<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 2 (File No. 333-79311) [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 4 (File No. 811-07355) [X]
---------
(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)
200 AXP Financial Center, Minneapolis, MN 55474
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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, 200 AXP Financial Center, Minneapolis, MN 55474
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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, 2000 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>
<PAGE>
PROSPECTUS
MAY 1, 2000
AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY
IDS LIFE VARIABLE ACCOUNT 10
ISSUED BY: IDS LIFE INSURANCE COMPANY (IDS LIFE)
200 AXP Financial Center
Minneapolis, MN 55474
Telephone: 800-862-7919
http://www.americanexpress.com/advisors
This prospectus contains information that you should know before investing.
You also will receive the prospectuses for:
- - American Express-Registered Trademark- Variable Portfolio Funds
- - AIM Variable Insurance Funds
- - American Century Variable Portfolios, Inc.
- - Calvert Variable Series, Inc.
- - Fidelity Variable Insurance Products Funds -- Service Class
- - Franklin Templeton Variable Insurance Products Trust (FTVIPT) -- Class 2
- - Goldman Sachs Variable Insurance Trust (VIT)
- - Janus Aspen Series: Service Shares
- - Lazard Retirement Series, Inc.
- - MFS-Registered Trademark- Variable Insurance Trust (SM)
- - Putnam Variable Trust -- Class IB Shares
- - Royce Capital Fund
- - Third Avenue Variable Series Trust
- - Wanger Advisors Trust
- - Warburg Pincus Trust
Please read the prospectuses carefully and keep them for future reference.
The contract provides for purchase payment credits which we may reverse up to
the maximum surrender charge under certain circumstances. Surrender charges
from contracts with purchase payment credits are higher than surrender
charges for contracts without such credits. The amount of the credit may be
more than offset by additional surrender charges associated with the credit.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS CONTRACT
INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and 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.
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PROSPECTUS -- MAY 1, 2000 1
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TABLE OF CONTENTS
KEY TERMS........................................................ 3
THE CONTRACT IN BRIEF............................................ 4
EXPENSE SUMMARY.................................................. 6
CONDENSED FINANCIAL INFORMATION (UNAUDITED)......................18
FINANCIAL STATEMENTS.............................................30
PERFORMANCE INFORMATION..........................................30
THE VARIABLE ACCOUNT AND THE FUNDS...............................31
THE FIXED ACCOUNT................................................37
BUYING YOUR CONTRACT.............................................37
CHARGES..........................................................39
VALUING YOUR INVESTMENT..........................................44
MAKING THE MOST OF YOUR CONTRACT.................................46
SURRENDERS.......................................................49
TSA -- SPECIAL SURRENDER PROVISIONS..............................50
CHANGING OWNERSHIP...............................................51
BENEFITS IN CASE OF DEATH........................................51
THE ANNUITY PAYOUT PERIOD........................................53
TAXES............................................................56
VOTING RIGHTS....................................................58
SUBSTITUTION OF INVESTMENTS......................................59
ABOUT THE SERVICE PROVIDERS......................................59
YEAR 2000........................................................61
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION.....62
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2 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
KEY TERMS
THESE TERMS CAN HELP YOU UNDERSTAND DETAILS ABOUT YOUR CONTRACT.
ACCUMULATION UNIT -- A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT -- The person on whose life or life expectancy the annuity payouts
are based.
ANNUITY PAYOUTS -- An amount paid at regular intervals under one of several
plans.
BENEFICIARY -- The person you designate to receive benefits in case of the
owner's or annuitant's death while the contract is in force and before
annuity payouts begin.
CLOSE OF BUSINESS -- When the New York Stock Exchange (NYSE) closes, normally
4 p.m. Eastern time.
CONTRACT -- A deferred annuity contract that permits you to accumulate money
for retirement by making one or more purchase payments. It provides for
lifetime or other forms of payouts beginning at a specified time in the
future.
CONTRACT VALUE -- The total value of your contract before we deduct any
applicable charges.
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 you allocate to this account earn interest at rates that we declare
periodically.
FUNDS -- Investment options under your contract. You may allocate your
purchase payments into subaccounts investing in shares of any or all of these
funds.
OWNER (YOU, YOUR) -- The person who controls the contract (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 contract's benefits.
PURCHASE PAYMENT CREDITS -- An addition we make to your contract value. We
base the amount of the credit on surrender charge schedule* you elect and/or
total purchase payments.
QUALIFIED ANNUITY -- A contract that you purchase to fund one of the
following tax-deferred retirement plans that is subject to applicable federal
law and any rules of the plan itself:
- -- Individual Retirement Annuities (IRAs) under Section 408(b) of the
Internal Revenue Code of 1986, as amended (the Code)
- -- Roth IRAs** under Section 408 A of the Code
- -- SIMPLE IRAs** under Section 408(p) of the Code
- -- Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
- -- Plans under Section 401(k) of the Code
- -- Custodial and trusteed pension and profit sharing plans under Section
401(a) of the Code
- -- Tax-Sheltered Annuities (TSAs) under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral
if it is used to fund a retirement plan that is already tax-deferred.
* The ten-year surrender charge is not available in Oregon. Contracts
purchased in Oregon are only eligible for a 1% purchase payout credit if
the initial purchase payment is at least $100,000.
** These qualified annuities are not scheduled to be available until June 2000.
Please see your sales representative for more information.
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PROSPECTUS -- MAY 1, 2000 3
<PAGE>
All other contracts are considered NONQUALIFIED ANNUITIES.
SETTLEMENT DATE -- The date when annuity payouts are scheduled to begin.
SURRENDER VALUE -- The amount you are entitled to receive if you make a full
surrender from your contract. It is the contract value minus any applicable
charges.
VALUATION DATE -- Any normal business day, Monday through Friday, that the
NYSE is open. Each valuation date ends at the close of business. We calculate
the value of each subaccount 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 fund. The value of
your investment in each subaccount changes with the performance of the
particular fund.
THE CONTRACT IN BRIEF
PURPOSE: The purpose of the contract is to allow you to accumulate money for
retirement. You do this by making one or more purchase payments. You may
allocate your purchase payments to the fixed account and/or subaccounts under
the contract. These accounts, in turn, may earn returns that increase the
value of the contract. Beginning at a specified time in the future called the
settlement date, the contract provides lifetime or other forms of payouts of
your contract value (less any applicable premium tax). As in the case of
other annuities, it may not be advantageous for you to purchase this contract
as a replacement for, or in addition to, an existing annuity.
A qualified annuity will not provide any necessary or additional tax deferral
if it is used to fund a retirement plan that is tax-deferred. However, the
contract has features other than tax deferral that may make it an appropriate
investment for your retirement plan. You should compare these features and
their costs with other investment options before deciding to purchase this
contract.
FREE LOOK PERIOD: You may return your contract to your sales representative
or to our office within the time stated on the first page of your contract
and receive a full refund of the contract value, less any purchase payment
credits up to the maximum surrender charge. (See "Valuing Your Investment --
Purchase payment credits.") We will not deduct any other charges. However,
you bear the investment risk from the time of purchase until you return the
contract; the refund amount may be more or less than the payment you made.
(Exception: If the law requires, we will refund all of your purchase
payments.)
ACCOUNTS: Currently, you may allocate your purchase payments among any or all
of:
- -- the subaccounts, each of which invests in a fund with a particular
investment objective. The value of each subaccount varies with the
performance of the particular fund in which it invests. We cannot guarantee
that the value at the retirement date will equal or exceed the total purchase
payments you allocate to the subaccounts. (p. 31)
- -- the fixed account, which earns interest at a rate that we adjust
periodically. (p. 37)
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4 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
BUYING YOUR CONTRACT: Your sales representative will help you complete and
submit an application. Applications are subject to acceptance at our office.
You may buy a nonqualified annuity or a qualified annuity. After your initial
purchase payment, you have the option of making additional purchase payments
in the future.* (p. 37)
- -- 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.
- -- Minimum additional purchase payment -- $50.
- -- Minimum installment purchase payment -- $50 monthly; $23.08 biweekly
(scheduled payment plan billing).
- -- Maximum first-year purchase payments -- $100,000 to $1,000,000 depending
on your age.
- -- Maximum purchase payment for each subsequent year -- $50,000 to $100,000
depending upon your age.
*Purchase payments are limited and may not be paid after the third contract
anniversary in Massachusetts, Washington and Oregon.
TRANSFERS: Subject to certain restrictions you currently may redistribute
your money among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. You may establish automated transfers among the accounts.
Fixed account transfers are subject to special restrictions. (p. 47)
SURRENDERS: You may surrender all or part of your contract value at any time
before the settlement date. You also may establish automated partial
surrenders. Surrenders may be subject to charges and tax penalties (including
a 10% IRS penalty if you surrender prior to your reaching age 59 1/2) and may
have other tax consequences; also, certain restrictions apply. (p. 49)
CHANGING OWNERSHIP: You may change ownership of a nonqualified annuity by
written instruction, but this may have federal income tax consequences.
Restrictions apply to changing ownership of a qualified annuity. (p. 51)
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount at least equal to the contract
value. (p. 51)
ANNUITY PAYOUTS: You can apply your contract value to an annuity payout plan
that begins on the settlement date. You may choose from a variety of plans to
make sure that payouts continue as long as you like. If you purchased a
qualified annuity, the payout schedule must meet the requirements of the
qualified plan. We can make payouts on a fixed or variable basis, or both.
Total monthly payouts may include amounts from each subaccount and the fixed
account. During the annuity payout period, you cannot be invested in more
than five subaccounts at any one time unless we agree otherwise. (p. 53)
TAXES: Generally, your contract 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 be taxed on the
income if you are the owner. (p. 56)
CHARGES: We assess certain charges in connection with your contract:
- -- $30 annual contract administrative charge;
- -- for nonqualified annuities a 0.95% mortality and expense risk fee (if you
allocate money to one or more subaccounts);
- -- for qualified annuities a 0.75%
mortality and expense risk fee (if you allocate money to one or more
subaccounts);
- -- surrender charge;
- -- any premium taxes that may be imposed on us by state or local governments
(Currently, we deduct any applicable premium tax when annuity payouts begin
but we reserve the right to deduct this tax at other times such as when you
make purchase payments or when you surrender your contract); and
- -- the operating expenses of the funds in which the subaccounts invest.
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PROSPECTUS -- MAY 1, 2000 5
<PAGE>
EXPENSE SUMMARY
The purpose of the following information is to help you understand the
various costs and expenses associated with your contract.
You pay no sales charge when you purchase your contract. We show all costs
that we deduct directly from your contract or indirectly from the subaccounts
and funds below. Some expenses may vary as we explain under "Charges." Please
see the fund prospectuses for more information on the operating expenses for
each fund.
CONTRACT OWNER EXPENSES
SURRENDER CHARGE: contingent deferred sales charge as a percentage of
purchase payment surrendered. The owner selects either a seven-year or
ten-year surrender charge schedule at the time of application.*
<TABLE>
<CAPTION>
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SEVEN-YEAR SCHEDULE TEN-YEAR SCHEDULE
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YEARS FROM PURCHASE SURRENDER CHARGE YEARS FROM PURCHASE SURRENDER CHARGE
PAYMENT RECEIPT PERCENTAGE PAYMENT RECEIPT PERCENTAGE
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<S> <C> <C> <C>
1 7% 1 8%
2 7 2 8
3 7 3 8
4 6 4 7
5 5 5 7
6 4 6 6
7 2 7 5
Thereafter 0 8 4
9 3
10 2
Thereafter 0
</TABLE>
*The ten-year surrender charge schedule is not available in Oregon.
SURRENDER CHARGE UNDER ANNUITY PAYOUT PLAN E -- PAYOUTS FOR A SPECIFIED
PERIOD: The amount equal to the difference in the present value of remaining
payments using the assumed investment rate and such present value using the
assumed investment rate plus 1.22% for qualified annuities and 1.42% for
nonqualified annuities. In no event would your surrender charge exceed 9% of
the amount available for payouts under the plan.
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $30**
**We will waive this charge when your contract value, or total purchase
payments less any payments surrendered, is $50,000 or more on the current
contract anniversary.
ANNUAL SUBACCOUNT EXPENSES
(as a percentage of average subaccount value):
MORTALITY AND EXPENSE RISK FEE 0.95% for nonqualified annuities
0.75% for qualified annuities
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6 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
<TABLE>
<CAPTION>
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ANNUAL OPERATING EXPENSES OF THE FUNDS (AFTER FEE WAIVERS AND/OR EXPENSE REIMBURSEMENTS,
IF APPLICABLE, AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
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MANAGEMENT 12b-1 OTHER
FEES FEES EXPENSES TOTAL
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<S> <C> <C> <C> <C>
AXP(SM) Variable Portfolio --
Blue Chip Advantage Fund .56% .13 .26 .95% (1)
Bond Fund .60% .13 .08 .81% (2)
Capital Resource Fund .60% .13 .06 .79% (2)
Cash Management Fund .51% .13 .05 .69% (2)
Diversified Equity Income Fund .56% .13 .26 .95% (1)
Emerging Markets Fund 1.27% .13 .35 1.75% (1)
Extra Income Fund .62% .13 .08 .83% (2)
Federal Income Fund .61% .13 .14 .88% (1)
Global Bond Fund .84% .13 .12 1.09% (2)
Growth Fund .63% .13 .19 .95% (1)
International Fund .83% .13 .11 1.07% (2)
Managed Fund .59% .13 .04 .76% (2)
New Dimensions Fund-Registered Trademark- .61% .13 .07 .81% (2)
S&P 500 Index Fund .37% .13 -- .50% (1)
Small Cap Advantage Fund .79% .13 .31 1.23% (1)
Strategy Aggressive Fund .60% .13 .07 .80% (2)
AIM V.I.
Capital Appreciation Fund .62% -- .11 .73% (3)
Capital Development Fund --% -- 1.23 1.23% (3,4)
American Century VP
International 1.34% -- -- 1.34% (5)
Value 1.00% -- -- 1.00% (5)
Calvert CVS
Social Balanced Portfolio .70% -- .16 .86% (6)
Fidelity VIP
III Growth & Income Portfolio
(Service Class) .48% .10 .12 .70% (7)
III Mid Cap Portfolio (Service Class) .57% .10 .40 1.07% (8)
Overseas Portfolio (Service Class) .73% .10 .18 1.01% (7)
FTVIPT
Franklin Real Estate Fund -- Class 2 .56% .25 .02 .83% (10)
Franklin Value Securities Fund -- Class 2 .60% .25 .21 1.06% (9)
Templeton International Smaller Companies
Fund -- Class 2 .85% .25 .26 1.36% (9)
</TABLE>
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PROSPECTUS -- MAY 1, 2000 7
<PAGE>
<TABLE>
<CAPTION>
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MANAGEMENT 12b-1 OTHER
FEES FEES EXPENSES TOTAL
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<S> <C> <C> <C> <C>
Goldman Sachs VIT
CORE(SM) Small Cap Equity Fund .75% -- .25 1.00% (11)
CORE(SM) U.S. Equity Fund .70% -- .20 .90% (11)
Mid Cap Value Fund .80% -- .25 1.05% (11)
Janus Aspen Series
Aggressive Growth Portfolio:
Service Shares .65% .25 .02 .92% (12)
Global Technology Portfolio:
Service Shares .65% .25 .13 1.03% (12)
International Growth Portfolio:
Service Shares .65% .25 .11 1.01% (12)
Lazard Retirement Series
International Equity Portfolio .75% .25 .25 1.25% (13)
MFS-Registered Trademark- VIT
Growth Series -- Service Class .75% .20 .16 1.11% (14,15,16)
New Discovery Series -- Service Class .90% .20 .17 1.27% (14,15,16)
Putnam Variable Trust
Putnam VT International New
Opportunities Fund -- Class IB Shares 1.08% .15 .33 1.56% (3)
Putnam VT Vista Fund - Class IB Shares .65% .15 .10 .90% (3)
Royce
Micro-Cap Portfolio 1.25% -- .10 1.35% (17)
Third Avenue
Value Portfolio .90% -- .40 1.30% (18)
Wanger
International Small Cap 1.25% -- .24 1.49% (19)
U.S. Small Cap .95% -- .07 1.02% (19)
Warburg Pincus Trust --
Emerging Growth Portfolio --% -- 1.40 1.40% (20)
</TABLE>
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8 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
(1) Based on estimated expenses after fee waivers and expense reimbursements.
Without fee waivers and expense reimbursements "Other Expenses" and
"Total" would be 0.39% and 1.08% for AXP Variable Portfolio -- Blue Chip
Advantage and AXP Variable Portfolio -- Diversified Equity Income Funds,
0.26% and 1.00% for AXP Variable Portfolio -- Federal Income Fund, 0.32%
and 1.08% for AXP Variable Portfolio -- Growth Fund and 0.43% and 1.35%
for AXP Variable Portfolio -- Small Cap Advantage Fund.
(2) The fund's expense figures are based on actual expenses for the fiscal
year ended Aug. 31, 1999 restated to include a Rule 12b-1 distribution fee
of 0.125% that went into effect Sept. 21, 1999.
(3) Figures in "Management Fees", "12b-1 Fees", "Other Expenses" and "Total"
are based on actual expenses for the fiscal year ended Dec. 31, 1999.
(4) Had there been no fee waiver or expenses reimbursements, expenses would
have been: 0.75%, 0.00%, 2.67% and 3.42%.
(5) The fund has a stepped fee schedule. As a result, the fund's management
fee rate generally decreases as fund assets increase.
(6) Net fund operating expenses after reductions for fees paid indirectly
again restated to reflect an indirect fee for Social Balanced would be
0.89%. Total expenses have been restated to reflect expenses expected to
be incurred in 2000.
(7) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, through arrangements with certain
funds' custodian, credits realized as a result of uninvested cash balances
were used to reduce a portion of each applicable funds' expenses. With
these reductions, "Other Expenses"and "Total" presented in the table would
have been 0.11% and 0.69% for Growth & Income Portfolio and 0.15% and
0.98% for Overseas Portfolio.
(8) FMR agreed to reimburse a portion Mid Cap Portfolio's expenses during the
period. Without this reimbursement, the Portfolio's management fee,
distribution & service fee (12b-1), other expenses and total expenses
would have been .57%, .10%, 2.74% and 3.41%, respectively.
(9) The fund's Class 2 distribution plan or "Rule 12b-1 plan" is described in
the fund's prospectus.
(10) Previously Franklin Real Estate Securities Fund. The fund administration
fee is paid indirectly through the management fee. The fund's Class 2
distribution plan or "Rule 12b-1 plan" is described in the fund's
prospectus.
(11) The fund's expenses are based on estimated expenses for the fiscal year
ended Dec. 31, 2000. Goldman Sachs Asset Management and Goldman Sachs
Asset Management International, the investment advisers, have voluntarily
agreed to reduce or limit certain other expenses (excluding management
fees, taxes, interest, brokerage fees, litigation, indemnification and
other extraordinary expenses) to the extent such expenses exceed the
percentage stated in the above table (as calculated per annum) of each
fund's respective average daily net assets. Without the limitations
described above, "Other Expenses" and "Total" would be as follows: 0.75%
and 1.50% for CORE Small Cap Equity Fund, 0.42% and 1.22% for Mid Cap
Value Fund (formerly the Mid Cap Equity Fund) and 0.20% and 0.90% for the
CORE(SM) U.S. Equity Fund. CORE(SM) is a service mark of Goldman, Sachs &
Co.
(12) Expenses are based on the estimated expenses that the new Service Shares
class of each portfolio expects to incur in its initial fiscal year. All
expenses are shown without the effect of expense offset arrangements.
(13) Effective May 1, 1999, the investment adviser agreed to waive its fees
and/or reimburse the Fund through Dec. 31, 2000 to the extent that Fund
expenses exceed 1.25% of the Fund's average daily net assets. Absent fee
waivers and/or reimbursements, "Other Expenses" and "Total" expenses for
the year ended Dec. 31, 1999 would have been 11.94% and 12.94% for
International Equity.
(14) Each series has adopted a distribution plan under Rule 12b-1 that permits
it to pay marketing and other fees to support the sales and distribution
of service class shares (these fees are referred to as distribution fees).
(15) Each series has an expense offset arrangement which reduces the series'
custodian fee based upon the amount of cash maintained by the series with
its custodian and dividend disbursing agent. The series may enter into
other similar arrangements and directed brokerage arrangements, which
would also have the effect of reducing the series' expenses. "Other
Expenses" do not take into account these expense reductions, and are
therefore higher than the actual expenses of the series. Had these fee
reductions been taken into account, "Net Expenses" would be lower, and for
service class shares would be estimated to be: 1.10% for Growth Series and
1.25% for New Discovery Series.
(16) MFS has contractually agreed, subject to reimbursement, to bear expenses
for the series' expenses such that "Other Expenses" (after taking into
account the expense offset arrangement described above), do not exceed
0.15% annually. Without this agreement, "Other Expenses" and "Total" would
be 0.71% and 1.66% for Growth Series and 1.59% and 2.69% for New Discovery
Series. These contractual fee arrangements will continue until at least
May 1, 2001, unless changed with the consent of the board of trustees
which oversees the series.
(17) Royce has contractually agreed to waive its fees and reimburse expenses to
the extent necessary to maintain the Funds Net Annual Operating Expense
ratio at or below 1.35% through Dec. 31, 1999 and 1.99% through Dec. 31,
2008. Absent fee waivers "Other Expenses" and "Total Expenses" would be
0.99% and 2.24% for Royce Micro-Cap Portfolio.
(18) These expenses reflect reimbursements by the Adviser. The Adviser
reimbursed the Fund for all expenses incurred by the Fund in excess of
1.30% of Fund assets. The fund will repay the Adviser the amount of its
reimbursement for up to three years following the reimbursement to the
extent Fund expenses drop below 1.30%. The Adviser expects to continue to
reimburse the Fund for these expenses for the foreseeable future. Either
the Fund or the Adviser can terminate this arrangement at any time.
Without this reimbursement, the Fund's "Other Expenses" and "Total" would
have been 2.05% and 2.95%. Other expenses are based on estimated amounts
for the current fiscal year.
(19) Actual operating expenses of funds at Dec. 31, 1999.
(20) Expense ratios are shown after fee waivers and expense reimbursements by
the investment adviser. The total expense ratio before the waivers and
reimbursements would have been 11.16% for Emerging Growth Portfolio of the
Warburg Pincus Trust.
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PROSPECTUS -- MAY 1, 2000 9
<PAGE>
EXAMPLES:*
You would pay the following expenses on a $1,000 investment in a nonqualified
annuity with a seven-year surrender charge schedule and a 0.95% mortality and
expense risk fee assuming a 5% annual return and ....
<TABLE>
<CAPTION>
NO SURRENDER OR SELECTION
FULL SURRENDER AT THE OF AN ANNUITY PAYOUT PLAN AT THE
END OF EACH TIME PERIOD END OF EACH TIME PERIOD
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
AXP(SM) Variable Portfolio -
Blue Chip Advantage Fund $90.06 $132.00 $156.48 $229.89 $20.06 $62.00 $106.48 $229.89
Bond Fund 88.62 127.64 149.15 214.86 18.62 57.64 99.15 214.86
Capital Resource Fund 88.42 127.02 148.10 212.70 18.42 57.02 98.10 212.70
Cash Management Fund 87.39 123.90 142.83 201.82 17.39 53.90 92.83 201.82
Diversified Equity Income Fund 90.06 132.00 156.48 229.89 20.06 62.00 106.48 229.89
Emerging Markets Fund 98.26 156.63 197.58 311.90 28.26 86.63 147.58 311.90
Extra Income Fund 88.83 128.27 150.20 217.02 18.83 58.27 100.20 217.02
Federal Income Fund 89.34 129.82 152.82 222.40 19.34 59.82 102.82 222.40
Global Bond Fund 91.49 136.34 163.78 244.72 21.49 66.34 113.78 244.72
Growth Fund 90.06 132.00 156.48 229.89 20.06 62.00 106.48 229.89
International Fund 91.29 135.72 162.74 242.61 21.29 65.72 112.74 242.61
Managed Fund 88.11 126.09 146.52 209.45 18.11 56.09 96.52 209.45
New Dimensions Fund-Registered Trademark- 88.62 127.64 149.15 214.86 18.62 57.64 99.15 214.86
S&P 500 Index Fund 85.45 117.96 132.76 180.84 15.45 47.96 82.76 180.84
Small Cap Advantage Fund 92.93 140.67 171.02 259.34 22.93 70.67 121.02 259.34
Strategy Aggressive Fund 88.52 127.33 148.63 213.78 18.52 57.33 98.63 213.78
AIM V.I.
Capital Appreciation Fund 87.80 125.15 144.94 206.18 17.80 55.15 94.94 206.18
Capital Development Fund 92.93 140.67 171.02 259.34 22.93 70.67 121.02 259.34
American Century VP
International 94.06 144.06 176.69 270.69 24.06 74.06 126.69 270.69
Value 90.57 133.55 159.09 235.21 20.57 63.55 109.09 235.21
Calvert CVS
Social Balanced Portfolio 89.14 129.20 151.78 220.26 19.14 59.20 101.78 220.26
Fidelity VIP
III Growth & Income Portfolio
(Service Class) 87.50 124.21 143.36 202.91 17.50 54.21 93.36 202.91
III Mid Cap Portfolio (Service Class) 91.29 135.72 162.74 242.61 21.29 65.72 112.74 242.61
Overseas Portfolio (Service Class) 90.67 133.86 159.61 236.27 20.67 63.86 109.61 236.27
</TABLE>
- -------------------------------------------------------------------------------
10 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
You would pay the following expenses on a $1,000 investment in a nonqualified
annuity with a seven-year surrender charge schedule and a 0.95% mortality and
expense risk fee assuming a 5% annual return and ....
<TABLE>
<CAPTION>
NO SURRENDER OR SELECTION
FULL SURRENDER AT THE OF AN ANNUITY PAYOUT PLAN AT THE
END OF EACH TIME PERIOD END OF EACH TIME PERIOD
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FTVIPT
Franklin Real Estate Fund - Class 2 $88.83 $128.27 $150.20 $217.02 $18.83 $58.27 $100.20 $217.02
Franklin Value Securities Fund - Class 2 91.19 135.41 162.22 241.56 21.19 65.41 112.22 241.56
Templeton International Smaller Companies
Fund - Class 2 94.26 144.67 177.72 272.74 24.26 74.67 127.72 272.74
Goldman Sachs VIT
CORE Small Cap Equity Fund 90.57 133.55 159.09 235.21 20.57 63.55 109.09 235.21
CORE U.S. Equity Fund 89.55 130.44 153.87 224.55 19.55 60.44 103.87 224.55
Mid Cap Value Fund 91.08 135.10 161.70 240.50 21.08 65.10 111.70 240.50
Janus Aspen Series
Aggressive Growth Portfolio:
Service Shares 89.75 131.07 154.92 226.69 19.75 61.07 104.92 226.69
Global Technology Portfolio:
Service Shares 90.88 134.48 160.66 238.39 20.88 64.48 110.66 238.39
International Growth Portfolio:
Service Shares 90.67 133.86 159.61 236.27 20.67 63.86 109.61 236.27
Lazard Retirement Series
International Equity Portfolio 93.13 141.28 172.06 261.41 23.13 71.28 122.06 261.41
MFS-Registered Trademark- VIT
Growth Series - Service Class 91.70 136.96 164.81 246.82 21.70 66.96 114.81 246.82
New Discovery Series - Service Class 93.34 141.90 173.09 263.48 23.34 71.90 123.09 263.48
Putnam Variable Trust
Putnam VT International
New Opportunities Fund -
Class IB Shares 96.31 150.82 187.94 293.01 26.31 80.82 137.94 293.01
Putnam VT Vista Fund - Class IB Shares 89.55 130.44 153.87 224.55 19.55 60.44 103.87 224.55
Royce
Micro-Cap Portfolio 94.16 144.37 177.20 271.71 24.16 74.37 127.20 271.71
Third Avenue
Value Portfolio 93.65 142.83 174.63 266.57 23.65 72.83 124.63 266.57
Wanger
International Small Cap 95.59 148.67 184.37 285.96 25.59 78.67 134.37 285.96
U.S. Small Cap 90.78 134.17 160.14 237.33 20.78 64.17 110.14 237.33
Warburg Pincus Trust -
Emerging Growth Portfolio 94.67 145.91 179.77 276.82 24.67 75.91 129.77 276.82
</TABLE>
- ------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 11
<PAGE>
You would pay the following expenses on a $1,000 investment in a nonqualified
annuity with a ten-year surrender charge schedule+ and a 0.95% mortality and
expense risk fee assuming a 5% annual return and ....
<TABLE>
<CAPTION>
NO SURRENDER OR SELECTION
FULL SURRENDER AT THE OF AN ANNUITY PAYOUT PLAN AT THE
END OF EACH TIME PERIOD END OF EACH TIME PERIOD
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AXP(SM) Variable Portfolio -
Blue Chip Advantage Fund $100.06 $142.00 $176.48 $249.89 $20.06 $62.00 $106.48 $229.89
Bond Fund 98.62 137.64 169.15 234.86 18.62 57.64 99.15 214.86
Capital Resource Fund 98.42 137.02 168.10 232.70 18.42 57.02 98.10 212.70
Cash Management Fund 97.39 133.90 162.83 221.82 17.39 53.90 92.83 201.82
Diversified Equity Income Fund 100.06 142.00 176.48 249.89 20.06 62.00 106.48 229.89
Emerging Markets Fund 108.26 166.63 217.58 331.90 28.26 86.63 147.58 311.90
Extra Income Fund 98.83 138.27 170.20 237.02 18.83 58.27 100.20 217.02
Federal Income Fund 99.34 139.82 172.82 242.40 19.34 59.82 102.82 222.40
Global Bond Fund 101.49 146.34 183.78 264.72 21.49 66.34 113.78 244.72
Growth Fund 100.06 142.00 176.48 249.89 20.06 62.00 106.48 229.89
International Fund 101.29 145.72 182.74 262.61 21.29 65.72 112.74 242.61
Managed Fund 98.11 136.09 166.52 229.45 18.11 56.09 96.52 209.45
New Dimensions Fund-Registered Trademark- 98.62 137.64 169.15 234.86 18.62 57.64 99.15 214.86
S&P 500 Index Fund 95.45 127.96 152.76 200.84 15.45 47.96 82.76 180.84
Small Cap Advantage Fund 102.93 150.67 191.02 279.34 22.93 70.67 121.02 259.34
Strategy Aggressive Fund 98.52 137.33 168.63 233.78 18.52 57.33 98.63 213.78
AIM V.I.
Capital Appreciation Fund 97.80 135.15 164.94 226.18 17.80 55.15 94.94 206.18
Capital Development Fund 102.93 150.67 191.02 279.34 22.93 70.67 121.02 259.34
American Century VP
International 104.06 154.06 196.69 290.69 24.06 74.06 126.69 270.69
Value 100.57 143.55 179.09 255.21 20.57 63.55 109.09 235.21
Calvert CVS
Social Balanced Portfolio 99.14 139.20 171.78 240.26 19.14 59.20 101.78 220.26
Fidelity VIP
III Growth & Income Portfolio
(Service Class) 97.50 134.21 163.36 222.91 17.50 54.21 93.36 202.91
III Mid Cap Portfolio (Service Class) 101.29 145.72 182.74 262.61 21.29 65.72 112.74 242.61
Overseas Portfolio (Service Class) 100.67 143.86 179.61 256.27 20.67 63.86 109.61 236.27
FTVIPT
Franklin Real Estate Fund - Class 2 98.83 138.27 170.20 237.02 18.83 58.27 100.20 217.02
Franklin Value Securities Fund - Class 2 101.19 145.41 182.22 261.56 21.19 65.41 112.22 241.56
Templeton International Smaller Companies
Fund - Class 2 104.26 154.67 197.72 292.74 24.26 74.67 127.72 272.74
</TABLE>
- ------------------------------------------------------------------------------
12 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
You would pay the following expenses on a $1,000 investment in a nonqualified
annuity with a ten-year surrender charge schedule+ and a 0.95% mortality and
expense risk fee assuming a 5% annual return and ....
<TABLE>
<CAPTION>
NO SURRENDER OR SELECTION
FULL SURRENDER AT THE OF AN ANNUITY PAYOUT PLAN AT THE
END OF EACH TIME PERIOD END OF EACH TIME PERIOD
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Goldman Sachs VIT
CORE Small Cap Equity Fund $100.57 $143.55 $179.09 $255.21 $20.57 $63.55 $109.09 $235.21
CORE U.S. Equity Fund 99.55 140.44 173.87 244.55 19.55 60.44 103.87 224.55
Mid Cap Value Fund 101.08 145.10 181.70 260.50 21.08 65.10 111.70 240.50
Janus Aspen Series
Aggressive Growth Portfolio:
Service Shares 99.75 141.07 174.92 246.69 19.75 61.07 104.92 226.69
Global Technology Portfolio:
Service Shares 100.88 144.48 180.66 258.39 20.88 64.48 110.66 238.39
International Growth Portfolio:
Service Shares 100.67 143.86 179.61 256.27 20.67 63.86 109.61 236.27
Lazard Retirement Series
International Equity Portfolio 103.13 151.28 192.06 281.41 23.13 71.28 122.06 261.41
MFS-Registered Trademark- VIT
Growth Series - Service Class 101.70 146.96 184.81 266.82 21.70 66.96 114.81 246.82
New Discovery Series - Service Class 103.34 151.90 193.09 283.48 23.34 71.90 123.09 263.48
Putnam Variable Trust
Putnam VT International New
Opportunities Fund -
Class IB Shares 106.31 160.82 207.94 313.01 26.31 80.82 137.94 293.01
Putnam VT Vista Fund - Class IB Shares 99.55 140.44 173.87 244.55 19.55 60.44 103.87 224.55
Royce
Micro-Cap Portfolio 104.16 154.37 197.20 291.71 24.16 74.37 127.20 271.71
Third Avenue
Value Portfolio 103.65 152.83 194.63 286.57 23.65 72.83 124.63 266.57
Wanger
International Small Cap 105.59 158.67 204.37 305.96 25.59 78.67 134.37 285.96
U.S. Small Cap 100.78 144.17 180.14 257.33 20.78 64.17 110.14 237.33
Warburg Pincus Trust -
Emerging Growth Portfolio 104.67 155.91 199.77 296.82 24.67 75.91 129.77 276.82
</TABLE>
- ----------
+The ten-year surrender charge schedule is not available in Oregon.
- ------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 13
<PAGE>
You would pay the following expenses on a $1,000 investment in a nonqualified
annuity with a seven-year surrender charge schedule and a 0.75% mortality and
expense risk fee assuming a 5% annual return and ....
<TABLE>
<CAPTION>
NO SURRENDER OR SELECTION
FULL SURRENDER AT THE OF AN ANNUITY PAYOUT PLAN AT THE
END OF EACH TIME PERIOD END OF EACH TIME PERIOD
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AXP(SM) Variable Portfolio -
Blue Chip Advantage Fund $88.01 $125.77 $145.99 $208.36 $18.01 $55.77 $95.99 $208.36
Bond Fund 86.57 121.40 138.60 193.03 16.57 51.40 88.60 193.03
Capital Resource Fund 86.37 120.78 137.54 190.82 16.37 50.78 87.54 190.82
Cash Management Fund 85.34 117.65 132.23 179.72 15.34 47.65 82.23 179.72
Diversified Equity Income Fund 88.01 125.77 145.99 208.36 18.01 55.77 95.99 208.36
Emerging Markets Fund 96.21 150.51 187.43 292.01 26.21 80.51 137.43 292.01
Extra Income Fund 86.78 122.03 139.66 195.23 16.78 52.03 89.66 195.23
Federal Income Fund 87.29 123.59 142.30 200.72 17.29 53.59 92.30 200.72
Global Bond Fund 89.44 130.13 153.35 223.48 19.44 60.13 103.35 223.48
Growth Fund 88.01 125.77 145.99 208.36 18.01 55.77 95.99 208.36
International Fund 89.24 129.51 152.30 221.33 19.24 59.51 102.30 221.33
Managed Fund 86.06 119.84 135.95 187.50 16.06 49.84 85.95 187.50
New Dimensions Fund-Registered Trademark- 86.57 121.40 138.60 193.03 16.57 51.40 88.60 193.03
S&P 500 Index Fund 83.40 111.68 122.07 158.33 13.40 41.68 72.07 158.33
Small Cap Advantage Fund 90.88 134.48 160.66 238.39 20.88 64.48 110.66 238.39
Strategy Aggressive Fund 86.47 121.09 138.07 191.93 16.47 51.09 88.07 191.93
AIM V.I.
Capital Appreciation Fund 85.75 118.90 134.35 184.18 15.75 48.90 84.35 184.18
Capital Development Fund 90.88 134.48 160.66 238.39 20.88 64.48 110.66 238.39
American Century VP
International 92.01 137.89 166.37 249.96 22.01 67.89 116.37 249.96
Value 88.52 127.33 148.63 213.78 18.52 57.33 98.63 213.78
Calvert CVS
Social Balanced Portfolio 87.09 122.97 141.25 198.53 17.09 52.97 91.25 198.53
Fidelity VIP
III Growth & Income Portfolio
(Service Class) 85.45 117.96 132.76 180.84 15.45 47.96 82.76 180.84
III Mid Cap Portfolio (Service Class) 89.24 129.51 152.30 221.33 19.24 59.51 102.30 221.33
Overseas Portfolio (Service Class) 88.62 127.64 149.15 214.86 18.62 57.64 99.15 214.86
FTVIPT
Franklin Real Estate Fund - Class 2 86.78 122.03 139.66 195.23 16.78 52.03 89.66 195.23
Franklin Value Securities Fund - Class 2 89.14 129.20 151.78 220.26 19.14 59.20 101.78 220.26
Templeton International Smaller Companies
Fund - Class 2 92.21 138.50 167.40 252.05 22.21 68.50 117.40 252.05
</TABLE>
- ------------------------------------------------------------------------------
14 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
You would pay the following expenses on a $1,000 investment in a nonqualified
annuity with a seven-year surrender charge schedule and a 0.75% mortality and
expense risk fee assuming a 5% annual return and ....
<TABLE>
<CAPTION>
NO SURRENDER OR SELECTION
FULL SURRENDER AT THE OF AN ANNUITY PAYOUT PLAN AT THE
END OF EACH TIME PERIOD END OF EACH TIME PERIOD
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Goldman Sachs VIT
CORE Small Cap Equity Fund 88.52 127.33 148.63 213.78 18.52 57.33 98.63 213.78
CORE U.S. Equity Fund 87.50 124.21 143.36 202.91 17.50 54.21 93.36 202.91
Mid Cap Value Fund 89.03 128.89 151.25 219.18 19.03 58.89 101.25 219.18
Janus Aspen Series
Aggressive Growth Portfolio: Service Shares 87.70 124.84 144.41 205.09 17.70 54.84 94.41 205.09
Global Technology Portfolio: Service Shares 88.83 128.27 150.20 217.02 18.83 58.27 100.20 217.02
International Growth Portfolio:
Service Shares 88.62 127.64 149.15 214.86 18.62 57.64 99.15 214.86
Lazard Retirement Series
International Equity Portfolio 91.08 135.10 161.70 240.50 21.08 65.10 111.70 240.50
MFS-Registered Trademark- VIT
Growth Series - Service Class 89.65 130.75 154.39 225.62 19.65 60.75 104.39 225.62
New Discovery Series - Service Class 91.29 135.72 162.74 242.61 21.29 65.72 112.74 242.61
Putnam Variable Trust
Putnam VT International
New Opportunities Fund -
Class IB Shares 94.26 144.67 177.72 272.74 24.26 74.67 127.72 272.74
Putnam VT Vista Fund - Class IB Shares 87.50 124.21 143.36 202.91 17.50 54.21 93.36 202.91
Royce
Micro-Cap Portfolio 92.11 138.19 166.89 251.01 22.11 68.19 116.89 251.01
Third Avenue
Value Portfolio 91.60 136.65 164.29 245.77 21.60 66.65 114.29 245.77
Wanger
International Small Cap 93.54 142.52 174.12 265.54 23.54 72.52 124.12 265.54
U.S. Small Cap 88.73 127.96 149.68 215.94 18.73 57.96 99.68 215.94
Warburg Pincus Trust -
Emerging Growth Portfolio 92.62 139.74 169.47 256.22 22.62 69.74 119.47 256.22
</TABLE>
- ------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 15
<PAGE>
You would pay the following expenses on a $1,000 investment in a nonqualified
annuity with a ten-year surrender charge schedule+ and a 0.75% mortality and
expense risk fee assuming a 5% annual return and ....
<TABLE>
<CAPTION>
NO SURRENDER OR SELECTION
FULL SURRENDER AT THE OF AN ANNUITY PAYOUT PLAN AT THE
END OF EACH TIME PERIOD END OF EACH TIME PERIOD
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AXP(SM) Variable Portfolio -
Blue Chip Advantage Fund $98.01 $135.77 $165.99 $228.36 $18.01 $55.77 $95.99 $208.36
Bond Fund 96.57 131.40 158.60 213.03 16.57 51.40 88.60 193.03
Capital Resource Fund 96.37 130.78 157.54 210.82 16.37 50.78 87.54 190.82
Cash Management Fund 95.34 127.65 152.23 199.72 15.34 47.65 82.23 179.72
Diversified Equity Income Fund 98.01 135.77 165.99 228.36 18.01 55.77 95.99 208.36
Emerging Markets Fund 106.21 160.51 207.43 312.01 26.21 80.51 137.43 292.01
Extra Income Fund 96.78 132.03 159.66 215.23 16.78 52.03 89.66 195.23
Federal Income Fund 97.29 133.59 162.30 220.72 17.29 53.59 92.30 200.72
Global Bond Fund 99.44 140.13 173.35 243.48 19.44 60.13 103.35 223.48
Growth Fund 98.01 135.77 165.99 228.36 18.01 55.77 95.99 208.36
International Fund 99.24 139.51 172.30 241.33 19.24 59.51 102.30 221.33
Managed Fund 96.06 129.84 155.95 207.50 16.06 49.84 85.95 187.50
New Dimensions Fund-Registered Trademark- 96.57 131.40 158.60 213.03 16.57 51.40 88.60 193.03
S&P 500 Index Fund 93.40 121.68 142.07 178.33 13.40 41.68 72.07 158.33
Small Cap Advantage Fund 100.88 144.48 180.66 258.39 20.88 64.48 110.66 238.39
Strategy Aggressive Fund 96.47 131.09 158.07 211.93 16.47 51.09 88.07 191.93
AIM V.I.
Capital Appreciation Fund 95.75 128.90 154.35 204.18 15.75 48.90 84.35 184.18
Capital Development Fund 100.88 144.48 180.66 258.39 20.88 64.48 110.66 238.39
American Century VP
International 102.01 147.89 186.37 269.96 22.01 67.89 116.37 249.96
Value 98.52 137.33 168.63 233.78 18.52 57.33 98.63 213.78
Calvert CVS
Social Balanced Portfolio 97.09 132.97 161.25 218.53 17.09 52.97 91.25 198.53
Fidelity VIP
III Growth & Income Portfolio
(Service Class) 95.45 127.96 152.76 200.84 15.45 47.96 82.76 180.84
III Mid Cap Portfolio (Service Class) 99.24 139.51 172.30 241.33 19.24 59.51 102.30 221.33
Overseas Portfolio (Service Class) 98.62 137.64 169.15 234.86 18.62 57.64 99.15 214.86
FTVIPT
Franklin Real Estate Fund - Class 2 96.78 132.03 159.66 215.23 16.78 52.03 89.66 195.23
Franklin Value Securities Fund - Class 2 99.14 139.20 171.78 240.26 19.14 59.20 101.78 220.26
Templeton International Smaller Companies
Fund - Class 2 102.21 148.50 187.40 272.05 22.21 68.50 117.40 252.05
</TABLE>
- -------------------------------------------------------------------------------
16 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
You would pay the following expenses on a $1,000 investment in a nonqualified
annuity with a ten-year surrender charge schedule+ and a 0.75% mortality and
expense risk fee assuming a 5% annual return and ....
<TABLE>
<CAPTION>
NO SURRENDER OR SELECTION
FULL SURRENDER AT THE OF AN ANNUITY PAYOUT PLAN AT THE
END OF EACH TIME PERIOD END OF EACH TIME PERIOD
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Goldman Sachs VIT
CORE Small Cap Equity Fund 98.52 137.33 168.63 233.78 18.52 57.33 98.63 213.78
CORE U.S. Equity Fund 97.50 134.21 163.36 222.91 17.50 54.21 93.36 202.91
Mid Cap Value Fund 99.03 138.89 171.25 239.18 19.03 58.89 101.25 219.18
Janus Aspen Series
Aggressive Growth Portfolio:
Service Shares 97.70 134.84 164.41 225.09 17.70 54.84 94.41 205.09
Global Technology Portfolio:
Service Shares 98.83 138.27 170.20 237.02 18.83 58.27 100.20 217.02
International Growth Portfolio:
Service Shares 98.62 137.64 169.15 234.86 18.62 57.64 99.15 214.86
Lazard Retirement Series
International Equity Portfolio 101.08 145.10 181.70 260.50 21.08 65.10 111.70 240.50
MFS-Registered Trademark- VIT
Growth Series - Service Class 99.65 140.75 174.39 245.62 19.65 60.75 104.39 225.62
New Discovery Series - Service Class 101.29 145.72 182.74 262.61 21.29 65.72 112.74 242.61
Putnam Variable Trust
Putnam VT International
New Opportunities Fund -
Class IB Shares 104.26 154.67 197.72 292.74 24.26 74.67 127.72 272.74
Putnam VT Vista Fund - Class IB Shares 97.50 134.21 163.36 222.91 17.50 54.21 93.36 202.91
Royce
Micro-Cap Portfolio 102.11 148.19 186.89 271.01 22.11 68.19 116.89 251.01
Third Avenue
Value Portfolio 101.60 146.65 184.29 265.77 21.60 66.65 114.29 245.77
Wanger
International Small Cap 103.54 152.52 194.12 285.54 23.54 72.52 124.12 265.54
U.S. Small Cap 98.73 137.96 169.68 235.94 18.73 57.96 99.68 215.94
Warburg Pincus Trust -
Emerging Growth Portfolio 102.62 149.74 189.47 276.22 22.62 69.74 119.47 256.22
</TABLE>
- ----------
+ The ten-year surrender charge schedule is not available in Oregon.
* In these examples, the $30 contract administrative charge is approximated
as a 0.057% charge based on our estimated average contract size. Premium
taxes imposed by some state and local governments are not reflected in this
table. We entered into certain arrangements under which we are compensated by
the funds' advisors and/or distributors for the administrative services we
provide to the funds.
YOU SHOULD NOT CONSIDER THESE EXAMPLES AS REPRESENTATIONS OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
- ------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 17
<PAGE>
CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
each subaccount. We have not provided this information for some subaccounts
because they are new and do not have any history.
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999
<S> <C>
SUBACCOUNT BC1(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - BLUE CHIP ADVANTAGE FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.11
Number of accumulation units outstanding at end of period (000 omitted) 8,145
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT BC2(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - BLUE CHIP ADVANTAGE FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.11
Number of accumulation units outstanding at end of period (000 omitted) 7,503
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT BD1(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - BOND FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.01
Number of accumulation units outstanding at end of period (000 omitted) 11,675
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT BD2(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - BOND FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.01
Number of accumulation units outstanding at end of period (000 omitted) 7,186
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT CR1(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - CAPITAL RESOURCE FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.14
Number of accumulation units outstanding at end of period (000 omitted) 3,227
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT CR2(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - CAPITAL RESOURCE FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.14
Number of accumulation units outstanding at end of period (000 omitted) 5,333
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
18 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999
<S> <C>
Subaccount CM1(1) (Investing in shares of AXP(SM) Variable Portfolio - Cash Management Fund)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.01
Number of accumulation units outstanding at end of period (000 omitted) 87,424
Ratio of operating expense to average net assets 0.95%
Simple yield(2) 5.03%
Compound yield(2) 5.16%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT CM2(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - CASH MANAGEMENT FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.01
Number of accumulation units outstanding at end of period (000 omitted) 65,522
Ratio of operating expense to average net assets 0.75%
Simple yield(2) 5.26%
Compound yield(2) 5.40%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT DE1(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.03
Number of accumulation units outstanding at end of period (000 omitted) 3,441
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT DE2(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.03
Number of accumulation units outstanding at end of period (000 omitted) 3,149
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT EI1(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - EXTRA INCOME FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.01
Number of accumulation units outstanding at end of period (000 omitted) 10,137
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT EI2(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - EXTRA INCOME FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.01
Number of accumulation units outstanding at end of period (000 omitted) 7,774
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 19
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999
<S> <C>
SUBACCOUNT FI1(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - FEDERAL INCOME FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.00
Number of accumulation units outstanding at end of period (000 omitted) 12,796
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT FI2(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - FEDERAL INCOME FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.00
Number of accumulation units outstanding at end of period (000 omitted) 11,135
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT GB1(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - GLOBAL BOND FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.00
Number of accumulation units outstanding at end of period (000 omitted) 2,368
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT GB2(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - GLOBAL BOND FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.00
Number of accumulation units outstanding at end of period (000 omitted) 1,552
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT GR1(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - GROWTH FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.18
Number of accumulation units outstanding at end of period (000 omitted) 13,813
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT GR2(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - GROWTH FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.18
Number of accumulation units outstanding at end of period (000 omitted) 16,891
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
20 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999
<S> <C>
SUBACCOUNT IE1(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - INTERNATIONAL FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.27
Number of accumulation units outstanding at end of period (000 omitted) 2,173
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT IE2(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - INTERNATIONAL FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.27
Number of accumulation units outstanding at end of period (000 omitted) 2,575
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT MF1(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - MANAGED FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.09
Number of accumulation units outstanding at end of period (000 omitted) 6,539
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT MF2(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - MANAGED FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.09
Number of accumulation units outstanding at end of period (000 omitted) 5,220
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT ND1(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO -
NEW DIMENSIONS FUND-REGISTERED TRADEMARK-)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.19
Number of accumulation units outstanding at end of period (000 omitted) 32,483
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT ND2(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO -
NEW DIMENSIONS FUND-REGISTERED TRADEMARK-)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.19
Number of accumulation units outstanding at end of period (000 omitted) 31,537
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 21
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999
<S> <C>
SUBACCOUNT SC1(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - SMALL CAP ADVANTAGE FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.12
Number of accumulation units outstanding at end of period (000 omitted) 3,029
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT SC2(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - SMALL CAP ADVANTAGE FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.12
Number of accumulation units outstanding at end of period (000 omitted) 2,970
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT SA1(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - STRATEGY AGGRESSIVE FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.51
Number of accumulation units outstanding at end of period (000 omitted) 3,901
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT SA2(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - STRATEGY AGGRESSIVE FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.51
Number of accumulation units outstanding at end of period (000 omitted) 4,470
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1CA(1) (INVESTING IN SHARES OF AIM V.I. CAPITAL APPRECIATION FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.31
Number of accumulation units outstanding at end of period (000 omitted) 5,160
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2CA(1) (INVESTING IN SHARES OF AIM V.I. CAPITAL APPRECIATION FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.31
Number of accumulation units outstanding at end of period (000 omitted) 4,337
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
22 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999
<S> <C>
SUBACCOUNT 1CD(1) (INVESTING IN SHARES OF AIM V.I. CAPITAL DEVELOPMENT FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.26
Number of accumulation units outstanding at end of period (000 omitted) 1,892
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2CD(1) (INVESTING IN SHARES OF AIM V.I. CAPITAL DEVELOPMENT FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.26
Number of accumulation units outstanding at end of period (000 omitted) 1,678
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1IF(1) (INVESTING IN SHARES OF AMERICAN CENTURY VP INTERNATIONAL)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.44
Number of accumulation units outstanding at end of period (000 omitted) 2,094
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2IF(1) (INVESTING IN SHARES OF AMERICAN CENTURY VP INTERNATIONAL)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.44
Number of accumulation units outstanding at end of period (000 omitted) 1,791
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1VA(1) (INVESTING IN SHARES OF AMERICAN CENTURY VP VALUE)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $0.92
Number of accumulation units outstanding at end of period (000 omitted) 4,775
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2VA(1) (INVESTING IN SHARES OF AMERICAN CENTURY VP VALUE)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $0.92
Number of accumulation units outstanding at end of period (000 omitted) 3,657
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 23
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999
<S> <C>
SUBACCOUNT 1GI(1) (INVESTING IN SHARES OF FIDELITY VIP III GROWTH & INCOME PORTFOLIO - SERVICE CLASS)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.04
Number of accumulation units outstanding at end of period (000 omitted) 18,137
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2GI(1) (INVESTING IN SHARES OF FIDELITY VIP III GROWTH & INCOME PORTFOLIO - SERVICE CLASS)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.05
Number of accumulation units outstanding at end of period (000 omitted) 15,603
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1MP(1) (INVESTING IN SHARES OF FIDELITY VIP III MID CAP PORTFOLIO - SERVICE CLASS)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.24
Number of accumulation units outstanding at end of period (000 omitted) 6,945
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2MP(1) (INVESTING IN SHARES OF FIDELITY VIP III MID CAP PORTFOLIO - SERVICE CLASS)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.24
Number of accumulation units outstanding at end of period (000 omitted) 5,709
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1OS(1) (INVESTING IN SHARES OF FIDELITY VIP OVERSEAS PORTFOLIO - SERVICE CLASS)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.23
Number of accumulation units outstanding at end of period (000 omitted) 3,612
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2OS(1) (INVESTING IN SHARES OF FIDELITY VIP OVERSEAS PORTFOLIO - SERVICE CLASS)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.23
Number of accumulation units outstanding at end of period (000 omitted) 3,421
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
24 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999
<S> <C>
SUBACCOUNT 1RE(1) (INVESTING IN SHARES OF FTVIPT FRANKLIN REAL ESTATE FUND - CLASS 2)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $0.96
Number of accumulation units outstanding at end of period (000 omitted) 683
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2RE(1) (INVESTING IN SHARES OF FTVIPT FRANKLIN REAL ESTATE FUND - CLASS 2)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $0.96
Number of accumulation units outstanding at end of period (000 omitted) 885
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1SI(1) (INVESTING IN SHARES OF FTVIPT FRANKLIN VALUE SECURITIES FUND - CLASS 2)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $0.96
Number of accumulation units outstanding at end of period (000 omitted) 590
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2SI(1) (INVESTING IN SHARES OF FTVIPT FRANKLIN VALUE SECURITIES FUND - CLASS 2)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $0.96
Number of accumulation units outstanding at end of period (000 omitted) 586
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1IS(1) (INVESTING IN SHARES OF FTVIPT TEMPLETON INTERNATIONAL SMALLER COMPANIES FUND - CLASS 2)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.02
Number of accumulation units outstanding at end of period (000 omitted) 1,053
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2IS(1) (INVESTING IN SHARES OF FTVIPT TEMPLETON INTERNATIONAL SMALLER COMPANIES FUND - CLASS 2)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.02
Number of accumulation units outstanding at end of period (000 omitted) 897
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 25
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999
<S> <C>
SUBACCOUNT 1SE(1) (INVESTING IN SHARES OF GOLDMAN SACHS VIT CORE SMALL CAP EQUITY FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.13
Number of accumulation units outstanding at end of period (000 omitted) 2,665
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2SE(1) (INVESTING IN SHARES OF GOLDMAN SACHS VIT CORE SMALL CAP EQUITY FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.13
Number of accumulation units outstanding at end of period (000 omitted) 1,876
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1UE(1) (INVESTING IN SHARES OF GOLDMAN SACHS VIT CORE U.S. EQUITY FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.10
Number of accumulation units outstanding at end of period (000 omitted) 9,951
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2UE(1) (INVESTING IN SHARES OF GOLDMAN SACHS VIT CORE U.S. EQUITY FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.10
Number of accumulation units outstanding at end of period (000 omitted) 8,981
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1MC(1) (INVESTING IN SHARES OF GOLDMAN SACHS VIT MID CAP VALUE FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $0.95
Number of accumulation units outstanding at end of period (000 omitted) 2,023
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2MC(1) (INVESTING IN SHARES OF GOLDMAN SACHS VIT MID CAP VALUE FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $0.95
Number of accumulation units outstanding at end of period (000 omitted) 1,634
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
26 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999
<S> <C>
SUBACCOUNT 1IP(1) (INVESTING IN SHARES OF LAZARD RETIREMENT SERIES INTERNATIONAL EQUITY PORTFOLIO)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.07
Number of accumulation units outstanding at end of period (000 omitted) 2,504
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2IP(1) (INVESTING IN SHARES OF LAZARD RETIREMENT SERIES INTERNATIONAL EQUITY PORTFOLIO)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.07
Number of accumulation units outstanding at end of period (000 omitted) 1,981
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1IN(1) (INVESTING IN SHARES OF PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND - CLASS IB SHARES)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.51
Number of accumulation units outstanding at end of period (000 omitted) 8,200
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2IN(1) (INVESTING IN SHARES OF PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND - CLASS IB SHARES)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.51
Number of accumulation units outstanding at end of period (000 omitted) 6,079
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1VS(1) (INVESTING IN SHARES OF PUTNAM VT VISTA FUND - CLASS IB SHARES)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.36
Number of accumulation units outstanding at end of period (000 omitted) 7,245
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2VS(1) (INVESTING IN SHARES OF PUTNAM VT VISTA FUND - CLASS IB SHARES)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.36
Number of accumulation units outstanding at end of period (000 omitted) 5,084
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 27
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999
<S> <C>
SUBACCOUNT 1MI(1) (INVESTING IN SHARES OF ROYCE MICRO-CAP PORTFOLIO)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.15
Number of accumulation units outstanding at end of period (000 omitted) 1,886
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2MI(1) (INVESTING IN SHARES OF ROYCE MICRO-CAP PORTFOLIO)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.15
Number of accumulation units outstanding at end of period (000 omitted) 1,228
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1SV(3) (INVESTING IN SHARES OF THIRD AVENUE VALUE PORTFOLIO)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.08
Number of accumulation units outstanding at end of period (000 omitted) 2,043
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2SV(3) (INVESTING IN SHARES OF THIRD AVENUE VALUE PORTFOLIO)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.08
Number of accumulation units outstanding at end of period (000 omitted) 1,873
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1IT(1) (INVESTING IN SHARES OF WANGER INTERNATIONAL SMALL CAP)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.51
Number of accumulation units outstanding at end of period (000 omitted) 1,343
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2IT(1) (INVESTING IN SHARES OF WANGER INTERNATIONAL SMALL CAP)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.51
Number of accumulation units outstanding at end of period (000 omitted) 1,234
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
28 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999
<S> <C>
SUBACCOUNT 1SP(1) (INVESTING IN SHARES OF WANGER U.S. SMALL CAP)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.15
Number of accumulation units outstanding at end of period (000 omitted) 2,723
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2SP(1) (INVESTING IN SHARES OF WANGER U.S. SMALL CAP)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.15
Number of accumulation units outstanding at end of period (000 omitted) 2,476
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1EG(3) (INVESTING IN SHARES OF WARBURG PINCUS TRUST - EMERGING GROWTH PORTFOLIO)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.32
Number of accumulation units outstanding at end of period (000 omitted) 2,872
Ratio of operating expense to average net assets 0.95%
- ---------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 2EG(3) (INVESTING IN SHARES OF WARBURG PINCUS TRUST - EMERGING GROWTH PORTFOLIO)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.32
Number of accumulation units outstanding at end of period (000 omitted) 1,838
Ratio of operating expense to average net assets 0.75%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Operations commenced on Sept. 15, 1999.
(2) Net of annual contract administrative charge and mortality and expense risk
fee.
(3) Operations commenced on Sept. 21, 1999.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 29
<PAGE>
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the subaccounts in the SAI. The SAI does not include the audited
financial statements for some of the subaccounts because they are new and do not
have any assets. You can find our audited financial statements later in this
prospectus
PERFORMANCE INFORMATION
Performance information for the subaccounts may appear from time to time in
advertisements or sales literature. This information reflects the performance of
a hypothetical investment in a particular subaccount during a specified time
period. We show actual performance from the date the subaccounts began investing
in funds. For some subaccounts, we do not provide any performance information
because they are new and have not had any activity to date. We also show
performance from the commencement date of the funds as if the contract existed
at that time, which it did not. Although we base performance figures on
historical earnings, past performance does not guarantee future results.
We include non-recurring charges (such as surrender charges) in total return
figures, but not in yield quotations. Excluding non-recurring charges in yield
calculations increases the reported value.
Total return figures reflect deduction of all applicable charges, including:
- - contract administrative charge,
- - mortality and expense risk fee, and
- - surrender charge (assuming a surrender at the end of the illustrated period).
We also show optional total return quotations that do not reflect a surrender
charge deduction (assuming no surrender). We may show total return quotations by
means of schedules, charts or graphs.
AVERAGE ANNUAL TOTAL RETURN is the average annual compounded rate of return of
the investment over a period of one, five and ten years (or up to the life of
the subaccount if it is less than ten years old).
CUMULATIVE TOTAL RETURN is the cumulative change in the value of an investment
over a specified time period. We assume that income earned by the investment is
reinvested. Cumulative total return generally will be higher than average annual
total return.
ANNUALIZED SIMPLE YIELD (FOR SUBACCOUNTS INVESTING IN MONEY MARKET FUNDS)
"annualizes" the income generated by the investment over a given seven-day
period. That is, we assume the amount of income generated by the investment
during the period will be generated each seven-day period for a year. We show
this as a percentage of the investment.
ANNUALIZED COMPOUND YIELD (FOR SUBACCOUNTS INVESTING IN MONEY MARKET FUNDS) is
calculated like simple yield except that we assume the income is reinvested when
we annualize it. Compound yield will be higher than the simple yield because of
the compounding effect of the assumed reinvestment.
ANNUALIZED YIELD (FOR SUBACCOUNTS INVESTING IN INCOME FUNDS) divides the net
investment income (income less expenses) for each accumulation unit during a
given 30-day period by the value of the unit on the last day of the period. We
then convert the result to an annual percentage.
