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. 28 (File No. 2-73114) [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 19 (File No. 811-3217) [x]
(Check appropriate box or boxes)
IDS LIFE ACCOUNT F
IDS LIFE ACCOUNT IZ
IDS LIFE ACCOUNT JZ
IDS LIFE ACCOUNT G
IDS LIFE ACCOUNT H
IDS LIFE ACCOUNT N
IDS LIFE ACCOUNT KZ
IDS LIFE ACCOUNT LZ
IDS LIFE ACCOUNT MZ
- -------------------------------------------------------------------------------
(Exact Name of Registrant)
IDS Life Insurance Company
- -------------------------------------------------------------------------------
(Name of Depositor)
IDS Tower 10, Minneapolis, MN 55440-0010
- -------------------------------------------------------------------------------
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code (612) 671-3678
- -------------------------------------------------------------------------------
Mary Ellyn Minenko, IDS Tower 10, Minneapolis, MN 55440-0010
- -------------------------------------------------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on May 1, 1998 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(i) of Rule 485
[ ] on (date) pursuant to paragraph (a)(i) of Rule 485
If appropriate check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
CROSS REFERENCE SHEET
Cross reference sheet showing location in the prospectus of the information
called for by the items enumerated in Part A and B of Form N-4.
Negative answers omitted from the prospectus and Statement of Additional
Information are so indicated.
PART A
Item No. Section in Prospectus
1 Cover page
2 Key terms
3 (a) Expense Summary
(b) The Variable and Combination Retirement Annuities in brief
4 (a) Condensed financial information
(b) Performance information
(c) Financial statements
5 (a) Cover page; About IDS Life
(b) The variable accounts
(c) The funds
(d) Cover page; The funds
(e) Voting rights
(f) NA
(g) NA
6 (a) Charges
(b) Expense Summary; Charges
(c) Charges
(d) Distribution of the contracts
(e) The funds
(f) NA
7 (a) Buying your annuity; Benefits in case of death; The annuity
payout period
(b) The variable accounts; Making the most of your annuity
(c) The funds; Charges
(d) Cover page
8 (a) The annuity payout period
(b) Buying your annuity
(c) The annuity payout period
(d) The annuity payout period
(e) The annuity payout period
(f) The annuity payout period
9 (a) Benefits in case of death
(b) Benefits in case of death
10 (a) Buying your annuity; Valuing your investment
(b) Valuing your investment
(c) Buying your annuity; Valuing your investment
(d) NA
11 (a) Surrendering your contract
(b) NA
(c) Surrendering your contract
(d) Buying your annuity
(e) The Variable and Combination Retirement Annuities in brief
12 (a) Taxes
(b) Key terms
(c) NA
13 About IDS Life
14 Table of contents of the Statement of Additional Information
<PAGE>
PART B
Section in
Item No. Statement of Additional Information
15 (a) Cover page
(b) NA
16 Table of Contents
17 (a) NA
(b) NA
(c) About IDS Life*
18 (a) NA
(b) NA
(c) Independent Auditors
(d) NA
(e) NA
(f) Principal underwriter
19 (a) Distribution of the contracts*; About IDS Life*
(b) Charges*
20 (a) Principal underwriter
(b) Principal underwriter
(c) Principal underwriter
(d) NA
21 (a) Performance information
(b) Performance information
22 Calculating annuity payouts
23 (a) Financial statements
(b) Financial statements
*Designates section in the prospectus, which is hereby incorporated by reference
in this Statement of Additional Information.
<PAGE>
IDS Life Variable Retirement and Combination Retirement Annuities
Prospectus
May 1, 1998
This prospectus describes two individual deferred annuity contracts offered by
IDS Life Insurance Company (IDS Life) a subsidiary of American Express Financial
Corporation (AEFC). The Variable Retirement Annuity (VRA) is a deferred variable
annuity contract in which a single purchase payment accumulates on a variable
basis and retirement payments are paid to the owner. The Combination Retirement
Annuity (CRA) is a deferred fixed/variable annuity contract in which installment
purchase payments are accumulated on a fixed and/or variable basis and
retirement payments are paid to the owner.
Both can be used for qualified and nonqualified retirement plans.
New Variable Retirement Annuity contracts are not currently being offered.
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
Sold by: IDS Life Insurance Company, IDS Tower 10, Minneapolis, MN 55440-0010
Telephone: 800-437-0602.
This prospectus contains the information about the variable accounts that you
should know before investing. Refer to "The variable accounts" in this
prospectus. As in the case of other annuities, it may not be advantageous to
purchase this annuity as a replacement for, or in addition to an existing
annuity.
The prospectus is accompanied or preceded by the Retirement Annuity Mutual Fund
prospectus for IDS Life Aggressive Growth Fund, IDS Life International Equity
Fund, IDS Life Capital Resource Fund, IDS Life Managed Fund, IDS Life Special
Income Fund, IDS Life Moneyshare Fund, IDS Life Growth Dimensions Fund, IDS Life
Global Yield Fund and IDS Life Income Advantage Fund. Please read these
documents carefully and
keep them for future reference.
These securities have not been approved or disapproved by the Securities and
Exchange Commission, or any state securities commission, nor has the Securities
and Exchange Commission or any state securities commission passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
IDS Life is not a bank or financial institution and the securities it offers are
not deposits or obligations of, backed or guaranteed or endorsed by any bank or
financial institution nor are they insured by the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other agency.
<PAGE>
A Statement of Additional Information (SAI) (incorporated by reference into this
prospectus) filed with the Securities and Exchange Commission (SEC) is available
without charge by contacting IDS Life at the telephone number above or by
completing and sending the order form on the last page of this prospectus.
The table of contents of the SAI is on the last page of this prospectus.
<PAGE>
Table of contents
Key terms
The Variable and Combination Retirement Annuities in brief
Expense summary
Condensed financial information
Financial statements
Performance information
The variable accounts
The funds
IDS Life Aggressive Growth Fund
IDS Life International Equity Fund
IDS Life Capital Resource Fund
IDS Life Managed Fund
IDS Life Special Income Fund
IDS Life Moneyshare Fund
IDS Life Growth Dimensions Fund
IDS Life Global Yield Fund
IDS Life Income Advantage Fund
The fixed account
Buying your annuity
The retirement date
Beneficiary
How to make purchase payments
Charges
Contract administrative charge
Mortality and expense risk fee
Surrender charge
Premium taxes
Valuing your investment
Number of units
Accumulation unit value
Net investment factor
Factors that affect variable account accumulation units
<PAGE>
Making the most of your annuity
Automated dollar-cost averaging
Transferring money between accounts
Transfer policies
How to request a transfer or a surrender
Surrendering your contract
Surrender policies
Receiving payment when you request a surrender
TSA special surrender provisions
Changing ownership
Benefits in case of death
The annuity payout period
Annuity payout plans
Death after annuity payouts begin
Taxes
Voting rights
Distribution of the contracts
About IDS Life
Legal proceedings
Year 2000
Regular and special reports
Services
Table of contents of the Statement of Additional Information
<PAGE>
Key terms
These terms can help you understand details about your annuity.
