you request that
represent ordinary income are normally taxable. You will receive a 1099 tax
information form for any year in which a taxable distribution was made according
to our records. Roth IRAs may grow tax-free if you meet certain distribution
requirements.
<PAGE>
Annuity payouts under nonqualified annuities: A portion of each payout will be
ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment and will not be taxed. All
amounts received after your investment in the annuity is fully recovered will be
subject to tax.
Tax law requires that all nonqualified deferred annuity contracts issued by the
same company to the same owner during a calendar year are to be taxed as a
single, unified contract when distributions are taken from any one of such
contracts.
Annuity payouts under qualified annuities: Under a qualified annuity, the entire
payout generally will be includable as ordinary income and subject to tax except
to the extent that contributions were made with after-tax dollars. If you or
your employer invested in your contract with pre-tax dollars as part of a
qualified retirement plan, such amounts are not considered to be part of your
investment in the contract and will be taxed when paid to you.
Surrenders: If you surrender part or all of your contract before your annuity
payouts begin, your surrender payment will be taxed to the extent that the value
of your contract immediately before the surrender exceeds your investment. You
also may have to pay a 10% IRS penalty for surrenders before reaching age 59
1/2. For qualified annuities, other penalties may apply if you surrender your
annuity before your plan specifies that you can receive payouts.
Death benefits to beneficiaries: The death benefit under an annuity is not
tax-exempt. Any amount received by the beneficiary that represents previously
deferred income earnings within the contract, is taxable as ordinary income to
the beneficiary in the year(s) he or she receives the payment(s).
Annuities owned by corporations, partnerships or trusts: For nonqualified
annuities any annual increase in the value of annuities held by such entities
generally will be treated as ordinary income received during that year. This
provision is effective for purchase payments made after Feb. 28, 1986. However,
if the trust was set up for the benefit of a natural person only, the income
will continue to be tax-deferred.
Penalties: If you receive amounts from your contract before reaching age 59 1/2,
you may have to pay a 10% IRS penalty on the amount includable in your ordinary
income. If you receive amounts from your SIMPLE IRA before reaching age 59 1/2,
generally the IRS 10% penalty provisions apply. However, if you receive these
amounts before age 59 1/2 and within the first two years of your participation
in the SIMPLE IRA plan, the IRS penalty will be assessed at the rate of 25%
instead of 10%. However, this penalty will not apply to any amount received by
you or your beneficiary:
o because of your death;
o because you become disabled (as defined in the Code);
o if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or
joint lives or life expectancies of you and your beneficiary); or
o if it is allocable to an investment before Aug. 14, 1982 (except for
qualified annuities).
For other qualified annuities, other penalties or exceptions may apply if you
surrender your annuity before your plan specifies that payouts can be made.
<PAGE>
Withholding, generally: If you receive all or part of the contract value from an
annuity, withholding may be imposed against the taxable income portion of the
payout. Any withholding that is done represents a prepayment of your tax due for
the year. You take credit for such amounts on the annual tax return that you
file.
If the payout is part of an annuity payout plan, the amount of withholding
generally is computed using payroll tables. You can provide us with a statement
of how many exemptions to use in calculating the withholding. As long as you've
provided us with a valid Social Security Number or Taxpayer Identification
Number, you can elect not to have any withholding occur.
If the distribution is any other type of payment (such as a partial or full
surrender), withholding is computed using 10% of the taxable portion. Similar to
above, as long as you've provided us with a valid Social Security Number or
Taxpayer Identification Number, you can elect not to have this withholding
occur.
If a distribution is taken from a contract offered under a Section 457 Plan
(deferred compensation plan of state and local governments and tax-exempt
organizations), withholding is computed using payroll methods depending upon the
type of payment.
Some states also may impose withholding requirements similar to the federal
withholding described above. If this should be the case, any payment from which
federal withholding is deducted may also have state withholding deducted.
The withholding requirements may differ if payment is being made to a non-U.S.
citizen or if the payment is being delivered outside the United States.
Withholding from qualified annuities: If you receive directly all or part of the
contract value from a qualified annuity (except an IRA, Roth IRA, SEP, SIMPLE
IRA or Section 457 plan), mandatory 20% income tax withholding generally will be
imposed at the time the payout is made. This mandatory withholding is in place
of the elective withholding discussed above. This mandatory withholding will not
be imposed if:
o instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan;
o the payout is one in a series of substantially equal periodic payouts,
made at least annually, over your life or life expectancy (or the joint
lives or life expectancies of you and your designated beneficiary) or
over a specified period of 10 years or more; or
o the payment is a minimum distribution required under the Code.
Payments made to a surviving spouse instead of being directly rolled over to an
IRA may also be subject to mandatory 20% income tax withholding.
State withholding also may be imposed on taxable distributions.
Transfer of ownership of a nonqualified annuity: If you make such a transfer
without receiving adequate consideration, the transfer is considered a gift, and
also may be considered a surrender for federal income tax purposes. If the gift
is a currently taxable event for income tax purposes, the amount of deferred
earnings at the time of the transfer will be taxed to the original owner, who
also may be subject to a 10% IRS penalty as
<PAGE>
discussed earlier. In this case, the new owner's investment in the annuity will
be the value of the annuity at the time of the transfer.
Collateral assignment of a nonqualified annuity: If you collaterally assign or
pledge your contract, earnings on purchase payments you made after Aug. 13, 1982
will be taxed to you like a surrender.
Important: Our discussion of federal tax laws is based upon our understanding of
these laws as they are currently interpreted. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
Tax qualification: The contract is intended to qualify as an annuity for federal
income tax purposes. To that end, the provisions of the contract are to be
interpreted to ensure or maintain such tax qualification, notwithstanding any
other provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any such amendments.
Voting rights
As a contract owner with investments in the variable subaccount(s) you may vote
on important mutual fund policies until annuity payouts begin. Once they begin,
the person receiving them has voting rights. We will vote fund shares according
to the instructions of the person with voting rights.
Before annuity payouts begin, the number of votes is determined by applying the
percentage interest in each variable subaccount to the total number of votes
allowed to the subaccount.
After annuity payouts begin, the number of votes is equal to:
o the reserve held in each subaccount for the contract, divided by;
o the net asset value of one share of the applicable underlying
mutual fund.
As we make annuity payouts, the reserve for the annuity decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount not more than 60 days before a
shareholders' meeting. Notice of these meetings, proxy materials and a statement
of the number of votes to which the voter is entitled, will be sent.
We will vote shares for which we have not received instructions in the same
proportion as the votes for which we have received instructions. We also will
vote the shares for which we have voting rights in the same proportion as the
votes for which we have received instructions.
<PAGE>
Substitution of investments
If shares of any fund should not be available for purchase by the appropriate
variable subaccount or if, in the judgment of IDS Life's Management, further
investment in such shares is no longer appropriate in view of the purposes of
the subaccount, investment in the subaccount may be discontinued or another
registered open-end management investment company may be substituted for fund
shares held in the subaccounts if IDS Life believes it would be in the best
interest of persons having voting rights under the contract. The variable
account may be operated as a management company under the 1940 Act or it may be
deregistered under this Act if the registration is no longer required. In the
event of any such substitution or change, IDS Life, without the consent or
approval of the owners, may amend the contract and take whatever action is
necessary and appropriate. However, no such substitution or change will be made
without the necessary approval of the SEC and state insurance departments. IDS
Life will notify owners of any substitution or change.
Distribution of the contracts
IDS Life, a registered broker/dealer, is the sole distributor of the contract.
IDS Life pays total commissions of up to 7.0% of the total purchase payments
received on the contracts. A portion of this total commission is paid to
district managers and field vice presidents of the selling representative.
About IDS Life
The Flexible Portfolio Annuity is issued by IDS Life, a wholly-owned subsidiary
of AEFC, which itself is a wholly-owned subsidiary of the American Express
Company, a financial services company headquartered in New York City.
IDS Life is a stock life insurance company organized in 1957 under the laws of
the State of Minnesota and located at IDS Tower 10, Minneapolis, MN 55440-0010.
IDS Life conducts a conventional life insurance business in the District of
Columbia and all states except New York.
American Express Financial Advisors Inc. offers mutual funds, investment
certificates and a broad range of financial management services. IDS Life offers
insurance and annuities.
American Express Financial Advisors Inc. serves individuals and businesses
through its nationwide network of more than 175 offices and more than 8,600
financial advisors.
Other subsidiaries provide investment management and related services for
pension, profit-sharing, employee savings and endowment funds of businesses and
institutions.
Legal Proceedings
A number of lawsuits have been filed against life and health insurers in
jurisdictions in which IDS Life and its subsidiaries do business involving
insurers' sales practices, alleged agent misconduct, failure to properly
supervise agents, and other matters. In December 1996, an action of this type
was brought against IDS Life and its parent, AEFC. A second action was filed in
March 1997. The plaintiffs purport to represent a class consisting of all
persons who replaced existing IDS Life policies with new IDS Life
<PAGE>
policies from and after Jan. 1, 1985. The complaint puts at issue various
alleged sales practices and misrepresentations, alleged breaches of fiduciary
duties and alleged violations of consumer fraud statues. Plaintiffs seek damages
in an unspecified amount and also seek to establish a claims resolution facility
for the determination of individual issues.
IDS Life believes it has meritorious defenses to these and other actions arising
in connection with the conduct of its business activities and intends to defend
them vigorously. IDS Life believes that it is not a party to, nor are any of its
properties the subject of, any pending legal proceedings which would have a
material adverse effect on its consolidated financial condition.
Year 2000
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of the IDS Life Variable
Account 10. The IDS Life Variable Account 10 has no computer systems of its own
but is dependent upon the systems maintained by, AEFC and certain other third
parties.
A comprehensive review of AEFC's computer systems and business processes has
been conducted to identify the major systems that could be affected by the Year
2000 issue. Steps are being taken to resolve any potential problems including
modification of existing software and the purchase of new software. These
measures are scheduled to be completed and tested on a timely basis. AEFC's goal
is to complete internal remediation and testing of each of its critical systems
by the end of 1998 and to continue compliance efforts through 1999. The Year
2000 readiness of unaffiliated investment managers and other third parties whose
system failures could have an impact on IDS Life Variable Account 10's
operations currently is being evaluated. The potential materiality of any such
impact is not known at this time.
Regular and special reports
Services
To help you track and evaluate the performance of your annuity, we provide:
Quarterly statements showing the value of your investment.
Annual reports containing required information on the annuity and its underlying
investments.
A personalized annuity progress report detailing the cumulative return since the
contract was purchased and the average annual rate of return on your
investments. This report, which is unique in the industry, is available upon
request from your financial advisor.
<PAGE>
Table of contents of the Statement of Additional Information
IDS Life Preferred Retirement Account........................................3
Performance information......................................................3
Calculating annuity payouts..................................................7
Rating agencies..............................................................8
Principal underwriter........................................................9
Independent auditors.........................................................9
Prospectus...................................................................9
Financial statements -
IDS Life Variable Account 10
IDS Life Insurance Company
- ------------------------------------------------------------------------------
Please check the appropriate box to receive a copy of the Statement of
Additional Information for:
IDS Life Flexible Portfolio Annuity
IDS Life Retirement Annuity Mutual Funds
AIM Variable Insurance Funds, Inc.
Putnam Variable Trust
American Century Variable Portfolios, Inc.
Templeton Variable Products Series Fund
Warburg Pincus Trust/Small Company Growth Portfolio
Please return this request to:
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
Your name
Address
City State Zip
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for
IDS LIFE FLEXIBLE PORTFOLIO ANNUITY
IDS Life Variable Account 10
May 1, 1998
IDS Life Variable Account 10 is a separate account established and maintained by
IDS Life Insurance Company (IDS Life).
This Statement of Additional Information, dated May 1, 1998, is not a
prospectus. It should be read together with the account's prospectus, dated May
1, 1998, which may be obtained from your financial advisor, or by writing or
calling IDS Life at the address or telephone number below.
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440
800-437-0602
<PAGE>
TABLE OF CONTENTS
IDS Life Preferred Retirement Account..................................p. 3
Performance Information................................................p. 3
Calculating Annuity Payouts............................................p. 7
Rating Agencies........................................................p. 8
Principal Underwriter..................................................p. 9
Independent Auditors...................................................p. 9
Prospectus.............................................................p. 9
Financial Statements
IDS Life Variable Account 10
IDS Life Insurance Company
<PAGE>
IDS LIFE PREFERRED RETIREMENT ACCOUNT
The Flexible Portfolio Annuity may be used to fund the IDS Life Preferred
Retirement Account (PRA) as a way to build tax-deferred retirement income. The
PRA can be used to supplement, or as an alternative to, a non-deductible IRA or
other retirement plan.
The advantages of the IDS Life Preferred Retirement Account over a
non-deductible IRA are shown below:
<TABLE>
<CAPTION>
IDS Life Preferred Retirement Account Non-deductible IRA
<S> <C> <C>
- --------------------------- --------------------------------------- ----------------------------------------
Maximum amount you can $50,000 to $1 million initially, then $2,000 per year ($4,000 per year for
contribute $50,000 to $100,000 per year married individuals filing jointly)
depending on your age. (spouse can
have own plan)
- --------------------------- --------------------------------------- ----------------------------------------
Highest age you can The later of age 85 or the 10th 70 1/2 years old
contribute contract anniversary
- --------------------------- --------------------------------------- ----------------------------------------
Types of income you can Any type: wages, investment income, Generally limited to income from
contribute gifts, inheritance, etc. employment
- --------------------------- --------------------------------------- ----------------------------------------
Records you must None required, but IDS Life furnishes You must keep all records yourself
keep furnishes you
reports for your files
- --------------------------- --------------------------------------- ----------------------------------------
Reports you must file None You must report all contributions and
with the IRS withdrawals each year
- --------------------------- --------------------------------------- ----------------------------------------
Age at which you must The later of age 85 or the 10th 70 1/2 years old
begin withdrawals contract anniversary
- --------------------------- --------------------------------------- ----------------------------------------
</TABLE>
PERFORMANCE INFORMATION
Calculation of yield for Subaccount HM (Investing in IDS Life Moneyshare Fund)
Subaccount HM, which invests in IDS Life Moneyshare Fund, calculates an
annualized simple yield and a compound yield based on a seven-day period.
The simple yield is calculated by determining the net change in the value of a
hypothetical subaccount having the balance of one accumulation unit at the
beginning of the seven-day period. (The net change does not include capital
change, but does include a pro rata share of the annual contract charges,
including the annual contract administrative charge and the mortality and
expense risk fee.) The net change in the subaccount value is divided by the
value of the subaccount at the beginning of the period to obtain the return for
the period. That return is then multiplied by 365/7 to obtain an annualized
figure.
<PAGE>
The value of the hypothetical subaccount includes the amount of any declared
dividends, the value of any shares purchased with any dividend paid during the
period and any dividends declared for such shares. The variable subaccount's
yield does not include any realized or unrealized gains or losses, nor does it
include the effect of any applicable surrender charge.
The subaccount calculates its compound yield according to the following formula:
Compound Yield = [(return for seven-day period +1) x (365/7)] - 1
Annualized Yield based on the Seven-Day Period ended Dec. 31, 1997
Subaccount investing in: Simple Yield Compound Yield
IDS Life Moneyshare Fund 3.90% 3.97%
The rate of return, or yield, on the subaccount's accumulation unit may
fluctuate daily and does not provide a basis for determining future yields.
Investors must consider, when comparing an investment in subaccount HM with
fixed annuities, that fixed annuities often provide an agreed-to or guaranteed
fixed yield for a stated period of time, whereas the variable subaccount's yield
fluctuates. In comparing the yield of subaccount HM to a money market fund, you
should consider the different services that the annuity provides.
Calculation of yield for Subaccounts (Investing in income funds)
Quotations of yield will be based on all investment income earned during a
particular 30-day period, less expenses accrued during the period (net
investment income) and will be computed by dividing net investment income per
accumulation unit by the value of an accumulation unit on the last day of the
period, according to the following formula:
YIELD = 2[(a-b + 1)6 - 1]
cd
where: a = dividends and investment income earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of accumulation units
outstanding during the period that were entitled to
receive dividends.
d = the maximum offering price per accumulation unit on
the last day of the period.
Yield on the subaccount is earned from the increase in the net asset value of
shares of the fund in which the subaccount invests and from dividends declared
and paid by the fund, which are automatically invested in shares of the fund.
Annualized Yield based on the 30-day Period ended Dec. 31, 1997
Subaccount investing in: Yield
IDS Life Special Income (HS) 6.83%
IDS Life Global Yield (HY) 5.87
IDS Life Income Advantage (HV) 8.23
<PAGE>
Calculation of average annual total return
Quotations of average annual total return for a subaccount will be expressed in
terms of the average annual compounded rate of return of a hypothetical
investment in the annuity contract over a period of one, five and ten years (or,
if less, up to the life of the account), calculated according to the following
formula:
P(1+T)n = ERV
where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of a hypothetical $1,000 payment
made at the beginning of the one, five, or ten year (or
other) period at the end of the one, five, or ten year (or
other) period (or fractional portion thereof).
We show actual performance from the date the subaccounts began investing in
funds. We also show performance from the commencement date of the funds as if
the annuity had existed at that time.
Average Annual Total Return For Period Ended: Dec. 31, 1997
Average Annual Total Return with Surrender
<TABLE>
<CAPTION>
Performance Since Performance Since
Commencement of the Commencement of the Fund
Subaccount
Since Since
Subaccount investing in:* 1 Year Commencement 1 Year 5 Years 10 Years Commencement
<S> <C> <C> <C> <C> <C> <C>
IDS LIFE
Aggressive Growth Fund (3/96;1/92)* 4.15% 7.77% 4.15% 10.69% --% 10.34%
Capital Resource Fund (3/96;10/81) 15.51 10.23 15.51 10.26 13.16 --
Global Yield (5/96;4/96) -4.53 1.56 -4.53 -- -- 1.56
Growth Dimensions (5/96;4/96) 15.73 16.39 15.73 -- -- 16.40
Income Advantage (5/96;4/96) 4.88 6.03 4.88 -- -- 6.03
International Equity Fund (3/96;1/92) -5.64 0.23 -5.64 6.89 -- 6.36
Managed Fund (3/96;4/86) 10.94 12.98 10.94 11.13 12.40 --
Moneyshare Fund (3/96;10/81) -3.22 -0.09 -3.22 2.17 4.18 --
Special Income Fund (3/96;10/81) 0.40 3.20 0.40 7.49 8.42 --
AIM
AIM V.I. Growth and Income Fund (3/96;5/94) 17.07 16.43 17.07 -- -- 18.47
AMERICAN
American Century VP Value (5/96;5/96) 17.42 17.82 17.42 -- -- 17.79
PUTNAM
Putnam VT New Opportunities Fund (3/96;5/94) 14.67 9.11 14.67 -- -- 20.27
TEMPLETON
Templeton Developing Markets Fund: Class I -37.15 -25.72 -37.15 -- -- -25.69
(3/96;5/96)
WARBURG
Warburg Pincus Trust Small Company Growth 7.13 9.00 7.13 -- -- 18.30
(3/96;6/95)
<PAGE>
Average Annual Total Return without Surrender
Performance Since Performance Since
Commencement of the Commencement of the Fund
Subaccount
Since Since
Subaccount investing in:* 1 Year Commencement 1 Year 5 Years 10 Years Commencement
IDS LIFE
Aggressive Growth Fund 11.15% 11.33% 11.15% 11.35% --% 10.85%
(3/96;1/92)*
Capital Resource Fund (3/96;10/81) 22.51 13.72 22.51 10.93 13.16 --
Global Yield (5/96;4/96) 2.47 5.66 2.47 -- -- 5.66
Growth Dimensions (5/96;4/96) 22.73 20.14 22.73 -- -- 20.15
Income Advantage (5/96;4/96) 11.88 10.01 11.88 -- -- 10.01
International Equity Fund 1.36 4.00 1.36 7.65 -- 6.97
(3/96;1/92)
Managed Fund (3/96;4/86) 17.94 16.40 17.94 11.77 12.40 --
Moneyshare Fund (3/96;10/81) 3.78 3.69 3.78 3.07 4.18 --
Special Income Fund (3/96;10/81) 7.40 6.89 7.40 8.23 8.42 --
AIM
AIM V.I. Growth and Income Fund
(3/96;5/94) 24.07 19.77 24.07 -- -- 19.50
AMERICAN
American Century VP Value 24.42 21.54 24.42 -- -- 21.50
(5/96;5/96)
PUTNAM VT
Putnam VT New Opportunities Fund 21.67 12.63 21.67 -- -- 21.26
(3/96;5/94)
TEMPLETON
Templeton Developing Markets Fund:
Class I (3/96;5/96) -30.15 -20.95 -30.15 -- -- -20.92
WARBURG
Warburg Pincus Trust - Small
Company Growth (3/96;6/95) 14.13 12.53 14.13 -- -- 20.44
</TABLE>
* (Commencement dates of the subaccounts; commencement dates of the funds).