You should consider performance information in light of the investment
objectives, policies, characteristics and quality of the fund in which the
subaccount invests and the market conditions during the specified time period.
Advertised yields and total return figures include charges that reduce
advertised performance. Therefore, you should not compare subaccount performance
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 total return and
yield.)
If you would like additional information about actual performance, please
contact us at the address or telephone number on the first page of this
prospectus.
- --------------------------------------------------------------------------------
30 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
THE VARIABLE ACCOUNT AND THE FUNDS
You may allocate payments to any or all of the subaccounts of the variable
account that invest in shares of the following funds:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT INVESTING IN INVESTMENT OBJECTIVES AND POLICIES: INVESTMENT ADVISOR OR MANAGER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BC1 AXP(SM) Variable Portfolio - Objective: long-term total return IDS Life, investment manager; American
BC2 Blue Chip Advantage Fund exceeding that of the U.S. stock Express Financial Corporation (AEFC)
market. Invests primarily in common investment advisor.
stocks of companies included in the
unmanaged S&P 500 Index.
- ------------------------------------------------------------------------------------------------------------------------------------
BD1 AXP(SM) Variable Portfolio - Objective: high level of current IDS Life, investment manager; AEFC
BD2 Bond Fund income while conserving the value of investment advisor.
the investment and continuing a high
level of income for the longest time
period. Invests primarily in bonds and
other debt obligations.
- ------------------------------------------------------------------------------------------------------------------------------------
CR1 AXP(SM) Variable Portfolio - Objective: capital appreciation. IDS Life, investment manager; AEFC
CR2 Capital Resource Fund Invests primarily in U.S. common investment advisor.
stocks and other securities
convertible into common stocks.
- ------------------------------------------------------------------------------------------------------------------------------------
CM1 AXP(SM) Variable Portfolio - Objective: maximum current income IDS Life, investment manager; AEFC
CM2 Cash Management Fund consistent with liquidity and investment advisor.
conservation of capital. Invests in
money market securities.
- ------------------------------------------------------------------------------------------------------------------------------------
DE1 AXP(SM) Variable Portfolio - Objective: high level of current IDS Life, investment manager; AEFC
DE2 Diversified Equity Income Fund income and, as a secondary goal, investment advisor.
steady growth of capital. Invests
primarily in dividend-paying common
and preferred stocks.
- ------------------------------------------------------------------------------------------------------------------------------------
EM1 AXP(SM) Variable Portfolio - Objective: long-term capital growth. IDS Life, investment manager; AEFC
EM2 Emerging Markets Fund Invests primarily in equity securities investment advisor; American Express
of companies in emerging markets. Asset Management International, Inc.,
a wholly-owned subsidiary of AEFC, is
the sub-investment advisor.
- ------------------------------------------------------------------------------------------------------------------------------------
EI1 AXP(SM) Variable Portfolio - Objective: high current income, with IDS Life, investment manager; AEFC
EI2 Extra Income Fund capital growth as a secondary investment advisor.
objective. Invests primarily in
high-yielding, high-risk corporate
bonds issued by U.S. and foreign
companies and governments.
- ------------------------------------------------------------------------------------------------------------------------------------
FI1 AXP(SM) Variable Portfolio - Objective: high level of current IDS Life, investment manager;
FI2 Federal Income Fund income and safety of principal AEFC investment advisor.
consistent with an investment in
U.S. government and government
agency securities. Invests
primarily in debt obligations
issued or guaranteed as to
principal and interest by the
U.S. government, its agencies or
instrumentalities.
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 31
<PAGE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT INVESTING IN INVESTMENT OBJECTIVES AND POLICIES: INVESTMENT ADVISOR OR MANAGER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
GB1 AXP(SM) Variable Portfolio - Objective: high total return IDS Life, investment manager;
GB2 Global Bond Fund through income and growth of AEFC investment advisor.
capital. Non-diversified mutual
fund that invests primarily in
debt obligations of U.S. and
foreign issuers.
- ------------------------------------------------------------------------------------------------------------------------------------
GR1 AXP(SM) Variable Portfolio - Objective: long-term capital IDS Life, investment manager;
GR2 Growth Fund growth. Invests primarily in AEFC investment advisor.
common stocks and securities
convertible into common stocks
that appear to offer growth
opportunities.
- ------------------------------------------------------------------------------------------------------------------------------------
IE1 AXP(SM) Variable Portfolio - Objective: capital appreciation. IDS Life, investment manager;
IE2 International Fund Invests primarily in common AEFC investment advisor.
stocks or convertible securities American Express Asset
of foreign issuers that offer Management International, Inc.,
growth potential. a wholly-owned subsidiary of
AEFC, is the sub-investment
advisor.
- ------------------------------------------------------------------------------------------------------------------------------------
MF1 AXP(SM) Variable Portfolio - Objective: maximum total IDS Life, investment manager;
MF2 Managed Fund investment return through a AEFC investment advisor.
combination of capital growth
and current income. Invests
primarily in stocks, convertible
securities, bonds and other debt
securities.
- ------------------------------------------------------------------------------------------------------------------------------------
ND1 AXP(SM) Variable Portfolio - Objective: long-term growth of IDS Life, investment manager;
ND2 New Dimensions Fund-Registered capital. Invests primarily in AEFC investment advisor.
Trademark- common stocks of U.S. and
foreign companies showing
potential for significant
growth.
- ------------------------------------------------------------------------------------------------------------------------------------
SP1 AXP(SM) Variable Portfolio - Objective: long-term capital IDS Life, investment manager;
SP2 S&P 500 Index Fund appreciation. Invests primarily AEFC investment advisor.
in securities that are expected
to provide investment results
that correspond to the
performance of the S&P 500
Index.
- ------------------------------------------------------------------------------------------------------------------------------------
SC1 AXP(SM) Variable Portfolio - Objective: long-term capital IDS Life, investment manager;
SC2 Small Cap Advantage Fund growth. Invests primarily in AEFC investment advisor. Kenwood
equity stocks of small companies Capital Management LLC is the
that are often included in the sub-investment advisor.
S&P SmallCap 600 Index or the
Russell 2000 Index.
- ------------------------------------------------------------------------------------------------------------------------------------
SA1 AXP(SM) Variable Portfolio - Objective: capital appreciation. IDS Life, investment manager;
SA2 Strategy Aggressive Fund Invests primarily in common AEFC investment advisor.
stocks of small-and medium-size
companies.
- ------------------------------------------------------------------------------------------------------------------------------------
1CA AIM V.I. Capital Objective: growth of capital. A I M Advisors, Inc.
2CA Appreciation Fund Invests primarily in common
stocks, with emphasis on medium-
or small-sized growth companies.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
32 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT INVESTING IN INVESTMENT OBJECTIVES AND POLICIES: INVESTMENT ADVISOR OR MANAGER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1CD AIM V.I. Capital Development Objective: long term growth of A I M Advisors, Inc.
2CD Fund capital. Invests primarily in
securities (including common
stocks, convertible securities
and bonds) of small- and
medium-sized companies.
- ------------------------------------------------------------------------------------------------------------------------------------
1IF American Century VP Objective: long term capital American Century Investment
2IF International growth. Invests primarily in Management, Inc.
stocks of growing foreign
companies.
- ------------------------------------------------------------------------------------------------------------------------------------
1VA American Century VP Value Objective: long-term capital American Century Investment
2VA growth, with income as a Management, Inc.
secondary objective. Invests
primarily in securities that
management believes to be
undervalued at the time of
purchase.
- ------------------------------------------------------------------------------------------------------------------------------------
1SR Calvert Variable Series Inc. Objective: income and capital Calvert Asset Management
2SR Social Balanced Portfolio growth. Invests primarily in Company, Inc. (CAMCO) is the
stocks, bonds and money market investment advisor. NCM Capital
instruments which offer income Management Group, Inc. is the
and capital growth opportunity investment subadvisor.
and which satisfy the investment
and social criteria.
- ------------------------------------------------------------------------------------------------------------------------------------
1GI Fidelity VIP III Growth & Income Objective: high total return Fidelity Management & Research
2GI Portfolio (Service Class) through a combination of current Company (FMR), investment
income and capital appreciation. manager; FMR U.K. and FMR Far
Invests primarily in common East, sub-investment advisors.
stocks with a focus on those
that pay current dividends and
show potential for capital
appreciation.
- ------------------------------------------------------------------------------------------------------------------------------------
1MP Fidelity VIP III Mid Cap Objective: long-term growth of FMR, investment manager; FMR
2MP Portfolio (Service Class) capital. Invests primarily in U.K. and FMR Far East,
medium market capitalization sub-investment advisors.
common stocks.
- ------------------------------------------------------------------------------------------------------------------------------------
1OS Fidelity VIP Overseas Portfolio Objective: long-term growth of FMR, investment manager; FMR
2OS (Service Class) capital. Invests primarily in U.K., FMR Far East, Fidelity
common stocks of foreign International Investment
securities. Advisors (FIIA) and FIIA U.K.,
sub-investment advisors.
- ------------------------------------------------------------------------------------------------------------------------------------
1RE FTVIPT Franklin Real Estate Fund - Objective: capital appreciation Franklin Advisers, Inc.
2RE Class 2 (previously Franklin with a secondary goal to earn
Real Estate Securities Fund) current income. Invests
primarily in securities of
companies operating in the real
estate industry, primarily
equity real estate investment
trusts (REITS).
- ------------------------------------------------------------------------------------------------------------------------------------
1SI FTVIPT Franklin Value Securities Objective: long-term total Franklin Advisory Services, LLC
2SI Fund - Class 2 return. Invests primarily in
equity securities of companies
the manager believes are
undervalued.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 33
<PAGE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT INVESTING IN INVESTMENT OBJECTIVES AND POLICIES: INVESTMENT ADVISOR OR MANAGER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1IS FTVIPT Templeton International Objective: long-term capital Templeton Investment Counsel,
2IS Smaller Companies Fund - Class 2 appreciation. Invests primarily Inc.
in equity securities of smaller
companies located outside the
U.S., including those in
emerging markets.
- ------------------------------------------------------------------------------------------------------------------------------------
1SE Goldman Sachs VIT CORE Small Cap Objective: long-term growth of Goldman Sachs Asset Management
2SE Equity Fund capital. Invests primarily in a
broadly diversified portfolio of
equity securities of U.S.
issuers which are included in
the Russell 2000 Index at the
time of investment.
- ------------------------------------------------------------------------------------------------------------------------------------
1UE Goldman Sachs VIT CORE U.S. Objective: long-term growth of Goldman Sachs Asset Management
2UE Equity Fund capital and dividend income.
Invests primarily in a broadly
diversified portfolio of
large-cap and blue chip equity
securities representing all
major sectors of the U.S.
economy.
- ------------------------------------------------------------------------------------------------------------------------------------
1MC Goldman Sachs VIT Mid Cap Value Objective: long-term capital Goldman Sachs Asset Management
2MC Fund appreciation. Invests primarily
in mid-capitalization companies
within the range of the market
capitalization of companies
constituting the Russell Midcap
Value Index at the time of
investment.
- ------------------------------------------------------------------------------------------------------------------------------------
1AG Janus Aspen Series Aggressive Objective: long-term growth of Janus Capital
2AG Growth Portfolio: Service Shares capital. Non-diversified mutual
fund that invests primarily in
common stocks selected for their
growth potential and normally
invests at least 50% of its
equity assets in medium-sized
companies.
- ------------------------------------------------------------------------------------------------------------------------------------
1GT Janus Aspen Series Global Objective: long-term growth of Janus Capital
2GT Technology Portfolio: Service capital. Non-diversified mutual
Shares fund that invests primarily in
equity securities of U.S. and
foreign companies selected for
their growth potential. Normally
invests at least 65% of total
assets in securities of
companies that the portfolio
manager believes will benefit
significantly from advancements
or improvements in technology.
- ------------------------------------------------------------------------------------------------------------------------------------
1IG Janus Aspen Series International Objective: long-term growth of Janus Capital
2IG Growth Portfolio: Service Shares capital. Invests at least 65%of
its total assets in securities
of issuers from at least five
different countries, excluding
the U.S. It may at times invest
all of its assets in fewer than
five countries or even a single
country.
- ------------------------------------------------------------------------------------------------------------------------------------
1IP Lazard Retirement Series Objective: long-term capital Lazard Asset Management
2IP International Equity Portfolio appreciation. Invests primarily
in equity securities,
principally common stocks of
relatively large non-U.S.
companies (those whose total
market value is more than $1
billion) that the Investment
Manager believes are undervalued
based on their earnings, cash
flow or asset values.
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
34 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT INVESTING IN INVESTMENT OBJECTIVES AND POLICIES: INVESTMENT ADVISOR OR MANAGER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1MG MFS-Registered Trademark- VIT Objective: long-term growth of MFS Investment
2MG Growth Series - Service Class capital and future income. Management-Registered Trademark-
Invests at least 80% of its
total assets in common stocks
and related securities of
companies which MFS believes
offer better than average
prospects for long-term growth.
- ------------------------------------------------------------------------------------------------------------------------------------
1MD MFS-Registered Trademark- VIT Objective: capital appreciation. MFS Investment
2MD New Discovery Series - Service Invests primarily in equity Management-Registered Trademark-
Class securities of emerging growth
companies.
- ------------------------------------------------------------------------------------------------------------------------------------
1IN Putnam VT International New Objective: long-term capital Putnam Investment Management,
2IN Opportunities Fund - Class IB appreciation. Invests primarily Inc.
Shares in a diversified portfolio of
common stocks that Putnam
Management believes have
above-average potential for
capital appreciation.
- ------------------------------------------------------------------------------------------------------------------------------------
1VS Putnam VT Vista Fund - Class IB Objective: capital appreciation. Putnam Investment Management,
2VS Shares Invests primarily in a Inc.
diversified portfolio of common
stocks that Putnam Management
believes have the potential for
above-average capital
appreciation.
- ------------------------------------------------------------------------------------------------------------------------------------
1MI Royce Micro-Cap Portfolio Objective: long-term growth of Royce & Associates, Inc.
2MI capital. Invests primarily in a
broadly diversified portfolio of
equity securities issued by
micro-cap companies (companies
with stock market
capitalizations below $300
million).
- ------------------------------------------------------------------------------------------------------------------------------------
1SV Third Avenue Value Portfolio Objective: long-term capital EQSF, Inc.
2SV appreciation. Invests primarily
in common stocks of
well-financed companies at a
substantial discount to what the
Advisor believes is their true
value.
- ------------------------------------------------------------------------------------------------------------------------------------
1IT Wanger International Small Cap Objective: long-term growth of Wanger Asset Management, L.P.
2IT capital. Invests primarily in
stocks of small- and medium-size
non-U.S. companies.
- ------------------------------------------------------------------------------------------------------------------------------------
1SP Wanger U.S. Small Cap Objective: long-term growth of Wanger Asset Management, L.P.
2SP capital. Invests primarily in
stocks of small- and medium-size
U.S. companies.
- ------------------------------------------------------------------------------------------------------------------------------------
1EG Warburg Pincus Trust - Emerging Objective: maximum capital Credit Suisse
2EG Growth Portfolio appreciation. Invests primarily Asset Management, LLC
in equity securities of small-
or medium-sized U.S.
emerging-growth companies.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 35
<PAGE>
The investment objectives and policies of some of the funds are similar to the
investment objectives and policies of other mutual funds that an investment
advisor or its affiliates manage. Although the objectives and policies may be
similar, each fund will have its own portfolio holdings and its own fees and
expenses. Accordingly, each fund will have its own investment results, and those
results may differ significantly from other funds with similar investment
objectives and policies.
The investment managers and advisors cannot guarantee that the funds will meet
their investment objectives. Please read the fund prospectuses for facts you
should know before investing. These prospectuses are also available by
contacting us at the address or telephone number on the first page of this
prospectus.
All funds are available to serve as the underlying investments for variable
annuities. Some funds also are available to serve as investment options for
variable life insurance policies and tax-deferred retirement plans. It is
possible that in the future, it may be disadvantageous for variable annuity
accounts and variable life insurance accounts and/or tax-deferred retirement
plans to invest in the available funds simultaneously.
Although the insurance company 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 annuity
owners, policy owners and tax-deferred retirement plans and to determine what
action, if any, should be taken in response to a conflict. If a board were to
conclude that it should establish separate funds for the variable annuity,
variable life insurance and tax-deferred retirement plan accounts, you would not
bear any expenses associated with establishing separate funds. Please refer to
the fund prospectuses for risk disclosure regarding simultaneous investments by
variable annuity, variable life insurance and tax-deferred retirement plan
accounts.
The Internal Revenue Service (IRS) issued final regulations relating to the
diversification requirements under Section 817(h) of the Code. Each fund intends
to comply with these requirements.
The variable account was established under Minnesota law on Aug. 23, 1995, and
the subaccounts are registered together as a single 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. All obligations arising under the contracts are general obligations
of IDS Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
The U.S. Treasury and the IRS indicated that they may provide additional
guidance on investment control. This concerns how many variable subaccounts an
insurance company may offer and how many exchanges among subaccounts it may
allow before the contract owner would be currently taxed on income earned within
subaccount assets. At this time, we do not know what the additional guidance
will be or when action will be taken. We reserve the right to modify the
contract, as necessary, so that the owner will not be subject to current
taxation as the owner of the subaccount assets.
We intend to comply with all federal tax laws so 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.
- --------------------------------------------------------------------------------
36 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
THE FIXED ACCOUNT
You also may allocate purchase payments to the fixed account. We back the
principal and interest guarantees relating to the fixed account. The value of
the fixed account increases as we credit interest to the account. Purchase
payments and transfers to the fixed account become part of our general account.
We credit interest daily and compound it annually. We will change the interest
rates from time to time at our discretion. These rates will be based on various
factors including, but not limited to, the interest rate environment, returns
earned on investments backing these annuities, the rates currently in effect for
new and existing company annuities, product design, competition, and the
company's revenues and expenses.
Interests in the fixed account are not required to be registered with the SEC.
The SEC staff does not review the disclosures in this prospectus on 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. (See
"Making the Most of Your Contract -Transfer policies" for restrictions on
transfers involving the fixed account.)
BUYING YOUR CONTRACT
You can fill out an application and send it along with your initial purchase
payment to our office. As the owner, you have all rights and may receive all
benefits under the contract. You can own a nonqualified annuity in joint tenancy
with rights of survivorship only in spousal situations. You cannot own a
qualified annuity in joint tenancy. You can buy a contract or become an
annuitant if you are 90 or younger.
When you apply, you may select:
- - the length of the surrender charge period (seven or ten years);*
- - the fixed account and/or subaccounts in which you want to invest;
- - how you want to make purchase payments; and
- - a beneficiary.
*The ten-year surrender charge schedule is not available in Oregon.
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 the fixed account and subaccounts you selected within two business
days after we receive it at our office. If we accept your application, 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 you make to your accounts on the valuation date we receive
them. We will value the additional payments at the next accumulation unit value
calculated after we receive your payments at our office.
THE SETTLEMENT DATE
Annuity payouts are scheduled to begin on the settlement date. When we process
your application, we will establish the settlement date to the maximum age or
date described below. You can also select a date within the maximum limits. You
can align this date 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 also can change the date, provided you send us written
instructions at least 30 days before annuity payouts begin.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 37
<PAGE>
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS*, the settlement date must be:
- - no earlier than the 60th day after the contract's effective date; and
- - no later than the annuitant's 85th birthday or the tenth contract
anniversary, if purchased after age 75. (In Pennsylvania, the maximum
settlement date ranges from age 85 to 96 based on the annuitant's age when we
issue the contract. See contract for details.)
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to avoid IRS penalty taxes, the
settlement date generally must be:
- - on or after the date the annuitant reaches age 59 1/2; and
- - 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
- - for all other qualified annuities, by April 1 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 settlement date that is
later than April 1 of the year following the calendar year when they reach
age 70 1/2).
If you take 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
contract, annuity payouts can start as late as the annuitant's 85th birthday or
the tenth contract anniversary, if later. (In Pennsylvania, the annuity payout
ranges from age 85 to 96 based on the annuitant's age when the contract is
issued. See contract for details.)
* These qualified annuities are not scheduled to be available until June 2000.
Please see your sales representative for more information.
BENEFICIARY
If death benefits become payable before the settlement date while the contract
is in force and before annuity payouts begin, we will pay your named beneficiary
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.)
PURCHASE PAYMENTS: Purchase payments are limited and may not be paid after the
third contract anniversary in Massachusetts, Washington and Oregon.
MINIMUM ALLOWABLE PURCHASE PAYMENTS*
<TABLE>
<CAPTION>
<S> <C>
If paying by installments under a scheduled payment plan: If paying by any other method:
$23.08 biweekly, or $1,000 initial payment for qualified annuities
$50 per month $2,000 initial payment for nonqualified annuities
$50 for any additional payments
</TABLE>
* Installments must total at least $600 in the first year. If you do not make
any 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 ALLOWABLE PURCHASE PAYMENTS** based on the age of you or the annuitant,
whoever is older, on the effective date of the contract:
<TABLE>
<CAPTION>
For the first year: For each subsequent year:
<S> <C>
$1,000,000 up to age 85 $100,000 up to age 85
$100,000 for ages 86 to 90 $50,000 for ages 86-90
</TABLE>
** These limits apply in total to all IDS Life annuities you own. We reserve the
right to increase maximum limits. For qualified annuities the tax-deferred
retirement plan's limits on annual contributions also apply.
We reserve the right to not accept purchase payments allocated to the fixed
account for twelve months following either:
1. a partial surrender from the fixed account; or
2. a lump sum transfer from the fixed account to a subaccount.
- --------------------------------------------------------------------------------
38 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
HOW TO MAKE PURCHASE PAYMENTS
1 BY LETTER:
Send your check along with your name and contract number to:
IDS LIFE INSURANCE COMPANY
70200 AXP FINANCIAL CENTER
MINNEAPOLIS, MN 55474
2 BY SCHEDULED PAYMENT PLAN:
We can help you set up:
- - an automatic payroll deduction, salary reduction or other group billing
arrangement; or
- - a bank authorization.
CHARGES
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $30
from the contract value on your contract anniversary at the end of each contract
year. We prorate this charge among the subaccounts and the fixed account in the
same proportion your interest in each account bears to your total contract
value.
We will waive this charge when your contract value, or total purchase payments
less any payments surrendered, is $50,000 or more on the current contract
anniversary.
If you surrender your contract, we will deduct the charge at the time of
surrender regardless of the contract value or purchase payments made. We cannot
increase the annual contract administrative charge and it does not apply after
annuity payouts begin or when we pay death benefits.
MORTALITY AND EXPENSE RISK FEE
We charge this fee daily to the subaccounts. The unit values of your subaccounts
reflect this fee. For nonqualified annuities the fee totals 0.95% of the average
daily net assets on an annual basis. For qualified annuities the fee totals
0.75% of the average daily net assets on an annual basis. This fee covers the
mortality and expense risk that we assume. 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.
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 our entire
group of annuitants live. If, as a group, annuitants outlive the life expectancy
we assumed in our actuarial tables, then we must take money from our general
assets to meet our obligations. If, as a group, annuitants do not live as long
as expected, we could profit from the mortality risk fee.
Expense risk arises because we cannot increase the contract administrative
charge and this charge may not cover our expenses. We would have to make up any
deficit from our general assets. We could profit from the expense risk fee if
future expenses are less than expected.
- ------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 39
<PAGE>
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
- - first, to the extent possible, the subaccounts pay this fee from any
dividends distributed from the funds in which they invest;
- - then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of 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
If you surrender all or part of your contract, you may be subject to a surrender
charge. A surrender charge applies if all or part of the surrender amount is
from purchase payments we received within seven (7) or ten (10) years before
surrender. You select the surrender charge period at the time of your
application for the contract.* The surrender charge percentages that apply to
you are shown in your contract.
*The ten-year surrender charge schedule is not available in Oregon.
For purposes of calculating any surrender charge, we treat amounts surrendered
from your contract value in the following order:
1. First, we surrender any contract earnings (contract value less purchase
payments received and not previously surrendered). We do not assess a
surrender charge on contract earnings.
NOTE: We determine contract earnings by looking at the entire contract value,
not the earnings of any particular subaccount or the fixed account.
2. Next, in each contract year, we surrender amounts totaling up to 10% of
your prior contract anniversary contract value, but only to the extent not
included and surrendered in number one above. (Your initial purchase
payment is considered the prior contract anniversary contract value during
the first contract year.) We do not assess a surrender charge on this
amount.
3. Next we surrender purchase payments received prior to the surrender charge
period you selected and shown in your contract. We do not assess a
surrender charge on these purchase payments.
4. Finally, if necessary, we surrender purchase payments received that are
still within the surrender charge period you selected and shown in your
contract. We surrender these payments on a "first-in, first-out" (FIFO)
basis. We do assess a surrender charge on these payments.
We determine your surrender charge by multiplying each of your payments
surrendered by the applicable surrender charge percentage, and then adding the
total surrender charges.
- -------------------------------------------------------------------------------
40 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
The surrender charge percentage depends on the number of years since you made
the payments that are surrendered, depending on the schedule you selected:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
SEVEN-YEARS SCHEDULE TEN-YEARS SCHEDULE
- ---------------------------------------------------------------------------------------------------------------------------
YEARS FROM PURCHASE SURRENDER CHARGE YEARS FROM PURCHASE SURRENDER CHARGE
PAYMENT RECEIPT PERCENTAGE PAYMENT RECEIPT PERCENTAGE
<S> <C> <C> <C> <C>
1 7% 1 8%
2 7 2 8
3 7 3 8
4 6 4 7
5 5 5 7
6 4 6 6
7 2 7 5
Thereafter 0 8 4
9 3
10 2
- ---------------------------------------------------------------------------------------------------------------------------
Thereafter 0
</TABLE>
For a partial surrender that is subject to a surrender charge, the amount
deducted for the surrender charge will be a percentage of the total amount
surrendered. We will deduct the charge from the value remaining after we pay you
the amount you requested. Example: Assume you request a surrender of $1,000 and
there is a 7% surrender charge. The surrender charge is $75.26 for a total
surrender amount of $1,075.26. This charge represents 7% of the total amount
surrendered and we deduct it from the contract value remaining after we pay you
the $1,000 you requested.
SURRENDER CHARGE UNDER ANNUITY PAYOUT PLAN E: Payouts for a specified period.
Under this payout plan, you can choose to take a surrender. The amount that you
can surrender is the present value of any remaining variable payouts. For
qualified contracts, the discount rate we use in the calculation will be 4.72%
if the assumed investment rate is 3.5% and 6.22% if the assumed investment rate
is 5%. For nonqualified contracts, the discount rate we use in the calculation
will be 4.92% if the assumed investment rate is 3.5% and 6.42% if the assumed
investment rate is 5%. The surrender charge is equal to the difference in
discount values using the above discount rates and the assumed investment rate.
In no event would your surrender charge exceed 9% of the amount available for
payouts under the plan.
- ------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 41
<PAGE>
SURRENDER CHARGE CALCULATION EXAMPLE
The following is an example of the calculation we would make to determine the
surrender charge on a contract that contains a seven-year surrender charge
schedule with this history:
- - The contract date is July 1, 2000 with a contract year of July 1 through
June 30 and with an anniversary date of July 1 each year; and
- - We received these payments:
-- $10,000 July 1, 2000;
-- $8,000 Dec.31, 2005
-- $6,000 Feb. 20, 2008; and
- - The owner surrenders the contract for its total surrender value of $26,500
on Aug. 5, 2009 and had not made any other surrenders during that contract
year; and
- - The prior anniversary July 1, 2008 contract value was $28,000.
<TABLE>
<CAPTION>
SURRENDER CHARGE EXPLANATION
<S> <C>
$0 $2,500 is contract earnings surrendered without charge; and
0 $300 is 10% of the prior anniversary contract value that is
in excess of contract earnings surrendered without charge
(from above). 10% of $28,000= $2,800 minus $2,500 = $300
0 $10,000 July 1, 2000 payment was received eight or more
years before surrender and is surrendered without surrender charge; and
400 $8,000 Dec. 31, 2005 payment is in its fifth year from receipt,
surrendered with a 5% surrender charge; and
420 $6,000 Feb. 20, 2008 payment is in its third year from receipt,
surrendered with a 7% surrender charge.
----------------
$820
</TABLE>
For a partial surrender that is subject to a surrender charge, the amount we
actually surrender from your contract will be the amount you request plus any
applicable surrender charge. We apply the surrender charge to this total amount.
We pay you the amount you requested. If you make a full surrender of your
contract, we also will deduct the $30 contract administrative charge.
- -------------------------------------------------------------------------------
42 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
WAIVER OF SURRENDER CHARGES
We do not assess surrender charges for: - surrenders of any contract earnings;
- - surrenders of amounts totaling up to 10% of your prior contract anniversary
contract value to the extent it exceeds contract earnings;
- - amounts surrendered after the tenth contract anniversary in Massachusetts,
Washington and Oregon.
- - required minimum distributions from a qualified annuity (for those amounts
required to be distributed from the contract described in this prospectus);
- - contracts settled using an annuity payout plan; - amounts we refund to you
during the free look period*; - death benefits*; and
- - surrenders you make under your contract's "Waiver of Surrender Charges for
Nursing Home Confinement" provision*. To the extent permitted by state law,
this provision applies when you are under age 76 on the date that we issue
the contract. We will waive surrender charges that we normally assess upon
full or partial surrender if you provide proof satisfactory to us that, as
of the date you request the surrender, you or the annuitant are confined to
a nursing home and have been for the prior 90 days and the confinement
began after the contract date. (See your contract for additional conditions
and restrictions on this waiver.)
* However, we will reverse certain purchase payment credits up to the maximum
surrender charge. (See "Valuing Your Investment -- Purchase payment credits.")
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 our annuities. Fees for these services start at $30 per calendar year
per participant. AEFC will charge a termination fee for owners under age 591U2
(fee waived in case of death or disability).
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses 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 on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was sold. Currently, we deduct any applicable premium tax when annuity
payouts begin, but we reserve the right to deduct this tax at other times such
as when you surrender your contract.
- ------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 43
<PAGE>
VALUING YOUR INVESTMENT
We value your accounts as follows:
FIXED ACCOUNT
We value the amounts you allocated to the fixed account directly in dollars.
The fixed account value equals:
- - the sum of your purchase payments and transfer amounts allocated to the
fixed account;
- - plus any purchase payment credits allocated to the fixed account;
- - plus interest credited; - minus the sum of amounts surrendered (including
any applicable surrender charges) and amounts transferred out; and
- - minus any prorated contract administrative charge.
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts or we apply any purchase payment credits to a subaccount, we credit
a certain number of accumulation units to your contract for that subaccount.
Conversely, each time you take a partial surrender, transfer amounts out of a
subaccount, or we assess a contract administrative charge, we subtract a certain
number of accumulation units from your contract.
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 fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses. Here is
how we calculate accumulation unit values:
NUMBER OF UNITS: to calculate the number of accumulation units for a particular
subaccount we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: the current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
- - adding the fund's current net asset value per share, plus the per share
amount of any accrued income or capital gain dividends to obtain a current
adjusted net asset value per share; then
- - dividing that sum by the previous adjusted net asset value per share; and
- - subtracting the percentage factor representing the mortality and expense
risk fee from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
- -------------------------------------------------------------------------------
44 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
- - additional purchase payments you allocate to the subaccounts;
- - any purchase payment credits allocated to the subaccounts;
- - transfers into or out of the subaccounts;
- - partial surrenders; - surrender charges; and/or
- - prorated portions of the contract administrative charge.
Accumulation unit values will fluctuate due to:
- - changes in funds' net asset value;
- - dividends distributed to the subaccounts;
- - capital gains or losses of funds;
- - fund operating expenses; and/or
- - mortality and expense risk fees.
PURCHASE PAYMENT CREDITS
We add a credit* to your contract in the amount of:
- - 1% of each purchase payment received:
-- if you elect the ten-year surrender charge schedule for your contract;
or
-- if you elect the seven-year surrender charge schedule for your
contract and your initial purchase payment to the contract is at least
$100,000.
- - 2% of each purchase payment received if you elect the ten-year surrender
charge schedule for your contract and your initial purchase payment to the
contract is at least $100,000.
We fund the credit from our general account. We do not consider credits to be
"investments" for income tax purposes. (See "Taxes.")
We allocate each credit to your contract value when the applicable purchase
payment is applied to your contract value. We allocate such credits to your
contract value according to allocation instructions in effect for your purchase
payments.
We will reverse credits from the contract value for any purchase payment that
is not honored.
To the extent a death benefit or surrender payment includes purchase payment
credits applied within twelve months preceding: (1) the date of death that
results in a lump sum death benefit under this contract; or (2) a request for
surrender charge waiver due to Nursing Home Confinement, we will assess a
charge, similar to a surrender charge, equal to the amount of the purchase
payment credits. The amount we pay to you under these circumstances will always
equal or exceed your surrender value. The amount returned to you under the free
look provision also will not include any credits applied to your contract.
*The ten-year surrender charge is not available in Oregon. Contracts purchased
in Oregon are only eligible for a 1% purchase payment credit if the initial
purchase payment is at least $100,000.
- ------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 45
<PAGE>
Because of higher charges, there may be circumstances where you may be worse off
having received the credit than in other contracts. All things being equal (such
as fund performance and availability), this may occur if you select the ten-year
surrender charge and you make a full withdrawal in years five through ten. You
should consider these higher charges and other relevant factors before you buy
this contract or before you exchange contract you currently own for this
contract. This credit is available because of lower costs associated with larger
sized contracts and through revenue from a higher and longer withdrawal charge
schedule. In general, we do not profit from the higher charges assessed to cover
the cost of the purchase payment credits. We use all the revenue from these
lower costs and higher charges to pay for the cost of the credits. However, we
could profit if contract owners hold their contracts for less than the surrender
charge period. We reserve the right to increase the amount of the credit for
certain groups of contract owners. The increase will not be greater than 8% of
total net payments. Increases in credit amounts are funded by reduced expenses
expected from such groups.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the fixed account to one or
more subaccounts. 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 values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
<TABLE>
<CAPTION>
HOW DOLLAR-COST AVERAGING WORKS
- ---------------------------------------------------------------------------------------------------------------------------
MONTH AMOUNT ACCUMULATION NUMBER OF UNITS
INVESTED UNIT VALUE PURCHASED
<S> <C> <C> <C> <C>
By investing an
equal number of
dollars each month... Jan $100 $20 5.00
Feb 100 18 5.56
Mar 100 17 5.88
you automatically --> Apr 100 15 6.67
buy more units
when the per unit May 100 16 6.25
market price is low
Jun 100 18 5.56
Jul 100 17 5.88
Aug 100 19 5.26
and fewer units --> Sep 100 21 4.76
when the per unit
market price is high. Oct 100 20 5.00
</TABLE>
You 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 subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success 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. For specific features contact your sales representative.
- -------------------------------------------------------------------------------
46 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
TRANSFERRING MONEY BETWEEN ACCOUNTS
You may transfer money from any one subaccount, or the fixed account, to another
subaccount before annuity payouts begin. (Certain restrictions apply to
transfers involving the fixed account.) We will process your transfer on the
valuation date we receive your request. We will value your transfer at the next
accumulation unit value calculated after we receive your request. There is no
charge for transfers. Before making a transfer, you should consider the risks
involved in switching investments.
We may suspend or modify transfer privileges at any time. Excessive trading
activity can disrupt fund management strategy and increase expenses, which are
borne by all contract owners who allocated purchase payments to the fund
regardless of their transfer activity. We may apply modifications or
restrictions in any reasonable manner to prevent transfers we believe will
disadvantage other contract owners. These modifications could include, but not
be limited to:
- - requiring a minimum time period between each transfer;
- - not accepting transfer requests of an agent acting under power of attorney
on behalf of more than one contract owner; or
- - limiting the dollar amount that a contract owner may transfer at any one
time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
- - Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the fixed account at any time.
However, if you made a transfer from the fixed account to the subaccounts,
you may not make a transfer from any subaccount back to the fixed account
until the next contract anniversary.
- - You may transfer contract values from the fixed account to the subaccounts
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).
- - If we receive your request within 30 days before the contract anniversary
date, the transfer from the fixed account to the subaccounts will be
effective on the anniversary.
- - If we receive your request on or within 30 days after the contract
anniversary date, the transfer from the fixed account to the subaccounts
will be effective on the valuation date we receive it.
- - We will not accept requests for transfers from the fixed account at any
other time.
- - Once annuity payouts begin, you may not make transfers to or from the fixed
account, but you may make transfers once per contract year among the
subaccounts. During the annuity payout period, you cannot invest in more
than five subaccounts at any one time unless we agree otherwise.
- ------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 47
<PAGE>
HOW TO REQUEST A TRANSFER OR SURRENDER
1 BY LETTER:
Send your name, contract number, Social Security Number or Taxpayer
Identification Number and signed request for a transfer or surrender to:
IDS LIFE INSURANCE COMPANY
70200 AXP FINANCIAL CENTER
MINNEAPOLIS, MN 55474
MINIMUM AMOUNT
Transfers or surrenders: $250 or entire account balance
MAXIMUM AMOUNT
Transfers or surrenders: Contract value or entire account balance
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL SURRENDERS:
Your sales representative can help you set up automated transfers among your
subaccounts or fixed account or partial surrenders from the accounts.
You can start or stop this service by written request or other method acceptable
to us. You must allow 30 days for us to change any instructions that are
currently in place.
- - Automated transfers from the fixed account to any one of the subaccounts
may not exceed an amount that, if continued, would deplete the fixed
account within 12 months.
- - Automated surrenders may be restricted by applicable law under some
contracts.
- - You may not make additional purchase payments if automated partial
surrenders are in effect.
- - Automated partial surrenders may result in IRS taxes and penalties on all
or part of the amount surrendered.
MINIMUM AMOUNT
Transfers or surrenders: $50
MAXIMUM AMOUNT
Transfers or surrenders: None (except for automated transfers from the fixed
account)
- -------------------------------------------------------------------------------
48 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
3 BY PHONE:
Call between 7 a.m. and 6 p.m. Central time:
1-800-862-7919 (TOLL FREE)
TTY service for the hearing impaired:
1-800-285-8846 (TOLL FREE)
MINIMUM AMOUNT
Transfers or surrenders: $250 or entire account balance
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Surrenders: $50,000
We answer telephone 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 requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and tape recording calls. We will not
allow a telephone surrender within 30 days of a phoned-in address change. As
long as we follow the procedures, we (and our affiliates) will not be liable for
any loss resulting from fraudulent requests.
Telephone transfers or surrenders are automatically available. You may request
that telephone transfers or surrenders not be authorized from your account by
writing to us.
SURRENDERS
You may surrender all or part of your contract at any time before annuity
payouts begin by sending us a written request or calling us. We will process
your surrender request on the valuation date we receive it. For total
surrenders, we will compute the value of your contract at the next accumulation
unit value calculated after we receive your request. We may ask you to return
the contract. You may have to pay surrender charges (see "Charges -- Surrender
charge") and IRS taxes and penalties (see "Taxes"). You cannot make surrenders
after annuity payouts begin except under Plan E (see "The Annuity Payout Period
- -- Annuity payout plans").
SURRENDER POLICIES
If you have a balance in more than one account and you request a partial
surrender, we will withdraw money from all your subaccounts and/or the fixed
account 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.
- ------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 49
<PAGE>
RECEIVING PAYMENT
By regular or express mail:
- - payable to you;
- - mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
By wire:
- - request that payment be wired to your bank;
- - bank account must be in the same ownership as your contract; and
- - pre-authorization required.
For instructions, contact your sales representative.
Normally, we will send the payment 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 to receive early
distributions from a TSA:
- - Distributions attributable to salary reduction contributions (plus
earnings) made after Dec. 31, 1988, or to transfers or rollovers from other
contracts, may be made from the TSA only if:
-- you are at least age 59 1/2;
-- you are disabled as defined in the Code;
-- you separated from the service of the employer who purchased the
contract; or
-- the distribution is because of your death.
- - If you encounter a financial hardship (as defined by 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.
- - Even though a distribution may be permitted under the above rules, it may
be subject to IRS taxes and penalties (see "Taxes").
- - The employer must comply with certain nondiscrimination requirements for
certain types of contributions under a TSA contract to be excluded from
taxable income. You should consult your employer to determine whether the
nondiscrimination rules apply to you.
- - The above restrictions on distributions do not affect the availability of
the amount credited to the contract as of Dec. 31, 1988. The restrictions
also do not apply to transfers or exchanges of contract value within the
contract, or to another registered variable annuity contract or investment
vehicle available through the employer.
- - If the contract has a loan provision, the right to receive a loan as
described in detail in your contract.
- -------------------------------------------------------------------------------
50 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our office. The change
will become binding upon us when we receive and record it. We will honor any
change of ownership request that we believe is authentic and we will use
reasonable procedures to confirm authenticity. If we follow these procedures, we
will not take any responsibility for the validity of the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
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 except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in similar capacity, ownership of the contract may be
transferred to the annuitant.
BENEFITS IN CASE OF DEATH
We will pay the death benefit to your beneficiary upon the earlier of your death
or the annuitant's death. If a contract has more than one person as the owner,
we will pay benefits upon the first to die of any owner or the annuitant.
If you or the annuitant die before annuity payouts begin while this contract is
in force, we will pay the beneficiary as follows:
If both you and the annuitant are age 80 or younger on the date of death, the
beneficiary receives the greatest of:
- - the contract value;
- - purchase payments, minus any "adjusted partial surrenders"; or
- - the contract value as of the most recent sixth contract anniversary, plus
any purchase payments paid and minus any "adjusted partial surrenders"
since that anniversary.
If either you or the annuitant are age 81 or older on the date of death, the
beneficiary receives the greater of:
- - the contract value; or
- - purchase payments minus any "adjusted partial surrenders."
ADJUSTED PARTIAL SURRENDERS: We calculate an "adjusted partial surrender" for
each partial surrender as the product of (a) times (b) where
(a) is the ratio of the amount of the partial surrender (including any
applicable surrender charge) to the contract value on the date of (but
prior to) the partial surrender; and
(b) is the death benefit on the date of (but prior to) the partial
surrender.
- ------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 51
<PAGE>
EXAMPLE OF DEATH BENEFIT CALCULATION WHEN THE OWNER AND ANNUITANT ARE AGE 80 OR
YOUNGER:
- - You purchase the contract with a payment of $20,000 on Jan. 1, 2000.
- - On Jan 1, 2006 (the 6th contract anniversary) the contract value grows to
$30,000.
- - March 1, 2006 the contract value falls to $28,000 at which point you take a
$1,500 partial surrender, leaving a contract value of $26,500.
We calculate the death benefit on March 1, 2006 as follows:
<TABLE>
<S> <C>
The contract value on the most recent 6th contract anniversary: $30,000.00
plus any purchase payments paid since that anniversary: + 0.00
minus any "adjusted partial surrenders" taken since that anniversary
calculated as: $1,500 x $30,000 = - 1,607.14
---------------- ----------
$28,000
for a death benefit of: $28,392.86
</TABLE>
IF YOUR SPOUSE IS SOLE BENEFICIARY under a nonqualified annuity and you die
before the settlement date, your spouse may keep the contract 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 Code requires
distributions to begin, and the spouse is the only beneficiary, the spouse may
keep the contract as owner 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: Under a nonqualified annuity we will pay the beneficiary in a single
sum unless you give us other written instructions. A death benefit paid in a
single sum will be reduced by the amount of any purchase payment credits applied
to the contract within 12 months of the date of death. (See "Valuing Your
Investment -- Purchase Payment credits.") We must fully distribute the death
benefit within five years of your death. However, the beneficiary may receive
payouts under any annuity payout plan available under this contract if:
- - the beneficiary asks us in writing within 60 days after we receive proof of
death; and
- - payouts begin no later than one year after your death, or other date as
permitted by the Code; and
- - the payout period does not extend beyond the beneficiary's life or life
expectancy.
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value at the next accumulation unit value calculated after our death
claim requirements are fulfilled. We pay interest, if any, 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.
Other rules may apply to qualified annuities. (See "Taxes.")
- -------------------------------------------------------------------------------
52 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
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 settlement date. You may select one of the
annuity payout plans outlined below, or we may mutually agree on other payout
arrangements. We do not deduct any surrender charges under the payout plans
listed below.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amounts available to purchase
payouts under the plan you select is the contract value on your settlement date
(less any applicable premium tax). You may reallocate this contract value to the
fixed account to provide fixed dollar payouts and/or among the subaccounts to
provide variable annuity payouts. During the annuity payout period, you cannot
invest in more than five subaccounts at any one time unless we agree otherwise.
Amounts of fixed and variable payouts depend on:
- - the annuity payout plan you select;
- - the annuitant's age and, in most cases, sex;
- - the annuity table in the contract; and
- - the amounts you allocated to the accounts at settlement.
In addition, for variable payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the 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 "Making the Most of Your Contract -- Transfer policies."
ANNUITY TABLE
The annuity table in your contract 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 rise and decrease more rapidly
when they decline.
- ------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 53
<PAGE>
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 used to purchase the
payout plan:
- - PLAN A -- LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the
annuitant dies after we made only one monthly payout, we will not make any
more payouts.
- - PLAN B -- LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly
payouts for a guaranteed payout period of five, ten or 15 years that you
elect. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires.
We calculate the guaranteed payout period from the settlement date. If the
annuitant outlives the elected guaranteed payout period, we will continue
to make payouts until the annuitant's death.
- - PLAN C -- LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until
the annuitant's death, with our guarantee that payouts will continue for
some period of time. We will make payouts 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.
- - PLAN D -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make
monthly payouts while both the annuitant and a joint annuitant are living.
If either annuitant dies, we will continue to make monthly payouts at the
full amount until the death of the surviving annuitant. Payouts end with
the death of the second annuitant.
- - PLAN E -- PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect. We will make
payouts only for the number of years specified whether the annuitant is
living or not. Depending on the selected time period, it is foreseeable
that an annuitant can outlive the payout period selected. During the payout
period, you can elect to have us determine the present value of any
remaining variable payouts and pay it to you in a lump sum. We determine
the present value of the remaining annuity payouts which are assumed to
remain level at the initial payment. For qualified contracts, the discount
rate we use in the calculation will vary between 4.72% and 6.22%, depending
on the applicable assumed investment rate. For nonqualified contracts, the
discount rate we use in the calculation will vary between 4.92% and 6.42%,
depending on the applicable assumed investment rate. (See "Charges --
Surrender charge under Annuity Payout Plan E.") You can also take a portion
of the discounted value once a year. If you do so, your monthly payouts
will be reduced by the proportion of your surrender to the full discounted
value. A 10% IRS penalty tax could apply if you take a surrender. (See
"Taxes.")
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54 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
RESTRICTIONS FOR SOME TAX-DEFERRED RETIREMENT PLANS: If you purchased a
qualified annuity, you may be required to select a payout plan that provides for
payouts:
- - over the life of the annuitant;
- - over the joint lives of the annuitant and a designated beneficiary;
- - for a period not exceeding the life expectancy of the annuitant; or
- - for a period not exceeding the joint life expectancies of the annuitant and
a designated beneficiary.
You have the responsibility for electing a payout plan that complies with your
contract and with applicable law.
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.
Contract values that you allocated to the fixed account will provide fixed
dollar payouts and contract values that you allocated among the subaccounts will
provide variable annuity payouts.
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 or to change
the frequency of the payouts.
DEATH AFTER ANNUITY PAYOUTS BEGIN
If you or the annuitant die after annuity payouts begin, we will pay any amount
payable to the beneficiary as provided in the annuity payout plan in effect.
- ------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 55
<PAGE>
TAXES
Generally, under current law, your contract has a tax deferral feature. This
means, any increase in the value of the fixed account and/or subaccounts in
which you invest 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. We
will send you a tax information reporting form for any year in which we made a
taxable distribution according to our records. Roth IRAs* may grow and be
distributed tax-free if you meet certain distribution requirements.
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 you receive after your investment in the contract is fully recovered
will be subject to tax.
Tax law requires that all nonqualified deferred annuities issued by the same
company (and possibly its affiliates) to the same owner during a calendar year
be taxed as a single, unified contract when you take distributions from any one
of those contracts.
QUALIFIED ANNUITIES: Your contract may be used to fund a tax-deferred retirement
plan that is already tax-deferred under the Code. The contract will not provide
any necessary or additional tax deferral if it is used to fund a retirement plan
that is tax deferred. Special rules apply to these retirement plans. Your rights
to benefits may be subject to the terms and conditions of these retirement plans
regardless of the terms of the contract.
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions during your life (except for Roth IRAs*) and after your
death. You should refer to your retirement plan or adoption agreement or consult
a tax advisor for more information about your distribution rules.
ANNUITY PAYOUTS UNDER QUALIFIED ANNUITIES (EXCEPT ROTH IRAS): Under a qualified
annuity, the entire payout generally is includable as ordinary income and is
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 deductible or
pre-tax dollars as part of a tax-deferred retirement plan, such amounts are not
considered to be part of your investment in the contract and will be taxed when
paid to you.
PURCHASE PAYMENT CREDITS: These are considered earnings and are taxed
accordingly.
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 you make before reaching
age 59 1/2 unless certain exceptions apply. For qualified annuities, other
penalties may apply if you surrender your contract before your plan specifies
that you can receive payouts.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a contract (except a
Roth IRA) is not tax-exempt. Any amount your beneficiary receives that
represents previously deferred earnings within the contract is taxable as
ordinary income to the beneficiary in the years he or she receives the payments.
The death benefit under a Roth IRA generally is not taxable as ordinary income
to the beneficiary if certain distribution requirements are met.
- -------------------------------------------------------------------------------
56 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
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 remain 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 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 a rate of 25% instead of 10%. However, this penalty will not apply to any
amount received by you or your beneficiary:
- - because of your death;
- - because you become disabled (as defined in the Code);
- - 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
- - if it is allocable to an investment before Aug. 14, 1982 (except for
qualified annuities).
For a qualified annuity, other penalties or exceptions may apply if you
surrender your contract before your plan specifies that payouts can be made.
* These qualified annuities are not scheduled to be available until June 2000.
Please see your sales representative for more information.
WITHHOLDING, GENERALLY: If you receive all or part of the contract value, we may
deduct withholding against the taxable income portion of the payment. Any
withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual tax return.
If the payment is part of an annuity payout plan, we generally compute the
amount of withholding using payroll tables. You may 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), we compute withholding using 10% of the taxable portion. Similar to
above, as long as you have provided us with a valid Social Security Number or
Taxpayer Identification Number, you can elect not to have this withholding
occur.
Some states also impose withholding requirements similar to the federal
withholding described above. If this should be the case, we may deduct state
withholding from any payment from which we deduct federal withholding. The
withholding requirements may differ if we are making payment to a non-U.S.
citizen or if we deliver the payment 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, SIMPLE IRA or
SEP), mandatory 20% federal income tax withholding (and possibly state income
tax withholding) generally will be imposed at the time we make payout. This
mandatory withholding is in place of the elective withholding discussed above.
This mandatory withholding will not be imposed if:
- - instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan;
- - 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
- - the payout is a minimum distribution required under the Code.
- ------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 57
<PAGE>
Payments we make to a surviving spouse instead of being directly rolled over to
an IRA also may 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 transfer a nonqualified
annuity without receiving adequate consideration, the transfer is a gift and
also may be a surrender for federal income tax purposes. If the gift is a
currently taxable event for income tax purposes, the original owner will be
taxed on the amount of deferred earnings at the time of the transfer and also
may be subject to the 10% IRS penalty discussed earlier. In this case, the new
owner's investment in the contract will be the value of the contract 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
current interpretations of these laws. 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: We intend that the contract 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, in spite of 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 amendments.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important 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 you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
- - the reserve held in each subaccount for your contract; divided by
- - the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
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58 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
- - laws or regulations change;
- - the existing funds become unavailable; or
- - in our judgment, the funds no longer are suitable for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute the funds currently listed in this prospectus for other funds.
We may also:
- - add new subaccounts;
- - combine any two or more subaccounts;
- - make additional subaccounts investing in additional funds; - transfer
assets to and from the subaccounts or the variable account; and - eliminate
or close any subaccounts.
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments. We will notify
you of any substitution or change.
ABOUT THE SERVICE PROVIDERS
ISSUER AND PRINCIPAL UNDERWRITER
IDS Life issues and is the principal underwriter for the contracts. IDS Life is
a stock life insurance company organized in 1957 under the laws of the State of
Minnesota and is located at 200 AXP Financial Center, Minneapolis, MN 55474. IDS
Life conducts a conventional life insurance business.
IDS Life is a wholly-owned subsidiary of AEFC, which itself is a wholly-owned
subsidiary of American Express Company, a financial services company
headquartered in New York City. The AEFC family of companies offers not only
insurance and annuities, but also mutual funds, investment certificates, and a
broad range of financial management services. American Express Financial
Advisors Inc. (AEFA) serves individuals and businesses through its nationwide
network of more than 600 supervisory offices, more than 3,800 branch offices and
9,480 financial advisors.
IDS Life pays commissions for sales of the contracts of up to 7% of the total
purchase payments to AEFA. This revenue is used to cover distribution costs that
include compensation to advisors and field leadership for the selling advisors.
These commissions consist of a combination of time of sale and on-going
service/trail commissions (which, when totaled, could exceed 7% of purchase
payments). From time to time, IDS Life will pay or permit other promotional
incentives, in cash or credit or other compensation
Other contracts issued by IDS Life or its affiliates that are not described in
this prospectus may be available through your advisor. The features, investment
options, sales charges and expenses of the other contracts are different than
those of this contract. Therefore, the contract values under the other contracts
may be different than your contract value under this contract. In addition,
sales commissions for the other contracts may be higher or lower than sales
commissions for this contract.
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PROSPECTUS -- MAY 1, 2000 59
<PAGE>
LEGAL PROCEEDINGS
A number of lawsuits have been filed against life and health insurers in
jurisdictions in which IDS Life and AEFC do business involving insurers' sales
practices, alleged agent misconduct, failure to properly supervise agents and
other matters. IDS Life and AEFC, like other life and health insurers, from time
to time are involved in such litigation. On December 13, 1996, an action
entitled LESA BENACQUISTO AND DANIEL BENACQUISTO VS. IDS LIFE INSURANCE COMPANY
AND AMERICAN EXPRESS FINANCIAL CORPORATION was commenced in Minnesota state
court. The action was brought by individuals who replaced an existing IDS Life
insurance policy with a new IDS Life policy. The plaintiffs purport to represent
a class consisting of all persons who replaced existing IDS Life policies with
new policies from and after January 1, 1985. The complaint put at issue various
alleged sales practices and misrepresentations, alleged breaches of fiduciary
duties and alleged violations of consumer fraud statutes. IDS Life and AEFC
filed an answer to the complaint on February 18, 1997, denying the allegations.
A second action, entitled ARNOLD MORK, ISABELLA MORK, RONALD MELCHART AND SUSAN
MELCHART VS. IDS LIFE INSURANCE COMPANY AND AMERICAN EXPRESS FINANCIAL
CORPORATION was commenced in the same court on March 21,1997. In addition to
claims that were included in the Benacquisto lawsuit, the second action include
an allegation of improper replacement of an existing IDS Life annuity contract.
A subsequent class action, RICHARD THORESEN AND ELIZABETH THORESEN VS. AEFC,
AMERICAN PARTNERS LIFE INSURANCE COMPANY, AMERICAN ENTERPRISE LIFE INSURANCE
COMPANY, AMERICAN CENTURION LIFE ASSURANCE COMPANY, IDS LIFE INSURANCE COMPANY
AND IDS LIFE INSURANCE COMPANY OF NEW YORK, was filed in the same court on
October 13, 1998 alleging that the sale of annuities in tax-deferred
contributory retirement investment plans (e.g. IRAs) was done through deceptive
marketing practices, which IDS Life denies. Plaintiffs in each of the above
actions seek damages in an unspecified amount and also seek to establish a
claims resolution facility for the determination of individual issues.
IDS Life is included as a party to a preliminary settlement of all three class
action lawsuits. We believe this approach will put these cases behind us and
provide a fair outcome for our clients. Our decision to settle does not include
any admission of wrong doing. We do not anticipate that this proposed settlement
or any other lawsuits in which IDS Life is a defendant, will have a material
adverse effect on our financial condition.
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60 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
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 IDS Life and the
variable account. All of the major systems used by IDS Life and the variable
account are maintained by AEFC and are utilized by multiple subsidiaries and
affiliates of AEFC. IDS Life's and the variable account's businesses are heavily
dependent upon AEFC's computer systems and have significant interaction with
systems of third parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to IDS Life and the variable account, was conducted to
identify the major systems that could be affected by the Year 2000 issue. Steps
were taken to resolve potential problems including modification to existing
software and the purchase of new software. As of Dec. 31, 1999, AEFC had
completed its program of corrective measures on its internal systems and
applications, including Year 2000 compliance testing. As of Dec. 31, 1999, AEFC
had also completed an evaluation of the Year 2000 readiness of other third
parties whose system failures could have an impact on IDS Life's and the
variable account's operations.
AEFC's Year 2000 project also included establishing Year 2000 contingency plans
for all key business units. Business continuation plans, which address business
continuation in the event of a system disruption, are in place for all key
business units. As of Dec. 31, 1999, these plans had been amended to include
specific Year 2000 considerations.
In assessing its Year 2000 initiatives and the results of actual production
since Jan. 1, 2000, management believes no material adverse consequences were
experienced, and there was no material effect on IDS Life's and the variable
account's business, results of operations, or financial condition as a result of
the Year 2000 issue.
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PROSPECTUS -- MAY 1, 2000 61
<PAGE>
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION
<TABLE>
<S> <C>
Performance Information................................................3
Calculating Annuity Payouts...........................................17
Rating Agencies.......................................................18
Principal Underwriter.................................................18
Independent Auditors..................................................18
Financial Statements
</TABLE>
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62 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY
<PAGE>
Please check the appropriate box to receive a copy of the Statement of
Additional Information for:
/ / American Express Retirement Advisor Variable Annuity (SM)
/ / American Express Variable Portfolio Funds
/ / AIM Variable Insurance Funds
/ / American Century Variable Portfolios, Inc.
/ / Calvert Variable Series, Inc.
/ / Fidelity Variable Insurance Products Funds - Service Class
/ / Franklin Templeton Variable Insurance Products Trust - Class 2
/ / Goldman Sachs Variable Insurance Trust (VIT)
/ / Janus Aspen Series: Service Shares
/ / Lazard Retirement Series, Inc.
/ / MFS-Registered Trademark- Variable Insurance Trust (SM)
/ / Putnam Variable Trust
/ / Royce Capital Fund
/ / Third Avenue Variable Series Trust
/ / Wanger Advisors Trust
/ / Warburg Pincus Trust - Emerging Growth Portfolio
MAIL YOUR REQUEST TO:
IDS LIFE INSURANCE COMPANY
200 AXP FINANCIAL CENTER
MINNEAPOLIS, MN 55474
WE WILL MAIL YOUR REQUEST TO:
Your name______________________________________________________________________
Address________________________________________________________________________
City_________________________________ State ___________________ Zip____________
<PAGE>
<PAGE>
Prospectus
MAY 1, 2000
AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
INDIVIDUAL FLEXIBLE PREMIUM DEFERRED COMBINATION FIXED/VARIABLE ANNUITY FOR:
- - current or retired employees of American Express Financial Corporation or
its subsidiaries and their spouses (employees),
- - current or retired American Express financial advisors and their spouses
(advisors), and
- - individuals investing an initial payment of $1 million (other individuals).
IDS LIFE VARIABLE ACCOUNT 10
ISSUED BY: IDS LIFE INSURANCE COMPANY (IDS LIFE)
200 AXP Financial Center
Minneapolis, MN 55474
Telephone: 800-862-7919
http://www.americanexpress.com/advisors
This prospectus contains information that you should know before investing. You
also will receive the prospectuses for:
- - American Express-Registered Trademark- - Lazard Retirement Series, Inc.
Variable Portfolio Funds - MFS-Registered Trademark-
- - AIM Variable Insurance Funds Variable Insurance
- - American Century Variable Portfolios, Trust(SM)
Inc. - Putnam Variable Trust - Class IB
- - Calvert Variable Series, Inc. Shares
- - Fidelity Variable Insurance Products - Royce Capital Fund
Funds - Service Class - Third Avenue Variable Series
- - Franklin Templeton Variable Insurance Trust
Products Trust (FTVIPT)- Class 2 - Wanger Advisors Trust
- - Goldman Sachs Variable Insurance - Warburg Pincus Trust
Trust (VIT)
- - Janus Aspen Series: Service Shares
Please read the prospectuses carefully and keep them for future reference.
THE SECURITIES AND EXCHANGE COMMISSION (SEC) HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AN INVESTMENT IN THIS CONTRACT IS NOT A DEPOSIT OF A BANK OR FINANCIAL
INSTITUTION AND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENT AGENCY. AN INVESTMENT IN THIS CONTRACT
INVOLVES INVESTMENT RISK INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
A Statement of Additional Information (SAI), dated the same date as this
prospectus, is incorporated by reference into this prospectus. It is filed with
the SEC and 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.
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PROSPECTUS - MAY 1, 2000 1
<PAGE>
<TABLE>
<S> <C>
TABLE OF CONTENTS
KEY TERMS........................................................ 3
THE CONTRACT IN BRIEF............................................ 4
EXPENSE SUMMARY.................................................. 6
CONDENSED FINANCIAL INFORMATION (UNAUDITED)......................12
FINANCIAL STATEMENTS............................................ 19
PERFORMANCE INFORMATION..........................................19
THE VARIABLE ACCOUNT AND THE FUNDS...............................20
THE FIXED ACCOUNT................................................26
BUYING YOUR CONTRACT............................................ 26
CHARGES..........................................................29
VALUING YOUR INVESTMENT..........................................30
MAKING THE MOST OF YOUR CONTRACT.................................31
SURRENDERS.......................................................34
TSA-- SPECIAL SURRENDER PROVISIONS...............................35
CHANGING OWNERSHIP...............................................36
BENEFITS IN CASE OF DEATH........................................36
THE ANNUITY PAYOUT PERIOD........................................38
TAXES............................................................40
VOTING RIGHTS....................................................42
SUBSTITUTION OF INVESTMENTS......................................43
ABOUT THE SERVICE PROVIDERS......................................43
YEAR 2000........................................................45
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION.... 46
</TABLE>
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2 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
KEY TERMS
THESE TERMS CAN HELP YOU UNDERSTAND DETAILS ABOUT YOUR CONTRACT.