Annuity - A contract purchased from an insurance company that offers
tax-deferred growth of the investment until earnings are withdrawn and that can
be tailored to meet the specific needs of the individual during retirement.
Accumulation unit - A measure of the value of each variable account 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
available to the owner and/or any other payee. This amount may be paid on a
variable or fixed basis or a combination of both.
Annuity unit - A measure of the value of each variable account used to calculate
the annuity payouts.
Beneficiary - The person designated to receive annuity benefits in case of the
owner's or annuitant's death.
Close of business - When the New York Stock Exchange (NYSE) closes, normally 3
p.m. Central time.
Code - Internal Revenue Code of 1986, as amended.
Contract value - The total value of your annuity before any applicable surrender
charge and any contract administrative charge have been deducted.
Contract year - A period of 12 months, starting on the effective date of your
contract and on each anniversary of the effective date.
Fixed account - An account to which you may allocate purchase payments under the
Combination Retirement Annuity. Amounts allocated to this account earn interest
at rates that are declared periodically by IDS Life.
IDS Life - In this prospectus, "we," "us," "our" and "IDS Life" refer to IDS
Life Insurance Company.
Mutual funds (funds) - Nine IDS Life Retirement Annuity mutual funds, each with
a different investment objective. (See "The funds.") You may allocate your
purchase payments into variable accounts investing in shares of any or all of
these funds.
<PAGE>
Owner (you, your) - The person who controls the annuity (decides on investment
allocations, transfers, annuity payout options, etc.). Usually, but not always,
the owner is also the annuitant. The owner is responsible for taxes, regardless
of whether he or she receives the annuity's benefits.
Purchase payments - Payments made to IDS Life for a contract.
Qualified annuity - An annuity purchased for a retirement plan that is subject
to applicable federal law and any rules of the plan itself. These plans include:
o Individual Retirement Annuities (IRAs)
o Roth IRAs
o Simplified Employee pension (SEP) plans
o Section 401(k) plans
o Custodial and trusteed pension and profit sharing plans
o Tax Sheltered Annuities (TSAs)
o Section 457 plans.
All other annuities are considered nonqualified annuities.
Retirement date - The date when annuity payouts are scheduled to begin. This
date is first established when you start your contract. You can change it in the
future.
Surrender charge - A deferred sales charge that may be applied if you surrender
your annuity before the retirement date.
Surrender value - The amount you are entitled to receive if you surrender your
annuity. It is the contract value minus any applicable surrender charge and
contract administrative charge.
Valuation date - Any normal business day, Monday through Friday, that the NYSE
is open. The value of each variable account is calculated at the close of
business on each valuation date.
Variable accounts - Separate accounts to which you may allocate purchase
payments; each invests in shares of one mutual fund. (See "The variable
accounts.") The value of your investment in each variable account changes with
the performance of the particular fund.
<PAGE>
The Variable and Combination Retirement Annuities in brief
Purpose: The Variable and Combination Retirement Annuities are designed to allow
you to build up funds for retirement. You do this by making one or more
investments (purchase payments) that may earn returns that increase the value of
the annuity. Beginning at a specified future date (the retirement date), the
annuity provides lifetime or other forms of payouts to you or to anyone you
designate.
Ten-day free look: You may return your annuity to your financial advisor or our
Minneapolis office within 10 days after it is delivered to you and receive a
full refund of the contract value. No charges will be deducted. However, you
bear the investment risk from the time of purchase until return of the contract;
the refund amount may be more or less than the payment you made. (Exception: If
the law so requires, all of your purchase payment will be refunded.)
Accounts: You may allocate your purchase payments among any or all of:
o nine variable accounts, each of which invests in mutual funds with a
particular investment objective. The value of each variable account
varies with the performance of the particular fund. We cannot guarantee
that the value at the retirement date will equal or exceed the total of
purchase payments allocated to the variable accounts. (p. 19)
o one fixed account (under CRA only), which earns interest at rates that
are adjusted periodically by IDS Life. (p. 23)
Buying the annuity: Your financial advisor will help you complete and submit an
application for CRA. Applications are subject to acceptance at our Minneapolis
office. You may buy a nonqualified annuity or a qualified annuity including an
IRA. Payment may be made either in a lump sum or installments for CRA:
o Minimum purchase payment - $600 on an annual basis.
o Minimum installment or additional payment - $50 monthly; $23.08
biweekly payroll deductions.
o Maximum first-year payment(s) -
Nonqualified: $25,000.
Qualified: Two times initial annual gross premium subject to any
restrictions.
o Maximum payment for each subsequent year -
Nonqualified: $50,000 excluding rollovers.
Qualified: Two times initial annual gross premium subject to any
restrictions.
<PAGE>
Unlike the CRA, VRA was purchased with a single payment. No additional payments
are allowed for VRA. (p. 24)
Transfers: You may redistribute your money among accounts without charge at any
time until annuity payouts begin and once per contract year among the variable
accounts thereafter. You may establish automated transfers among the fixed and
variable account(s), subject to certain restrictions. (p. 36)
Surrenders: You may surrender all or part of your contract value at any time
before the retirement date. You also may establish automated partial surrenders.
Surrenders may be subject to charges and tax penalties and may have other tax
consequences; also, certain restrictions apply. (p. 39)
Changing ownership: You may change ownership of a nonqualified annuity by
written instruction, however, such changes of nonqualified annuities may have
federal income tax consequences. Certain restrictions apply concerning change of
ownership of a qualified annuity. (p. 42)
Benefits in case of death: If you or the annuitant dies before annuity payouts
begin, we will pay the beneficiary an amount at least equal to the contract
value. (p. 43)
Annuity payouts: The contract value of your investment can be applied to an
annuity payout plan that begins on the retirement date. You may choose from a
variety of plans to make sure that payouts continue as long as they are needed.
If you purchased a qualified annuity, the payout schedule must meet requirements
of the qualified plan. Payouts may be made on a fixed or variable basis, or
both. Total monthly payouts include amounts from each variable account and the
fixed account. During the annuity payout period, you cannot be invested in more
than five variable accounts at any one time unless we agree otherwise. (p. 44)
Taxes: Generally, your annuity grows tax-deferred until you surrender it or
begin to receive payouts (under certain circumstances, IRS penalty taxes may
apply.) Even if you direct payouts to someone else, you will still be taxed on
the income if you are the owner. Roth IRAs, however, may grow tax-free if you
meet certain distribution requirements. (p. 48)
Charges: Your Variable Retirement Annuity is subject to an annual charge of $20
and your Combination Retirement Annuity is subject to an annual charge of $30
for contract administrative services. Both annuities are also subject to a 1%
mortality and expense risk charge, a surrender charge and any premium taxes that
may be imposed by state or local governments are deducted either from your
purchase payments or upon total withdrawal or when annuity payouts begin. (p.