Aggregate Total Return
Aggregate total return represents the cumulative change in the value of an
investment over a specified period of time (reflecting change in a subaccount's
accumulation unit value) and is computed by the following formula:
ERV - P
P
where: P = a hypothetical initial payment of $1,000.
ERV = Ending Redeemable Value of a hypothetical $1,000 payment
made at the beginning of the one, five, or ten year (or
other) period at the end of the one, five, or ten year (or
other) period (or fractional portion thereof).
The Securities and Exchange Commission requires that an assumption be made that
the contract owner surrenders the entire contract at the end of the one, five
and ten year periods (or, if less, up to the life of the account) for which
performance is required to be calculated. In addition, performance figures may
be shown without the deduction of a surrender charge.
<PAGE>
Total return figures reflect the deduction of all applicable charges including
the contract administrative charge and mortality and expense risk fee.
Performance of the subaccounts may be quoted or compared to rankings, yields, or
returns or used in variable annuity accumulation or settlement illustrations as
published or prepared by independent rating or statistical services or
publishers or publications such as The Bank Rate Monitor National Index,
Barron's, Business Week, CDA Technologies, Donoghue's Money Market Fund Report,
Financial Services Week, Financial Times, Financial World, Forbes, Fortune,
Global Investor, Institutional Investor, Investor's Daily, Kiplinger's Personal
Finance, Lipper Analytical Services, Money, Morningstar, Mutual Fund Forecaster,
Newsweek, The New York Times, Personal Investor, Stanger Report, Sylvia Porter's
Personal Finance, USA Today, U.S. News and World Report, The Wall Street Journal
and Wiesenberger Investment Companies Service.
CALCULATING ANNUITY PAYOUTS
The Variable Account
The following calculations are done separately for each of the subaccounts of
the variable account. The separate monthly payouts, added together, make up your
total variable annuity payout.
Initial Payout: To compute your first monthly payment, we:
o determine the dollar value of your annuity as of the valuation date
seven days before the retirement date and then deduct any applicable
premium tax.
o apply the result to the annuity table contained in the contract or
another table at least as favorable. The annuity table shows the amount
of the first monthly payment for each $1,000 of value which depends on
factors built into the table, as described below.
Annuity Units: The value of your subaccount is then converted to annuity units.
To compute the number credited to you, we divide the first monthly payment by
the annuity unit value (see below) on the valuation date on (or next day
preceding) the seventh calendar day before the retirement date. The number of
units in your subaccount is fixed. The value of the units fluctuates with the
performance of the underlying mutual fund.
Subsequent Payouts: To compute later payouts, we multiply:
o the annuity unit value on the valuation date on or immediately
preceding the seventh calendar day before the payout is due; by the
fixed number of annuity units credited to you.
<PAGE>
Annuity Table: The table shows the amount of the first monthly payment for each
$1,000 of contract value according to the age and, when applicable, the sex of
the annuitant. (Where required by law, we will use a unisex table of settlement
rates.) The table assumes that the contract value is invested at the beginning
of the annuity payout period and earns a 5% rate of return, which is reinvested
and helps to support future payouts.
Substitution of 3.5% Table: If you ask us at least 30 days before the retirement
date, we will substitute an annuity table based on an assumed 3.5% investment
rate for the 5% table in the contract. The assumed investment rate affects both
the amount of the first payout and the extent to which subsequent payouts
increase or decrease. Using the 5% table results in a higher initial payment,
but later payouts will increase more slowly when annuity unit values are rising
and decrease more rapidly when they are declining.
Annuity Unit Values: This value was originally set at $1 for each variable
subaccount. To calculate later values we multiply the last annuity value by
the product of:
o the net investment factor; and
o the neutralizing factor. The purpose of the neutralizing factor is to
offset the effect of the assumed investment rate built into the
annuity table. With an assumed investment rate of 5%, the neutralizing
factor is 0.999866 for a one day valuation period.
Net Investment Factor:
o Determined each business day by adding the underlying mutual fund's
current net asset value per share plus per share amount of any current
dividend or capital gain distribution; then
o dividing that sum by the previous net asset value per share; and
o subtracting the percentage factor representing the mortality and
expense risk fee from the result.
Because the net asset value of the underlying mutual fund may fluctuate, the net
investment factor may be greater or less than one, and the accumulation unit
value may increase or decrease. You bear this investment risk in a variable
subaccount.
The Fixed Account
Your fixed annuity payout amounts are guaranteed. Once calculated, your payout
will remain the same and never change. To calculate your annuity payouts we:
o take the value of your fixed account at the retirement date or the
date you have selected to begin receiving your annuity payouts; then
o using an annuity table we apply the value according to the annuity
payout plan you select; and
o the annuity payout table we use will be the one in effect at the time
you choose to begin your annuity payouts. The table will be equal
to or greater than the table in your contract.
<PAGE>
RATING AGENCIES
The following chart reflects the ratings given to IDS Life by independent rating
agencies. These agencies evaluate the financial soundness and claims-paying
ability of insurance companies based on a number of different factors. This
information does not relate to the management or performance of the variable
subaccounts of the annuity. This information relates only to the fixed account
and reflects IDS Life's ability to make annuity payouts and to pay death
benefits and other distributions from the annuity.
Rating agency Rating
A.M. Best A+
(Superior)
Duff & Phelps AAA
Moody's Aa2
PRINCIPAL UNDERWRITER
The principal underwriter for the variable account is IDS Life, which offers the
variable annuities on a continuous basis.
Surrender charges received by IDS Life for 1997 and 1996, aggregated $14,502,145
and $11,956,753 respectively. Commissions paid by IDS Life for 1997 and 1996,
aggregated $17,883,488 and $17,247,007, respectively. The surrender charges were
applied toward payment of commissions.
INDEPENDENT AUDITORS
The financial statements of IDS Life Variable Account 10 including the
statements of net assets as of Dec. 31, 1997, and the related statement of
operations for the year then ended and the statements of changes in net assets
for the year ended Dec. 31, 1997 and for the period from March 5, 1996
(commencement of operations) to Dec. 31, 1996, and the consolidated financial
statements of IDS Life Insurance Company as of Dec. 31, 1997 and 1996 and for
each of the three years in the period then ended, appearing in this Statement of
Additional Information have been audited by Ernst & Young LLP, independent
auditors, as stated in their reports appearing herein.
PROSPECTUS
The prospectus dated May 1, 1998, is hereby incorporated in this Statement of
Additional Information by reference.
<PAGE>
IDS Life Variable Account 10
Annual Financial Information
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company
We have audited the accompanying individual and combined statements of net
assets of the segregated asset subaccounts of IDS Life Variable Account 10
(comprised of subaccounts HC, HI, HA, HS, HM, HD, HG, HY, HV, HW, HN, HP, HK and
HT) as of December 31, 1997, and the related statements of operations for the
year then ended, and the statements of changes in net assets for the year ended
December 31, 1997 and the period March 5, 1996 (commencement of operations) to
December 31, 1996, except for subaccounts HG, HY, HV and HP which are for the
year ended December 31, 1997 and the period May 1, 1996 (commencement of
operations) to December 31, 1996. These financial statements are the
responsibility of the management of IDS Life Insurance Company. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned at December 31, 1997 with the affiliated and
unaffiliated mutual fund managers. 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 individual and combined financial position of the
segregated asset subaccounts of IDS Life Variable Account 10 at December 31,
1997, and the individual and combined results of their operations and changes in
their net assets for the periods described above, in conformity with generally
accepted accounting principles.
Ernst & Young LLP
Minneapolis, Minnesota
March 13, 1998
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Net Assets Dec. 31, 1997
Segregated Asset Subaccount
--------------------------------------------------------------------------------------------
Assets HC HI HA HS HM
- ------------------------------------------------------------------------------------------------------------------------------------
Investments in shares of mutual funds,
at market value:
IDS Life Capital Resource Fund
5,453,621 shares at net asset value
<S> <C> <C> <C> <C> <C>
of $28.58 per share (cost $142,863,049) $ 155,843,105 $ - $ - $ - $ -
IDS Life International Equity Fund
9,147,506 shares at net asset value
of $13.63 per share (cost $127,001,485) - 124,670,617 - - -
IDS Life Aggressive Growth Fund
8,559,750 shares at net asset value
of $16.07 per share (cost $138,207,473) - - 137,497,896 - -
IDS Life Special Income Fund
14,065,928 shares at net asset value
of $11.80 per share (cost $165,903,130) - - - 165,908,767 -
IDS Life Moneyshare Fund, Inc.
160,985,186 shares at net asset value
of $1.00 per share (cost $160,968,932) - - - - 160,971,770
IDS Life Managed Fund, Inc.
11,101,901 shares at net asset value
of $18.04 per share (cost $196,458,268) - - - - -
IDS Life Growth Dimensions Fund
29,426,253 shares at net asset value
of $13.70 per share (cost $351,769,867) - - - - -
IDS Life Global Yield Fund
6,233,514 shares at net asset value
of $10.39 per share (cost $64,163,703) - - - - -
IDS Life Income Advantage Fund
18,116,462 shares at net asset value
of $10.38 per share (cost $184,110,214) - - - - -
AIM V.I. Growth and Income Fund
15,859,425 shares at net asset value
of $18.87 per share (cost $259,690,258) - - - - -
Putnam VT New Opportunities Fund
15,630,892 shares at net asset value
of $21.23 per share (cost $285,199,389) - - - - -
American Century VP Value
15,229,889 shares at net asset value
of $6.93 per share (cost $91,534,721) - - - - -
Templeton Developing Markets Fund: Class 1
20,635,227 shares at net asset value
of $6.63 per share (cost $193,938,715) - - - - -
Warburg Pincus Trust/Small
Company Growth Portfolio
13,872,606 shares at net asset value
of $16.48 per share (cost $201,333,371) - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
155,843,105 124,670,617 137,497,896 165,908,767 160,971,770
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends receivable - - - 1,002,966 752,013
Accounts receivable from IDS Life
for contract purchase payments 143,802 74,082 112,310 413,918 686,300
Receivable from mutual funds for
share redemptions 265 82,339 - - 68,220
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 155,987,172 124,827,038 137,610,206 167,325,651 162,478,303
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payable to IDS Life for:
Mortality and expense risk fee 173,084 138,647 152,284 183,379 180,385
Contract terminations 265 82,339 - - 68,220
Payable to mutual funds for investments
purchased 143,802 74,172 112,310 1,233,505 1,257,928
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 317,151 295,158 264,594 1,416,884 1,506,533
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to contracts in
accumulation period 155,424,061 124,346,448 137,027,737 165,828,857 160,871,928
Net assets applicable to contracts in
payment period 245,960 185,432 317,875 79,910 99,842
- ------------------------------------------------------------------------------------------------------------------------------------
Total net assets $ 155,670,021 $ 124,531,880 $ 137,345,612 $ 165,908,767 $ 160,971,770
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding 122,749,028 115,579,437 112,555,811 146,644,987 150,354,200
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value per accumulation unit $ 1.27 $ 1.08 $ 1.22 $ 1.13 $ 1.07
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Net Assets - continued Dec. 31, 1997
Segregated Asset Subaccount
-----------------------------------------------------------------------------------------
Assets HD HG HY HV HW
- ------------------------------------------------------------------------------------------------------------------------------------
Investments in shares of mutual funds,
at market value:
IDS Life Capital Resource Fund
5,453,621 shares at net asset value
<S> <C> <C> <C> <C> <C>
of $28.58 per share (cost $142,863,049) $ - $ - $ - $ - $ -
IDS Life International Equity Fund
9,147,506 shares at net asset value
of $13.63 per share (cost $127,001,485) - - - - -
IDS Life Aggressive Growth Fund
8,559,750 shares at net asset value
of $16.07 per share (cost $138,207,473) - - - - -
IDS Life Special Income Fund
14,065,928 shares at net asset value
of $11.80 per share (cost $165,903,130) - - - - -
IDS Life Moneyshare Fund, Inc.
160,985,186 shares at net asset value
of $1.00 per share (cost $160,968,932) - - - - -
IDS Life Managed Fund, Inc.
11,101,901 shares at net asset value
of $18.04 per share (cost $196,458,268) 200,251,161 - - - -
IDS Life Growth Dimensions Fund
29,426,253 shares at net asset value
of $13.70 per share (cost $351,769,867) - 403,139,604 - - -
IDS Life Global Yield Fund
6,233,514 shares at net asset value
of $10.39 per share (cost $64,163,703) - - 64,753,886 - -
IDS Life Income Advantage Fund
18,116,462 shares at net asset value
of $10.38 per share (cost $184,110,214) - - - 188,136,828 -
AIM V.I. Growth and Income Fund
15,859,425 shares at net asset value
of $18.87 per share (cost $259,690,258) - - - - 299,267,340
Putnam VT New Opportunities Fund
15,630,892 shares at net asset value
of $21.23 per share (cost $285,199,389) - - - - -
American Century VP Value
15,229,889 shares at net asset value
of $6.93 per share (cost $91,534,721) - - - - -
Templeton Developing Markets Fund: Class 1
20,635,227 shares at net asset value
of $6.63 per share (cost $193,938,715) - - - - -
Warburg Pincus Trust/Small
Company Growth Portfolio
13,872,606 shares at net asset value
of $16.48 per share (cost $201,333,371) - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
200,251,161 403,139,604 64,753,886 188,136,828 299,267,340
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends receivable - - 339,085 1,367,392 -
Accounts receivable from IDS Life for contract
purchase payments 348,332 435,159 103,946 380,602 -
Receivable from mutual funds for
share redemptions 617 96,800 61 42 -
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 200,600,110 403,671,563 65,196,978 189,884,864 299,267,340
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payable to IDS Life for:
Mortality and expense risk fee 219,347 441,739 71,684 206,581 325,302
Contract terminations 617 96,800 61 42 -
Payable to mutual funds for investments
purchased 348,332 435,159 371,347 1,541,413 -
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 568,296 973,698 443,092 1,748,036 325,302
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to contracts in
accumulation period 199,487,972 401,846,061 64,687,752 187,930,384 298,591,370
Net assets applicable to contracts in
payment period 543,842 851,804 66,134 206,444 350,668
- ------------------------------------------------------------------------------------------------------------------------------------
Total net assets $ 200,031,814 $ 402,697,865 $ 64,753,886 $ 188,136,828 $ 298,942,038
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding 150,987,102 295,452,068 58,925,382 160,046,402 214,549,068
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value per accumulation unit $ 1.32 $ 1.36 $ 1.10 $ 1.17 $ 1.39
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Net Assets - continued Dec. 31, 1997
Segregated Asset Subaccount
------------------------------------------------------------------------------ Combined
Assets HN HP HK HT Variable
Account
- ------------------------------------------------------------------------------------------------------------------------------------
Investments in shares of mutual funds,
at market value:
IDS Life Capital Resource Fund
5,453,621 shares at net asset value
<S> <C> <C> <C> <C> <C>
of $28.58 per share (cost $142,863,049) $ - $ - $ - $ - $ 155,843,105
IDS Life International Equity Fund
9,147,506 shares at net asset value
of $13.63 per share (cost $127,001,485) - - - - 124,670,617
IDS Life Aggressive Growth Fund
8,559,750 shares at net asset value
of $16.07 per share (cost $138,207,473) - - - - 137,497,896
IDS Life Special Income Fund
14,065,928 shares at net asset value
of $11.80 per share (cost $165,903,130) - - - - 165,908,767
IDS Life Moneyshare Fund, Inc.
160,985,186 shares at net asset value
of $1.00 per share (cost $160,968,932) - - - - 160,971,770
IDS Life Managed Fund, Inc.