ACCUMULATION UNIT -- A measure of the value of each subaccount before annuity
payouts begin.
ANNUITANT -- The person on whose life or life expectancy the annuity payouts are
based.
ANNUITY PAYOUTS -- An amount paid at regular intervals under one of several
plans.
BENEFICIARY -- The person you designate to receive benefits in case of the
owner's or annuitant's death while the contract is in force and before annuity
payouts begin.
CLOSE OF BUSINESS -- When the New York Stock Exchange (NYSE) closes, normally 4
p.m. Eastern time.
CONTRACT -- A deferred annuity contract that permits you to accumulate money for
retirement by making one or more purchase payments. It provides for lifetime or
other forms of payouts beginning at a specified time in the future.
CONTRACT VALUE -- The total value of your contract before we deduct any
applicable charges.
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
you allocate to this account earn interest at rates that we declare
periodically.
FUNDS -- Investment options under your contract. You may allocate your purchase
payments into subaccounts investing in shares of any or all of these funds.
OWNER (YOU, YOUR) -- The person who controls the contract (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 contract's benefits.
QUALIFIED ANNUITY -- A contract that you purchase to fund one of the following
tax-deferred retirement plans that is subject to applicable federal law and any
rules of the plan itself:
- - Individual Retirement Annuities (IRAs) under Section 408(b) of the Internal
Revenue Code of 1986, as amended (the Code)
- - Roth IRAs* under Section 408 A of the Code
- - SIMPLE IRAs* under Section 408(p) of the Code
- - Simplified Employee Pension (SEP) plans under Section 408(k) of the Code
- - Plans under Section 401(k) of the Code
- - Custodial and trusteed pension and profit sharing plans under Section
401(a) of the Code
- - Tax-Sheltered Annuities (TSAs) under Section 403(b) of the Code
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is already tax-deferred.
All other contracts are considered NONQUALIFIED ANNUITIES.
* These qualified annuities are not scheduled to be available until June 2000.
Please see your sales representative for more information.
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PROSPECTUS - MAY 1, 2000 3
<PAGE>
SETTLEMENT DATE -- The date when annuity payouts are scheduled to begin.
SURRENDER VALUE -- The amount you are entitled to receive if you make a full
surrender from your contract. It is the contract value minus any applicable
charges.
VALUATION DATE -- Any normal business day, Monday through Friday, that the NYSE
is open. Each valuation date ends at the close of business. We calculate the
value of each subaccount 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 fund. The value of your
investment in each subaccount changes with the performance of the particular
fund.
THE CONTRACT IN BRIEF
PURPOSE: The purpose of the contract is to allow you to accumulate money for
retirement. You do this by making one or more purchase payments. You may
allocate your purchase payments to the fixed account and/or subaccounts under
the contract. These accounts, in turn, may earn returns that increase the value
of the contract. Beginning at a specified time in the future called the
settlement date, the contract provides lifetime or other forms of payouts of
your contract value (less any applicable premium tax). As in the case of other
annuities, it may not be advantageous for you to purchase this contract as a
replacement for, or in addition to, an existing annuity.
A qualified annuity will not provide any necessary or additional tax deferral if
it is used to fund a retirement plan that is tax-deferred. However, the contract
has features other than tax deferral that may make it an appropriate investment
for your retirement plan. You should compare these features and their costs with
other investment options before deciding to purchase this contract.
FREE LOOK PERIOD: You may return your contract to your sales representative or
to our office within the time stated on the first page of your contract and
receive a full refund of the contract value. We will not deduct any other
charges. However, you bear the investment risk from the time of purchase until
you return the contract; the refund amount may be more or less than the payment
you made. (Exception: If the law requires, we will refund all of your purchase
payments.)
ACCOUNTS: Currently, you may allocate your purchase payments among any or all
of:
- - the subaccounts, each of which invests in a fund with a particular investment
objective. The value of each subaccount varies with the performance of the
particular fund in which it invests. We cannot guarantee that the value at
the retirement date will equal or exceed the total purchase payments you
allocate to the subaccounts. (p. 20)
- - the fixed account, which earns interest at a rate that we adjust
periodically. (p. 26)
BUYING YOUR CONTRACT: Your sales representative will help you complete and
submit an application. Applications are subject to acceptance at our office.
You may buy a nonqualified annuity or a qualified annuity. After your initial
purchase payment, you have the option of making additional purchase payments
in the future.* (p. 26)
- - 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.
- - Minimum additional purchase payment -- $50.
- - Minimum installment purchase payment -- $50 monthly; $23.08 biweekly
(scheduled payment plan billing).
- - Maximum first-year purchase payments -- $100,000 to $1,000,000 depending on
your age.
- - Maximum purchase payment for each subsequent year -- $50,000 to $100,000
depending upon your age.
*Purchase payments are limited and may not be paid after the third contract
anniversary in Massachusetts, Washington and Oregon.
- ------------------------------------------------------------------------------
4 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
TRANSFERS: Subject to certain restrictions you currently may redistribute
your money among the accounts without charge at any time until annuity
payouts begin, and once per contract year among the subaccounts after annuity
payouts begin. You may establish automated transfers among the accounts.
Fixed account transfers are subject to special restrictions. (p. 32)
SURRENDERS: You may surrender all or part of your contract value at any time
before the settlement date. You also may establish automated partial
surrenders. Surrenders may be subject to charges and tax penalties (including
a 10% IRS penalty if you surrender prior to your reaching age 59 1/2) and may
have other tax consequences; also, certain restrictions apply. (p. 34)
CHANGING OWNERSHIP: You may change ownership of a nonqualified annuity by
written instruction, but this may have federal income tax consequences.
Restrictions apply to changing ownership of a qualified annuity. (p. 36)
BENEFITS IN CASE OF DEATH: If you or the annuitant die before annuity payouts
begin, we will pay the beneficiary an amount at least equal to the contract
value. (p. 36)
ANNUITY PAYOUTS: You can apply your contract value to an annuity payout plan
that begins on the settlement date. You may choose from a variety of plans to
make sure that payouts continue as long as you like. If you purchased a
qualified annuity, the payout schedule must meet the requirements of the
qualified plan. We can make payouts on a fixed or variable basis, or both. Total
monthly payouts may include amounts from each subaccount and the fixed account.
During the annuity payout period, you cannot be invested in more than five
subaccounts at any one time unless we agree otherwise. (p. 38)
TAXES: Generally, your contract 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 be taxed on the
income if you are the owner. (p. 40)
CHARGES: We assess certain charges in connection with your contract:
- - $30 annual contract administrative charge;
- - a 0.55% mortality and expense risk fee (if you allocate money to one or more
subaccounts);
- - any premium taxes that may be imposed on us by state or local governments
(Currently, we deduct any applicable premium tax when annuity payouts
begin but we reserve the right to deduct this tax at other times such
as when you make purchase payments or when you surrender your contract); and
- - the operating expenses of the funds in which the subaccounts invest.
- ------------------------------------------------------------------------------
PROSPECTUS - MAY 1, 2000 5
<PAGE>
EXPENSE SUMMARY
The purpose of the following information is to help you understand the various
costs and expenses associated with your contract.
You pay no sales charge when you purchase your contract. We show all costs that
we deduct directly from your contract or indirectly from the subaccounts and
funds below. Some expenses may vary as we explain under "Charges." Please see
the fund prospectuses for more information on the operating expenses for each
fund.
CONTRACT OWNER EXPENSES
SURRENDER CHARGE 0%
ANNUAL CONTRACT ADMINISTRATIVE CHARGE $30*
*We will waive this charge when your contract value, or total purchase payments
less any payments surrendered, is $50,000 or more on the current contract
anniversary.
ANNUAL SUBACCOUNT EXPENSES
(as a percentage of average subaccount value):
MORTALITY AND EXPENSE RISK FEE 0.55%
- ------------------------------------------------------------------------------
6 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
- ------------------------------------------------------------------------------
Annual operating expenses of the funds (after fee waivers and/or expense
reimbursements, if applicable, as a percentage of average daily net assets)
<TABLE>
<CAPTION>
MANAGEMENT 12b-1 OTHER
FEES FEES EXPENSES TOTAL
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AXP(SM) Variable Portfolio -
Blue Chip Advantage Fund .56% .13 .26 .95%(1)
Bond Fund .60% .13 .08 .81%(2)
Capital Resource Fund .60% .13 .06 .79%(2)
Cash Management Fund .51% .13 .05 .69%(2)
Diversified Equity Income Fund .56% .13 .26 .95%(1)
Emerging Markets Fund 1.27% .13 .35 1.75%(1)
Extra Income Fund .62% .13 .08 .83%(2)
Federal Income Fund .61% .13 .14 .88%(1)
Global Bond Fund .84% .13 .12 1.09%(2)
Growth Fund .63% .13 .19 .95%(1)
International Fund .83% .13 .11 1.07%(2)
Managed Fund .59% .13 .04 .76%(2)
New Dimensions Fund-Registered Trademark- .61% .13 .07 .81%(2)
S&P 500 Index Fund .37% .13 -- .50%(1)
Small Cap Advantage Fund .79% .13 .31 1.23%(1)
Strategy Aggressive Fund .60% .13 .07 .80%(2)
AIM V.I.
Capital Appreciation Fund .62% -- .11 .73%(3)
Capital Development Fund -- % -- 1.23 1.23%(3,4)
American Century VP
International 1.34% -- -- 1.34%(5)
Value 1.00% -- -- 1.00%(5)
Calvert CVS
Social Balanced Portfolio .70% -- .16 .86%(6)
Fidelity VIP
III Growth & Income Portfolio (Service Class) .48% .10 .12 .70%(7)
III Mid Cap Portfolio (Service Class) .57% .10 .40 1.07%(8)
Overseas Portfolio (Service Class) .73% .10 .18 1.01%(7)
FTVIPT
Franklin Real Estate Fund - Class 2 .56% .25 .02 .83%(10)
Franklin Value Securities Fund - Class 2 .60% .25 .21 1.06%(9)
Templeton International Smaller Companies Fund - Class 2 .85% .25 .26 1.36%(9)
</TABLE>
- ------------------------------------------------------------------------------
PROSPECTUS - MAY 1, 2000 7
<PAGE>
<TABLE>
<CAPTION>
MANAGEMENT 12b-1 OTHER
FEES FEES EXPENSES TOTAL
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Goldman Sachs VIT
CORE(SM) Small Cap Equity Fund .75% -- .25 1.00%(11)
CORE(SM) U.S. Equity Fund .70% -- .20 .90%(11)
Mid Cap Value Fund .80% -- .25 1.05%(11)
Janus Aspen Series
Aggressive Growth Portfolio: Service Shares .65% .25 .02 .92%(12)
Global Technology Portfolio: Service Shares .65% .25 .13 1.03%(12)
International Growth Portfolio: Service Shares .65% .25 .11 1.01%(12)
Lazard Retirement Series
International Equity Portfolio .75% .25 .25 1.25%(13)
MFS-Registered Trademark- VIT
Growth Series - Service Class .75% .20 .16 1.11%(14,15,16)
New Discovery Series - Service Class .90% .20 .17 1.27%(14,15,16)
Putnam Variable Trust
Putnam VT International New Opportunities
Fund - Class IB Shares 1.08% .15 .33 1.56%(3)
Putnam VT Vista Fund - Class IB Shares .65% .15 .10 .90%(3)
Royce
Micro-Cap Portfolio 1.25% -- .10 1.35%(17)
Third Avenue
Value Portfolio .90% -- .40 1.30%(18)
Wanger
International Small Cap 1.25% -- .24 1.49%(19)
U.S. Small Cap .95% -- .07 1.02%(19)
Warburg Pincus Trust -
Emerging Growth Portfolio --% -- 1.40 1.40%(20)
</TABLE>
- ------------------------------------------------------------------------------
8 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
(1) Based on estimated expenses after fee waivers and expense
reimbursements. Without fee waivers and expense reimbursements "Other
Expenses" and "Total" would be 0.39% and 1.08% for AXP Variable Portfolio
Blue Chip Advantage and AXP Variable Portfolio - Diversified Equity
Income Funds, 0.26% and 1.00% for AXP Variable Portfolio - Federal Income
Fund, 0.32% and 1.08% for AXP Variable Portfolio - Growth Fund and 0.43%
and 1.35% for AXP Variable Portfolio - Small Cap Advantage Fund.
(2) The fund's expense figures are based on actual expenses for the fiscal
year ended Aug. 31, 1999 restated to include a Rule 12b-1 distribution
fee of 0.125% that went into effect Sept. 21, 1999.
(3) Figures in "Management Fees", "12b-1 Fees", "Other Expenses" and
"Total" are based on actual expenses for the fiscal year ended Dec. 31,
1999.
(4) Had there been no fee waiver or expenses reimbursements, expenses would
have been: 0.75%, 0.00%, 2.67% and 3.42%.
(5) The fund has a stepped fee schedule. As a result, the fund's management
fee rate generally decreases as fund assets increase.
(6) Net fund operating expenses after reductions for fees paid indirectly
again restated to reflect an indirect fee for Social Balanced would be
0.89%. Total expenses have been restated to reflect expenses expected to
be incurred in 2000.
(7) A portion of the brokerage commissions that certain funds pay was used
to reduce fund expenses. In addition, through arrangements with certain
funds' custodian, credits realized as a result of uninvested cash
balances were used to reduce a portion of each applicable funds'
expenses. With these reductions, "Other Expenses" and "Total" presented
in the table would have been 0.11% and 0.69% for Growth & Income
Portfolio and 0.15% and 0.98% for Overseas Portfolio.
(8) FMR agreed to reimburse a portion Mid Cap Portfolio's expenses during
the period. Without this reimbursement, the Portfolio's management fee,
distribution & service fee (12b-1), other expenses and total expenses
would have been .57%, .10%, 2.74% and 3.41%, respectively.
(9) The fund's Class 2 distribution plan or "Rule 12b-1 plan" is described
in the fund's prospectus.
(10) Previously Franklin Real Estate Securities Fund. The fund
administration fee is paid indirectly through the management fee. The
fund's Class 2 distribution plan or "Rule 12b-1 plan" is described in the
fund's prospectus.
(11) The fund's expenses are based on estimated expenses for the fiscal
year ended Dec. 31, 2000. Goldman Sachs Asset Management and Goldman
Sachs Asset Management International, the investment advisers, have
voluntarily agreed to reduce or limit certain other expenses (excluding
management fees, taxes, interest, brokerage fees, litigation,
indemnification and other extraordinary expenses) to the extent such
expenses exceed the percentage stated in the above table (as calculated
per annum) of each fund's respective average daily net assets. Without
the limitations described above, "Other Expenses" and "Total" would be as
follows: 0.75% and 1.50% for CORE Small Cap Equity Fund, 0.42% and 1.22%
for Mid Cap Value Fund (formerly the Mid Cap Equity Fund) and 0.20% and
0.90% for the CORE(SM) U.S. Equity Fund. CORE(SM), is a service mark of
Goldman, Sachs and Co.
(12) Expenses are based on the estimated expenses that the new Service
Shares class of each portfolio expects to incur in its initial fiscal
year. All expenses are shown without the effect of expense offset
arrangements.
(13) Effective May 1, 1999, the investment adviser agreed to waive its fees
and/or reimburse the Fund through Dec. 31, 2000 to the extent that total
Fund expenses exceed 1.25% of the Fund's average daily net assets. Absent
fee waivers and/or reimbursements, "Other Expenses" and "Total" expenses
for the year ended Dec. 31, 1999 would have been 11.94% and 12.94% for
International Equity.
(14) Each series has adopted a distribution plan under Rule 12b-1 that
permits it to pay marketing and other fees to support the sales and
distribution of service class shares (these fees are referred to as
distribution fees).
(15) Each series has an expense offset arrangement which reduces the
series' custodian fee based upon the amount of cash maintained by the
series with its custodian and dividend disbursing agent. The series may
enter into other similar arrangements and directed brokerage
arrrangements, which would also have the effect of reducing the series'
expenses. "Other Expenses" do not take into account these expense
reductions, and are therefore higher than the actual expenses of the
series. Had these fee reductions been taken into account, "Net Expenses"
would be lower, and for service class shares would be estimated to be:
1.10% for Growth Series and 1.25% for New Discovery Series.
(16) MFS has contractually agreed, subject to reimbursement, to bear
expenses for the series' expenses such that "Other Expenses " (after
taking into account the expense offset arrangement described above), do
not exceed 0.15% annually. Without this agreement, "Other Expenses" and
"Total" would be 0.71% and 1.66% for Growth Series and 1.59% and 2.69%
for New Discovery Series. These contractual fee arrangements will
continue until at least May 1, 2001, unless changed with the consent of
the board of trustees which oversees the series.
(17) Royce has contractually agreed to waive its fees and reimburse
expenses to the extent necessary to maintain the Funds Net Annual
Operating Expense ratio at or below 1.35% through Dec. 31, 1999 and 1.99%
through Dec. 31, 2008. Absent fee waivers "Other Expenses" and "Total
Expenses" would be 0.99% and 2.24% for Royce Micro-Cap Portfolio.
(18) These expenses reflect reimbursements by the Adviser. The Adviser
reimbursed the Fund for all expenses incurred by the Fund in excess of
1.30% of Fund assets. The fund will repay the Adviser the amount of its
reimbursement for up to three years following the reimbursement to the
extent Fund expenses drop below 1.30%. The Adviser expects to continue to
reimburse the Fund for these expenses for the foreseeable future. Either
the Fund or the Adviser can terminate this arrangement at any time.
Without this reimbursement, the Fund's "Other Expenses" and "Total" would
have been 2.05% and 2.95%. Other expenses are based on estimated amounts
for the current fiscal year.
(19) Actual operating expenses of funds at Dec. 31, 1999.
(20) Expense ratios are shown after fee waivers and expense reimbursements
by the investment adviser. The total expense ratio before the waivers and
reimbursements would have been 11.16% for Emerging Growth Portfolio of
the Warburg Pincus Trust.
- ------------------------------------------------------------------------------
PROSPECTUS - MAY 1, 2000 9
<PAGE>
EXAMPLE:*
You would pay the following expenses on a $1,000 investment assuming a 5%
annual return and full surrender, no surrender or selection of an annuity
payout plan at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
AXP(SM) Variable Portfolio -
Blue Chip Advantage Fund $15.96 $49.53 $85.42 $186.40
Bond Fund 14.52 45.14 77.96 170.76
Capital Resource Fund 14.32 44.51 76.89 168.51
Cash Management Fund 13.29 41.36 71.53 157.20
Diversified Equity Income Fund 15.96 49.53 85.42 186.40
Emerging Markets Fund 24.16 74.37 127.20 271.71
Extra Income Fund 14.73 45.76 79.03 173.01
Federal Income Fund 15.24 47.33 81.69 178.61
Global Bond Fund 17.39 53.90 92.83 201.82
Growth Fund 15.96 49.53 85.42 186.40
International Fund 17.19 53.28 91.77 199.63
Managed Fund 14.01 43.57 75.29 165.13
New Dimensions Fund-Registered Trademark- 14.52 45.14 77.96 170.76
S&P 500 Index Fund 11.35 35.37 61.29 135.38
Small Cap Advantage Fund 18.83 58.27 100.20 217.02
Strategy Aggressive Fund 14.42 44.82 77.43 169.64
AIM V.I.
Capital Appreciation Fund 13.70 42.62 73.68 161.74
Capital Development Fund 18.83 58.27 100.20 217.02
American Century VP
International 19.96 61.69 105.96 228.83
Value 16.47 51.09 88.07 191.93
Calvert CVS
Social Balanced Portfolio 15.04 46.71 80.63 176.37
Fidelity VIP
III Growth & Income Portfolio (Service Class) 13.40 41.68 72.07 158.33
III Mid Cap Portfolio (Service Class) 17.19 53.28 91.77 199.63
Overseas Portfolio (Service Class) 16.57 51.40 88.60 193.03
FTVIPT
Franklin Real Estate Fund - Class 2 14.73 45.76 79.03 173.01
Franklin Value Securities Fund - Class 2 17.09 52.97 91.25 198.53
Templeton International Smaller Companies Fund - Class 2 20.16 62.31 107.01 230.96
</TABLE>
- --------------------------------------------------------------------------------
10 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
You would pay the following expenses on a $1,000 investment assuming a 5%
annual return and full surrender, no surrender or selection of an annuity
payout plan at the end of each time period.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Goldman Sachs VIT
CORE Small Cap Equity Fund 16.47 51.09 88.07 191.93
CORE U.S. Equity Fund 15.45 47.96 82.76 180.84
Mid Cap Value Fund 16.98 52.65 90.72 197.43
Janus Aspen Series
Aggressive Growth Portfolio: Service Shares 15.65 48.59 83.82 183.06
Global Technology Portfolio: Service Shares 16.78 52.03 89.66 195.23
International Growth Portfolio: Service Shares 16.57 51.40 88.60 193.03
Lazard Retirement Series
International Equity Portfolio 19.03 58.89 101.25 219.18
MFS-Registered Trademark- VIT
Growth Series - Service Class 17.60 54.53 93.89 204.00
New Discovery Series - Service Class 19.24 59.51 102.30 221.33
Putnam Variable Trust
Putnam VT International New Opportunities Fund - Class IB Shares 22.21 68.50 117.40 252.05
Putnam VT Vista Fund - Class IB Shares 15.45 47.96 82.76 180.84
Royce
Micro-Cap Portfolio 20.06 62.00 106.48 229.89
Third Avenue
Value Portfolio 19.55 60.44 103.87 224.55
Wanger
International Small Cap 21.49 66.34 113.78 244.72
U.S. Small Cap 16.68 51.72 89.13 194.13
Warburg Pincus Trust -
Emerging Growth Portfolio 20.57 63.55 109.09 235.21
</TABLE>
*In this example, the $30 contract administrative charge is approximated as a
0.057% charge based on our estimated average contract size. Premium taxes
imposed by some state and local governments are not reflected in this table. We
entered into certain arrangements under which we are compensated by the funds'
advisors and/or distributors for the administrative services we provide to the
funds.
YOU SHOULD NOT CONSIDER THIS EXAMPLE AS A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
- --------------------------------------------------------------------------------
PROSPECTUS - MAY 1, 2000 11
<PAGE>
CONDENSED FINANCIAL INFORMATION (UNAUDITED)
The following tables give per-unit information about the financial history of
each subaccount. We have not provided this information for some subaccounts
because they are new and do not have any history.
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999
<S> <C>
SUBACCOUNT BC3(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - BLUE CHIP ADVANTAGE FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.11
Number of accumulation units outstanding at end of period (000 omitted) 211
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT BD3(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - BOND FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.02
Number of accumulation units outstanding at end of period (000 omitted) 47
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT CR3(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - CAPITAL RESOURCE FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.14
Number of accumulation units outstanding at end of period (000 omitted) 872
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT CM3(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - CASH MANAGEMENT FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.01
Number of accumulation units outstanding at end of period (000 omitted) 2,266
Ratio of operating expense to average net assets 0.55%
Simple yield(2) 5.51%
Compound yield(2) 5.66%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT DE3(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - DIVERSIFIED EQUITY INCOME FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.02
Number of accumulation units outstanding at end of period (000 omitted) 23
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
12 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999
<S> <C>
SUBACCOUNT EI3(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - EXTRA INCOME FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.01
Number of accumulation units outstanding at end of period (000 omitted) 48
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT FI3(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - FEDERAL INCOME FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.01
Number of accumulation units outstanding at end of period (000 omitted) 10
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT GB3(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - GLOBAL BOND FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.00
Number of accumulation units outstanding at end of period (000 omitted) 3
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT GR3(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - GROWTH FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.17
Number of accumulation units outstanding at end of period (000 omitted) 401
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT IE3(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - INTERNATIONAL FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.27
Number of accumulation units outstanding at end of period (000 omitted) 133
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
PROSPECTUS - MAY 1, 2000 13
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999
<S> <C>
SUBACCOUNT MF3(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - MANAGED FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.09
Number of accumulation units outstanding at end of period (000 omitted) 10
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT ND3(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - NEW DIMENSIONS
FUND-Registered Trademark-)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.19
Number of accumulation units outstanding at end of period (000 omitted) 426
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT SC3(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - SMALL CAP ADVANTAGE FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.12
Number of accumulation units outstanding at end of period (000 omitted) 28
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT SA3(1) (INVESTING IN SHARES OF AXP(SM) VARIABLE PORTFOLIO - STRATEGY AGGRESSIVE FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.52
Number of accumulation units outstanding at end of period (000 omitted) 33
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 3CA(1) (INVESTING IN SHARES OF AIM V.I. CAPITAL APPRECIATION FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.31
Number of accumulation units outstanding at end of period (000 omitted) 185
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
14 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999
<S> <C>
SUBACCOUNT 3CD(1) (INVESTING IN SHARES OF AIM V.I. CAPITAL DEVELOPMENT FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.27
Number of accumulation units outstanding at end of period (000 omitted) 4
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 3IF(1) (INVESTING IN SHARES OF AMERICAN CENTURY VP INTERNATIONAL)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.44
Number of accumulation units outstanding at end of period (000 omitted) 9
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 3VA(1) (INVESTING IN SHARES OF AMERICAN CENTURY VP VALUE)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $0.92
Number of accumulation units outstanding at end of period (000 omitted) 59
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 3GI(1) (INVESTING IN SHARES OF FIDELITY VIP III GROWTH & INCOME PORTFOLIO - SERVICE CLASS)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.05
Number of accumulation units outstanding at end of period (000 omitted) 445
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 3MP(1) (INVESTING IN SHARES OF FIDELITY VIP III MID CAP PORTFOLIO - SERVICE CLASS)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.24
Number of accumulation units outstanding at end of period (000 omitted) 102
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
PROSPECTUS - MAY 1, 2000 15
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999
<S> <C>
SUBACCOUNT 3OS(1) (INVESTING IN SHARES OF FIDELITY VIP OVERSEAS PORTFOLIO - SERVICE CLASS)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.23
Number of accumulation units outstanding at end of period (000 omitted) 25
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 3RE(1) (INVESTING IN SHARES OF FTVIPT FRANKLIN REAL ESTATE FUND - CLASS 2)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $0.96
Number of accumulation units outstanding at end of period (000 omitted) 4
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 3SI(1) (INVESTING IN SHARES OF FTVIPT FRANKLIN VALUE SECURITIES FUND - CLASS 2)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $0.96
Number of accumulation units outstanding at end of period (000 omitted) 2
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 3IS(1) (INVESTING IN SHARES OF FTVIPT TEMPLETON INTERNATIONAL SMALLER COMPANIES
FUND - CLASS 2)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.02
Number of accumulation units outstanding at end of period (000 omitted) 9
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 3SE(1) (INVESTING IN SHARES OF GOLDMAN SACHS VIT CORE SMALL CAP EQUITY FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.13
Number of accumulation units outstanding at end of period (000 omitted) 41
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
16 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999
<S> <C>
SUBACCOUNT 3UE(1) (INVESTING IN SHARES OF GOLDMAN SACHS VIT CORE U.S. EQUITY FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.10
Number of accumulation units outstanding at end of period (000 omitted) 170
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 3MC(1) (INVESTING IN SHARES OF GOLDMAN SACHS VIT MID CAP VALUE FUND)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $0.95
Number of accumulation units outstanding at end of period (000 omitted) 8
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 3IP(1) (INVESTING IN SHARES OF LAZARD RETIREMENT SERIES INTERNATIONAL EQUITY PORTFOLIO)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.07
Number of accumulation units outstanding at end of period (000 omitted) 8
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 3IN(1) (INVESTING IN SHARES OF PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES
FUND - CLASS IB SHARES)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.52
Number of accumulation units outstanding at end of period (000 omitted) 87
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 3VS(1) (INVESTING IN SHARES OF PUTNAM VT VISTA FUND - CLASS IB SHARES)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.36
Number of accumulation units outstanding at end of period (000 omitted) 183
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
PROSPECTUS - MAY 1, 2000 17
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DEC. 31, 1999
<S> <C>
SUBACCOUNT 3MI(1) (INVESTING IN SHARES OF ROYCE MICRO-CAP PORTFOLIO)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.15
Number of accumulation units outstanding at end of period (000 omitted) 19
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 3SV(3) (INVESTING IN SHARES OF THIRD AVENUE VALUE PORTFOLIO)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.08
Number of accumulation units outstanding at end of period (000 omitted) 120
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 3IT(1) (INVESTING IN SHARES OF WANGER INTERNATIONAL SMALL CAP)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.51
Number of accumulation units outstanding at end of period (000 omitted) 112
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 3SP(1) (INVESTING IN SHARES OF WANGER U.S. SMALL CAP)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.15
Number of accumulation units outstanding at end of period (000 omitted) 125
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 3EG(3) (INVESTING IN SHARES OF WARBURG PINCUS TRUST - EMERGING GROWTH PORTFOLIO)
Accumulation unit value at beginning of period $1.00
Accumulation unit value at end of period $1.32
Number of accumulation units outstanding at end of period (000 omitted) 17
Ratio of operating expense to average net assets 0.55%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Operations commenced on Sept. 15, 1999.
(2) Net of annual contract administrative charge and mortality and expense risk
fee.
(3) Operations commenced on Sept. 21, 1999.
- --------------------------------------------------------------------------------
18 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
FINANCIAL STATEMENTS
You can find our audited financial statements and the audited financial
statements of the subaccounts in the SAI. The SAI does not include the audited
financial statements for some of the subaccounts because they are new and do not
have any assets. You can find our audited financial statements later in this
prospectus.
PERFORMANCE INFORMATION
Performance information for the subaccounts may appear from time to time in
advertisements or sales literature. This information reflects the performance of
a hypothetical investment in a particular subaccount during a specified time
period. We show actual performance from the date the subaccounts began investing
in funds. For some subaccounts, we do not provide any performance information
because they are new and have not had any activity to date. We also show
performance from the commencement date of the funds as if the contract existed
at that time which it did not. Although we base performance figures on
historical earnings, past performance does not guarantee future results.
We include non-recurring charges (such as surrender charges) in total return
figures, but not in yield quotations. Excluding non-recurring charges in yield
calculations increases the reported value.
Total return figures reflect deduction of all applicable charges, including:
- - contract administrative charge, and
- - mortality and expense risk fee.
We may show total return quotations by means of schedules, charts or graphs.
AVERAGE ANNUAL TOTAL RETURN is the average annual compounded rate of return of
the investment over a period of one, five and ten years (or up to the life of
the subaccount if it is less than ten years old).
CUMULATIVE TOTAL RETURN is the cumulative change in the value of an investment
over a specified time period. We assume that income earned by the investment is
reinvested. Cumulative total return generally will be higher than average annual
total return.
ANNUALIZED SIMPLE YIELD (FOR SUBACCOUNTS INVESTING IN MONEY MARKET FUNDS)
"annualizes" the income generated by the investment over a given seven-day
period. That is, we assume the amount of income generated by the investment
during the period will be generated each seven-day period for a year. We show
this as a percentage of the investment.
ANNUALIZED COMPOUND YIELD (FOR SUBACCOUNTS INVESTING IN MONEY MARKET FUNDS) is
calculated like simple yield except that we assume the income is reinvested when
we annualize it. Compound yield will be higher than the simple yield because of
the compounding effect of the assumed reinvestment.
ANNUALIZED YIELD (FOR SUBACCOUNTS INVESTING IN INCOME FUNDS) divides the net
investment income (income less expenses) for each accumulation unit during a
given 30-day period by the value of the unit on the last day of the period. We
then convert the result to an annual percentage.
You should consider performance information in light of the investment
objectives, policies, characteristics and quality of the fund in which the
subaccount invests and the market conditions during the specified time period.
Advertised yields and total return figures include charges that reduce
advertised performance. Therefore, you should not compare subaccount performance
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 total return and
yield.)
If you would like additional information about actual performance, please
contact us at the address or telephone number on the first page of this
prospectus.
- -------------------------------------------------------------------------------
PROSPECTUS - MAY 1, 2000 19
<PAGE>
THE VARIABLE ACCOUNT AND THE FUNDS
You may allocate payments to any or all of the subaccounts of the variable
account that invest in shares of the following funds:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT INVESTING IN INVESTMENT OBJECTIVES AND POLICIES: INVESTMENT ADVISOR OR MANAGER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BC3 AXP(SM) Variable Portfolio - Objective: long-term total return IDS Life, investment manager; American
Blue Chip Advantage Fund exceeding that of the U.S. stock market. Express Financial Corporation (AEFC)
Invests primarily in common stocks of investment advisor.
companies included in the unmanaged S&P
500 Index.
- ------------------------------------------------------------------------------------------------------------------------------------
BD3 AXP(SM) Variable Portfolio - Objective: high level of current income IDS Life, investment manager; AEFC
Bond Fund while conserving the value of the investment advisor.
investment and continuing a high level
of income for the longest time period.
Invests primarily in bonds and other
debt obligations.
- ------------------------------------------------------------------------------------------------------------------------------------
CR3 AXP(SM) Variable Portfolio - Objective: capital appreciation. Invests IDS Life, investment manager; AEFC
Capital Resource Fund primarily in U.S. common stocks and investment advisor.
other securities convertible into common
stocks.
- ------------------------------------------------------------------------------------------------------------------------------------
CM3 AXP(SM) Variable Portfolio - Objective: maximum current income IDS Life, investment manager; AEFC
Cash Management Fund consistent with liquidity and investment advisor.
conservation of capital. Invests in
money market securities.
- ------------------------------------------------------------------------------------------------------------------------------------
DE3 AXP(SM) Variable Portfolio - Objective: high level of current income IDS Life, investment manager; AEFC
Diversified Equity Income Fund and, as a secondary goal, steady growth investment advisor.
of capital. Invests primarily in
dividend-paying common and preferred
stocks.
- ------------------------------------------------------------------------------------------------------------------------------------
EM3 AXP(SM) Variable Portfolio - Objective: long-term capital growth. IDS Life, investment manager; AEFC
Emerging Markets Fund Invests primarily in equity securities investment advisor; American Express
of companies in emerging markets. Asset Management International, Inc., a
wholly-owned subsidiary of AEFC, is the
sub-investment advisor.
- ------------------------------------------------------------------------------------------------------------------------------------
EI3 AXP(SM) Variable Portfolio - Objective: high current income, with IDS Life, investment manager; AEFC
Extra Income Fund capital growth as a secondary objective. investment advisor.
Invests primarily in high-yielding,
high-risk corporate bonds issued by U.S.
and foreign companies and governments.
- ------------------------------------------------------------------------------------------------------------------------------------
FI3 AXP(SM) Variable Portfolio - Objective: a high level of current IDS Life, investment manager; AEFC
Federal Income Fund income and safety of principal investment advisor.
consistent with an investment in U.S.
government and government agency
securities. Invests primarily in debt
obligations issued or guaranteed as to
principal and interest by the U.S.
government, its agencies or
instrumentalities.
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
20 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT INVESTING IN INVESTMENT OBJECTIVES AND POLICIES: INVESTMENT ADVISOR OR MANAGER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
GB3 AXP(SM) Variable Portfolio - Objective: high total return through IDS Life, investment manager; AEFC
Global Bond Fund income and growth of capital. investment advisor.
Non-diversified mutual fund that invests
primarily in debt obligations of U.S.
and foreign issuers.
- ------------------------------------------------------------------------------------------------------------------------------------
GR3 AXP(SM) Variable Portfolio - Objective: long-term capital growth. IDS Life, investment manager; AEFC
Growth Fund Invests primarily in common stocks and investment advisor.
securities convertible into common
stocks that appear to offer growth
opportunities.
- ------------------------------------------------------------------------------------------------------------------------------------
IE3 AXP(SM) Variable Portfolio - Objective: capital appreciation. Invests IDS Life, investment manager; AEFC
International Fund primarily in common stocks or investment advisor. American Express
convertible securities of foreign Asset Management International, Inc., a
issuers that offer growth potential. wholly-owned subsidiary of AEFC, is the
sub-investment advisor.
- ------------------------------------------------------------------------------------------------------------------------------------
MF3 AXP(SM) Variable Portfolio - Objective: maximum total investment IDS Life, investment manager; AEFC
Managed Fund return through a combination of capital investment advisor.
growth and current income. Invests
primarily in stocks, convertible
securities, bonds and other debt
securities.
- ------------------------------------------------------------------------------------------------------------------------------------
ND3 AXP(SM) Variable Portfolio - Objective: long-term growth of capital. IDS Life, investment manager; AEFC
New Dimensions Fund-Registered Invests primarily in common stocks of investment advisor.
Trademark- U.S. and foreign companies showing
potential for significant growth.
- ------------------------------------------------------------------------------------------------------------------------------------
SP3 AXP(SM) Variable Portfolio - Objective: long-term capital IDS Life, investment manager; AEFC
S&P 500 Index Fund appreciation. Invests primarily in investment advisor.
securities that are expected to provide
investment results that correspond to
the performance of the S&P 500 Index.
- ------------------------------------------------------------------------------------------------------------------------------------
SC3 AXP(SM) Variable Portfolio - Objective: long-term capital growth. IDS Life, investment manager; AEFC
Small Cap Advantage Fund Invests primarily in equity stocks of investment advisor. Kenwood Capital
small companies that are often included Management LLC is the sub-investment
in the S&P SmallCap 600 Index or the advisor.
Russell 2000 Index.
- ------------------------------------------------------------------------------------------------------------------------------------
SA3 AXP(SM) Variable Portfolio - Objective: capital appreciation. Invests IDS Life, investment manager; AEFC
Strategy Aggressive Fund primarily in common stocks of small-and investment advisor.
medium-size companies.
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 21
<PAGE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT INVESTING IN INVESTMENT OBJECTIVES AND POLICIES: INVESTMENT ADVISOR OR MANAGER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3CA AIM V.I. Capital Objective: growth of capital. Invests A I M Advisors, Inc.
Appreciation Fund primarily in common stocks, with
emphasis on medium- and small-sized
growth companies.
- ------------------------------------------------------------------------------------------------------------------------------------
3CD AIM V.I. Capital Objective: long term growth of capital. A I M Advisors, Inc.
Development Fund Invests primarily in securities
(including common stocks, convertible
securities and bonds) of small- and
medium-sized companies.
- ------------------------------------------------------------------------------------------------------------------------------------
3IF American Century VP Objective: long term capital growth. American Century Investment Management,
International Invests primarily in stocks of growing Inc.
foreign companies.
- ------------------------------------------------------------------------------------------------------------------------------------
3VA American Century VP Value Objective: long-term capital growth, American Century Investment Management,
with income as a secondary objective. Inc.
Invests primarily in securities that
management believes to be undervalued at
the time of purchase.
- ------------------------------------------------------------------------------------------------------------------------------------
3SR Calvert Variable Series, Inc. Objective: income and capital growth. Calvert Asset Management Company, Inc.
Social Balanced Portfolio Invests primarily in stocks, bonds and (CAMCO) is the investment advisor. NCM
money market instruments which offer Capital Management Group, Inc. is the
income and capital growth opportunity investment subadvisor.
and which satisfy the investment and
social criteria.
- ------------------------------------------------------------------------------------------------------------------------------------
3GI Fidelity VIP III Growth & Objective: high total return through a Fidelity Management & Research Company
Income Portfolio combination of current income and (FMR), investment manager; FMR U.K. and
(Service Class) capital appreciation. Invests primarily FMR Far East, sub-investment advisors.
in common stocks with a focus on those
that pay current dividends and show
potential for capital appreciation.
- ------------------------------------------------------------------------------------------------------------------------------------
3MP Fidelity VIP III Mid Cap Objective: long-term growth of capital. FMR, investment manager; FMR U.K. and
Portfolio (Service Class) Invests primarily in medium market FMR Far East, sub-investment advisors.
capitalization common stocks.
- ------------------------------------------------------------------------------------------------------------------------------------
3OS Fidelity VIP Overseas Objective: long-term growth of capital. FMR, investment manager; FMR U.K., FMR
Portfolio (Service Class) Invests primarily in common stocks of Far East, Fidelity International
foreign securities. Investment Advisors (FIIA) and FIIA
U.K., sub-investment advisors.
- ------------------------------------------------------------------------------------------------------------------------------------
3RE FTVIPT Franklin Real Estate Objective: capital appreciation with a Franklin Advisers, Inc.
Fund - Class 2 secondary goal to earn current income.
(previously Franklin Real Invests primarily in securities of
Estate Securities Fund) companies operating in the real estate
industry, primarily equity real estate
investment trusts (REITS).
- ------------------------------------------------------------------------------------------------------------------------------------
22 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT INVESTING IN INVESTMENT OBJECTIVES AND POLICIES: INVESTMENT ADVISOR OR MANAGER
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
3SI FTVIPT Franklin Value Objective: long-term total return. Franklin Advisory Services, LLC
Securities Fund - Class 2 Invests primarily in equity securities
of companies the manager believes are
undervalued.
- ------------------------------------------------------------------------------------------------------------------------------------
3IS FTVIPT Templeton Objective: long-term capital Templeton Investment
International Smaller appreciation. Invests primarily in Counsel, Inc.
Companies Fund - Class 2 equity securities of smaller companies
located outside the U.S., including
those in emerging markets.
- ------------------------------------------------------------------------------------------------------------------------------------
3SE Goldman Sachs VIT CORE Objective: long-term growth of capital. Goldman Sachs Asset Management
Small Cap Equity Fund Invests primarily in a broadly
diversified portfolio of equity
securities of U.S. issuers which are
included in the Russell 2000 Index at
the time of investment.
- ------------------------------------------------------------------------------------------------------------------------------------
3UE Goldman Sachs VIT CORE Objective: long-term growth of capital Goldman Sachs Asset Management
U.S. Equity Fund and dividend income. Invests primarily
in a broadly diversified portfolio of
large-cap and blue chip equity
securities representing all major
sectors of the U.S. economy.
- ------------------------------------------------------------------------------------------------------------------------------------
3MC Goldman Sachs VIT Mid Cap Objective: long-term capital Goldman Sachs Asset Management
Value Fund appreciation. Invests primarily in
mid-capitalization companies within the
range of the market capitalization of
companies constituting the Russell
Midcap Value Index at the time of
investment
- ------------------------------------------------------------------------------------------------------------------------------------
3AG Janus Aspen Series Aggressive Objective: long-term growth of capital. Janus Capital
Growth Portfolio: Non-diversified mutual fund that invests
Service Shares primarily in common stocks selected for
their growth potential and normally
invests at least 50% of its equity
assets in medium-sized companies.
- ------------------------------------------------------------------------------------------------------------------------------------
3GT Janus Aspen Series Objective: long-term growth of capital. Janus Capital
Global Technology Portfolio: Non-diversified mutual fund that invests
Service Shares primarily in equity securities of U.S.
and foreign companies selected for their
growth potential. Normally invests at
least 65% of total assets in securities
of companies that the portfolio manager
believes will benefit significantly from
advancements or improvements in
technology.
- ------------------------------------------------------------------------------------------------------------------------------------
3IG Janus Aspen Series Objective: long-term growth of capital. Janus Capital
International Growth Invests at least 65% of its total assets
Portfolio: Service Shares in securities of issuers from at least
five different countries, excluding the
U.S. It may at times invest all of its
assets in fewer than five countries or
even a single country.
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 23
<PAGE>
- ------------------------------------------------------------------------------------------------------------------------------------
3IP Lazard Retirement Series Objective: long-term capital Lazard Asset Management
International Equity Portfolio appreciation. Invests primarily in
equity securities, principally common
stocks of relatively large non-U.S.
companies (those whose total market
value is more than $1 billion) that the
Investment Manager believes are
undervalued based on their earnings,
cash flow or asset values.
- ------------------------------------------------------------------------------------------------------------------------------------
3MG MFS-Registered Trademark- Objective: long-term growth of capital MFS Investment Management-Registered
VIT Growth Series - and future income. Invests at least 80% Trademark-
Service Class of its total assets in common stocks and
related securities of companies which
MFS believes offer better than average
prospects for long-term growth.
- ------------------------------------------------------------------------------------------------------------------------------------
3MD MFS-Registered Trademark- Objective: capital appreciation. Invests Massachusetts Financial
VIT New Discovery Series - primarily in equity securities of Service Company (MFS)
Service Class emerging growth companies.
- ------------------------------------------------------------------------------------------------------------------------------------
3IN Putnam VT International New Objective: long-term capital Putnam Investment Management, Inc.
Opportunities Fund - appreciation. Invests primarily in a
Class IB Shares diversified portfolio of common stocks
that Putnam Management believes have
above-average potential for capital
appreciation.
- ------------------------------------------------------------------------------------------------------------------------------------
3VS Putnam VT Vista Fund - Objective: capital appreciation. Invests Putnam Investment Management, Inc.
Class IB Shares primarily in a diversified portfolio of
common stocks that Putnam Management
believes have the potential for
above-average capital appreciation.
- ------------------------------------------------------------------------------------------------------------------------------------
3MI Royce Micro-Cap Portfolio Objective: long-term growth of capital. Royce & Associates, Inc.
Invests primarily in a broadly
diversified portfolio of equity
securities issued by micro-cap companies
(companies with stock market
capitalizations below $300 million).
- ------------------------------------------------------------------------------------------------------------------------------------
3SV Third Avenue Value Portfolio Objective: long-term capital EQSF, Inc.
appreciation. Invests primarily in
common stocks of well-financed companies
at a substantial discount to what the
Advisor believes is their true value.
- ------------------------------------------------------------------------------------------------------------------------------------
3IT Wanger International Objective: long-term growth of capital. Wanger Asset Management, L.P.
Small Cap Invests primarily in stocks of small-
and medium-size non-U.S. companies.
- ------------------------------------------------------------------------------------------------------------------------------------
3SP Wanger U.S. Small Cap Objective: long-term growth of capital. Wanger Asset Management, L.P.
Invests primarily in stocks of small-
and medium-size U.S. companies.
- ------------------------------------------------------------------------------------------------------------------------------------
3EG Warburg Pincus Trust - Objective: maximum capital appreciation. Credit Suisse Asset Management, LLC
Emerging Growth Portfolio Invests primarily in equity securities
of small- or medium-sized U.S.
emerging-growth companies.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
24 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
The investment objectives and policies of some of the funds are similar to the
investment objectives and policies of other mutual funds that an investment
advisor or its affiliates manage. Although the objectives and policies may be
similar, each fund will have its own portfolio holdings and its own fees and
expenses. Accordingly, each fund will have its own investment results, and those
results may differ significantly from other funds with similar investment
objectives and policies.
The investment managers and advisors cannot guarantee that the funds will meet
their investment objectives. Please read the fund prospectuses for facts you
should know before investing. These prospectuses are also available by
contacting us at the address or telephone number on the first page of this
prospectus.
All funds are available to serve as the underlying investments for variable
annuities. Some funds also are available to serve as investment options for
variable life insurance policies and tax-deferred retirement plans. It is
possible that in the future, it may be disadvantageous for variable annuity
accounts and variable life insurance accounts and/or tax-deferred retirement
plans to invest in the available funds simultaneously.
Although the insurance company 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 annuity
owners, policy owners and tax-deferred retirement plans and to determine what
action, if any, should be taken in response to a conflict. If a board were to
conclude that it should establish separate funds for the variable annuity,
variable life insurance and tax-deferred retirement plan accounts, you would not
bear any expenses associated with establishing separate funds. Please refer to
the fund prospectuses for risk disclosure regarding simultaneous investments by
variable annuity, variable life insurance and tax-deferred retirement plan
accounts.
The Internal Revenue Service (IRS) issued final regulations relating to the
diversification requirements under Section 817(h) of the Code. Each fund intends
to comply with these requirements.
The variable account was established under Minnesota law on Aug. 23, 1995, and
the subaccounts are registered together as a single 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. All obligations arising under the contracts are general obligations
of IDS Life.
The variable account meets the definition of a separate account under federal
securities laws. We credit or charge income, capital gains and capital losses of
each subaccount only to that subaccount. State insurance law prohibits us from
charging a subaccount with liabilities of any other subaccount or of our general
business. The variable account includes other subaccounts that are available
under contracts that are not described in this prospectus.
The U.S. Treasury and the IRS indicated that they may provide additional
guidance on investment control. This concerns how many variable subaccounts an
insurance company may offer and how many exchanges among subaccounts it may
allow before the contract owner would be currently taxed on income earned within
subaccount assets. At this time, we do not know what the additional guidance
will be or when action will be taken. We reserve the right to modify the
contract, as necessary, so that the owner will not be subject to current
taxation as the owner of the subaccount assets.
We intend to comply with all federal tax laws so 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.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 25
<PAGE>
THE FIXED ACCOUNT
You also may allocate purchase payments to the fixed account. We back the
principal and interest guarantees relating to the fixed account. The value of
the fixed account increases as we credit interest to the account. Purchase
payments and transfers to the fixed account become part of our general account.
We credit interest daily and compound it annually. We will change the interest
rates from time to time at our discretion. These rates will be based on various
factors including, but not limited to, the interest rate environment, returns
earned on investments backing these annuities, the rates currently in effect for
new and existing company annuities, product design, competition, and the
company's revenues and expenses.
Interests in the fixed account are not required to be registered with the SEC.
The SEC staff does not review the disclosures in this prospectus on 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. (See
"Making the Most of Your Contract -- Transfer policies" for restrictions on
transfers involving the fixed account.)
BUYING YOUR CONTRACT
You can fill out an application and send it along with your initial purchase
payment to our office. As the owner, you have all rights and may receive all
benefits under the contract. You can own a nonqualified annuity in joint tenancy
with rights of survivorship only in spousal situations. You cannot own a
qualified annuity in joint tenancy. You can buy a contract or become an
annuitant if you are 90 or younger.
When you apply, you may select:
- - the fixed account and/or subaccounts in which you want to invest;
- - how you want to make purchase payments; and
- - 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 the fixed account and subaccounts you selected within two business
days after we receive it at our office. If we accept your application, 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 you make to your accounts on the valuation date we receive
them. We will value the additional payments at the next accumulation unit value
calculated after we receive your payments at our office.
- --------------------------------------------------------------------------------
26 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
THE SETTLEMENT DATE
Annuity payouts are scheduled to begin on the settlement date. When we process
your application, we will establish the settlement date to the maximum age or
date described below. You can also select a date within the maximum limits. You
can align this date 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 also can change the date, provided you send us written
instructions at least 30 days before annuity payouts begin.
FOR NONQUALIFIED ANNUITIES AND ROTH IRAS*, the settlement date must be:
- - no earlier than the 60th day after the contract's effective date; and
- - no later than the annuitant's 85th birthday or the tenth contract
anniversary, if purchased after age 75. (In Pennsylvania, the maximum
settlement date ranges from age 85 to 96 based on the annuitant's age when we
issue the contract. See contract for details.)
FOR QUALIFIED ANNUITIES EXCEPT ROTH IRAS, to avoid IRS penalty taxes, the
settlement date generally must be:
- - on or after the date the annuitant reaches age 59 1/2; and
- - 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
- - for all other qualified annuities, by April 1 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 settlement date that is
later than April 1 of the year following the calendar year when they reach
age 70 1/2).
If you take 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
contract, annuity payouts can start as late as the annuitant's 85th birthday or
the tenth contract anniversary, if later. (In Pennsylvania, the annuity payout
ranges from age 85 to 96 based on the annuitant's age when the contract is
issued. See contract for details.)
*These qualified annuities are not scheduled to be available until June 2000.
Please see your sales representative for more information.
BENEFICIARY
If death benefits become payable before the settlement date while the contract
is in force and before annuity payouts begin, we will pay your named beneficiary
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.)
PURCHASE PAYMENTS
MINIMUM ALLOWABLE PURCHASE PAYMENTS*
<TABLE>
<S> <C>
For employees/advisors:
If paying by installments under a scheduled
payment plan: If paying by any other method:
$23.08 biweekly, or $1,000 initial payment for qualified annuities
$50 per month $2,000 initial payment for nonqualified annuities
$50 for any additional payments
For other individuals:
$1 million
</TABLE>
* Installments must total at least $600 in the first year. If you do not make
any 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.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 27
<PAGE>
MAXIMUM ALLOWABLE PURCHASE PAYMENTS** based on the age of you or the annuitant,
whoever is older, on the effective date of the contract:
<TABLE>
<S> <C>
For employees/advisors:
First year: Each subsequent year:
$2,000,000 up to age 85 $100,000 up to age 85
$100,000 for ages 86 to 90 $50,000 for ages 86 to 90
For other individuals:
First year: Each subsequent year:
$2,000,000 up to age 85 $100,000
$1,000,000 for ages 86 to 90
</TABLE>
**These limits apply in total to all IDS Life annuities you own. We reserve the
right to increase maximum limits. For qualified annuities the tax-deferred
retirement plan's limits on annual contributions also apply.
We reserve the right to not accept purchase payments allocated to the fixed
account for twelve months following either:
1. a partial surrender from the fixed account; or
2. a lump sum transfer from the fixed account to a subaccount.
HOW TO MAKE PURCHASE PAYMENTS
- --------------------------------------------------------------------------------
1 By letter
- --------------------------------------------------------------------------------
Send your check along with your name and contract number to:
Regular mail:
IDS Life Insurance Company
70200 AXP Financial Center
Minneapolis, MN 55474
- --------------------------------------------------------------------------------
2 By scheduled payment plan
- --------------------------------------------------------------------------------
FOR EMPLOYEES/ADVISORS ONLY
We can help you set up:
- - an automatic payroll deduction, salary reduction or other group billing
arrangement; or
- - a bank authorization.
- --------------------------------------------------------------------------------
28 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
CHARGES
CONTRACT ADMINISTRATIVE CHARGE
We charge this fee for establishing and maintaining your records. We deduct $30
from the contract value on your contract anniversary at the end of each contract
year. We prorate this charge among the subaccounts and the fixed account in the
same proportion your interest in each account bears to your total contract
value.
We will waive this charge when your contract value, or total purchase payments
less any payments surrendered, is $50,000 or more on the current contract
anniversary.
If you surrender your contract, we will deduct the charge at the time of
surrender regardless of the contract value or purchase payments made. We cannot
increase the annual contract administrative charge and it does not apply after
annuity payouts begin or when we pay death benefits.
MORTALITY AND EXPENSE RISK FEE
We charge this fee daily to the subaccounts. The unit values of your subaccounts
reflect this fee and it totals 0.55% of their average daily net assets on an
annual basis. This fee covers the mortality and expense risk that we assume.
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.
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 our entire
group of annuitants live. If, as a group, annuitants outlive the life expectancy
we assumed in our actuarial tables, then we must take money from our general
assets to meet our obligations. If, as a group, annuitants do not live as long
as expected, we could profit from the mortality risk fee.
Expense risk arises because we cannot increase the contract administrative
charge and this charge may not cover our expenses. We would have to make up any
deficit from our general assets. We could profit from the expense risk fee if
future expenses are less than expected.
The subaccounts pay us the mortality and expense risk fee they accrued as
follows:
- - first, to the extent possible, the subaccounts pay this fee from any
dividends distributed from the funds in which they invest;
- - then, if necessary, the funds redeem shares to cover any remaining fees
payable.
We may use any profits we realize from the subaccounts' payment to us of the
mortality and expense risk fee for any proper corporate purpose, including,
among others, payment of distribution (selling) expenses.
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 our annuities. Fees for these services start at $30 per calendar year
per participant. AEFC will charge a termination fee for owners under age 59 1/2
(fee waived in case of death or disability).
POSSIBLE GROUP REDUCTIONS: In some cases we may incur lower sales and
administrative expenses 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 on us (up to 3.5%).
These taxes depend upon your state of residence or the state in which the
contract was sold. Currently, we deduct premium taxes when annuity payouts begin
but we reserve the right to deduct this tax at other times such as when you make
purchase payments or when you surrender your contract.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 29
<PAGE>
VALUING YOUR INVESTMENT
We value your accounts as follows:
FIXED ACCOUNT
We value the amounts you allocated to the fixed account directly in dollars. The
fixed account value equals:
- - the sum of your purchase payments and transfer amounts allocated to the
fixed account;
- - plus interest credited;
- - minus the sum of amounts surrendered and amounts transferred out; and
- - minus any prorated contract administrative charge.
SUBACCOUNTS
We convert amounts you allocated to the subaccounts into accumulation units.
Each time you make a purchase payment or transfer amounts into one of the
subaccounts, we credit a certain number of accumulation units to your contract
for that subaccount. Conversely, each time you take a partial surrender,
transfer amounts out of a subaccount, or we assess a contract administrative
charge, we subtract a certain number of accumulation units from your contract.
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 fund in which the subaccount invests. The dollar
value of each accumulation unit can rise or fall daily depending on the variable
account expenses, performance of the fund and on certain fund expenses. Here is
how we calculate accumulation unit values:
NUMBER OF UNITS: to calculate the number of accumulation units for a particular
subaccount we divide your investment by the current accumulation unit value.
ACCUMULATION UNIT VALUE: the current accumulation unit value for each subaccount
equals the last value times the subaccount's current net investment factor.
WE DETERMINE THE NET INVESTMENT FACTOR BY:
- - adding the fund's current net asset value per share, plus the per share
amount of any accrued income or capital gain dividends to obtain a current
adjusted net asset value per share; then
- - dividing that sum by the previous adjusted net asset value per share; and
- - subtracting the percentage factor representing the mortality and expense
risk fee from the result.
Because the net asset value of the fund may fluctuate, the accumulation unit
value may increase or decrease. You bear all the investment risk in a
subaccount.
- --------------------------------------------------------------------------------
|30|AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
FACTORS THAT AFFECT SUBACCOUNT ACCUMULATION UNITS: accumulation units may change
in two ways -- in number and in value.
The number of accumulation units you own may fluctuate due to:
- - additional purchase payments you allocate to the subaccounts;
- - transfers into or out of the subaccounts;
- - partial surrenders; and/or
- - prorated portions of the contract administrative charge.
Accumulation unit values will fluctuate due to:
- - changes in funds' net asset value;
- - dividends distributed to the subaccounts;
- - capital gains or losses of funds;
- - fund operating expenses; and/or
- - mortality and expense risk fees.
MAKING THE MOST OF YOUR CONTRACT
AUTOMATED DOLLAR-COST AVERAGING
Currently, you can use automated transfers to take advantage of dollar-cost
averaging (investing a fixed amount at regular intervals). For example, you
might transfer a set amount monthly from a relatively conservative subaccount to
a more aggressive one, or to several others, or from the fixed account to one or
more subaccounts. 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 values of the funds. Since you
invest the same amount each period, you automatically acquire more units when
the market value falls and fewer units when it rises. The potential effect is to
lower your average cost per unit.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
HOW DOLLAR-COST AVERAGING WORKS
- -------------------------------------------------------------------------------------------------------------------
MONTH AMOUNT ACCUMULATION NUMBER OF UNITS
INVESTED UNIT VALUE PURCHASED
<S> <C> <C> <C> <C>
By investing an
equal number of Jan $100 $20 5.00
dollars each month... Feb 100 18 5.56
Mar 100 17 5.88
you automatically Apr 100 15 6.67
buy more units May 100 16 6.25
when the per unit Jun 100 18 5.56
market price is low... Jul 100 17 5.88
Aug 100 19 5.26
and fewer units Sep 100 21 4.76
when the per unit Oct 100 20 5.00
market price is high.
</TABLE>
You paid an average price of only $17.91 per unit over the 10 months, while the
average market price actually was $18.10.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 |31|
<PAGE>
Dollar-cost averaging does not guarantee that any subaccount will gain in value
nor will it protect against a decline in value if market prices fall. Because
dollar-cost averaging involves continuous investing, your success 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. For specific features contact your sales representative.
TRANSFERRING MONEY BETWEEN ACCOUNTS
You may transfer money from any one subaccount, or the fixed account, to another
subaccount before annuity payouts begin. (Certain restrictions apply to
transfers involving the fixed account.) We will process your transfer on the
valuation date we receive your request. We will value your transfer at the next
accumulation unit value calculated after we receive your request. There is no
charge for transfers. Before making a transfer, you should consider the risks
involved in switching investments.
We may suspend or modify transfer privileges at any time. Excessive trading
activity can disrupt fund management strategy and increase expenses, which are
borne by all contract owners who allocated purchase payments to the fund
regardless of their transfer activity. We may apply modifications or
restrictions in any reasonable manner to prevent transfers we believe will
disadvantage other contract owners. These modifications could include, but not
be limited to:
- - requiring a minimum time period between each transfer;
- - not accepting transfer requests of an agent acting under power of attorney
on behalf of more than one contract owner; or
- - limiting the dollar amount that a contract owner may transfer at any one
time.
For information on transfers after annuity payouts begin, see "Transfer
policies" below.
TRANSFER POLICIES
- - Before annuity payouts begin, you may transfer contract values between the
subaccounts, or from the subaccounts to the fixed account at any time.
However, if you made a transfer from the fixed account to the subaccounts,
you may not make a transfer from any subaccount back to the fixed account
until the next contract anniversary.
- - You may transfer contract values from the fixed account to the subaccounts
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).
- - If we receive your request within 30 days before the contract anniversary
date, the transfer from the fixed account to the subaccounts will be
effective on the anniversary.
- - If we receive your request on or within 30 days after the contract
anniversary date, the transfer from the fixed account to the subaccounts
will be effective on the valuation date we receive it.
- - We will not accept requests for transfers from the fixed account at any
other time.
- - Once annuity payouts begin, you may not make transfers to or from the fixed
account, but you may make transfers once per contract year among the
subaccounts. During the annuity payout period, you cannot invest in more
than five subaccounts at any one time unless we agree otherwise.