29)
<PAGE>
Expense summary
The purpose of this table is to help you understand the various costs and
expenses associated with VRA and CRA.
You pay no sales charge when you purchase the annuities. All costs that you bear
directly or indirectly for the variable accounts and underlying mutual funds are
shown below. Some expenses may vary as explained under "Contract charges."
Variable Retirement Annuity Expenses
Owner Expenses*
Surrender Charge**
(Contingent deferred
sales charge as a
percentage of
amount surrendered) Contract Year Percentage
------------------- ------------- ----------
1 7%
2 6
3 5
4 4
5 3
6 2
7 1
8 and later 0
Annual Contract
Administrative Charge $20
Separate Account Annual Expense
(as a percentage of average daily net assets of the underlying fund)
Mortality and Expense Risk Fee 1%
<PAGE>
Combination Retirement Annuity Expenses
Owner Expenses*
Surrender Charge**
(Contingent deferred
sales charge as a
percentage of
amount surrendered) Contract Year Percentage
1-5 7%
6 6
7 5
8 4
9 3
10 2
11 1
12 and later 0
Annual Contract
Administrative Charge $30
Separate Account Annual Expense
(as a percentage of average daily net assets of the underlying fund)
Mortality and Expense Risk Fee 1%
Combination Retirement Annuity-Select Expenses (University of Wisconsin TSA
plan)
Owner Expenses*
Surrender Charge**
(Contingent deferred
sales charge as a
percentage of
amount surrendered) Contract Year Percentage
1-3 7%
4 6
5 5
6 4
7 3
8 2
9 and later 0
Annual Contract
Administrative Charge $30
<PAGE>
Separate Account Annual Expense
(as a percentage of average daily net assets of the underlying fund)
Mortality and Expense Risk Fee 1%
Combination Retirement Annuity Expenses (American Express Retirement Services)
Owner Expenses*
Surrender Charge**
(Contingent deferred
sales charge as a
percentage of
amount surrendered) Contract Year Percentage
------------------- ------------- ----------
1 6%
2 6
3 5
4 4
5 3
6 2
7 1
8 and later 0
Annual Contract
Administrative Charge $30
Separate Account Annual Expense
(as a percentage of average daily net assets of the underlying fund)
Mortality and Expense Risk Fee 1%
* Premium taxes imposed by some state and local governments are not reflected.
**The surrender charge is further limited so that it will never exceed 8.5% of
aggregate purchase payments made to the contract.
<PAGE>
Annual operating expenses of underlying mutual funds (Management fees and other
expenses deducted as a percentage of average net assets)
<TABLE>
<CAPTION>
IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life
Aggressive International Capital IDS Life Special IDS Life Growth Global Income
Growth Equity Resource Managed Income Moneyshare Dimensions Yield Advantage
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management fees 0.60% 0.83% 0.60% 0.59% 0.60% 0.51% 0.63% 0.84% 0.62%
Other expenses 0.07% 0.11% 0.07% 0.05% 0.06 0.06% 0.08% 0.07% 0.03%
Total * 0.67% 0.94% 0.67% 0.64% 0.67% 0.57% 0.71% 0.91% 0.65%
</TABLE>
*Annualized operating expenses of underlying mutual funds at Dec. 31, 1997.
Example for the Variable Retirement Annuity:*
<TABLE>
<CAPTION>
IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life
Aggressive International Capital IDS Life Special IDS Life Growth Global Income
Growth Equity Resource Managed Income Moneyshare Dimensions Yield Advantage
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and surrender at the end of each time period:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $89.78 $92.36 $89.78 $89.50 $89.78 $88.83 $90.16 $92.07 $89.59
3 years $109.28 $117.24 $109.28 $108.39 $109.28 $106.32 $110.46 $116.36 $108.69
5 years $128.61 $142.31 $128.61 $127.08 $128.61 $123.50 $130.65 $140.80 $127.59
10 years $203.02 $232.13 $203.02 $199.74 $203.02 $192.04 $207.38 $228.93 $200.83
You would pay the following expenses on the same investment assuming no
surrender or selection of an annuity payout plan at the end of each time period:
1 year $17.51 $20.27 $17.51 $17.20 $17.51 $16.48 $17.92 $19.97 $17.30
3 years $54.25 $62.65 $54.25 $53.31 $54.25 $51.12 $55.49 $61.72 $53.62
5 years $93.41 $107.58 $93.41 $91.83 $93.41 $88.12 $95.52 $106.01 $92.36
10 years $203.02 $232.13 $203.02 $199.74 $203.02 $192.04 $207.38 $228.93 $200.83
</TABLE>
This example should not be considered a representation of past or future
expenses. Actual expenses may be more or less than those shown.
* In this example, the $20 annual contract administrative charge is approximated
as a .038% charge based on our average contract size.
<PAGE>
Example for the Combination Retirement Annuity:**
<TABLE>
<CAPTION>
IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life
Aggressive International Capital IDS Life Special IDS Life Growth Global Income
Growth Equity Resource Managed Income Moneyshare Dimensions Yield Advantage
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and surrender at the end of each time period:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $90.30 $92.87 $90.30 $90.01 $90.30 $89.34 $90.68 $92.58 $90.11
3 years $132.85 $140.63 $132.85 $131.99 $132.85 $129.96 $134.01 $139.77 $132.28
5 years $178.17 $191.22 $178.17 $176.72 $178.17 $173.31 $180.12 $189.78 $177.20
10 years $236.29 $264.52 $236.29 $233.11 $236.29 $225.64 $240.52 $261.42 $234.17
You would pay the following expenses on the same investment assuming no
surrender or selection of an annuity payout plan at the end of each time period:
1 year $18.06 $20.83 $18.06 $17.75 $18.06 $17.04 $18.47 $20.52 $17.86
3 years $55.93 $64.32 $55.93 $54.99 $55.93 $52.81 $57.18 $63.39 $55.31
5 years $96.26 $110.40 $96.26 $94.68 $96.26 $90.98 $98.36 $108.83 $95.20
10 years $208.90 $237.86 $208.90 $205.64 $208.90 $197.98 $213.24 $234.68 $206.73
</TABLE>
This example should not be considered a representation of past or future
expenses. Actual expenses may be more or less than those shown.