11,101,901 shares at net asset value
of $18.04 per share (cost $196,458,268) - - - - 200,251,161
IDS Life Growth Dimensions Fund
29,426,253 shares at net asset value
of $13.70 per share (cost $351,769,867) - - - - 403,139,604
IDS Life Global Yield Fund
6,233,514 shares at net asset value
of $10.39 per share (cost $64,163,703) - - - - 64,753,886
IDS Life Income Advantage Fund
18,116,462 shares at net asset value
of $10.38 per share (cost $184,110,214) - - - - 188,136,828
AIM V.I. Growth and Income Fund
15,859,425 shares at net asset value
of $18.87 per share (cost $259,690,258) - - - - 299,267,340
Putnam VT New Opportunities Fund
15,630,892 shares at net asset value
of $21.23 per share (cost $285,199,389) 331,843,827 - - - 331,843,827
American Century VP Value
15,229,889 shares at net asset value
of $6.93 per share (cost $91,534,721) - 105,543,021 - - 105,543,021
Templeton Developing Markets Fund: Class 1
20,635,227 shares at net asset value
of $6.63 per share (cost $193,938,715) - - 136,811,555 - 136,811,555
Warburg Pincus Trust/Small
Company Growth Portfolio
13,872,606 shares at net asset value
of $16.48 per share (cost $201,333,371) - - - 228,620,551 228,620,551
- ------------------------------------------------------------------------------------------------------------------------------------
331,843,827 105,543,021 136,811,555 228,620,551 2,703,259,928
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends receivable - - - - 3,461,456
Accounts receivable from IDS Life
for contract purchase payments - - - - 2,698,451
Receivable from mutual funds for
share redemptions - - - - 248,344
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 331,843,827 105,543,021 136,811,555 228,620,551 2,709,668,179
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities Payable to IDS Life for:
Mortality and expense risk fee 365,473 114,182 149,772 250,191 2,972,050
Contract terminations - - - - 248,344
Payable to mutual funds for investments
purchased - - - - 5,517,968
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 365,473 114,182 149,772 250,191 8,738,362
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to contracts in
accumulation period 331,020,707 105,317,482 136,591,033 228,181,486 2,697,153,278
Net assets applicable to contracts in
payment period 457,647 111,357 70,750 188,874 3,776,539
- ------------------------------------------------------------------------------------------------------------------------------------
Total net assets $ 331,478,354 $ 105,428,839 $ 136,661,783 $ 228,370,360 $ 2,700,929,817
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding 266,067,508 75,956,936 209,358,338 183,718,637
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value per accumulation unit $ 1.24 $ 1.39 $ 0.65 $ 1.24
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Operations Year ended Dec.31, 1997
Segregated Asset Subaccount
--------------------------------------------------------------------------------------
Investment income HC HI HA HS HM
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dividend income from mutual funds $ 3,975,913 $ 3,887,300 $ 11,465,208 $ 12,454,499 $ 7,609,865
Mortality and expense risk fee 1,469,065 1,164,372 1,250,949 1,595,978 1,888,990
- ------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss) - net 2,506,848 2,722,928 10,214,259 10,858,521 5,720,875
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investments - net
- ------------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on sales of investments in mutual funds:
Proceeds from sales 599,613 604,843 107,258 4,413,883 71,773,068
Cost of investments sold 590,237 598,854 99,620 4,341,002 71,775,762
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 9,376 5,989 7,638 72,881 (2,694)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation of investments 20,416,760 (3,027,897) 2,091,485 (1,612,428) 2,432
- ------------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 20,426,136 (3,021,908) 2,099,123 (1,539,547) (262)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 22,932,984 $ (298,980) $ 12,313,382 $ 9,318,974 $ 5,720,613
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Operations - continued Year ended Dec. 31, 1997
Segregated Asset Subaccount
-------------------------------------------------------------------------------------
Investment income HD HG HY HV HW
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dividend income from mutual funds $ 17,564,821 $ 2,147,882 $ 2,236,020 $ 11,105,321 $ 381,129
Mortality and expense risk fee 1,582,046 3,093,767 545,067 1,500,813 2,303,490
- ------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss) - net 15,982,775 (945,885) 1,690,953 9,604,508 (1,922,361)
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investments - net
- ------------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on sales of investments in mutual funds:
Proceeds from sales 115,051 452,945 108,829 1,090,254 2,061,078
Cost of investments sold 107,307 402,982 108,012 1,046,857 1,779,865
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 7,744 49,963 817 43,397 281,213
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation of investments 2,794,924 46,438,001 9,717 3,291,337 34,663,516
- ------------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 2,802,668 46,487,964 10,534 3,334,734 34,944,729
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 18,785,443 $ 45,542,079 $ 1,701,487 $ 12,939,242 $ 33,022,368
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Operations - continued Year ended Dec. 31, 1997
Segregated Asset Subaccount
---------------------------------------------------------------------------- Combined
Investment income HN HP HK HT Variable
Account
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dividend income from mutual funds $ - $ 491,038 $ 629,934 $ - $ 73,948,930
Mortality and expense risk fee 2,808,952 737,871 1,538,763 1,773,501 23,253,624
- ------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss) - net (2,808,952) (246,833) (908,829) (1,773,501) 50,695,306
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investments - net
- ------------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on sales of investments in mutual funds:
Proceeds from sales 2,623,360 645,476 1,459,819 1,738,117 87,793,594
Cost of investments sold 2,430,882 569,765 1,526,136 1,624,081 87,001,362
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 192,478 75,711 (66,317) 114,036 792,232
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation of investments 49,093,786 12,434,801 (56,349,117) 25,515,684 135,763,001
- ------------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 49,286,264 12,510,512 (56,415,434) 25,629,720 136,555,233
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 46,477,312 $ 12,263,679 $ (57,324,263) $ 23,856,219 $ 187,250,539
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets Year ended Dec. 31, 1997
Segregated Asset Subaccount
--------------------------------------------------------------------------------------------
Operations HC HI HA HS HM
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net $ 2,506,848 $ 2,722,928 $ 10,214,259 $ 10,858,521 $ 5,720,875
Net realized gain (loss) on investments 9,376 5,989 7,638 72,881 (2,694)
Net change in unrealized appreciation or
depreciation of investments 20,416,760 (3,027,897) 2,091,485 (1,612,428) 2,432
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 22,932,984 (298,980) 12,313,382 9,318,974 5,720,613
- ------------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
Contract purchase payments 36,931,780 38,880,699 35,621,085 98,768,294 266,965,682
Net transfers* 23,406,717 31,636,834 30,159,841 (30,665,504) (223,861,762)
Transfers for policy loans 26,922 10,579 36,999 21,113 41,060
Annuity payments (16,018) (14,311) (17,548) (4,791) (253)
Contract charges (112,558) (70,587) (99,490) (35,668) (18,947)
Contract terminations:
Surrender benefits (2,207,550) (1,366,489) (1,762,063) (1,535,542) (2,045,021)
Death benefits (663,208) (469,896) (629,417) (988,185) (568,930)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from
contract transactions 57,366,085 68,606,829 63,309,407 65,559,717 40,511,829
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at beginning of year 75,370,952 56,224,031 61,722,823 91,030,076 114,739,328
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 155,670,021 $ 124,531,880 $ 137,345,612 $ 165,908,767 $ 160,971,770
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at beginning of year 72,833,032 52,954,574 56,317,608 86,466,532 111,372,433
Contract purchase payments 31,938,729 35,623,923 31,643,209 90,741,395 254,524,237
Net transfers* 20,532,788 28,832,710 26,922,056 (28,244,963) (212,984,080)
Transfers for policy loans 22,712 9,693 31,877 19,371 39,395
Contract charges (99,740) (64,451) (88,979) (33,008) (18,325)
Contract terminations:
Surrender benefits (1,872,725) (1,324,463) (1,691,371) (1,322,029) (2,037,904)
Death benefits (605,768) (452,549) (578,589) (982,311) (541,556)
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at end of year 122,749,028 115,579,437 112,555,811 146,644,987 150,354,200
- ------------------------------------------------------------------------------------------------------------------------------------
*Includes transfer activity from (to) other subaccounts and transfers (from) to
IDS Life for conversion from (to) fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets - continued Year ended Dec. 31, 1997
Segregated Asset Subaccount
---------------------------------------------------------------------------------------------
Operations HD HG HY HV HW
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net $ 15,982,775 $ (945,885) $ 1,690,953 $ 9,604,508 $ (1,922,361)
Net realized gain (loss) on investments 7,744 49,963 817 43,397 281,213
Net change in unrealized appreciation or
depreciation of investments 2,794,924 46,438,001 9,717 3,291,337 34,663,516
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 18,785,443 45,542,079 1,701,487 12,939,242 33,022,368
- ------------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
Contract purchase payments 82,774,910 141,846,009 23,206,919 105,160,412 104,217,902
Net transfers* 44,435,585 118,536,433 17,980,115 14,653,385 83,017,986
Transfers for policy loans 33,010 41,791 2,140 10,414 49,444
Annuity payments (27,899) (62,857) (5,556) (14,613) (25,231)
Contract charges (86,857) (192,518) (10,828) (23,250) (126,211)
Contract terminations:
Surrender benefits (2,077,407) (3,726,731) (443,740) (1,450,110) (2,338,296)
Death benefits (904,888) (1,341,632) (203,481) (937,278) (666,084)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from
contract transactions 124,146,454 255,100,495 40,525,569 117,398,960 184,129,510
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at beginning of year 57,099,917 102,055,291 22,526,830 57,798,626 81,790,160
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 200,031,814 $ 402,697,865 $ 64,753,886 $ 188,136,828 $ 298,942,038
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at beginning of year 50,902,429 91,977,207 21,035,193 55,065,097 72,802,697
Contract purchase payments 66,947,805 113,356,561 21,716,856 94,089,132 80,165,471
Net transfers* 35,916,564 94,614,500 16,840,943 13,150,929 63,975,812
Transfers for policy loans 26,304 32,323 1,982 9,225 37,475
Contract charges (70,688) (148,365) (10,045) (20,444) (96,137)
Contract terminations:
Surrender benefits (1,719,830) (3,262,778) (441,808) (1,362,132) (1,788,770)
Death benefits (1,015,482) (1,117,380) (217,739) (885,405) (547,480)
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at end of year 150,987,102 295,452,068 58,925,382 160,046,402 214,549,068
- ------------------------------------------------------------------------------------------------------------------------------------
*Includes transfer activity from (to) other subaccounts and transfers (from) to
IDS Life for conversion from (to) fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets - continued Year ended Dec. 31, 1997
Segregated Asset Subaccount
---------------------------------------------------------------------------- Combined
Operations HN HP HK HT Variable
Account
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net $ (2,808,952) $ (246,833) $ (908,829) $ (1,773,501) $ 50,695,306
Net realized gain (loss) on investments 192,478 75,711 (66,317) 114,036 792,232
Net change in unrealized appreciation or
depreciation of investments 49,093,786 12,434,801 (56,349,117) 25,515,684 135,763,001
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 46,477,312 12,263,679 (57,324,263) 23,856,219 187,250,539
- ------------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
Contract purchase payments 93,322,119 38,673,232 70,158,881 70,302,582 1,206,830,506
Net transfers* 73,894,714 33,214,737 56,165,618 68,184,509 340,759,208
Transfers for policy loans 51,521 9,072 21,166 20,449 375,680
Annuity payments (30,488) (7,415) (8,943) (11,662) (247,585)
Contract charges (243,638) (30,725) (96,612) (102,333) (1,250,222)
Contract terminations:
Surrender benefits (3,663,428) (468,765) (1,618,569) (1,733,708) (26,437,419)
Death benefits (812,802) (128,390) (356,668) (448,274) (9,119,133)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from
contract transactions 162,517,998 71,261,746 124,264,873 136,211,563 1,510,911,035
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at beginning of year 122,483,044 21,903,414 69,721,173 68,302,578 1,002,768,243
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 331,478,354 $ 105,428,839 $ 136,661,783 $ 228,370,360 $ 2,700,929,817
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at beginning of year 119,724,152 19,657,041 74,609,737 62,742,823
Contract purchase payments 83,991,897 30,615,557 76,017,307 62,598,014
Net transfers* 66,634,360 26,239,471 61,007,888 60,399,312
Transfers for policy loans 45,419 7,391 25,293 18,059
Contract charges (214,254) (23,330) (107,087) (89,015)
Contract terminations:
Surrender benefits (3,338,632) (415,779) (1,773,288) (1,536,543)
Death benefits (775,434) (123,415) (421,512) (414,013)
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at end of year 266,067,508 75,956,936 209,358,338 183,718,637
- ------------------------------------------------------------------------------------------------------------------------------------
*Includes transfer activity from (to) other subaccounts and transfers (from) to
IDS Life for conversion from (to) fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets Period ended Dec. 31, 1996
Segregated Asset Subaccount
-----------------------------------------------------------------------------------
Operations HC* HI* HA* HS* HM*
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net $ 9,987,371 $ 677,557 $ 5,215,149 $ 2,858,074 $ 1,741,045
Net realized gain (loss) on investments 12,108 1,436 9,744 11,274 (23)
Net change in unrealized appreciation or
depreciation of investments (7,436,704) 697,029 (2,801,062) 1,618,065 406
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 2,562,775 1,376,022 2,423,831 4,487,413 1,741,428
- ------------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
Contract purchase payments 56,060,581 41,554,519 44,191,843 103,496,668 191,361,572
Net transfers*** 17,159,991 13,498,067 15,362,767 (16,626,341) (77,976,542)
Transfers for policy loans 4,384 336 628 82 -
Annuity payments (5,797) (2,734) (2,227) (3,280) -
Contract charges (703) (266) (577) (222) (236)
Contract terminations:
Surrender benefits (257,056) (145,563) (194,679) (253,029) (269,706)
Death benefits (153,223) (56,350) (58,763) (71,215) (117,188)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from
contract transactions 72,808,177 54,848,009 59,298,992 86,542,663 112,997,900
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at beginning of period - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 75,370,952 $56,224,031 $61,722,823 $91,030,076 $114,739,328
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at beginning of period - - - - -
Contract purchase payments 56,400,154 40,418,074 42,259,043 103,731,974 189,836,790
Net transfers*** 17,272,101 13,010,729 14,584,736 (16,476,053) (76,476,138)
Transfers for policy loans 4,324 319 586 78 -
Contract charges (1,132) (420) (896) (305) (349)
Contract terminations:
Surrender benefits (666,034) (420,182) (469,681) (713,000) (1,872,914)
Death benefits (176,381) (53,946) (56,180) (76,162) (114,956)
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at end of period 72,833,032 52,954,574 56,317,608 86,466,532 111,372,433
- ------------------------------------------------------------------------------------------------------------------------------------
* For the period March 5, 1996 (commencement of operations) to Dec. 31, 1996.
** For the period May 1, 1996 (commencement of operations) to Dec. 31, 1996.
***Includes transfer activity from (to) other subaccounts and transfers (from)
to IDS Life for conversion from (to) fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets - continued Period ended Dec. 31, 1996
Segregated Asset Subaccount
----------------------------------------------------------------------------------
Operations HD* HG** HY** HV** HW*
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net $ 3,300,306 $ (128,121) $ 174,564 $ 1,123,113 $ 525,986
Net realized gain (loss) on investments 36,763 4,339 2,554 (50) 18,871
Net change in unrealized appreciation or
depreciation of investments 997,969 4,931,736 580,466 735,277 4,913,566
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 4,335,038 4,807,954 757,584 1,858,340 5,458,423
- ------------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
Contract purchase payments 42,757,191 71,415,379 16,169,875 51,746,000 56,231,920
Net transfers*** 10,438,891 26,110,325 5,641,014 4,265,679 20,365,242
Transfers for policy loans 1,902 234 - 20 741
Annuity payments (1,970) (3,374) (97) (2,118) (2,586)
Contract charges (390) (399) (19) (17) (287)
Contract terminations:
Surrender benefits (230,950) (193,049) (25,668) (56,519) (217,802)
Death benefits (199,795) (81,779) (15,859) (12,759) (45,491)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from contract transactions 52,764,879 97,247,337 21,769,246 55,940,286 76,331,737
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at beginning of period - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 57,099,917 $ 102,055,291 $ 22,526,830 $ 57,798,626 $ 81,790,160
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at beginning of period - - - - -
Contract purchase payments 41,643,373 68,063,843 15,756,300 51,071,007 54,078,974
Net transfers*** 9,912,266 24,517,537 5,427,313 4,191,671 19,260,816
Transfers for policy loans 1,770 211 - 19 675
Contract charges (574) (534) (27) (31) (378)
Contract terminations:
Surrender benefits (469,290) (506,393) (124,138) (165,797) (487,721)
Death benefits (185,116) (97,457) (24,255) (31,772) (49,669)
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at end of period 50,902,429 91,977,207 21,035,193 55,065,097 72,802,697
- ------------------------------------------------------------------------------------------------------------------------------------
* For the period March 5, 1996 (commencement of operations) to Dec. 31, 1996.
** For the period May 1, 1996 (commencement of operations) to Dec. 31, 1996.
***Includes transfer activity from (to) other subaccounts and transfers (from)
to IDS Life for conversion from (to) fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets - continued Period ended Dec. 31, 1996
Segregated Asset Subaccount
-------------------------------------------------------------------- Combined
Operations HN* HP** HK* HT* Variable
Account
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net $ (535,475) $ (36,652) $ (309,686) $ (268,990) $ 24,324,241
Net realized gain (loss) on investments 5,873 1,847 (11,235) (613) 92,888
Net change in unrealized appreciation or
depreciation of investments (2,449,348) 1,573,499 (778,043) 1,771,496 4,354,352
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (2,978,950) 1,538,694 (1,098,964) 1,501,893 28,771,481
- ------------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
Contract purchase payments 93,797,674 14,929,878 54,156,061 49,448,431 887,317,592
Net transfers*** 32,064,285 5,460,855 16,824,989 17,498,210 90,087,432
Transfers for policy loans 1,072 50 532 161 10,142
Annuity payments (2,813) (308) (1,191) (1,249) (29,744)
Contract charges (757) (25) (262) (208) (4,368)
Contract terminations:
Surrender benefits (322,379) (23,144) (114,828) (103,864) (2,408,236)
Death benefits (75,088) (2,586) (45,164) (40,796) (976,056)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from contract transactions 125,461,994 20,364,720 70,820,137 66,800,685 973,996,762
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at beginning of period - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of period $ 122,483,044 $ 21,903,414 $ 69,721,173 $ 68,302,578 $ 1,002,768,243
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at beginning of period - - - -
Contract purchase payments 90,058,689 14,509,560 57,054,308 46,639,240
Net transfers*** 30,676,346 5,225,591 17,958,600 16,445,856
Transfers for policy loans 1,028 46 579 154
Contract charges (907) (11) (447) (296)
Contract terminations:
Surrender benefits (919,136) (75,431) (320,321) (296,685)
Death benefits (91,868) (2,714) (82,982) (45,446)
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at end of period 119,724,152 19,657,041 74,609,737 62,742,823
- ------------------------------------------------------------------------------------------------------------------------------------
* For the period March 5, 1996 (commencement of operations) to Dec. 31, 1996.
** For the period May 1, 1996 (commencement of operations) to Dec. 31, 1996.
***Includes transfer activity from (to) other subaccounts and transfers (from)
to IDS Life for conversion from (to) fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
IDS Life Variable Account 10
Notes to Financial Statements
- ---------------------------------------------------------------
1. Organization
IDS Life Variable Account 10 (the Account) was established on Aug. 23, 1995 as a
segregated asset account of IDS Life Insurance Company (IDS Life) under
Minnesota law and is registered as a unit investment trust under the Investment
Company Act of 1940. The Account commenced operations on March 5, 1996.
The assets of the Account are held for the exclusive benefit of the Flexible
Portfolio Annuity contract owners and are not chargeable with liabilities
arising out of the business conducted by any other segregated asset accounts or
by IDS Life. Contract owners allocate their variable purchase payments to one or
more of the fourteen subaccounts. Such funds are then invested in shares of nine
mutual funds organized by IDS Life or in shares of one fund organized by AIM
Advisors, Inc., one fund organized by Putnam Investment Management, Inc., one
fund organized by American Century Investment Management, Inc., one fund
organized by Templeton Asset Management Ltd. or one fund portfolio organized by
Warburg Pincus Counsellors, Inc.
Each Fund is registered under the Investment Company Act of 1940 as a
diversified (non-diversified for Global Yield and Warburg Pincus Trust/Small
Company Growth Portfolio), open-end management investment company or series of
an open-end management investment company. IDS Life Capital Resource Fund, IDS
Life Special Income Fund and IDS Life Moneyshare Fund, Inc. commenced operations
on Oct. 13, 1981. IDS Life Managed Fund, Inc. commenced operations on April 30,
1986. IDS Life Aggressive Growth Fund and IDS Life International Equity Fund
commenced operations on Jan. 13, 1992. IDS Life Global Yield Fund, IDS Life
Income Advantage Fund and IDS Life Growth Dimensions Fund commenced operations
on April 30, 1996. AIM V.I. Growth and Income Fund commenced operations on May,
2, 1994. Putnam VT New Opportunities Fund commenced operations on May 2, 1994.
American Century VP Value commenced operations on May 1, 1996. Templeton
Developing Markets Fund: Class 1 commenced operations March 4, 1996. Warburg
Pincus Trust/Small Company Growth Portfolio commenced operations on June 30,
1995. Funds allocated to subaccount HC are invested in the shares of IDS Life
Capital Resource Fund; subaccount HI invests in the shares of IDS Life
International Equity Fund; subaccount HA invests in the shares of IDS Life
Aggressive Growth Fund; subaccount HS invests in the shares of IDS Life Special
Income Fund; subaccount HM invests in the shares of IDS Life Moneyshare Fund,
Inc.; subaccount HD invests in the shares of IDS Life Managed Fund, Inc.;
subaccount HG invests in the shares of IDS Life Growth Dimensions Fund;
subaccount HY invests in the shares of IDS Life Global Yield Fund; subaccount HV
invests in the shares of IDS Life Income Advantage Fund; subaccount HW invests
in the shares of AIM V.I. Growth and Income Fund; subaccount HN invests in the
shares of Putnam VT New Opportunities Fund; subaccount HP invests in the shares
of American Century VP Value; subaccount HK invests in the shares of Templeton
Developing Markets Fund: Class 1 and subaccount HT invests in the shares of
Warburg Pincus Trust/Small Company Growth Portfolio.
IDS Life serves as the investment manager and American Express Financial
Corporation (AEFC), an affiliated company, is the investment advisor for each of
the IDS Life Funds. American Express Asset Management International, Inc., a
wholly owned subsidiary of AEFC, is the sub-investment advisor for IDS Life
International Equity Fund. AIM Advisors, Inc. is the investment manager for AIM
V.I. Growth and Income Fund. Putnam Investment Management, Inc. is the
investment manager for Putnam VT New Opportunities Fund. American Century
Investment Management, Inc. is the investment manager for American Century VP
Value. Templeton Asset Management Ltd. is the investment manager for the
Templeton Developing Markets Fund: Class 1. Warburg Pincus Counsellors, Inc. is
the investment manager for the Warburg Pincus Trust/Small Company Growth
Portfolio. IDS Life serves as issuer of the contracts investing in the IDS Life
Variable Account 10.
- ---------------------------------------------------------------
2. Summary of Significant Accounting Policies
Investments in Mutual Funds
Investments in shares of the mutual funds are stated at market value, which is
the net asset value per share as determined by the respective funds. Investment
transactions are accounted for on the date the shares are purchased and sold.
The cost of investments sold and redeemed is determined on the average cost
method. Dividend distributions received from the mutual funds are reinvested in
additional shares of the mutual funds and are recorded as income by the
subaccounts on the ex-dividend date.
Unrealized appreciation or depreciation of investments in the accompanying
financial statements represents the subaccounts' share of the mutual funds'
undistributed net investment income, undistributed realized gain or loss and the
unrealized appreciation or depreciation on their investment securities.
Use of Estimates
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 disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Federal Income Taxes
IDS Life is taxed as a life insurance company. The Account is treated as part of
IDS Life for federal income tax purposes. Under existing federal income tax law,
no income taxes are payable with respect to any investment income of the
Account.
- ---------------------------------------------------------------
3. Mortality and Expense Risk Fee and Contract Charges
IDS Life makes contractual assurances to the Account that possible future
adverse changes in administrative expenses and mortality experience of the
annuitants and beneficiaries will not affect the Account. The mortality and
expense risk fee paid to IDS Life is computed daily and is equal, on an annual
basis, to 1.25 percent of the average daily net assets of the subaccounts.
An annual charge of $30 is deducted from the contract value of each Flexible
Portfolio Annuity contract. The annual charges are deducted on each contract
anniversary for administrative services provided to the Account by IDS Life. The
deduction will be allocated to the subaccounts on a pro-rata basis. If the
contract value or total purchase payments (less any payments surrendered) equals
or exceeds $25,000 on the contract anniversary, the charge will be waived. The
charge cannot be increased and does not apply after annuity payouts begin.