- --------------------------------------------------------------------------------
|32|AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
HOW TO REQUEST A TRANSFER OR SURRENDER
- --------------------------------------------------------------------------------
1 BY LETTER:
- --------------------------------------------------------------------------------
Send your name, contract number, Social Security Number or Taxpayer
Identification Number and signed request for a transfer or surrender to:
IDS Life Insurance Company
70200 AXP Financial Center
Minneapolis, MN 55474
MINIMUM AMOUNT
Transfers or surrenders: $250 or entire account balance
MAXIMUM AMOUNT
Transfers or surrenders: Contract value or entire account balance
- --------------------------------------------------------------------------------
2 BY AUTOMATED TRANSFERS AND AUTOMATED PARTIAL SURRENDERS:
- --------------------------------------------------------------------------------
Your sales representative can help you set up automated transfers among your
subaccounts or fixed account or partial surrenders from the accounts.
You can start or stop this service by written request or other method acceptable
to us. You must allow 30 days for us to change any instructions that are
currently in place.
- - Automated transfers from the fixed account to any one of the subaccounts
may not exceed an amount that, if continued, would deplete the fixed
account within 12 months.
- - Automated surrenders may be restricted by applicable law under some
contracts.
- - You may not make additional purchase payments if automated partial
surrenders are in effect.
- - Automated partial surrenders may result in IRS taxes and penalties on all
or part of the amount surrendered.
MINIMUM AMOUNT
Transfers or surrenders: $50
MAXIMUM AMOUNT
Transfers or surrenders: None (except for automated transfers from the fixed
account)
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 |33|
<PAGE>
- --------------------------------------------------------------------------------
3 BY PHONE:
- --------------------------------------------------------------------------------
Call between 7 a.m. and 6 p.m. Central time:
1-800-862-7919
TTY service for the hearing impaired:
1-800-285-8846 (TOLL FREE)
MINIMUM AMOUNT
Transfers or surrenders: $250 or entire account balance
MAXIMUM AMOUNT
Transfers: Contract value or entire account balance
Surrenders: $50,000
We answer telephone 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 requests that we believe are
authentic and we will use reasonable procedures to confirm that they are. This
includes asking identifying questions and tape recording calls. We will not
allow a telephone surrender within 30 days of a phoned-in address change. As
long as we follow the procedures, we (and our affiliates) will not be liable for
any loss resulting from fraudulent requests.
Telephone transfers or surrenders are automatically available. You may request
that telephone transfers or surrenders NOT be authorized from your account by
writing to us.
SURRENDERS
You may surrender all or part of your contract at any time before annuity
payouts begin by sending us a written request or calling us. We will process
your surrender request on the valuation date we receive it. For total
surrenders, we will compute the value of your contract at the next accumulation
unit value calculated after we receive your request. We may ask you to return
the contract. You may have to pay IRS taxes and penalties (see "Taxes"). You
cannot make surrenders after annuity payouts begin except under Plan E (see "The
Annuity Payout Period -- Annuity payout plans").
SURRENDER POLICIES
If you have a balance in more than one account and you request a partial
surrender, we will withdraw money from all your subaccounts and/or the fixed
account 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.
RECEIVING PAYMENT
By regular or express mail:
- - payable to you;
- - mailed to address of record.
NOTE: We will charge you a fee if you request express mail delivery.
- --------------------------------------------------------------------------------
|34|AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
By wire:
- - request that payment be wired to your bank;
- - bank account must be in the same ownership as your contract; and
- - pre-authorization required.
For instructions, contact your sales representative.
Normally, we will send the payment 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 to receive early
distributions from a TSA:
- - Distributions attributable to salary reduction contributions (plus
earnings) made after Dec. 31, 1988, or to transfers or rollovers from other
contracts, may be made from the TSA only if:
-- you are at least age 59 1/2;
-- you are disabled as defined in the Code;
-- you separated from the service of the employer who purchased the
contract; or
-- the distribution is because of your death.
- - If you encounter a financial hardship (as defined by 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.
- - Even though a distribution may be permitted under the above rules, it may
be subject to IRS taxes and penalties (see "Taxes").
- - The employer must comply with certain nondiscrimination requirements for
certain types of contributions under a TSA contract to be excluded from
taxable income. You should consult your employer to determine whether the
nondiscrimination rules apply to you.
- - The above restrictions on distributions do not affect the availability of
the amount credited to the contract as of Dec. 31, 1988. The restrictions
also do not apply to transfers or exchanges of contract value within the
contract, or to another registered variable annuity contract or investment
vehicle available through the employer.
- - If the contract has a loan provision, the right to receive a loan as
described in detail in your contract.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 |35|
<PAGE>
CHANGING OWNERSHIP
You may change ownership of your nonqualified annuity at any time by completing
a change of ownership form we approve and sending it to our office. The change
will become binding upon us when we receive and record it. We will honor any
change of ownership request that we believe is authentic and we will use
reasonable procedures to confirm authenticity. If we follow these procedures, we
will not take any responsibility for the validity of the change.
If you have a nonqualified annuity, you may incur income tax liability by
transferring, assigning or pledging any part of it. (See "Taxes.")
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 except as required or
permitted by the Code. However, if the owner is a trust or custodian, or an
employer acting in similar capacity, ownership of the contract may be
transferred to the annuitant.
BENEFITS IN CASE OF DEATH
We will pay the death benefit to your beneficiary upon the earlier of your death
or the annuitant's death. If a contract has more than one person as the owner,
we will pay benefits upon the first to die of any owner or the annuitant.
If you or the annuitant die before annuity payouts begin while this contract is
in force, we will pay the beneficiary as follows:
If both you and the annuitant are age 80 or younger on the date of death, the
beneficiary receives the greatest of:
- - the contract value;
- - purchase payments, minus any "adjusted partial surrenders"; or
- - the contract value as of the most recent sixth contract anniversary, plus
any purchase payments paid and minus any "adjusted partial surrenders"
since that anniversary.
If either you or the annuitant are age 81 or older on the date of death, the
beneficiary receives the greater of:
- - the contract value; or
- - purchase payments minus any "adjusted partial surrenders."
ADJUSTED PARTIAL SURRENDERS: We calculate an "adjusted partial surrender" for
each partial surrender as the product of (a) times (b) where
(a) is the ratio of the amount of the partial surrender to the contract
value on the date of (but prior to) the partial surrender; and
(b) is the death benefit on the date of (but prior to) the partial
surrender.
- --------------------------------------------------------------------------------
|36|AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
EXAMPLE OF DEATH BENEFIT CALCULATION WHEN THE OWNER AND ANNUITANT ARE AGE 80 OR
YOUNGER:
- - You purchase the contract with a payment of $20,000 on Jan. 1, 2000.
- - On Jan 1, 2006 (the 6th contract anniversary) the contract value grows to
$30,000.
- - March 1, 2006 the contract value falls to $28,000 at which point you take a
$1,500 partial surrender, leaving a contract value of $26,500.
We calculate the death benefit on March 1, 2006 as follows:
<TABLE>
<S> <C>
The contract value on the most recent 6th contract anniversary: $30,000.00
plus any purchase payments paid since that anniversary: + 0.00
minus any "adjusted partial surrenders" taken since that anniversary
calculated as: $1,500 x $30,000 = -1,607.14
-------------------- --------
$28,000
for a death benefit of: $28,392.86
</TABLE>
IF YOUR SPOUSE IS SOLE BENEFICIARY under a nonqualified annuity and you die
before the settlement date, your spouse may keep the contract 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 Code requires
distributions to begin, and the spouse is the only beneficiary, the spouse
may keep the contract as owner 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: Under a nonqualified annuity we will pay the beneficiary in a single
sum unless you give us other written instructions. We must fully distribute the
death benefit within five years of your death. However, the beneficiary may
receive payouts under any annuity payout plan available under this contract if:
- - the beneficiary asks us in writing within 60 days after we receive proof of
death; and
- - payouts begin no later than one year after your death, or other date as
permitted by the Code; and
- - the payout period does not extend beyond the beneficiary's life or life
expectancy.
When paying the beneficiary, we will process the death claim on the valuation
date our death claim requirements are fulfilled. We will determine the
contract's value at the next accumulation unit value calculated after our death
claim requirements are fulfilled. We pay interest, if any, 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.
Other rules may apply to qualified annuities. (See "Taxes.")
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 |37|
<PAGE>
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 may mutually agree on other payout
arrangements. We do not deduct any surrender charges under the payout plans
listed below.
You also decide whether we will make annuity payouts on a fixed or variable
basis, or a combination of fixed and variable. The amounts available to purchase
payouts under the plan you select is the contract value on your retirement date
(less any applicable premium tax). You may reallocate this contract value to the
fixed account to provide fixed dollar payouts and/or among the subaccounts to
provide variable annuity payouts. During the annuity payout period, you cannot
invest in more than five subaccounts at any one time unless we agree otherwise.
Amounts of fixed and variable payouts depend on:
- - the annuity payout plan you select;
- - the annuitant's age and, in most cases, sex;
- - the annuity table in the contract; and
- - the amounts you allocated to the accounts at settlement.
In addition, for variable payouts only, amounts depend on the investment
performance of the subaccounts you select. These payouts will vary from month to
month because the performance of the 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 "Making the Most of Your Contract -- Transfer policies."
ANNUITY TABLE
The annuity table in your contract 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 rise and decrease more rapidly
when they decline.
- --------------------------------------------------------------------------------
|38|AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
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 used to purchase the
payout plan:
- - PLAN A -- LIFE ANNUITY -- NO REFUND: We make monthly payouts until the
annuitant's death. Payouts end with the last payout before the annuitant's
death. We will not make any further payouts. This means that if the
annuitant dies after we made only one monthly payout, we will not make any
more payouts.
- - PLAN B -- LIFE ANNUITY WITH FIVE, TEN OR 15 YEARS CERTAIN: We make monthly
payouts for a guaranteed payout period of five, ten or 15 years that you
elect. This election will determine the length of the payout period to the
beneficiary if the annuitant should die before the elected period expires.
We calculate the guaranteed payout period from the settlement date. If the
annuitant outlives the elected guaranteed payout period, we will continue
to make payouts until the annuitant's death.
- - PLAN C -- LIFE ANNUITY -- INSTALLMENT REFUND: We make monthly payouts until
the annuitant's death, with our guarantee that payouts will continue for
some period of time. We will make payouts 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.
- - PLAN D -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND: We make
monthly payouts while both the annuitant and a joint annuitant are living.
If either annuitant dies, we will continue to make monthly payouts at the
full amount until the death of the surviving annuitant. Payouts end with
the death of the second annuitant.
- - PLAN E-- PAYOUTS FOR A SPECIFIED PERIOD: We make monthly payouts for a
specific payout period of ten to 30 years that you elect. We will make
payouts only for the number of years specified whether the annuitant is
living or not. Depending on the selected time period, it is foreseeable
that an annuitant can outlive the payout period selected. During the payout
period, you can elect to have us determine the present value of any
remaining variable payouts and pay it to you in a lump sum. We determine
the present value of the remaining annuity payouts which are assumed to
remain level at the initial payment. You can also take a portion of the
discounted value once a year. If you do so, your monthly payouts will be
reduced by the proportion of your surrender to the full discounted value. A
10% IRS penalty tax could apply if you take a surrender. (See "Taxes.")
RESTRICTIONS FOR SOME TAX-DEFERRED RETIREMENT PLANS: If you purchased a
qualified annuity, you may be required to select a payout plan that provides for
payouts:
- - over the life of the annuitant;
- - over the joint lives of the annuitant and a designated beneficiary;
- - for a period not exceeding the life expectancy of the annuitant; or
- - for a period not exceeding the joint life expectancies of the annuitant and
a designated beneficiary.
You have the responsibility for electing a payout plan that complies with your
contract and with applicable law.
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.
Contract values that you allocated to the fixed account will provide fixed
dollar payouts and contract values that you allocated among the subaccounts will
provide variable annuity payouts.
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 or to change
the frequency of the payouts.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 |39|
<PAGE>
DEATH AFTER ANNUITY PAYOUTS BEGIN
If you or the annuitant die after annuity payouts begin, we will pay any amount
payable to the beneficiary as provided in the annuity payout plan in effect.
TAXES
Generally, under current law, your contract has a tax deferral feature. This
means, any increase in the value of the fixed account and/or subaccounts in
which you invest 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. We
will send you a tax information reporting form for any year in which we made a
taxable distribution according to our records. Roth IRAs* may grow and be
distributed tax-free if you meet certain distribution requirements.
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 you receive after your investment in the contract is fully recovered
will be subject to tax.
Tax law requires that all nonqualified deferred annuities issued by the same
company (and possibly its affiliates) to the same owner during a calendar year
be taxed as a single, unified contract when you take distributions from any one
of those contracts.
QUALIFIED ANNUITIES: Your contract may be used to fund a tax-deferred retirement
plan that is already tax-deferred under the Code. The contract will not provide
any necessary or additional tax deferral if it is used to fund a retirement plan
that is tax deferred. Special rules apply to these retirement plans. Your rights
to benefits may be subject to the terms and conditions of these retirement plans
regardless of the terms of the contract.
Adverse tax consequences may result if you do not ensure that contributions,
distributions and other transactions under the contract comply with the law.
Qualified annuities have minimum distribution rules that govern the timing and
amount of distributions during your life (except for Roth IRAs) and after your
death. You should refer to your retirement plan or adoption agreement or consult
a tax advisor for more information about your distribution rules.
ANNUITY PAYOUTS UNDER QUALIFIED ANNUITIES (EXCEPT ROTH IRAS): Under a qualified
annuity, the entire payout generally is includable as ordinary income and is
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 deductible or
pre-tax dollars as part of a tax-deferred 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 you make before reaching
age 59 1/2 unless certain exceptions apply. For qualified annuities, other
penalties may apply if you surrender your contract before your plan specifies
that you can receive payouts.
DEATH BENEFITS TO BENEFICIARIES: The death benefit under a contract (except a
Roth IRA) is not tax-exempt. Any amount your beneficiary receives that
represents previously deferred earnings within the contract is taxable as
ordinary income to the beneficiary in the years he or she receives the payments.
The death benefits under a Roth IRA generally is not taxable as ordinary income
to the beneficiary if certain distribution requirements are met.
* These qualified annuities are not scheduled to be available until June 2000.
Please see your sales representative for more information.
- --------------------------------------------------------------------------------
40 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
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 remain 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 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 a rate of 25%
instead of 10%. However, this penalty will not apply to any amount received by
you or your beneficiary:
- - because of your death;
- - because you become disabled (as defined in the Code);
- - 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
- - if it is allocable to an investment before Aug. 14, 1982 (except for qualified
annuities).
For a qualified annuity, other penalties or exceptions may apply if you
surrender your contract before your plan specifies that payouts can be made.
* These qualified annuities are not scheduled to be available until June 2000.
Please see your sales representative for more information.
WITHHOLDING, GENERALLY: If you receive all or part of the contract value, we may
deduct withholding against the taxable income portion of the payment. Any
withholding represents a prepayment of your tax due for the year. You take
credit for these amounts on your annual tax return.
If the payment is part of an annuity payout plan, we generally compute the
amount of withholding using payroll tables. You may 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), we compute withholding using 10% of the taxable portion. Similar to
above, as long as you have provided us with a valid Social Security Number or
Taxpayer Identification Number, you can elect not to have this withholding
occur.
Some states also impose withholding requirements similar to the federal
withholding described above. If this should be the case, we may deduct state
withholding from any payment from which we deduct federal withholding. The
withholding requirements may differ if we are making payment to a non-U.S.
citizen or if we deliver the payment 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, SIMPLE IRA or
SEP), mandatory 20% federal income tax withholding (and possibly state income
tax withholding) generally will be imposed at the time we make payout. This
mandatory withholding is in place of the elective withholding discussed above.
This mandatory withholding will not be imposed if:
- - instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan;
- - 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
- - the payout is a minimum distribution required under the Code.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 41
<PAGE>
Payments we make to a surviving spouse instead of being directly rolled over to
an IRA also may 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 transfer a nonqualified
annuity without receiving adequate consideration, the transfer is a gift and
also may be a surrender for federal income tax purposes. If the gift is a
currently taxable event for income tax purposes, the original owner will be
taxed on the amount of deferred earnings at the time of the transfer and also
may be subject to the 10% IRS penalty discussed earlier. In this case, the new
owner's investment in the contract will be the value of the contract 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
current interpretations of these laws. 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: We intend that the contract 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, in spite of 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 amendments.
VOTING RIGHTS
As a contract owner with investments in the subaccounts, you may vote on
important 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 you have is determined by
applying your percentage interest in each subaccount to the total number of
votes allowed to the subaccount.
After annuity payouts begin, the number of votes you have is equal to:
- - the reserve held in each subaccount for your contract; divided by
- - the net asset value of one share of the applicable fund.
As we make annuity payouts, the reserve for the contract decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each subaccount. We will send notice of
shareholders' meetings, proxy materials and a statement of the number of votes
to which the voter is entitled. We will vote shares for which we have not
received instructions in the same proportion as the votes for which we received
instructions. We also will vote the shares for which we have voting rights in
the same proportion as the votes for which we received instructions.
- --------------------------------------------------------------------------------
42 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
SUBSTITUTION OF INVESTMENTS
We may substitute the funds in which the subaccounts invest if:
- - laws or regulations change;
- - the existing funds become unavailable; or
- - in our judgment, the funds no longer are suitable for the subaccounts.
If any of these situations occur, and if we believe it is in the best interest
of persons having voting rights under the contract, we have the right to
substitute the funds currently listed in this prospectus for other funds.
We may also:
- - add new subaccounts;
- - combine any two or more subaccounts;
- - make additional subaccounts investing in additional funds;
- - transfer assets to and from the subaccounts or the variable account; and
- - eliminate or close any subaccounts.
In the event of substitution or any of these changes, we may amend the contract
and take whatever action is necessary and appropriate without your consent or
approval. However, we will not make any substitution or change without the
necessary approval of the SEC and state insurance departments. We will notify
you of any substitution or change.
ABOUT THE SERVICE PROVIDERS
ISSUER AND PRINCIPAL UNDERWRITER
IDS Life issues and is the principal underwriter for the contracts. IDS Life is
a stock life insurance company organized in 1957 under the laws of the State of
Minnesota and is located at 200 AXP Financial Center, Minneapolis, MN 55474. IDS
Life conducts a conventional life insurance business.
IDS Life is a wholly-owned subsidiary of AEFC, which itself is a wholly-owned
subsidiary of American Express Company, a financial services company
headquartered in New York City. The AEFC family of companies offers not only
insurance and annuities, but also mutual funds, investment certificates, and a
broad range of financial management services. American Express Financial
Advisors Inc. (AEFA) serves individuals and businesses through its nationwide
network of more than 600 supervisory offices, more than 3,800 branch offices and
9,480 financial advisors.
IDS Life pays commissions for sales of the contracts of up to 7% of the total
purchase payments to AEFA. This revenue is used to cover distribution costs that
include compensation to advisors and field leadership for the selling advisors.
These commissions consist of a combination of time of sale and on-going
service/trail commissions (which, when totaled, could exceed 7% of purchase
payments). From time to time, IDS Life will pay or permit other promotional
incentives, in cash or credit or other compensation.
Other contracts issued by IDS Life or its affiliates that are not described in
this prospectus may be available through your advisor. The features, investment
options, sales charges and expenses of the other contracts are different than
those of this contract. Therefore, the contract values under the other contracts
may be different than your contract value under this contract. In addition,
sales commissions for the other contracts may be higher or lower than sales
commissions for this contract.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000
<PAGE>
LEGAL PROCEEDINGS
A number of lawsuits have been filed against life and health insurers in
jurisdictions in which IDS Life and AEFC do business involving insurers' sales
practices, alleged agent misconduct, failure to properly supervise agents and
other matters. IDS Life and AEFC, like other life and health insurers, from time
to time are involved in such litigation. On December 13, 1996, an action
entitled LESA BENACQUISTO AND DANIEL BENACQUISTO VS. IDS LIFE INSURANCE COMPANY
AND AMERICAN EXPRESS FINANCIAL CORPORATION was commenced in Minnesota state
court. The action was brought by individuals who replaced an existing IDS Life
insurance policy with a new IDS Life policy. The plaintiffs purport to represent
a class consisting of all persons who replaced existing IDS Life policies with
new policies from and after January 1, 1985. The complaint put at issue various
alleged sales practices and misrepresentations, alleged breaches of fiduciary
duties and alleged violations of consumer fraud statutes. IDS Life and AEFC
filed an answer to the complaint on February 18, 1997, denying the allegations.
A second action, entitled ARNOLD MORK, ISABELLA MORK, RONALD MELCHART AND SUSAN
MELCHART VS. IDS LIFE INSURANCE COMPANY AND AMERICAN EXPRESS FINANCIAL
CORPORATION was commenced in the same court on March 21,1997. In addition to
claims that were included in the Benacquisto lawsuit, the second action include
an allegation of improper replacement of an existing IDS Life annuity contract.
A subsequent class action, RICHARD THORESEN AND ELIZABETH THORESEN VS. AEFC,
AMERICAN PARTNERS LIFE INSURANCE COMPANY, AMERICAN ENTERPRISE LIFE INSURANCE
COMPANY, AMERICAN CENTURION LIFE ASSURANCE COMPANY, IDS LIFE INSURANCE COMPANY
AND IDS LIFE INSURANCE COMPANY OF NEW YORK, was filed in the same court on
October 13, 1998 alleging that the sale of annuities in tax-deferred
contributory retirement investment plans (e.g. IRAs) was done through deceptive
marketing practices, which IDS Life denies. Plaintiffs in each of the above
actions seek damages in an unspecified amount and also seek to establish a
claims resolution facility for the determination of individual issues.
IDS Life is included as a party to a preliminary settlement of all three class
action lawsuits. We believe this approach will put these cases behind us and
provide a fair outcome for our clients. Our decision to settle does not include
any admission of wrongdoing. We do not anticipate that this proposed settlement,
or any other lawsuits in which IDS Life is a defendant, will have a material
adverse effect on our financial condition.
- --------------------------------------------------------------------------------
44 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY - BAND 3
<PAGE>
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 IDS Life and the
variable account. All of the major systems used by IDS Life and the variable
account are maintained by AEFC and are utilized by multiple subsidiaries and
affiliates of AEFC. IDS Life's and the variable account's businesses are heavily
dependent upon AEFC's computer systems and have significant interaction with
systems of third parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to IDS Life and the variable account, was conducted to
identify the major systems that could be affected by the Year 2000 issue. Steps
were taken to resolve potential problems including modification to existing
software and the purchase of new software. As of Dec. 31, 1999, AEFC had
completed its program of corrective measures on its internal systems and
applications, including Year 2000 compliance testing. As of Dec. 31, 1999, AEFC
had also completed an evaluation of the Year 2000 readiness of other third
parties whose system failures could have an impact on IDS Life's and the
variable account's operations.
AEFC's Year 2000 project also included establishing Year 2000 contingency plans
for all key business units. Business continuation plans, which address business
continuation in the event of a system disruption, are in place for all key
business units. As of Dec. 31, 1999, these plans had been amended to include
specific Year 2000 considerations.
In assessing its Year 2000 initiatives and the results of actual production
since Jan. 1, 2000, management believes no material adverse consequences were
experienced, and there was no material effect on IDS Life's and the variable
account's business, results of operations, or financial condition as a result of
the Year 2000 issue.
- --------------------------------------------------------------------------------
PROSPECTUS -- MAY 1, 2000 45
<PAGE>
TABLE OF CONTENTS OF THE STATEMENT OF
ADDITIONAL INFORMATION
Performance Information ....................................... p.3
Calculating Annuity Payouts ................................... p.7
Rating Agencies ............................................... p.8
Principal Underwriter ......................................... p.8
Independent Auditors .......................................... p.8
Financial Statements
- --------------------------------------------------------------------------------
46 AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITY -- BAND 3
<PAGE>
Please check the appropriate box to receive a copy of the Statement of
Additional Information for:
/ / American Express Retirement Advisor Variable Annuity(SM) - Band 3
/ / American Express Variable Portfolio Funds
/ / AIM Variable Insurance Funds
/ / American Century Variable Portfolios, Inc.
/ / Calvert Variable Series, Inc.
/ / Fidelity Variable Insurance Products Funds - Service Class
/ / Franklin Templeton Variable Insurance Products Trust - Class 2
/ / Goldman Sachs Variable Insurance Trust (VIT)
/ / Janus Aspen Series: Service Shares
/ / Lazard Retirement Series, Inc.
/ / MFS-Registered Trademark- Variable Insurance Trust(SM)
/ / Putnam Variable Trust
/ / Royce Capital Fund
/ / Third Avenue Variable Series Trust
/ / Wanger Advisors Trust
/ / Warburg Pincus Trust - Emerging Growth Portfolio
MAIL YOUR REQUEST TO:
IDS Life Insurance Company
200 AXP Financial Center
Minneapolis, MN 55474
WE WILL MAIL YOUR REQUEST TO:
Your name_______________________________________________________________________
Address_________________________________________________________________________
City___________________________________________ State __________ Zip____________
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for
AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITYSM
IDS Life Variable Account 10
May 1, 2000
IDS Life Variable Account 10 is a separate account established and maintained by
IDS Life Insurance Company (IDS Life).
This Statement of Additional Information (SAI) is not a prospectus. It should be
read together with the prospectus dated the same date as this SAI, which may be
obtained by writing or calling us at the address and telephone number below. The
prospectus is incorporated in this SAI by reference.
IDS Life Insurance Company
200 AXP Financial Center
Minneapolis, MN 55474
800-437-0602
<PAGE>
American Express Retirement Advisor Variable Annuity
IDS Life Variable Account 10
TABLE OF CONTENTS
Performance Information..............................................p.3
Calculating Annuity Payouts..........................................p.17
Rating Agencies......................................................p.18
Principal Underwriter................................................p.18
Independent Auditors.................................................p.18
Financial Statements
<PAGE>
PERFORMANCE INFORMATION
The subaccounts may quote various performance figures to illustrate past
performance. We base total return and current yield quotations (if applicable)
on standardized methods of computing performance as required by the Securities
and Exchange Commission (SEC). An explanation of the methods used to compute
performance follows below.
Average Annual Total Return
We will express quotations of average annual total return for the subaccounts in
terms of the average annual compounded rate of return of a hypothetical
investment in the contract over a period of one, five and ten years (or, if
less, up to the life of the subaccounts), 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 period, at the end of the
period (or fractional portion thereof)
We calculated the following performance figures on the basis of historical
performance of each fund. We show actual performance from the date the
subaccounts begin investing in the funds. For some subaccounts, we do not
provide any performance information because they are new and have not had any
activity to date. We also show performance from the commencement date of the
funds as if the contract existed at the time, which it did not. Although we base
performance figures on historical earnings, past performance does not guarantee
future results.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Nonqualified Annuities (Without Purchase Payment
Credits) Without Surrender For Periods Ending Dec. 31, 1999
Performance Since Commencement of the Fund*
<S> <C> <C> <C> <C> <C>
Since
Subaccount Investing In: 1 Year 5 Years 10 Years Commencement
- ---------- ------------- ------ ------- -------- ------------
AXPSM VARIABLE PORTFOLIO -
BC1 Blue Chip Advantage Fund (9/99)** --% --% --% 10.98%
BD1 Bond Fund (10/81) 0.69 6.93 7.10 9.62
CR1 Capital Resource Fund (10/81) 22.52 20.15 14.36 14.83
CM1 Cash Management Fund (10/81) 3.68 4.07 3.86 5.52
DE1 Diversified Equity Income Fund (9/99) -- -- -- 2.53
EM1 Emerging Markets Fund (5/00)+ -- -- -- --
EI1 Extra Income Fund (5/96) 5.18 -- -- 4.46
FI1 Federal Income Fund (9/99) -- -- -- 0.30
GB1 Global Bond Fund (5/96) -5.37 -- -- 3.03
GR1 Growth Fund (9/99) -- -- -- 17.89
IE1 International Fund (1/92) 44.19 14.99 -- 12.25
MF1 Managed Fund (4/86) 13.70 17.05 12.41 11.76
ND1 New Dimensions Fund(R)(5/96) 30.70 -- -- 25.10
SP1 S&P 500 Index Fund (5/00)+ -- -- -- --
SC1 Small Cap Advantage Fund (9/99) -- -- -- 12.35
SA1 Strategy Aggressive Fund (1/92) 69.36 23.56 -- 15.86
AIM V.I.
1CA Capital Appreciation Fund (5/93) 43.21 24.34 -- 21.11
1CD Capital Development Fund (5/98) 27.82 -- -- 10.09
American Century VARIABLE PORTFOLIOS, INC.
1IF VP International (5/94) 62.44 20.97 -- 17.07
1VA VP Value (5/96) -1.84 -- -- 9.99
CALVERT CVS
1SR Social Balanced Portfolio (9/86) 11.13 15.73 11.22 14.68
FIDELITY VIP
1GI III Growth & Income Portfolio (Service Class) 6.62 -- -- 19.63
(12/96)
1MP III Mid Cap Portfolio (Service Class) (12/98) 47.28 -- -- 51.32
1OS Overseas Portfolio (Service Class) (12/87) 40.99 16.16 10.29 11.29
FRANKLIN TEMPLETON VIP TRUST
1RE Franklin Real Estate Fund - Class 2 (1/89)*** -7.62 6.45 7.59 7.28
1SI Franklin Value Securities Fund - Class 2 0.38 -- -- -14.08
(5/98)***
1IS Templeton International Smaller Companies 22.70 -- -- 4.20
Fund - Class 2 (5/96)***
GOLDMAN SACHS VIT
1SE CORESM Small Cap Equity Fund (2/98)**** 16.37 -- -- 2.37
1UE CORESM U.S. Equity Fund (2/98) 23.07 -- -- 19.53
1MC Mid Cap Value Fund (4/98) -1.95 -- -- -9.80
JANUS ASPEN SERIES
1AG Aggressive Growth Portfolio - Service Shares 121.13 34.52 -- 32.68
(9/93)
1GT Global Technology Portfolio - Service Shares -- -- -- --
(1/00) +
1IG International Growth Portfolio - Service 77.84 31.99 -- 27.28
Shares (4/94)
LAZARD RETIREMENT SERIES
1IP International Equity Portfolio (9/98) 20.21 -- -- 24.97
MFS(R) VARIABLE INSURANCE TRUST (VIT)
1MG Growth Series - Service Class (5/99) -- -- -- 51.04
1MD New Discovery Series - Service Class (5/98) 92.33 -- -- 40.64
PUTNAM VARIABLE TRUST
1IN Putnam VT International New Opportunities 100.85 -- -- 50.24
Fund - Class IB Shares (4/98)*****
1VS Putnam VT Vista Fund - Class IB Shares 51.18 -- -- 29.77
(1/97)*****
<PAGE>
ROYCE CAPITAL FUND
1MI Micro-Cap Portfolio (12/96) 26.85 -- -- 16.16
THIRD AVENUE
1SV Value Portfolio (9/99) -- -- -- 8.06
WANGER
1IT International Small Cap (5/95) 124.28 -- -- 37.40
1SP U.S. Small Cap (5/95) 23.66 -- -- 25.20
WARBURG PINCUS TRUST
1EG Emerging Growth Portfolio (9/99) -- -- -- 34.51
* Current applicable charges deducted from fund performance include a $30
contract administrative charge and a 0.95% mortality and expense risk fee.
+ Fund had not commenced operations as of Dec. 31, 1999.
** (Commencement date of the Funds)
*** Because no Class 2 Shares were issued until Jan. 6, 1999, Class 2
performance represents the historical results of Class 1 Shares.
Performance of Class 2 Shares for periods after its January 6, 1999
inception will reflect Class 2's additional 12b-1 fee expense which also
affects all future performance.
**** CoreSM is a service mark of Goldman, Sachs & Co.
*****Each of the above Funds' Class IB Shares commenced operations on April 30,
1998. For periods prior to inception of Class IB Shares, performance
information for Class IB Shares is based upon performance of Class IA
Shares (not offered) of the fund, adjusted to reflect the fees paid by
Class IB Shares, including the 12b-1 fee of 0.15%.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Nonqualified Annuities (Without Purchase Payment
Credits) With a Seven-Year Surrender Charge Schedule For Periods Ending Dec. 31,
1999
Performance Since Commencement of the Fund*
<S> <C> <C> <C> <C> <C>
Since
Subaccount Investing In: 1 Year 5 Years 10 Years Commencement
- ---------- ------------- ------ ------- -------- ------------
AXPSM VARIABLE PORTFOLIO -
BC1 Blue Chip Advantage Fund (9/99)** --% --% --% 3.98%
BD1 Bond Fund (10/81) -5.66 6.32 7.10 9.62
CR1 Capital Resource Fund (10/81) 15.52 19.77 14.36 14.83
CM1 Cash Management Fund (10/81) -2.88 3.37 3.86 5.52
DE1 Diversified Equity Income Fund (9/99) -- -- -- -3.95
EM1 Emerging Markets Fund (5/00)+ -- -- -- --
EI1 Extra Income Fund (5/96) -1.48 -- -- 3.23
FI1 Federal Income Fund (9/99) -- -- -- -6.03
GB1 Global Bond Fund (5/96) -11.29 -- -- 1.75
GR1 Growth Fund (9/99) -- -- -- 10.89
IE1 International Fund (1/92) 37.19 14.53 -- 12.25
MF1 Managed Fund (4/86) 6.70 16.62 12.41 11.76
ND1 New Dimensions Fund(R)(5/96) 23.70 -- --
SP1 S&P 500 Index Fund (5/00)+ -- -- -- --
SC1 Small Cap Advantage Fund (9/99) -- -- -- 5.35
SA1 Strategy Aggressive Fund (1/92) 62.36 23.22 -- 15.86
AIM V.I.
1CA Capital Appreciation Fund (5/93) 36.21 24.01 -- 21.01
1CD Capital Development Fund (5/98) 20.82 -- -- 6.11
American Century variable portfolios, inc.
1IF VP International (5/94) 55.44 20.59 -- 16.82
1VA VP Value (5/96) -8.02 -- -- 8.92
CALVERT CVS
1SR Social Balanced Portfolio (9/86) 4.13 11.73 11.22 14.68
FIDELITY VIP
1GI III Growth & Income Portfolio (Service Class) -0.14 -- -- 18.21
(12/96)
1MP III Mid Cap Portfolio (Service Class) (12/98) 40.28 -- -- 44.40
1OS Overseas Portfolio (Service Class) (12/87) 33.99 15.71 10.29 11.29
FRANKLIN TEMPLETON VIP TRUST
1RE Franklin Real Estate Fund - Class 2 (1/89)*** -13.38 5.82 7.59 7.28
1SI Franklin Value Securities Fund - Class 2 -5.95 -- -- -17.35
(5/98)***
1IS Templeton International Smaller Companies 15.70 -- -- 2.96
Fund - Class 2 (5/96)***
GOLDMAN SACHS VIT
1SE CORESM Small Cap Equity Fund (2/98)**** 9.37 -- -- -1.20
1UE CORESM U.S. Equity Fund (2/98) 16.07 -- -- 16.30
1MC Mid Cap Value Fund (4/98) -8.11 -- -- -13.20
JANUS ASPEN SERIES
1AG Aggressive Growth Portfolio - Service Shares 114.13 34.27 -- 32.61
(9/93)
1GT Global Technology Portfolio - Service Shares -- -- -- --
1/00) +
1IG International Growth Portfolio - Service 70.84 31.72 -- 27.10
Shares (4/94)
LAZARD RETIREMENT SERIES
1IP International Equity Portfolio (9/98) 13.21 -- -- 20.06
MFS(R) VARIABLE INSURANCE TRUST (VIT)
1MG Growth Series - Service Class (5/99) -- -- -- 44.04
1MD New Discovery Series - Service Class (5/98) 85.33 -- -- 33.64
PUTNAM VARIABLE TRUST
1IN Putnam VT International New Opportunities 93.85 -- -- 47.03
Fund - Class IB Shares (4/98) *****
1VS Putnam VT Vista Fund - Class IB Shares (1/97) 44.18 -- -- 28.57
*****
<PAGE>
ROYCE CAPITAL FUND
1MI Micro-Cap Portfolio (12/96) 19.85 -- -- 14.66
THIRD AVENUE
1SV Value Portfolio (9/99) -- -- -- 1.19
WANGER
1IT International Small Cap (5/95) 117.28 -- -- 37.13
1SP U.S. Small Cap (5/95) 16.66 -- -- 24.82
WARBURG PINCUS TRUST
1EG Emerging Growth Portfolio (9/99) -- -- -- 27.51
* Current applicable charges deducted from fund performance include a $30
contract administrative charge, a 0.95% mortality and expense risk fee and
applicable surrender charges associated with the seven-year surrender
charge schedule.
+ Fund had not commenced operations as of Dec. 31, 1999.
** (Commencement date of the Funds) ***Because no Class 2 Shares were issued
until Jan. 6, 1999, Class 2 performance represents the historical results
of Class 1 Shares. Performance of Class 2 Shares for periods after its
January 6, 1999 inception will reflect Class 2's additional 12b-1 fee
expense which also affects all future performance.
**** CoreSM is a service mark of Goldman, Sachs & Co.
*****Each of the above Funds' Class IB Shares commenced operations on April 30,
1998. For periods prior to inception of Class IB Shares, performance
information for Class IB Shares is based upon performance of Class IA
Shares (not offered) of the fund, adjusted to reflect the fees paid by
Class IB Shares, including the 12b-1 fee of 0.15%.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Nonqualified Annuities (Without Purchase Payment
Credits) With a Ten-Year Surrender Charge Schedule For Periods Ending Dec. 31,
1999
Performance Since Commencement of the
Fund*
<S> <C> <C> <C> <C> <C>
Since
Subaccount Investing In: 1 Year 5 Years 10 Years Commencement
- ---------- ------------- ------ ------- ------- ------------
AXPSM VARIABLE PORTFOLIO -
BC1 Blue Chip Advantage Fund (9/99)** --% --% --% 2.98%
BD1 Bond Fund (10/81) -6.57 6.00 7.05 9.62
CR1 Capital Resource Fund (10/81) 14.52 19.57 14.33 14.83
CM1 Cash Management Fund (10/81) -3.81 3.02 3.79 5.52
DE1 Diversified Equity Income Fund (9/99) -- -- -- -4.88
EM1 Emerging Markets Fund (5/00)+ -- -- -- --
EI1 Extra Income Fund (5/96) -2.43 -- -- 2.72
FI1 Federal Income Fund (9/99) -- -- -- -6.93
GB1 Global Bond Fund (5/96) -12.14 -- -- 1.23
GR1 Growth Fund (9/99) -- -- -- 9.89
IE1 International Fund (1/92) 36.19 14.29 -- 12.08
MF1 Managed Fund (4/86) 5.70 16.40 12.38 11.76
ND1 New Dimensions Fund(R)(5/96) 22.70 -- -- 24.04
SP1 S&P 500 Index Fund (5/00)+ -- -- -- --
SC1 Small Cap Advantage Fund (9/99) -- -- -- 4.35
SA1 Strategy Aggressive Fund (1/92) 61.36 23.04 -- 15.72
AIM V.I.
1CA Capital Appreciation Fund (5/93) 35.21 23.84 -- 20.91
1CD Capital Development Fund (5/98) 19.82 -- -- 5.53
American Century VARIABLE PORTFOLIOS, INC.
1IF VP International (5/94) 54.44 20.40 -- 16.64
1VA VP Value (5/96) -8.90 -- -- 8.48
CALVERT CVS
1SR Social Balanced Portfolio (9/86) 3.13 9.73 10.22 14.68
FIDELITY VIP
1GI III Growth & Income Portfolio (Service Class) -1.11 -- -- 17.98
(12/96)
1MP III Mid Cap Portfolio (Service Class) (12/98) 39.28 -- -- 43.41
1OS Overseas Portfolio (Service Class) (12/87) 32.99 15.49 10.25 11.29
FRANKLIN TEMPLETON VIP TRUST
1RE Franklin Real Estate Fund - Class 2 (1/89)*** -14.21 5.50 7.54 7.28
1SI Franklin Value Securities Fund - Class 2 -6.85 -- -- -17.82
(5/98)***
1IS Templeton International Smaller Companies Fund 14.70 -- -- 2.45
- Class 2 (5/96)***
GOLDMAN SACHS VIT
1SE CORESM Small Cap Equity Fund (2/98)**** 8.37 -- -- -1.72
1UE CORESM U.S. Equity Fund (2/98) 15.07 -- -- 15.84
1MC Mid Cap Value Fund (4/98) -9.00 -- -- -13.69
JANUS ASPEN SERIES
1AG Aggressive Growth Portfolio - Service Shares 113.13 34.15 -- 32.54
(9/93)
1GT Global Technology Portfolio - Service Shares -- -- -- --
(1/00) +
1IG International Growth Portfolio - Service 69.84 31.59 -- 26.99
Shares (4/94)
LAZARD RETIREMENT SERIES,
1IP International Equity Portfolio (9/98) 12.21 -- -- 19.35
MFS(R) VARIABLE INSURANCE TRUST (VIT)
1MG Growth Series - Service Class (5/99 ) -- -- -- 43.04
1MD New Discovery Series - Service Class (5/98) 84.33 -- -- 32.64
PUTNAM VARIABLE TRUST
1IN Putnam VT International New Opportunities Fund 92.85 -- -- 46.56
- Class IB Shares (4/98)*****
1VS Putnam VT Vista Fund - Class IB Shares 43.18 -- -- 28.36
(1/97)*****
<PAGE>
ROYCE CAPITAL FUND
1MI Micro-Cap Portfolio (12/96) 18.85 -- -- 14.40
THIRD AVENUE
1SV Value Portfolio (9/99) -- -- -- 0.21
WANGER
1IT International Small Cap (5/95) 116.28 -- -- 36.99
1SP U.S. Small Cap (5/95) 15.66 -- -- 24.63
WARBURG PINCUS TRUST
1EG Emerging Growth Portfolio (9/99) -- -- -- 26.51
* Current applicable charges deducted from fund performance include a $30
contract administrative charge, a 0.95% mortality and expense risk fee and
applicable surrender charges associated with the ten-year surrender charge
schedule.
+ Fund had not commenced operations as of Dec. 31, 1999.
** (Commencement date of the Funds) ***Because no Class 2 Shares were issued
until Jan. 6, 1999, Class 2 performance represents the historical results
of Class 1 Shares. Performance of Class 2 Shares for periods after its
January 6, 1999 inception will reflect Class 2's additional 12b-1 fee
expense which also affects all future performance.
**** CoreSM is a service mark of Goldman, Sachs & Co.
*****Each of the above Funds' Class IB Shares commenced operations on April 30,
1998. For periods prior to inception of Class IB Shares, performance
information for Class IB Shares is based upon performance of Class IA
Shares (not offered) of the fund, adjusted to reflect the fees paid by
Class IB Shares, including the 12b-1 fee of 0.15%.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Qualified Annuities (Without Purchase Payment Credits) Without Surrender
For Periods Ending Dec. 31, 1999
Performance Since Commencement of the
Fund*
<S> <C> <C> <C> <C> <C>
Since
Subaccount Investing In: 1 Year 5 Years 10 Years Commencement
- ---------- ------------- ------ ------- -------- ------------
AXPSM VARIABLE PORTFOLIO -
BC2 Blue Chip Advantage Fund (9/99)** --% --% --% 11.04%
BD2 Bond Fund (10/81) 0.89 7.15 7.31 9.84
CR2 Capital Resource Fund (10/81) 22.77 20.39 14.59 15.07
CM2 Cash Management Fund (10/81) 3.89 4.27 4.07 5.74
DE2 Diversified Equity Income Fund (9/99) -- -- -- 2.59
EM2 Emerging Markets Fund (5/00)+ -- -- -- --
EI2 Extra Income Fund (5/96) 5.39 -- -- 4.67
FI2 Federal Income Fund (9/99) -- -- -- 0.36
GB2 Global Bond Fund (5/96) -5.18 -- -- 3.24
GR2 Growth Fund (9/99) -- -- -- 17.96
IE2 International Fund (1/92) 13.44 9.78 -- 9.12
MF2 Managed Fund (4/86) 13.93 17.28 12.64 11.99
ND2 New Dimensions Fund(R)(5/96) 30.96 -- -- 25.35
SP2 S&P 500 Index Fund (5/00)+ -- -- -- --
SC2 Small Cap Advantage Fund (9/99) -- -- -- 12.42
SA2 Strategy Aggressive Fund (1/92) 69.69 23.81 -- 16.09
AIM V.I.
2CA Capital Appreciation Fund (5/93) 43.49 24.59 -- 21.35
2CD Capital Development Fund (5/98) 28.08 -- -- 10.31
American Century variable portfolios, inc.
2IF VP International (5/94) 62.76 21.21 -- 17.30
2VA VP Value (5/96) -1.65 -- -- 10.21
CALVERT CVS
2SR Social Balanced Portfolio (9/86) 10.93 15.53 11.02 14.48
FIDELITY VIP
2GI III Growth & Income Portfolio (Service Class) 6.83 -- -- 19.87
(12/96)
2MP III Mid Cap Portfolio (Service Class) (12/98) 47.58 -- -- 51.63
2OS Overseas Portfolio (Service Class) (12/87) 41.27 16.39 10.51 11.51
FRANKLIN TEMPLETON VIP TRUST
2RE Franklin Real Estate Fund - Class 2 (1/89)*** -7.12 7.12 8.13 7.79
2SI Franklin Value Securities Fund - Class 2 0.58 -- -- -13.90
(5/98)***
2IS Templeton International Smaller Companies 22.94 -- -- 4.40
Fund - Class 2 (5/96)***
GOLDMAN SACHS VIT
2SE CORESM Small Cap Equity Fund (2/98)**** 16.58 -- -- 2.57
2UE CORESM U.S. Equity Fund (2/98) 23.32 -- -- 19.77
2MC Mid Cap Value Fund (4/98) -1.75 -- -- -9.61
JANUS ASPEN SERIES
2AG Aggressive Growth Portfolio - Service Shares 121.54 34.78 -- 32.94
( 9/93)
2GT Global Technology Portfolio - Service Shares -- -- -- --
(1/00) +
2IG International Growth Portfolio - Service 78.18 32.25 -- 27.53
Shares (4/94)
LAZARD RETIREMENT SERIES
2IP International Equity Portfolio (9/98) 20.45 -- -- 25.22
MFS(R) VARIABLE INSURANCE TRUST (VIT)
2MG Growth Series - Service Class (5/99) -- -- -- 50.84
2MD New Discovery Series - Service Class (5/98) 92.13 -- -- 40.44
PUTNAM VARIABLE TRUST
2IN Putnam VT International New Opportunities 101.25 -- -- 50.54
Fund - Class IB Shares (4/98)*****
2VS Putnam VT Vista Fund - Class IB Shares 51.50 -- -- 30.03
(1/97)*****
<PAGE>
ROYCE CAPITAL FUND
2MI Micro-Cap Portfolio (12/96) 27.13 -- -- 16.40
THIRD AVENUE
2SV Value Portfolio (9/99) -- -- -- 8.12
WANGER
2IT International Small Cap (5/95) 124.71 -- -- 37.67
2SP U.S. Small Cap (5/95) 23.90 -- -- 25.44
WARBURG PINCUS TRUST
2EG Emerging Growth Portfolio (9/99) -- -- -- 34.58
* Current applicable charges deducted from fund performance include a $30
contract administrative charge and a 0.75% mortality and expense risk fee.
+ Fund had not commenced operations as of Dec. 31, 1999.
** (Commencement date of the Funds)
*** Because no Class 2 Shares were issued until Jan. 6, 1999, Class 2
performance represents the historical results of Class 1 shares.
Performance of Class 2 Shares for periods after its January 6, 1999
inception will reflect Class 2's additional 12b-1 fee expense which also
affects all future performance.
**** CoreSM is a service mark of Goldman, Sachs & Co.
*****Each of the above Funds' Class IB Shares commenced operations on April 30,
1998. For periods prior to inception of Class IB Shares, performance
information for Class IB Shares is based upon performance of Class IA
shares (not offered) of the fund, adjusted to reflect the fees paid by
Class IB Shares, including the 12b-1 fee of 0.15%.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Qualified Annuities (Without Purchase Payment Credits) With a Seven-Year
Surrender Charge Schedule For Periods Ending Dec. 31, 1999
Performance Since Commencement of the
Fund*
<S> <C> <C> <C> <C> <C>
Since
Subaccount Investing In: 1 Year 5 Years 10 Years Commencement
- ---------- ------------- ------ ------- -------- ------------
AXPSM VARIABLE PORTFOLIO -
BC2 Blue Chip Advantage Fund (9/99)** --% --% --% 4.04%
BD2 Bond Fund (10/81) -5.47 6.54 7.31 9.84
CR2 Capital Resource Fund (10/81) 15.77 20.01 14.59 15.07
CM2 Cash Management Fund (10/81) -2.68 3.59 4.07 5.74
DE2 Diversified Equity Income Fund (9/99) -- -- -- -3.89
EM2 Emerging Markets Fund (5/00)+ -- -- -- --
EI2 Extra Income Fund (5/96) -1.29 -- -- 3.44
FI2 Federal Income Fund (9/99) -- -- -- -5.97
GB2 Global Bond Fund (5/96) -11.11 -- -- 1.97
GR2 Growth Fund (9/99) -- -- -- 10.96
IE2 International Fund (1/92) 6.44 9.22 -- 9.12
MF2 Managed Fund (4/86) 6.93 16.85 12.64 11.99
ND2 New Dimensions Fund(R)(5/96) 23.96 -- -- 24.60
SP2 S&P 500 Index Fund (5/00)+ -- -- -- --
SC2 Small Cap Advantage Fund (9/99) -- -- -- 5.42
SA2 Strategy Aggressive Fund (1/92) 62.69 23.47 -- 16.09
AIM V.I.
2CA Capital Appreciation Fund (5/93) 36.49 24.26 -- 21.25
2CD Capital Development Fund (5/98) 21.08 -- -- 6.33
American Century variable portfolios, inc.
2IF VP International (5/94) 55.76 20.84 -- 17.05
2VA VP Value (5/96) -7.83 -- -- 9.15
CALVERT CVS
2SR Social Balanced Portfolio (9/86) 3.93 11.53 11.02 14.48
FIDELITY VIP
2GI III Growth & Income Portfolio (Service Class) 0.06 -- -- 18.46
(12/96)
2MP III Mid Cap Portfolio (Service Class) (12/98) 40.58 -- -- 44.71
2OS Overseas Portfolio (Service Class) (12/87) 34.27 15.95 10.51 11.51
FRANKLIN TEMPLETON VIP TRUST
2RE Franklin Real Estate Fund - Class 2 (1/89)*** -12.92 6.50 8.13 7.79
2SI Franklin Value Securities Fund - Class 2 -5.76 -- -- -17.18
(5/98)***
2IS Templeton International Smaller Companies 15.94 -- -- 3.17
Fund - Class 2 (5/96)***
GOLDMAN SACHS VIT
2SE CORESM Small Cap Equity Fund (2/98)**** 9.58 -- -- -1.01
2UE CORESM U.S. Equity Fund (2/98) 16.32 -- -- 16.55
2MC Mid Cap Value Fund (4/98) -7.93 -- -- -13.03
JANUS ASPEN SERIES
2AG Aggressive Growth Portfolio - Service Shares 114.54 34.54 -- 32.87
(9/93)
2GT Global Technology Portfolio - Service Shares -- -- -- --
(1/00) +
2IG International Growth Portfolio - Service 71.18 31.98 -- 27.36
Shares (4/94)
LAZARD RETIREMENT SERIES
2IP International Equity Portfolio (9/98) 13.45 -- -- 20.31
MFS(R) VARIABLE INSURANCE TRUST (VIT)
2MG Growth Series - Service Class (5/99) -- -- -- 43.84
2MD New Discovery Series - Service Class (5/98) 85.13 -- -- 33.44
PUTNAM VARIABLE TRUST
2IN Putnam VT International New Opportunities 94.25 -- -- 47.33
Fund - Class IB Shares (4/98)*****
2VS Putnam VT Vista Fund - Class IB Shares 44.50 -- -- 28.84
(1/97)*****
<PAGE>
ROYCE CAPITAL FUND
2MI Micro-Cap Portfolio (12/96) 20.13 -- -- 14.90
THIRD AVENUE
2SV Value Portfolio (9/99) -- -- -- 1.25
WANGER
2IT International Small Cap (5/95) 117.71 -- -- 37.40
2SP U.S. Small Cap (5/95) 16.90 -- -- 25.07
WARBURG PINCUS TRUST
2EG Emerging Growth Portfolio (9/99) -- -- -- 27.58
* Current applicable charges deducted from fund performance include a $30
contract administrative charge, a 0.75% mortality and expense risk fee and
applicable surrender charges associated with the seven-year surrender
charge schedule.
+ Fund had not commenced operations as of Dec. 31, 1999.
** (Commencement date of the Funds)
*** Because no Class 2 Shares were issued until Jan. 6, 1999, Class 2
performance represents the historical results of Class 1 Shares.
Performance of Class 2 Shares for periods after its January 6, 1999
inception will reflect Class 2's additional 12b-1 fee expense which also
affects all future performance.
**** CoreSM is a service mark of Goldman, Sachs & Co.
*****Each of the above Funds' Class IB Shares commenced operations on April 30,
1998. For periods prior to inception of Class IB Shares, performance
information for Class IB Shares is based upon performance of Class IA
Shares (not offered) of the fund, adjusted to reflect the fees paid by
Class IB Shares, including the 12b-1 fee of 0.15%.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Qualified Annuities (Without Purchase Payment Credits) With a Ten-Year
Surrender Charge Schedule For Periods Ending Dec. 31, 1999
Performance Since Commencement of the Fund*
<S> <C> <C> <C> <C> <C>
Since
Subaccount Investing In: 1 Year 5 Years 10 Years Commencement
- ---------- ------------- ------ ------- -------- ------------
AXPSM VARIABLE PORTFOLIO -
BC2 Blue Chip Advantage Fund (9/99)** --% --% --% 3.04%
BD2 Bond Fund (10/81) -6.38 6.22 7.26 9.84
CR2 Capital Resource Fund (10/81) 14.77 19.82 14.56 15.07
CM2 Cash Management Fund (10/81) -3.62 3.24 4.00 5.74
DE2 Diversified Equity Income Fund (9/99) -- -- -- -4.82
EM2 Emerging Markets Fund (5/00 )+ -- -- -- --
EI2 Extra Income Fund (5/96) -2.24 -- -- 2.94
FI2 Federal Income Fund (9/99) -- -- -- -6.87
GB2 Global Bond Fund (5/96) -11.96 -- -- 1.45
GR2 Growth Fund (9/99) -- -- -- 9.96
IE2 International Fund (1/92) 5.44 8.94 -- 8.91
MF2 Managed Fund (4/86) 5.93 16.64 12.60 11.99
ND2 New Dimensions Fund(R)(5/96) 22.96 -- -- 24.29
SP2 S&P 500 Index Fund (5/00)+ -- -- -- --
SC2 Small Cap Advantage Fund (9/99) -- -- -- 4.42
SA2 Strategy Aggressive Fund (1/92) 61.69 23.29 -- 15.96
AIM V.I.
2CA Capital Appreciation Fund (5/93) 35.49 24.09 -- 21.15
2CD Capital Development Fund (5/98) 20.08 -- -- 5.76
American Century VARIABLE PORTFOLIOS, INC.
2IF VP International (5/94) 54.76 20.65 -- 16.88
2VA VP Value (5/96) -8.72 -- -- 8.71
CALVERT CVS
2SR Social Balanced Portfolio (9/86) 2.93 9.53 10.02 14.48
FIDELITY VIP
2GI III Growth & Income Portfolio (Service Class) -0.91 -- -- 18.22
(12/96)
2MP III Mid Cap Portfolio (Service Class) (12/98) 39.58 -- -- 43.72
2OS Overseas Portfolio (Service Class) (12/87) 33.27 15.73 10.47 11.51
FRANKLIN TEMPLETON VIP TRUST
2RE Franklin Real Estate Fund - Class 2 (1/89)*** -13.75 6.19 8.08 7.79
2SI Franklin Value Securities Fund - Class 2 -6.67 -- -- -17.66
(5/98)***
2IS Templeton International Smaller Companies 14.94 -- -- 2.66
Fund - Class 2 (5/96)***
GOLDMAN SACHS VIT
2SE CORESM Small Cap Equity Fund (2/98)**** 8.58 -- -- -1.53
2UE CORESM U.S. Equity Fund (2/98) 15.32 -- -- 16.08
2MC Mid Cap Value Fund (4/98) -8.81 -- -- -13.52
JANUS ASPEN SERIES
2AG Aggressive Growth Portfolio - Service Shares 113.54 34.42 -- 32.80
(9/93)
2GT Global Technology Portfolio - Service Shares -- -- -- --
(1/00) +
2IG International Growth Portfolio - Service 70.18 31.85 -- 27.24
Shares (4/94)
LAZARD RETIREMENT SERIES
2IP International Equity Portfolio (9/98) 12.45 -- -- 19.60
MFS(R) VARIABLE INSURANCE TRUST (VIT)
2MG Growth Series - Service Class (5/99) -- -- -- 42.84
2MD New Discovery Series - Service Class (5/98) 84.13 -- -- 32.44
PUTNAM VARIABLE TRUST
2IN Putnam VT International New Opportunities 93.25 -- -- 46.87
Fund - Class IB Shares (4/98)*****
2VS Putnam VT Vista Fund - Class IB Shares 43.50 -- -- 28.63
(1/97)*****
<PAGE>
ROYCE CAPITAL FUND
2MI Micro-Cap Portfolio (12/96) 19.13 -- -- 14.65
THIRD AVENUE
2SV Value Portfolio (9/99) -- -- -- 0.27
WANGER
2IT International Small Cap (5/95) 116.71 -- -- 37.27
2SP U.S. Small Cap (5/95) 15.90 -- -- 24.88
WARBURG PINCUS TRUST
2EG Emerging Growth Portfolio (9/99) -- -- -- 26.58
* Current applicable charges deducted from fund performance include a $30
contract administrative charge, a 0.75% mortality and expense risk fee and
applicable surrender charges associated with the ten-year surrender charge
schedule.
+ Fund had not commenced operations as of Dec. 31, 1999.
** (Commencement date of the Funds) ***Because no Class 2 Shares were issued
until Jan. 6, 1999, Class 2 performance represents the historical results
of Class 1 Shares. Performance of Class 2 Shares for periods after its
January 6, 1999 inception will reflect Class 2's additional 12b-1 fee
expense which also affects all future performance.
**** CoreSM is a service mark of Goldman, Sachs & Co.
*****Each of the above Funds' Class IB Shares commenced operations on April 30,
1998. For periods prior to inception of Class IB Shares, performance
information for Class IB Shares is based upon performance of Class IA
Shares (not offered) of the fund, adjusted to reflect the fees paid by
Class IB Shares, including the 12b-1 fee of 0.15%.
</TABLE>
Cumulative Total Return
Cumulative total return represents the cumulative change in the value of an
investment for a given period (reflecting change in a subaccount's accumulation
unit value). We compute cumulative total return by using 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 period, at the
end of the period (or fractional portion thereof).
Total return figures reflect the deduction of the surrender charge which assumes
you withdraw the entire contract value at the end of the one, five and ten year
periods (or, if less, up to the life of the subaccount). We also may show
performance figures without the deduction of a surrender charge. In addition,
total return figures reflect the deduction of all other applicable charges
including the contract administrative charge and mortality and expense risk fee.
Annualized Calculation of Yield for Subaccounts Investing in Money Market Funds
Annualized Simple Yield
For the subaccounts investing in money market funds, we base quotations of
simple yield on:
(a) the change in the value of a hypothetical subaccount (exclusive of capital
changes and income other than investment income) at the beginning of a
particular seven-day period;
(b) less a pro rata share of the subaccount expenses accrued over the period;
(c) dividing this difference by the value of the subaccount at the beginning of
the period to obtain the base period return; and
(d) multiplying the base period return by 365/7.
The subaccount's value includes:
o any declared dividends,
o the value of any shares purchased with dividends paid during the period,
and o any dividends declared for such shares.
It does not include:
o the effect of any applicable surrender charge, or
o any realized or unrealized gains or losses.
Annualized Compound Yield
We calculate compound yield using the base period return described above, which
we then compound according to the following formula:
Compound Yield = [(Base Period Return + 1)365/7] -1
Annualized Yields Based on the Seven-Day Period Ending Dec. 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Subaccount Investing In Simple Yield Compound Yield
- ---------- ------------ ------------ --------------
CM1 AXPSM Variable Portfolio - Cash Management Fund 5.03% 5.16%
CM2 AXPSM Variable Portfolio - Cash Management Fund 5.26 5.40
</TABLE>
You must consider (when comparing an investment in subaccounts investing in
money market funds with fixed annuities) that fixed annuities often provide an
agreed-to or guaranteed yield for a stated period of time, whereas the
subaccount's yield fluctuates. In comparing the yield of the subaccount to a
money market fund, you should consider the different services that the contract
provides.
Annualized Yield for Subaccounts Investing in Income Funds
For the subaccounts investing in income funds, we base quotations of yield on
all investment income earned during a particular 30-day period, less expenses
accrued during the period (net investment income) and compute it 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
The subaccount earns yield from the increase in the net asset value of shares of
the fund in which it invests and from dividends declared and paid by the fund,
which are automatically invested in shares of the fund.
Annualized Yield Based on 30-Day Period Ended Dec. 31, 1999
Subaccount Investing In Yield
- ---------- ------------ -----
BD1 AXPSM Variable Portfolio - Bond Fund 7.08%
BD2 AXPSM Variable Portfolio - Bond Fund 7.34
EI1 AXPSM Variable Portfolio - Extra Income Fund 10.62
EI2 AXPSM Variable Portfolio - Extra Income Fund 10.28
FI1 AXPSM Variable Portfolio - Federal Income Fund 5.09
FI2 AXPSM Variable Portfolio - Federal Income Fund 5.15
GB1 AXPSM Variable Portfolio - Global Bond Fund 5.71
GB2 AXPSM Variable Portfolio - Global Bond Fund 5.65
The yield on the subaccount's accumulation unit may fluctuate daily and does not
provide a basis for determining future yields.