** In this example, the $30 annual contract administrative charge is
approximated as a .092% charge based on our average contract size.
Example for the Combination Retirement Annuity Select (University of Wisconsin
TSA plan):***
<TABLE>
<CAPTION>
IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life
Aggressive International Capital IDS Life Special IDS Life Growth Global Income
Growth Equity Resource Managed Income Moneyshare Dimensions Yield Advantage
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and surrender at the end of each time period:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $90.30 $92.87 $90.30 $90.01 $90.30 $89.34 $90.68 $92.58 $90.11
3 years $132.85 $140.63 $132.85 $131.99 $132.85 $129.96 $134.01 $139.77 $132.28
5 years $154.77 $168.13 $154.77 $153.28 $154.77 $149.78 $156.76 $166.65 $153.77
10 years $208.90 $237.86 $208.90 $205.64 $208.90 $197.98 $213.24 $234.68 $206.73
<PAGE>
You would pay the following expenses on the same investment assuming no
surrender or selection of an annuity payout plan at the end of each time period:
1 year $18.06 $20.83 $18.06 $17.75 $18.06 $17.04 $18.47 $20.52 $17.86
3 years $55.93 $64.32 $55.93 $54.99 $55.93 $52.81 $57.18 $63.39 $55.31
5 years $96.26 $110.40 $96.26 $94.68 $96.26 $90.98 $98.36 $108.83 $95.20
10 years $208.90 $237.86 $208.90 $205.64 $208.90 $197.98 $213.24 $234.68 $206.73
</TABLE>
This example should not be considered a representation of past or future
expenses. Actual expenses may be more or less than those shown.
*** In this example, the $30 annual contract administrative charge is
approximated as a .092% charge based on our average contract size.
Example for the Combination Retirement Annuity (American Express Retirement
Service):****
<TABLE>
<CAPTION>
IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life IDS Life
Aggressive International Capital IDS Life Special IDS Life Growth Global Income
Growth Equity Resource Managed Income Moneyshare Dimensions Yield Advantage
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and surrender at the end of each time period:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 year $79.98 $82.58 $79.98 $79.69 $79.98 $79.01 $80.36 $82.29 $79.78
3 years $110.88 $118.83 $110.88 $109.99 $110.88 $107.92 $112.06 $117.95 $110.29
5 years $131.37 $145.03 $131.37 $129.84 $131.37 $126.26 $133.40 $143.52 $130.35
10 years $208.90 $237.86 $208.90 $205.64 $208.90 $197.98 $213.24 $234.68 $206.73
You would pay the following expenses on the same investment assuming no
surrender or selection of an annuity payout plan at the end of each time period:
1 year $18.06 $20.83 $18.06 $17.75 $18.06 $17.04 $18.47 $20.52 $17.86
3 years $55.93 $64.32 $55.93 $54.99 $55.93 $52.81 $57.18 $63.39 $55.31
5 years $96.26 $110.40 $96.26 $94.68 $96.26 $90.98 $98.36 $108.83 $95.20
10 years $208.90 $237.86 $208.90 $205.64 $208.90 $197.98 $213.24 $234.68 $206.73
</TABLE>
This example should not be considered a representation of past or future
expenses. Actual expenses may be more or less than those shown.
**** In this example, the $30 annual contract administrative charge is
approximated as a .092% charge based on our average contract size.
<PAGE>
Condensed financial information
(unaudited)
<TABLE>
<CAPTION>
The following tables give per-unit information about the financial history of each variable account.
Year Ended Dec. 31,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
Account F (investing in shares of Capital Resource Fund)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation unit $6.67 $6.25 $4.94 $4.93 $4.82 $4.67 $3.22 $3.23 $2.57 $2.31
value at beginning
of period
Accumulation unit value $8.21 $6.67 $6.25 $4.94 $4.93 $4.82 $4.67 $3.22 $3.22 $2.57
at end of period
Number of accumulation 556,866 628,555 641,903 576,724 488,632 402,977 309,984 242,767 204,645 186,639
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
expense to average
Account IZ1 (investing in shares of International Equity Fund)
Accumulation unit $1.49 $1.38 $1.25 $1.29 $0.98 $1.00 -- -- -- --
value at beginning
of period
Accumulation unit value $1.52 $1.49 $1.38 $1.25 $1.29 $0.98 -- -- -- --
at end of period
Number of accumulation 1,168,353 1,220,486 1,088,874 913,364 405,536 69,874 -- -- -- --
units outstanding at end
of period (000 omitted)
Ration of operating 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% -- -- -- --
expense to average
net assets
Account JZ1 (investing in shares of Aggressive Growth Fund)
Accumulation unit $1.68 $1.46 $1.12 $1.21 $1.08 $1.00 -- -- -- --
value at beginning
of period
Accumulation unit value $1.88 $1.68 $1.46 $1.12 $1.21 $1.08 -- -- -- --
at end of period
Number of accumulation 1,168,829 1,172,793 1,007,976 780,423 347,336 115,574 -- -- -- --
units outstanding at end
of period (000 omitted)
Ration of operating 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% -- -- -- --
expense to average
net assets
<PAGE>
Account G (investing in shares of Special Income Fund)
Accumulation unit $4.86 $4.59 $3.80 $3.99 $3.48 $3.21 $2.76 $2.67 $2.48 $2.27
value at beginning
of period
Accumulation unit value $5.25 $4.86 $4.59 $3.80 $3.99 $3.48 $3.21 $2.76 $2.67 $2.48
at end of period
Number of accumulation 316,789 362,167 393,697 361,640 405,429 330,000 270,858 236,926 222,248 175,878
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
expense to average
net assets
Account H (investing in shares of Moneyshare Fund)
Accumulation unit $2.36 $2.27 $2.18 $2.12 $2.09 $2.04 $1.95 $1.82 $1.69 $1.59
value at beginning
of period
Accumulation unit value $2.46 $2.36 $2.27 $2.18 $2.12 $2.09 $2.04 $1.95 $1.82 $1.69
at end of period
Number of accumulation 87,255 89,644 102,568 84,475 74,935 102,277 126,489 139,005 108,690 63,005
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
expense to average
net assets
Simple yield2 4.16% 3.85% 4.11% 4.41% 1.91% 1.79% 3.26% 6.25% 6.81% 7.30%
Compound yield2 4.24% 3.93% 4.20% 4.51% 1.93% 1.80% 3.31% 6.44% 7.04% 7.57%
Account N (investing in shares of Managed Fund)
Accumulation unit $2.97 $2.56 $2.09 $2.21 $1.98 $1.86 $1.45 $1.42 $1.14 $1.06
value at beginning
of period
Accumulation unit value $3.51 $2.97 $2.56 $2.09 $2.21 $1.98 $1.86 $1.45 $1.42 $1.14
at end of period
Number of accumulation 1,178,735 1,197,162 1,212,021 1,127,834 910,254 650,797 496,554 400,961 331,315 325,918
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
expense to average
net assets
<PAGE>
Account KZ3 (investing in shares of Global Yield Fund)
Accumulation unit $1.07 $1.00 -- -- -- -- -- -- -- --
value at beginning
of period
Accumulation unit value $1.10 $1.07 -- -- -- -- -- -- -- --
at end of period
Number of accumulation 65,609 24,878 -- -- -- -- -- -- -- --
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% 1.00% -- -- -- -- -- -- -- --
expense to average
net assets
Account LZ3 (investing in shares of Income Advantage Fund)
Accumulation unit $1.05 $1.00 -- -- -- -- -- -- --
value at beginning
of period
Accumulation unit value $1.18 $1.05 -- -- -- -- -- -- --
at end of period
Number of accumulation 175,024 59,939 -- -- -- -- -- -- --
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% 1.00% -- -- -- -- -- -- --
expense to average
net assets
Account MZ3 (investing in shares of Growth Dimensions Fund)
Accumulation unit $1.11 $1.00 -- -- -- -- -- --
value at beginning
of period
Accumulation unit value $1.37 $1.11 -- -- -- -- -- --
at end of period
Number of accumulation 831,259 350,598 -- -- -- -- -- --
units outstanding at end
of period (000 omitted)