- ----------------------------------------------------------------
4. Surrender Charges
There are surrender charges for all purchase payments surrendered in the first
eight contract years. Charges by IDS Life for surrenders are not identified on
an individual segregated asset account basis. Charges for all segregated asset
accounts amounted to $14,502,145 in 1997 and $11,956,753 in 1996. Such charges
are not treated as a separate expense of the subaccounts. They are ultimately
deducted from contract surrender benefits paid by IDS Life.
- ---------------------------------------------------------------
5. Investment Transactions
The subaccounts' purchases of mutual fund shares including reinvestment of
dividend distributions, were as follows:
Period from
March 5, 1996
(commencement
Year ended of operations)
Subaccount Investment Dec. 31,1997 to Dec. 31, 1996
- -------------------------------------------------------------------------------
HC IDS Life Capital Resource Fund.......... $ 60,566,501 $ 83,286,499
HI IDS Life International Equity Fund...... 72,015,482 55,760,553
HA IDS Life Aggressive Growth Fund......... 73,719,919 64,865,549
HS IDS Life Special Income Fund............ 80,832,122 90,904,965
HM IDS Life Moneyshare Fund, Inc........... 118,005,771 124,065,078
HD IDS Life Managed Fund, Inc.............. 140,405,506 56,795,469
HG IDS Life Growth Dimensions Fund......... 254,947,774 97,269,819*
HY IDS Life Global Yield Fund.............. 42,325,350 22,036,116*
HV IDS Life Income Advantage Fund, Inc..... 128,093,723 57,076,025*
HW AIM V.I. Growth and Income Fund......... 184,510,639 77,304,871
HN Putnam VT New Opportunities Fund........ 162,573,266 125,826,872
HP American Century VP Value............... 71,752,784 20,403,403*
HK Templeton Developing Markets Fund: Class 1 124,894,806 70,920,700
HT Warburg Pincus Trust/Small Company
Growth Portfolio........................ 136,357,949 66,939,357
- --------------------------------------------------------------------------------
Combined Variable Account............. $1,651,001,592 $1,013,455,276
- --------------------------------------------------------------------------------
*For the period May 1, 1996 (commencement of operations) to Dec. 31, 1996.
- ----------------------------------------------------------------
6. Year 2000 Issue (Unaudited)
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of the Variable Account.
The Variable Account has no computer systems of its own but is dependent upon
the systems maintained by AEFC and certain other third parties.
A comprehensive review of AEFC's computer systems and business processes has
been conducted to identify the major systems that could be affected by the Year
2000 issue. Steps are being taken to resolve any potential problems including
modification to existing software and the purchase of new software. These
measures are scheduled to be completed and tested on a timely basis. AEFC's goal
is to complete internal remediation and testing of each system by the end of
1998 and to continue compliance efforts through 1999.
The Year 2000 readiness of unaffiliated investment managers and other third
parties whose system failures could have an impact on Variable Account's
operations is currently being evaluated. The potential materiality of any such
impact is not known at this time.
<PAGE>
<PAGE>
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company
We have audited the accompanying consolidated balance sheets of IDS Life
Insurance Company (a wholly owned subsidiary of American Express Financial
Corporation) as of December 31, 1997 and 1996 and the related consolidated
statements of income, stockholder's equity and cash flows for each of the three
years in the period ended December 31, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements 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 consolidated financial position of IDS Life Insurance
Company at December 31, 1997 and 1996, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
Ernst & Young LLP
Minneapolis, Minnesota
February 5, 1998
<PAGE>
IDS Life Financial Information
IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
Dec. 31, Dec. 31,
ASSETS 1997 1996
(thousands)
Investments:
Fixed maturities:
Held to maturity, at amortized cost (Fair value:
1997, $9,743,410; 1996, $10,521,650) $9,315,450 $10,236,379
Available for sale, at fair value (Amortized cost:
1997, $12,515,030; 199, $11,008,622) 12,876,694 11,146,845
Mortgage loans on real estate 3,618,647 3,493,364
Policy loans 498,874 459,902
Other investments 318,591 251,465
Total investments 26,628,256 25,587,955
Cash and cash equivalents 19,686 224,603
Amounts recoverable from reinsurers 205,716 157,722
Amounts due from brokers 8,400 11,047
Other accounts receivable 37,895 44,089
Accrued investment income 357,390 343,313
Deferred policy acquisition costs 2,479,577 2,330,805
Deferred income taxes, net -- 33,923
Other assets 22,700 37,364
Separate account assets 23,214,504 18,535,160
Total assets $52,974,124 $47,305,981
========= =========
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS (continued)
Dec. 31, Dec. 31
LIABILITIES AND STOCKHOLDER'S EQUITY 1997 1996
(thousands)
Liabilities:
Future policy benefits:
Fixed annuities $22,009,747 $21,838,008
Universal life-type insurance 3,280,489 3,177,149
Traditional life insurance 213,676 209,685
Disability income and long-term care insurance 533,124 424,200
Policy claims and other policyholders' funds 68,345 83,634
Deferred income taxes, net 61,582 --
Amounts due to brokers 381,458 261,987
Other liabilities 345,383 332,078
Separate account liabilities 23,214,504 18,535,160
Total liabilities 50,108,308 44,861,901
Stockholder's equity:
Capital stock, $30 par value per share;
100,000 shares authorized, issued and outstanding 3,000 3,000
Additional paid-in capital 290,847 283,615
Net unrealized gain on investments 226,359 86,102
Retained earnings 2,345,610 2,071,363
Total stockholder's equity 2,865,816 2,444,080
Total liabilities and stockholder's equity $52,974,124 $47,305,981
========= =========
See accompanying notes.
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years ended Dec. 31,
1997 1996 1995
(thousands)
<S> <C> <C> <C>
Revenues:
Premiums:
Traditional life insurance $ 52,473 $ 51,403 $ 50,193
Disability income and long-term care insurance 154,021 131,518 111,337
Total premiums 206,494 182,921 161,530
Policyholder and contractholder charges 341,726 302,999 256,454
Management and other fees 340,892 271,342 215,581
Net investment income 1,988,389 1,965,362 1,907,309
Net realized gain (loss) on investments 860 (159) (4,898)
Total revenues 2,878,361 2,722,465 2,535,976
Benefits and expenses:
Death and other benefits:
Traditional life insurance 28,951 26,919 29,528
Universal life-type insurance
and investment contracts 92,814 85,017 71,691
Disability income and
long-term care insurance 22,333 19,185 16,259
Increase (decrease) in liabilities for
future policy benefits:
Traditional life insurance 3,946 1,859 (1,315)
Disability income and
long-term care insurance 63,631 57,230 51,279
Interest credited on universal life-type
insurance and investment contracts 1,386,448 1,370,468 1,315,989
Amortization of deferred policy acquisition costs 322,731 278,605 280,121
Other insurance and operating expenses 276,596 261,468 211,642
Total benefits and expenses 2,197,450 2,100,751 1,975,194
Income before income taxes 680,911 621,714 560,782
Income taxes 206,664 207,138 195,842
Net income $ 474,247 $ 414,576 $ 364,940
======== ======== =======
See accompanying notes.
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
Three years ended Dec. 31, 1997
(thousands)
<TABLE>
<CAPTION>
Additional Net Unrealized
Capital Paid-In Gain (Loss) on Retained
Stock Capital on Investments Earnings Total
<S> <C> <C> <C> <C> <C>
Balance, Dec. 31, 1994 3,000 222,000 (275,708) 1,639,399 1,588,691
Net income -- -- -- 364,940 364,940
Change in net unrealized
gain (loss) on investments -- -- 505,837 -- 505,837
Capital contribution from parent -- 56,814 -- -- 56,814
Loss on reinsurance transaction
with affiliate -- -- -- (4,574) (4,574)
Cash dividends -- -- -- (180,000) (180,000)
Balance, Dec. 31, 1995 3,000 278,814 230,129 1,819,765 2,331,708
Net income -- -- -- 414,576 414,576
Change in net unrealized
gain (loss) on investments -- -- (144,027) -- (144,027)
Capital contribution from parent -- 4,801 -- -- 4,801
Other changes -- -- -- 2,022 2,022
Cash dividends -- -- -- (165,000) (165,000)
Balance, Dec. 31, 1996 $3,000 $283,615 $ 86,102 $2,071,363 $2,444,080
Net income -- -- -- 474,247 474,247
Change in net unrealized
gain (loss) on investments -- -- 140,257 -- 140,257
Capital contribution from parent -- 7,232 -- -- 7,232
Cash dividends -- -- -- (200,000) (200,000)
Balance, Dec. 31, 1997 $3,000 $290,847 $226,359 $2,345,610 $2,865,816
===== ======= ======= ========= ========
See accompanying notes.
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended Dec. 31,
1997 1996 1995
(thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 474,247 $ 414,576 $ 364,940
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Policy loan issuance, excluding universal
life-type insurance (54,665) (49,314) (46,011)
Policy loan repayment, excluding universal
life-type insurance 46,015 41,179 36,416
Change in amounts recoverable from reinsurers (47,994) (43,335) (34,083)
Change in other accounts receivable 6,194 (4,981) 12,231
Change in accrued investment income (14,077) 4,695 (30,498)
Change in deferred policy acquisition
costs, net (156,486) (294,755) (196,963)
Change in liabilities for future policy
benefits for traditional life,
disability income and
long-term care insurance 112,915 97,479 85,575
Change in policy claims and other
policyholders' funds (15,289) 27,311 6,255
Change in deferred income tax provision (benefit) 19,982 (65,609) (33,810)
Change in other liabilities 13,305 46,724 (6,548)
(Accretion of discount)
amortization of premium, net (5,649) (23,032) (22,528)
Net realized (gain) loss on investments (860) 159 4,898
Policyholder and contractholder
charges, non-cash (160,885) (154,286) (140,506)
Other, net 7,161 (10,816) 3,849
Net cash provided by (used in) operating
activities $ 223,914 $ (14,005) $ 3,217
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
<TABLE>
<CAPTION>
Years ended Dec. 31,
1997 1996 1995
(thousands)
<S> <C> <C> <C>
Cash flows from investing activities:
Fixed maturities held to maturity:
Purchases $ (1,996) $ (43,751) $ (1,007,208)
Maturities, sinking fund payments and calls 686,503 759,248 538,219
Sales 236,761 279,506 332,154
Fixed maturities available for sale:
Purchases (3,160,133) (2,299,198) (2,452,181)
Maturities, sinking fund payments and calls 1,206,213 1,270,240 861,545
Sales 457,585 238,905 136,825
Other investments, excluding policy loans:
Purchases (524,521) (904,536) (823,131)
Sales 335,765 236,912 160,521
Change in amounts due from brokers 2,647 (11,047) 7,933
Change in amounts due to brokers 119,471 140,369 (105,119)
Net cash used in investing activities (641,705) (333,352) (2,350,442)
Cash flows from financing activities:
Activity related to universal life-type insurance
and investment contracts:
Considerations received 2,785,758 3,567,586 4,189,525
Surrenders and death benefits (3,736,242) (4,250,294) (3,141,404)
Interest credited to account balances 1,386,448 1,370,468 1,315,989
Universal life-type insurance policy loans:
Issuance (84,835) (86,501) (84,700)
Repayment 54,513 58,753 52,188
Capital contribution from parent 7,232 4,801 --
Dividends paid (200,000) (165,000) (180,000)
Net cash provided by financing activities 212,874 499,813 2,151,598
Net (decrease) increase in cash and
cash equivalents (204,917) 152,456 (195,627)
Cash and cash equivalents at
beginning of year 224,603 72,147 267,774
Cash and cash equivalents at
end of year $ 19,686 $ 224,603 $ 72,147
======= ======== ========
See accompanying notes.
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
($ thousands)
1. Summary of significant accounting policies
------------------------------------------
Nature of business
IDS Life Insurance Company (the Company) is a stock life insurance
company organized under the laws of the State of Minnesota. The
Company is a wholly owned subsidiary of American Express Financial
Corporation (AEFC), which is a wholly owned subsidiary of American
Express Company. The Company serves residents of all states except New
York. IDS Life Insurance Company of New York is a wholly owned
subsidiary of the Company and serves New York State residents. The
Company also wholly owns American Enterprise Life Insurance Company,
American Centurion Life Assurance Company (ACLAC), American Partners
Life Insurance Company and American Express Corporation.
The Company's principal products are deferred annuities and universal
life insurance, which are issued primarily to individuals. It offers
single premium and flexible premium deferred annuities on both a fixed
and variable dollar basis. Immediate annuities are offered as well.
The Company's insurance products include universal life (fixed and
variable), whole life, single premium life and term products (including
waiver of premium and accidental death benefits). The Company also
markets disability income and long-term care insurance.
Basis of presentation
The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. All material
intercompany accounts and transactions have been eliminated in
consolidation.
The accompanying consolidated financial statements have been prepared
in conformity with generally accepted accounting principles which vary
in certain respects from reporting practices prescribed or permitted by
state insurance regulatory authorities (see Note 4).
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.
Investments
Fixed maturities that the Company has both the positive intent and the
ability to hold to maturity are classified as held to maturity and
carried at amortized cost. All other fixed maturities and all
marketable equity securities are classified as available for sale and
carried at fair value. Unrealized gains and losses on securities
classified as available for sale are reported as a separate component
of stockholder's equity, net of deferred taxes.
<PAGE>
Realized investment gain or loss is determined on an identified cost
basis.
Prepayments are anticipated on certain investments in mortgage-backed
securities in determining the constant effective yield used to
recognize interest income. Prepayment estimates are based on
information received from brokers who deal in mortgage-backed
securities.
Mortgage loans on real estate are carried at amortized cost less
reserves for mortgage loan losses. The estimated fair value of the
mortgage loans is determined by a discounted cash flow analysis using
mortgage interest rates currently offered for mortgages of similar
maturities.
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------
Impairment of mortgage loans is measured as the excess of the loan's
recorded investment over its present value of expected principal and
interest payments discounted at the loan's effective interest rate, or
the fair value of collateral. The amount of the impairment is recorded
in a reserve for mortgage loan losses. The reserve for mortgage loans
losses is maintained at a level that management believes is adequate to
absorb estimated losses in the portfolio. The level of the reserve
account is determined based on several factors, including historical
experience, expected future principal and interest payments, estimated
collateral values, and current and anticipated economic and political
conditions. Management regularly evaluates the adequacy of the reserve
for mortgage loan losses.
The Company generally stops accruing interest on mortgage loans for
which interest payments are delinquent more than three months. Based
on management's judgment as to the ultimate collectibility of
principal, interest payments received are either recognized as income
or applied to the recorded investment in the loan.
The cost of interest rate caps and floors is amortized to investment
income over the life of the contracts and payments received as a result
of these agreements are recorded as investment income when realized.
The amortized cost of interest rate caps and floors is included in
other investments. Amounts paid or received under interest rate swap
agreements are recognized as an adjustment to investment income.
During 1997, 1996 and 1995, the Company purchased and wrote index
options to protect against significant declines in fee income as a
result of a decrease in the market value of its managed assets. These
options were marked-to-market through the income statement.
During 1997, the Company purchased and wrote index options to hedge
1998 management fee and other income from separate accounts and the
underlying mutual funds. These index options are carried at market
value and are included in other investments. Gains or losses on these
instruments are deferred and recognized in management and other fees in
the same period as the hedged fee income.
Policy loans are carried at the aggregate of the unpaid loan balances
which do not exceed the cash surrender values of the related policies.
When evidence indicates a decline, which is other than temporary, in
the underlying value or earning power of individual investments, such
investments are written down to the fair value by a charge to income.
Statements of cash flows
The Company considers investments with a maturity at the date of their
acquisition of three months or less to be cash equivalents. These
securities are carried principally at amortized cost, which
approximates fair value.
<PAGE>
Supplementary information to the consolidated statements of cash flows
for the years ended December 31 is summarized as
follows:
1997 1996 1995
---- ---- ----
Cash paid during the year for:
Income taxes $174,472 $317,283 $191,011
Interest on borrowings 8,213 4,119 5,524
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------
Recognition of profits on annuity contracts and insurance policies
Profits on fixed deferred annuities are recognized by the Company over
the lives of the contracts, using primarily the interest method.
Profits represent the excess of investment income earned from
investment of contract considerations over interest credited to
contract owners and other expenses.
The retrospective deposit method is used in accounting for universal
life-type insurance. Under this method, profits are recognized over
the lives of the policies in proportion to the estimated gross profits
expected to be realized.
Premiums on traditional life, disability income and long-term care
insurance policies are recognized as revenue when due, and related
benefits and expenses are associated with premium revenue in a manner
that results in recognition of profits over the lives of the insurance
policies. This association is accomplished by means of the provision
for future policy benefits and the deferral and subsequent amortization
of policy acquisition costs.
Policyholder and contractholder charges include the monthly cost of
insurance charges and issue and administrative fees. These charges
also include the minimum death benefit guarantee fees received from the
variable life insurance separate accounts. Management and other fees
include investment management fees and mortality and expense risk fees
received from the variable annuity and variable life insurance separate
accounts and underlying mutual funds.
Deferred policy acquisition costs
The costs of acquiring new business, principally sales compensation,
policy issue costs, underwriting and certain sales expenses, have been
deferred on insurance and annuity contracts.The deferred acquisition costs
for most single premium deferred annuities and installment annuities are
amortized in relation to accumulation values and surrender charge revenue.
The costs for universal life-type insurance and certain installment
annuities are amortized as a percentage of the estimated gross profits
expected to be realized on the policies. For traditional life, disability
income and long-term care insurance policies, the costs are amortized over
an appropriate period in proportion to premium revenue.
Liabilities for future policy benefits
Liabilities for universal life-type insurance and deferred annuities
are accumulation values.
Liabilities for fixed annuities in a benefit status are based on
established industry mortality tables and interest rates ranging from
5% to 9.5%, depending on year of issue.
<PAGE>
Liabilities for future benefits on traditional life insurance are based
on the net level premium method, using anticipated mortality, policy
persistency and interest earning rates. Anticipated mortality rates
are based on established industry mortality tables. Anticipated policy
persistency rates vary by policy form, issue age and policy duration
with persistency on cash value plans generally anticipated to be better
than persistency on term insurance plans. Anticipated interest rates
range from 4% to 10%, depending on policy form, issue year and policy
duration.
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------
Liabilities for future disability income and long-term care policy
benefits include both policy reserves and claim reserves. Policy
reserves are based on the net level premium method, using anticipated
morbidity, mortality, policy persistency and interest earning rates.
Anticipated morbidity and mortality rates are based on established
industry morbidity and mortality tables. Anticipated policy
persistency rates vary by policy form, issue age, policy duration and,
for disability income policies, occupation class. Anticipated interest
rates for disability income and long-term care policy reserves are 3%
to 9.5% at policy issue and grade to ultimate rates of 5% to 10% over 5
to 10 years.
Claim reserves are calculated based on claim continuance tables and
anticipated interest earnings. Anticipated claim continuance rates are
based on a national survey. Anticipated interest rates for claim
reserves for both disability income and long-term care range from 6% to
8%.
Reinsurance
The maximum amount of life insurance risk retained by the Company on
any one life is $750 of life and waiver of premium benefits plus $50 of
accidental death benefits. The maximum amount of disability income
risk retained by the Company on any one life is $6 of monthly benefit
for benefit periods longer than three years. The excesses are
reinsured with other life insurance companies on a yearly renewable
term basis. Graded premium whole life and long-term care policies are
primarily reinsured on a coinsurance basis.
Federal income taxes
The Company's taxable income is included in the consolidated federal
income tax return of American Express Company. The Company provides
for income taxes on a separate return basis, except that, under an
agreement between AEFC and American Express Company, tax benefit is
recognized for losses to the extent they can be used on the
consolidated tax return. It is the policy of AEFC and its subsidiaries
that AEFC will reimburse subsidiaries for all tax benefits.
Included in other liabilities at December 31, 1997 and 1996 are $12,061
and $33,358, respectively, receivable from American Express Financial
Corporation for federal income taxes.
Separate account business
The separate account assets and liabilities represent funds held for
the exclusive benefit of the variable annuity and variable life
insurance contract owners. The Company receives investment
management fees from the proprietary mutual funds used as investment
options for variable annuities and variable life insurance. The
Company receives mortality and expense risk fees from the separate
accounts.
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------
The Company makes contractual mortality assurances to the variable
annuity contract owners that the net assets of the separate accounts
will not be affected by future variations in the actual life expectancy
experience of the annuitants and the beneficiaries from the mortality
assumptions implicit in the annuity contracts. The Company makes
periodic fund transfers to, or withdrawals from, the separate accounts
for such actuarial adjustments for variable annuities that are in the
benefit payment period. For variable life insurance, the Company
guarantees that the rates at which insurance charges and administrative
fees are deducted from contract funds will not exceed contractual
maximums. The Company also guarantees that the death benefit will
continue payable at the initial level regardless of investment
performance so long as minimum premium payments are made.