<PAGE>
Independent rating or statistical services or publishers or publications such as
those listed below may quote subaccount performance, compare it to rankings,
yields or returns, or use it in variable annuity accumulation or settlement
illustrations they publish or prepare.
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 Business 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 & World Report, The Wall Street Journal and Wiesenberger
Investment Companies Service.
CALCULATING ANNUITY PAYOUTS
The Variable Account
We do the following calculations 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 contract on the valuation date and then
deduct any applicable premium tax; then
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: We then convert the value of your subaccount to annuity units. To
compute the number of units credited to you, we divide the first monthly payment
by the annuity unit value (see below) on the valuation date. The number of units
in your subaccount is fixed. The value of the units fluctuates with the
performance of the underlying fund.
Subsequent Payouts: To compute later payouts, we multiply:
o the annuity unit value on the valuation date; by
o the fixed number of annuity units credited to you.
Annuity Unit Values: We originally set this value at $1 for each 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
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:
We determine the net investment factor by:
o adding the fund's current net asset value per share plus the per share
amount of any accrued income or capital gain dividends to obtain a current
adjusted net asset value per share; then
o dividing that sum by the previous adjusted net asset value per share; and
o subtracting the percentage factor representing the mortality and expense
risk fee from the result.
<PAGE>
Because the net asset value of the fund may fluctuate, the net investment factor
may be greater or less than one, and the annuity unit value may increase or
decrease. You bear this investment risk in a variable subaccount.
The Fixed Account
We guarantee your fixed annuity payout amounts. 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 settlement date or the date you
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.
The annuity payout table we use will be the one in effect at the time you choose
to begin your annuity payouts. The values in the table will be equal to or
greater than the table in your contract.
RATING AGENCIES
The following chart reflects the ratings given to us 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 subaccounts
of the contract. This information relates only to the fixed account and reflects
our ability to make annuity payouts and to pay death benefits and other
distributions from the contract.
Rating Agency Rating
A.M. Best A+
(Superior)
Duff & Phelps AAA
Moody's Aa2
PRINCIPAL UNDERWRITER
The principal underwriter for the contract is IDS Life which offers the contract
on a continuous basis.
The contract is new and, therefore, we have not received any surrender charges
or paid any commissions.
INDEPENDENT AUDITORS
The financial statements appearing in this SAI have been audited by Ernst &
Young LLP (1400 Pillsbury Center, 200 South Sixth Street, Minneapolis, MN 55402)
independent auditors, as stated in their report appearing herein.
FINANCIAL STATEMENTS
<PAGE>
IDS Life Variable Account 10 - American Express Retirement Advisor Variable
Annuity (SM)
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 BC1, BC2, BD1, BD2, CR1, CR2, CM1, CM2, DE1, DE2, EI1,
EI2, FI1, FI2, GB1, GB2, GR1, GR2, IE1, IE2, MF1, MF2, ND1, ND2, SC1, SC2, SA1,
SA2, 1CA, 2CA, 1CD, 2CD, 1IF, 2IF, 1VA, 2VA, 1GI, 2GI, 1MP, 2MP, 1OS, 2OS, 1RE,
2RE, 1IS, 2IS, 1SI, 2SI, 1SE, 2SE, 1UE, 2UE, 1MC, 2MC, 1IP, 2IP, 1IN, 2IN, 1VS,
2VS, 1MI, 2MI, 1SV, 2SV, 1IT, 2IT, 1SP, 2SP, 1EG and 2EG) as of December 31,
1999, and the related statements of operations and changes in net assets for the
periods indicated therein. 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 auditing standards generally accepted
in the United States. 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, 1999 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 (as described
above) at December 31, 1999, and the individual and combined results of their
operations and changes in their net assets for the periods indicated therein, in
conformity with accounting principles generally accepted in the United States.
ERNST & YOUNG LLP
Minneapolis, Minnesota
March 17, 2000
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 -- AXP Retirement Advisor Variable AnnuitySM
Statements of Net Assets
December 31, 1999
Segregated Asset Subaccounts
Assets BC1 BC2 BD1 BD2
Investments in shares of mutual funds and portfolios:
<S> <C> <C> <C> <C>
at cost $ 8,340,461 $ 7,740,222 $ 11,764,925 $ 7,268,808
----------- ----------- ------------ -----------
at market value $ 8,922,487 $ 8,243,991 $ 11,741,709 $ 7,259,035
Dividends receivable -- -- 56,314 34,069
Accounts receivable from IDS Life for contract
purchase payments 126,579 96,372 50,401 2,854
Receivable from mutual funds and portfolios for
share redemptions -- -- -- --
------ ----- ------ -----
Total assets 9,049,066 8,340,363 11,848,424 7,295,958
========= ========= ========== =========
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 5,781 4,075 7,418 3,566
Payable to mutual funds and portfolios for investments
purchased -- -- -- --
---- --- ---- ---
Total liabilities 5,781 4,075 7,418 3,566
----- ----- ----- -----
Net assets applicable to contracts in accumulation period $ 9,043,285 $ 8,336,288 $ 11,841,006 $ 7,292,392
Net assets applicable to contracts in payment period -- -- -- --
-------- ------ ----- ------
Total net assets $ 9,043,285 $ 8,336,288 $ 11,841,006 $ 7,292,392
=========== =========== ============ ===========
Accumulation units outstanding 8,144,701 7,503,378 11,675,134 7,185,953
========= ========= ========== =========
Net asset value per accumulation unit $ 1.11 $ 1.11 $ 1.01 $ 1.01
====== ====== ====== ======
Assets CR1 CR2 CM1 CM2
Investments in shares of mutual funds and portfolios:
at cost $ 3,545,916 $ 5,870,376 $ 85,931,081 $ 65,125,174
----------- ----------- ------------ ------------
at market value $ 3,675,437 $ 6,070,686 $ 85,931,061 $ 65,125,157
Dividends receivable -- -- 299,391 239,605
Accounts receivable from IDS Life for contract
purchase payments 7,100 69,844 2,202,485 946,907
Receivable from mutual funds and portfolios for
share redemptions -- -- -- --
----- -------- ------ -----
Total assets 3,682,537 6,140,530 88,432,937 66,311,669
========= ========= ========== ==========
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 2,214 2,892 53,621 34,128
Payable to mutual funds and portfolios for investments
purchased -- -- -- --
---- --- ---- -----
Total liabilities 2,214 2,892 53,621 34,128
----- ----- ------ ------
Net assets applicable to contracts in accumulation period $ 3,680,323 $ 6,085,769 $ 88,379,316 $ 66,277,541
Net assets applicable to contracts in payment period -- 51,869 -- --
------- ----- ------- ----
Total net assets $ 3,680,323 $ 6,137,638 $ 88,379,316 $ 66,277,541
=========== =========== ============ ============
Accumulation units outstanding 3,227,001 5,332,889 87,424,293 65,522,124
========= ========= ========== ==========
Net asset value per accumulation unit $ 1.14 $ 1.14 $ 1.01 $ 1.01
====== ====== ====== ======
Assets DE1 DE2 EI1 EI2
Investments in shares of mutual funds and portfolios:
at cost $ 3,354,582 $ 3,130,415 $ 9,882,491 $ 7,746,628
----------- ----------- ----------- -----------
at market value $ 3,452,432 $ 3,204,387 $ 9,951,851 $ 7,761,527
Dividends receivable -- -- 71,950 49,018
Accounts receivable from IDS Life for contract
purchase payments 79,673 29,698 232,353 60,178
Receivable from mutual funds and portfolios for share
redemptions -- -- -- --
------ ----- ------- -----
Total assets 3,532,105 3,234,085 10,256,154 7,870,723
========= ========= ========== =========
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 2,299 1,776 6,443 3,483
Payable to mutual funds and portfolios for investments
purchased -- -- -- --
---- ----- ----- ----
Total liabilities 2,299 1,776 6,443 3,483
----- ----- ----- -----
Net assets applicable to contracts in accumulation period $ 3,529,806 $ 3,232,309 $ 10,249,711 $ 7,867,240
Net assets applicable to contracts in payment period -- -- -- --
------- ------ ---- -----
Total net assets $ 3,529,806 $ 3,232,309 $ 10,249,711 $ 7,867,240
=========== =========== ============ ===========
Accumulation units outstanding 3,440,938 3,149,027 10,137,005 7,774,094
========= ========= ========== =========
Net asset value per accumulation unit $ 1.03 $ 1.03 $ 1.01 $ 1.01
====== ====== ====== ======
Assets FI1 FI2 GB1 GB2
Investments in shares of mutual funds and portfolios:
at cost $ 12,612,627 $ 10,690,674 $ 2,368,551 $ 1,531,955
------------ ------------ ----------- -----------
at market value $ 12,548,146 $ 10,639,849 $ 2,339,001 $ 1,513,916
Dividends receivable 45,364 39,341 9,031 5,821
Accounts receivable from IDS Life for contract
purchase payments 241,893 495,557 22,132 34,694
Receivable from mutual funds and portfolios for
share redemptions -- -- -- --
------ ----- ----- -----
Total assets 12,835,403 11,174,747 2,370,164 1,554,431
========== ========== ========= =========
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 8,385 5,726 1,585 804
Payable to mutual funds and portfolios for investments
purchased -- -- -- --
---- ---- ---- ---
Total liabilities 8,385 5,726 1,585 804
----- ----- ----- ---
Net assets applicable to contracts in accumulation period $ 12,827,018 $ 11,169,021 $ 2,368,579 $ 1,553,627
Net assets applicable to contracts in payment period -- -- -- --
-------- ------- ----- -----
Total net assets $ 12,827,018 $ 11,169,021 $ 2,368,579 $ 1,553,627
============ ============ =========== ===========
Accumulation units outstanding 12,795,965 11,135,246 2,367,731 1,552,116
========== ========== ========= =========
Net asset value per accumulation unit $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ======
Assets GR1 GR2 IE1 IE2
Investments in shares of mutual funds and portfolios:
at cost $ 14,581,563 $ 17,946,468 $ 2,586,290 $ 3,100,177
------------ ------------ ----------- -----------
at market value $ 16,057,261 $ 19,668,014 $ 2,750,899 $ 3,270,927
Dividends receivable -- -- -- --
Accounts receivable from IDS Life for contract
purchase payments 245,118 297,109 16,511 10,148
Receivable from mutual funds and portfolios for
share redemptions -- -- -- --
----- ------ ----- ----
Total assets 16,302,379 19,965,123 2,767,410 3,281,075
========== ========== ========= =========
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 9,736 9,466 1,511 1,538
Payable to mutual funds and portfolios for investments
purchased -- -- -- --
--- ---- ---- ----
Total liabilities 9,736 9,466 1,511 1,538
----- ----- ----- -----
Net assets applicable to contracts in accumulation period $ 16,292,643 $ 19,935,382 $ 2,765,899 $ 3,279,537
Net assets applicable to contracts in payment period -- 20,275 -- --
--- ------ --- ------
Total net assets $ 16,292,643 $ 19,955,657 $ 2,765,899 $ 3,279,537
============ ============ =========== ===========
Accumulation units outstanding 13,812,928 16,891,257 2,173,305 2,575,364
========== ========== ========= =========
Net asset value per accumulation unit $ 1.18 $ 1.18 $ 1.27 $ 1.27
====== ====== ====== ======
Assets MF1 MF2 ND1 ND2
Investments in shares of mutual funds and portfolios:
at cost $ 6,827,525 $ 5,419,833 $ 34,372,353 $ 33,869,008
----------- ----------- ------------ ------------
at market value $ 7,036,639 $ 5,591,957 $ 37,716,666 $ 37,120,591
Dividends receivable -- -- -- --
Accounts receivable from IDS Life for contract
purchase payments 75,964 88,815 937,370 452,382
Receivable from mutual funds and portfolios for share
redemptions -- -- -- --
----- ------ ----- -----
Total assets 7,112,603 5,680,772 38,654,036 37,572,973
========= ========= ========== ==========
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 4,407 2,763 23,155 17,884
Payable to mutual funds and portfolios for investments
purchased -- -- -- --
---- ---- ---- -----
Total liabilities 4,407 2,763 23,155 17,884
----- ----- ------ ------
Net assets applicable to contracts in accumulation period $ 7,108,196 $ 5,678,009 $ 38,630,881 $ 37,535,733
Net assets applicable to contracts in payment period -- -- -- 19,356
---- ------ ---- ------
Total net assets $ 7,108,196 $ 5,678,009 $ 38,630,881 $ 37,555,089
=========== =========== ============ ============
Accumulation units outstanding 6,539,086 5,220,299 32,482,584 31,537,411
========= ========= ========== ==========
Net asset value per accumulation unit $ 1.09 $ 1.09 $ 1.19 $ 1.19
====== ====== ====== ======
Assets SC1 SC2 SA1 SA2
Investments in shares of mutual funds and portfolios:
at cost $ 3,063,756 $ 3,087,705 $ 5,056,239 $ 5,719,628
----------- ----------- ----------- -----------
at market value $ 3,309,203 $ 3,314,330 $ 5,799,202 $ 6,696,598
Dividends receivable -- -- -- --
Accounts receivable from IDS Life for contract
purchase payments 97,579 28,147 110,082 78,194
Receivable from mutual funds and portfolios for share
redemptions -- -- -- --
---- ---- ----- -----
Total assets 3,406,782 3,342,477 5,909,284 6,774,792
========= ========= ========= =========
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 2,008 1,632 3,071 2,935
Payable to mutual funds and portfolios for investments
purchased -- -- -- --
---- ---- ---- ---
Total liabilities 2,008 1,632 3,071 2,935
----- ----- ----- -----
Net assets applicable to contracts in accumulation period $ 3,404,774 $ 3,340,845 $ 5,906,213 $ 6,771,857
Net assets applicable to contracts in payment period -- -- -- --
------ ------ ------ ----
Total net assets $ 3,404,774 $ 3,340,845 $ 5,906,213 $ 6,771,857
=========== =========== =========== ===========
Accumulation units outstanding 3,029,109 2,970,291 3,901,133 4,470,245
========= ========= ========= =========
Net asset value per accumulation unit $ 1.12 $ 1.12 $ 1.51 $ 1.51
====== ====== ====== ======
Assets 1CA 2CA 1CD 2CD
Investments in shares of mutual funds and portfolios:
at cost $ 5,917,680 $ 5,017,833 $ 2,101,888 $ 1,865,352
----------- ----------- ----------- -----------
at market value $ 6,776,829 $ 5,699,060 $ 2,391,964 $ 2,122,028
Dividends receivable -- -- -- --
Accounts receivable from IDS Life for contract
purchase payments 122,571 72,031 35,498 65,858
Receivable from mutual funds and portfolios for share
redemptions 4,229 2,711 1,429 972
----- ----- ----- ---
Total assets 6,903,629 5,773,802 2,428,891 2,188,858
========= ========= ========= =========
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 4,229 2,711 1,429 972
Payable to mutual funds and portfolios for investments
purchased 122,571 72,031 35,498 65,858
------- ------ ------ ------
Total liabilities 126,800 74,742 36,927 66,830
------- ------ ------ ------
Net assets applicable to contracts in accumulation period $ 6,776,829 $ 5,699,060 $ 2,391,964 $ 2,122,028
Net assets applicable to contracts in payment period -- -- -- --
------ ----- ------ -----
Total net assets $ 6,776,829 $ 5,699,060 $ 2,391,964 $ 2,122,028
=========== =========== =========== ===========
Accumulation units outstanding 5,159,901 4,336,748 1,892,365 1,677,796
========= ========= ========= =========
Net asset value per accumulation unit $ 1.31 $ 1.31 $ 1.26 $ 1.26
====== ====== ====== ======
Assets 1IF 2IF 1VA 2VA
Investments in shares of mutual funds and portfolios:
at cost $ 2,426,525 $ 2,090,627 $ 4,401,177 $ 3,387,139
----------- ----------- ----------- -----------
at market value $ 3,010,123 $ 2,575,936 $ 4,392,300 $ 3,365,883
Dividends receivable -- -- -- --
Accounts receivable from IDS Life for contract
purchase payments 17,643 63,241 77,738 61,232
Receivable from mutual funds and portfolios for share
redemptions 1,877 1,253 2,756 1,775
----- ----- ----- -----
Total assets 3,029,643 2,640,430 4,472,794 3,428,890
========= ========= ========= =========
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 1,877 1,253 2,756 1,775
Payable to mutual funds and portfolios for investments
purchased 17,643 63,241 77,738 61,232
------ ------ ------ ------
Total liabilities 19,520 64,494 80,494 63,007
------ ------ ------ ------
Net assets applicable to contracts in accumulation period $ 3,010,123 $ 2,575,936 $ 4,392,300 $ 3,365,883
Net assets applicable to contracts in payment period -- -- -- --
----- ------ ----- -----
Total net assets $ 3,010,123 $ 2,575,936 $ 4,392,300 $ 3,365,883
=========== =========== =========== ===========
Accumulation units outstanding 2,093,734 1,790,650 4,774,965 3,656,963
========= ========= ========= =========
Net asset value per accumulation unit $ 1.44 $ 1.44 $ 0.92 $ 0.92
====== ====== ====== ======
Assets 1GI 2GI 1MP 2MP
Investments in shares of mutual funds and portfolios:
at cost $ 18,384,586 $ 15,814,032 $ 7,423,180 $ 6,094,471
------------ ------------ ----------- -----------
at market value $ 18,937,955 $ 16,305,525 $ 8,563,900 $ 7,066,173
Dividends receivable -- -- 52,306 43,451
Accounts receivable from IDS Life for contract
purchase payments 591,559 61,922 144,755 41,355
Receivable from mutual funds and portfolios for share
redemptions 11,711 8,363 5,338 3,665
------ ----- ----- -----
Total assets 19,541,225 16,375,810 8,766,299 7,154,644
========== ========== ========= =========
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 11,711 8,363 5,338 3,665
Payable to mutual funds and portfolios for investments
purchased 591,559 61,922 144,755 41,355
------- ------ ------- ------
Total liabilities 603,270 70,285 150,093 45,020
------- ------ ------- ------
Net assets applicable to contracts in accumulation period $ 18,937,955 $ 16,305,525 $ 8,616,183 $ 7,089,136
Net assets applicable to contracts in payment period -- -- 23 20,488
------- ----- -- ------
Total net assets $ 18,937,955 $ 16,305,525 $ 8,616,206 $ 7,109,624
============ ============ =========== ===========
Accumulation units outstanding 18,137,421 15,602,831 6,945,013 5,709,401
========== ========== ========= =========
Net asset value per accumulation unit $ 1.04 $ 1.05 $ 1.24 $ 1.24
====== ====== ====== ======
Assets 1OS 2OS 1RE 2RE
Investments in shares of mutual funds and portfolios:
at cost $ 3,915,758 $ 3,722,290 $ 636,248 $ 825,640
----------- ----------- --------- ---------
at market value $ 4,429,715 $ 4,197,953 $ 654,603 $ 848,254
Dividends receivable -- -- -- --
Accounts receivable from IDS Life for contract
purchase payments 46,198 58,362 15,403 7,220
Receivable from mutual funds and portfolios for
share redemptions 2,724 2,094 422 437
----- ----- --- ---
Total assets 4,478,637 4,258,409 670,428 855,911
========= ========= ======= =======
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 2,724 2,094 422 388
Payable to mutual funds and portfolios for investments
purchased 46,198 58,362 15,403 7,220
------ ------ ------ -----
Total liabilities 48,922 60,456 15,825 7,608
------ ------ ------ -----
Net assets applicable to contracts in accumulation period $ 4,429,715 $ 4,197,953 $ 654,603 $ 848,303
Net assets applicable to contracts in payment period -- -- -- --
----- ------ ---- ------
Total net assets $ 4,429,715 $ 4,197,953 $ 654,603 $ 848,303
=========== =========== ========= =========
Accumulation units outstanding 3,611,816 3,420,658 683,371 885,005
========= ========= ======= =======
Net asset value per accumulation unit $ 1.23 $ 1.23 $ 0.96 $ 0.96
====== ====== ====== ======
Assets 1SI 2SI 1IS 2IS
Investments in shares of mutual funds and portfolios:
at cost $ 549,517 $ 542,286 $ 1,023,029 $ 879,384
--------- --------- ----------- ---------
at market value $ 567,167 $ 563,783 $ 1,069,184 $ 911,568
Dividends receivable -- -- -- --
Accounts receivable from IDS Life for contract
purchase payments 116,493 2,222 7,880 7,047
Receivable from mutual funds and portfolios for share
redemptions 285 269 649 380
--- --- --- ---
Total assets 683,945 566,274 1,077,713 918,995
======= ======= ========= =======
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 285 269 547 380
Payable to mutual funds and portfolios for investments
purchased 116,493 2,222 7,880 7,047
------- ----- ----- -----
Total liabilities 116,778 2,491 8,427 7,427
------- ----- ----- -----
Net assets applicable to contracts in accumulation period $ 567,167 $ 563,783 $ 1,069,286 $ 911,568
Net assets applicable to contracts in payment period -- -- -- --
------ ---- ----- -----
Total net assets $ 567,167 $ 563,783 $ 1,069,286 $ 911,568
========= ========= =========== =========
Accumulation units outstanding 589,712 585,846 1,052,855 897,107
======= ======= ========= =======
Net asset value per accumulation unit $ 0.96 $ 0.96 $ 1.02 $ 1.02
====== ====== ====== ======
Assets 1SE 2SE 1UE 2UE
Investments in shares of mutual funds and portfolios:
at cost $ 2,725,507 $ 1,917,308 $ 10,359,345 $ 9,381,210
----------- ----------- ------------ -----------
at market value $ 3,017,070 $ 2,121,185 $ 10,953,123 $ 9,912,956
Dividends receivable -- 3,582 -- --
Accounts receivable from IDS Life for contract
purchase payments 74,283 46,439 253,437 77,400
Receivable from mutual funds and portfolios for share
redemptions 1,827 1,020 6,723 4,956
----- ----- ----- -----
Total assets 3,093,180 2,172,226 11,213,283 9,995,312
========= ========= ========== =========
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 1,827 1,020 6,723 4,956
Payable to mutual funds and portfolios for investments
purchased 74,283 46,439 253,437 77,400
------ ------ ------- ------
Total liabilities 76,110 47,459 260,160 82,356
------ ------ ------- ------
Net assets applicable to contracts in accumulation period $ 3,017,070 $ 2,124,767 $ 10,953,123 $ 9,912,956
Net assets applicable to contracts in payment period -- -- -- --
---- ----- ----- -----
Total net assets $ 3,017,070 $ 2,124,767 $ 10,953,123 $ 9,912,956
=========== =========== ============ ===========
Accumulation units outstanding 2,665,253 1,876,209 9,951,016 8,980,927
========= ========= ========= =========
Net asset value per accumulation unit $ 1.13 $ 1.13 $ 1.10 $ 1.10
====== ====== ====== ======
Assets 1MC 2MC 1IP 2IP
Investments in shares of mutual funds and portfolios:
at cost $ 1,885,525 $ 1,522,954 $ 2,550,213 $ 2,004,758
----------- ----------- ----------- -----------
at market value $ 1,917,102 $ 1,549,468 $ 2,680,901 $ 2,122,181
Dividends receivable -- -- -- --
Accounts receivable from IDS Life for contract
purchase payments 20,333 1,768 65,123 8,121
Receivable from mutual funds and portfolios for share
redemptions 1,183 819 1,658 1,141
----- --- ----- -----
Total assets 1,938,618 1,552,055 2,747,682 2,131,443
========= ========= ========= =========
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 1,183 819 1,658 1,141
Payable to mutual funds and portfolios for investments
purchased 20,333 1,768 65,123 8,121
------ ----- ------ -----
Total liabilities 21,516 2,587 66,781 9,262
------ ----- ------ -----
Net assets applicable to contracts in accumulation period $ 1,917,102 $ 1,549,468 $ 2,680,901 $ 2,122,181
Net assets applicable to contracts in payment period -- -- -- --
----- ------ ------ ------
Total net assets $ 1,917,102 $ 1,549,468 $ 2,680,901 $ 2,122,181
=========== =========== =========== ===========
Accumulation units outstanding 2,022,724 1,633,700 2,504,403 1,981,118
========= ========= ========= =========
Net asset value per accumulation unit $ 0.95 $ 0.95 $ 1.07 $ 1.07
====== ====== ====== ======
Assets 1IN 2IN 1VS 2VS
Investments in shares of mutual funds and portfolios:
at cost $ 9,944,779 $ 7,361,537 $ 8,808,330 $ 6,242,378
----------- ----------- ----------- -----------
at market value $12,408,688 $ 9,204,802 $ 9,817,341 $ 6,918,021
Dividends receivable -- -- -- --
Accounts receivable from IDS Life for contract
purchase payments 134,217 144,670 263,878 50,356
Receivable from mutual funds and portfolios for share
redemptions 7,484 4,507 5,841 3,456
----- ----- ----- -----
Total assets 12,550,389 9,353,979 10,087,060 6,971,833
========== ========= ========== =========
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 7,484 4,507 5,841 3,456
Payable to mutual funds and portfolios for investments
purchased 134,217 144,670 263,878 50,356
------- ------- ------- ------
Total liabilities 141,701 149,177 269,719 53,812
------- ------- ------- ------
Net assets applicable to contracts in accumulation period $ 12,408,688 $ 9,204,802 $ 9,817,341 $ 6,917,980
Net assets applicable to contracts in payment period -- -- -- 41
------ ---- ------- -----
Total net assets $ 12,408,688 $ 9,204,802 $ 9,817,341 $ 6,918,021
============ =========== =========== ===========
Accumulation units outstanding 8,199,597 6,078,883 7,245,003 5,083,557
========= ========= ========= =========
Net asset value per accumulation unit $ 1.51 $ 1.51 $ 1.36 $ 1.36
====== ====== ====== ======
Assets 1MI 2MI 1SV 2SV
Investments in shares of mutual funds and portfolios:
at cost $ 2,111,886 $ 1,385,251 $ 2,084,708 $ 1,887,826
----------- ----------- ----------- -----------
at market value $ 2,173,432 $ 1,415,465 $ 2,208,733 $ 2,026,059
Dividends receivable -- -- -- --
Accounts receivable from IDS Life for contract
purchase payments 53,889 3,945 21,872 23,441
Receivable from mutual funds and portfolios for share
redemptions 1,264 704 1,353 1,052
----- --- ----- -----
Total assets 2,228,585 1,420,114 2,231,958 2,050,552
========= ========= ========= =========
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 1,264 704 1,353 1,052
Payable to mutual funds and portfolios for investments
purchased 53,889 3,945 21,872 23,441
------ ----- ------ ------
Total liabilities 55,153 4,649 23,225 24,493
------ ----- ------ ------
Net assets applicable to contracts in accumulation period $ 2,173,432 $ 1,415,465 $ 2,208,733 $ 2,026,059
Net assets applicable to contracts in payment period -- -- -- --
----- ------ ------ -----
Total net assets $ 2,173,432 $ 1,415,465 $ 2,208,733 $ 2,026,059
=========== =========== =========== ===========
Accumulation units outstanding 1,886,045 1,227,570 2,043,367 1,873,052
========= ========= ========= =========
Net asset value per accumulation unit $ 1.15 $ 1.15 $ 1.08 $ 1.08
====== ====== ====== ======
Assets 1IT 2IT 1SP 2SP
Investments in shares of mutual funds and portfolios:
at cost $ 1,676,343 $ 1,532,620 $ 2,933,382 $ 2,671,164
----------- ----------- ----------- -----------
at market value $ 2,031,976 $ 1,867,844 $ 3,132,024 $ 2,850,015
Dividends receivable -- -- -- --
Accounts receivable from IDS Life for contract
purchase payments 80,267 51,257 45,698 64,688
Receivable from mutual funds and portfolios for share
redemptions 1,089 786 1,763 1,277
----- --- ----- -----
Total assets 2,113,332 1,919,887 3,179,485 2,915,980
========= ========= ========= =========
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 1,089 734 1,763 1,277
Payable to mutual funds and portfolios for investments
purchased 80,267 51,257 45,698 64,688
------ ------ ------ ------
Total liabilities 81,356 51,991 47,461 65,965
------ ------ ------ ------
Net assets applicable to contracts in accumulation period $ 2,031,976 $ 1,867,896 $ 3,132,024 $ 2,850,015
Net assets applicable to contracts in payment period -- -- -- --
----- ------ ------ -------
Total net assets $ 2,031,976 $ 1,867,896 $ 3,132,024 $ 2,850,015
=========== =========== =========== ===========
Accumulation units outstanding 1,342,920 1,233,713 2,723,041 2,476,379
========= ========= ========= =========
Net asset value per accumulation unit $ 1.51 $ 1.51 $ 1.15 $ 1.15
====== ====== ====== ======
Combined
Variable
Assets 1EG 2EG Account
Investments in shares of mutual funds and portfolios:
at cost $ 3,263,376 $ 2,093,976 $ 555,898,449
----------- ----------- -------------
at market value $ 3,777,614 $ 2,420,059 $ 587,688,921
Dividends receivable -- -- 949,243
Accounts receivable from IDS Life for contract
purchase payments 55,796 43,162 10,336,407
Receivable from mutual funds and portfolios for share
redemptions 2,285 1,161 106,688
----- ----- -------
Total assets 3,835,695 2,464,382 599,081,259
========= ========= ===========
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 2,285 1,161 330,787
Payable to mutual funds and portfolios for investments
purchased 55,796 43,162 3,200,268
------ ------ ---------
Total liabilities 58,081 44,323 3,531,055
------ ------ ---------
Net assets applicable to contracts in accumulation period $ 3,777,614 $ 2,420,059 $ 595,438,152
Net assets applicable to contracts in payment period -- -- 112,052
----- ----- -------
Total net assets $ 3,777,614 $ 2,420,059 $ 595,550,204
=========== =========== =============
Accumulation units outstanding 2,872,085 1,838,182
========= =========
Net asset value per accumulation unit $ 1.32 $ 1.32
====== ======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 -- AXP Retirement Advisor Variable Annuity (SM)
Statements of Operations
Period ended December 31, 1999
Segregated Asset Subaccounts(1)
Investment income BC1 BC2 BD1 BD2
<S> <C> <C> <C> <C>
Dividend income from mutual funds and portfolios $ 6,772 $ 5,765 $ 86,087 $ 59,818
Mortality and expense risk fee 9,359 6,367 11,304 6,238
----- ----- ------ -----
Investment income (loss) - net (2,587) (602) 74,783 53,580
====== ==== ====== ======
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in
mutual funds and portfolios:
Proceeds from sales 3,630 33,210 426,478 182,817
Cost of investments sold 3,511 33,072 427,455 182,460
----- ------ ------- -------
Net realized gain (loss) on investments 119 138 (977) 357
Net change in unrealized appreciation or
depreciation of investments 582,026 503,769 (23,216) (9,773)
------- ------- ------- ------
Net gain (loss) on investments 582,145 503,907 (24,193) (9,416)
------- ------- ------- ------
Net increase (decrease) in net assets resulting
from operations $ 579,558 $ 503,305 $ 50,590 $ 44,164
========= ========= ======== ========
Investment income CR1 CR2 CM1 CM2
Dividend income from mutual funds and portfolios $ 183,607 $ 325,161 $ 516,305 $ 405,856
Mortality and expense risk fee 3,463 4,483 95,329 59,218
----- ----- ------ ------
Investment income (loss) - net 180,144 320,678 420,976 346,638
======= ======= ======= =======
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in
mutual funds and portfolios:
Proceeds from sales 24,926 72,979 42,956 1,358,047
Cost of investments sold 24,698 71,180 42,956 1,358,047
------ ------ ------ ---------
Net realized gain (loss) on investments 228 1,799 -- --
Net change in unrealized appreciation or
depreciation of investments 129,521 200,310 (20) (17)
------- ------- --- ---
Net gain (loss) on investments 129,749 202,109 (20) (17)
------- ------- --- ---
Net increase (decrease) in net assets resulting
from operations $ 309,893 $ 522,787 $ 420,956 $ 346,621
========= ========= ========= =========
Investment income DE1 DE2 EI1 EI2
Dividend income from mutual funds and portfolios $ 7,449 $ 6,972 $ 112,895 $ 78,119
Mortality and expense risk fee 4,013 2,874 10,474 5,760
----- ----- ------ -----
Investment income (loss) - net 3,436 4,098 102,421 72,359
===== ===== ======= ======
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in
mutual funds and portfolios:
Proceeds from sales 1,777 1,143 89,091 129,710
Cost of investments sold 1,735 1,125 88,848 130,694
----- ----- ------ -------
Net realized gain (loss) on investments 42 18 243 (984)
Net change in unrealized appreciation or
depreciation of investments 97,850 73,972 69,360 14,899
------ ------ ------ ------
Net gain (loss) on investments 97,892 73,990 69,603 13,915
------ ------ ------ ------
Net increase (decrease) in net assets resulting
from operations $ 101,328 $ 78,088 $ 172,024 $ 86,274
========= ======== ========= ========
Investment income FI1 FI2 GB1 GB2
Dividend income from mutual funds and portfolios $ 87,849 $ 65,644 $ 13,388 $ 8,842
Mortality and expense risk fee 15,784 9,385 2,527 1,331
------ ----- ----- -----
Investment income (loss) - net 72,065 56,259 10,861 7,511
====== ====== ====== =====
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in
mutual funds and portfolios:
Proceeds from sales 278,632 769,739 77,446 541
Cost of investments sold 279,403 770,817 78,427 546
------- ------- ------ ---
Net realized gain (loss) on investments (771) (1,078) (981) (5)
Net change in unrealized appreciation or
depreciation of investments (64,481) (50,825) (29,550) (18,039)
------- ------- ------- -------
Net gain (loss) on investments (65,252) (51,903) (30,531) (18,044)
------- ------- ------- -------
Net increase (decrease) in net assets resulting
from operations $ 6,813 $ 4,356 $ (19,670) $ (10,533)
======= ======= ========= =========
Investment income GR1 GR2 IE1 IE2
Dividend income from mutual funds and portfolios $ 9,895 $ 11,139 $ 148,076 $ 246,226
Mortality and expense risk fee 15,651 14,326 2,303 2,426
------ ------ ----- -----
Investment income (loss) - net (5,756) (3,187) 145,773 243,800
====== ====== ======= =======
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in
mutual funds and portfolios:
Proceeds from sales 6,098 25,509 16,038 47,489
Cost of investments sold 5,812 23,642 15,686 47,208
----- ------ ------ ------
Net realized gain (loss) on investments 286 1,867 352 281
Net change in unrealized appreciation or
depreciation of investments 1,475,698 1,721,546 164,609 170,750
--------- --------- ------- -------
Net gain (loss) on investments 1,475,984 1,723,413 164,961 171,031
--------- --------- ------- -------
Net increase (decrease) in net assets resulting
from operations $ 1,470,228 $ 1,720,226 $ 310,734 $ 414,831
=========== =========== ========= =========
Investment income MF1 MF2 ND1 ND2
Dividend income from mutual funds and portfolios $ 190,813 $ 147,789 $ 175,961 $ 161,503
Mortality and expense risk fee 7,149 4,395 35,949 27,115
----- ----- ------ ------
Investment income (loss) - net 183,664 143,394 140,012 134,388
======= ======= ======= =======
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in
mutual funds and portfolios:
Proceeds from sales 25,527 5,288 25,765 10,338
Cost of investments sold 25,118 5,379 24,430 9,975
------ ----- ------ -----
Net realized gain (loss) on investments 409 (91) 1,335 363
Net change in unrealized appreciation or
depreciation of investments 209,114 172,124 3,344,313 3,251,583
------- ------- --------- ---------
Net gain (loss) on investments 209,523 172,033 3,345,648 3,251,946
------- ------- --------- ---------
Net increase (decrease) in net assets resulting
from operations $ 393,187 $ 315,427 $ 3,485,660 $ 3,386,334
========= ========= =========== ===========
Investment income SC1 SC2 SA1 SA2
Dividend income from mutual funds and portfolios $ 13,105 $ 13,192 $ 157,457 $ 203,100
Mortality and expense risk fee 3,274 2,483 4,179 4,260
----- ----- ----- -----
Investment income (loss) - net 9,831 10,709 153,278 198,840
===== ====== ======= =======
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in
mutual funds and portfolios:
Proceeds from sales 1,563 2,708,655 1,171 27,417
Cost of investments sold 1,529 2,690,974 1,169 24,645
----- --------- ----- ------
Net realized gain (loss) on investments 34 17,681 2 2,772
Net change in unrealized appreciation or
depreciation of investments 245,447 226,625 742,963 976,970
------- ------- ------- -------
Net gain (loss) on investments 245,481 244,306 742,965 979,742
------- ------- ------- -------
Net increase (decrease) in net assets resulting
from operations $ 255,312 $ 255,015 $ 896,243 $ 1,178,582
========= ========= ========= ===========
Investment income 1CA 2CA 1CD 2CD
Dividend income from mutual funds and portfolios $ 104,087 $ 82,137 $-- $--
Mortality and expense risk fee 6,666 4,145 2,242 1,528
----- ----- ----- -----
Investment income (loss) - net 97,421 77,992 (2,242) (1,528)
====== ====== ====== ======
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in
mutual funds and portfolios:
Proceeds from sales 27,663 4 27,014 21,602
Cost of investments sold 25,765 4 25,079 20,006
------ - ------ ------
Net realized gain (loss) on investments 1,898 -- 1,935 1,596
Net change in unrealized appreciation or
depreciation of investments 859,149 681,227 290,076 256,676
------- ------- ------- -------
Net gain (loss) on investments 861,047 681,227 292,011 258,272
------- ------- ------- -------
Net increase (decrease) in net assets resulting
from operations $ 958,468 $ 759,219 $ 289,769 $ 256,744
========= ========= ========= =========
Investment income 1IF 2IF 1VA 2VA
Dividend income from mutual funds and portfolios $-- $-- $-- $--
Mortality and expense risk fee 2,948 1,939 4,716 3,075
----- ----- ----- -----
Investment income (loss) - net (2,948) (1,939) (4,716) (3,075)
====== ====== ====== ======
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in
mutual funds and portfolios:
Proceeds from sales 1 43,247 22,835 27,396
Cost of investments sold 1 40,472 22,160 27,980
- ------ ------ ------
Net realized gain (loss) on investments -- 2,775 675 (584)
Net change in unrealized appreciation or
depreciation of investments 583,598 485,309 (8,877) (21,256)
------- ------- ------ -------
Net gain (loss) on investments 583,598 488,084 (8,202) (21,840)
------- ------- ------ -------
Net increase (decrease) in net assets resulting
from operations $ 580,650 $ 486,145 $ (12,918) $ (24,915)
========= ========= ========= =========
Investment income 1GI 2GI 1MP 2MP
Dividend income from mutual funds and portfolios $-- $-- $ 52,306 $ 43,451
Mortality and expense risk fee 19,386 13,669 8,558 5,857
------ ------ ----- -----
Investment income (loss) - net (19,386) (13,669) 43,748 37,594
======= ======= ====== ======
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in
mutual funds and portfolios:
Proceeds from sales 19 17 13 266,497
Cost of investments sold 19 17 13 256,449
-- -- -- -------
Net realized gain (loss) on investments -- -- -- 10,048
Net change in unrealized appreciation or
depreciation of investments 553,369 491,493 1,140,720 971,702
------- ------- --------- -------
Net gain (loss) on investments 553,369 491,493 1,140,720 981,750
------- ------- --------- -------
Net increase (decrease) in net assets resulting
from operations $ 533,983 $ 477,824 $ 1,184,468 $ 1,019,344
========= ========= =========== ===========
Investment income 1OS 2OS 1RE 2RE
Dividend income from mutual funds and portfolios $-- $-- $-- $--
Mortality and expense risk fee 4,319 3,218 675 727
----- ----- --- ---
Investment income (loss) - net (4,319) (3,218) (675) (727)
====== ====== ==== ====
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in
mutual funds and portfolios:
Proceeds from sales 6,577 265,613 11,057 3
Cost of investments sold 6,508 260,557 11,175 3
----- ------- ------ -
Net realized gain (loss) on investments 69 5,056 (118) --
Net change in unrealized appreciation or
depreciation of investments 513,957 475,663 18,355 22,614
------- ------- ------ ------
Net gain (loss) on investments 514,026 480,719 18,237 22,614
------- ------- ------ ------
Net increase (decrease) in net assets resulting
from operations $ 509,707 $ 477,501 $ 17,562 $ 21,887
========= ========= ======== ========
Investment income 1SI 2SI 1IS 2IS
Dividend income from mutual funds and portfolios $-- $-- $-- $--
Mortality and expense risk fee 430 467 1,094 529
--- --- ----- ---
Investment income (loss) - net (430) (467) (1,094) (529)
==== ==== ====== ====
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in
mutual funds and portfolios:
Proceeds from sales -- 318 3 45,191
Cost of investments sold -- 320 3 45,194
--- --- - ------
Net realized gain (loss) on investments -- (2) -- (3)
Net change in unrealized appreciation or
depreciation of investments 17,650 21,497 46,155 32,184
------ ------ ------ ------
Net gain (loss) on investments 17,650 21,495 46,155 32,181
------ ------ ------ ------
Net increase (decrease) in net assets resulting
from operations $ 17,220 $ 21,028 $ 45,061 $ 31,652
======== ======== ======== ========
Investment income 1SE 2SE 1UE 2UE
Dividend income from mutual funds and portfolios $ 4,992 $ 3,582 $ 121,813 $ 113,993
Mortality and expense risk fee 3,021 1,640 11,183 8,056
----- ----- ------ -----
Investment income (loss) - net 1,971 1,942 110,630 105,937
===== ===== ======= =======
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in
mutual funds and portfolios:
Proceeds from sales 5 5,860 35,994 14,432
Cost of investments sold 5 5,603 33,790 13,640
- ----- ------ ------
Net realized gain (loss) on investments -- 257 2,204 792
Net change in unrealized appreciation or
depreciation of investments 291,563 203,877 593,778 531,746
------- ------- ------- -------
Net gain (loss) on investments 291,563 204,134 595,982 532,538
======= ======= ======= =======
Net increase (decrease) in net assets resulting
from operations $ 293,534 $ 206,076 $ 706,612 $ 638,475
========= ========= ========= =========
Investment income 1MC 2MC 1IP 2IP
Dividend income from mutual funds and portfolios $ 11,299 $ 9,907 $ 20,808 $ 18,758
Mortality and expense risk fee 2,052 1,445 2,668 2,027
----- ----- ----- -----
Investment income (loss) - net 9,247 8,462 18,140 16,731
===== ===== ====== ======
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in
mutual funds and portfolios:
Proceeds from sales 1,596 63,300 8,785 5,072
Cost of investments sold 1,561 64,252 8,591 4,985
----- ------ ----- -----
Net realized gain (loss) on investments 35 (952) 194 87
Net change in unrealized appreciation or
depreciation of investments 31,577 26,514 130,688 117,423
------ ------ ------- -------
Net gain (loss) on investments 31,612 25,562 130,882 117,510
------ ------ ------- -------
Net increase (decrease) in net assets resulting
from operations $ 40,859 $ 34,024 $ 149,022 $ 134,241
======== ======== ========= =========
Investment income 1IN1 2IN1 1VS1 2VS1
Dividend income from mutual funds and portfolios $-- $-- $ 537,157 $ 426,628
Mortality and expense risk fee 11,652 6,830 9,068 5,054
------ ----- ----- -----
Investment income (loss) - net (11,652) (6,830) 528,089 421,574
======= ====== ======= =======
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in
mutual funds and portfolios:
Proceeds from sales 7 14 14 9
Cost of investments sold 7 14 14 9
- -- -- -
Net realized gain (loss) on investments -- -- -- --
Net change in unrealized appreciation or
depreciation of investments 2,463,909 1,843,265 1,009,011 675,643
--------- --------- --------- -------
Net gain (loss) on investments 2,463,909 1,843,265 1,009,011 675,643
--------- --------- --------- -------
Net increase (decrease) in net assets resulting
from operations $ 2,452,257 $ 1,836,435 $ 1,537,100 $ 1,097,217
=========== =========== =========== ===========
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2For the period Sept. 21, 1999 (commencement of operations) to Dec. 31, 1999.
Investment income 1MI1 2MI1 1SV2 2SV2
Dividend income from mutual funds and portfolios $ 140,724 $ 97,888 $-- $--
Mortality and expense risk fee 2,104 1,031 2,131 1,787
----- ----- ----- -----
Investment income (loss) - net 138,620 96,857 (2,131) (1,787)
======= ====== ====== ======
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in
mutual funds and portfolios:
Proceeds from sales 2 326,475 2,099 48,587
Cost of investments sold 2 323,822 2,113 47,864
- ------- ----- ------
Net realized gain (loss) on investments -- 2,653 (14) 723
Net change in unrealized appreciation or
depreciation of investments 61,546 30,214 124,025 138,233
------ ------ ------- -------
Net gain (loss) on investments 61,546 32,867 124,011 138,956
------ ------ ------- -------
Net increase (decrease) in net assets resulting
from operations $ 200,166 $ 129,724 $ 121,880 $ 137,169
========= ========= ========= =========
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2For the period Sept. 21, 1999 (commencement of operations) to Dec. 31, 1999.
Investment income 1IT1 2IT1 1SP1 2SP1
Dividend income from mutual funds and portfolios $-- $-- $-- $--
Mortality and expense risk fee 1,448 1,112 2,628 1,851
----- ----- ----- -----
Investment income (loss) - net (1,448) (1,112) (2,628) (1,851)
====== ====== ====== ======
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in
mutual funds and portfolios:
Proceeds from sales 255 -- 2 --
Cost of investments sold 254 -- 2 --
--- -
Net realized gain (loss) on investments 1 -- -- --
Net change in unrealized appreciation or
depreciation of investments 355,633 335,224 198,642 178,851
------- ------- ------- -------
Net gain (loss) on investments 355,634 335,224 198,642 178,851
======= ======= ======= =======
Net increase (decrease) in net assets resulting
from operations $ 354,186 $ 334,112 $ 196,014 $ 177,000
========= ========= ========= =========
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2For the period Sept. 21, 1999 (commencement of operations) to Dec. 31, 1999.
Combined
Variable
Investment income 1EG2 2EG2 Account
Dividend income from mutual funds and portfolios $ 19,793 $ 12,276 $ 5,270,384
Mortality and expense risk fee 3,459 1,699 541,553
----- ----- -------
Investment income (loss) - net 16,334 10,577 4,728,831
====== ====== =========
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in
mutual funds and portfolios:
Proceeds from sales 1 945 7,672,504
Cost of investments sold 1 899 7,619,694
- --- ---------
Net realized gain (loss) on investments -- 46 52,810
Net change in unrealized appreciation or
depreciation of investments 514,238 326,083 31,790,472
------- ------- ----------
Net gain (loss) on investments 514,238 326,129 31,843,282
------- ------- ----------
Net increase (decrease) in net assets resulting
from operations $ 530,572 $ 336,706 $ 36,572,113
========= ========= ============
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2For the period Sept. 21, 1999 (commencement of operations) to Dec. 31, 1999.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
Period ended December 31, 1999
Segregated Asset Subaccounts1
Operations BC1 BC2 BD1 BD2
<S> <C> <C> <C> <C>
Investment income (loss) - net $ (2,587) $ (602) $ 74,783 $ 53,580
Net realized gain (loss) on investments 119 138 (977) 357
Net change in unrealized appreciation or
depreciation of investments 582,026 503,769 (23,216) (9,773)
------- ------- ------- ------
Net increase (decrease) in net assets
resulting from operations 579,558 503,305 50,590 44,164
======= ======= ====== ======
Contract transactions
Contract purchase payments 7,433,114 7,101,931 11,484,828 6,956,813
Net transfers2 1,035,077 734,585 313,214 345,360
Transfers for policy loans -- -- -- (4,036)
Annuity payments -- -- -- --
Contract terminations:
Surrender benefits (4,464) (3,533) (3,858) (43,861)
Death benefits -- -- (3,768) (6,048)
------ ------ ------ ------
Increase (decrease) from contract transactions 8,463,727 7,832,983 11,790,416 7,248,228
--------- --------- ---------- ---------
Net assets at beginning of year -- -- -- --
--------- --------- ---------- ---------
Net assets at end of year $ 9,043,285 $ 8,336,288 $ 11,841,006 $ 7,292,392
=========== =========== ============ ===========
Accumulation unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 7,162,609 6,810,380 11,373,968 6,895,987
Net transfers2 986,160 696,257 308,700 343,400
Transfers for policy loans -- -- -- (4,057)
Contract terminations:
Surrender benefits (4,068) (3,259) (3,810) (43,401)
Death benefits -- -- (3,724) (5,976)
-------- ------- ------ ------
Units outstanding at end of year 8,144,701 7,503,378 11,675,134 7,185,953
========= ========= ========== =========
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
Segregated Asset Subaccounts1
Operations CR1 CR2 CM1 CM2
Investment income (loss) - net $ 180,144 $ 320,678 $ 420,976 $ 346,638
Net realized gain (loss) on investments 228 1,799 -- --
Net change in unrealized appreciation or
depreciation of investments 129,521 200,310 (20) (17)
------- ------- --- ---
Net increase (decrease) in net assets resulting
from operations 309,893 522,787 420,956 346,621
======= ======= ======= =======
Contract transactions
Contract purchase payments 3,111,030 5,526,328 109,375,412 85,241,344
Net transfers2 263,751 97,735 (21,277,400) (19,097,300)
Transfers for policy loans -- -- -- (135,836)
Annuity payments -- (278) -- --
Contract terminations:
Surrender benefits (4,351) (8,934) (24,995) (37,313)
Death benefits -- -- (114,657) (39,975)
------ ------- -------- -------
Increase (decrease) from contract transactions 3,370,430 5,614,851 87,958,360 65,930,920
--------- --------- ---------- ----------
Net assets at beginning of year -- -- -- --
--------- --------- ---------- ----------
Net assets at end of year $ 3,680,323 $ 6,137,638 $ 88,379,316 $ 66,277,541
=========== =========== ============ ============
Accumulation unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 2,978,006 5,287,001 108,634,311 84,680,749
Net transfers2 253,016 99,898 (21,071,326) (18,947,088)
Transfers for policy loans -- -- -- (134,817)
Contract terminations:
Surrender benefits (4,021) (54,010) (24,769) (37,017)
Death benefits -- -- (113,923) (39,703)
------ ------ -------- -------
Units outstanding at end of year 3,227,001 5,332,889 87,424,293 65,522,124
========= ========= ========== ==========
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
Segregated Asset Subaccounts1
Operations DE1 DE2 EI1 EI2
Investment income (loss) - net $ 3,436 $ 4,098 $ 102,421 $ 72,359
Net realized gain (loss) on investments 42 18 243 (984)
Net change in unrealized appreciation or
depreciation of investments 97,850 73,972 69,360 14,899
------ ------ ------ ------
Net increase (decrease) in net assets
resulting from operations 101,328 78,088 172,024 86,274
======= ====== ======= ======
Contract transactions
Contract purchase payments 3,052,274 2,819,613 9,162,394 7,046,617
Net transfers2 381,448 347,588 919,468 740,456
Transfers for policy loans -- (2,929) -- (1,362)
Annuity payments -- -- (167) --
Contract terminations:
Surrender benefits (1,452) (3,891) (4,008) (4,745)
Death benefits (3,792) (6,160) -- --
------ ------ ------- ------
Increase (decrease) from contract transactions 3,428,478 3,154,221 10,077,687 7,780,966
--------- --------- ---------- ---------
Net assets at beginning of year -- -- -- --
--------- --------- ---------- ---------
Net assets at end of year $ 3,529,806 $ 3,232,309 $ 10,249,711 $ 7,867,240
=========== =========== ============ ===========
Accumulation unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 3,066,645 2,814,906 9,219,216 7,069,480
Net transfers2 379,466 346,936 932,432 710,749
Transfers for policy loans -- (2,892) -- (1,370)
Contract terminations:
Surrender benefits (1,433) (3,849) (14,643) (4,765)
Death benefits (3,740) (6,074) -- --
------ ------ ------ ------
Units outstanding at end of year 3,440,938 3,149,027 10,137,005 7,774,094
========= ========= ========== =========
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
Segregated Asset Subaccounts1
Operations FI1 FI2 GB1 GB2
Investment income (loss) - net $ 72,065 $ 56,259 $ 10,861 $ 7,511
Net realized gain (loss) on investments (771) (1,078) (981) (5)
Net change in unrealized appreciation or
depreciation of investments (64,481) (50,825) (29,550) (18,039)
------- ------- ------- -------
Net increase (decrease) in net assets
resulting from operations 6,813 4,356 (19,670) (10,533)
===== ===== ======= =======
Contract transactions
Contract purchase payments 14,336,568 12,246,539 2,072,704 1,343,061
Net transfers2 (1,420,267) (1,058,145) 317,070 223,877
Transfers for policy loans -- -- -- (2,046)
Annuity payments -- -- -- --
Contract terminations:
Surrender benefits (88,589) (11,705) (1,525) (732)
Death benefits (7,507) (12,024) -- --
------ ------- ----- ------
Increase (decrease) from contract transactions 12,820,205 11,164,665 2,388,249 1,564,160
---------- ---------- --------- ---------
Net assets at beginning of year -- -- -- --
---------- ---------- --------- ---------
Net assets at end of year $ 12,827,018 $ 11,169,021 $ 2,368,579 $ 1,553,627
============ ============ =========== ===========
Accumulation unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 14,318,437 12,212,010 2,054,070 1,332,987
Net transfers2 (1,426,679) (1,053,115) 315,167 221,882
Transfers for policy loans -- -- -- (2,024)
Contract terminations:
Surrender benefits (88,311) (11,669) (1,506) (729)
Death benefits (7,482) (11,980) -- --
------ ------- ----- ------
Units outstanding at end of year 12,795,965 11,135,246 2,367,731 1,552,116
========== ========== ========= =========
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
Segregated Asset Subaccounts1
Operations GR1 GR2 IE1 IE2
Investment income (loss) - net $ (5,756) $ (3,187) $ 145,773 $ 243,800
Net realized gain (loss) on investments 286 1,867 352 281
Net change in unrealized appreciation
or depreciation of investments 1,475,698 1,721,546 164,609 170,750
--------- --------- ------- -------
Net increase (decrease) in net assets
resulting from operations 1,470,228 1,720,226 310,734 414,831
========= ========= ======= =======
Contract transactions
Contract purchase payments 12,920,916 16,592,001 2,134,769 2,647,146
Net transfers2 1,906,148 1,670,102 322,635 220,086
Transfers for policy loans -- (17,061) -- --
Annuity payments -- (247) -- --
Contract terminations:
Surrender benefits (4,649) (9,364) (2,239) (2,526)
Death benefits -- -- -- --
-------- ------- ------- ------
Increase (decrease) from contract transactions 14,822,415 18,235,431 2,455,165 2,864,706
---------- ---------- --------- ---------
Net assets at beginning of year -- -- -- --
---------- ---------- --------- ---------
Net assets at end of year $ 16,292,643 $ 19,955,657 $ 2,765,899 $ 3,279,537
============ ============ =========== ===========
Accumulation unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 12,046,112 15,400,990 1,892,810 2,385,192
Net transfers2 1,770,848 1,533,999 282,373 192,407
Transfers for policy loans -- (15,706) -- --
Contract terminations:
Surrender benefits (4,032) (28,026) (1,878) (2,235)
Death benefits -- -- -- --
-------- ------- ------- ------
Units outstanding at end of year 13,812,928 16,891,257 2,173,305 2,575,364
========== ========== ========= =========
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
Segregated Asset Subaccounts1
Operations MF1 MF2 ND1 ND2
Investment income (loss) - net $ 183,664 $ 143,394 $ 140,012 $ 134,388
Net realized gain (loss) on investments 409 (91) 1,335 363
Net change in unrealized appreciation or
depreciation of investments 209,114 172,124 3,344,313 3,251,583
------- ------- --------- ---------
Net increase (decrease) in net assets
resulting from operations 393,187 315,427 3,485,660 3,386,334
======= ======= ========= =========
Contract transactions
Contract purchase payments 6,071,982 5,083,910 31,310,027 30,126,003
Net transfers2 644,363 284,874 3,851,864 4,080,510
Transfers for policy loans -- -- -- (8,431)
Annuity payments -- -- (247) (1,064)
Contract terminations:
Surrender benefits (1,336) (6,202) (12,517) (21,866)
Death benefits -- -- (3,906) (6,397)
------- ------- ------ ------
Increase (decrease) from contract transactions 6,715,009 5,362,582 35,145,221 34,168,755
--------- --------- ---------- ----------
Net assets at beginning of year -- -- -- --
--------- --------- ---------- ----------
Net assets at end of year $ 7,108,196 $ 5,678,009 $ 38,630,881 $ 37,555,089
=========== =========== ============ ============
Accumulation unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 5,922,803 4,952,443 28,968,153 27,841,928
Net transfers2 617,528 273,875 3,544,018 3,800,123
Transfers for policy loans -- -- -- (7,719)
Contract terminations:
Surrender benefits (1,245) (6,019) (25,986) (91,026)
Death benefits -- -- (3,601) (5,895)
------- ------- ------ ------
Units outstanding at end of year 6,539,086 5,220,299 32,482,584 31,537,411
========= ========= ========== ==========
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
Segregated Asset Subaccounts1
Operations SC1 SC2 SA1 SA2
Investment income (loss) - net $ 9,831 $ 10,709 $ 153,278 $ 198,840
Net realized gain (loss) on investments 34 17,681 2 2,772
Net change in unrealized appreciation or
depreciation of investments 245,447 226,625 742,963 976,970
------- ------- ------- -------
Net increase (decrease) in net assets
resulting from operations 255,312 255,015 896,243 1,178,582
======= ======= ======= =========
Contract transactions
Contract purchase payments 2,653,515 2,663,423 4,360,849 4,744,466
Net transfers2 497,807 424,091 654,792 859,140
Transfers for policy loans -- (1,155) -- --
Annuity payments (143) -- -- --
Contract terminations:
Surrender benefits (1,717) (529) (5,671) (10,331)
Death benefits -- -- -- --
-------- ------- ------- ------
Increase (decrease) from contract transactions 3,149,462 3,085,830 5,009,970 5,593,275
--------- --------- --------- ---------
Net assets at beginning of year -- -- -- --
--------- --------- --------- ---------
Net assets at end of year $ 3,404,774 $ 3,340,845 $ 5,906,213 $ 6,771,857
=========== =========== =========== ===========
Accumulation unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 2,555,169 2,569,999 3,400,022 3,813,282
Net transfers2 484,382 401,900 505,167 664,753
Transfers for policy loans -- (1,113) -- --
Contract terminations:
Surrender benefits (10,442) (495) (4,056) (7,790)
Death benefits -- -- -- --
-------- ------- ------- ------
Units outstanding at end of year 3,029,109 2,970,291 3,901,133 4,470,245
========= ========= ========= =========
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
Segregated Asset Subaccounts1
Operations 1CA 2CA 1CD 2CD
Investment income (loss) - net $ 97,421 $ 77,992 $ (2,242) $ (1,528)
Net realized gain (loss) on investments 1,898 -- 1,935 1,596
Net change in unrealized appreciation or
depreciation of investments 859,149 681,227 290,076 256,676
------- ------- ------- -------
Net increase (decrease) in net assets
resulting from operations 958,468 759,219 289,769 256,744
======= ======= ======= =======
Contract transactions
Contract purchase payments 5,107,384 4,183,527 1,839,913 1,383,121
Net transfers2 711,052 756,963 262,326 482,191
Transfers for policy loans -- 9 -- --
Annuity payments -- -- -- --
Contract terminations:
Surrender benefits (75) (658) (44) (28)
Death benefits -- -- -- --
-------- ------- ------- ------
Increase (decrease) from contract transactions 5,818,361 4,939,841 2,102,195 1,865,284
--------- --------- --------- ---------
Net assets at beginning of year -- -- -- --
--------- --------- --------- ---------
Net assets at end of year $ 6,776,829 $ 5,699,060 $ 2,391,964 $ 2,122,028
=========== =========== =========== ===========
Accumulation unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 4,542,912 3,684,401 1,659,747 1,256,610
Net transfers2 617,051 652,901 232,656 421,210
Transfers for policy loans -- -- -- --
Contract terminations:
Surrender benefits (62) (554) (38) (24)
Death benefits -- -- -- --
-------- ------- ------- ------
Units outstanding at end of year 5,159,901 4,336,748 1,892,365 1,677,796
========= ========= ========= =========
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
Segregated Asset Subaccounts1
Operations 1IF 2IF 1VA 2VA
Investment income (loss) - net $ (2,948) $ (1,939) $ (4,716) $ (3,075)
Net realized gain (loss) on investments -- 2,775 675 (584)
Net change in unrealized appreciation or
depreciation of investments 583,598 485,309 (8,877) (21,256)
------- ------- ------ -------
Net increase (decrease) in net assets
resulting from operations 580,650 486,145 (12,918) (24,915)
======= ======= ======= =======
Contract transactions
Contract purchase payments 1,999,856 1,691,173 3,777,935 2,999,761
Net transfers2 429,804 407,485 628,524 393,293
Transfers for policy loans -- (5,437) -- 2
Annuity payments -- -- -- --
Contract terminations:
Surrender benefits (187) (3,430) (1,241) (2,258)
Death benefits -- -- -- --
-------- ------- ------- ------
Increase (decrease) from contract transactions 2,429,473 2,089,791 4,405,218 3,390,798
--------- --------- --------- ---------
Net assets at beginning of year -- -- -- --
--------- --------- --------- ---------
Net assets at end of year $ 3,010,123 $ 2,575,936 $ 4,392,300 $ 3,365,883
=========== =========== =========== ===========
Accumulation unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 1,730,284 1,454,910 4,092,189 3,231,208
Net transfers2 363,593 342,202 684,142 428,242
Transfers for policy loans -- (3,831) -- --
Contract terminations:
Surrender benefits (143) (2,631) (1,366) (2,487)
Death benefits -- -- -- --
-------- ------- ------- ------
Units outstanding at end of year 2,093,734 1,790,650 4,774,965 3,656,963
========= ========= ========= =========
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
Segregated Asset Subaccounts1
Operations 1GI 2GI 1MP 2MP
Investment income (loss) - net $ (19,386) $ (13,669) $ 43,748 $ 37,594
Net realized gain (loss) on investments -- -- -- 10,048
Net change in unrealized appreciation
or depreciation of investments 553,369 491,493 1,140,720 971,702
------- ------- --------- -------
Net increase (decrease) in net assets
resulting from operations 533,983 477,824 1,184,468 1,019,344
======= ======= ========= =========
Contract transactions
Contract purchase payments 15,741,210 13,409,862 6,375,769 5,111,676
Net transfers2 2,672,550 2,443,726 1,062,042 995,983
Transfers for policy loans -- (4,840) -- (2,566)
Annuity payments -- -- -- (248)
Contract terminations:
Surrender benefits (2,211) (8,767) (2,185) (8,145)
Death benefits (7,577) (12,280) (3,888) (6,420)
------ ------- ------ ------
Increase (decrease) from contract transactions 18,403,972 15,827,701 7,431,738 6,090,280
---------- ---------- --------- ---------
Net assets at beginning of year -- -- -- --
---------- ---------- --------- ---------
Net assets at end of year $ 18,937,955 $ 16,305,525 $ 8,616,206 $ 7,109,624
============ ============ =========== ===========
Accumulation unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 15,529,921 13,239,175 5,965,971 4,839,333
Net transfers2 2,617,031 2,388,834 984,780 905,320
Transfers for policy loans -- (4,699) -- (2,341)
Contract terminations:
Surrender benefits (2,129) (8,488) (2,102) (26,910)
Death benefits (7,402) (11,991) (3,636) (6,001)
------ ------- ------ ------
Units outstanding at end of year 18,137,421 15,602,831 6,945,013 5,709,401
========== ========== ========= =========
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
Segregated Asset Subaccounts1
Operations 1OS 2OS 1RE 2RE
Investment income (loss) - net $ (4,319) $ (3,218) $ (675) $ (727)
Net realized gain (loss) on investments 69 5,056 (118) --
Net change in unrealized appreciation or
depreciation of investments 513,957 475,663 18,355 22,614
------- ------- ------ ------
Net increase (decrease) in net assets
resulting from operations 509,707 477,501 17,562 21,887
======= ======= ====== ======
Contract transactions
Contract purchase payments 3,319,653 3,100,261 453,462 644,456
Net transfers2 601,976 622,039 187,577 187,834
Transfers for policy loans -- (696) -- --
Annuity payments -- -- -- --
Contract terminations:
Surrender benefits (1,621) (1,152) (303) --
Death benefits -- -- (3,695) (5,874)
------- -------- ------ ------
Increase (decrease) from contract transactions 3,920,008 3,720,452 637,041 826,416
--------- --------- ------- -------
Net assets at beginning of year -- -- -- --
--------- --------- ------- -------
Net assets at end of year $ 4,429,715 $ 4,197,953 $ 654,603 $ 848,303
=========== =========== ========= =========
Accumulation unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 3,063,564 2,864,852 493,488 691,728
Net transfers2 549,802 557,449 194,209 199,636
Transfers for policy loans -- (636) -- --
Contract terminations:
Surrender benefits (1,550) (1,007) (325) --
Death benefits -- -- (4,001) (6,359)
------- -------- ------ ------
Units outstanding at end of year 3,611,816 3,420,658 683,371 885,005
========= ========= ======= =======
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
Segregated Asset Subaccounts1
Operations 1SI 2SI 1IS 2IS
Investment income (loss) - net $ (430) $ (467) $ (1,094) $ (529)
Net realized gain (loss) on investments -- (2) -- (3)
Net change in unrealized appreciation or
depreciation of investments 17,650 21,497 46,155 32,184
------ ------ ------ ------
Net increase (decrease) in net assets
resulting from operations 17,220 21,028 45,061 31,652
------ ------ ------ ------
Contract transactions
Contract purchase payments 390,967 443,196 882,752 817,794
Net transfers2 159,814 100,926 143,139 62,525
Transfers for policy loans -- (1,367) -- --
Annuity payments -- -- -- --
Contract terminations:
Surrender benefits (834) -- (1,666) (403)
Death benefits -- -- -- --
------- ------- ------- ------
Increase (decrease) from contract transactions 549,947 542,755 1,024,225 879,916
Net assets at beginning of year -- -- -- --
------- ------- ------- ------
Net assets at end of year $ 567,167 $ 563,783 $ 1,069,286 $ 911,568
========= ========= =========== =========
Accumulation unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 418,504 477,931 907,205 834,324
Net transfers2 172,094 109,379 147,298 63,196
Transfers for policy loans -- (1,464) -- --
Contract terminations:
Surrender benefits (886) -- (1,648) (413)
Death benefits -- -- -- --
------ ------ ------- ------
Units outstanding at end of year 589,712 585,846 1,052,855 897,107
======= ======= ========= =======
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
Segregated Asset Subaccounts1
Operations 1SE 2SE 1UE 2UE
Investment income (loss) - net $ 1,971 $ 1,942 $ 110,630 $ 105,937
Net realized gain (loss) on investments -- 257 2,204 792
Net change in unrealized appreciation or
depreciation of investments 291,563 203,877 593,778 531,746
------- ------- ------- -------
Net increase (decrease) in net assets
resulting from operations 293,534 206,076 706,612 638,475
======= ======= ======= =======
Contract transactions
Contract purchase payments 2,253,298 1,589,356 8,368,472 7,827,059
Net transfers2 472,295 329,796 1,880,455 1,490,338
Transfers for policy loans -- -- -- (4,373)
Annuity payments -- -- -- (244)
Contract terminations:
Surrender benefits (2,057) (461) (2,416) (38,299)
Death benefits -- -- -- --
-------- ------- ------- ------
Increase (decrease) from contract transactions 2,723,536 1,918,691 10,246,511 9,274,481
--------- --------- ---------- ---------
Net assets at beginning of year -- -- -- --
--------- --------- ---------- ---------
Net assets at end of year $ 3,017,070 $ 2,124,767 $ 10,953,123 $ 9,912,956
=========== =========== ============ ===========
Accumulation unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 2,204,317 1,557,541 8,137,134 7,616,924
Net transfers2 462,798 319,102 1,816,102 1,423,309
Transfers for policy loans -- -- -- (4,147)
Contract terminations:
Surrender benefits (1,862) (434) (2,220) (55,159)
Death benefits -- -- -- --
-------- ------- ------- ------
Units outstanding at end of year 2,665,253 1,876,209 9,951,016 8,980,927
========= ========= ========= =========
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
Segregated Asset Subaccounts1
Operations 1MC 2MC 1IP 2IP
Investment income (loss) - net $ 9,247 $ 8,462 $ 18,140 $ 16,731
Net realized gain (loss) on investments 35 (952) 194 87
Net change in unrealized appreciation or
depreciation of investments 31,577 26,514 130,688 117,423
------ ------ ------- -------
Net increase (decrease) in net assets
resulting from operations 40,859 34,024 149,022 134,241
====== ====== ======= =======
Contract transactions
Contract purchase payments 1,624,627 1,278,447 1,993,477 1,541,460
Net transfers2 251,809 239,262 538,601 450,491
Transfers for policy loans -- (2,265) -- --
Annuity payments (193) -- (199) --
Contract terminations:
Surrender benefits -- -- -- (4,011)
Death benefits -- -- -- --
-------- ------- ------- ------
Increase (decrease) from contract transactions 1,876,243 1,515,444 2,531,879 1,987,940
--------- --------- --------- ---------
Net assets at beginning of year -- -- -- --
--------- --------- --------- ---------
Net assets at end of year $ 1,917,102 $ 1,549,468 $ 2,680,901 $ 2,122,181
=========== =========== =========== ===========
Accumulation unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 1,751,803 1,378,191 1,973,700 1,540,067
Net transfers2 284,474 257,926 543,216 445,014
Transfers for policy loans -- (2,417) -- --
Contract terminations:
Surrender benefits (13,553) -- (12,513) (3,963)
Death benefits -- -- -- --
-------- ------- ------- ------
Units outstanding at end of year 2,022,724 1,633,700 2,504,403 1,981,118
========= ========= ========= =========
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
Segregated Asset Subaccounts
Operations 1IN1 2IN1 1VS1 2VS1
Investment income (loss) - net $ (11,652) $ (6,830) $ 528,089 $ 421,574
Net realized gain (loss) on investments -- -- -- --
Net change in unrealized appreciation or
depreciation of investments 2,463,909 1,843,265 1,009,011 675,643
--------- --------- --------- -------
Net increase (decrease) in net assets
resulting from operations 2,452,257 1,836,435 1,537,100 1,097,217
========= ========= ========= =========
Contract transactions
Contract purchase payments 8,535,266 5,909,629 7,028,603 4,793,250
Net transfers3 1,430,140 1,468,630 1,252,334 1,037,971
Transfers for policy loans -- (723) -- (6,501)
Annuity payments -- -- -- (252)
Contract terminations:
Surrender benefits (4,850) (2,266) (696) (3,664)
Death benefits (4,125) (6,903) -- --
------ ------ -------- ------
Increase (decrease) from contract transactions 9,956,431 7,368,367 8,280,241 5,820,804
--------- --------- --------- ---------
Net assets at beginning of year -- -- -- --
--------- --------- --------- ---------
Net assets at end of year $ 12,408,688 $ 9,204,802 $ 9,817,341 $ 6,918,021
============ =========== =========== ===========
Accumulation unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 7,060,160 4,917,565 6,168,604 4,236,058
Net transfers3 1,146,075 1,169,160 1,076,943 874,498
Transfers for policy loans -- (479) -- (5,052)
Contract terminations:
Surrender benefits (3,252) (1,698) (544) (21,947)
Death benefits (3,386) (5,665) -- --
------ ------ ------- --------
Units outstanding at end of year 8,199,597 6,078,883 7,245,003 5,083,557
========= ========= ========= =========
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2For the period Sept. 21, 1999 (commencement of operations) to Dec. 31, 1999.
3Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
Segregated Asset Subaccounts
Operations 1MI1 2MI1 1SV2 2SV2
Investment income (loss) - net $ 138,620 $ 96,857 $ (2,131) $ (1,787)
Net realized gain (loss) on investments -- 2,653 (14) 723
Net change in unrealized appreciation or
depreciation of investments 61,546 30,214 124,025 138,233
------ ------ ------- -------
Net increase (decrease) in net assets
resulting from operations 200,166 129,724 121,880 137,169
======= ======= ======= =======
Contract transactions
Contract purchase payments 1,609,563 1,028,429 1,572,645 1,669,098
Net transfers3 363,725 257,313 514,208 256,673
Transfers for policy loans -- -- -- (698)
Annuity payments -- -- -- --
Contract terminations:
Surrender benefits (22) (1) -- (36,183)
Death benefits -- -- -- --
-------- ------- ------- ------
Increase (decrease) from contract transactions 1,973,266 1,285,741 2,086,853 1,888,890
--------- --------- --------- ---------
Net assets at beginning of year -- -- -- --
--------- --------- -------- ---------
Net assets at end of year $ 2,173,432 $ 1,415,465 $ 2,208,733 $ 2,026,059
=========== =========== =========== ===========
Accumulation unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 1,539,605 983,406 1,539,862 1,657,064
Net transfers3 346,461 244,164 503,505 250,547
Transfers for policy loans -- -- -- (669)
Contract terminations:
Surrender benefits (21) -- -- (33,890)
Death benefits -- -- -- --
-------- ------- ------- ------
Units outstanding at end of year 1,886,045 1,227,570 2,043,367 1,873,052
========= ========= ========= =========
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2For the period Sept. 21, 1999 (commencement of operations) to Dec. 31, 1999.
3Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
Segregated Asset Subaccounts
Operations 1IT1 2IT1 1SP1 2SP1
Investment income (loss) - net $ (1,448) $ (1,112) $ (2,628) $ (1,851)
Net realized gain (loss) on investments 1 -- -- --
Net change in unrealized appreciation or
depreciation of investments 355,633 335,224 198,642 178,851
------- ------- ------- -------
Net increase (decrease) in net assets
resulting from operations 354,186 334,112 196,014 177,000
======= ======= ======= =======
Contract transactions
Contract purchase payments 1,310,346 1,184,921 2,500,578 2,150,975
Net transfers3 367,444 349,599 436,774 527,819
Transfers for policy loans -- (706) -- (5,051)
Annuity payments -- -- -- --
Contract terminations:
Surrender benefits -- (30) (1,342) (728)
Death benefits -- -- -- --
-------- ------- ------- ------
Increase (decrease) from contract transactions 1,677,790 1,533,784 2,936,010 2,673,015
--------- --------- --------- ---------
Net assets at beginning of year -- -- -- --
--------- --------- --------- ---------
Net assets at end of year $ 2,031,976 $ 1,867,896 $ 3,132,024 $ 2,850,015
=========== =========== =========== ===========
Accumulation unit activity
Units outstanding at beginning of year -- -- -- --
Contract purchase payments 1,062,898 934,849 2,318,078 1,988,261
Net transfers3 280,022 299,511 406,223 493,274
Transfers for policy loans -- (626) -- (4,487)
Contract terminations:
Surrender benefits -- (21) (1,260) (669)
Death benefits -- -- -- --
-------- ------- ------- ------
Units outstanding at end of year 1,342,920 1,233,713 2,723,041 2,476,379
========= ========= ========= =========
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2For the period Sept. 21, 1999 (commencement of operations) to Dec. 31, 1999.
3Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
Segregated Asset Subaccounts
Combined
Variable
Operations 1EG2 2EG2 Account
Investment income (loss) - net $ 16,334 $ 10,577 $ 4,728,831
Net realized gain (loss) on investments -- 46 52,810
Net change in unrealized appreciation or
depreciation of investments 514,238 326,083 31,790,472
------- ------- ----------
Net increase (decrease) in net assets
resulting from operations 530,572 336,706 36,572,113
======= ======= ==========
Contract transactions
Contract purchase payments 2,696,796 1,724,400 553,484,000
Net transfers3 552,346 362,709 6,425,430
Transfers for policy loans -- -- (208,068)
Annuity payments -- -- (3,282)
Contract terminations:
Surrender benefits (2,100) (3,756) (464,993)
Death benefits -- -- (254,996)
-------- -------- --------
Increase (decrease) from contract transactions 3,247,042 2,083,353 558,978,091
Net assets at beginning of year -- -- --
-------- ------- ----------
Net assets at end of year $ 3,777,614 $ 2,420,059 $ 595,550,204
=========== =========== =============
Accumulation unit activity
Units outstanding at beginning of year -- --
Contract purchase payments 2,390,678 1,523,280
Net transfers3 483,019 318,154
Transfers for policy loans -- --
Contract terminations:
Surrender benefits (1,612) (3,252)
Death benefits -- --
-------- -------
Units outstanding at end of year 2,872,085 1,838,182
========= =========
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2For the period Sept. 21, 1999 (commencement of operations) to Dec. 31, 1999.
3Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 - American Express Retirement Advisor Variable
Annuity
Notes to Financial Statements
1. ORGANIZATION
IDS Life Variable Account 10 (the Account) was established under Minnesota law
on Aug. 23, 1995 as a segregated asset account of IDS Life Insurance Company
(IDS Life). The Account is registered as a unit investment trust under the
Investment Company Act of 1940, as amended (the 1940 Act). Operations of the
Account commenced on March 5, 1996.
The Account is comprised of various subaccounts. Each subaccount invests
exclusively in shares of the following funds or portfolios (collectively, the
Funds), which are registered under the 1940 Act as diversified (non-diversified
for Global Bond and Warburg Pincus Trust/Emerging Growth Portfolio), open-end
management investment companies and have the following investment managers.
Subaccount Invests exclusively in shares of Investment Manager
<S> <C> <C>
BC1 AXPSM Variable Portfolio-- Blue Chip Advantage Fund IDS Life Insurance Company 1
BC2
BD1 AXPSM Variable Portfolio-- Bond Fund IDS Life Insurance Company 1
BD2
CR1 AXPSM Variable Portfolio-- Capital Resource Fund IDS Life Insurance Company 1
CR2
CM1 AXPSM Variable Portfolio-- Cash Management Fund IDS Life Insurance Company 1
CM2
DE1 AXPSM Variable Portfolio-- Diversified Equity IDS Life Insurance Company 1
DE2 Income Fund
EI1 AXPSM Variable Portfolio-- Extra Income Fund IDS Life Insurance Company 1
EI2
FI1 AXPSM Variable Portfolio-- Federal Income Fund IDS Life Insurance Company 1
FI2
GB1 AXPSM Variable Portfolio-- Global Bond Fund IDS Life Insurance Company 1
GB2
GR1 AXPSM Variable Portfolio-- Growth Fund IDS Life Insurance Company 1
GR2
IE1 AXPSM Variable Portfolio-- International Fund IDS Life Insurance Company 2
IE2
MF1 AXPSM Variable Portfolio-- Managed Fund IDS Life Insurance Company 1
MF2
ND1 AXPSM Variable Portfolio-- New Dimensions Fund(R) IDS Life Insurance Company 1
ND2
SC1 AXPSM Variable Portfolio-- Small Cap Advantage Fund IDS Life Insurance Company 3
SC2
SA1 AXPSM Variable Portfolio-- Strategy Aggressive Fund IDS Life Insurance Company 1
SA2
1CA AIM V.I. Capital Appreciation Fund A I M Advisors, Inc.
2CA
1CD AIM V.I. Capital Development Fund A I M Advisors, Inc.
2CD
1IF American Century VP International American Century Investment Management, Inc.
2IF
1VA American Century VP Value American Century Investment Management, Inc.
2VA
1GI Fidelity VIP III Growth & Income Portfolio - Fidelity Management & Research Company (FMR) 4
2GI Service Class
1MP Fidelity VIP III Mid Cap Portfolio - Service Class FMR 4
2MP
1OS Fidelity VIP Overseas Portfolio - Service Class FMR 5
2OS
1RE FTVIPT Franklin Real Estate Securities Fund - Class Franklin Advisers, Inc.
2RE 2
1SI FTVIPT Franklin Value Securities Fund - Class 2 Franklin Advisory Services, LLC
2SI
1IS FTVIPT Templeton International Smaller Companies Templeton Investment Counsel, Inc.
2IS Fund - Class 2
1SE Goldman Sachs VIT CORESM Small Cap Equity Fund Goldman Sachs Asset Management
2SE
1UE Goldman Sachs VIT CORESM U.S. Equity Fund Goldman Sachs Asset Management
2UE
1MC Goldman Sachs VIT Mid Cap Value Fund Goldman Sachs Asset Management
2MC
1IP Lazard Retirement International Equity Portfolio Lazard Asset Management
2IP
1IN Putnam VT International New Opportunities Fund - Putnam Investment Management, Inc.
2IN Class IB Shares
1VS Putnam VT Vista Fund - Class IB Shares Putnam Investment Management, Inc.
2VS
1MI Royce Micro-Cap Portfolio Royce & Associates, Inc.
2MI
1SV Third Avenue Value Portfolio The Investment Adviser EQSF Advisers, Inc.
2SV
1IT Wanger International Small Cap Wanger Asset Management, L.P.
2IT
1SP Wanger U.S. Small Cap Wanger Asset Management, L.P.
2SP
1EG Warburg Pincus Trust - Emerging Growth Portfolio Warburg Pincus Asset Management, Inc.
2EG
1 American Express Financial Corporation (AEFC) is the investment advisor.
2 AEFC is the investment advisor. American Express Asset Management
International Inc. is the sub-investment advisor.
3 AEFC is the investment advisor. Kenwood Capital Management LLC is the sub-investment
advisor.
4 FMR U.K. and FMR Far East are the sub-investment advisors.
5 FMR U.K., FMR Far East, Fidelity International Investment Advisors (FIIA) and
FIIA U.K.are the sub-investment advisors.
The assets of each subaccount of the Account are not chargeable with liabilities
arising out of the business conducted by any other segregated asset account or
by IDS Life.
IDS Life serves as issuer of the contract.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investments in the Funds
Investments in shares of the 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 Funds are reinvested in
additional shares of the 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 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 accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
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
IDS Life makes contractual assurances to the Account that possible future
adverse changes in administrative expenses and mortality experience of the
contract owners and annuitants 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 0.95% of the average daily net assets of the subaccounts for
nonqualified annuities, and 0.75% of the average daily net assets of the
subaccounts for qualified annuities.
4. CONTRACT ADMINISTRATIVE CHARGES
IDS Life deducts a contract administrative charge of $30 per year on each
contract anniversary. This charge cannot be increased and does not apply after
annuity payouts begin. IDS Life does not expect to profit from this charge. This
charge reimburses IDS Life for expenses incurred in establishing and maintaining
the annuity records. This charge is waived when the contract value, or total
purchase payments less any payments surrendered, is $50,000 or more on the
current contract anniversary. The $30 annual charge is deducted at the time of
any full surrender.
5. SURRENDER CHARGE
IDS Life will use a surrender charge to help it recover certain expenses
relating to the sale of the annuity. The surrender charge applies if all or part
of the surrender amount is from purchase payments received within seven or ten
years before surrender (depending on surrender charge period selected at time of
application). Charges by IDS Life for surrenders are not identified on an
individual segregated asset account basis. Charges for all segregated asset
accounts amounted to $19,803,247 in 1999 and $17,936,810 in 1998. Such charges
are not treated as a separate expense of the subaccounts. They are ultimately
deducted from contract surrender benefits paid by IDS Life. This charge is
waived if the withdrawal meets certain provisions as stated in the contract.
6. INVESTMENT IN SHARES
The subaccounts' investment in shares of the Funds as of Dec. 31, 1999 were as
follows:
Subaccount Investment Shares NAV
<S> <C> <C> <C>
BC1 AXPSM Variable Portfolio-- Blue Chip Advantage Fund 804,975 $11.08
BC2 743,762 11.08
BD1 AXPSM Variable Portfolio-- Bond Fund 1,113,577 10.54
BD2 688,442 10.54
CR1 AXPSM Variable Portfolio-- Capital Resource Fund 100,985 36.40
CR2 166,796 36.40
CM1 AXPSM Variable Portfolio-- Cash Management Fund 85,939,386 1.00
CM2 65,131,467 1.00
DE1 AXPSM Variable Portfolio-- Diversified Equity Income Fund 338,830 10.19
DE2 314,486 10.19
EI1 AXPSM Variable Portfolio-- Extra Income Fund 1,160,431 8.58
EI2 905,029 8.58
FI1 AXPSM Variable Portfolio-- Federal Income Fund 1,265,076 9.92
FI2 1,072,686 9.92
GB1 AXPSM Variable Portfolio-- Global Bond Fund 241,370 9.69
GB2 156,226 9.69
GR1 AXPSM Variable Portfolio-- Growth Fund 1,374,900 11.68
GR2 1,684,070 11.68
IE1 AXPSM Variable Portfolio-- International Fund 141,927 19.38
IE2 168,757 19.38
MF1 AXPSM Variable Portfolio-- Managed Fund 355,097 19.82
MF2 282,193 19.82
ND1 AXPSM Variable Portfolio-- New Dimensions Fund(R) 1,650,116 22.86
ND2 1,624,037 22.86
SC1 AXPSM Variable Portfolio-- Small Cap Advantage Fund 297,383 11.13
SC2 297,844 11.13
SA1 AXPSM Variable Portfolio-- Strategy Aggressive Fund 242,483 23.92
SA2 280,006 23.92
1CA AIM V.I. Capital Appreciation Fund 190,467 35.58
2CA 160,176 35.58
1CD AIM V.I. Capital Development Fund 201,174 11.89
2CD 178,472 11.89
1IF American Century VP International 240,810 12.50
2IF 206,075 12.50
1VA American Century VP Value 738,202 5.95
2VA 565,695 5.95
1GI Fidelity VIP III Growth & Income Portfolio - Service Class 1,098,489 17.24
2GI 945,797 17.24
1MP Fidelity VIP III Mid Cap Portfolio - Service Class 561,936 15.24
2MP 463,660 15.24
1OS Fidelity VIP Overseas Portfolio - Service Class 161,787 27.38
2OS 153,322 27.38
1RE FTVIPT Franklin Real Estate Securities Fund - Class 2 43,992 14.88
2RE 57,006 14.88
1SI FTVIPT Franklin Value Securities Fund - Class 2 71,976 7.88
2SI 71,546 7.88
1IS FTVIPT Templeton International Smaller Companies Fund - Class 2 96,584 11.07
2IS 82,346 11.07
1SE Goldman Sachs VIT CORESM Small Cap Equity Fund 284,629 10.60
2SE 200,112 10.60
1UE Goldman Sachs VIT CORESM U.S. Equity Fund 783,485 13.98
2UE 709,081 13.98
1MC Goldman Sachs VIT Mid Cap Value Fund 227,684 8.42
2MC 184,022 8.42
1IP Lazard Retirement International Equity Portfolio 198,732 13.49
2IP 157,315 13.49
1IN Putnam VT International New Opportunities Fund - Class IB 533,019 23.28
2IN Shares 395,395 23.28
1VS Putnam VT Vista Fund - Class IB Shares 475,416 20.65
2VS 335,013 20.65
1MI Royce Micro-Cap Portfolio 354,557 6.13
2MI 230,908 6.13
1SV Third Avenue Value Portfolio 203,758 10.84
2SV 186,906 10.84
1IT Wanger International Small Cap 46,530 43.67
2IT 42,772 43.67
1SP Wanger U.S. Small Cap 125,885 24.88
2SP 114,550 24.88
1EG Warburg Pincus Trust - Emerging Growth Portfolio 289,136 13.07
2EG 185,161 13.07
7. INVESTMENT TRANSACTIONS
The subaccounts' purchases of the Funds' shares, including reinvestment of
dividend distributions, were as follows:
Year ended Dec. 31,
Subaccount Investment 1999
<S> <C> <C>
BC1 AXPSM Variable Portfolio-- Blue Chip Advantage Fund $8,343,972 1
BC2 7,773,294 1
BD1 AXPSM Variable Portfolio -- Bond Fund 12,192,380 1
BD2 7,451,268 1
CR1 AXPSM Variable Portfolio -- Capital Resource Fund 3,570,614 1
CR2 5,941,556 1
CM1 AXPSM Variable Portfolio -- Cash Management Fund 85,974,037 1
CM2 66,483,221 1
DE1 AXPSM Variable Portfolio -- Diversified Equity Income Fund 3,356,317 1
DE2 3,131,540 1
EI1 AXPSM Variable Portfolio -- Extra Income Fund 9,971,339 1
EI2 7,877,322 1
FI1 AXPSM Variable Portfolio -- Federal Income Fund 12,892,030 1
FI2 11,461,491 1
GB1 AXPSM Variable Portfolio -- Global Bond Fund 2,446,978 1
GB2 1,532,501 1
GR1 AXPSM Variable Portfolio -- Growth Fund 14,587,375 1
GR2 17,970,110 1
IE1 AXPSM Variable Portfolio -- International Fund 2,601,976 1
IE2 3,147,385 1
MF1 AXPSM Variable Portfolio -- Managed Fund 6,852,643 1
MF2 5,425,212 1
ND1 AXPSM Variable Portfolio -- New Dimensions Fund(R) 34,396,783 1
ND2 33,878,983 1
SC1 AXPSM Variable Portfolio -- Small Cap Advantage Fund 3,065,285 1
SC2 5,778,679 1
SA1 AXPSM Variable Portfolio -- Strategy Aggressive Fund 5,057,408 1
SA2 5,744,273 1
1CA AIM V.I. Capital Appreciation Fund 5,943,445 1
2CA 5,017,837 1
1CD AIM V.I. Capital Development Fund 2,126,967 1
2CD 1,885,358 1
1IF American Century VP International 2,426,526 1
2IF 2,131,099 1
1VA American Century VP Value 4,423,337 1
2VA 3,415,119 1
1GI Fidelity VIP III Growth & Income Portfolio - Service Class 18,384,605 1
2GI 15,814,049 1
1MP Fidelity VIP III Mid Cap Portfolio - Service Class 7,423,193 1
2MP 6,350,920 1
1OS Fidelity VIP Overseas Portfolio - Service Class 3,922,266 1
2OS 3,982,847 1
1RE FTVIPT Franklin Real Estate Securities Fund - Class 2 647,423 1
2RE 825,643 1
1SI FTVIPT Franklin Value Securities Fund - Class 2 549,517 1
2SI 542,606 1
1IS FTVIPT Templeton International Smaller Companies Fund - Class 2 1,023,032 1
2IS 924,578 1
1SE Goldman Sachs VIT CORESM Small Cap Equity Fund 2,725,512 1
2SE 1,922,911 1
1UE Goldman Sachs VIT CORESM U.S. Equity Fund 10,393,135 1
2UE 9,394,850 1
1MC Goldman Sachs VIT Mid Cap Value Fund 1,887,086 1
2MC 1,587,206 1
1IP Lazard Retirement International Equity Portfolio 2,558,804 1
2IP 2,009,743 1
1IN Putnam VT International New Opportunities Fund - Class IB 9,944,786 1
2IN Shares 7,361,551 1
1VS Putnam VT Vista Fund - Class IB Shares 8,808,344 1
2VS 6,242,387 1
1MI Royce Micro-Cap Portfolio 2,111,888 1
2MI 1,709,073 1
1SV Third Avenue Value Portfolio 2,086,821 2
2SV 1,935,690 2
1IT Wanger International Small Cap 1,676,597 1
2IT 1,532,620 1
1SP Wanger U.S. Small Cap 2,933,384 1
2SP 2,671,164 1
1EG Warburg Pincus Trust - Emerging Growth Portfolio 3,263,377 2
2EG 2,094,875 2
Combined Variable Account $563,518,143
1 Operations commenced on Sept. 15, 1999.
2 Operations commenced on Sept. 21, 1999.
8. 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 IDS Life and the
Account. All of the major systems used by the IDS Life and by the Account are
maintained by AEFC and are utilized by multiple subsidiaries and affiliates of
AEFC. IDS Life and the Account's businesses are heavily dependent upon AEFC's
computer systems and have significant interactions with systems of third
parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to IDS Life and the Account, was conducted to identify
the major systems that could be affected by the Year 2000 issue. Steps were
taken to resolve potential problems including modification to existing software
and the purchase of new software. As of Dec. 31, 1999, AEFC completed its
program of corrective measures on its internal systems and applications,
including Year 2000 compliance testing. As of Dec. 31, 1999, AEFC had also
completed an evaluation of the Year 2000 readiness of other third parties whose
system failures could have an impact on IDS Life's and the Account's operations.
AEFC's Year 2000 project also included establishing Year 2000 contingency plans
for all key business units. Business continuation plans, which address business
continuation in the event of a system disruption, are in place for all key
business units. As of Dec. 31, 1999, these plans had been amended to include
specific Year 2000 considerations.
In assessing its Year 2000 initiatives and the results of actual production
since Jan. 1, 2000, management believes no material adverse consequences were
experienced, and there was no material effect on IDS Life's and the Account's
business, results of operations, or financial condition as a result of the Year
2000 issue.
</TABLE>
<PAGE>
<PAGE>
IDS LIFE INSURANCE COMPANY
FINANCIAL INFORMATION
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, 1999 and 1998, 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, 1999. 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 auditing standards generally accepted
in the United States. 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, 1999 and 1998, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.
ERNST & YOUNG LLP
February 3, 2000
Minneapolis, Minnesota
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-1
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, ($ THOUSANDS) 1999 1998
<S> <C> <C>
ASSETS
- ------------------------------------------------------------------
Investments:
Fixed maturities:
Held to maturity, at amortized cost
(fair value:
1999, $7,105,743; 1998, $8,420,035) $ 7,156,292 $ 7,964,114
Available for sale, at fair value
(amortized cost:
1999, $13,703,137; 1998,
$13,344,949) 13,049,549 13,613,139
- ------------------------------------------------------------------
20,205,841 21,577,253
Mortgage loans on real estate 3,606,377 3,505,458
Policy loans 561,834 525,431
Other investments 506,797 366,604
- ------------------------------------------------------------------
Total investments 24,880,849 25,974,746
Cash and cash equivalents 32,333 22,453
Amounts recoverable from reinsurers 327,168 262,260
Amounts due from brokers 145 327
Other accounts receivable 48,578 47,963
Accrued investment income 343,449 366,574
Deferred policy acquisition costs 2,665,175 2,496,352
Deferred income taxes, net 216,020 --
Other assets 33,089 30,487
Separate account assets 35,894,732 27,349,401
- ------------------------------------------------------------------
Total assets $64,441,538 $56,550,563
- ------------------------------------------------------------------
LIABILITIES AND STOCKHOLDER'S EQUITY
- ------------------------------------------------------------------
Liabilities:
Future policy benefits:
Fixed annuities $20,552,159 $21,172,303
Universal life-type insurance 3,391,203 3,343,671
Traditional life insurance 226,842 225,306
Disability income and long-term care
insurance 811,941 660,320
Policy claims and other policyholders'
funds 24,600 70,309
Deferred income taxes, net -- 16,930
Amounts due to brokers 148,112 195,406
Other liabilities 579,678 410,285
Separate account liabilities 35,894,732 27,349,401
- ------------------------------------------------------------------
Total liabilities 61,629,267 53,443,931
- ------------------------------------------------------------------
Commitments and contingencies
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 288,327 288,327
Accumulated other comprehensive (loss)
income, net of tax:
Net unrealized securities (losses) gains (411,230) 169,584
- ------------------------------------------------------------------
Retained earnings 2,932,174 2,645,721
- ------------------------------------------------------------------
Total stockholder's equity 2,812,271 3,106,632
- ------------------------------------------------------------------
Total liabilities and stockholder's
equity $64,441,538 $56,550,563
==================================================================
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
F-2 IDS LIFE INSURANCE COMPANY
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, ($ THOUSANDS) 1999 1998 1997
<S> <C> <C> <C>
REVENUES:
- -----------------------------------------------------------------------------
Premiums:
Traditional life insurance $ 53,790 $ 53,132 $ 52,473
Disability income and long-term care
insurance 201,637 176,298 154,021
- -----------------------------------------------------------------------------
Total premiums 255,427 229,430 206,494
Policyholder and contractholder charges 411,994 383,965 341,726
Management and other fees 473,108 401,057 340,892
Net investment income 1,919,573 1,986,485 1,988,389
Net realized gain on investments 26,608 6,902 860
- -----------------------------------------------------------------------------
Total revenues 3,086,710 3,007,839 2,878,361
- -----------------------------------------------------------------------------
BENEFITS AND EXPENSES:
- -----------------------------------------------------------------------------
Death and other benefits:
Traditional life insurance 29,819 29,835 28,951
Universal life-type insurance and
investment contracts 118,561 108,349 92,814
Disability income and long-term care
insurance 30,622 27,414 22,333
Increase in liabilities for future
policy benefits:
Traditional life insurance 7,311 6,052 3,946
Disability income and long-term care
insurance 87,620 73,305 63,631
Interest credited on universal life-type
insurance and investment contracts 1,240,575 1,317,124 1,386,448
Amortization of deferred policy
acquisition costs 332,705 382,642 322,731
Other insurance and operating expenses 335,180 287,326 276,596
- -----------------------------------------------------------------------------
Total benefits and expenses 2,182,393 2,232,047 2,197,450
- -----------------------------------------------------------------------------
Income before income taxes 904,317 775,792 680,911
Income taxes 267,864 235,681 206,664
- -----------------------------------------------------------------------------
Net income $ 636,453 $ 540,111 $ 474,247
=============================================================================
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-3
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
TOTAL ADDITIONAL COMPREHENSIVE
STOCKHOLDER'S CAPITAL PAID-IN (LOSS) INCOME, RETAINED
THREE YEARS ENDED DECEMBER 31, 1999 ($ THOUSANDS) EQUITY STOCK CAPITAL NET OF TAX EARNINGS
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 $2,444,080 $3,000 $283,615 $ 86,102 $2,071,363
Comprehensive income:
Net income 474,247 -- -- -- 474,247
Unrealized holding gains arising during the year,
net of deferred policy acquisition costs of
($7,714) and taxes of ($75,215) 139,686 -- -- 139,686 --
Reclassification adjustment for losses included in
net income, net of tax of ($308) 571 -- -- 571 --
Other comprehensive income 140,257 -- -- 140,257 --
- ---------------------------------------------------------------------------------------------------------------------
Comprehensive income 614,504 -- -- -- --
Capital contribution from parent 7,232 -- 7,232 -- --
Cash dividends to parent (200,000) -- -- -- (200,000)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 2,865,816 3,000 290,847 226,359 2,345,610
Comprehensive income:
Net income 540,111 -- -- -- 540,111
Unrealized holding losses arising during the year,
net of deferred policy acquisition costs of
$6,333 and taxes of $32,826 (60,964) -- -- (60,964) --
Reclassification adjustment for losses included in
net income, net of tax of ($2,254) 4,189 -- -- 4,189 --
Other comprehensive loss (56,775) -- -- (56,775) --
Comprehensive income 483,336 -- -- -- --
Other changes (2,520) -- (2,520) -- --
- ---------------------------------------------------------------------------------------------------------------------
Cash dividends to parent (240,000) -- -- -- (240,000)
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 3,106,632 3,000 288,327 169,584 2,645,721
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 $3,106,632 $3,000 $288,327 $ 169,584 $2,645,721
Comprehensive income:
Net income 636,453 -- -- -- 636,453
Unrealized holding losses arising during the year,
net of deferred policy acquisition costs of
$28,444 and taxes of $304,936 (566,311) -- -- (566,311) --
Reclassification adjustment for gains included in
net income, net of tax of $7,810 (14,503) -- -- (14,503) --
- ---------------------------------------------------------------------------------------------------------------------
Other comprehensive loss (580,814) -- -- (580,814) --
Comprehensive income 55,639 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Cash dividends to parent (350,000) -- -- -- (350,000)
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999 $2,812,271 $3,000 $288,327 $(411,230) $2,932,174
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
F-4 IDS LIFE INSURANCE COMPANY
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, ($ THOUSANDS) 1999 1998 1997
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------------------------------------------------------
Net income $ 636,453 $ 540,111 $ 474,247
Adjustments to reconcile net income to
net cash provided by operating
activities: Policy loans, excluding
universal life-type insurance:
Issuance (56,153) (53,883) (54,665)
Repayment 54,105 57,902 46,015
Change in amounts recoverable from
reinsurers (64,908) (56,544) (47,994)
Change in other accounts receivable (615) (10,068) 6,194
Change in accrued investment income 23,125 (9,184) (14,077)
Change in deferred policy acquisition
costs, net (140,379) (10,443) (156,486)
Change in liabilities for future policy
benefits for traditional life,
disability income and long-term care
insurance 153,157 138,826 112,915
Change in policy claims and other
policyholders' funds (45,709) 1,964 (15,289)
Deferred income tax provision (benefit) 79,796 (19,122) 19,982
Change in other liabilities 169,395 64,902 13,305
(Accretion of discount), amortization of
premium, net (17,907) 9,170 (5,649)
Net realized gain on investments (26,608) (6,902) (860)
Policyholder and contractholder charges,
non-cash (175,059) (172,396) (160,885)
Other, net (5,324) 10,786 7,161
- -------------------------------------------------------------------------------
Net cash provided by operating
activities $ 583,369 $ 485,119 $ 223,914
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------------------------------------------------
Fixed maturities held to maturity:
Purchases $ (3,030) $ (1,020) $ (1,996)
Maturities, sinking fund payments and
calls 741,949 1,162,731 686,503
Sales 66,547 236,963 236,761
Fixed maturities available for sale:
Purchases (3,433,128) (4,100,238) (3,160,133)
Maturities, sinking fund payments and
calls 1,442,507 2,967,311 1,206,213
Sales 1,691,389 278,955 457,585
Other investments, excluding policy
loans:
Purchases (657,383) (555,647) (524,521)
Sales 406,684 579,038 335,765
Change in amounts due from brokers 182 8,073 2,647
Change in amounts due to brokers (47,294) (186,052) 119,471
- -------------------------------------------------------------------------------
Net cash provided by (used in) investing
activities 208,423 390,114 (641,705)
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------------------------------------------------
Activity related to universal life-type
insurance and investment contracts:
Considerations received 2,031,630 1,873,624 2,785,758
Surrenders and other benefits (3,669,759) (3,792,612) (3,736,242)
Interest credited to account balances 1,240,575 1,317,124 1,386,448
Universal life-type insurance policy
loans:
Issuance (102,239) (97,602) (84,835)
Repayment 67,881 67,000 54,513
Capital transaction with parent -- -- 7,232
Dividends paid (350,000) (240,000) (200,000)
- -------------------------------------------------------------------------------
Net cash (used in) provided by financing
activities (781,912) (872,466) 212,874
- -------------------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents 9,880 2,767 (204,917)
Cash and cash equivalents at beginning
of year 22,453 19,686 224,603
- -------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 32,333 $ 22,453 $ 19,686
- -------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ 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, 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 significant intercompany accounts
and transactions have been eliminated in consolidation.
The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States
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 accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities 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 accumulated other comprehensive (loss) income, net of the related
deferred policy acquisition costs effect and deferred taxes.
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.
- --------------------------------------------------------------------------------
F-6 IDS LIFE INSURANCE COMPANY
<PAGE>
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.
Impairment of mortgage loans is measured as the excess of a loan's recorded
investment over its present value of expected principal and interest payments
discounted at the loan's effective interest rate, or the fair value of
collateral. The amount of the impairment is recorded in a reserve for mortgage
loan losses. The reserve for mortgage loan losses is maintained at a level that
management believes is adequate to absorb estimated losses in the portfolio. The
level of the reserve account is determined based on several factors, including
historical experience, expected future principal and interest payments,
estimated collateral values, and current 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.
The Company may purchase and write index options to hedge the fee income earned
on the management of equity securities in separate accounts and the underlying
mutual funds. These index options are carried at market value and are included
in other investments or other liabilities, as appropriate. Gains or losses on
index options that qualify as hedges are deferred and recognized in management
and other fees in the same period as the hedged fee income.
The Company also uses index options to manage the risks related to a certain
annuity product that pay interest based upon the relative change in a major
stock market index between the beginning and end of the product's term.
Purchased options used in conjunction with this product are reported in other
investments and written options are included in other liabilities. The
amortization of the cost of purchased options, the proceeds of written options
and the changes in intrinsic value of the contracts are included in net
investment 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.
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-7
<PAGE>
Supplementary information to the consolidated statements of cash flows for the
years ended December 31 is summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------------
<S> <C> <C> <C>
Cash paid during the year for:
Income taxes $214,940 $215,003 $174,472
Interest on borrowings 4,521 14,529 8,213
</TABLE>
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, issue and administrative fees and surrender charges. 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 from underlying proprietary mutual funds and mortality and
expense risk fees received from the variable annuity and variable life insurance
separate accounts.
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 using
primarily the interest method. 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.
Amortization of deferred policy acquisition costs requires the use of
assumptions including interest margins, mortality margins, persistency rates,
maintenance expense levels and, for variable products, separate account
performance. For universal life-type insurance and deferred annuities, actual
experience is reflected in the Company's amortization models monthly. As actual
experience differs from the current assumptions, management considers the need
to change key assumptions underlying the amortization models prospectively. The
impact of changing prospective assumptions is reflected in the period that such
changes are made and is generally referred to as an unlocking adjustment. During
1999, unlocking adjustments resulted in a net decrease in amortization of $56.8
million. Net unlocking adjustments in 1998 and 1997 were not significant.
LIABILITIES FOR FUTURE POLICY BENEFITS
Liabilities for universal-life type insurance and fixed and variable deferred
annuities are accumulation values.
- --------------------------------------------------------------------------------
F-8 IDS LIFE INSURANCE COMPANY
<PAGE>
Liabilities for equity indexed deferred annuities are determined as the present
value of guaranteed benefits and the intrinsic value of index-based benefits.
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.
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.
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 7% 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 established
industry tables. Anticipated interest rates for claim reserves for both
disability income and long-term care range from 5% to 8%.
REINSURANCE
The maximum amount of life insurance risk retained by the Company is $750 on any
policy insuring a single life and $1,500 on any policy insuring a joint-life
combination. Beginning in 1999, the Company retains only 20% of the mortality
risk on new variable universal life insurance policies. Risk not retained is
reinsured with other life insurance companies, primarily on a yearly renewable
term basis. Long-term care policies are primarily reinsured on a coinsurance
basis. The Company retains all disability income and waiver of premium risk.
Beginning in 2000, the Company will retain all accidental death benefit risk.
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, 1999 and 1998 are $852 receivable
from and $26,291 payable to, respectively, AEFC 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.
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-9
<PAGE>
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 beneficiaries from the mortality assumptions implicit in the
annuity contracts. The Company makes periodic fund transfers to, or withdrawals
from, the separate account assets for such actuarial adjustments for variable
annuities that are in the benefit payment period. The Company also guarantees
that the rates at which administrative fees are deducted from contract funds
will not exceed contractual maximums.
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.
ACCOUNTING CHANGES
American Institute of Certified Public Accountants (AICPA) Statement of Position
(SOP) 98-1, "Accounting for Costs of Computer Software Developed or Obtained for
Internal Use" became effective January 1, 1999. The SOP requires the
capitalization of certain costs incurred after the date of adoption to develop
or obtain software for internal use. Software utilized by the Company is owned
by AEFC and capitalized by AEFC. As a result, the new rule did not have a
material impact on the Company's results of operations or financial condition.
Effective January 1, 1999, the Company adopted AICPA SOP 97-3, "Accounting by
Insurance and Other Enterprises for Insurance-Related Assessments," providing
guidance for the timing of recognition of liabilities related to guaranty fund
assessments. The Company had historically carried a liability for estimated
guaranty fund assessment exposure. Adoption of the SOP did not have a material
impact on the Company's results of operations or financial condition.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which is effective January 1, 2001. This Statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. It requires the recognition of all derivatives as either
assets or liabilities on the balance sheet and measure those instruments at fair
value. The accounting for changes in the fair value of a derivative depends on
the intended use of the derivative and the resulting designation. The ultimate
financial effect of adoption of the new rule will depend on the derivatives in
place at adoption and cannot be estimated at this time.
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.
- --------------------------------------------------------------------------------
F-10 IDS LIFE INSURANCE COMPANY
<PAGE>
The amortized cost, gross unrealized gains and losses and fair values of
investments in fixed maturities and equity securities at December 31, 1999 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 $ 37,613 $ 236 $ 2,158 $ 35,691
State and municipal
obligations 9,681 150 -- 9,831
Corporate bonds and
obligations 5,713,475 91,571 113,350 5,691,696
Mortgage-backed securities 1,395,523 4,953 31,951 1,368,525
- ------------------------------------------------------------------------------
$7,156,292 $96,910 $147,459 $7,105,743
- ------------------------------------------------------------------------------
</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 $ 46,325 $ 612 $ 2,231 $ 44,706
State and municipal
obligations 13,226 519 191 13,554
Corporate bonds and
obligations 7,960,352 60,120 560,450 7,460,022
Mortgage-backed securities 5,683,234 9,692 161,659 5,531,267
- --------------------------------------------------------------------------------
Total fixed maturities 13,703,137 70,943 724,531 13,049,549
Equity securities 3,000 16 -- 3,016
- --------------------------------------------------------------------------------
$13,706,137 $70,959 $724,531 $13,052,565
- --------------------------------------------------------------------------------
</TABLE>
The amortized cost, gross unrealized gains and losses and fair values of
investments in fixed maturities and equity securities at December 31, 1998 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 $ 39,888 $ 4,460 $ -- $ 44,348
State and municipal
obligations 9,683 490 -- 10,173
Corporate bonds and
obligations 6,305,476 447,752 27,087 6,726,141
Mortgage-backed securities 1,609,067 30,458 152 1,639,373
- -------------------------------------------------------------------------------
$7,964,114 $483,160 $27,239 $8,420,035
- -------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-11
<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 $ 52,043 $ 3,324 $ -- $ 55,367
State and municipal
obligations 11,060 1,231 -- 12,291
Corporate bonds and
obligations 7,332,344 271,174 155,181 7,448,337
Mortgage-backed securities 5,949,502 151,511 3,869 6,097,144
- --------------------------------------------------------------------------------
Total fixed maturities 13,344,949 427,240 159,050 13,613,139
Equity securities 3,000 158 -- 3,158
- --------------------------------------------------------------------------------
$13,347,949 $427,398 $159,050 $13,616,297
- --------------------------------------------------------------------------------
</TABLE>
The amortized cost and fair value of investments in fixed maturities at
December 31, 1999 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.
<TABLE>
<CAPTION>
AMORTIZED FAIR
HELD TO MATURITY COST VALUE
- ----------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 238,740 $ 239,747
Due from one to five years 2,996,713 3,012,721
Due from five to ten years 1,922,199 1,893,918
Due in more than ten years 603,117 590,832
Mortgage-backed securities 1,395,523 1,368,525
- ----------------------------------------------------------------
$7,156,292 $7,105,743
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AMORTIZED FAIR
AVAILABLE FOR SALE COST VALUE
- ------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 271,381 $ 274,415
Due from one to five years 595,747 592,533
Due from five to ten years 4,936,041 4,669,573
Due in more than ten years 2,216,734 1,981,761
Mortgage-backed securities 5,683,234 5,531,267
- ------------------------------------------------------------------
$13,703,137 $13,049,549
- ------------------------------------------------------------------
</TABLE>
During the years ended December 31, 1999, 1998 and 1997, fixed maturities
classified as held to maturity were sold with amortized cost of $68,470,
$230,036 and $229,848, 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 1999 with proceeds of
$1,691,389 and gross realized gains and losses of $36,568 and $14,255,
respectively. Fixed maturities available for sale were sold during 1998 with
proceeds of $278,955 and gross realized gains and losses of $15,658 and $22,102,
respectively. 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.
At December 31, 1999, bonds carried at $14,559 were on deposit with various
states as required by law.
- --------------------------------------------------------------------------------
F-12 IDS LIFE INSURANCE COMPANY
<PAGE>
At December 31, 1999, investments in fixed maturities comprised 81 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 $3.7
billion which are rated by AEFC's 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:
<TABLE>
<CAPTION>
RATING 1999 1998
- ------------------------------------------------------------------
<S> <C> <C>
Aaa/AAA $ 7,144,280 $ 7,629,628
Aaa/AA 1,920 2,277
Aa/AA 301,728 308,053
Aa/A 314,168 301,325
A/A 2,598,300 2,525,283
A/BBB 1,014,566 1,148,736
Baa/BBB 6,319,549 6,237,014
Baa/BB 348,849 492,696
Below investment grade 2,816,069 2,664,051
- ------------------------------------------------------------------
$20,859,429 $21,309,063
- ------------------------------------------------------------------
</TABLE>
At December 31, 1999, 90 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, 1999, 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:
<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
ON BALANCE COMMITMENTS ON BALANCE COMMITMENTS
REGION SHEET TO PURCHASE SHEET TO PURCHASE
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
East North Central $ 715,998 $ 10,380 $ 750,705 $ 16,393
West North Central 555,635 42,961 491,006 81,648
South Atlantic 867,838 23,317 839,233 21,020
Middle Atlantic 428,051 1,806 476,448 6,169
New England 259,243 4,415 263,761 2,824
Pacific 238,299 3,466 195,851 16,946
West South Central 144,607 4,516 136,841 1,412
East South Central 43,841 -- 46,029 --
Mountain 381,148 9,380 345,379 8,473
- ----------------------------------------------------------------------------------
3,634,660 100,241 3,545,253 154,885
Less allowance for losses 28,283 -- 39,795 --
- ----------------------------------------------------------------------------------
$3,606,377 $100,241 $3,505,458 $154,885
- ----------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-13
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
ON BALANCE COMMITMENTS ON BALANCE COMMITMENTS
PROPERTY TYPE SHEET TO PURCHASE SHEET TO PURCHASE
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Department/retail stores $1,158,712 $ 33,829 $1,139,349 $ 59,305
Apartments 887,538 11,343 960,808 9,272
Office buildings 931,234 26,062 783,576 50,450
Industrial buildings 309,845 5,525 298,549 13,263
Hotels/motels 103,625 -- 109,185 14,122
Medical buildings 114,045 -- 124,369 --
Nursing/retirement homes 45,935 -- 46,696 --
Mixed use 66,893 -- 65,151 --
Other 16,833 23,482 17,570 8,473
- ----------------------------------------------------------------------------------
3,634,660 100,241 3,545,253 154,885
Less allowance for losses 28,283 -- 39,795 --
- ----------------------------------------------------------------------------------
$3,606,377 $100,241 $3,505,458 $154,885
- ----------------------------------------------------------------------------------
</TABLE>
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. Commitments to purchase mortgages are
made in the ordinary course of business. The fair value of the mortgage
commitments is $nil.
At December 31, 1999 and 1998, the Company's recorded investment in impaired
loans was $21,375 and $24,941, respectively, with allowances of $5,750 and
$6,662, respectively. During 1999 and 1998, the average recorded investment in
impaired loans was $23,815 and $37,873, respectively.
The Company recognized $1,190, $1,809 and $2,981 of interest income related to
impaired loans for the years ended December 31, 1999, 1998 and 1997
respectively.
The following table presents changes in the allowance for losses related to all
loans:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------
<S> <C> <C> <C>
Balance, January 1 $39,795 $38,645 $37,495
Provision (reduction) for
investment losses (9,512) 7,582 8,801
Loan payoffs (500) (800) (3,851)
Foreclosures and writeoffs (1,500) (5,632) (3,800)
- --------------------------------------------------------------
Balance, December 31 $28,283 $39,795 $38,645
- --------------------------------------------------------------
</TABLE>
At December 31, 1999, the Company had no commitments to purchase investments
other than mortgage loans.
- --------------------------------------------------------------------------------
F-14 IDS LIFE INSURANCE COMPANY
<PAGE>
Net investment income for the years ended December 31 is summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Interest on fixed maturities $1,598,059 $1,676,984 $1,692,481
Interest on mortgage loans 285,921 301,253 305,742
Other investment income 70,892 43,518 25,089
Interest on cash equivalents 5,871 5,486 5,914
- -----------------------------------------------------------------------
1,960,743 2,027,241 2,029,226
Less investment expenses 41,170 40,756 40,837
- -----------------------------------------------------------------------
$1,919,573 $1,986,485 $1,988,389
- -----------------------------------------------------------------------
</TABLE>
Net realized gain (loss) on investments for the years ended December 31 is
summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities $22,387 $12,084 $16,115
Mortgage loans 10,211 (5,933) (6,424)
Other investments (5,990) 751 (8,831)
- --------------------------------------------------------------
$26,608 $ 6,902 $ 860
- --------------------------------------------------------------
</TABLE>
Changes in net unrealized appreciation (depreciation) of investments for the
years ended December 31 are summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- ------------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities available for sale $(921,778) $(93,474) $223,441
Equity securities (142) (203) 53
</TABLE>
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 (benefit) for the years ended December 31 consists of the
following:
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------------
<S> <C> <C> <C>
Federal income taxes:
Current $178,444 $244,946 $176,879
Deferred 79,796 (16,602) 19,982
- -----------------------------------------------------------------
258,240 228,344 196,861
State income taxes-current 9,624 7,337 9,803
- -----------------------------------------------------------------
Income tax expense $267,864 $235,681 $206,664
- -----------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-15
<PAGE>
Increases (decreases) to the income tax provision applicable to pretax income
based on the statutory rate are attributable to:
<TABLE>
<CAPTION>
1999 1998 1997
PROVISION RATE PROVISION RATE PROVISION RATE
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federal income taxes
based on the statutory
rate $316,511 35.0% $271,527 35.0% $238,319 35.0%
Tax-excluded interest and
dividend income (9,626) (1.1) (12,289) (1.6) (10,294) (1.5)
State taxes, net of
federal benefit 6,256 0.7 4,769 0.6 6,372 0.9
Affordable housing
credits (31,000) (3.4) (19,688) (2.5) (20,705) (3.0)
Other, net (14,277) (1.6) (8,638) (1.1) (7,028) (1.0)
- -------------------------------------------------------------------------------
Total income taxes $267,864 29.6% $235,681 30.4% $206,664 30.4%
- -------------------------------------------------------------------------------
</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, 1999, 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:
<TABLE>
<CAPTION>
1999 1998
- ------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Policy reserves $733,647 $756,769
Unrealized loss on available for sale
investments 221,431 --
Investments, other 1,873 --
Life insurance guaranty fund assessment
reserve 4,789 15,289
Other -- 4,253
- ------------------------------------------------------------
Total deferred tax assets 961,740 776,311
- ------------------------------------------------------------
Deferred tax liabilities:
Deferred policy acquisition costs 740,837 698,471
Unrealized gain on available for sale
investments -- 91,315
Investments, other -- 3,455
Other 4,883 --
- ------------------------------------------------------------
Total deferred tax liabilities 745,720 793,241
- ------------------------------------------------------------
Net deferred tax assets (liabilities) $216,020 $(16,930)
- ------------------------------------------------------------
</TABLE>
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.
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
- --------------------------------------------------------------------------------
F-16 IDS LIFE INSURANCE COMPANY
<PAGE>
aggregated $1,693,356 as of December 31, 1999 and $1,598,203 as of December 31,
1998 (see Note 3 with respect to the income tax effect of certain
distributions). In addition, any dividend distributions in 2000 in excess of
approximately $418,845 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:
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Statutory net income $ 478,173 $ 429,903 $ 379,615
Statutory capital and surplus 1,978,406 1,883,405 1,765,290
</TABLE>
5. RELATED PARTY TRANSACTIONS
The Company loans funds to AEFC under a collateral loan agreement. The balance
of the loan was $nil at December 31, 1999 and 1998. 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 $nil, $nil and $103 in 1999, 1998
and 1997, 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 $223, $211 and $201 in 1999, 1998 and 1997, 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 1999, 1998 and 1997 were $1,906, $1,503 and $1,245,
respectively.
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. The Company's share of postretirement benefits in
1999, 1998 and 1997 was $1,147, $1,352 and $1,330, respectively.
Charges by AEFC for use of joint facilities, technology support, marketing
services and other services aggregated $485,177, $411,337 and $414,155 for 1999,
1998 and 1997, respectively. Certain of these costs are included in deferred
policy acquisition costs.
6. COMMITMENTS AND CONTINGENCIES
At December 31, 1999, 1998 and 1997, traditional life insurance and universal
life-type insurance in force aggregated $89,271,957, $81,074,928 and $74,730,720
respectively, of which $8,281,576, $4,912,313 and $4,351,904 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 $76,970,
$66,378 and $60,495 and reinsurance recovered from reinsurers amounted to
$27,816, $20,982, and $19,042 for the years ended December 31, 1999, 1998 and
1997, respectively. Reinsurance contracts do not relieve the Company from its
primary obligation to policyholders.
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-17
<PAGE>
In January 2000, AEFC reached an agreement in principle to settle three
class-action lawsuits. The Company had been named as a co-defendant in all three
lawsuits. It is expected the settlement will provide $215 million of benefits to
more than 2 million class participants. The agreement in principle to settle
also provides for release by class members of all insurance and annuity market
conduct claims dating back to 1985 and is subject to a number of contingencies
including a definitive agreement and court approval. The settlement costs
allocated to the Company are included in the accompanying 1999 statement of
income and did not have a material impact on the Company's consolidated
financial position or results from operations.
The Company is named as a defendant in various other lawsuits. The outcome of
any litigation cannot be predicted with certainty. In the opinion of management,
however, the ultimate resolution of these lawsuits, taken in aggregate 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 completing the audit 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 available lines of credit with its parent aggregating $200,000
($100,000 committed and $100,000 uncommitted). The interest rate for any
borrowings is established by reference to various indices plus 20 to 45 basis
points, depending on the term. Borrowings outstanding under this agreement were
$50,000 uncommitted at December 31, 1999 and $nil at December 31, 1998.
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.
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.
- --------------------------------------------------------------------------------
F-18 IDS LIFE INSURANCE COMPANY
<PAGE>
The Company's holdings of derivative financial instruments are as follows:
<TABLE>
<CAPTION>
NOTIONAL CARRYING FAIR TOTAL CREDIT
DECEMBER 31, 1999 AMOUNT AMOUNT VALUE EXPOSURE
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Interest rate caps $2,500,000 $ 9,685 $ 12,773 $12,773
Interest rate floors 1,000,000 602 319 319
Options purchased 180,897 49,789 61,745 61,745
Liabilities:
Options written 43,262 (1,677) (2,402) --
Off balance sheet:
Interest rate swaps 1,267,000 -- (17,582) --
------- -------- -------
$58,399 $ 54,853 $74,837
======= ======== =======
</TABLE>
<TABLE>
<CAPTION>
NOTIONAL CARRYING FAIR TOTAL CREDIT
DECEMBER 31, 1998 AMOUNT AMOUNT VALUE EXPOSURE
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Interest rate caps $3,400,000 $ 15,985 $ 4,256 $ 4,256
Interest rate floors 1,000,000 1,082 13,971 13,971
Options purchased 110,912 24,094 29,453 29,453
Liabilities:
Options purchased/written 265,454 (10,526) (11,062) --
Off balance sheet:
Interest rate swaps 1,667,000 -- (73,477) --
-------- -------- -------
$ 30,635 $(36,859) $47,680
======== ======== =======
</TABLE>
The fair values of derivative financial instruments are based on market values,
dealer quotes or pricing models. The interest rate caps, floors and swaps expire
on various dates from 2000 to 2003. The purchased and written options expire on
various dates from 2000 to 2006.
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.
The Company also uses interest rate swaps to manage interest rate risk related
to the level of fee income earned on the management of fixed income securities
in separate accounts and the underlying mutual funds. The amount of fee income
received is based upon the daily market value of the separate account and mutual
fund assets. As a result, changing interest rate conditions could impact the
Company's fee income significantly. The Company entered into interest rate swaps
to hedge anticipated fee income for 1999 related to separate accounts and mutual
funds which invest in fixed income securities. Interest was reported in
management and other fees.
The Company offers an annuity product that pays interest based upon the relative
change in a major stock market index between the beginning and end of the
product's term. As a means of hedging its obligation under the provisions of
this product, the Company purchases and writes options on the major stock market
index.