Ratio of operating 1.00% 1.00% -- -- -- -- -- --
expense to average
net assets
1 Accounts IZ and JZ commenced operations on Jan. 13, 1992.
2 Net of annual contract administrative charge and mortality and expense risk fee.
3 Accounts KZ, LZ and MZ commenced operations on April 30, 1996.
</TABLE>
<PAGE>
Financial statements
The SAI dated May 1, 1998, contains:
o complete audited financial statements of the variable accounts
including:
- statements of net assets as of Dec. 31, 1997;
- statements of operations for the year ended Dec. 31, 1997, and
- statements of changes in net assets for the years ended Dec. 31, 1997
and Dec. 31, 1996,
except for IDS Life Accounts KZ, LZ and MZ which are for the year ended Dec.
31, 1997, and the period April 30, 1996 (commencement of operations)
to Dec. 31, 1996.
o complete audited financial statements for IDS Life including:
- consolidated balance sheets as of Dec. 31, 1997 and Dec. 31, 1996;
and
- related consolidated statements of income, stockholder's equity and
cash flows for years ended Dec. 31, 1997, 1996 and 1995.
Performance information
Performance information for the variable accounts may appear from time to time
in advertisements or sales literature. In all cases, such information reflects
the performance of a hypothetical investment in a particular account during a
particular time period. Calculations are performed as follows:
Simple yield - Account H (investing in IDS Life Moneyshare Fund): Income over a
given seven-day period (not counting any change in the capital value of the
investment) is annualized (multiplied by 52) by assuming that the same income is
received for 52 weeks. This annual income is then stated as an annual percentage
return on the investment.
Compound yield - Account H: Calculated like simple yield, except that, when
annualized, the income is assumed to be reinvested. Compounding of reinvested
returns increases the yield as compared to a simple yield.
Yield - For accounts investing in income funds: Net investment income (income
less expenses) per accumulation unit during a given 30-day period is divided by
the value of the unit on the last day of the period. The result is converted to
an annual percentage.
<PAGE>
Average annual total return: Expressed as an average annual compounded rate of
return of a hypothetical investment over a period of one, five and 10 years (or
up to the life of the account if it is less than 10 years old). This figure
reflects deduction of all applicable charges, including the contract
administrative charge, mortality and expense risk fee and surrender charge,
assuming a surrender at the end of the illustrated period. Optional average
annual total return quotations may be made that do not reflect a surrender
charge deduction (assuming no surrender).
Aggregate total return: Represents the cumulative change in the value of an
investment over a specified period of time (reflecting change in an account's
accumulation unit value). The calculation assumes reinvestment of investment
earnings and reflects the deduction of all applicable charges, including the
contract administrative charge, mortality and expense risk fee and surrender
charge, assuming a surrender at the end of the illustrated period. Optional
aggregate total return quotations may be made that do not reflect a surrender
charge deduction (assuming no surrender). Aggregate total return may be shown by
means of schedules, charts or graphs.
Performance information should be considered in light of the investment
objectives and policies, characteristics and quality of the fund in which the
account invests and the market conditions during the given time period. Such
information is not intended to indicate future performance. Because advertised
yields and total return figures include all charges attributable to the annuity
which has the effect of decreasing advertised performance, account performance
should not be compared to that of mutual funds that sell their shares directly
to the public. (See the SAI for a further description of methods used to
determine yield and total return for the accounts.)
If you would like additional information about actual performance, contact your
financial advisor.
The variable accounts
Purchase payments can be allocated to any or all of the variable accounts that
invest in shares of the following funds:
<TABLE>
<CAPTION>
IDS Life Account Established
<S> <C> <C>
IDS Life Aggressive Growth Fund JZ Sept. 20, 1991
IDS Life International Equity Fund IZ Sept. 20, 1991
IDS Life Capital Resource Fund F May 13, 1981
IDS Life Managed Fund N April 17, 1985
IDS Life Special Income Fund G May 13, 1981
IDS Life Moneyshare Fund H May 13, 1981
IDS Life Growth Dimensions Fund MZ April 2, 1996
IDS Life Global Yield Fund KZ April 2, 1996
IDS Life Income Advantage Fund LZ April 2, 1996
</TABLE>
<PAGE>
Each variable account meets the definition of a separate account under federal
securities laws. Income, capital gains and capital losses of each account are
credited or charged to that account alone. No variable account will be charged
with liabilities of any other account or of our general business. Each variable
account's net assets are held in relation to the contracts described in this
prospectus as well as other variable annuity contracts that we issue that are
not described in this prospectus. All obligations arising under the contracts
are general obligations of IDS Life.
All variable accounts were established under Minnesota law and 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.
The funds
IDS Life Aggressive Growth Fund
Objective: capital appreciation. Invests primarily in common stock of small- and
medium-size companies. The fund also may invest in warrants or debt securities
or in large well-established companies when the portfolio manager believes such
investments offer the best opportunity for capital appreciation.
IDS Life International Equity Fund
Objective: capital appreciation. Invests primarily in common stock of foreign
issuers and foreign securities convertible into common stock. The fund also may
invest in certain international bonds if the portfolio manager believes they
have a greater potential for capital appreciation than equities.
IDS Life Capital Resource Fund
Objective: capital appreciation. Invests primarily in U.S. common stocks and
other securities convertible into common stock, diversified over many different
companies in a variety of industries.