Reclassification
Certain 1996 and 1995 amounts have been reclassified to conform to the
1997 presentation.
2. Investments
-----------
Fair values of investments in fixed maturities represent quoted market
prices and estimated values when quoted prices are not available.
Estimated values are determined by established procedures involving,
among other things, review of market indices, price levels of current
offerings of comparable issues, price estimates and market data from
independent brokers and financial files.
The amortized cost, gross unrealized gains and losses and fair values
of investments in fixed maturities and equity securities at December
31, 1997 are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- --------- ---------- ---------- -----
<S> <C> <C> <C> <C>
U.S. Government agency obligations $41,932 $ 2,950 $ -- $ 44,881
State and municipal obligations 9,684 568 -- 10,252
Corporate bonds and obligations 7,280,646 415,700 9,322 7,687,024
Mortgage-backed securities 1,983,188 25,976 7,911 2,001,253
--------- ------ ----- ---------
$9,315,450 $445,194 $17,233 $9,743,410
========= ======= ====== =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
------------------ --------- ---------- ---------- -----
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 65,291 $ 4,154 $ -- $69,445
State and municipal obligations 11,045 1,348 -- 12,393
Corporate bonds and obligations 5,308,129 232,761 30,198 5,510,692
Mortgage-backed securities 7,130,565 160,478 6,879 7,284,164
--------- ------- ----- ---------
Total fixed maturities 12,515,030 398,741 37,077 12,876,694
Equity securities 3,000 361 -- 3,361
---------- ------- ------ ----------
$12,518,030 $399,102 $37,077 $12,880,055
========== ======= ====== ==========
</TABLE>
<PAGE>
2. Investments (continued)
-----------
The amortized cost, gross unrealized gains and losses and fair values
of investments in fixed maturities and equity securities at December
31, 1996 are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- --------- ---------- ---------- ------
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 44,002 $ 933 $ 1,276 $ 43,659
State and municipal obligations 9,685 412 -- 10,097
Corporate bonds and obligations 8,057,997 356,687 47,639 8,367,045
Mortgage-backed securities 2,124,695 21,577 45,423 2,100,849
---------- ------- ------ ----------
$10,236,379 $379,609 $94,338 $10,521,650
========== ======= ====== ==========
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
------------------ ---- ----- ------ -----
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 77,944 $ 2,607 $ 96 $ 80,455
State and municipal obligations 11,032 1,336 -- 12,368
Corporate bonds and obligations 3,701,604 122,559 24,788 3,799,375
Mortgage-backed securities 7,218,042 104,808 68,203 7,254,647
--------- ------- ------ ---------
Total fixed maturities 11,008,622 231,310 93,087 11,146,845
Equity securities 3,000 308 -- 3,308
---------- ------- ------ ----------
$11,011,622 $231,618 $93,087 $11,150,153
========== ======= ====== ==========
</TABLE>
The amortized cost and fair value of investments in fixed maturities at
December 31, 1997 by contractual maturity are shown below. Expected
maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call
or prepayment penalties.
<PAGE>
Amortized Fair
Held to maturity Cost Value
---------------- --------- --------
Due in one year or less $ 356,597 $360,956
Due from one to five years 1,536,239 1,619,875
Due from five to ten years 4,337,547 4,577,552
Due in more than ten years 1,101,879 1,183,774
Mortgage-backed securities 1,983,188 2,001,253
--------- ---------
$9,315,450 $9,743,410
========= =========
Amortized Fair
Available for sale Cost Value
--------- -----
Due in one year or less $ 162,663 $ 164,012
Due from one to five years 633,339 679,561
Due from five to ten years 2,418,162 2,517,098
Due in more than ten years 2,170,301 2,231,859
Mortgage-backed securities 7,130,565 7,284,164
---------- ----------
$12,515,030 $12,876,694
========== ==========
<PAGE>
2. Investments (continued)
-----------
During the years ended December 31, 1997, 1996 and 1995, fixed
maturities classified as held to maturity were sold with amortized cost
of $229,848, $277,527 and $333,508, respectively. Net gains and losses
on these sales were not significant. The sale of these fixed
maturities was due to significant deterioration in the issuers' credit
worthiness.
Fixed maturities available for sale were sold during 1997 with proceeds
of $457,585 and gross realized gains and losses of $6,639 and $7,518,
respectively. Fixed maturities available for sale were sold during
1996 with proceeds of $238,905 and gross realized gains and losses of
$571 and $16,084, respectively. Fixed maturities available for sale
were sold during 1995 with proceeds of $136,825 and gross realized
gains and losses of $nil and $5,781, respectively.
At December 31, 1997, bonds carried at $14,351 were on deposit with
various states as required by law.
At December 31, 1997, investments in fixed maturities comprised 83
percent of the Company's total invested assets. These securities are
rated by Moody's and Standard & Poor's (S&P), except for securities
carried at approximately $2.7 billion which are rated by American
Express Financial Corporation internal analysts using criteria similar
to Moody's and S&P. A summary of investments in fixed maturities, at
amortized cost, by rating on December 31 is as follows:
Rating 1997 1996
--------- --------- ---------
Aaa/AAA $ 9,195,619 $ 9,460,134
Aaa/AA -- 2,870
Aa/AA 232,451 241,914
Aa/A 246,792 192,631
A/A 2,787,936 2,949,895
A/BBB 1,200,345 1,034,661
Baa/BBB 5,226,616 4,531,515
Baa/BB 475,084 768,285
Below investment grade 2,465,637 2,063,096
--------- ---------
$21,830,480 $21,245,001
========== ==========
At December 31, 1997, 95 percent of the securities rated Aaa/AAA are
GNMA, FNMA and FHLMC mortgage-backed securities. No holdings of any
other issuer are greater than one percent of the Company's total
investments in fixed maturities.
At December 31, 1997, approximately 14 percent of the Company's
invested assets were mortgage loans on real estate. Summaries of
mortgage loans by region of the United States and by type of real
estate are as follows:
<PAGE>
December 31, 1997 December 31, 1996
------------------------ -----------------------
On Balance Commitments On Balance Commitments
Region Sheet to Purchase Sheet to Purchase
------------- ---------- ------------ ---------- -----------
East North Central $ 748,372 $ 32,462 $ 777,960 $ 19,358
West North Central 456,934 14,340 389,285 29,620
South Atlantic 922,172 14,619 891,852 35,007
Middle Atlantic 545,601 15,507 553,869 17,959
New England 316,250 2,136 310,177 14,042
Pacific 184,917 3,204 190,770 4,997
West South Central 125,227 -- 105,173 11,246
East South Central 60,274 -- 75,176 --
Mountain 297,545 28,717 236,597 11,401
--------- ------- --------- -------
3,657,292 110,985 3,530,859 143,630
Less allowance for
losses 38,645 -- 37,495 --
--------- ------- --------- -------
$3,618,647 $110,985 $3,493,364 $143,630
========= ======= ========= =======
<PAGE>
2. Investments (continued)
-----------
December 31, 1997 December 31, 1996
------------------------ -------------------------
On Balance Commitments On Balance Commitments
Property type Sheet to Purchase Sheet to Purchase
--------------- ---------- ----------- ---------- -----------
Department/retail
stores $1,189,203 $ 27,314 $1,154,179 $ 68,032
Apartments 1,089,127 16,576 1,119,352 23,246
Office buildings 716,729 34,546 611,395 27,653
Industrial buildings 295,889 21,200 296,944 6,716
Hotels/motels 101,052 -- 97,870 6,257
Medical buildings 99,979 9,748 67,178 8,289
Nursing/retirement
homes 72,359 -- 88,226 1,877
Mixed Use 71,007 -- 73,120 --
Other 21,947 1,601 22,595 1,560
--------- ------- --------- ------
3,657,292 110,985 3,530,859 143,630
Less allowance for
losses 38,645 -- 37,495 --
--------- ------- --------- -------
$3,618,647 $110,985 $3,493,364 $143,630
========= ======= ========= =======
Mortgage loan fundings are restricted by state insurance regulatory
authorities to 80 percent or less of the market value of the real
estate at the time of origination of the loan. The Company holds the
mortgage document, which gives it the right to take possession of the
property if the borrower fails to perform according to the terms of the
agreement. The fair value of the mortgage loans is determined by a
discounted cash flow analysis using mortgage interest rates currently
offered for mortgages of similar maturities. Commitments to purchase
mortgages are made in the ordinary course of business. The fair value
of the mortgage commitments is $nil.
At December 31, 1997 and 1996, the Company's recorded investment in
impaired loans was $45,714 and $79,441, respectively, with allowances
of $9,812 and $16,162, respectively. During 1997 and 1996, the average
recorded investment in impaired loans was $61,870 and $74,338,
respectively.
The Company recognized $2,981, $4,889 and $5,014 of interest income
related to impaired loans for the years ended December 31, 1997, 1996
and 1995 respectively.
<PAGE>
The following table presents changes in the allowance for investment
losses related to all loans:
1997 1996 1995
------ ------ ------
Balance, January 1 $37,495 $37,340 $35,252
Provision for investment losses 8,801 10,005 15,900
Loan payoffs (3,851) (4,700) (11,900)
Foreclosures (3,800) (5,150) (1,350)
Other -- -- (562)
------ ------ -------
Balance, December 31 $38,645 $37,495 $37,340
====== ====== ======
At December 31, 1997, the Company had commitments to purchase
investments other than mortgage loans for $234,485. Commitments to
purchase investments are made in the ordinary course of business. The
fair value of these commitments is $nil.
<PAGE>
2. Investments (continued)
-----------
Net investment income for the years ended December 31 is summarized as
follows:
1997 1996 1995
--------- --------- ---------
Interest on fixed maturities $1,692,481 $1,666,929 $1,656,136
Interest on mortgage loans 305,742 283,830 232,827
Other investment income 25,089 43,283 35,936
Interest on cash equivalents 5,914 5,754 5,363
--------- --------- ---------
2,029,226 1,999,796 1,930,262
Less investment expenses 40,837 34,434 22,953
--------- --------- ---------
$1,988,389 $1,965,362 $1,907,309
========= ========= =========
Net realized gain (loss) on investments for the years ended December 31
is summarized as follows:
1997 1996 1995
------ ----- -----
Fixed maturities $ 16,115 $ 8,736 $ 9,973
Mortgage loans (6,424) (8,745) (13,259)
Other investments (8,831) (150) (1,612)
------- ----- -------
$ 860 $ (159) $ (4,898)
======= ====== ======
Changes in net unrealized appreciation (depreciation) of investments
for the years ended December 31 are summarized as follows:
1997 1996 1995
------- ------- -------
Fixed maturities available
for sale $223,441 $(231,853) $811,649
Equity securities 53 (52) 3,118
3. Income taxes
------------
The Company qualifies as a life insurance company for federal income
tax purposes. As such, the Company is subject to the Internal Revenue
Code provisions applicable to life insurance companies.
The income tax expense consists of the following:
1997 1996 1995
Federal income taxes:
Current $176,879 $260,357 $218,040
Deferred 19,982 (65,609) (33,810)
------- -------- -------
196,861 194,748 184,230
State income taxes-current 9,803 12,390 11,612
------- ------- -------
Income tax expense $206,664 $207,138 $195,842
======= ======= =======
<PAGE>
3. Income taxes (continued)
------------
Increases (decreases) to the federal tax provision applicable to pretax
income based on the statutory rate are attributable to:
<TABLE>
<CAPTION>
1997 1996 1995
---------------- --------------- ---------------
Provision Rate Provision Rate Provision Rate
--------- ---- --------- ---- --------- ----
<S> <C> <C> <C> <C> <C> <C>
Federal income
taxes based on
the statutory rate $238,319 35.0% $217,600 35.0% $196,274 35.0%
Increases (decreases)
are attributable to:
Tax-excluded interest
and dividend income (10,294) (1.5) (9,636) (1.5) (8,524) (1.5)
State Taxes, net of federal
benefit 6,372 0.9 8,053 1.3 7,548 1.3
Low income housing
credits (20,705) (3.0) (5,090) (0.8) (861) (0.2)
Other, net (7,028) (1.0) (3,789) (0.7) 1,405 0.3
------- ----- ------- ---- ------- ----
Federal income taxes $206,664 30.4% $207,138 33.3% $195,842 34.9%
======= ==== ======= ==== ======= ====
</TABLE>
A portion of life insurance company income earned prior to 1984 was not
subject to current taxation but was accumulated, for tax purposes, in a
policyholders' surplus account. At December 31, 1997, the Company had
a policyholders' surplus account balance of $20,114. The
policyholders' surplus account is only taxable if dividends to the
stockholder exceed the stockholder's surplus account or if the Company
is liquidated. Deferred income taxes of $7,040 have not been
established because no distributions of such amounts are contemplated.
Significant components of the Company's deferred tax assets and
liabilities as of December 31 are as follows:
1997 1996
---- ----
Deferred tax assets:
Policy reserves $748,204 $724,412
Life insurance guarantee
fund assessment reserve 20,101 29,854
Other 9,589 2,763
------- -------
Total deferred tax assets 777,894 757,029
------- -------
<PAGE>
Deferred tax
liabilities:
Deferred policy acquisition costs 700,032 665,685
Unrealized gain on investments 121,885 48,486
Investments, other 17,559 8,935
------- -------
Total deferred tax liabilities 839,476 723,106
------- -------
Net deferred tax (liabilities) assets $(61,582) $ 33,923
====== ======
The Company is required to establish a valuation allowance for any
portion of the deferred tax assets that management believes will not be
realized. In the opinion of management, it is more likely than not
that the Company will realize the benefit of the deferred tax assets
and, therefore, no such valuation allowance has been established.
<PAGE>
4. Stockholder's equity
--------------------
Retained earnings available for distribution as dividends to the parent
are limited to the Company's surplus as determined in accordance with
accounting practices prescribed by state insurance regulatory
authorities. Statutory unassigned surplus aggregated $1,468,677 as of
December 31, 1997 and $1,261,592 as of December 31, 1996 (see Note 3
with respect to the income tax effect of certain distributions). In
addition, any dividend distributions in 1998 in excess of approximately
$331,480 would require approval of the Department of Commerce of the
State of Minnesota.
Statutory net income for the years ended December 31 and capital and
surplus as of December 31 are summarized as follows:
1997 1996 1995
---------- ---------- ----------
Statutory net income $ 379,615 $ 365,585 $ 326,799
Statutory capital and surplus 1,765,290 1,565,082 1,398,649
surplus
5. Related party transactions
--------------------------
The Company loans funds to American Express Financial Corporation under
a collateral loan agreement. The balance of the loan was $nil and
$11,800 at December 31, 1997 and 1996, respectively. This loan can be
increased to a maximum of $75,000 and pays interest at a rate equal to
the preceding month's effective new money rate for the Company's
permanent investments. Interest income on related party loans totaled
$103, $780 and $1,371 in 1997, 1996 and 1995, respectively.
The Company purchased a five year secured note from an affiliated
company which was redeemed in 1996. The interest rate on the note was
8.42 percent. Interest income on the above note totaled $1,637 and
$1,937 in 1996 and 1995, respectively.
The Company participates in the American Express Company Retirement
Plan which covers all permanent employees age 21 and over who have met
certain employment requirements. Employer contributions to the plan
are based on participants' age, years of service and total compensation
for the year. Funding of retirement costs for this plan complies with
the applicable minimum funding requirements specified by ERISA. The
Company's share of the total net periodic pension cost was $201, $174
and $155 in 1997, 1996 and 1995, respectively.
The Company also participates in defined contribution pension plans of
American Express Company which cover all employees who have met certain
employment requirements. Company contributions to the plans are a
percent of either each employee's eligible compensation or basic
contributions. Costs of these plans charged to operations in 1997,
1996 and 1995 were $1,245, $990 and $815, respectively.
<PAGE>
The Company participates in defined benefit health care plans of AEFC
that provide health care and life insurance benefits to retired
employees and retired financial advisors. The plans include
participant contributions and service related eligibility
requirements. Upon retirement, such employees are considered to have
been employees of AEFC. AEFC expenses these benefits and allocates the
expenses to its subsidiaries. Accordingly, costs of such benefits to
the Company are included in employee compensation and benefits and
cannot be identified on a separate company basis.
<PAGE>
5. Related party transactions (continued)
--------------------------
Charges by AEFC for use of joint facilities, marketing services and
other services aggregated $414,155, $397,362 and $377,139 for 1997,
1996 and 1995, respectively. Certain of these costs are included in
deferred policy acquisition costs. In addition, the Company rents its
home office space from AEFC on an annual renewable basis.
6. Commitments and contingencies
-----------------------------
At December 31, 1997 and 1996, traditional life insurance and universal
life-type insurance in force aggregated $74,730,720 and $67,274,354,
respectively, of which $4,351,904 and $3,875,921 were reinsured at the
respective year ends. The Company also reinsures a portion of the
risks assumed under disability income and long-term care policies.
Under all reinsurance agreements, premiums ceded to reinsurers amounted
to $60,495, $48,250 and $39,399 and reinsurance recovered from
reinsurers amounted to $19,042, $15,612, and $14,088 for the years
ended December 31, 1997, 1996 and 1995, respectively. Reinsurance
contracts do not relieve the Company from its primary obligation to
policyholders.
A number of lawsuits have been filed against life and health insurers
in jurisdictions in which the Company and its subsidiaries do business
involving insurers' sales practices, alleged agent misconduct, failure
to properly supervise agents, and other matters. In December 1996, an
action of this type was brought against the Company and its parent,
AEFC. A second action was filed in March, 1997. The plaintiffs
purport to represent a class consisting of all persons who replaced
existing Company policies with new Company policies from and after
January 1, 1985. The complaint puts at issue various alleged sales
practices and misrepresentations, alleged breaches of fiduciary duties
and alleged violations of consumer fraud statutes. Plaintiffs seek
damages in an unspecified amount and seek to establish a claims
resolution facility for the determination of individual issues. The
Company and its parent believe they have meritorious defenses to the
claims raised in the lawsuit. The outcome of any litigation cannot be
predicted with certainty. In the opinion of management, however, the
ultimate resolution of the above lawsuit and others filed against the
Company should not have a material adverse effect on the Company's
consolidated financial position.
The IRS routinely examines the Company's federal income tax returns,
and is currently auditing the Company's returns for the 1990 through
1992 tax years. Management does not believe there will be a material
adverse effect on the Company's consolidated financial position as a
result of this audit.
7. Lines of credit
---------------
The Company has an available line of credit with its parent aggregating
$100,000. The rate for the line of credit is the parent's cost of
funds, ranging from 20 to 45 basis points over the established index.
Borrowings outstanding under this agreement were $nil at
December 31, 1997 and 1996.
<PAGE>
8. Derivative financial instruments
--------------------------------
The Company enters into transactions involving derivative financial
instruments to manage its exposure to interest rate risk and equity
market risk, including hedging specific transactions. The Company does
not hold derivative instruments for trading purposes. The Company
manages risks associated with these instruments as described below.
<PAGE>
8. Derivative financial instruments (continued)
--------------------------------
Market risk is the possibility that the value of the derivative
financial instruments will change due to fluctuations in a factor from
which the instrument derives its value, primarily an interest rate or
equity market index. The Company is not impacted by market risk
related to derivatives held for non-trading purposes beyond that
inherent in cash market transactions. Derivatives held for purposes
other than trading are largely used to manage risk and, therefore, the
cash flow and income effects of the derivatives are inverse to the
effects of the underlying transactions.
Credit risk is the possibility that the counterparty will not fulfill
the terms of the contract. The Company monitors credit risk related to
derivative financial instruments through established approval
procedures, including setting concentration limits by counterparty, and
requiring collateral, where appropriate. A vast majority of the
Company's counterparties are rated A or better by Moody's and Standard
& Poor's.
Credit risk related to interest rate caps and floors and index options
is measured by the replacement cost of the contracts. The replacement
cost represents the fair value of the instruments.
The notional or contract amount of a derivative financial instrument is
generally used to calculate the cash flows that are received or paid
over the life of the agreement. Notional amounts are not recorded on
the balance sheet. Notional amounts far exceed the related credit risk.