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-19
<PAGE>
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 fluctuations in the
equity market. The Company entered into index option collars (combination of
puts and calls) to hedge anticipated fee income for 1999 and 1998 related to
separate accounts and mutual funds which invest in equity securities. Testing
demonstrated the impact of these instruments on the income statement closely
correlates with the amount of fee income the Company realizes. At December 31,
1999 deferred losses on purchased put and written call index options were $nil.
At December 31, 1998 deferred losses on purchased put and written call index
options were $2,933 and deferred gains on written call index options were
$7,435, respectively.
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>
1999 1998
CARRYING FAIR CARRYING FAIR
FINANCIAL ASSETS VALUE VALUE VALUE VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments:
Fixed maturities (Note 2):
Held to maturity $ 7,156,292 $ 7,105,743 $ 7,964,114 $ 8,420,035
Available for sale 13,049,549 13,049,549 13,613,139 13,613,139
Mortgage loans on real
estate (Note 2) 3,606,377 3,541,958 3,505,458 3,745,617
Other:
Equity securities (Note 2) 3,016 3,016 3,158 3,158
Derivative financial
Instruments (Note 8) 60,076 74,837 41,161 47,680
Other 2,258 2,258 28,872 28,872
Cash and cash equivalents
(Note 1) 32,333 32,333 22,453 22,453
Separate account assets (Note
1) 35,894,732 35,894,732 27,349,401 27,349,401
</TABLE>
<TABLE>
<CAPTION>
1999 1998
CARRYING FAIR CARRYING FAIR
FINANCIAL LIABILITIES VALUE VALUE VALUE VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Future policy benefits for
fixed annuities $19,189,170 $18,591,859 $19,855,203 $19,144,838
Derivative financial
instruments (Note 8) 1,677 19,984 10,526 84,539
Separate account liabilities 31,869,184 31,016,081 25,005,732 24,179,115
</TABLE>
At December 31, 1999 and 1998, the carrying amount and fair value of future
policy benefits for fixed annuities exclude life insurance-related contracts
carried at $1,270,094 and $1,226,985, respectively, and policy loans of $92,895
and $90,115, respectively. The fair value of these benefits is based on the
status of the annuities at December 31, 1999 and 1998. The fair value of
deferred
- --------------------------------------------------------------------------------
F-20 IDS LIFE INSURANCE COMPANY
<PAGE>
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 1999 and 1998.
At December 31, 1999 and 1998, 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 $4,025,548 and
$2,343,669, respectively.
10. YEAR 2000 (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
major systems used by the Company are maintained by AEFC and are utilized by
multiple subsidiaries and affiliates of AEFC. The Company's businesses are
heavily dependent upon AEFC's computer systems and have significant interaction
with systems of third parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to the Company, was conducted to identify the major
systems that could be affected by the Year 2000 issue. Steps were taken to
resolve potential problems including modification to existing software and the
purchase of new software. As of December 31, 1999, AEFC had completed its
program of corrective measures on its internal systems and applications,
including Year 2000 compliance testing. As of December 31, 1999, AEFC had also
completed an evaluation of the Year 2000 readiness of other third parties whose
system failures could have an impact on the Company's operations.
AEFC's Year 2000 project also included establishing Year 2000 contingency plans
for all key business units. Business continuation plans, which address business
continuation in the event of a system disruption, are in place for all key
business units. At December 31, 1999, these plans had been amended to include
specific Year 2000 considerations.
In assessing its Year 2000 initiatives and the results of actual production
since January 1, 2000, management believes no material adverse consequences were
experienced, and there was no material effect on the Company's business, results
of operations, or financial condition as a result of the Year 2000 issue.
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-21
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for
AMERICAN EXPRESS RETIREMENT ADVISOR VARIABLE ANNUITYSM -BAND 3
IDS Life Variable Account 10
May 1, 2000
IDS Life Variable Account 10 is a separate account established and maintained by
IDS Life Insurance Company (IDS Life).
This Statement of Additional Information (SAI) is not a prospectus. It should be
read together with the prospectus dated the same date as this SAI, which may be
obtained by writing or calling us at the address and telephone number below. The
prospectus is incorporated in this SAI by reference.
IDS Life Insurance Company
200 AXP Financial Center
Minneapolis, MN 55474
800-437-0602
<PAGE>
American Express Retirement Advisor Variable Annuity-Band 3
IDS Life Variable Account 10
TABLE OF CONTENTS
Performance Information.................................................p.3
Calculating Annuity Payouts.............................................p.7
Rating Agencies.........................................................p.8
Principal Underwriter...................................................p.8
Independent Auditors....................................................p.8
Financial Statements
<PAGE>
PERFORMANCE INFORMATION
The subaccounts may quote various performance figures to illustrate past
performance. We base total return and current yield quotations (if applicable)
on standardized methods of computing performance as required by the Securities
and Exchange Commission (SEC). An explanation of the methods used to compute
performance follows below.
Average Annual Total Return
We will express quotations of average annual total return for the subaccounts in
terms of the average annual compounded rate of return of a hypothetical
investment in the contract over a period of one, five and ten years (or, if
less, up to the life of the subaccounts), 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 period, at the end of the
period (or fractional portion thereof)
We calculated the following performance figures on the basis of historical
performance of each fund. We show actual performance from the date the
subaccounts begin investing in the funds. For some subaccounts, we do not
provide any performance information because they are new and have not had any
activity to date. We also show performance from the commencement date of the
funds as if the contract existed at that time, which it did not. Although we
base performance figures on historical earnings, past performance does not
guarantee future results.
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return For Periods Ending Dec. 31, 1999
Performance Since Commencement of the Fund*
<S> <C> <C> <C> <C> <C>
Since
Subaccount Investing In: 1 Year 5 Years 10 Years Commencement
- ---------- ------------- ------ ------- -------- ------------
AXPSM VARIABLE PORTFOLIO
BC3 Blue Chip Advantage Fund (9/99)** --% --% --% 11.10%
BD3 Bond Fund (10/81) 1.08 7.36 7.53 10.06
CR3 Capital Resource Fund (10/81) 23.01 20.63 14.82 15.30
CM3 Cash Management Fund (10/81) 4.10 4.48 4.27 5.95
DE3 Diversified Equity Income Fund (9/99) -- -- -- 2.64
EM3 Emerging Markets Fund (5/00)+ -- -- -- --
EI3 Extra Income Fund (5/96) 5.60 -- -- 4.88
FI3 Federal Income Fund (9/99) -- -- -- 0.60
GB3 Global Bond Fund (5/96) -4.98 -- -- 3.45
GR3 Growth Fund (9/99) -- -- -- 18.02
IE3 International Fund (1/92) 44.77 15.45 -- 12.70
MF3 Managed Fund (4/86) 14.16 17.51 12.86 12.21
ND3 New Dimensions Fund(R)(5/96) 31.22 -- -- 25.60
SP3 S&P 500 Index Fund (5/00)+ -- -- -- --
SC3 Small Cap Advantage Fund (9/99) -- -- -- 12.47
SA3 Strategy Aggressive Fund (1/92) 70.03 24.06 -- 16.32
AIM V.I.
3CA Capital Appreciation Fund (5/93) 43.78 24.84 -- 21.59
3CD Capital Development Fund (5/98) 28.33 -- -- 10.53
American Century VARIABLE PORTFOLIOS, INC.
3IF VP International (5/94) 63.09 21.45 -- 17.54
3VA VP Value (5/96) -1.45 -- -- 10.43
CALVERT CVS
3SR Social Balanced Portfolio (9/86) 10.73 15.33 10.82 14.28
FIDELITY VIP
3GI III Growth & Income Portfolio (Service 7.05 -- -- 20.11
Class) (12/96)
3MP III Mid Cap Portfolio (Service Class) 47.87 -- -- 51.93
(12/98)
3OS Overseas Portfolio (Service Class) 41.56 16.62 10.74 11.73
(12/87)
FRANKLIN TEMPLETON VIP TRUST
3RE Franklin Real Estate Fund - Class 2 -6.93 7.33 8.34 8.01
(1/89)***
3SI Franklin Value Securities Fund - Class 0.78 -- -- -13.72
2 (5/98)***
3IS Templeton International Smaller 23.18 -- -- 4.61
Companies Fund - Class 2 (5/96)***
GOLDMAN SACHS Variable Insurance Trust (VIT)
3SE CORESM Small Cap Equity Fund (2/98)**** 16.84 -- -- 2.78
3UE CORESM U.S. Equity Fund (2/98) 23.56 -- -- 20.00
3MC Mid Cap Value Fund (4/94) -1.55 -- -- -9.43
JANUS ASPEN SERIES
3AG Aggressive Growth Portfolio - Service 121.96 35.05 -- 33.20
Shares (9/93)
3GT Global Technology Portfolio - Service -- -- -- --
Shares (1/00) +
3IG International Growth Portfolio - 78.52 32.50 -- 27.78
Service Shares (4/94)
LAZARD RETIREMENT SERIES
3IP International Equity Portfolio (9/98) 20.69 -- -- 25.47
MFS(R) VARIABLE INSURANCE TRUST (VIT)
3MG Growth Series - Service Class (5/99) -- -- -- 50.64
3MD New Discovery Series - Service Class -- -- -- 40.24
(5/98)
PUTNAM VARIABLE TRUST
3IN Putnam VT International New 101.65 -- -- 50.84
Opportunities Fund - Class IB Shares
(4/98)*****
3VS Putnam VT Vista Fund - Class IB Shares 51.83 -- -- 30.30
(1/97)*****
<PAGE>
ROYCE CAPITAL FUND
3MI Micro-Cap Portfolio (12/96) 27.40 -- -- 16.64
THIRD AVENUE
3SV Value Portfolio (9/99) -- -- -- 8.18
WANGER
3IT International Small Cap (5/95) 125.15 -- -- 37.94
3SP U.S. Small Cap (5/95) 24.15 -- -- 25.69
WARBURG PINCUS TRUST
3EG Emerging Growth Portfolio (9/99) -- -- -- 34.66
* Current applicable charges deducted from fund performance include a $30
contract administrative charge and a 0.55% mortality and expense risk fee.
+ Fund had not commenced operations as of Dec. 31, 1999.
** (Commencement date of the Funds)
*** Because no Class 2 Shares were issued until Jan. 6, 1999, Class 2
performance represents the historical results of Class 1 Shares.
Performance of Class 2 Shares for periods after its January 6, 1999
inception will reflect Class 2's additional 12b-1 fee expense which also
affects all future performance.
**** CoreSM is a service mark of Goldman, Sachs & Co.
*****Each of the above Funds' Class IB Shares commenced operations on April 30,
1998. For periods prior to inception of Class IB Shares, performance
information for Class IB Shares is based upon performance of Class IA
Shares (not offered) of the fund, adjusted to reflect the fees paid by
Class IB Shares, including the 12b-1 fee of 0.15%.
</TABLE>
Cumulative Total Return
Cumulative total return represents the cumulative change in the value of an
investment for a given period (reflecting change in a subaccount's accumulation
unit value). We compute cumulative total return by using 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 period, at the
end of the period (or fractional portion thereof).
All total return figures reflect the deduction of all applicable charges
including the contract administrative charge and mortality and expense risk fee.
Annualized Calculation of Yield for Subaccounts Investing in Money Market Funds
Annualized Simple Yield
For the subaccounts investing in money market funds, we base quotations of
simple yield on:
(a) the change in the value of a hypothetical subaccount (exclusive of capital
changes and income other than investment income) at the beginning of a
particular seven-day period;
(b) less a pro rata share of the subaccount expenses accrued over the period;
(c) dividing this difference by the value of the subaccount at the beginning of
the period to obtain the base period return; and
(d) multiplying the base period return by 365/7.
The subaccount's value includes:
o any declared dividends,
o the value of any shares purchased with dividends paid during the period,
and
o any dividends declared for such shares.
It does not include any realized or unrealized gains or losses.
<PAGE>
Annualized Compound Yield
We calculate compound yield using the base period return described above, which
we then compound according to the following formula:
Compound Yield = [(Base Period Return + 1)365/7] -1
Annualized Yields Based on the Seven-Day Period Ending Dec. 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Subaccount Investing In Simple Yield Compound Yield
CM3 AXPSM Variable Portfolio - Cash Management Fund 5.51% 5.66%
</TABLE>
You must consider (when comparing an investment in subaccounts investing in
money market funds with fixed annuities) that fixed annuities often provide an
agreed-to or guaranteed yield for a stated period of time, whereas the
subaccount's yield fluctuates. In comparing the yield of the subaccount to a
money market fund, you should consider the different services that the contract
provides.
Annualized Yield for Subaccounts Investing in Income Funds
For the subaccounts investing in income funds, we base quotations of yield on
all investment income earned during a particular 30-day period, less expenses
accrued during the period (net investment income) and compute it 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
The subaccount earns yield from the increase in the net asset value of shares of
the fund in which it invests and from dividends declared and paid by the fund,
which are automatically invested in shares of the fund.
The yield on the subaccount's accumulation unit may fluctuate daily and does not
provide a basis for determining future yields.
Annualized Yield Based on 30-Day Period Ended Dec. 31, 1999
Subaccount Investing In Simple Yield
- ---------- ------------ ------------
BD3 AXPSM Variable Portfolio - Bond Fund 7.42%
EI3 AXPSM Variable Portfolio - Extra Income Fund 10.23
FI3 AXPSM Variable Portfolio - Federal Income Fund 5.47
GB3 AXPSM Variable Portfolio - Global Bond Fund 5.26
Independent rating or statistical services or publishers or publications such as
those listed below may quote subaccount performance, compare it to rankings,
yields or returns, or use it in variable annuity accumulation or settlement
illustrations they publish or prepare.
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 Business 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 & World Report, The Wall Street Journal and Wiesenberger
Investment Companies Service.
CALCULATING ANNUITY PAYOUTS
The Variable Account
We do the following calculations 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 contract on the valuation date and then
deduct any applicable premium tax; then
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: We then convert the value of your subaccount to annuity units. To
compute the number of units credited to you, we divide the first monthly payment
by the annuity unit value (see below) on the valuation date. The number of units
in your subaccount is fixed. The value of the units fluctuates with the
performance of the underlying fund.
Subsequent Payouts: To compute later payouts, we multiply:
o the annuity unit value on the valuation date; by
o the fixed number of annuity units credited to you.
Annuity Unit Values: We originally set this value at $1 for each 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
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:
We determine the net investment factor by:
o adding the fund's current net asset value per share plus the per share
amount of any accrued income or capital gain dividends to obtain a current
adjusted net asset value per share; then
o dividing that sum by the previous adjusted 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 fund may fluctuate, the net investment factor
may be greater or less than one, and the annuity unit value may increase or
decrease. You bear this investment risk in a variable subaccount.
<PAGE>
The Fixed Account
We guarantee your fixed annuity payout amounts. 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 settlement date or the date you
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.
The annuity payout table we use will be the one in effect at the time you choose
to begin your annuity payouts. The values in the table will be equal to or
greater than the table in your contract.
RATING AGENCIES
The following chart reflects the ratings given to us 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 subaccounts
of the contract. This information relates only to the fixed account and reflects
our ability to make annuity payouts and to pay death benefits and other
distributions from the contract.
Rating Agency Rating
A.M. Best A+
(Superior)
Duff & Phelps AAA
Moody's Aa2
PRINCIPAL UNDERWRITER
The principal underwriter for the contract is IDS Life which offers the contract
on a continuous basis.
The contract is new and, therefore, we have not received any surrender charges
or paid any commissions.
INDEPENDENT AUDITORS
The financial statements appearing in this SAI have been audited by Ernst &
Young LLP (1400 Pillsbury Center, 200 South Sixth Street, Minneapolis, MN
55402), independent auditors, as stated in their report appearing herein.
FINANCIAL STATEMENTS
<PAGE>
IDS Life Variable Account 10 - American Express Retirement Advisor Variable
AnnuitySM - Band 3
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 BC3, BD3, CR3, CM3, DE3, EI3, FI3, GB3, GR3, IE3, MF3,
ND3, SC3, SA3, 3CA, 3CD, 3IF, 3VA, 3GI, 3MP, 3OS, 3RE, 3SI, 3IS, 3SE, 3UE, 3MC,
3IP, 3IN, 3VS, 3MI, 3SV, 3IT, 3SP and 3EG) as of December 31, 1999, and the
related statements of operations and changes in nets assets for the periods
indicated therein. 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 auditing standards generally accepted
in the United States. 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, 1999 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 (as described
above) at December 31, 1999, and the individual and combined results of their
operations and changes in their net assets for the periods indicated therein, in
conformity with accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Minneapolis, Minnesota
March 17, 2000
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 -- AXP Retirement Advisor Variable AnnuitySM Band 3
Statements of Net Assets
December 31, 1999
Segregated Asset Subaccounts
Assets BC3 BD3 CR3
Investments in shares of mutual funds and portfolios:
<S> <C> <C> <C>
at cost $ 212,470 $ 47,995 $ 938,790
--------- -------- ---------
at market value $ 234,104 $ 47,900 $ 996,131
Dividends receivable -- 291 --
Accounts receivable from IDS Life for
contract purchase payments -- -- --
Receivable from mutual funds and portfolios
for share redemptions -- -- --
-------- ------- -------
Total assets 234,104 48,191 996,131
======= ====== =======
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 593 22 464
Contract terminations 3 -- --
Payable to mutual funds and portfolios
for investments purchased -- -- --
------- ------- -------
Total liabilities 596 22 464
--- -- ---
Net assets applicable to contracts
in accumulation period $ 233,508 $ 48,169 $ 995,667
========= ======== =========
Accumulation units outstanding 210,746 47,444 871,976
======= ====== =======
Net asset value per accumulation unit $ 1.11 $ 1.02 $ 1.14
====== ====== ======
Assets CM3 DE3 EI3
Investments in shares of mutual funds and portfolios:
at cost $ 2,285,594 $ 22,840 $ 47,337
----------- -------- --------
at market value $ 2,285,593 $ 23,318 $ 47,709
Dividends receivable 9,214 -- 398
Accounts receivable from IDS Life for
contract purchase payments 114 -- 700
Receivable from mutual funds and portfolios
for share redemptions -- -- --
------- ------ -------
Total assets 2,294,921 23,318 48,807
========= ====== ======
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 945 230 21
Contract terminations -- -- --
Payable to mutual funds and portfolios
for investments purchased -- -- --
--- ---- ---
Total liabilities 945 230 21
--- --- --
Net assets applicable to contracts
in accumulation period $ 2,293,976 $ 23,088 $ 48,786
----------- -------- --------
Accumulation units outstanding 2,266,486 22,622 48,194
========= ====== ======
Net asset value per accumulation unit $ 1.01 $ 1.02 $ 1.01
====== ====== ======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 -- AXP Retirement Advisor Variable AnnuitySM Band 3
Statements of Net Assets
December 31, 1999
Segregated Asset Subaccounts
Assets FI3 GB3 GR3
Investments in shares of mutual funds
and portfolios:
<S> <C> <C> <C>
at cost $ 10,946 $ 2,832 $ 405,149
-------- ------- ---------
at market value $ 10,943 $ 2,809 $ 467,888
Dividends receivable 11,133 9 --
Accounts receivable from IDS Life for
contract purchase payments 1,285 -- 22
Receivable from mutual funds and portfolios
for share redemptions -- -- --
----- ----- -----
Total assets 23,361 2,818 467,910
====== ===== =======
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 2,497 1 216
Contract terminations -- -- --
Payable to mutual funds and portfolios
for investments purchased -- -- --
----- ----- -----
Total liabilities 2,497 1 216
----- - ---
Net assets applicable to contracts in
accumulation period $ 20,864 $ 2,817 $ 467,694
======== ======= =========
Accumulation units outstanding 9,663 2,813 400,647
----- ----- -------
Net asset value per accumulation unit $ 1.01 $ 1.00 $ 1.17
====== ====== ======
Assets IE3 MF3 ND3
Investments in shares of mutual funds
and portfolios:
at cost $ 151,783 $ 10,089 $ 459,229
--------- -------- ---------
at market value $ 169,572 $ 10,472 $ 500,044
Dividends receivable -- -- --
Accounts receivable from IDS Life for
contract purchase payments -- -- 7,640
Receivable from mutual funds and portfolios
for share redemptions -- -- --
----- ----- -----
Total assets 169,572 10,472 507,684
======= ====== =======
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 73 4 201
Contract terminations -- -- --
Payable to mutual funds and portfolios
for investments purchased -- -- --
----- ----- -----
Total liabilities 73 4 201
-- - ---
Net assets applicable to contracts in
accumulation period $ 169,499 $ 10,468 $ 507,483
--------- -------- ---------
Accumulation units outstanding 133,025 9,618 426,131
======= ===== =======
Net asset value per accumulation unit $ 1.27 $ 1.09 $ 1.19
====== ====== ======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 -- AXP Retirement Advisor Variable AnnuitySM Band 3
Statements of Net Assets
December 31, 1999
Segregated Asset Subaccounts
Assets SC3 SA3 3CA
Investments in shares of mutual funds and portfolios:
<S> <C> <C> <C>
at cost $ 595,837 $ 40,705 $ 218,472
--------- -------- ---------
at market value $ 662,774 $ 49,917 $ 243,363
Dividends receivable -- -- --
Accounts receivable from IDS Life for contract purchase payments -- -- --
Receivable from mutual funds and portfolios for share redemptions -- -- 95
---- ------- -------
Total assets 662,774 49,917 243,458
======= ====== =======
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 1,022 20 95
Contract terminations 200,000 -- --
Payable to mutual funds and portfolios for investments purchased -- -- --
---- ---- ----
Total liabilities 201,022 20 95
------- -- --
Net assets applicable to contracts in accumulation period $ 461,752 $ 49,897 $ 243,363
--------- -------- ---------
Accumulation units outstanding 27,894 32,918 185,081
====== ====== =======
Net asset value per accumulation unit $ 1.12 $ 1.52 $ 1.31
====== ====== ======
Assets 3CD 3IF 3VA
Investments in shares of mutual funds and portfolios:
at cost $ 4,002 $ 11,894 $ 53,884
------- -------- --------
at market value $ 4,882 $ 13,570 $ 54,561
Dividends receivable -- -- --
Accounts receivable from IDS Life for contract purchase payments -- -- --
Receivable from mutual funds and portfolios for share redemptions 2 5 18
- - --
Total assets 4,884 13,575 54,579
===== ====== ======
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 2 5 18
Contract terminations -- -- --
Payable to mutual funds and portfolios for investments purchased -- -- --
----- ---- ----
Total liabilities 2 5 18
- - --
Net assets applicable to contracts in accumulation period $ 4,882 $ 13,570 $ 54,561
------- -------- --------
Accumulation units outstanding 3,858 9,427 59,244
===== ===== ======
Net asset value per accumulation unit $ 1.27 $ 1.44 $ 0.92
====== ====== ======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 -- AXP Retirement Advisor Variable AnnuitySM Band 3
Statements of Net Assets
December 31, 1999
Segregated Asset Subaccounts
Assets 3GI 3MP 3OS
Investments in shares of mutual funds and portfolios:
<S> <C> <C> <C>
at cost $ 456,359 $ 111,787 $ 26,387
--------- --------- --------
at market value $ 465,000 $ 126,214 $ 30,534
Dividends receivable -- 790 --
Accounts receivable from IDS Life for contract purchase payments 131 24 --
Receivable from mutual funds and portfolios for share redemptions 158 50 14
--- -- --
Total assets 465,289 127,078 30,548
======= ======= ======
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 158 50 14
Contract terminations -- -- --
Payable to mutual funds and portfolios for investments purchased 131 24 --
--- --
Total liabilities 289 74 14
--- -- --
Net assets applicable to contracts in accumulation period $ 465,000 $ 127,004 $ 30,534
--------- --------- --------
Accumulation units outstanding 444,754 102,185 24,865
======= ======= ======
Net asset value per accumulation unit $ 1.05 $ 1.24 $ 1.23
====== ====== ======
Assets 3RE 3SI 3IS
Investments in shares of mutual funds and portfolios:
at cost $ 3,941 $ 1,504 $ 8,872
------- ------- -------
at market value $ 3,989 $ 1,563 $ 9,405
Dividends receivable -- -- --
Accounts receivable from IDS Life for contract purchase payments -- -- --
Receivable from mutual funds and portfolios for share redemptions 3 16 16
- -- --
Total assets 3,992 1,579 9,421
===== ===== =====
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 2 -- 4
Contract terminations -- -- --
Payable to mutual funds and portfolios for investments purchased 1 16 12
- -- --
Total liabilities 3 16 16
- -- --
Net assets applicable to contracts in accumulation period $ 3,989 $ 1,563 $ 9,405
------- ------- -------
Accumulation units outstanding 4,160 1,623 9,250
===== ===== =====
Net asset value per accumulation unit $ 0.96 $ 0.96 $ 1.02
====== ====== ======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 -- AXP Retirement Advisor Variable AnnuitySM Band 3
Statements of Net Assets
December 31, 1999
Segregated Asset Subaccounts
Assets 3SE 3UE 3MC
Investments in shares of mutual funds and portfolios:
<S> <C> <C> <C>
at cost $ 42,261 $ 182,216 $ 7,429
-------- --------- -------
at market value $ 46,356 $ 187,710 $ 7,530
Dividends receivable -- -- --
Accounts receivable from IDS Life for contract purchase payments -- -- 10
Receivable from mutual funds and portfolios for share redemptions 20 92 2
-- -- -
Total assets 46,376 187,802 7,542
====== ======= =====
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 20 32 2
Contract terminations -- -- --
Payable to mutual funds and portfolios for investments purchased -- 60 10
-- --
Total liabilities 20 92 12
-- -- --
Net assets applicable to contracts in accumulation period $ 46,356 $ 187,710 $ 7,530
-------- --------- -------
Accumulation units outstanding 40,902 170,333 7,935
====== ======= =====
Net asset value per accumulation unit $ 1.13 $ 1.10 $ 0.95
====== ====== ======
Assets 3IP 3IN 3VS
Investments in shares of mutual funds and portfolios:
at cost $ 8,398 $ 105,475 $ 230,602
------- --------- ---------
at market value $ 8,964 $ 131,637 $ 247,884
Dividends receivable -- -- --
Accounts receivable from IDS Life for contract purchase payments -- 11 3,382
Receivable from mutual funds and portfolios for share redemptions 4 50 102
- -- ---
Total assets 8,968 131,698 251,368
===== ======= =======
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 4 50 102
Contract terminations -- -- --
Payable to mutual funds and portfolios for investments purchased -- 11 3,382
-- -----
Total liabilities 4 61 3,484
- -- -----
Net assets applicable to contracts in accumulation period $ 8,964 $ 131,637 $ 247,884
------- --------- ---------
Accumulation units outstanding 8,363 86,882 182,717
===== ====== =======
Net asset value per accumulation unit $ 1.07 $ 1.52 $ 1.36
====== ====== ======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 -- AXP Retirement Advisor Variable AnnuitySM Band 3
Statements of Net Assets
December 31, 1999
Segregated Asset Subaccounts
Assets 3MI 3SV 3IT
Investments in shares of mutual funds and portfolios:
<S> <C> <C> <C>
at cost $ 21,022 $ 124,441 $ 138,891
-------- --------- ---------
at market value $ 21,970 $ 130,357 $ 169,351
Dividends receivable -- -- --
Accounts receivable from IDS Life for contract purchase payments 5 -- 3,385
Receivable from mutual funds and portfolios for share redemptions 9 866 60
- --- --
Total assets 21,984 131,223 172,796
====== ======= =======
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 9 58 60
Contract terminations -- -- --
Payable to mutual funds and portfolios for investments purchased 5 808 3,385
- --- -----
Total liabilities 14 866 3,445
-- --- -----
Net assets applicable to contracts in accumulation period $ 21,970 $ 130,357 $ 169,351
-------- --------- ---------
Accumulation units outstanding 19,042 120,448 111,791
====== ======= =======
Net asset value per accumulation unit $ 1.15 $ 1.08 $ 1.51
====== ====== ======
Combined
Variable
Assets 3SP 3EG Account
Investments in shares of mutual funds and portfolios:
at cost $ 135,620 $ 18,725 $ 7,143,778
--------- -------- -----------
at market value $ 143,413 $ 22,322 $ 7,579,749
Dividends receivable -- -- 21,835
Accounts receivable from IDS Life for contract purchase payments -- -- 16,709
Receivable from mutual funds and portfolios for share redemptions 174 11 1,767
--- -- -----
Total assets 143,587 22,333 7,620,060
======= ====== =========
Liabilities
Payable to IDS Life for:
Mortality and expense risk fee 51 11 7,056
Contract terminations -- -- 200,003
Payable to mutual funds and portfolios for investments purchased 123 -- 7,968
--- -----
Total liabilities 174 11 215,027
--- -- -------
Net assets applicable to contracts in accumulation period $ 143,413 $ 22,322 $ 7,405,033
--------- -------- -----------
Accumulation units outstanding 124,538 16,945
======= ======
Net asset value per accumulation unit $ 1.15 $ 1.32
====== ======
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 -- AXP Retirement Advisor Variable AnnuitySM Band 3
Statements of Operations
Period ended December 31, 1999
Segregated Asset Subaccounts1
<S> <C> <C> <C>
Investment income BC3 BD3 CR3
Dividend income from mutual funds and portfolios $ 2,835 $ 449 $ 89,254
Mortality and expense risk fee 3,101 32 1,193
----- -- -----
Investment income (loss) - net (266) 417 88,061
==== === ======
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in mutual funds and portfolios:
Proceeds from sales 2,132,738 41,908 1,590
Cost of investments sold 2,015,349 42,117 1,558
--------- ------ -----
Net realized gain (loss) on investments 117,389 (209) 32
Net change in unrealized appreciation or depreciation of investments 21,634 (95) 57,341
------ --- ------
Net gain (loss) on investments 139,023 (304) 57,373
------- ---- ------
Net increase (decrease) in net assets resulting from operations $ 138,757 $ 113 $ 145,434
========= ===== =========
Investment income CM3 DE3 EI3
Dividend income from mutual funds and portfolios $ 12,609 $ 6,759 $ 445
Mortality and expense risk fee 1,286 2,691 24
----- ----- --
Investment income (loss) - net 11,323 4,068 421
====== ===== ===
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in mutual funds and portfolios:
Proceeds from sales 410,561 2,018,274 994
Cost of investments sold 410,561 2,006,620 987
------- --------- ---
Net realized gain (loss) on investments -- 11,654 7
Net change in unrealized appreciation or depreciation of investments (1) 478 372
-- --- ---
Net gain (loss) on investments (1) 12,132 379
-- ------ ---
Net increase (decrease) in net assets resulting from operations $ 11,322 $ 16,200 $ 800
======== ======== =====
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 -- AXP Retirement Advisor Variable AnnuitySM Band 3
Statements of Operations
Period ended December 31, 1999
Segregated Asset Subaccounts1
Investment income FI3 GB3 GR3
<S> <C> <C> <C>
Dividend income from mutual funds and portfolios $ 129,829 $ 18 $ 465
Mortality and expense risk fee 14,908 2 2,851
------ - -----
Investment income (loss) - net 114,921 16 (2,386)
======= == ======
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in mutual funds and portfolios:
Proceeds from sales 10,084,511 691 2,208,747
Cost of investments sold 10,120,144 699 2,020,091
---------- --- ---------
Net realized gain (loss) on investments (35,633) (8) 188,656
Net change in unrealized appreciation or depreciation of investments (3) (23) 62,739
-- --- ------
Net gain (loss) on investments (35,636) (31) 251,395
------- --- -------
Net increase (decrease) in net assets resulting from operations $ 79,285 $ (15) $ 249,009
======== ===== =========
Investment income IE3 MF3 ND3
Dividend income from mutual funds and portfolios $ 1,762 $ 206 $ 1,060
Mortality and expense risk fee 79 5 238
-- - ---
Investment income (loss) - net 1,683 201 822
===== === ===
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in mutual funds and portfolios:
Proceeds from sales 1,647 702 19,277
Cost of investments sold 1,531 681 18,631
----- --- ------
Net realized gain (loss) on investments 116 21 646
Net change in unrealized appreciation or depreciation of investments 17,789 383 40,815
------ --- ------
Net gain (loss) on investments 17,905 404 41,461
------ --- ------
Net increase (decrease) in net assets resulting from operations $ 19,588 $ 605 $ 42,283
======== ===== ========
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 -- AXP Retirement Advisor Variable AnnuitySM Band 3
Statements of Operations
Period ended December 31, 1999
Segregated Asset Subaccounts1
Investment income SC3 SA3 3CA
<S> <C> <C> <C>
Dividend income from mutual funds and portfolios $ 25,198 $ 1,311 $ 4,208
Mortality and expense risk fee 4,801 28 115
----- -- ---
Investment income (loss) - net 20,397 1,283 4,093
====== ===== =====
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments in
mutual funds and portfolios:
Proceeds from sales 2,597,025 1,583 2,099
Cost of investments sold 2,460,592 1,435 1,942
--------- ----- -----
Net realized gain (loss) on investments 136,433 148 157
Net change in unrealized appreciation or
depreciation of investments 66,937 9,212 24,891
------ ----- ------
Net gain (loss) on investments 203,370 9,360 25,048
------- ----- ------
Net increase (decrease) in net assets resulting
from operations $ 223,767 $ 10,643 $ 29,141
========= ======== ========
Investment income 3CD 3IF 3VA
Dividend income from mutual funds and portfolios $-- $-- $--
Mortality and expense risk fee 5 6 35
- - --
Investment income (loss) - net (5) (6) (35)
== == ===
Realized and unrealized gain (loss)
on investments - net
Realized gain (loss) on sales of investments in
mutual funds and portfolios:
Proceeds from sales 989 5,299 1,060
Cost of investments sold 842 4,796 1,075
--- ----- -----
Net realized gain (loss) on investments 147 503 (15)
Net change in unrealized appreciation or
depreciation of investments 880 1,676 677
--- ----- ---
Net gain (loss) on investments 1,027 2,179 662
----- ----- ---
Net increase (decrease) in net assets resulting
from operations $ 1,022 $ 2,173 $ 627
======= ======= =====
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 -- AXP Retirement Advisor Variable AnnuitySM Band 3
Statements of Operations
Period ended December 31, 1999
Segregated Asset Subaccounts1
Investment income 3GI 3MP 3OS
<S> <C> <C> <C>
Dividend income from mutual funds and portfolios $-- $ 790 $--
Mortality and expense risk fee 207 65 21
--- -- --
Investment income (loss) - net (207) 725 (21)
==== === ===
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in mutual funds and portfolios:
Proceeds from sales 19,674 1,937 926
Cost of investments sold 19,571 1,855 827
------ ----- ---
Net realized gain (loss) on investments 103 82 99
Net change in unrealized appreciation or depreciation of investments 8,641 14,427 4,147
----- ------ -----
Net gain (loss) on investments 8,744 14,509 4,246
----- ------ -----
Net increase (decrease) in net assets resulting from operations $ 8,537 $ 15,234 $ 4,225
======= ======== =======
Investment income 3RE 3SI 3IS
Dividend income from mutual funds and portfolios $-- $-- $--
Mortality and expense risk fee 4 2 10
- - --
Investment income (loss) - net (4) (2) (10)
== == ===
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in mutual funds and portfolios:
Proceeds from sales 706 1,528 722
Cost of investments sold 712 1,493 684
--- ----- ---
Net realized gain (loss) on investments (6) 35 38
Net change in unrealized appreciation or depreciation of investments 48 59 533
-- -- ---
Net gain (loss) on investments 42 94 571
-- -- ---
Net increase (decrease) in net assets resulting from operations $ 38 $ 92 $ 561
==== ==== =====
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 -- AXP Retirement Advisor Variable AnnuitySM Band 3
Statements of Operations
Period ended December 31, 1999
Segregated Asset Subaccounts1
Investment income 3SE 3UE 3MC
<S> <C> <C> <C>
Dividend income from mutual funds and portfolios $ 99 $ 781 $ 43
Mortality and expense risk fee 25 56 4
-- -- -
Investment income (loss) - net 74 725 39
== === ==
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in mutual funds and portfolios:
Proceeds from sales 767 2,857 814
Cost of investments sold 726 2,715 826
--- ----- ---
Net realized gain (loss) on investments 41 142 (12)
Net change in unrealized appreciation or depreciation of investments 4,095 5,494 101
----- ----- ---
Net gain (loss) on investments 4,136 5,636 89
----- ----- --
Net increase (decrease) in net assets resulting from operations $ 4,210 $ 6,361 $ 128
======= ======= =====
Investment income 3IP 3IN 3VS
Dividend income from mutual funds and portfolios $ 84 $ -- $16,708
Mortality and expense risk fee 10 72 117
-- -- ------
Investment income (loss) - net 74 (72) 16,591
== === ======
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in mutual funds and portfolios:
Proceeds from sales 1,772 12,231 6,053
Cost of investments sold 1,695 10,485 6.170
--- ----- -----
Net realized gain (loss) on investments 77 1,746 (117)
Net change in unrealized appreciation or depreciation of investments 566 26,162 17,282
----- ----- ------
Net gain (loss) on investments 643 27,908 17,165
----- ----- ------
Net increase (decrease) in net assets resulting from operations $ 717 $27,836 $33,756
======= ======= =======
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 -- AXP Retirement Advisor Variable AnnuitySM Band 3
Statements of Operations
Period ended December 31, 1999
Segregated Asset Subaccounts
Investment income 3MI1 3SV2 3IT1
<S> <C> <C> <C>
Dividend income from mutual funds and portfolios $ 1,671 $-- $--
Mortality and expense risk fee 19 69 66
-- -- --
Investment income (loss) - net 1,652 (69) (66)
===== === ===
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in mutual funds and portfolios:
Proceeds from sales 1,218 2,975 875
Cost of investments sold 1,188 2,919 736
----- ----- ---
Net realized gain (loss) on investments 30 56 139
Net change in unrealized appreciation or depreciation of investments 948 5,916 30,460
--- ----- ------
Net gain (loss) on investments 978 5,972 30,599
--- ----- ------
Net increase (decrease) in net assets resulting from operations $ 2,630 $ 5,903 $ 30,533
======= ======= ========
Combined
Variable
Investment income 3SP1 3EG2 Account
Dividend income from mutual funds and portfolios $-- $ 176 $ 296,760
Mortality and expense risk fee 60 17 32,224
-- -- ------
Investment income (loss) - net (60) 159 264,536
=== === =======
Realized and unrealized gain (loss) on investments - net
Realized gain (loss) on sales of investments in mutual funds and portfolios:
Proceeds from sales 3,399 7,867 19,596,016
Cost of investments sold 3,337 6,877 19,172,467
----- ----- ----------
Net realized gain (loss) on investments 62 990 423,549
Net change in unrealized appreciation or depreciation of investments 7,793 3,597 435,971
----- ----- -------
Net gain (loss) on investments 7,855 4,587 859,520
----- ----- -------
Net increase (decrease) in net assets resulting from operations $ 7,795 $ 4,746 $ 1,124,056
======= ======= ===========
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2For the period Sept. 21, 1999 (commencement of operations) to Dec. 31, 1999.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 -- AXP Retirement Advisor Variable AnnuitySM Band 3
Statements of Changes in Net Assets
Period ended December 31, 1999
Segregated Asset Subaccounts1
Operations BC3 BD3 CR3
<S> <C> <C> <C>
Investment income (loss) - net $ (266) $ 417 $ 88,061
Net realized gain (loss) on investments 117,389 (209) 32
Net change in unrealized appreciation or depreciation of investments 21,634 (95) 57,341
------ --- ------
Net increase (decrease) in net assets resulting from operations 138,757 113 145,434
======= === =======
Contract transactions
Contract purchase payments 2,223,661 56,502 850,083
Net transfers2 (428) (8,446) 150
Transfers for policy loans -- -- --
Contract terminations:
Surrender benefits (2,128,482) -- --
---------- ---- -----
Increase (decrease) from contract transactions 94,751 48,056 850,233
------ ------ -------
Net assets at beginning of year -- -- --
----- --- -----
Net assets at end of year $ 233,508 $ 48,169 $ 995,667
========= ======== =========
Accumulation unit activity
Units outstanding at beginning of year -- -- --
Contract purchase payments 211,504 56,266 871,965
Net transfers2 598 (8,822) 11
Transfers for policy loans -- -- --
Contract terminations:
Surrender benefits (1,356) -- --
------ ----- -----
Units outstanding at end of year 210,746 47,444 871,976
======= ====== =======
Operations CM3 DE3 EI3
Investment income (loss) - net $ 11,323 $ 4,068 $ 421
Net realized gain (loss) on investments -- 11,654 7
Net change in unrealized appreciation or depreciation of investments (1) 478 372
-- --- ---
Net increase (decrease) in net assets resulting from operations 11,322 16,200 800
====== ====== ===
Contract transactions
Contract purchase payments 2,447,471 2,017,652 40,753
Net transfers2 (151,562) 4,251 7,563
Transfers for policy loans (7,921) -- --
Contract terminations:
Surrender benefits (5,334) (2,015,015) (330)
------ ---------- ----
Increase (decrease) from contract transactions 2,282,654 6,888 47,986
--------- ----- ------
Net assets at beginning of year -- -- --
------ ----- ----
Net assets at end of year $ 2,293,976 $ 23,088 $ 48,786
=========== ======== ========
Accumulation unit activity
Units outstanding at beginning of year -- -- --
Contract purchase payments 2,427,761 18,486 40,956
Net transfers2 (148,076) 4,136 7,565
Transfers for policy loans (7,903) -- --
Contract terminations:
Surrender benefits (5,296) -- (327)
------ ----
Units outstanding at end of year 2,266,486 22,622 48,194
========= ====== ======
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 -- AXP Retirement Advisor Variable AnnuitySM Band 3
Statements of Changes in Net Assets
Period ended December 31, 1999
Segregated Asset Subaccounts1
Operations FI3 GB3 GR3
<S> <C> <C> <C>
Investment income (loss) - net $ 114,921 $ 16 $ (2,386)
Net realized gain (loss) on investments (35,633) (8) 188,656
Net change in unrealized appreciation or depreciation of investments (3) (23) 62,739
-- --- ------
Net increase (decrease) in net assets resulting from operations 79,285 (15) 249,009
====== === =======
Contract transactions
Contract purchase payments 10,011,795 1,366 2,385,249
Net transfers2 (875) 1,466 12,026
Transfers for policy loans -- -- --
Contract terminations:
Surrender benefits (10,069,341) -- (2,178,590)
----------- ----------
Increase (decrease) from contract transactions (58,421) 2,832 218,685
------- ----- -------
Net assets at beginning of year -- -- --
----- ------ -----
Net assets at end of year $ 20,864 $ 2,817 $ 467,694
-------- ------- ---------
Accumulation unit activity
Units outstanding at beginning of year -- -- --
Contract purchase payments 11,748 1,356 390,177
Net transfers2 (2,085) 1,457 10,470
Transfers for policy loans -- -- --
Contract terminations:
Surrender benefits -- -- --
----- ------ -----
Units outstanding at end of year 9,663 2,813 400,647
===== ===== =======
Operations IE3 MF3 ND3
Investment income (loss) - net $ 1,683 $ 201 $ 822
Net realized gain (loss) on investments 116 21 646
Net change in unrealized appreciation or depreciation of investments 17,789 383 40,815
------ --- ------
Net increase (decrease) in net assets resulting from operations 19,588 605 42,283
====== === ======
Contract transactions
Contract purchase payments 122,687 3,163 419,823
Net transfers2 28,149 6,700 47,188
Transfers for policy loans -- -- --
Contract terminations:
Surrender benefits (925) -- (1,811)
---- ------
Increase (decrease) from contract transactions 149,911 9,863 465,200
------- ----- -------
Net assets at beginning of year -- -- --
----- ------- ---------
Net assets at end of year $ 169,499 $ 10,468 $ 507,483
========= ======== =========
Accumulation unit activity
Units outstanding at beginning of year -- -- --
Contract purchase payments 109,540 3,128 384,980
Net transfers2 24,246 6,490 42,731
Transfers for policy loans -- -- --
Contract terminations:
Surrender benefits (761) -- (1,580)
---- ------
Units outstanding at end of year 133,025 9,618 426,131
======= ===== =======
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 -- AXP Retirement Advisor Variable AnnuitySM Band 3
Statements of Changes in Net Assets
Period ended December 31, 1999
Segregated Asset Subaccounts1
Operations SC3 SA3 3CA
<S> <C> <C> <C>
Investment income (loss) - net $ 20,397 $ 1,283 $ 4,093
Net realized gain (loss) on investments 136,433 148 157
Net change in unrealized appreciation or depreciation of investments 66,937 9,212 24,891
------ ----- ------
Net increase (decrease) in net assets resulting from operations 223,767 10,643 29,141
======= ====== ======
Contract transactions
Contract purchase payments 3,025,558 27,399 193,854
Net transfers2 2,427 12,050 21,404
Transfers for policy loans -- -- --
Contract terminations:
Surrender benefits (2,790,000) (195) (1,036)
---------- ---- ------
Increase (decrease) from contract transactions 237,985 39,254 214,222
------- ------ -------
Net assets at beginning of year -- -- --
----- ------ ------
Net assets at end of year $ 461,752 $ 49,897 $ 243,363
========= ======== =========
Accumulation unit activity
Units outstanding at beginning of year -- -- --
Contract purchase payments 25,607 23,484 167,912
Net transfers2 2,287 9,588 17,993
Transfers for policy loans -- -- --
Contract terminations:
Surrender benefits -- (154) (824)
---- ----
Units outstanding at end of year 27,894 32,918 185,081
====== ====== =======
Operations 3CD 3IF 3VA
Investment income (loss) - net $ (5) $ (6) $ (35)
Net realized gain (loss) on investments 147 503 (15)
Net change in unrealized appreciation or depreciation of investments 880 1,676 677
--- ----- ---
Net increase (decrease) in net assets resulting from operations 1,022 2,173 627
===== ===== ===
Contract transactions
Contract purchase payments 3,153 9,015 53,734
Net transfers2 707 2,382 200
Transfers for policy loans -- -- --
Contract terminations:
Surrender benefits -- -- --
----- ----- ----
Increase (decrease) from contract transactions 3,860 11,397 53,934
----- ------ ------
Net assets at beginning of year -- -- --
----- ----- ----
Net assets at end of year $ 4,882 $ 13,570 $ 54,561
======= ======== ========
Accumulation unit activity
Units outstanding at beginning of year -- -- --
Contract purchase payments 3,331 7,633 59,036
Net transfers2 527 1,794 208
Transfers for policy loans -- -- --
Contract terminations:
Surrender benefits -- -- --
----- ----- ----
Units outstanding at end of year 3,858 9,427 59,244
===== ===== ======
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 -- AXP Retirement Advisor Variable AnnuitySM Band 3
Statements of Changes in Net Assets
Period ended December 31, 1999
Segregated Asset Subaccounts1
Operations 3GI 3MP 3OS
<S> <C> <C> <C>
Investment income (loss) - net $ (207) $ 725 $ (21)
Net realized gain (loss) on investments 103 82 99
Net change in unrealized appreciation or depreciation of investments 8,641 14,427 4,147
----- ------ -----
Net increase (decrease) in net assets resulting from operations 8,537 15,234 4,225
===== ====== =====
Contract transactions
Contract purchase payments 448,377 87,463 22,997
Net transfers2 9,516 24,417 3,312
Transfers for policy loans -- (16) --
Contract terminations:
Surrender benefits (1,430) (94) --
------ ---
Increase (decrease) from contract transactions 456,463 111,770 26,309
------- ------- ------
Net assets at beginning of year -- -- --
----- ----- -----
Net assets at end of year $ 465,000 $ 127,004 $ 30,534
========= ========= ========
Accumulation unit activity
Units outstanding at beginning of year -- -- --
Contract purchase payments 436,983 80,126 22,044
Net transfers2 9,167 22,159 2,821
Transfers for policy loans -- (16) --
Contract terminations:
Surrender benefits (1,396) (84) --
------ ---
Units outstanding at end of year 444,754 102,185 24,865
======= ======= ======
Operations 3RE 3SI 3IS
Investment income (loss) - net $ (4) $ (2) $ (10)
Net realized gain (loss) on investments (6) 35 38
Net change in unrealized appreciation or depreciation of investments 48 59 533
-- -- ---
Net increase (decrease) in net assets resulting from operations 38 92 561
== == ===
Contract transactions
Contract purchase payments 4,253 1,303 7,650
Net transfers2 (302) 168 1,194
Transfers for policy loans -- -- --
Contract terminations:
Surrender benefits -- -- --
---- ---- ----
Increase (decrease) from contract transactions 3,951 1,471 8,844
----- ----- -----
Net assets at beginning of year -- -- --
----- ----- -----
Net assets at end of year $ 3,989 $ 1,563 $ 9,405
======= ======= =======
Accumulation unit activity
Units outstanding at beginning of year -- -- --
Contract purchase payments 4,478 1,436 8,027
Net transfers2 (318) 187 1,223
Transfers for policy loans -- -- --
Contract terminations:
Surrender benefits -- -- --
---- ---- ----
Units outstanding at end of year 4,160 1,623 9,250
===== ===== =====
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 -- AXP Retirement Advisor Variable AnnuitySM Band 3
Statements of Changes in Net Assets
Period ended December 31, 1999
Segregated Asset Subaccounts1
Operations 3SE 3UE 3MC
<S> <C> <C> <C>
Investment income (loss) - net $ 74 $ 725 $ 39
Net realized gain (loss) on investments 41 142 (12)
Net change in unrealized appreciation or depreciation of investments 4,095 5,494 101
----- ----- ---
Net increase (decrease) in net assets resulting from operations 4,210 6,361 128
===== ===== ===
Contract transactions
Contract purchase payments 17,711 176,140 2,268
Net transfers2 24,582 5,209 5,150
Transfers for policy loans -- -- (16)
Contract terminations:
Surrender benefits (147) -- --
----
Increase (decrease) from contract transactions 42,146 181,349 7,402
------ ------- -----
Net assets at beginning of year -- -- --
----- ------ -----
Net assets at end of year $ 46,356 $ 187,710 $ 7,530
======== ========= =======
Accumulation unit activity
Units outstanding at beginning of year -- -- --
Contract purchase payments 17,410 165,502 2,440
Net transfers2 23,632 4,831 5,512
Transfers for policy loans -- -- (17)
Contract terminations:
Surrender benefits (140) -- --
----
Units outstanding at end of year 40,902 170,333 7,935
====== ======= =====
Operations 3IP 3IN 3VS
Investment income (loss) - net $ 74 $ (72) $ 16,591
Net realized gain (loss) on investments 77 1,746 (117)
Net change in unrealized appreciation or depreciation of investments 566 26,162 17,282
--- ------ ------
Net increase (decrease) in net assets resulting from operations 717 27,836 33,756
=== ====== ======
Contract transactions
Contract purchase payments 8,054 61,050 214,071
Net transfers2 193 42,951 1,301
Transfers for policy loans -- -- --
Contract terminations:
Surrender benefits -- (200) (1,244)
---- ------
Increase (decrease) from contract transactions 8,247 103,801 214,128
----- ------- -------
Net assets at beginning of year -- -- --
----- ------- ------
Net assets at end of year $ 8,964 $ 131,637 $ 247,884
======= ========= =========
Accumulation unit activity
Units outstanding at beginning of year -- -- --
Contract purchase payments 8,327 52,793 182,784
Net transfers2 36 34,238 899
Transfers for policy loans -- -- --
Contract terminations:
Surrender benefits -- (149) (966)
---- ----
Units outstanding at end of year 8,363 86,882 182,717
===== ====== =======
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 -- AXP Retirement Advisor Variable AnnuitySM Band 3
Statements of Changes in Net Assets
Period ended December 31, 1999
Segregated Asset Subaccounts
Operations 3MI1 3SV2 3IT1
<S> <C> <C> <C>
Investment income (loss) - net $ 1,652 $ (69) $ (66)
Net realized gain (loss) on investments 30 56 139
Net change in unrealized appreciation or depreciation of investments 948 5,916 30,460
--- ----- ------
Net increase (decrease) in net assets resulting from operations 2,630 5,903 30,533
===== ===== ======
Contract transactions
Contract purchase payments 16,525 124,554 132,267
Net transfers3 2,831 779 7,240
Transfers for policy loans (16) (16) (16)
Contract terminations:
Surrender benefits -- (863) (673)
---- ----
Increase (decrease) from contract transactions 19,340 124,454 138,818
------ ------- -------
Net assets at beginning of year -- -- --
----- ------- ------
Net assets at end of year $ 21,970 $ 130,357 $ 169,351
======== ========= =========
Accumulation unit activity
Units outstanding at beginning of year -- -- --
Contract purchase payments 16,569 120,290 106,977
Net transfers3 2,489 1,000 5,308
Transfers for policy loans (16) (16) (16)
Contract terminations:
Surrender benefits -- (826) (478)
---- ----
Units outstanding at end of year 19,042 120,448 111,791
====== ======= =======
Combined
Variable
Operations 3SP1 3EG2 Account
Investment income (loss) - net $ (60) $ 159 $ 264,536
Net realized gain (loss) on investments 62 990 423,549
Net change in unrealized appreciation or depreciation of investments 7,793 3,597 435,971
----- ----- -------
Net increase (decrease) in net assets resulting from operations 7,795 4,746 1,124,056
===== ===== =========
Contract transactions
Contract purchase payments 128,180 17,525 25,363,306
Net transfers3 8,005 51 121,949
Transfers for policy loans -- -- (8,001)
Contract terminations:
Surrender benefits (567) -- (19,196,277)
---- -----------
Increase (decrease) from contract transactions 135,618 17,576 6,280,977
------- ------ ---------
Net assets at beginning of year -- -- --
----- --- ------
Net assets at end of year $ 143,413 $ 22,322 $ 7,405,033
========= ======== ===========
Accumulation unit activity
Units outstanding at beginning of year -- --
Contract purchase payments 117,633 17,008
Net transfers3 7,426 (63)
Transfers for policy loans -- --
Contract terminations:
Surrender benefits (521) --
----
Units outstanding at end of year 124,538 16,945
======= ======
1For the period Sept. 15, 1999 (commencement of operations) to Dec. 31, 1999.
2For the period Sept. 21, 1999 (commencement of operations) to Dec. 31, 1999.
3Includes transfer activity from (to) other subaccounts and transfers from (to)
IDS Life's fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Variable Account 10 - American Express Retirement Advisor Variable
Annuity - Band 3
Notes to Financial Statements
1. ORGANIZATION
IDS Life Variable Account 10 (the Account) was established under Minnesota law
on Aug. 23, 1995 as a segregated asset account of IDS Life Insurance Company
(IDS Life). The Account is registered as a unit investment trust under the
Investment Company Act of 1940, as amended (the 1940 Act). Operations of the
Account commenced on March 5, 1996.
The Account is comprised of various subaccounts. Each subaccount invests
exclusively in shares of the following funds or portfolios (collectively, the
Funds), which are registered under the 1940 Act as diversified (non-diversified
for Global Bond and Warburg Pincus Trust/Emerging Growth Portfolio), open-end
management investment companies and have the following investment managers.
Subaccount Invests exclusively in shares of Investment Manager
<S> <C> <C>
BC3 AXPSM Variable Portfolio-- Blue Chip Advantage Fund IDS Life Insurance Company 1
BD3 AXPSM Variable Portfolio-- Bond Fund IDS Life Insurance Company 1
CR3 AXPSM Variable Portfolio-- Capital Resource Fund IDS Life Insurance Company 1
CM3 AXPSM Variable Portfolio-- Cash Management Fund IDS Life Insurance Company 1
DE3 AXPSM Variable Portfolio-- Diversified Equity IDS Life Insurance Company 1
Income Fund
EI3 AXPSM Variable Portfolio-- Extra Income Fund IDS Life Insurance Company 1
FI3 AXPSM Variable Portfolio-- Federal Income Fund IDS Life Insurance Company 1
GB3 AXPSM Variable Portfolio-- Global Bond Fund IDS Life Insurance Company 1
GR3 AXPSM Variable Portfolio-- Growth Fund IDS Life Insurance Company 1
IE3 AXPSM Variable Portfolio-- International Fund IDS Life Insurance Company 2
MF3 AXPSM Variable Portfolio-- Managed Fund IDS Life Insurance Company 1
ND3 AXPSM Variable Portfolio-- New Dimensions Fund(R) IDS Life Insurance Company 1
SC3 AXPSM Variable Portfolio-- Small Cap Advantage Fund IDS Life Insurance Company 3
SA3 AXPSM Variable Portfolio-- Strategy Aggressive Fund IDS Life Insurance Company 1
3CA AIM V.I. Capital Appreciation Fund A I M Advisors, Inc.
3CD AIM V.I. Capital Development Fund A I M Advisors, Inc.
3IF American Century VP International American Century Investment Management, Inc.
3VA American Century VP Value American Century Investment Management, Inc.
3GI Fidelity VIP III Growth & Income Portfolio - Fidelity Management & Research Company (FMR) 4
Service Class
3MP Fidelity VIP III Mid Cap Portfolio - Service Class FMR 4
3OS Fidelity VIP Overseas Portfolio - Service Class FMR 5
3RE FTVIPT Franklin Real Estate Securities Fund - Class 2 Franklin Advisers, Inc.
3SI FTVIPT Franklin Value Securities Fund - Class 2 Franklin Advisory Services, LLC
3IS FTVIPT Templeton International Smaller Companies Templeton Investment Counsel, Inc.
Fund - Class 2
3SE Goldman Sachs VIT CORESM Small Cap Equity Fund Goldman Sachs Asset Management
3UE Goldman Sachs VIT CORESM U.S. Equity Fund Goldman Sachs Asset Management
3MC Goldman Sachs VIT Mid Cap Value Fund Goldman Sachs Asset Management
3IP Lazard Retirement International Equity Portfolio Lazard Asset Management
3IN Putnam VT International New Opportunities Fund - Putnam Investment Management, Inc.
Class IB Shares
3VS Putnam VT Vista Fund - Class IB Shares Putnam Investment Management, Inc.
3MI Royce Micro-Cap Portfolio Royce & Associates, Inc.
3SV Third Avenue Value Portfolio The Investment Adviser EQSF Advisers, Inc.
3IT Wanger International Small Cap Wanger Asset Management, L.P.
3SP Wanger U.S. Small Cap Wanger Asset Management, L.P.
3EG Warburg Pincus Trust - Emerging Growth Portfolio Warburg Pincus Asset Management, Inc.
1 American Express Financial Corporation (AEFC) is the investment advisor.
2 AEFC is the investment advisor. American Express Asset Management
International Inc. is the sub-investment advisor.
3 AEFC is the investment advisor. Kenwood Capital Management LLC is the
sub-investment advisor.
4 FMR U.K. and FMR Far East are the sub-investment advisors.
5 FMR U.K., FMR Far East, Fidelity International Investment Advisors (FIIA) and
FIIA U.K. are the sub-investment advisors.
The assets of each subaccount of the Account are not chargeable with liabilities
arising out of the business conducted by any other segregated asset account or
by IDS Life.
IDS Life serves as issuer of the contract.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investments in the Funds
Investments in shares of the 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 Funds are reinvested in
additional shares of the 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 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 accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
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
IDS Life makes contractual assurances to the Account that possible future
adverse changes in administrative expenses and mortality experience of the
contract owners and annuitants 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 0.55% of the average daily net assets.
4. CONTRACT ADMINISTRATIVE CHARGES
IDS Life deducts a contract administrative charge of $30 per year on each
contract anniversary. This charge cannot be increased and does not apply after
annuity payouts begin. IDS Life does not expect to profit from this charge. This
charge reimburses IDS Life for expenses incurred in establishing and maintaining
the annuity records. This charge is waived when the contract value, or total
purchase payments less any payments surrendered, is $50,000 or more on the
current contract anniversary. The $30 annual charge is deducted at the time of
any full surrender.