IDS Life Managed Fund
Objective: maximum total investment return. Invests primarily in U.S. common
stocks, securities convertible into common stock, warrants, fixed income
securities (primarily high-quality corporate bonds) and money-market
instruments. The fund invests in many different companies in a variety of
industries.
IDS Life Special Income Fund
Objective: to provide a high level of current income while conserving the value
of the investment for the longest time period. Invests primarily in
high-quality, lower-risk corporate bonds issued by many different companies in a
variety of industries and in government bonds.
<PAGE>
IDS Life Moneyshare Fund
Objective: maximum current income consistent with liquidity and conservation of
capital. Invests in high-quality money market securities with remaining
maturities of 13 months or less. The fund also will maintain a dollar-weighted
average portfolio maturity not exceeding 90 days. The fund attempts to maintain
a constant net asset value of $1 per share.
IDS Life Growth Dimensions Fund
Objective: long-term growth of capital. Invests primarily in common stocks of
U.S. and foreign companies showing potential for significant growth.
IDS Life Global Yield Fund
Objective: high total return through income and growth of capital. Invests
primarily in a non-diversified portfolio of debt securities of U.S. and foreign
issuers.
IDS Life Income Advantage Fund
Objective: high current income, with capital growth as a secondary objective.
Invests in long-term, high-yielding, high-risk debt securities below investment
grade issued by U.S. and foreign corporations.
More comprehensive information regarding each fund is contained in the fund
prospectus. You should read the fund prospectus and consider carefully, and on a
continuing basis, which fund or combination of funds is best suited to your
long-term investment needs. There is no assurance that the investment objectives
of the funds will be attained nor is there any guarantee that the contract value
will equal or exceed the total purchase payments made. Some funds may involve
more risk than others--please monitor your investments accordingly.
The Internal Revenue Service (IRS) has issued final regulations relating to the
diversification requirements under Section 817(h) of the Code. Each mutual fund
intends to comply with these requirements.
The U.S. Treasury and the IRS have indicated that they may provide additional
guidance concerning how many variable accounts may be offered and how many
exchanges among variable accounts may be allowed before the owner is considered
to have investment control and thus is currently taxed on income earned within
variable account assets. We do not know at this time what the additional
guidance will be or when action will be taken. We reserve the right to modify
the contract, as necessary, to ensure that the owner will not be subject to
current taxation as the owner of the variable account assets.
We intend to comply with all federal tax laws to ensure that the contract
continues to qualify as an annuity for federal income tax purposes. We reserve
the right to modify the contract as necessary to comply with any new tax laws.
<PAGE>
IDS Life is the investment manager and AEFC is the investment advisor for each
of the funds. American Express Asset Management International Inc., a wholly
owned subsidiary of AEFC, is the sub-investment advisor for IDS Life
International Equity Fund. The investment manager and advisors cannot guarantee
that the funds will meet their investment objectives. Please read the Retirement
Annuity Mutual Fund prospectus for complete information on investment risks,
deductions, expenses and other facts you should know before investing. It is
available by contacting IDS Life at the address or telephone number on the front
of this prospectus, or from your financial advisor.
The fixed account
For the Combination Retirement Annuity contracts only.
Purchase payments may also be allocated to the fixed account. The cash value of
the fixed account increases as interest is credited to the account. Purchase
payments and transfers to the fixed account become part of the general account
of IDS Life the company's main portfolio of investments. Interest is credited
daily and compounded annually. We may change the interest rates from time to
time.
Because of exemptive and exclusionary provisions, interests in the fixed account
have not been registered under the Securities Act of 1933 (1933 Act), nor is the
fixed account registered as an investment company under the 1940 Act.
Accordingly, neither the fixed account nor any interests in it are generally
subject to the provisions of the 1933 or 1940 Acts, and we have been advised
that the staff of the SEC has not reviewed the disclosures in this prospectus
that relate to the fixed account. Disclosures regarding the fixed account,
however, may be subject to certain generally applicable provisions of the
federal securities laws relating to the accuracy and completeness of statements
made in prospectuses.
Buying your annuity
Your financial advisor will help you prepare and submit your CRA application
(VRA is no longer being sold) and send it along with your initial purchase
payment to our Minneapolis office. As the owner, you have all rights and may
receive all benefits under the contract. The annuity can be owned in joint
tenancy only in spousal situations. Please remember that investment performance,
expenses and deduction of certain charges affect accumulation unit value.
When you apply, you can select:
o the account(s) in which you want to invest;
o how you want to make purchase payments;
o an annual purchase payment amount;
<PAGE>
o the date you want to start receiving annuity payouts (the retirement
date); and
o a beneficiary.
If your application is complete, we will process it and apply your purchase
payment to your account(s) within two business days after we receive it at our
Minneapolis office. If your application is accepted, we will send you a
contract. If we cannot accept your application within five business days, we
will decline it and return your payment. We will credit additional purchase
payments to your account(s) at the next close of business after we receive your
payments at our Minneapolis office.
The retirement date
Upon processing your application, we will establish the retirement date to the
maximum age or date as specified below. You can also select a date within the
maximum limits. This date can be aligned with your actual retirement from a job,
or it can be a different future date, depending on your needs and goals and on
certain restrictions. You can also change the date, provided you send us written
instructions at least 30 days before annuity payouts begin.
For nonqualified annuities and Roth IRAs, the retirement date must be:
o no earlier than the 60th day after the contract's effective date; and
o no later than the annuitant's 85th birthday.
For qualified annuities (except Roth IRAs), to avoid IRS penalty taxes, the
retirement date generally must be:
o on or after the date the annuitant reaches age 59 1/2; and
o for IRAs and SEPs, by April 1 of the year following the calendar year
when the annuitant reaches age 70 1/2;
o 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 retirement
date that is later than April 1 of the year following the calendar year
when they reach age 70 1/2.
Certain restrictions on retirement dates apply to participants in the Texas
Optional Retirement Program. (See "Special surrender provisions".)
<PAGE>
Beneficiary
If death benefits become payable before the retirement date, your named
beneficiary will receive all or part of the contract value. If there is no named
beneficiary, then you or your estate will be the beneficiary. (See "Benefits in
case of death" for more about beneficiaries.)
For the Variable Retirement Annuity
This is a single premium contract. Additional payments cannot be made. This
annuity is no longer being sold.
For the Combination Retirement Annuity
If installment payments:
$50 monthly; $23.08 biweekly
Installments must total $600 in the first year.*
*If you make no purchase payments for 24 months and your previous payments total
$600 or less, we have the right to give you 30 days' written notice and pay you
the total value of your contract in a lump sum. This right does not apply to
contracts sold to New Jersey residents.