The Company's holdings of derivative financial instruments are as
follows:
Notional Carrying Fair Total Credit
December 31, 1997 Amount Amount Value Exposure
----------------- -------- -------- ----- ------------
Assets:
Interest rate caps $ 4,600,000 $ 24,963 $ 15,665 $ 15,665
Interest rate floors 1,000,000 1,561 4,551 4,551
Put index options 221,984 11,120 11,120 11,120
Liabilities:
Call index options 221,984 (8,273) (8,273) --
Off balance sheet:
Interest rate swaps 1,267,000 -- (45,799) --
--------- ------ ------ ------
$29,371 $(22,736) $31,336
====== ====== ======
Notional Carrying Fair Total Credit
December 31, 1996 Amount Amount Value Exposure
Assets:
Interest rate caps $4,000,000 $ 16,227 $ 7,439 $ 7,439
Interest rate floors 1,000,000 2,041 4,341 4,341
Off balance sheet:
Interest rate swaps 1,000,000 -- (24,715) --
--------- ------ -------- ------
$18,268 $(12,935) $11,780
====== ====== ======
<PAGE>
The fair values of derivative financial instruments are based on market
values, dealer quotes or pricing models. The interest rate caps and
floors expire on various dates from 1998 to 2003. The interest rate
swaps expire on various dates from 2000 to 2003. All put and call
options expire in 1998.
Interest rate caps, swaps and floors are used principally to manage the
Company's interest rate risk. These instruments are used to protect
the margin between interest rates earned on investments and the
interest rates credited to related annuity contract holders.
<PAGE>
8. Derivative financial instruments (continued)
--------------------------------
Index options are used to manage the equity market risk related to the
fee income that the Company receives from its separate accounts and the
underlying mutual funds. The amount of the fee income received is
based upon the daily market value of the separate account and mutual
fund assets. As a result, the Company's fee income could be impacted
significantly by changing economic conditions in the equity market.
The Company entered into index option collars (combination of puts and
calls) to hedge anticipated fee income for 1998 related to separate
accounts and mutual funds which invest in equity securities. Testing
has demonstrated the impact of these instruments on the income
statement closely correlates with the amount of fee income the Company
realizes. In the event that testing demonstrates that this correlation
no longer exists, or in the event the Company disposes of the index
options collars, the instruments will be marked-to-market through the
income statement. At December 31, 1997, deferred gains on purchased
put index options were $11,120 and deferred losses on written call
index options were $8,273.
9. Fair values of financial instruments
------------------------------------
The Company discloses fair value information for most on- and
off-balance sheet financial instruments for which it is practicable to
estimate that value. Fair values of life insurance obligations and all
non-financial instruments, such as deferred acquisition costs are
excluded. Off-balance sheet intangible assets, such as the value of
the field force, are also excluded. Management believes the value of
excluded assets and liabilities is significant. The fair value of the
Company, therefore, cannot be estimated by aggregating the amounts
presented.
<TABLE>
<CAPTION>
1997 1996
------------------ ---------------------
Carrying Fair Carrying Fair
Financial Assets Amount Value Amount Value
---------------- -------- ------ ------- -----
<S> <C> <C> <C> <C>
Investments:
Fixed maturities (Note 2):
Held to maturity $9,315,450 $9,743,410 $10,236,379 $10,521,650
Available for sale 12,876,694 12,876,694 11,146,845 11,146,845
Mortgage loans on
real estate (Note 2) 3,618,647 3,808,570 3,493,364 3,606,077
Other:
Equity securities (Note 2) 3,361 3,361 3,308 3,308
Derivative financial
instruments (Note 8) 37,644 31,336 18,268 11,780
Other 82,347 85,383 63,993 66,242
Cash and
cash equivalents (Note 1) 19,686 19,686 224,603 224,603
Separate account assets
(Note 1) 23,214,504 23,214,504 18,535,160 18,535,160
<PAGE>
Financial Liabilities
Future policy benefits
for fixed annuities 20,731,052 19,882,302 20,641,986 19,721,968
Derivative financial
instruments (Note 8) (8,273) (54,072) -- (24,715)
Separate account liabilities 21,488,282 20,707,620 17,358,087 16,688,519
</TABLE>
<PAGE>
9. Fair values of financial instruments (continued)
------------------------------------
At December 31, 1997 and 1996, the carrying amount and fair value of
future policy benefits for fixed annuities exclude life
insurance-related contracts carried at $1,185,155 and $1,112,155,
respectively, and policy loans of $93,540 and $83,867, respectively.
The fair value of these benefits is based on the status of the
annuities at December 31, 1997 and 1996. The fair value of deferred
annuities is estimated as the carrying amount less any applicable
surrender charges and related loans. The fair value for annuities in
non-life contingent payout status is estimated as the present value of
projected benefit payments at rates appropriate for contracts issued in
1997 and 1996.
At December 31, 1997 and 1996, the fair value of liabilities related to
separate accounts is estimated as the carrying amount less any
applicable surrender charges and less variable insurance contracts
carried at $1,726,222 and $1,177,073, respectively.
10. Segment information
-------------------
The Company's operations consist of two business segments; first,
individual and group life insurance, disability income and long-term
care insurance, and second, annuity products designed for individuals,
pension plans, small businesses and employer-sponsored groups. The
consolidated condensed statements of income for the years ended
December 31, 1997, 1996 and 1995 and total assets at December 31, 1997,
1996 and 1995 by segment are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Net investment income:
Life, disability income
and long-term care insurance $ 269,874 $ 262,998 $ 256,242
Annuities 1,718,515 1,702,364 1,651,067
--------- --------- ---------
$ 1,988,389 $ 1,965,362 $ 1,907,309
========= ========= =========
Premiums, charges and fees:
Life, disability income
and long-term care insurance $ 514,838 $ 448,389 $ 384,008
Annuities 374,274 308,873 249,557
------- ------- -------
$ 889,112 $ 757,262 $ 633,565
======= ======= =======
Income before income taxes:
Life, disability income
and long-term care insurance $ 178,717 $ 161,115 $ 125,402
Annuities 501,334 460,758 440,278
Net gain (loss) on investments 860 (159) (4,898)
------- ------- -------
$ 680,911 $ 621,714 $ 560,782
======= ======= =======
<PAGE>
Total assets:
Life, disability income
and long-term care insurance $ 8,193,796 $ 7,028,906 $ 6,195,870
Annuities 44,780,328 40,277,075 36,704,208
---------- ---------- ----------
$52,974,124 $47,305,981 $42,900,078
========== ========== ==========
</TABLE>
<PAGE>
Allocations of net investment income and certain general expenses are
based on various assumptions and estimates.
Assets are not individually identifiable by segment and have been
allocated principally based on the amount of future policy benefits by
segment.
Capital expenditures and depreciation expense are not material, and
consequently, are not reported.
11. Year 2000 Issue (unaudited)
---------------
The Year 2000 issue is the result of computer programs having been
written using two digits rather than four to define a year. Any
programs that have time-sensitive software may recognize a date using "00"
as the year 1900 rather than 2000. This could result in the failure of
major systems or miscalculations, which could have a material impact on
the operations of the Company. All of the systems used by the Company are
maintained by AEFC and are utilized by multiple subsidiaries and
affiliates of AEFC. The Company's business is heavily dependent
upon AEFC's computer systems and has significant interactions with
systems of third parties.
A comprehensive review of AEFC's computer systems and business
processes, including those specific to the Company, has been conducted to
identify the major systems that could be affected by the Year 2000
issue. Steps are being taken to resolve any potential problems including
modification to existing software and the purchase of new software. These
measures are scheduled to be completed and tested on a timely basis.
AEFC's goal is to complete internal remediation and testing of each
system by the end of 1998 and to continue compliance efforts through
1999.
AEFC is evaluating the Year 2000 readiness of advisors and other third
parties whose system failures could have an impact on the Company's
operations. The potential materiality of any such impact is not known at
this time.
<PAGE>
PART C.
Item 24. Financial Statements and Exhibits
(a) Financial statements included in Part B of this Registration Statement:
IDS Life Insurance Company:
Consolidated Balance Sheets as of Dec. 31, 1997 and 1996.
Consolidated Statements of income for the three years ended
Dec. 31, 1997.
Consolidated Statements of Stockholder's Equity, for the three years
ended Dec. 31, 1997.
Consolidated Statements of Cash Flows, for the three years ended
Dec. 31, 1997.
Notes to Consolidated Financial Statements.
Report of Independent Auditors dated February 5, 1998.
The audited financial statements of the Variable Account including:
Statements of net assets as of Dec. 31, 1997.
Statements of operations for the year ended Dec. 31, 1997, and
Statements of changes in net assets for the year ended Dec. 31, 1997
and for the period from March 5, 1996 (commencement of
operations) to Dec. 31, 1996, except for subaccounts HG, HY, HV,
and HP which are for the year ended Dec. 31, 1997 and for the
period May 1, 1996 (commencement of operations) to Dec. 31, 1996.
Notes to Financial Statements.
Report of Independent Auditors for IDS Life Variable Account 10 dated
March 13, 1998.
(b) Exhibits:
1. Resolution of the Board of Directors of IDS Life establishing the IDS
Life Variable Account 10 dated August 23, 1995, filed electronically as
Exhibit 1 to Initial Registration Statement is incorporated herein by
reference.
2. Not applicable.
3. Not applicable.
4.1 Copy of Deferred Annuity Contract for non-qualified contract (form
31030), filed electronically as Exhibit 4.1 to Post-Effective Amendment
No.2 to the Registration Statement filed on Form N-4 is incorporated
herein by reference.
4.2 Copy of Deferred Annuity Contract for tax qualified (form 31031), filed
electronically as Exhibit 4.2 to Initial Registration Statement is
incorporated herein by reference.
4.3 Copy of Deferred Annuity Contract for IRA (form 31032-IRA), filed
electronically as Exhibit 4.3 to Post-Effective Amendment No.2 to the
Registration Statement filed on Form N-4 is incorporated herein by
reference.
<PAGE>
5.1 Copy of Application for IDS Life Variable Annuity (form 34055), filed
electronically as Exhibit 5.1 to Post-Effective Amendment No.2 to the
Registration Statement filed on Form N-4 is incorporated herein by
reference.
5.2 Copy of Application for IDS Life Variable Annuity (form 34054), is
filed electronically herewith.
6.1 Copy of Certificate of Incorporation of IDS Life dated July 24, 1957,
filed electronically as Exhibit 6.1 to Initial Registration Statement
is incorporated herein by reference.
6.2 Copy of Amended By-Laws of IDS Life filed electronically as
Exhibit 6.2 to Initial Registration Statement is incorporated herein
by reference.
7. Not applicable.
8.1 Participation Agreement between IDS Life Insurance Company and Putnam
Capital Manager Trust and Putnam Mutual Funds Corp., dated March 1,
1996, filed electronically as Exhibit 8.1 to Post-Effective Amendment
No. 2 to Registration Statement No. 33-62407 is incorporated herein by
reference.
8.2 Copy of Participation Agreement between IDS Life Insurance Company and
Templeton Variable Products Series Fund and Franklin Templeton
Distributors, Inc., dated March 1, 1996, filed electronically as
Exhibit 8.2 to Post-Effective Amendment No. 2 to Registration Statement
No. 33-62407 is incorporated herein by reference.
8.3 Copy of Participation Agreement between IDS Life Insurance Company and
Warburg Pincus Trust and Warburg Pincus Counsellors, Inc. and
Counsellors Securities Inc., dated March 1, 1996, filed electronically
as Exhibit 8.3 to Post-Effective Amendment No. 2 to Registration
Statement No. 33-62407 is incorporated herein by reference.
8.4 Participation Agreement between IDS Life Insurance Company and AIM
Variable Insurance Funds, Inc. and AIM Distributors, Inc., dated
March 4, 1996, filed electronically as Exhibit 8.4 to Post-Effective
Amendment No. 2 to Registration Statement No. 33-62407 is
incorporated herein by reference.
8.5 Copy of Participation Agreement between IDS Life Insurance Company and
TCI Portfolios, Inc., dated April 24, 1996, filed electronically as
Exhibit 8.5 to Post-Effective Amendment No.2 to the Registration
Statement filed on Form N-4 and is incorporated herein by reference.
9. Opinion of counsel is filed electronically herewith.
10. Consent of Independent Auditors, filed electronically herewith.
11. Financial Statement Schedules and Report of Independent Auditors are
filed electronically herewith.
<PAGE>
Financial Statement Schedules:
Schedule I - Consolidated Summary of Investments Other Than
Investments In Related Parties
Schedule III - Supplementary Insurance Information
Schedule IV - Reinsurance
Schedule V - Valuation and Qualifying Accounts
Report of Independent Auditors for IDS Life Insurance Company's
Financial Statement Schedules.
All other schedules to the financial statements required by Article 7
of Regulation S-4 are not required under the related instructions or
are inapplicable and, therefore, have been omitted.
12. Not applicable.
13. Copy of schedule for computation of each performance quotation provided
in the Registration Statement in response to Item 21, filed
electronically as Exhibit 13 to Initial Registration Statement, is
incorporated herein by reference.
14. Financial Data Schedules are filed electronically herewith.
15(a) Power of Attorney to sign this Registration Statement dated March 12,
1997, filed electronically as Exhibit 15 to Post-Effective Amendment
No.2 to the Registration Statement filed on Form N-4 is incorporated
herein by reference.
15(b). Power of Attorney to sign this Registration Statement dated April 18,
1998, is filed electronically herewith.
<TABLE>
<CAPTION>
Item 25. Directors and Officers of the Depositor (IDS Life Insurance Company)
Positions and Offices with Depositor
Name Principal Business Address
- -------------------------------- ----------------------------------- ---------------------------------------
<S> <C> <C>
Timothy V. Bechtold IDS Tower 10 Executive Vice President-Risk
Minneapolis, MN 55440 Management Products
David J. Berry IDS Tower 10 Vice President
Minneapolis, MN 55440
Mark W. Carter IDS Tower 10 Executive Vice President-Marketing
Minneapolis, MN 55440
Robert M. Elconin IDS Tower 10 Vice President
Minneapolis, MN 55440
<PAGE>
Item 25. Directors and Officers of the Depositor (IDS Life Insurance Company)(cont'd)
Positions and Offices with Depositor
Name Principal Business Address
- -------------------------------- ----------------------------------- ---------------------------------------
Lorraine R. Hart IDS Tower 10 Vice President-Investments
Minneapolis, MN 55440
David R. Hubers IDS Tower 10 Director
Minneapolis, MN 55440
James M. Jensen IDS Tower 10 Vice President-Insurance Product
Minneapolis, MN 55440 Development
Richard W. Kling IDS Tower 10 Director and President
Minneapolis, MN 55440
Paul F. Kolkman IDS Tower 10 Director and Executive Vice President
Minneapolis, MN 55440
Ryan R. Larson IDS Tower 10 Vice President
Minneapolis, MN 55440
James A. Mitchell IDS Tower 10 Director, Chairman of the Board and
Minneapolis, MN 55440 Chief Executive Officer
Pamela J. Moret IDS Tower 10 Executive Vice President-Variable
Minneapolis, MN 55440 Assets
Barry J. Murphy IDS Tower 10 Director and Executive Vice
Minneapolis, MN 55440 President-Client Service
James R. Palmer IDS Tower 10 Vice President-Taxes
Minneapolis, MN 55440
Stuart A. Sedlacek IDS Tower 10 Director and Executive Vice
Minneapolis, MN 55440 President-Assured Assets
F. Dale Simmons IDS Tower 10 Vice President-Real Estate Loan
Minneapolis, MN 55440 Management and Assistant Treasurer
William A. Stoltzmann IDS Tower 10 Vice President, General Counsel and
Minneapolis, MN 55440 Secretary
Philip C. Wentzel IDS Tower 10 Vice President and Controller
Minneapolis, MN 55440
</TABLE>
<PAGE>
Item 26. Persons Controlled by or Under Common Control with the
Depositor or Registrant
IDS Life Insurance Company is a wholly-owned subsidiary of
American Express Financial Corporation. American Express
Financial Corporation is a wholly-owned subsidiary of American
Express Company (American Express).
The following list includes the names of major subsidiaries of
American Express.
<TABLE>
<CAPTION>
Jurisdiction of
Name of Subsidiary Incorporation
<S> <C>
I. Travel Related Services
American Express Travel Related Services Company, Inc. New York
II. International Banking Services
American Express Bank Ltd. Connecticut
III. Companies engaged in Financial Services
Advisory Capital Strategies Group Inc. Minnesota
American Centurion Life Assurance Company New York
American Enterprise Investment Services Inc. Minnesota
American Enterprise Life Insurance Company Indiana
American Express Asset Management Group Inc. Minnesota
American Express Asset Management International Inc. Delaware
American Express Asset Management International (Japan) Ltd. Japan
American Express Asset Management Ltd. England
American Express Client Service Corporation Minnesota
American Express Corporation Delaware
American Express Financial Advisors Inc. Delaware
American Express Financial Corporation Minnesota
Delaware
American Express Insurance Agency of Arizona Inc. Arizona
American Express Insurance Agency of Idaho Inc. Idaho
American Express Insurance Agency of Nevada Inc. Nevada
American Express Insurance Agency of Oregon Inc. Oregon
American Express Minnesota Foundation Minnesota
American Express Property Casualty Insurance Agency of Kentucky Inc. Kentucky
American Express Property Casualty Insurance Agency of Maryland Inc. Maryland
American Express Property Casualty Insurance Agency of Pennsylvania Inc. Pennsylvania
American Express Trust Company Minnesota
American Partners Life Insurance Company Arizona
IDS Cable Corporation Minnesota
IDS Cable II Corporation Minnesota
IDS Capital Holdings Inc. Minnesota
IDS Certificate Company Delaware
IDS Futures Corporation Minnesota
IDS Insurance Agency of Alabama Inc. Alabama
<PAGE>
Item 26. Persons Controlled by or Under Common Control with the Depositor or Registrant
(Continued)
Jurisdiction of
Name of Subsidiary Incorporation
IDS Insurance Agency of Arkansas Inc. Arkansas
IDS Insurance Agency of Massachusetts Inc. Massachusetts
IDS Insurance Agency of New Mexico Inc. New Mexico
IDS Insurance Agency of North Carolina Inc. North Carolina
IDS Insurance Agency of Utah Inc. Utah
IDS Insurance Agency of Wyoming Inc. Wyoming
IDS Life Insurance Company Minnesota
IDS Life Insurance Company of New York New York
IDS Management Corporation Minnesota
IDS Partnership Services Corporation Minnesota
IDS Plan Services of California, Inc. Minnesota
IDS Property Casualty Insurance Company Wisconsin
IDS Real Estate Services, Inc. Delaware
IDS Realty Corporation Minnesota
IDS Sales Support Inc. Minnesota
IDS Securities Corporation Delaware
Investors Syndicate Development Corp. Nevada
North Dakota Public Employee Payment Company Minnesota
</TABLE>
Item 27. Number of Contractowners
On February 28, 1998, there were 73,534 contract
holders of qualified contracts. There were 61,771 owners of
non-qualified contracts.
Item 28. Indemnification
The By-Laws of the depositor provide that it shall
indemnify any person who was or is a party or is threatened to
be made a party, by reason of the fact that he is or was a
director, officer, employee or agent of this Corporation, or
is or was serving at the direction of the Corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, to any
threatened, pending or completed action, suit or proceeding,
wherever brought, to the fullest extent permitted by the laws
of the State of Minnesota, as now existing or hereafter
amended, provided that this Article shall not indemnify or
protect any such director, officer, employee or agent against
any liability to the Corporation or its security holders to
which he would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence, in the
performance of his duties or by reason of his reckless
disregard of his obligations and duties.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to director, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for
<PAGE>
indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
Item 29. Principal Underwriters
(a) IDS Life is the principal underwriter
for IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and
MZ IDS Life Variable Annuity Fund A, IDS Life
Variable Annuity Fund B, IDS Life Account RE, IDS
Life Account MGA, IDS Life Account SBS, IDS Life
Variable Account 10, IDS Life Variable Life Separate
Account and IDS Life Variable Account for Smith
Barney.
(b) This table is the same as our response
to Item 25 of this Registration Statement.
(c)
<TABLE>
<CAPTION>
Name of Net Underwriting
Principal Discounts and Compensation on Brokerage
Underwriter Commissions Redemption Commissions Compensation
<S> <C> <C> <C> <C>
IDS Life $17,883,488 $14,502,145 None None
</TABLE>
Item 30. Location of Accounts and Records
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Registrant undertakes to file a post-effective amendment to
this registration statement as frequently as is necessary to
ensure that the audited financial statements in the
registration statement are never more than 16 months old for
so long as payments under the variable annuity contracts may
be accepted.
(b) Registrant undertakes to include either (1) as part of any
application to purchase a contract offered by the prospectus,
a space that an applicant can check to request a Statement of
Additional Information, or (2) a post card or
<PAGE>
similar written communication affixed to or included in the
prospectus that the applicant can remove to send for a
Statement of Additional Information.