5. INVESTMENT IN SHARES
The subaccounts' investment in shares of the Funds as of Dec. 31, 1999 were as follows:
Subaccount Investment Shares NAV
<S> <C> <C> <C>
BC3 AXPSM Variable Portfolio-- Blue Chip Advantage Fund 21,121 $11.08
BD3 AXPSM Variable Portfolio-- Bond Fund 4,543 10.54
CR3 AXPSM Variable Portfolio-- Capital Resource Fund 27,369 36.40
CM3 AXPSM Variable Portfolio-- Cash Management Fund 2,285,814 1.00
DE3 AXPSM Variable Portfolio-- Diversified Equity Income Fund 2,289 10.19
EI3 AXPSM Variable Portfolio-- Extra Income Fund 5,563 8.58
FI3 AXPSM Variable Portfolio-- Federal Income Fund 1,103 9.92
GB3 AXPSM Variable Portfolio-- Global Bond Fund 290 9.69
GR3 AXPSM Variable Portfolio-- Growth Fund 40,063 11.68
IE3 AXPSM Variable Portfolio-- International Fund 8,749 19.38
MF3 AXPSM Variable Portfolio-- Managed Fund 528 19.82
ND3 AXPSM Variable Portfolio-- New Dimensions Fund(R) 21,877 22.86
SC3 AXPSM Variable Portfolio-- Small Cap Advantage Fund 59,561 11.13
SA3 AXPSM Variable Portfolio-- Strategy Aggressive Fund 2,087 23.92
3CA AIM V.I. Capital Appreciation Fund 6,840 35.58
3CD AIM V.I. Capital Development Fund 411 11.89
3IF American Century VP International 1,086 12.50
3VA American Century VP Value 9,170 5.95
3GI Fidelity VIP III Growth & Income Portfolio - Service Class 26,972 17.24
3MP Fidelity VIP III Mid Cap Portfolio - Service Class 8,282 15.24
3OS Fidelity VIP Overseas Portfolio - Service Class 1,115 27.38
3RE FTVIPT Franklin Real Estate Securities Fund - Class 2 268 14.88
3SI FTVIPT Franklin Value Securities Fund - Class 2 198 7.88
3IS FTVIPT Templeton International Smaller Companies Fund - Class 850 11.07
2
3SE Goldman Sachs VIT CORESM Small Cap Equity Fund 4,373 10.60
3UE Goldman Sachs VIT CORESM U.S. Equity Fund 13,427 13.98
3MC Goldman Sachs VIT Mid Cap Value Fund 894 8.42
3IP Lazard Retirement International Equity Portfolio 665 13.49
3IN Putnam VT International New Opportunities Fund - Class IB 5,655 23.28
Shares
3VS Putnam VT Vista Fund - Class IB Shares 12,004 20.65
3MI Royce Micro-Cap Portfolio 3,584 6.13
3SV Third Avenue Value Portfolio 12,026 10.84
3IT Wanger International Small Cap 3,878 43.67
3SP Wanger U.S. Small Cap 5,764 24.88
3EG Warburg Pincus Trust - Emerging Growth Portfolio 1,708 13.07
6. INVESTMENT TRANSACTIONS
The subaccounts' purchases of the Funds' shares, including reinvestment of
dividend distributions, were as follows:
Period ended Dec. 31,
Subaccount Investment 1999
<S> <C> <C>
BC3 AXPSM Variable Portfolio-- Blue Chip Advantage Fund $ 2,227,8191
BD3 AXPSM Variable Portfolio-- Bond Fund 90,1121
CR3 AXPSM Variable Portfolio-- Capital Resource Fund 940,3481
CM3 AXPSM Variable Portfolio-- Cash Management Fund 2,696,1551
DE3 AXPSM Variable Portfolio-- Diversified Equity Income Fund 2,029,4601
EI3 AXPSM Variable Portfolio-- Extra Income Fund 48,3241
FI3 AXPSM Variable Portfolio-- Federal Income Fund 10,131,0901
GB3 AXPSM Variable Portfolio-- Global Bond Fund 3,5311
GR3 AXPSM Variable Portfolio-- Growth Fund 2,425,2401
IE3 AXPSM Variable Portfolio-- International Fund 153,3141
MF3 AXPSM Variable Portfolio-- Managed Fund 10,7701
ND3 AXPSM Variable Portfolio-- New Dimensions Fund(R) 477,8601
SC3 AXPSM Variable Portfolio-- Small Cap Advantage Fund 3,056,4291
SA3 AXPSM Variable Portfolio-- Strategy Aggressive Fund 42,1401
3CA AIM V.I. Capital Appreciation Fund 220,4141
3CD AIM V.I. Capital Development Fund 4,8441
3IF American Century VP International 16,6901
3VA American Century VP Value 54,9591
3GI Fidelity VIP III Growth & Income Portfolio - Service Class 475,9301
3MP Fidelity VIP III Mid Cap Portfolio - Service Class 113,6421
3OS Fidelity VIP Overseas Portfolio - Service Class 27,2141
3RE FTVIPT Franklin Real Estate Securities Fund - Class 2 4,6531
3SI FTVIPT Franklin Value Securities Fund - Class 2 2,9971
3IS FTVIPT Templeton International Smaller Companies Fund - Class 2 9,5561
3SE Goldman Sachs VIT CORESM Small Cap Equity Fund 42,9871
3UE Goldman Sachs VIT CORESM U.S. Equity Fund 184,9311
3MC Goldman Sachs VIT Mid Cap Value Fund 8,2551
3IP Lazard Retirement International Equity Portfolio 10,0931
3IN Putnam VT International New Opportunities Fund - Class IB 115,9601
Shares
3VS Putnam VT Vista Fund - Class IB Shares 236,7721
3MI Royce Micro-Cap Portfolio 22,2101
3SV Third Avenue Value Portfolio 127,3602
3IT Wanger International Small Cap 139,6271
3SP Wanger U.S. Small Cap 138,9571
3EG Warburg Pincus Trust - Emerging Growth Portfolio 25,6022
Combined Variable Account $26,316,246
1 Operations commenced on Sept. 15, 1999.
2 Operations commenced on Sept. 21, 1999.
7. 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 IDS Life and the
Account. All of the major systems used by the IDS Life and by the Account are
maintained by AEFC and are utilized by multiple subsidiaries and affiliates of
AEFC. IDS Life and the Account's businesses are heavily dependent upon AEFC's
computer systems and have significant interactions with systems of third
parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to IDS Life and the Account, was conducted to identify
the major systems that could be affected by the Year 2000 issue. Steps were
taken to resolve potential problems including modification to existing software
and the purchase of new software. As of Dec. 31, 1999, AEFC completed its
program of corrective measures on its internal systems and applications,
including Year 2000 compliance testing. As of Dec. 31, 1999, AEFC had also
completed an evaluation of the Year 2000 readiness of other third parties whose
system failures could have an impact on IDS Life's and the Account's operations.
AEFC's Year 2000 project also included establishing Year 2000 contingency plans
for all key business units. Business continuation plans, which address business
continuation in the event of a system disruption, are in place for all key
business units. As of Dec. 31, 1999, these plans had been amended to include
specific Year 2000 considerations.
In assessing its Year 2000 initiatives and the results of actual production
since Jan. 1, 2000, management believes no material adverse consequences were
experienced, and there was no material effect on IDS Life's and the Account's
business, results of operations, or financial condition as a result of the Year
2000 issue.
</TABLE>
<PAGE>
<PAGE>
IDS LIFE INSURANCE COMPANY
FINANCIAL INFORMATION
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, 1999 and 1998, 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, 1999. 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 auditing standards generally accepted
in the United States. 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, 1999 and 1998, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.
ERNST & YOUNG LLP
February 3, 2000
Minneapolis, Minnesota
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-1
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, ($ THOUSANDS) 1999 1998
<S> <C> <C>
ASSETS
- ------------------------------------------------------------------
Investments:
Fixed maturities:
Held to maturity, at amortized cost
(fair value:
1999, $7,105,743; 1998, $8,420,035) $ 7,156,292 $ 7,964,114
Available for sale, at fair value
(amortized cost:
1999, $13,703,137; 1998,
$13,344,949) 13,049,549 13,613,139
- ------------------------------------------------------------------
20,205,841 21,577,253
Mortgage loans on real estate 3,606,377 3,505,458
Policy loans 561,834 525,431
Other investments 506,797 366,604
- ------------------------------------------------------------------
Total investments 24,880,849 25,974,746
Cash and cash equivalents 32,333 22,453
Amounts recoverable from reinsurers 327,168 262,260
Amounts due from brokers 145 327
Other accounts receivable 48,578 47,963
Accrued investment income 343,449 366,574
Deferred policy acquisition costs 2,665,175 2,496,352
Deferred income taxes, net 216,020 --
Other assets 33,089 30,487
Separate account assets 35,894,732 27,349,401
- ------------------------------------------------------------------
Total assets $64,441,538 $56,550,563
- ------------------------------------------------------------------
LIABILITIES AND STOCKHOLDER'S EQUITY
- ------------------------------------------------------------------
Liabilities:
Future policy benefits:
Fixed annuities $20,552,159 $21,172,303
Universal life-type insurance 3,391,203 3,343,671
Traditional life insurance 226,842 225,306
Disability income and long-term care
insurance 811,941 660,320
Policy claims and other policyholders'
funds 24,600 70,309
Deferred income taxes, net -- 16,930
Amounts due to brokers 148,112 195,406
Other liabilities 579,678 410,285
Separate account liabilities 35,894,732 27,349,401
- ------------------------------------------------------------------
Total liabilities 61,629,267 53,443,931
- ------------------------------------------------------------------
Commitments and contingencies
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 288,327 288,327
Accumulated other comprehensive (loss)
income, net of tax:
Net unrealized securities (losses) gains (411,230) 169,584
- ------------------------------------------------------------------
Retained earnings 2,932,174 2,645,721
- ------------------------------------------------------------------
Total stockholder's equity 2,812,271 3,106,632
- ------------------------------------------------------------------
Total liabilities and stockholder's
equity $64,441,538 $56,550,563
==================================================================
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
F-2 IDS LIFE INSURANCE COMPANY
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, ($ THOUSANDS) 1999 1998 1997
<S> <C> <C> <C>
REVENUES:
- -----------------------------------------------------------------------------
Premiums:
Traditional life insurance $ 53,790 $ 53,132 $ 52,473
Disability income and long-term care
insurance 201,637 176,298 154,021
- -----------------------------------------------------------------------------
Total premiums 255,427 229,430 206,494
Policyholder and contractholder charges 411,994 383,965 341,726
Management and other fees 473,108 401,057 340,892
Net investment income 1,919,573 1,986,485 1,988,389
Net realized gain on investments 26,608 6,902 860
- -----------------------------------------------------------------------------
Total revenues 3,086,710 3,007,839 2,878,361
- -----------------------------------------------------------------------------
BENEFITS AND EXPENSES:
- -----------------------------------------------------------------------------
Death and other benefits:
Traditional life insurance 29,819 29,835 28,951
Universal life-type insurance and
investment contracts 118,561 108,349 92,814
Disability income and long-term care
insurance 30,622 27,414 22,333
Increase in liabilities for future
policy benefits:
Traditional life insurance 7,311 6,052 3,946
Disability income and long-term care
insurance 87,620 73,305 63,631
Interest credited on universal life-type
insurance and investment contracts 1,240,575 1,317,124 1,386,448
Amortization of deferred policy
acquisition costs 332,705 382,642 322,731
Other insurance and operating expenses 335,180 287,326 276,596
- -----------------------------------------------------------------------------
Total benefits and expenses 2,182,393 2,232,047 2,197,450
- -----------------------------------------------------------------------------
Income before income taxes 904,317 775,792 680,911
Income taxes 267,864 235,681 206,664
- -----------------------------------------------------------------------------
Net income $ 636,453 $ 540,111 $ 474,247
=============================================================================
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-3
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
TOTAL ADDITIONAL COMPREHENSIVE
STOCKHOLDER'S CAPITAL PAID-IN (LOSS) INCOME, RETAINED
THREE YEARS ENDED DECEMBER 31, 1999 ($ THOUSANDS) EQUITY STOCK CAPITAL NET OF TAX EARNINGS
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 $2,444,080 $3,000 $283,615 $ 86,102 $2,071,363
Comprehensive income:
Net income 474,247 -- -- -- 474,247
Unrealized holding gains arising during the year,
net of deferred policy acquisition costs of
($7,714) and taxes of ($75,215) 139,686 -- -- 139,686 --
Reclassification adjustment for losses included in
net income, net of tax of ($308) 571 -- -- 571 --
Other comprehensive income 140,257 -- -- 140,257 --
- ---------------------------------------------------------------------------------------------------------------------
Comprehensive income 614,504 -- -- -- --
Capital contribution from parent 7,232 -- 7,232 -- --
Cash dividends to parent (200,000) -- -- -- (200,000)
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 2,865,816 3,000 290,847 226,359 2,345,610
Comprehensive income:
Net income 540,111 -- -- -- 540,111
Unrealized holding losses arising during the year,
net of deferred policy acquisition costs of
$6,333 and taxes of $32,826 (60,964) -- -- (60,964) --
Reclassification adjustment for losses included in
net income, net of tax of ($2,254) 4,189 -- -- 4,189 --
Other comprehensive loss (56,775) -- -- (56,775) --
Comprehensive income 483,336 -- -- -- --
Other changes (2,520) -- (2,520) -- --
- ---------------------------------------------------------------------------------------------------------------------
Cash dividends to parent (240,000) -- -- -- (240,000)
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 3,106,632 3,000 288,327 169,584 2,645,721
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 $3,106,632 $3,000 $288,327 $ 169,584 $2,645,721
Comprehensive income:
Net income 636,453 -- -- -- 636,453
Unrealized holding losses arising during the year,
net of deferred policy acquisition costs of
$28,444 and taxes of $304,936 (566,311) -- -- (566,311) --
Reclassification adjustment for gains included in
net income, net of tax of $7,810 (14,503) -- -- (14,503) --
- ---------------------------------------------------------------------------------------------------------------------
Other comprehensive loss (580,814) -- -- (580,814) --
Comprehensive income 55,639 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Cash dividends to parent (350,000) -- -- -- (350,000)
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999 $2,812,271 $3,000 $288,327 $(411,230) $2,932,174
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
F-4 IDS LIFE INSURANCE COMPANY
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, ($ THOUSANDS) 1999 1998 1997
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
- -------------------------------------------------------------------------------
Net income $ 636,453 $ 540,111 $ 474,247
Adjustments to reconcile net income to
net cash provided by operating
activities: Policy loans, excluding
universal life-type insurance:
Issuance (56,153) (53,883) (54,665)
Repayment 54,105 57,902 46,015
Change in amounts recoverable from
reinsurers (64,908) (56,544) (47,994)
Change in other accounts receivable (615) (10,068) 6,194
Change in accrued investment income 23,125 (9,184) (14,077)
Change in deferred policy acquisition
costs, net (140,379) (10,443) (156,486)
Change in liabilities for future policy
benefits for traditional life,
disability income and long-term care
insurance 153,157 138,826 112,915
Change in policy claims and other
policyholders' funds (45,709) 1,964 (15,289)
Deferred income tax provision (benefit) 79,796 (19,122) 19,982
Change in other liabilities 169,395 64,902 13,305
(Accretion of discount), amortization of
premium, net (17,907) 9,170 (5,649)
Net realized gain on investments (26,608) (6,902) (860)
Policyholder and contractholder charges,
non-cash (175,059) (172,396) (160,885)
Other, net (5,324) 10,786 7,161
- -------------------------------------------------------------------------------
Net cash provided by operating
activities $ 583,369 $ 485,119 $ 223,914
CASH FLOWS FROM INVESTING ACTIVITIES:
- -------------------------------------------------------------------------------
Fixed maturities held to maturity:
Purchases $ (3,030) $ (1,020) $ (1,996)
Maturities, sinking fund payments and
calls 741,949 1,162,731 686,503
Sales 66,547 236,963 236,761
Fixed maturities available for sale:
Purchases (3,433,128) (4,100,238) (3,160,133)
Maturities, sinking fund payments and
calls 1,442,507 2,967,311 1,206,213
Sales 1,691,389 278,955 457,585
Other investments, excluding policy
loans:
Purchases (657,383) (555,647) (524,521)
Sales 406,684 579,038 335,765
Change in amounts due from brokers 182 8,073 2,647
Change in amounts due to brokers (47,294) (186,052) 119,471
- -------------------------------------------------------------------------------
Net cash provided by (used in) investing
activities 208,423 390,114 (641,705)
CASH FLOWS FROM FINANCING ACTIVITIES:
- -------------------------------------------------------------------------------
Activity related to universal life-type
insurance and investment contracts:
Considerations received 2,031,630 1,873,624 2,785,758
Surrenders and other benefits (3,669,759) (3,792,612) (3,736,242)
Interest credited to account balances 1,240,575 1,317,124 1,386,448
Universal life-type insurance policy
loans:
Issuance (102,239) (97,602) (84,835)
Repayment 67,881 67,000 54,513
Capital transaction with parent -- -- 7,232
Dividends paid (350,000) (240,000) (200,000)
- -------------------------------------------------------------------------------
Net cash (used in) provided by financing
activities (781,912) (872,466) 212,874
- -------------------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents 9,880 2,767 (204,917)
Cash and cash equivalents at beginning
of year 22,453 19,686 224,603
- -------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 32,333 $ 22,453 $ 19,686
- -------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ($ 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, 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 significant intercompany accounts
and transactions have been eliminated in consolidation.
The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States
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 accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities 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 accumulated other comprehensive (loss) income, net of the related
deferred policy acquisition costs effect and deferred taxes.
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.
- --------------------------------------------------------------------------------
F-6 IDS LIFE INSURANCE COMPANY
<PAGE>
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.
Impairment of mortgage loans is measured as the excess of a loan's recorded
investment over its present value of expected principal and interest payments
discounted at the loan's effective interest rate, or the fair value of
collateral. The amount of the impairment is recorded in a reserve for mortgage
loan losses. The reserve for mortgage loan losses is maintained at a level that
management believes is adequate to absorb estimated losses in the portfolio. The
level of the reserve account is determined based on several factors, including
historical experience, expected future principal and interest payments,
estimated collateral values, and current 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.
The Company may purchase and write index options to hedge the fee income earned
on the management of equity securities in separate accounts and the underlying
mutual funds. These index options are carried at market value and are included
in other investments or other liabilities, as appropriate. Gains or losses on
index options that qualify as hedges are deferred and recognized in management
and other fees in the same period as the hedged fee income.
The Company also uses index options to manage the risks related to a certain
annuity product that pay interest based upon the relative change in a major
stock market index between the beginning and end of the product's term.
Purchased options used in conjunction with this product are reported in other
investments and written options are included in other liabilities. The
amortization of the cost of purchased options, the proceeds of written options
and the changes in intrinsic value of the contracts are included in net
investment 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.
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-7
<PAGE>
Supplementary information to the consolidated statements of cash flows for the
years ended December 31 is summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------------
<S> <C> <C> <C>
Cash paid during the year for:
Income taxes $214,940 $215,003 $174,472
Interest on borrowings 4,521 14,529 8,213
</TABLE>
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, issue and administrative fees and surrender charges. 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 from underlying proprietary mutual funds and mortality and
expense risk fees received from the variable annuity and variable life insurance
separate accounts.
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 using
primarily the interest method. 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.
Amortization of deferred policy acquisition costs requires the use of
assumptions including interest margins, mortality margins, persistency rates,
maintenance expense levels and, for variable products, separate account
performance. For universal life-type insurance and deferred annuities, actual
experience is reflected in the Company's amortization models monthly. As actual
experience differs from the current assumptions, management considers the need
to change key assumptions underlying the amortization models prospectively. The
impact of changing prospective assumptions is reflected in the period that such
changes are made and is generally referred to as an unlocking adjustment. During
1999, unlocking adjustments resulted in a net decrease in amortization of $56.8
million. Net unlocking adjustments in 1998 and 1997 were not significant.
LIABILITIES FOR FUTURE POLICY BENEFITS
Liabilities for universal-life type insurance and fixed and variable deferred
annuities are accumulation values.
- --------------------------------------------------------------------------------
F-8 IDS LIFE INSURANCE COMPANY
<PAGE>
Liabilities for equity indexed deferred annuities are determined as the present
value of guaranteed benefits and the intrinsic value of index-based benefits.
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.
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.
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 7% 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 established
industry tables. Anticipated interest rates for claim reserves for both
disability income and long-term care range from 5% to 8%.
REINSURANCE
The maximum amount of life insurance risk retained by the Company is $750 on any
policy insuring a single life and $1,500 on any policy insuring a joint-life
combination. Beginning in 1999, the Company retains only 20% of the mortality
risk on new variable universal life insurance policies. Risk not retained is
reinsured with other life insurance companies, primarily on a yearly renewable
term basis. Long-term care policies are primarily reinsured on a coinsurance
basis. The Company retains all disability income and waiver of premium risk.
Beginning in 2000, the Company will retain all accidental death benefit risk.
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, 1999 and 1998 are $852 receivable
from and $26,291 payable to, respectively, AEFC 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.
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-9
<PAGE>
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 beneficiaries from the mortality assumptions implicit in the
annuity contracts. The Company makes periodic fund transfers to, or withdrawals
from, the separate account assets for such actuarial adjustments for variable
annuities that are in the benefit payment period. The Company also guarantees
that the rates at which administrative fees are deducted from contract funds
will not exceed contractual maximums.
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.
ACCOUNTING CHANGES
American Institute of Certified Public Accountants (AICPA) Statement of Position
(SOP) 98-1, "Accounting for Costs of Computer Software Developed or Obtained for
Internal Use" became effective January 1, 1999. The SOP requires the
capitalization of certain costs incurred after the date of adoption to develop
or obtain software for internal use. Software utilized by the Company is owned
by AEFC and capitalized by AEFC. As a result, the new rule did not have a
material impact on the Company's results of operations or financial condition.
Effective January 1, 1999, the Company adopted AICPA SOP 97-3, "Accounting by
Insurance and Other Enterprises for Insurance-Related Assessments," providing
guidance for the timing of recognition of liabilities related to guaranty fund
assessments. The Company had historically carried a liability for estimated
guaranty fund assessment exposure. Adoption of the SOP did not have a material
impact on the Company's results of operations or financial condition.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which is effective January 1, 2001. This Statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. It requires the recognition of all derivatives as either
assets or liabilities on the balance sheet and measure those instruments at fair
value. The accounting for changes in the fair value of a derivative depends on
the intended use of the derivative and the resulting designation. The ultimate
financial effect of adoption of the new rule will depend on the derivatives in
place at adoption and cannot be estimated at this time.
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.
- --------------------------------------------------------------------------------
F-10 IDS LIFE INSURANCE COMPANY
<PAGE>
The amortized cost, gross unrealized gains and losses and fair values of
investments in fixed maturities and equity securities at December 31, 1999 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 $ 37,613 $ 236 $ 2,158 $ 35,691
State and municipal
obligations 9,681 150 -- 9,831
Corporate bonds and
obligations 5,713,475 91,571 113,350 5,691,696
Mortgage-backed securities 1,395,523 4,953 31,951 1,368,525
- ------------------------------------------------------------------------------
$7,156,292 $96,910 $147,459 $7,105,743
- ------------------------------------------------------------------------------
</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 $ 46,325 $ 612 $ 2,231 $ 44,706
State and municipal
obligations 13,226 519 191 13,554
Corporate bonds and
obligations 7,960,352 60,120 560,450 7,460,022
Mortgage-backed securities 5,683,234 9,692 161,659 5,531,267
- --------------------------------------------------------------------------------
Total fixed maturities 13,703,137 70,943 724,531 13,049,549
Equity securities 3,000 16 -- 3,016
- --------------------------------------------------------------------------------
$13,706,137 $70,959 $724,531 $13,052,565
- --------------------------------------------------------------------------------
</TABLE>
The amortized cost, gross unrealized gains and losses and fair values of
investments in fixed maturities and equity securities at December 31, 1998 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 $ 39,888 $ 4,460 $ -- $ 44,348
State and municipal
obligations 9,683 490 -- 10,173
Corporate bonds and
obligations 6,305,476 447,752 27,087 6,726,141
Mortgage-backed securities 1,609,067 30,458 152 1,639,373
- -------------------------------------------------------------------------------
$7,964,114 $483,160 $27,239 $8,420,035
- -------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-11
<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 $ 52,043 $ 3,324 $ -- $ 55,367
State and municipal
obligations 11,060 1,231 -- 12,291
Corporate bonds and
obligations 7,332,344 271,174 155,181 7,448,337
Mortgage-backed securities 5,949,502 151,511 3,869 6,097,144
- --------------------------------------------------------------------------------
Total fixed maturities 13,344,949 427,240 159,050 13,613,139
Equity securities 3,000 158 -- 3,158
- --------------------------------------------------------------------------------
$13,347,949 $427,398 $159,050 $13,616,297
- --------------------------------------------------------------------------------
</TABLE>
The amortized cost and fair value of investments in fixed maturities at
December 31, 1999 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.
<TABLE>
<CAPTION>
AMORTIZED FAIR
HELD TO MATURITY COST VALUE
- ----------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 238,740 $ 239,747
Due from one to five years 2,996,713 3,012,721
Due from five to ten years 1,922,199 1,893,918
Due in more than ten years 603,117 590,832
Mortgage-backed securities 1,395,523 1,368,525
- ----------------------------------------------------------------
$7,156,292 $7,105,743
- ----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AMORTIZED FAIR
AVAILABLE FOR SALE COST VALUE
- ------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 271,381 $ 274,415
Due from one to five years 595,747 592,533
Due from five to ten years 4,936,041 4,669,573
Due in more than ten years 2,216,734 1,981,761
Mortgage-backed securities 5,683,234 5,531,267
- ------------------------------------------------------------------
$13,703,137 $13,049,549
- ------------------------------------------------------------------
</TABLE>
During the years ended December 31, 1999, 1998 and 1997, fixed maturities
classified as held to maturity were sold with amortized cost of $68,470,
$230,036 and $229,848, 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 1999 with proceeds of
$1,691,389 and gross realized gains and losses of $36,568 and $14,255,
respectively. Fixed maturities available for sale were sold during 1998 with
proceeds of $278,955 and gross realized gains and losses of $15,658 and $22,102,
respectively. 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.
At December 31, 1999, bonds carried at $14,559 were on deposit with various
states as required by law.
- --------------------------------------------------------------------------------
F-12 IDS LIFE INSURANCE COMPANY
<PAGE>
At December 31, 1999, investments in fixed maturities comprised 81 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 $3.7
billion which are rated by AEFC's 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:
<TABLE>
<CAPTION>
RATING 1999 1998
- ------------------------------------------------------------------
<S> <C> <C>
Aaa/AAA $ 7,144,280 $ 7,629,628
Aaa/AA 1,920 2,277
Aa/AA 301,728 308,053
Aa/A 314,168 301,325
A/A 2,598,300 2,525,283
A/BBB 1,014,566 1,148,736
Baa/BBB 6,319,549 6,237,014
Baa/BB 348,849 492,696
Below investment grade 2,816,069 2,664,051
- ------------------------------------------------------------------
$20,859,429 $21,309,063
- ------------------------------------------------------------------
</TABLE>
At December 31, 1999, 90 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, 1999, 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:
<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
ON BALANCE COMMITMENTS ON BALANCE COMMITMENTS
REGION SHEET TO PURCHASE SHEET TO PURCHASE
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
East North Central $ 715,998 $ 10,380 $ 750,705 $ 16,393
West North Central 555,635 42,961 491,006 81,648
South Atlantic 867,838 23,317 839,233 21,020
Middle Atlantic 428,051 1,806 476,448 6,169
New England 259,243 4,415 263,761 2,824
Pacific 238,299 3,466 195,851 16,946
West South Central 144,607 4,516 136,841 1,412
East South Central 43,841 -- 46,029 --
Mountain 381,148 9,380 345,379 8,473
- ----------------------------------------------------------------------------------
3,634,660 100,241 3,545,253 154,885
Less allowance for losses 28,283 -- 39,795 --
- ----------------------------------------------------------------------------------
$3,606,377 $100,241 $3,505,458 $154,885
- ----------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-13
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, 1999 DECEMBER 31, 1998
ON BALANCE COMMITMENTS ON BALANCE COMMITMENTS
PROPERTY TYPE SHEET TO PURCHASE SHEET TO PURCHASE
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Department/retail stores $1,158,712 $ 33,829 $1,139,349 $ 59,305
Apartments 887,538 11,343 960,808 9,272
Office buildings 931,234 26,062 783,576 50,450
Industrial buildings 309,845 5,525 298,549 13,263
Hotels/motels 103,625 -- 109,185 14,122
Medical buildings 114,045 -- 124,369 --
Nursing/retirement homes 45,935 -- 46,696 --
Mixed use 66,893 -- 65,151 --
Other 16,833 23,482 17,570 8,473
- ----------------------------------------------------------------------------------
3,634,660 100,241 3,545,253 154,885
Less allowance for losses 28,283 -- 39,795 --
- ----------------------------------------------------------------------------------
$3,606,377 $100,241 $3,505,458 $154,885
- ----------------------------------------------------------------------------------
</TABLE>
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. Commitments to purchase mortgages are
made in the ordinary course of business. The fair value of the mortgage
commitments is $nil.
At December 31, 1999 and 1998, the Company's recorded investment in impaired
loans was $21,375 and $24,941, respectively, with allowances of $5,750 and
$6,662, respectively. During 1999 and 1998, the average recorded investment in
impaired loans was $23,815 and $37,873, respectively.
The Company recognized $1,190, $1,809 and $2,981 of interest income related to
impaired loans for the years ended December 31, 1999, 1998 and 1997
respectively.
The following table presents changes in the allowance for losses related to all
loans:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------
<S> <C> <C> <C>
Balance, January 1 $39,795 $38,645 $37,495
Provision (reduction) for
investment losses (9,512) 7,582 8,801
Loan payoffs (500) (800) (3,851)
Foreclosures and writeoffs (1,500) (5,632) (3,800)
- --------------------------------------------------------------
Balance, December 31 $28,283 $39,795 $38,645
- --------------------------------------------------------------
</TABLE>
At December 31, 1999, the Company had no commitments to purchase investments
other than mortgage loans.
- --------------------------------------------------------------------------------
F-14 IDS LIFE INSURANCE COMPANY
<PAGE>
Net investment income for the years ended December 31 is summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Interest on fixed maturities $1,598,059 $1,676,984 $1,692,481
Interest on mortgage loans 285,921 301,253 305,742
Other investment income 70,892 43,518 25,089
Interest on cash equivalents 5,871 5,486 5,914
- -----------------------------------------------------------------------
1,960,743 2,027,241 2,029,226
Less investment expenses 41,170 40,756 40,837
- -----------------------------------------------------------------------
$1,919,573 $1,986,485 $1,988,389
- -----------------------------------------------------------------------
</TABLE>
Net realized gain (loss) on investments for the years ended December 31 is
summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities $22,387 $12,084 $16,115
Mortgage loans 10,211 (5,933) (6,424)
Other investments (5,990) 751 (8,831)
- --------------------------------------------------------------
$26,608 $ 6,902 $ 860
- --------------------------------------------------------------
</TABLE>
Changes in net unrealized appreciation (depreciation) of investments for the
years ended December 31 are summarized as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- ------------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities available for sale $(921,778) $(93,474) $223,441
Equity securities (142) (203) 53
</TABLE>
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 (benefit) for the years ended December 31 consists of the
following:
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------------
<S> <C> <C> <C>
Federal income taxes:
Current $178,444 $244,946 $176,879
Deferred 79,796 (16,602) 19,982
- -----------------------------------------------------------------
258,240 228,344 196,861
State income taxes-current 9,624 7,337 9,803
- -----------------------------------------------------------------
Income tax expense $267,864 $235,681 $206,664
- -----------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-15
<PAGE>
Increases (decreases) to the income tax provision applicable to pretax income
based on the statutory rate are attributable to:
<TABLE>
<CAPTION>
1999 1998 1997
PROVISION RATE PROVISION RATE PROVISION RATE
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Federal income taxes
based on the statutory
rate $316,511 35.0% $271,527 35.0% $238,319 35.0%
Tax-excluded interest and
dividend income (9,626) (1.1) (12,289) (1.6) (10,294) (1.5)
State taxes, net of
federal benefit 6,256 0.7 4,769 0.6 6,372 0.9
Affordable housing
credits (31,000) (3.4) (19,688) (2.5) (20,705) (3.0)
Other, net (14,277) (1.6) (8,638) (1.1) (7,028) (1.0)
- -------------------------------------------------------------------------------
Total income taxes $267,864 29.6% $235,681 30.4% $206,664 30.4%
- -------------------------------------------------------------------------------
</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, 1999, 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:
<TABLE>
<CAPTION>
1999 1998
- ------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Policy reserves $733,647 $756,769
Unrealized loss on available for sale
investments 221,431 --
Investments, other 1,873 --
Life insurance guaranty fund assessment
reserve 4,789 15,289
Other -- 4,253
- ------------------------------------------------------------
Total deferred tax assets 961,740 776,311
- ------------------------------------------------------------
Deferred tax liabilities:
Deferred policy acquisition costs 740,837 698,471
Unrealized gain on available for sale
investments -- 91,315
Investments, other -- 3,455
Other 4,883 --
- ------------------------------------------------------------
Total deferred tax liabilities 745,720 793,241
- ------------------------------------------------------------
Net deferred tax assets (liabilities) $216,020 $(16,930)
- ------------------------------------------------------------
</TABLE>
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.
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
- --------------------------------------------------------------------------------
F-16 IDS LIFE INSURANCE COMPANY
<PAGE>
aggregated $1,693,356 as of December 31, 1999 and $1,598,203 as of December 31,
1998 (see Note 3 with respect to the income tax effect of certain
distributions). In addition, any dividend distributions in 2000 in excess of
approximately $418,845 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:
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Statutory net income $ 478,173 $ 429,903 $ 379,615
Statutory capital and surplus 1,978,406 1,883,405 1,765,290
</TABLE>
5. RELATED PARTY TRANSACTIONS
The Company loans funds to AEFC under a collateral loan agreement. The balance
of the loan was $nil at December 31, 1999 and 1998. 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 $nil, $nil and $103 in 1999, 1998
and 1997, 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 $223, $211 and $201 in 1999, 1998 and 1997, 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 1999, 1998 and 1997 were $1,906, $1,503 and $1,245,
respectively.
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. The Company's share of postretirement benefits in
1999, 1998 and 1997 was $1,147, $1,352 and $1,330, respectively.
Charges by AEFC for use of joint facilities, technology support, marketing
services and other services aggregated $485,177, $411,337 and $414,155 for 1999,
1998 and 1997, respectively. Certain of these costs are included in deferred
policy acquisition costs.
6. COMMITMENTS AND CONTINGENCIES
At December 31, 1999, 1998 and 1997, traditional life insurance and universal
life-type insurance in force aggregated $89,271,957, $81,074,928 and $74,730,720
respectively, of which $8,281,576, $4,912,313 and $4,351,904 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 $76,970,
$66,378 and $60,495 and reinsurance recovered from reinsurers amounted to
$27,816, $20,982, and $19,042 for the years ended December 31, 1999, 1998 and
1997, respectively. Reinsurance contracts do not relieve the Company from its
primary obligation to policyholders.
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-17
<PAGE>
In January 2000, AEFC reached an agreement in principle to settle three
class-action lawsuits. The Company had been named as a co-defendant in all three
lawsuits. It is expected the settlement will provide $215 million of benefits to
more than 2 million class participants. The agreement in principle to settle
also provides for release by class members of all insurance and annuity market
conduct claims dating back to 1985 and is subject to a number of contingencies
including a definitive agreement and court approval. The settlement costs
allocated to the Company are included in the accompanying 1999 statement of
income and did not have a material impact on the Company's consolidated
financial position or results from operations.
The Company is named as a defendant in various other lawsuits. The outcome of
any litigation cannot be predicted with certainty. In the opinion of management,
however, the ultimate resolution of these lawsuits, taken in aggregate 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 completing the audit 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 available lines of credit with its parent aggregating $200,000
($100,000 committed and $100,000 uncommitted). The interest rate for any
borrowings is established by reference to various indices plus 20 to 45 basis
points, depending on the term. Borrowings outstanding under this agreement were
$50,000 uncommitted at December 31, 1999 and $nil at December 31, 1998.
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.
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.
- --------------------------------------------------------------------------------
F-18 IDS LIFE INSURANCE COMPANY
<PAGE>
The Company's holdings of derivative financial instruments are as follows:
<TABLE>
<CAPTION>
NOTIONAL CARRYING FAIR TOTAL CREDIT
DECEMBER 31, 1999 AMOUNT AMOUNT VALUE EXPOSURE
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Interest rate caps $2,500,000 $ 9,685 $ 12,773 $12,773
Interest rate floors 1,000,000 602 319 319
Options purchased 180,897 49,789 61,745 61,745
Liabilities:
Options written 43,262 (1,677) (2,402) --
Off balance sheet:
Interest rate swaps 1,267,000 -- (17,582) --
------- -------- -------
$58,399 $ 54,853 $74,837
======= ======== =======
</TABLE>
<TABLE>
<CAPTION>
NOTIONAL CARRYING FAIR TOTAL CREDIT
DECEMBER 31, 1998 AMOUNT AMOUNT VALUE EXPOSURE
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Interest rate caps $3,400,000 $ 15,985 $ 4,256 $ 4,256
Interest rate floors 1,000,000 1,082 13,971 13,971
Options purchased 110,912 24,094 29,453 29,453
Liabilities:
Options purchased/written 265,454 (10,526) (11,062) --
Off balance sheet:
Interest rate swaps 1,667,000 -- (73,477) --
-------- -------- -------
$ 30,635 $(36,859) $47,680
======== ======== =======
</TABLE>
The fair values of derivative financial instruments are based on market values,
dealer quotes or pricing models. The interest rate caps, floors and swaps expire
on various dates from 2000 to 2003. The purchased and written options expire on
various dates from 2000 to 2006.
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.
The Company also uses interest rate swaps to manage interest rate risk related
to the level of fee income earned on the management of fixed income securities
in separate accounts and the underlying mutual funds. The amount of fee income
received is based upon the daily market value of the separate account and mutual
fund assets. As a result, changing interest rate conditions could impact the
Company's fee income significantly. The Company entered into interest rate swaps
to hedge anticipated fee income for 1999 related to separate accounts and mutual
funds which invest in fixed income securities. Interest was reported in
management and other fees.
The Company offers an annuity product that pays interest based upon the relative
change in a major stock market index between the beginning and end of the
product's term. As a means of hedging its obligation under the provisions of
this product, the Company purchases and writes options on the major stock market
index.
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-19
<PAGE>
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 fluctuations in the
equity market. The Company entered into index option collars (combination of
puts and calls) to hedge anticipated fee income for 1999 and 1998 related to
separate accounts and mutual funds which invest in equity securities. Testing
demonstrated the impact of these instruments on the income statement closely
correlates with the amount of fee income the Company realizes. At December 31,
1999 deferred losses on purchased put and written call index options were $nil.
At December 31, 1998 deferred losses on purchased put and written call index
options were $2,933 and deferred gains on written call index options were
$7,435, respectively.
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>
1999 1998
CARRYING FAIR CARRYING FAIR
FINANCIAL ASSETS VALUE VALUE VALUE VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investments:
Fixed maturities (Note 2):
Held to maturity $ 7,156,292 $ 7,105,743 $ 7,964,114 $ 8,420,035
Available for sale 13,049,549 13,049,549 13,613,139 13,613,139
Mortgage loans on real
estate (Note 2) 3,606,377 3,541,958 3,505,458 3,745,617
Other:
Equity securities (Note 2) 3,016 3,016 3,158 3,158
Derivative financial
Instruments (Note 8) 60,076 74,837 41,161 47,680
Other 2,258 2,258 28,872 28,872
Cash and cash equivalents
(Note 1) 32,333 32,333 22,453 22,453
Separate account assets (Note
1) 35,894,732 35,894,732 27,349,401 27,349,401
</TABLE>
<TABLE>
<CAPTION>
1999 1998
CARRYING FAIR CARRYING FAIR
FINANCIAL LIABILITIES VALUE VALUE VALUE VALUE
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Future policy benefits for
fixed annuities $19,189,170 $18,591,859 $19,855,203 $19,144,838
Derivative financial
instruments (Note 8) 1,677 19,984 10,526 84,539
Separate account liabilities 31,869,184 31,016,081 25,005,732 24,179,115
</TABLE>
At December 31, 1999 and 1998, the carrying amount and fair value of future
policy benefits for fixed annuities exclude life insurance-related contracts
carried at $1,270,094 and $1,226,985, respectively, and policy loans of $92,895
and $90,115, respectively. The fair value of these benefits is based on the
status of the annuities at December 31, 1999 and 1998. The fair value of
deferred
- --------------------------------------------------------------------------------
F-20 IDS LIFE INSURANCE COMPANY
<PAGE>
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 1999 and 1998.
At December 31, 1999 and 1998, 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 $4,025,548 and
$2,343,669, respectively.
10. YEAR 2000 (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
major systems used by the Company are maintained by AEFC and are utilized by
multiple subsidiaries and affiliates of AEFC. The Company's businesses are
heavily dependent upon AEFC's computer systems and have significant interaction
with systems of third parties.
A comprehensive review of AEFC's computer systems and business processes,
including those specific to the Company, was conducted to identify the major
systems that could be affected by the Year 2000 issue. Steps were taken to
resolve potential problems including modification to existing software and the
purchase of new software. As of December 31, 1999, AEFC had completed its
program of corrective measures on its internal systems and applications,
including Year 2000 compliance testing. As of December 31, 1999, AEFC had also
completed an evaluation of the Year 2000 readiness of other third parties whose
system failures could have an impact on the Company's operations.
AEFC's Year 2000 project also included establishing Year 2000 contingency plans
for all key business units. Business continuation plans, which address business
continuation in the event of a system disruption, are in place for all key
business units. At December 31, 1999, these plans had been amended to include
specific Year 2000 considerations.
In assessing its Year 2000 initiatives and the results of actual production
since January 1, 2000, management believes no material adverse consequences were
experienced, and there was no material effect on the Company's business, results
of operations, or financial condition as a result of the Year 2000 issue.
- --------------------------------------------------------------------------------
IDS LIFE INSURANCE COMPANY F-21
<PAGE>
PART C.
Item 24. Financial Statements and Exhibits
(a) Financial statements included in Part B of this Registration Statement:
The audited financial statements of the IDS Life Variable Account 10
for Retirement Advisor Variable AnnuitySM including:
Statements of Net Assets for year ended Dec. 31, 1999.
Statements of Operations for year ended Dec. 31, 1999.
Statements of Changes in Net Assets for year ended Dec. 31, 1999.
Notes to Financial Statements.
Report of Independent Auditors dated March 17, 2000.
The audited financial statements of the IDS Life Insurance Company for
Retirement Advisor Variable AnnuitySM including:
Consolidated Balance Sheets as of Dec. 31, 1999 and 1998.
Consolidated Statements of Income for years ended Dec. 31, 1999, 1998
and 1997.
Consolidated Statements of Stockholder's Equity for years ended Dec.
31, 1999, 1998 and 1997.
Consolidated Statements of Cash Flows for years ended Dec. 31, 1999,
1998 and 1997.
Notes to Consolidated Financial Statements.
Report of Independent Auditors dated February 3, 2000.
The audited financial statements of the IDS Life Variable Account 10
for Retirement Advisor Variable AnnuitySM - Band 3 including:
Statements of Net Assets for year ended Dec. 31, 1999.
Statements of Operations for year ended Dec. 31, 1999.
Statements of Changes in Net Assets for year ended Dec. 31, 1999.
Notes to Financial Statements.
Report of Independent Auditors dated March 17, 2000.
The audited financial statements of the IDS Life Insurance Company for
Retirement Advisor Variable AnnuitySM - Band 3 including:
Consolidated Balance Sheets as of Dec. 31, 1999 and 1998.
Consolidated Statements of Income for years ended Dec. 31, 1999, 1998
and 1997.
Consolidated Statements of Stockholder's Equity for years ended Dec.
31, 1999, 1998 and 1997.
Consolidated Statements of Cash Flows for years ended Dec. 31, 1999,
1998 and 1997.
Notes to Consolidated Financial Statements.
Report of Independent Auditors dated February 3, 2000.
(b) Exhibits:
1.1 Resolution of the Board of Directors of IDS Life Insurance Company
establishing the IDS Life Variable Account 10 dated August 23, 1995,
filed electronically as Exhibit 1 to Registrant's Initial Registration
Statement No. 33-62407 is incorporated herein by reference.
1.2 Resolution of the Board of Directors of IDS Life Insurance Company
establishing 105 additional subaccounts within the separate account,
filed electronically as Exhibit 1.2 to Pre-Effective Amendment No. 1
to Registration Statement No. 333-79311 filed on or about Aug. 10,
1999, is incorporated herein by reference.
<PAGE>
1.3 Resolution of the Board of Directors of IDS life Insurance Company
establishing 25 additional subaccounts within the separate account,
dated April 25, 2000, is filed electronically herewith.
2. Not applicable.
3. Not applicable.
4.1 Form of Deferred Annuity Contract for non-qualified contracts (form
31043) filed electronically as Exhibit 4.1 to Registrant's Initial
Registration Statement No. 333-79311, filed on or about May 26, 1999,
is incorporated herein by reference.
4.2 Form of Deferred Annuity Contract for tax qualified contracts (form
31044) filed electronically as Exhibit 4.2 to Registrant's Initial
Registration Statement No. 333-79311, filed on or about May 26, 1999,
is incorporated herein by reference.
4.3 Form of Deferred Annuity Contract for IRA contracts (form 31045-IRA)
filed electronically as Exhibit 4.3 to Registrant's Initial
Registration Statement No. 333-79311, filed on or about May 26, 1999,
is incorporated herein by reference.
4.4 Form of Deferred Annuity Contract for non-qualified contracts (form
31046) filed electronically as Exhibit 4.4 to Registrant's Initial
Registration Statement No. 333-79311, filed on or about May 26, 1999,
is incorporated herein by reference.
4.5 Form of Deferred Annuity Contract for tax qualified contracts (form
31047) filed electronically as Exhibit 4.5 to Registrant's Initial
Registration Statement No. 333-79311, filed on or about May 26, 1999,
is incorporated herein by reference.
4.6 Form of Deferred Annuity Contract for IRA contracts (form 31048-IRA)
filed electronically as Exhibit 4.6 to Registrant's Initial
Registration Statement No. 333-79311, filed on or about May 26, 1999,
is incorporated herein by reference.
4.7 Form of TSA Endorsement (form 31049), filed electronically as Exhibit
4.7 to Pre-Effective Amendment No. 1 to Registration Statement No.
333-79311 filed on or about Aug. 10, 1999 is incorporated herein by
reference.
5. Form of Variable Annuity Application (form 31063), filed
electronically as Exhibit 5 to Pre-Effective Amendment No. 1 to
Registration Statement No. 333-79311 filed on or about Aug. 10, 1999
is incorporated herein by reference.
6.1 Certificate of Incorporation of IDS Life dated July 24, 1957, filed
electronically as Exhibit 6.1 to Registrant's Initial Registration
Statement No. 33-62407 is incorporated herein by reference.
6.2 Amended By-Laws of IDS Life filed electronically as Exhibit 6.2 to
Registrant's Initial Registration Statement No. 33-62407 is
incorporated herein by reference.
7. Not applicable.
8.1(a) Copy of 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.
<PAGE>
8.1(b) Form of Amendment No. 1 to Participation Agreement between IDS Life
Insurance Company and AIM Variable Insurance Funds, Inc. and AIM
Distributors, Inc., dated Oct. 7, 1996, filed electronically as
Exhibit 8.1(b) to Pre-Effective Amendment No. 1 to Registration
Statement No. 333-79311 filed on or about Aug. 10, 1999 is
incorporated herein by reference.
8.2(a) 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 Registration
Statement No. 33-62407, is incorporated herein by reference.
8.2(b) Form of Amendment No. 1 to Participation Agreement between IDS Life
Insurance Company and American Century Investment Management, Inc. and
American Century Variable Portfolios, Inc., dated April 15, 1999,
filed electronically as Exhibit 8.2(b) to Pre-Effective Amendment No.
1 to Registration Statement No. 333-79311 filed on or about Aug. 10,
1999 is incorporated herein by reference.
8.3 Form of Participation Agreement between IDS Life Insurance Company and
Goldman Sachs Variable Insurance Trust and Goldman, Sachs & Co.,
undated, filed electronically as Exhibit 8.3 to Pre-Effective
Amendment No. 1 to Registration Statement No. 333-79311 filed on or
about Aug. 10, 1999 is incorporated herein by reference.
8.4(a) Copy of 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.
8.4(b) Form of Amendment No. 1 to Participation Agreement between IDS Life
Insurance Company and Putnam Capital Manager Trust and Putnam Mutual
Funds Corp., dated April 30, 1999, filed electronically as Exhibit
8.4(b) to Pre-Effective Amendment No. 1 to Registration Statement No.
333-79311 filed on or about Aug. 10, 1999 is incorporated herein by
reference.
8.5 Form of Participation Agreement between IDS Life Insurance Company and
Royce Capital Fund and Royce & Associates, Inc., undated, filed
electronically as Exhibit 8.5 to Pre-Effective Amendment No. 1 to
Registration Statement No. 333-79311 filed on or about Aug. 10, 1999
is incorporated herein by reference.
8.6(a) 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.
8.6(b) Form of Amendment No. 1 to Participation Agreement between IDS Life
Insurance Company and Warburg Pincus Trust and Warburg Pincus
Counsellors, Inc. and Counsellors Securities Inc., dated April 30,
1999, filed electronically as Exhibit 8.6(b) to Pre-Effective
Amendment No. 1 to Registration Statement No. 333-79311 filed on or
about Aug. 10, 1999 is incorporated herein by reference.
9. Opinion of counsel and consent to its use as the legality of the
securities being registered, dated April 28, 2000, is filed
electronically herewith.
10. Consent of Independent Auditors is filed electronically herewith.
<PAGE>
11. None.
12. Not applicable.
13. Copy of schedule for computation of each performance quotation
provided in the Registration Statement in response to Item 21 is filed
electronically herewith.
14. Not applicable.
15. Power of Attorney to sign Amendments to this Registration Statement
dated April 20, 2000, is filed electronically herewith.
<TABLE>
<CAPTION>
Item 25. Directors and Officers of the Depositor (IDS Life Insurance Company)
<S> <C> <C>
Name Principal Business Address Position and Offices with Depositor
- ------------------------------------- ----------------------------------------- ----------------------------------------
200 AXP Financial Center
Timothy V. Bechtold Minneapolis, MN 55474 Executive Vice President, Risk
Management Products
200 AXP Financial Center
David J. Berry Minneapolis, MN 55474 Vice President
200 AXP Financial Center
Mark W. Carter Minneapolis, MN 55474 Executive Vice President, Marketing
200 AXP Financial Center
Robert M. Elconin Minneapolis, MN 55474 Vice President
200 AXP Financial Center
Lorraine R. Hart Minneapolis, MN 55474 Vice President, Investments
200 AXP Financial Center
Jeffrey S. Horton Minneapolis, MN 55474 Vice President, Treasurer and
Assistant Secretary
200 AXP Financial Center
David R. Hubers Minneapolis, MN 55474 Director
200 AXP Financial Center
James M. Jensen Minneapolis, MN 55474 Vice President, Insurance Product
Development
200 AXP Financial Center
Richard W. Kling Minneapolis, MN 55474 Director, Chief Executive Officer and
President
200 AXP Financial Center
Paul F. Kolkman Minneapolis, MN 55474 Director and Executive Vice President
200 AXP Financial Center
Paula R. Meyer Minneapolis, MN 55474 Director and Executive Vice President,
Assured Assets
James A. Mitchell 200 AXP Financial Center Director and Chairman of the Board
Minneapolis, MN 55474
<PAGE>
200 AXP Financial Center
Pamela J. Moret Minneapolis, MN 55474 Director and Executive Vice President,
Variable Assets
200 AXP Financial Center
Barry J. Murphy Minneapolis, MN 55474 Director and Executive Vice President,
Client Service
200 AXP Financial Center
James R. Palmer Minneapolis, MN 55474 Vice President, Taxes
200 AXP Financial Center
Stuart A. Sedlacek Minneapolis, MN 55474 Director and Executive Vice President
200 AXP Financial Center
William A. Stoltzmann Minneapolis, MN 55474 Vice President, General Counsel and
Secretary
200 AXP Financial Center
Philip C. Wentzel Minneapolis, MN 55474 Vice President and Controller
</TABLE>
<TABLE>
<CAPTION>
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.
<S> <C>
Jurisdiction of
Name of Subsidiary Incorporation
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 Partners LLC Delaware
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
<PAGE>
American Express Financial Advisors Japan Inc. Delaware
American Express Financial Corporation 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 Mississippi Inc. Mississippi
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 Brokerage Group Minnesota
IDS Futures Corporation Minnesota
IDS Insurance Agency of Alabama Inc. Alabama
IDS Insurance Agency of Arkansas Inc. Arkansas
IDS Insurance Agency of Massachusetts Inc. Massachusetts
IDS Insurance Agency of Mississippi Ltd. Mississippi
IDS Insurance Agency of New Mexico Inc. New Mexico
IDS Insurance Agency of North Carolina Inc. North Carolina
IDS Insurance Agency of Ohio Inc. Ohio
IDS Insurance Agency of Texas Inc. Texas
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
Investors Syndicate Development Corp. Nevada
Public Employee Payment Company Minnesota
</TABLE>
Item 27. Number of Contractowners
As of March 31, 2000, there were 15,467 contract owners of
non-qualified contracts and 15,043 contract owners of qualified
contracts.
<PAGE>
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 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
(c)
Name of Net Underwriting
Principal Discounts and Compensation on Brokerage
Underwriter Commissions Redemption Commissions Compensation
IDS Life Insurance $21,517,281 $19,803,247 None None
Company
</TABLE>
Item 30. Location of Accounts and Records
IDS Life Insurance Company
200 AXP Financial Center
Minneapolis, MN 55474
<PAGE>
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 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 all of the 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 Amendment to its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of
Minneapolis, and State of Minnesota, on the 28th day of April, 2000.
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 28th day of
April, 2000.
Signature Title
/s/ Timothy V. Bechtold* Executive Vice President, Risk Management
Timothy V. Bechtold Products
/s/ Jeffrey S. Horton* Vice President and Treasurer
Jeffrey S. Horton
/s/ David R. Hubers* Director
David R. Hubers
/s/ Richard W. Kling* Director and President
Richard W. Kling
/s/ Paul F. Kolkman* Director and Executive Vice
Paul F. Kolkman President
/s/ Paula R. Meyer* Director and Executive Vice President,
Paula R. Meyer Assured Assets
/s/ James A. Mitchell* Director and Chairman of the Board
James A. Mitchell
/s/ Pamela J. Moret* Director and Executive Vice President,
Pamela J. Moret Variable Assets
/s/ Barry J. Murphy* Director and Executive Vice
Barry J. Murphy President, Client Service
<PAGE>
Signature Title
/s/ Stuart A. Sedlacek* Director and Executive Vice President
Stuart A. Sedlacek
/s/ Philip C. Wentzel* Vice President and Controller
Philip C. Wentzel
*Signed pursuant to Power of Attorney dated April 20, 2000 filed electronically
herewith.
/s/ Mary Ellyn Minenko
Mary Ellyn Minenko
<PAGE>
CONTENTS OF POST-EFFECTIVE AMENDMENT NO. 2 TO REGISTRATION STATEMENT
This Post-Effective Amendment is comprised of the following papers and
documents:
The Cover Page.
Part A.
The prospectuses.
Part B.
Statements of Additional Information.
Financial Statements
Part C.
Other Information.
The signatures.
EXHIBIT INDEX
Exhibit 1.3: Resolution of Board of Directors
Exhibit 9: Opinion of Counsel
Exhibit 10: Independent Auditors Consent
Exhibit 13: Copy of schedule for computation
Exhibit 15: Power of Attorney
TO THE SECRETARY OF
IDS LIFE INSURANCE COMPANY
By Resolution received by the Secretary on August 23, 1995, the Board of
Directors of IDS Life Insurance Company:
RESOLVED, That IDS Life Variable Account 10, comprised of one or more
subaccounts, was established as a separate account in accordance with
Section 61A.14, Minnesota Statues; and
RESOLVED FURTHER, That the proper officers of the Corporation were
authorized and directed to establish such subaccounts within such
separate account as they determine to be appropriate; and
RESOLVED FURTHER, that the proper officers of the Corporation were
authorized and directed, as they may deem appropriate from time to time
and in accordance with applicable laws and regulations to establish
further any subaccounts.
As President of IDS Life Insurance Company, I hereby establish, in accordance
with the above resolutions and pursuant to authority granted by the Board of
Directors, 24 additional subaccounts within the separate account. Three of each
such subaccounts will invest in the following funds or portfolios:
AXPsm Variable Portfolio - Emerging Markets Fund
AXPsm Variable Portfolio - S&P 500 Index Fund
Calvert Variable Series, Inc.: Social Balanced Portfolio
Janus Aspen Series Aggressive Growth Portfolio: Service Shares
Janus Aspen Series Global Technology Portfolio: Service Shares
Janus Aspen Series International Growth Portfolio: Service Shares
MFS(R) VIT Growth Series - Service Class
MFS(R) VIT New Discovery Series - Service Class
In accordance with the above resolutions and pursuant to authority granted by
the Board of Directors of IDS Life Insurance Company, the Unit Investment Trust
comprised of IDS Life Variable Account 10 and consisting of 119 subaccounts is
hereby reconstituted as IDS Life Variable Account 10 consisting of 143
subaccounts.
Received by the Secretary:
/s/ Richard W. Kling /s/ William A. Stoltzmann
Richard W. Kling William A. Stoltzmann
Date: April 25, 2000
April 28, 2000
IDS Life Insurance Company
829 AXP Financial Center
Minneapolis, MN 55474
Re: IDS Life Variable Account 10
Post-Effective Amendment No. 2
File No. 333-79311/811-07355
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, when offered and sold in
accordance with the prospectuses contained in the Registration
Statement and in compliance with applicable law, will be 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,
/s/ Mary Ellyn Minenko
Mary Ellyn Minenko
Assistant General Counsel and Assistant Secretary
MEM/CLGE/ps
Consent of Independent Auditors
We consent to the references to our firm under the caption "Independent
Auditors" in the Statement of Additional Information and to the use of our
report dated February 3, 2000 with respect to the consolidated financial
statements of IDS Life Insurance Company and to the use of our report dated
March 17, 2000 with respect to the financial statements of IDS Life Variable
Account 10 - American Express Retirement Advisor Variable Annuity and to the use
of our report dated March 17, 2000 with respect to the financial statements of
IDS Life Variable Account 10 - American Express Retirement Advisor Variable
Annuity - Band 3, included in Post-Effective Amendment No. 2 to the Registration
Statement (Form N-4, No. 333-79311) and related Prospectuses for the
registration of the American Express Retirement Advisor Variable Annuity
Contracts and the American Express Retirement Advisor Variable Annuity - Band 3
Contracts to be offered by IDS life Insurance Company.
/s/ Ernst & Young LLP
Ernst & Young LLP
Minneapolis, Minnesota
April 24, 2000
IDS Life - Retirement Advisor Variable Annuity
Performance Calculations
As disclosed in the Fund's prospectus, cumulative total return is the cumulative
change in the value of an investment over a specified time period. We assume
that income earned by the investment is reinvested.
Cumulative Total Return = Ending Total Value - Initial Amount Invested
____________________________________________
Initial Amount Invested
Where: Ending Total Value = Initial Investment * [(1 + Gross Total Return) -
Contract Charge Factor]
and; Contract Charge Factor = Policy Fee
_____________________________
Estimated Average Policy Size
Gross Total Return = Ending AUV - Initial AUV
_____________________________
Initial AUV
Average Policy Size = $52,326
Policy Fee = $30
Average annual total return (T) equated the initial amount invested (P) to the
ending redeemable value (ERV) over each period (n) in accordance with the
formula prescribed by the Securities and Exchange P(1+T) (n) = ERV.
Average annual total return with surrender charge
Ending Total Value - Surrender Charge Amount
____________________________________________
Initial Amount Invested
where: Surrender Charge Amount = (Ending Total Value - Free Withdrawal Amount)*
Surrender Charge %
and; Free Withdrawal Amount is the greater of 10% of the value of the
contract on the prior contract anniversary or 100% of earnings on the
contract (Ending Total value - Initial Amount Invested). The surrender
charge percentage depends on the number of years since you made the
payments that are surrendered, depending on the schedule you selected:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Seven year schedule Ten year schedule
Years from purchase Years from purchase
payment receipt Surrender charge payment receipt Surrender charge
percentage percentage
1 7% 1 8%
2 7 2 8
3 6 3 7
4 5 4 7
5 4 5 6
6 3 6 5
7 2 7 4
8 0 8 3
9 2
10 1
11 0
</TABLE>
IDS LIFE INSURANCE COMPANY
POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as officers and/or directors, 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>
<S> <C> <C>
1933 Act 1940 Act
Reg. Number Reg. Number
IDS Life Variable Account 10
IDS Life Flexible Portfolio Annuity (FPA) 33-62407 811-07355
American Express Retirement
Advisor Variable AnnuitySM (RAVA) 333-79311 811-07355
American Express Retirement
Advisor Variable AnnuitySM (RAVA-B3) 333-79311 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 Variable Retirement and Combination
Retirement Annuities (CRA) 2-73114 811-3217
IDS Life Employee Benefit Annuity (EBA) 33-52518 811-3217
IDS Life Group Variable Annuity Contract (GVAC) 33-47302 811-3217
IDS Life Group Variable Annuity Contract
(GVAC Fixed Account) 33-48701 N/A
IDS Life Insurance Company
IDS Life Flexible Payment Market Value Annuity (FP-MVA) 33-50968 N/A
IDS Life Guaranteed Term Annuity (GTA) 33-28976 N/A
Portfolio Guaranteed Term Annuity (PGTA) 333-42793 N/A
IDS Life Variable Life Separate Account
Flexible Premium Variable Life Insurance Policy (VUL) 33-11165 811-4298
Flexible Premium Survivorship Variable Life
Insurance Policy (V2D) 33-62457 811-4298
Flexible Premium Variable Life Insurance Policy (VUL-3) 333-69777 811-4298
Single Premium Variable Life Insurance Policy (SPVL) 2-97637 811-4298
<PAGE>
IDS Life Variable Account for Smith Barney
Single Premium Variable Life Insurance Policy 33-5210 811-4652
(SBS-SPVL)
IDS Life Account SBS
Symphony Annuity (SYMPHONY) 33-40779 811-06315
IDS Life Account RE
Real Estate Variable Annuity (REVA) 33-13375 N/A
</TABLE>
hereby constitutes and appoints William A. Stoltzmann, Mary Ellyn Minenko,
Eileen J. Newhouse, Bruce Kohn and Timothy S. Meehan or any one of them, as his
or her attorney-in-fact and agent, to sign for him or her 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 (with all 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 jurisdictions, and grants to any or all of them the full power
and authority to do and perform each and every act required, necessary or
appropriate in connection therewith.
Dated the 20th day of April, 2000.
<PAGE>
/s/ Timothy V. Bechtold
Timothy V. Bechtold
Executive Vice President,
Risk Management Products
/s/ Jeffrey S. Horton
Jeffrey S. Horton
Vice President, Treasurer
and Assistant Secretary
/s/ David R. Hubers
David R. Hubers
Director
/s/ Richard W. Kling
Richard W. Kling
Director, President
and Chief Executive Officer
/s/ Paul F. Kolkman
Paul F. Kolkman
Director and Executive Vice President
/s/ Paula R. Meyer
Paula R. Meyer
Director and Executive Vice President, Assured Assets
/s/ James A. Mitchell
James A. Mitchell
Director and Chairman of the Board
/s/ Pamela J. Moret
Pamela J. Moret
Director and Executive Vice President, Variable Assets
/s/ Barry J. Murphy
Barry J. Murphy
Director and Executive Vice President, Client Service
/s/ Stuart A. Sedlacek
Stuart A. Sedlacek
Director and Executive Vice President
/s/ Philip C. Wentzel
Philip C. Wentzel
Vice President and Controller