Maximum payment(s)**
Nonqualified -
first year: $25,000
subsequent years: $50,000 excluding rollovers
Qualified - two times initial gross premium (subject to any IRS limits)
Participants in the Combination Retirement Annuity-Select (University of
Wisconsin TSA Plan) may buy the Combination Retirement Annuity with installment
payments of $200 to $25,000 annually.
**These limits apply in total to all IDS Life annuities you own. We reserve the
right to increase maximum limits or reduce age limits. For qualified annuities
the qualified plan's limits on annual contributions also apply.
How to make purchase payments
1 By letter
Send your check along with your name and account number to:
<PAGE>
Regular mail:
IDS Life Insurance Company
Box 74
Minneapolis, MN 55440-0074
Express mail:
IDS Life Insurance Company
733 Marquette Avenue
Minneapolis, MN 55402
2 By scheduled payment plan for CRA
Your financial advisor can help you set up:
o an automatic payroll deduction, salary reduction or other group billing
arrangement; or
o a bank authorization.
Charges
Contract administrative charge
This fee is for establishing and maintaining your records. We deduct $20
annually from each VRA contract or $30 annually from each CRA contract. This
charge is deducted on each anniversary date from the contract value at the end
of each contract year.
If you surrender your contract, the charge will be deducted at the time of
surrender. The charge cannot be increased and does not apply after annuity
payouts begin.
Mortality and expense risk fee
This fee is to cover the mortality risk and expense risk and is applied daily to
the variable accounts and reflected in the unit values of the accounts. The
variable accounts pay this fee at the time that dividends are distributed from
the funds in which they invest.
Annually, the fee totals 1% of the variable accounts' average daily net assets.
Approximately two-thirds of this amount is for our assumption of mortality risk
and one-third is for our assumption of expense risk. This fee does not apply to
the CRA's fixed account.
<PAGE>
Mortality risk arises because of our guarantee to pay a death benefit and our
guarantee to make annuity payouts according to the terms of the contract, no
matter how long a specific annuitant lives and no matter how long the entire
group of IDS Life annuitants live. If, as a group, IDS Life annuitants outlive
the life expectancy we have assumed in our actuarial tables, then we must take
money from our general assets to meet our obligations. If, as a group, IDS Life
annuitants do not live as long as expected, we could profit from the mortality
risk fee.
Expense risk arises because the contract administrative charge cannot be
increased and may not cover our expenses. Any deficit would have to be made up
from our general assets.
We may use any profits realized from the mortality and expense risk fee for any
proper corporate purpose, including, among others, payment of distribution
(selling) expenses. We do not expect that the surrender charge, discussed in the
following paragraphs, will cover sales and distribution expenses.
Surrender charge
If you surrender part or all of your contract, you may be subject to a surrender
charge as follows:
Variable Retirement Annuity - A surrender charge applies if you make a surrender
in the first seven contract years.
Surrender charge as
percent of
amount surrendered Contract year
------------------ -------------
7% 1
6 2
5 3
4 4
3 5
2 6
1 7
0 After 7 years
The surrender charge is further limited so it will never exceed 8.5% of
aggregate purchase payments made to the contract. After the first contract year,
you may surrender 10% of your purchase payment each year without any surrender
charge.
<PAGE>
Combination Retirement Annuity - A surrender charge applies if you surrender all
or part of your annuity's value in the first 11 contract years.
Surrender charge as
percent of
amount surrendered Contract year
------------------ -------------
7% 1-5
6 6
5 7
4 8
3 9
2 10
1 11
0 After 11 years
The surrender charge is further limited so that it will never exceed 8.5% of
aggregate purchase payments made to the contract.
Combination Retirement Annuity Select (University of Wisconsin TSA participants
only) - A surrender charge applies if you surrender all or part of your
annuity's value in the first eight contract years.
Surrender charge as
percent of
amount surrendered Contract year
------------------ -------------
7% 1-3
6 4
5 5
4 6
3 7
2 8
0 After 8 years
The surrender charge is further limited so that it will never exceed 8.5% of
aggregate purchase payments made to the contract.
Combination Retirement Annuity (Conversion from American Express Retirement
Services, or other IDS Life retirement annuity under which conversion is
available) - A surrender charge applies if you surrender all or part of your
annuity's value in the first seven contract years.
<PAGE>
Surrender charge as
percent of
amount surrendered Contract year
------------------ -------------
6% 1
6 2
5 3
4 4
3 5
2 6
1 7
0 After 7 years
The surrender charge is further limited so that it will never exceed 8.5% of
aggregate purchase payments made to the contract.
Example of withdrawal charge:
You request a $1,000 partial withdrawal, and the withdrawal charge is 5%:
1,000 partial withdrawal = $1,052.63
.95
Total amount withdrawn...............................$ 1,052.63
x 0.05
Total withdrawal charge..............................$ 52.63
We will not increase the surrender charges during the term of the contract.
Other information on charges: AEFC makes certain custodial services available to
some custodial and trusteed pension and profit sharing plans and 401(k) plans
funded by IDS Life annuities. Fees for these services start at $30 per calendar
year per participant. A termination fee for owners under age 59 1/2 will be
charged (fee waived in case of death or disability).
Possible group reductions: In some cases (for example, an employer making the
annuity available to employees) lower sales and administrative expenses may be
incurred due to the size of the group, the average contribution and the use of
group enrollment procedures. In such cases, we may be able to reduce or
eliminate the contract administrative and surrender charges. However, we expect
this to occur infrequently.
Premium taxes
Certain state and local governments impose premium taxes (up to 3.5%). These
taxes are dependent upon the state of residence or the state in which the
contract was sold and are deducted as applicable. In some cases, premium taxes
are deducted from your purchase payments before they are allocated. In other
cases, the deduction is made when you surrender your contract or when annuity
payouts begin.
<PAGE>
Valuing your investment
Here is how your accounts are valued:
Fixed account for CRA: The amounts allocated to the fixed account are valued
directly in dollars and equal the sum of your purchase payments, plus interest
earned, less any amounts surrendered or transferred (including the contract
administrative charge).
Variable accounts: Amounts allocated to the variable accounts are converted into
accumulation units. Each time you make a purchase payment or transfer amounts
into one of the variable accounts, a certain number of accumulation units are
credited to your contract for that account. Conversely, each time you take a
partial surrender, transfer amounts out of a variable account or are assessed a
contract administrative charge, a certain number of accumulation units are
subtracted from your contract.
The accumulation units are the true measure of investment value in each account
during the accumulation period. They are related to, but not the same as, the
net asset value of the underlying fund. The dollar value of each accumulation
unit can rise or fall daily depending on the performance of the underlying
mutual fund and on certain fund expenses. Here is how unit values are
calculated:
Number of units
To calculate the number of accumulation units for a particular account, we
divide your investment, after deduction of any premium taxes, by the current
accumulation unit value.