(c) Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made
available under this Form promptly upon written or oral
request.
(d) Registrant represents that it is relying upon the no-action
assurance given to the American Council of Life Insurance
(pub. avail. Nov. 28, 1988). Further, Registrant represents
that it has complied with the provisions of paragraphs (1)-(4)
of that no-action letter.
(e) The sponsoring insurance company represents that the fees and
charges deducted under the contract, in the aggregate, are
reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by the
insurance company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, IDS Life Insurance Company, on behalf of the Registrant, certifies that it
meets requirements for effectiveness of this Amendment to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Registration Statement to be signed on its behalf in the City of
Minneapolis, and State of Minnesota, on the 27th day of April, 1998.
IDS LIFE VARIABLE ANNUITY ACCOUNT 10
(Registrant)
By IDS Life Insurance Company
(Sponsor)
By /s/ Richard W. Kling
Richard W. Kling
President
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities indicated on the 27th day of
April, 1998.
Signature Title
/s/ James A. Mitchell* Director, Chairman of the
James A. Mitchell Board and Chief Executive Officer
/s/ Richard W. Kling* Director
Richard W. Kling
/s/ David R. Hubers* Director
David R. Hubers
/s/ Paul F. Kolkman* Director and Executive Vice
Paul F. Kolkman President
/s/ Barry J. Murphy* Director and Executive Vice
Barry J. Murphy President, Client Service
/s/ Stuart A. Sedlacek* Director and Executive Vice
Stuart A. Sedlacek President, Assured Assets
/s/ Philip C. Wentzel** Director, Vice President
Philip C. Wentzel and Controller
/s/ Jeffrey S. Horton** Director, Vice President,
Jeffrey S. Horton Treasurer and Assistant Secretary
<PAGE>
*Signed pursuant to Power of Attorney dated March 12, 1997, filed electronically
and is herein incorporated by reference as an Exhibit to Post-Effective
Amendment No. 2 to the Registration Statement Form N-4 by:
**Signed pursuant to Power of Attorney dated April 8, 1998, is filed
electronically herewith as an Exhibit to Post-Effective Amendment No. 3 to the
Registration Statement Form N-4 by:
Sherilyn K. Beck
<PAGE>
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 3
This Registration Statement is comprised of the following papers and documents:
The Cover Page.
Cross-reference sheet.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Financial Statements.
Part C.
Other Information.
The signatures.
Exhibits.
IDS LIFE FLEXIBLE PORTFOLIO ANNUITY
Exhibit 5.2 Copy of Application for IDS Life Variable Annuity
Exhibit 9 Opinion of counsel
Exhibit 10 Consent of Independent Auditors
Exhibit 11 Financial Statement Schedules
Exhibit 14 Financial Data Schedules
Exhibit 15(b) Power of Attorney dated April 18, 1998
<TABLE>
IDS Life Insurance Company Annuity
IDS Tower 10 Application
Minneapolis, MN 55440
Section A Clients
- ---------------------------------------------------------------------------------------------------------
<S><C>
1 Annuitant
a Name (first) (mi) (last)
b Social Security no. ___-__-___ __ Male __ Female
c Birthdate ___/___/___ Age (submit proof of age for immediate annuity)
2 Joint Annuitant (for Immediate Joint Annuity
a Name (first) (mi) (last)
b Social Security no. ___-__-___ __ Male __ Female
c Birthdate ___/___/___ Age (submit proof of age)
3 Owner
a Will the annuitant own this annuity (must be "Yes" for IRA and TSA)
__ Yes (complete the following if not on attached Client Profile or
Client Review Document) Home address (street, city, state, zip)
Phone no. (____)
__ No (complete the following seven (o) items)
Owner's name(s) __ American Express Trust Co. __ Other
Type of ownership (check one)
__ Trustee __ Sole Proprietorship __ 457 Governmental
__ Custodian __ Partnership
__ Individual __ Corporation (State of incorporation)
__ Other
Trust or Custodial ownership basis (complete one if applicable)
__ Retirement plan (name) __ Trust (name) Trust date ___/___/___
__ Purchased under Uniform Gifts/Transfers to Minors Act of
(state)
Owner's relationship to annuitant
(Complete the following if not on attached Client Profile or Client Review Document)
Owner's address (street, city, state, zip)
Phone no. (____)
Owner's Social Security or Taxpayer Identification no. _____-_____-_____
If ownership is individual, give owner's birthdate ___/___/___ Age
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Section B Purchase Basis (complete only one of the four (o) sections on this
page) See New Business Section of Reference Manual for required papers
- -------------------------------------------------------------------------------
__ Nonqualified
__ individual purchase
__ 1035 exchange
__ deferred compensation plan (nongovernmental) (private)
__ Gift under Uniform Gifts/Transfers to Minor's Act (If donor is not
custodian give donor's name, Soc. Sec. no., residence state and
relationship to annuitant.)
__ Other nonqualified:
- -------------------------------------------------------------------------------
<S><C>
__ IRA (complete all that apply)
1 Type of IRA Establishing: a__ Regular (active) IRA b__ Segregated
(rollover) IRA c __ Beneficial IRA (for use with IRA transfers after
death only)
as beneficiary of the deceased IRA
d __ SEP-IRA
Name of Company Address
__ SRA Adoption Agreement with another company
e __ SRA
Name of Company Address __ SRA Adoption Agreement with another
company Date of first participated in employer's SIMPLE Plan
(MM/DD/YY)
2 Type of contribution and amount paid with this application:
a __ IRA contribution: for prior tax year $ and/or current tax year $
----------------
b __ Employer contribution: $ designated tax year
-----------------------
c __ Rollover contribution: $ designated tax year
-----------------------
from (check source): __ IRA or SEP __ Employer-sponsored
retirement plan __ SRA d __ IRA transfer contribution (must submit
"Request for Transfer" form along with application)
- -------------------------------------------------------------------------------------------------------------------
__ Tax-qualified Retirement Plan (IRC Section 401)
1 Type __ Profit Sharing (05) __ Assumed/Target Benefit (04) __ 401(k) (02)
__ Money Purchase (06) __ Defined Benefit Pension (01) __ Other (10)
2 Plan fiscal year-end Mo. Day Plan starting date Mo. Year 3 Is the Plan an
American Express Financial Advisors prototype? __Yes __No 4 If Custodial
Plan, identify participant (annuitant) as __ Employer/Sponsor __Other
participant
- -------------------------------------------------------------------------------------------------------------------
__ Other Tax-qualified Plan
1 Type of Plan __ 403(b) TSA __ 457/Government (07) __ Texas optional retirement
2 Type of Group a.__ Public schools and universities a. __ State or subdivisionprogram (ORP)
b.__ 501(c)(3) Nonprofit
3 __ This is a TSA Transfer.
__ This is a TSA Rollover.
See explanation section on Page 10 for more information.
4 403(b) participant (owner/annuitant) information
a Current annual salary from employer $ (required)
b Employment date ___/___/___ Has employment been continuous? __ Yes __ No
c Is owner/annuitant covered by employer's retirement plan? __ Yes __No
If yes, give name of plan
If contribution amount exceeds 20% of net salary, a copy of the InfoServ
TSA/TSCA calculation must be attached. Complete and initial the TSA Disclosure
and Acknowledgement on Page 6, Form 31647.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Section C Annuity Applied For
- -----------------------------------------------------------------------------------------------------------------------
Deferred Annuities
<S><C>
__ Flexible Portfolio Annuity (check A or B or C; complete amount)
__ A. Single payment only: $
NOTE: minimum single payment $1,000 TQ, $2,000NQ
__ B. Installment payments only: $ annually
NOTE: minimum $500/year (BAs, PDS, group billing only)
__ C. Combination:
Single payment: $ with installment payments $ annually
--------------------- -------------------
Initial Payment Allocation:
(FA) IDS Life Fixed Account...........................________% (FA) IDS Life Fixed Account..........................________%
(CR) IDS Life Capital Resource Fund...................________% (CR) IDS Life Capital Resource Fund..................________%
(SI) IDS Life Special Income Fund.....................________% (SI) IDS Life Special Income Fund....................________%
(MS) IDS Life Moneyshare Fund.........................________% (MS) IDS Life Moneyshare Fund........................________%
(MF) IDS Life Managed Fund............................________% (MF) IDS Life Managed Fund...........................________%
(IE) IDS Life International Equity Fund...............________% (IE) IDS Life International Equity Fund..............________%
(AG) IDS Life Aggressive Growth Fund..................________% (AG) IDS Life Aggressive Growth Fund.................________%
(GY) IDS Life Global Yield Fund.......................________% (GY) IDS Life Global Yield Fund......................________%
(IA) IDS Life Income Advantage Fund...................________% (IA) IDS Life Income Advantage Fund..................________%
(GD) IDS Life Growth Dimensions Fund..................________% (GD) IDS Life Growth Dimensions Fund.................________%
(GI) AIM Variable Ins. Growth & Income Fund...........________% (GI) AIM Variable Ins. Growth & Income Fund..........________%
(NO) Putnam VT New Opportunities Fund.................________% (NO) Putnam VT New Opportunities Fund................________%
(SC) Warburg Pincus Trust Small Company Portfolio.....________% (SC) Warburg Pincus Trust Small Company Portfolio....________%
(DM) Templeton Developing Markets Fund................________% (DM) Templeton Developing Markets Fund...............________%
(TV) TCI (American Century) VP Value..................________% (TV) TCI (American Century) VP Value.................________%
Total must equal 100% ________% Total must equal 100% ________%
Future Payments (Flexible only)
1) Frequency of payment
__ Annually 1/Year __ Quarterly 4/Year __ Bifortnightly 13/Year __ Biweekly 26/Year
__ Semiannually 2/Year __ Monthly 12/Year __ Semimonthly 24/Year __ Weekly 52/Year
__ Other (specify months) __Jan __Feb __March __April __May __June
__July __Aug __Sept __Oct __Nov __Dec
</TABLE>
2) Payments to start* ___/___/___
*Must be at least 30 days from date received in home office (if omitted, the
home office will establish start date)
3) Method of payment
__ Add to existing BA with account no.
__ New BA form 1748 (see Page 13 of application)
__ Add to existing PDS/Employer Billing no. (contact the employer)
-------------
__ New PDS/Employer Billing Form 3188 (see Page 14 of application)
__ Systematic Payout, submit Form F137
__ Other allowed method (see reference manual)
<PAGE>
<TABLE>
Section C Annuity Applied For (continued)
<S> <C>
__ Fixed Retirement Annuity - Value Plus (FRA-VP) Single payment $ _____________________
Note: minimum $5,000
- --------------------------------------------------------------------------------------------
__ Fixed Retirement Annuity - Extra Rate (FRA-XR) Single payment $______________________
Note: minimum $5,000
- --------------------------------------------------------------------------------------------
__ Guaranteed Term Annuity (GTA) Single payment $ ______________________
Note: minimum $5,000
Initial Guarantee Period (check one)
__ 1 Year __ 6 Years
__ 2 Years __ 7 Years
__ 3 Years __ 8 Years
__ 4 Years __ 9 Years
__ 5 Years __10 Years
- --------------------------------------------------------------------------------------------
__ Index 500 Annuity Single payment $ ________________________
Note: minimum $5,000
- --------------------------------------------------------------------------------------------
__ Fixed Immediate Annuity Required Proof of Age
1) Single Payment $_________________ Note $5,000 minimum Proof of age submitted:
Monthly payment quoted $_____________________
2) Payout Option: __ Copy of birth certificate enclosed or:
__ Individual annuitant __ Joint and full to survivor
__ Joint and 2/3 to survivor __ Joint and 1/2 to survivor Submit copies of two (2) of the following when birth
3) Payout Mode: certificate is not available:
__ Nonrefund
__ Life income with period certain. Circle one: 5 10 15 20 years __ Baptism certificate
__ Installment refund (not available with Joint and 2/3 or1/2option) __ Family record of birth
__ Term certain only (Mode E) ______ year (5 to 30 years) __ Confirmation record showing age at time of
4) Payout checks to start / / confirmation
-------------------------
Month Day Year __ Marriage certificate
Note: Must be at least 30 days from received home office date. __ Naturalization record
__Monthly __Quarterly __ Semiannual __ Annual __ Passport (at least five years old)
5) Withholding to apply? __Yes __ No If yes, indicate $_______ __ Military discharge papers
6) __ Direct Deposit. Form 33581
7) __ Direct Deposit to account no.____________________________
8) __ Special payee name ___________________________________
Address____________________________________________
</TABLE>
<PAGE>
<TABLE>
Section D Agreements and Signatures
- ------------------------------------------------------------------------------------------------------------------------------------
a) All Annuities ____________ Client's initials
<S><C>
__ Investment Objectives: You understand the investment objectives and risks of the contract(s) for which you are applying. There
can be no assurance that such objectives will be achieved. Your risk tolerance for investment is:
__ Low __ Medium __ High
Your specific long-term goals and objectives are:
__ Aggressive Growth __ Growth with Income __ Income __ Other _____________
__ Growth __ Preservation of Principal __ Tax Deferral (specify)
</TABLE>
__ Earnings: The method for crediting fixed and/or variable earnings for your
particular contract has been explained to you. Any interest crediting rates
are annual effective rates.
__ Changes: Only officers of the company have the authority to accept any
representation or information not contained in this application or to
modify any annuity contract or waive any requirement in the
application. They must do so in writing. Our sales representatives do
not have the authority to make any changes.
__ Cancellation: You understand the contract provides you with certain
cancellation privileges for a period of time from receipt (usually 10 days)
under which no surrender charges or fees will be charges by the company.
Please not the Guaranteed Term Annuity (GTA) does not have these same
cancellation privileges. Generally, the GTA allows for cancellation of an
individual Retirement Annuity (usually 7 days) and certain other arrangements
based on individual state requirements.
b) Products ___________________ Client's initials
Deferred Annuity (Please read all headings, because several categories may
apply to your type of contract)
__ You understand that the basic purpose of an annuity is to provide lifetime
income at retirement and it should be purchased for this purpose. You
understand the benefits and consequences of tax deferral, and are confident
that it can work to your advantage. The contract value may be surrendered in
full or in part before annuity payments begin, but not after. Surrender of a
contract may result in a loss to you because of fees and charges that may
apply. They are explained in detail in the contract.
__ The Guaranteed Term Annuity contains a market value adjustment which may
result in either or both upward and downward adjustments in cash surrender
benefits.
__ You have received the current prospectus(es) for the variable annuity
applied for. Investment earnings, values and monthly income benefits based
on the performance of a Variable Fund or Variable Account are not guaranteed
and may both increase and decrease.
__ We reserve the right to terminate certain installment payment contracts for
full value, if in any 24-month period no purchase payments have been
received and the amount paid is less than $600.
__ The FRA-XR annuity includes a first-year bonus interest rate, which is no
longer credited after one (1) year.
__ The Index 500 Annuity's performance is linked to changes in the Standard &
Poor's 500 Composite Stock Price Index. Regardless of the Index's
performance, you are guaranteed at least 110% of the amount of your original
payment at the end of the initial 7-year term, assuming no surrenders have
been made.
Immediate Annuity
__ You cannot surrender or take loans from an Immediate Annuity. Also, there is
no death benefit under the nonrefund payout mode.
__ You understand that this transaction is not reversible.
IRA Applications
__ You have received a copy of Your Guide to IRAs and understand the terms
contained in it.
__ You assume all responsibility for any tax consequences and penalties that
may result from making contributions to, transactions with, and
distributions from this IRA.
<PAGE>
Section D Agreements and Signatures (continued)
- -------------------------------------------------------------------------------
c) Additional disclosures: (must have client initial)
- -------------------------------------------------------------------------------
__ Serial Annuity
- -------------------------------------------------------------------------------
Instructions: Complete Section A when applying for any nonqualified deferred
annuity; and/or Section B when more than one Fixed Retirement Annuity-Extra
Rate, Fixed Retirement Annuity-Value Plus, Guaranteed Term Annuity or Index 500
Annuity is being purchased whether nonqualified or tax-qualified. Section A
____________ Client's initials
This section discussed current federal tax laws as IDS Life understands them.
Federal tax laws and their interpretations may change. The client must initial
above indicating that he/she has read and understands the following:
Multiple Contracts (Serial Annuities)
- -------------------------------------------------------------------------------
Tax law requires that all nonqualified deferred annuity contracts issued by the
same company, to the same policyholder (owner), during a calendar year are to be
treated as a single, unified contract. The amount of income included and taxed
in a distribution (or a transaction deemed a distribution under tax law) taken
from any one of such contracts is determined by summing all such contracts
together. Section B _____________Client's initials
If more than one Fixed Retirement Annuity-XR or Fixed Retirement Annuity-VP
product is being purchased, the client must initial above and provide the
requested information below.
Benefits of Larger Contracts The single premium Fixed Retirement Annuity-XR or
Fixed Retirement Annuity-VP provides for crediting interest at a higher rate at
certain premium sizes. You may be able to receive a higher interest crediting
rate by purchasing one larger contract rather than two or more smaller ones.
Multiple Beneficiaries More than one beneficiary may be named under a single
contract. Each beneficiary has a choice to receive any death benefit as either a
lump sum or in the form of annuity payments as provided by the contract.
Reasons: Your reason(s) for purchasing more than one contract is (are):
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
__ Tax-Sheltered Annuity (TSA) _______________Client's initials
Disclosure and Acknowledgement
- -------------------------------------------------------------------------------
(Form 31647)
Effective January 1, 1989, a distribution from a Tax-Sheltered Annuity (TSA)
purchased under ss.403(b) of the Internal Revenue Code may be made only if the
employee/participant has:
1. attained age 59 1/2; or
2. separated from the service of the employer that purchased the TSA; or 3.
died; or 4. become disabled, as defined in Section 72(m)(7) of the Code; or 5.
encountered financial hardship within the meaning of Section 403(b) of the Code.
The restriction applies to contributions of deferred salary made after December
31, 1988, and all earnings credited to the contract after that date. The
"hardship" exception above is limited to the amount of contributions made and
does not apply to any earnings credited to the contract.
The restriction does not apply to any values in the TSA as of December 31, 1988,
nor to transfers or exchanges of contract values within the annuity or to
another registered variable annuity contract or investment vehicle available
through the employer. Client acknowledges that the representative has reviewed
and explained the above information. Client should consult a tax advisor if
he/she has questions about the taxation of his/her annuity contract.
<PAGE>
Section D Agreements and Signatures (continued)
- -------------------------------------------------------------------------------
Backup Withholding
__ Check here if the IRS has notified that you are subject to backup
withholding because of a failure to report all interests and dividends.
__ Check here if you are a tax-exempt payee.
Replacement
__ Is this annuity intended to replace existing annuities or life insurance? __
Yes __ No If "Yes", see State Requirements section of the Annuity Reference
Manual for required papers.
__ Consolidated Statement
We periodically send out informational statements, for each of our accounts,
which are consolidated into one statement covering all accounts owned by
members of the same household. We understand that by applying as spouses or
domestic partners that all of our accounts, whether in individual or joint
ownership, will be reported together by American Express Financial Advisors.
If you don't want this account reported that way, check here __.
__ For Florida residents only
Any person who knowingly and with intent to injury, defraud or deceive any
insurer files a statement of claim or an application containing any false,
incomplete or misleading information is guilty of a felony of the third
degree.
__ For Indiana residents only
A person who knowingly and with intent to defraud an insurer files a
statement of claim containing any false, incomplete, or misleading
information commits a felony.
__ For Kentucky residents only
Any person who knowingly and with intent to defraud any insurance company or
other person files an application for insurance containing any materially
false information or conceals, for the purpose of misleading, information
concerning any fact material thereto commits a fraudulent insurance act,
which is a crime.
__ For New Jersey residents only
Any person who includes any false or misleading information on an
application for an insurance policy is subject to criminal and civil
penalties.
__ For Ohio residents only
Any person who, with intent to defraud or knowing that he is facilitating a
fraud against an insurer, submits an application or files a claim containing
a false or deceptive statement is guilty of insurance fraud.
__ For Oklahoma residents only
WARNING: Any person who knowingly, and with intent to injure, defraud or
deceive any insurer, makes a claim for the proceeds of an insurance policy
containing any false, incomplete or misleading information is guilty of a
felony.
__ For Pennsylvania residents only
Any person who knowingly and with intent to defraud any insurance company or
other person files an application for insurance or statement of claim
containing any materially false information or conceals for the purpose of
misleading, information concerning any fact material thereto commits a
fraudulent insurance act, which is a crime and subjects such person to
criminal and civil penalties.
<PAGE>
__ Declaration Agreement
You declare that each of the statements and answers given in this
application is true and complete to the best of your knowledge and belief
and will be the basis of any annuity issued from this application.
Under penalties of perjury, I certify that:
1. The number shown on this form is my correct taxpayer identification
number (or I am waiting for a number to be issued to me), and
2. I am not subject to backup withholding because: (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal
Revenue Service that I am subject to backup withholding as a result of
a failure to report all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup withholding.
Certification Instructions-You must cross out item 2 above if you have been
notified by the IRS that you are currently subject to backup withholding
because of underreporting interest or dividends on your tax return. For
real estate transactions, item 2 does not apply. For mortgage interest
paid, the acquisition or abandonment of secured property, cancellation of
debt, contributions to an individual retirement arrangement (IRA), and
generally payments other than interest and dividends, you are not required
to sign the Certification, but you must provide your correct TIN. The
Internal Revenue Service does not require your consent to any provision of
this document other than the certifications required to avoid backup
withholding. By signing this application and checking each statement that
pertains to your annuity, you understand and acknowledge the above:
<TABLE>
Signatures
<S> <C>
Signatures of all Annuitants x___________________________________________________
x___________________________________________________
Owner/trustee/plan administrator signature x___________________________________________________
Other applicant's signature (if required) x___________________________________________________
Signed at (city) ___________________________ (state) ____________________, on (date) _____/_______/_______
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Section D Agreements and Signatures (continued)
- ------------------------------------------------------------------------------------------------------------------------------------
Representative's Report
- ------------------------------------------------------------------------------------------------------------------------------------
Declaration and signature. You certify that you personally solicited this
application and witnessed its signing. The application and this report are
complete and accurate to the best of your knowledge and belief.
Are you related to the annuitant/owner? Please state relationship _____________________________ (required)
This application __ does __ does not involve replacement of existing insurance or annuities.
- --------------------- ------------------- --------------- ------------ ----------
Representative's signature Team ID Representative ID *Compensation Area Office
(Set up as client's servicing representative) %
- ------------------------- -(----)------------- ----------------
Print Representative name Phone Florida License no.
- --------------------- ------------------- --------------- ------------ ----------
Joint Representative's signature Team ID Representative ID *Compensation Area Office
%
- ------------------------- ----------------- -----------------
Print Name Florida License no. Phone no.
-(----)----------
Fax no.
*Total percentages must equal 100%.
__ Junior
Name _________________________________________________ No. _______________________________
Send contract to: __ Owner __ Representative (If sent to representative, delivery assurance form is required)
Note: Contract will be mailed to owner unless otherwise indicated.
For Home Office Use Only
- --------------------------------------------------------------------------------
Amount submitted ___________________________ Purchased date _________________________
Accepted by ___________________________
</TABLE>
<PAGE>
Instructions for Specific Items
- -------------------------------------------------------------------------------
Page 1, Ownership
If you complete the Yes response and provide any necessary address information,
you are finished with this section. If you checked No, complete the seven items
requested.
Note: If the Type of Ownership is Trustee or Custodian, check only that one box,
regardless of whether the Trustee/Custodian is also an individual, proprietor,
partner or corporation. Also, if ownership is Trustee, be sure that all trustees
are listed on the line above (next to "Other").
Other types of ownership include: Guardian, Power of Attorney, etc.
Forms needed for TSAs:
31647-TSA Disclosure and Acknowledgement Statement (found on Page 6
of application)
For a 501(c)(3) Organization, a copy of the IRS determination letter (if
this is the first TSA application through that organization)
PDS/Employer Billing Form 3188-to set up a new billing with the employer
(found on Page 14) Salary reduction agreement-send to employer.
TSA transfers are allowed from company to company. TSA rollovers to TSAs are to
be a lump-sum distribution on account of a) separation from service, or b)
attaining age 591/2. See the Special Markets Section of Annuity Reference Manual
for more information.
Refer to Special Markets Section of IDS Life Annuity Reference Manual for
information on TSA Contribution limits.
Page 2, Section B (Purchase Basis)
Check only one response section for this entire page and complete everything
asked for that one response. For instance, if this is a Nonqualified Individual
Purchase, check the two applicable boxes and go on to the next page.
Page 3, Section C (Annuity Applied For)
For the Flexible Portfolio Annuity, fill in a yearly payment amount only if the
client intends to make regular payments into the contract through a Bank
Authorization, Group/PDS billing or Systematic Payout. All other purchases will
be processed as a Single Payment contract for the amount submitted even though
additional amounts may be paid in periodically.
Pages 3 and 4 (Flexible Portfolio (PFA), FRA-VP, FRA-XR, GTA and Index 500
Deferred Annuity)
The charges for Deferred Annuities as of 3/97 are:
1. Surrender Charge for Flexible Portfolio Annuity (FPA)
Contract Year Surrender Charge
1 through 3 7%
4 6%
5 5%
6 4%
7 3%
8 2%
Thereafter 0%
Contract Charge for Administration
$30.00 annually. Charge will be waived if purchase payments made less purchase
payments surrendered, or the contract value equals or exceeds $25,000.
2. Surrender Charges applied against amounts surrendered for Fixed Retirement
Annuity-Extra Rate (FRA-XR) and Fixed Retirement Annuity-Value Plus
(FRA-VP):
FRA-XR FRA-VP
Contract Surrender Contract Surrender
Year Charge Year Charge
- ---------------- --------------- --------------- ---------------
1 7% 1 10%
2 6% 2 9%
3 5% 3 8%
4 4% 4 7%
5 3% 5 6%
6 2% 6 5%
7 1% 7 4%
8th and later 0% 8 3%
9 2%
10 1%
11th and later 0%
FRA-XR and FRA-VP: Amounts totaling up to 10% of the contract value as of the
last contract anniversary may be surrendered in any year without charge.
3. For the Guaranteed Retirement Annuity (GTA), a surrender charge may be
assessed on any total or partial surrender taken prior to the eighth
contract anniversary unless the surrender occurs on the last day of a
Guarantee Period. The amount of the surrender charge will be based on the
length of the Guarantee Period.
Amounts totaling up to 10% of the contract value as of the last contract
anniversary may be surrendered in any year after the first without
surrender charge. A market value adjustment will apply.
4. The Index 500 Annuity has a fixed 7% surrender charge for the length of
each term. This surrender charge is waived from the last day of any term
until the start of a new term. There is a 15 day window to renew the
contract if a renewal request has not been received. If no surrender
request is received after 15 days, it will be renewed at that time. Amounts
totaling up to10% of the accumulation value as of the beginning of each
contract year may be surrendered without surrender charge.
Page 12, Beneficiary Designation Form
Standard designations apply to the Annuitant's spouse-not the owner's spouse.
The owner's purpose in designating a Beneficiary can be thwarted, if the
beneficiary designation is worded incorrectly. This form provides for standard
beneficiary designations by simply checking a box and providing certain name
information. If a standard designation can't be used, please copy one of the
examples supplied with this application or from the Policy owner Service Section
of the Reference Manual, as exactly as possible.
April 27, 1998
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
Re: IDS Life Variable Account 10
Post-Effective Amendment No. 3
File No. 33-62407/811-07355
Ladies and Gentlemen:
I am familiar with the establishment of the IDS Life of Variable Account 10
("Account"), which is a separate account of IDS Life Insurance Company
("Company") established by the Company's Board of Directors according to
applicable insurance law. I also am familiar with the above-referenced
Registration Statement filed by the Company on behalf of the Account with the
Securities and Exchange Commission.
I have made such examination of law and examined such documents and records as
in my judgment are necessary and appropriate to enable me to give the following
opinion:
1. The Company is duly incorporated, validly existing and in good standing
under applicable state law and is duly licensed or qualified to do
business in each jurisdiction where it transacts business. The Company
has all corporate powers required to carry on its business and to issue
the contracts.
2. The Account is a validly created and existing separate account of the
Company and is duly authorized to issue the securities registered.
3. The contracts issued by the Company during the past fiscal year, when
offered and sold in accordance with the prospectus contained in the
Registration Statement and in compliance with applicable law, were
legally issued and represent binding obligations of the Company in
accordance with their terms.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
Sherilyn K. Beck
Associate Counsel
SKB/SP/dm
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our reports dated February 5, 1998 on the consolidated
financial statements and schedules of IDS Life Insurance Company and our report
dated March 13, 1998 on the financial statements of IDS Life Variable Account 10
in Post Effective Amendment No. 3 to the Registration Statement (Form N-4, No.
33-62407) and related Prospectus for the registration of the IDS Life Variable
Account 10 to be offered by IDS Life Insurance Company.
Ernst & Young LLP
Minneapolis, Minnesota
April 27, 1998
<PAGE>
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company
We have audited the consolidated financial statements of IDS Life Insurance
Company as of December 31, 1997 and 1996, and for each of the three years in the
period ended December 31, 1997, and have issued our report thereon dated
February 5, 1998 (included elsewhere in this Registration Statement). Our audits
also included the financial statement schedules listed in the index to financial
statement schedules of this Registration Statement. These schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
Ernst & Young LLP
Minneapolis, Minnesota
February 5, 1998
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE I - CONSOLIDATED SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN RELATED PARTIES ($ thousands)
AS OF DECEMBER 31, 1997
- -----------------------------------------------------------------------------------------------------
Column A Column B Column C Column D
Type of Investment Cost Value Amount at which
shown in the
balance sheet
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities:
Held to maturity:
United States Government and
government agencies and
authorities (a) $ 1,829,112 $ 1,846,833 $ 1,829,112
States, municipalities and
political subdivisions 9,684 10,252 9,684
All other corporate bonds (b) 7,476,654 7,886,325 7,476,654
------------ ---------- ----------
Total held to maturity 9,315,450 9,743,410 9,315,450
Available for sale:
United States Government and
government agencies and
authorities (c) 6,798,425 6,944,942 6,944,942
States, municipalities and
political subdivisions 11,045 12,393 12,393
All other corporate bonds (d) 5,705,560 5,919,359 5,919,359
------------ ---------- ----------
Total available for sale 12,515,030 12,876,694 12,876,694
Mortgage loans on real estate 3,618,647 XXXXXXXXX 3,618,647
Policy loans 498,874 XXXXXXXXX 498,874
Other investments 318,591 XXXXXXXXX 318,591
------------ ----------
Total investments $ 26,266,592 $ XXXXXXXXX $ 26,628,256
============ ========== ==========
(a) - Includes mortgage-backed securities with a cost and market value of $1,787,180 and $1,801,952,
respectively.
(b) - Includes mortgage-backed securities with a cost and market value of $196,008 and $199,301,
respectively.
(c) - Includes mortgage-backed securities with a cost and market value of $6,733,134 and $6,875,498,
respectively.
(d) - Includes mortgage-backed securities with a cost and market value of $397,431 and $408,667,
respectively.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($
thousands)
FOR THE YEAR ENDED DECEMBER 31, 1997
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other policy Premium Net Benefits, Amortization Other Premiums
policy policy premiums claims and revenue investment claims, of deferred operating written
acquisition benefits, benefits income losses and policy expenses*
cost losses, payable settlement acquisition
claims and expenses costs
loss
expenses
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $ 1,453,441 $ 22,009,747 $ - $ 35,007 $ - $1,718,515 $ 1,720 $229,729 $262,680 N/A
Life, DI, and
Long-term Care
Insurance 1,026,136 4,027,289 - 33,338 206,494 269,874 209,955 93,002 13,916 N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Total $ 2,479,577 $ 26,037,036 $ - $ 68,345 $ 206,494 $ 1,988,389 $ 211,675 $322,731 $276,596 N/A
- -----------------------------------------------------------------------------------------------------------------------------------
*Allocations of net investment income and other operating expenses are based on various assumptions and estimates.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1996
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other policy Premium Net Benefits, Amortization Other Premiums
policy policy premiums claims and revenue investment claims, of deferred operating written
acquisition benefits, benefits income losses and policy expenses*
cost losses, payable settlement acquisition
claims and expenses costs
loss
expenses
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $ 1,398,025 $ 21,838,008 $ - $ 50,137 $ - $1,702,364 $ 2,724 $ 189,645 $ 180,942 N/A
Life, DI, and
Long-term
Care Insurance 932,780 3,811,034 - 33,497 182,921 262,998 187,486 88,960 80,526 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 2,330,805 $ 25,649,042 $ - $ 83,634 $ 182,921 $1,965,362 $ 190,210 $ 278,605 $ 261,468 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
*Allocations of net investment income and other operating expenses are based on various assumptions and estimates.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1995
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other policy Premium Net Benefits, Amortization Other Premiums
policy policy premiums claims and revenue investment claims, of deferred operating written
acquisition benefits, benefits income losses and policy expenses*
cost losses, payable settlement acquisition
claims and expenses costs
loss
expenses
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $ 1,227,169 $ 21,404,836 $ - $ 28,191 $ - $1,651,067 $ 2,693 $ 189,626 $ 166,191 N/A
Life, DI,
and Long-term
Care Insurance 798,556 3,613,253 - 28,132 161,530 256,242 164,749 90,495 45,451 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 2,025,725 $ 25,018,089 $ - $ 56,323 $ 161,530 $1,907,309 $ 167,442 $ 280,121 $ 211,642 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
*Allocations of net investment income and other operating expenses are based on various assumptions and estimates.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE IV - REINSURANCE ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
Gross amount Ceded to other Assumed from Net % of amount
companies other companies Amount assumed to net
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1997
Life insurance in force $ 73,119,122 $ 4,351,904 $ 1,611,596 $ 70,378,814 2.29%
- -------------------------------------------------------------------------------------------
Premiums:
Life insurance $ 55,094 $ 3,124 $ 503 $ 52,473 0.96%
DI & LTC insurance 196,799 42,778 -- 154,021 0.00%
- -------------------------------------------------------------------------------------------
Total premiums $ 251,893 $ 45,902 $ 503 $ 206,494 0.24%
- -------------------------------------------------------------------------------------------
For the year ended
December 31, 1996
Life insurance in force $ 65,571,173 $ 3,875,921 $ 1,703,181 $ 63,398,433 2.69%
- -------------------------------------------------------------------------------------------
Premiums:
Life insurance $ 54,111 $ 3,253 $ 545 $ 51,403 1.06%
DI & LTC insurance 164,561 33,043 -- 131,518 0.00%
- -------------------------------------------------------------------------------------------
Total premiums $ 218,672 $ 36,296 $ 545 $ 182,921 0.30%
- -------------------------------------------------------------------------------------------
For the year ended
December 31, 1995
Life insurance in force $ 57,895,180 $ 3,771,204 $ 1,788,352 $ 55,912,328 3.20%
- -------------------------------------------------------------------------------------------
Premiums:
Life insurance $ 53,089 $ 2,648 $ (248) $ 50,193 -0.49%
DI & LTC insurance 137,016 25,679 -- 111,337 0.00%
- -------------------------------------------------------------------------------------------
Total premiums $ 190,105 $ 28,327 $ (248) $ 161,530 -0.15%
- -------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- ------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
---------
Balance at Charged to
Description Beginning Charged to Other Accounts- Deductions- Balance at End
of Period Costs & Expenses Describe Describe * of Period
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1997
- ----------------------------
Reserve for Mortgage Loans $37,495 $8,801 $0 $7,651 $38,645
Reserve for Other Investments $3,963 $2,100 $0 $0 $6,063
For the year ended
December 31, 1996
- ----------------------------
Reserve for Mortgage Loans $37,340 $10,005 $0 $9,850 $37,495
Reserve for Other Investments $4,713 ($750) $0 $0 $3,963
For the year ended
December 31, 1995
- ----------------------------
Reserve for Mortgage Loans $35,252 $15,900 $0 $13,812 $37,340
Reserve for Other Investments $7,515 ($2,802) $0 $0 $4,713
* 1997, 1996 and 1995 amounts represent $7,651, $9,850, and $13,812, respectively, for loan
payoffs and foreclosures.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> MAR-05-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 2563142575
<INVESTMENTS-AT-VALUE> 2703259928
<RECEIVABLES> 6408251
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2709668179
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (8738362)
<TOTAL-LIABILITIES> (8738362)
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 2262944904
<SHARES-COMMON-PRIOR> 948460555
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2700929817
<DIVIDEND-INCOME> 73948930
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (23253624)
<NET-INVESTMENT-INCOME> 50695306
<REALIZED-GAINS-CURRENT> 792232
<APPREC-INCREASE-CURRENT> 135763001
<NET-CHANGE-FROM-OPS> 187250539
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1594666144
<NUMBER-OF-SHARES-REDEEMED> (280181795)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1698161574
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (23253624)
<AVERAGE-NET-ASSETS> 1851849030
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLAR
<S> <C>
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<PERIOD-TYPE> YEAR
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 12876694
<DEBT-CARRYING-VALUE> 9315450
<DEBT-MARKET-VALUE> 9743410
<EQUITIES> 3361
<MORTGAGE> 3618647
<REAL-ESTATE> 102433
<TOTAL-INVEST> 26628256
<CASH> 19686
<RECOVER-REINSURE> 989
<DEFERRED-ACQUISITION> 2479577
<TOTAL-ASSETS> 52974124
<POLICY-LOSSES> 26037036
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 68345
<NOTES-PAYABLE> 0
<COMMON> 3000
0
0
<OTHER-SE> 2862816
<TOTAL-LIABILITY-AND-EQUITY> 52974124
206494
<INVESTMENT-INCOME> 1988389
<INVESTMENT-GAINS> 860
<OTHER-INCOME> 682618
<BENEFITS> 1598123
<UNDERWRITING-AMORTIZATION> 322731
<UNDERWRITING-OTHER> 276596
<INCOME-PRETAX> 680911
<INCOME-TAX> 206664
<INCOME-CONTINUING> 474247
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 474247
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 26387
<PROVISION-CURRENT> 144098
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 143237
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 27248
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
IDS LIFE INSURANCE COMPANY
POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as principal financial officer and controller,
respectively, of IDS Life Insurance Company on behalf of the below listed
registrants that previously have filed registration statements and amendments
thereto pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 with the Securities and Exchange Commission:
<TABLE>
<CAPTION>
1933 Act 1940 Act
Reg. Number Reg. Number
<S> <C> <C>
IDS Life Variable Account 10
IDS Life Flexible Portfolio Annuity 33-62407 811-07355
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Flexible Annuity 33-4173 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Variable Retirement and Combination
Retirement Annuities 2-73114 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Employee Benefit Annuity 33-52518 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Group Variable Annuity Contract 33-47302 811-3217
IDS Life Insurance Company
IDS Life Group Variable Annuity Contract (Fixed Account) 33-48701 N/A
IDS Life Insurance Company
IDS Life Guaranteed Term Annuity 33-28976 N/A
IDS Life Insurance Company
IDS Life Flexible Payment Market Value Annuity 33-50968 N/A
IDS Life Insurance Company
Portfolio Guaranteed Term Annuity 333-42793 N/A
IDS Life Variable Life Separate Account
Flexible Premium Variable Life Insurance Policy 33-11165 811-4298
IDS Life Variable Life Separate Account
Flexible Premium Survivorship Variable Life
Insurance Policy 33-62457 811-4298
IDS Life Variable Life Separate Account
Single Premium Variable Life Insurance Policy 2-97637 811-4298
IDS Life Variable Account for Smith Barney
Single Premium Variable Life Insurance Policy 33-5210 811-4652
IDS Life Account SBS
Symphony Annuity 33-40779 812-7731
IDS Life Account RE
Real Estate Variable Annuity 33-13375 N/A
IDS Life Variable Annuity Fund A 2-29081 811-1653
IDS Life Variable Annuity Fund B 2-47430 811-1674
</TABLE>
hereby constitutes and appoints William A. Stoltzmann, Mary Ellyn Minenko,
Eileen J. Newhouse, Sherilyn K. Beck, Colin Lancaster, Bruce Kohn and Timothy S.
Meehan or any one of them, as his attorney-in-fact and agent, to sign for him in
his name, place and stead any and all filings, applications (including
applications for exemptive relief), periodic reports, registration statements
for existing or future products of existing separate accounts (with all
<PAGE>
exhibits and other documents required or desirable in connection therewith),
other documents, and amendments thereto and to file such filings, applications,
periodic reports, registration statements, other documents, and amendments
thereto with the Securities and Exchange Commission, and any necessary states,
and grants to any or all of them the full power and authority to do and perform
each and every act required or necessary in connection therewith.
Dated the 9th day of April, 1998.
/s/ Jeffrey S. Horton April 8, 1998
- ------------------------------------
Jeffrey S. Horton
Vice President, Treasurer
and Assistant Secretary
/s/ Philip C. Wentzel April 9, 1998
- ------------------------------------
Philip C. Wentzel
Vice President and Controller