Accumulation unit value
The current accumulation unit value for each variable account equals the last
value times the account's current net investment factor.
Net investment factor
o Determined each business day by adding the underlying mutual fund's
current net asset value per share, plus per share amount of any current
dividend or capital gain distribution; then
o dividing that sum by the previous net asset value per share; and
o subtracting the percentage factor representing the mortality and
expense risk fee from the result.
Because the net asset value of the underlying mutual fund may fluctuate, the
accumulation unit value may increase or decrease. You bear this investment risk
in a variable account.
<PAGE>
Factors that affect variable account accumulation units
Accumulation units may change in two ways; in number and in value. Here are the
factors that influence those changes:
The number of accumulation units you own may fluctuate due to:
o additional purchase payments allocated to the variable account(s);
o transfers into or out of the variable account(s);
o partial surrenders;
o surrender charges; and/or
o contract administrative charges.
Accumulation unit values will fluctuate due to:
o changes in underlying mutual fund(s) net asset value;
o dividends distributed to the variable account(s);
o capital gains or losses of underlying mutual funds;
o mutual fund operating expenses; and/or
o mortality and expense risk fees.
Making the most of your annuity
Automated dollar-cost averaging
You can use automated transfers to take advantage of dollar-cost averaging
(investing a fixed amount at regular intervals). For example, you might have a
set amount transferred monthly from a relatively conservative variable account
to a more aggressive one or to several others, or from the fixed account to one
or more variable accounts. There is no charge for dollar-cost averaging.
This systematic approach can help you benefit from fluctuations in accumulation
unit values caused by fluctuations in the market value(s) of the underlying
mutual fund(s). Since you invest the same amount each period, you automatically
acquire more units when the market value falls, fewer units when it rises. The
potential effect is to lower the average cost per unit. For specific features
contact your financial advisor.
<PAGE>
How dollar-cost averaging works
Amount invested Accumulation unit Number of units
Month value purchased
Jan $100 $20 5.00
Feb 100 18 5.56
March 100 17 5.88
April 100 15 6.67
May 100 16 6.25
June 100 18 5.56
July 100 17 5.88
Aug 100 19 5.26
Sept 100 21 4.76
Oct 100 20 5.00
(footnotes to table) By investing an equal number of dollars each month...
(arrow in table pointing to April) you automatically buy more units when the per
unit market price is low...
(arrow in table pointing to September) and fewer units when the per unit market
price is high.
You have paid an average price of only $17.91 per unit over the 10 months, while
the average market price actually was $18.10.
Dollar-cost averaging does not guarantee that any variable subaccount will gain
in value, nor will it protect against a decline in value if market prices fall.
Because this strategy involves the continuous investing, your success with
dollar-cost averaging will depend upon your willingness to continue to invest
regularly through periods of low price levels. Dollar-cost averaging can be an
effective way to help meet your long-term goals.
Transferring money between accounts
You may transfer money from one account, including CRA's fixed account, to
another before the annuity payouts begin. If we receive your request before the
close of business, we will process it that day. Requests received after the
close of business will be processed the next business day. There is no charge
for transfers. Before making a transfer, you should consider the risks involved
in switching investments.
We may suspend or modify transfer privileges at any time. Certain restrictions
apply to transfers involving CRA's fixed account.
<PAGE>
Transfer policies
You may transfer contract values between the variable accounts for VRA or CRA,
or from the variable account(s) to the fixed account for CRA at any time.
For the Combination Retirement Annuity
o If you have made a transfer from CRA's fixed account to the variable
account(s), you may not make a transfer from any variable account back to
the fixed account until the next contract anniversary.
o You may transfer contract values from the fixed account to the variable
account(s) once a year during a 31-day transfer period starting on each
contract anniversary, (except for automated transfers, which can be set up
for transfer periods of your choosing subject to certain minimums).
o If we receive your transfer request within 30 days before the contract
anniversary date, the transfer from the fixed account to the variable
account(s) will be effective on the anniversary.
o If we receive your request on or within 30 days after the contract
anniversary date, the transfer from the fixed account to the variable
account(s) will be effective on the day we receive it.
o We will not accept requests for transfers from the fixed account at any
other time.
o Once annuity payouts begin, no transfers may be made to or from the fixed
account, but transfers may be made once per contract year among the
variable accounts. During the annuity payout period, you cannot be invested
in more than five variable accounts at any one time unless we agree
otherwise.
How to request a transfer or a surrender
1 By letter
Send your name, account number, Social Security Number or Taxpayer
Identification Number and signed request for a transfer or surrender to:
Regular mail:
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
<PAGE>
Express mail:
IDS Life Insurance Company
733 Marquette Avenue
Minneapolis, MN 55402
Minimum amount
Mail transfers: $250 or entire account balance
Mail surrenders: none
Maximum amount
Mail transfers: None (up to contract value)
Mail surrenders: None (up to contract value)
2 By phone
Call between 7 a.m. and 6 p.m. Central time:
1-800-437-0602 (toll free) or
(612) 671-9900 (Minneapolis area)
TTY service for the hearing impaired:
1-800-285-8846 (toll free)
Minimum amount
Phone transfers: $250 or entire account balance
Phone surrenders: $100
Maximum amount
Phone transfers: None (up to contract value)
Phone surrenders: $50,000
We answer phone requests promptly, but you may experience delays when the call
volume is unusually high. If you are unable to get through, use the mail
procedure as an alternative.
We will honor any telephone transfer or surrender request believed to be
authentic and will use reasonable procedures to confirm that they are. This
includes asking identifying questions and tape recording calls. A telephone
surrender request will be allowed within 30 days of a phoned-in address change.
As long as these procedures are followed, neither IDS Life nor its affiliates
will 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 IDS Life.
<PAGE>
3 By automated transfers and automated partial surrenders
Your financial advisor can help you set up automated transfers among your
accounts or partial surrenders from the accounts.
You can start or stop this service by written request or other method acceptable
to IDS Life. You must allow 30 days for IDS Life to change any instructions that
are currently in place.
o Automated transfers from CRA's fixed to variable account(s) may not exceed
an amount that, if continued, would deplete the fixed account within 12
months.
o Automated transfers and automated partial surrenders are subject to all of
the contract provisions and terms, including transfer of contract values
between accounts. Automated surrenders may be restricted by applicable law
under some contracts.
o You may not make additional purchase payments if automated partial
surrenders are in effect.
o Automated partial surrenders may result in IRS taxes and penalties on all
or part of the amount surrendered.
Minimum amount
Automated transfers or surrenders: $50
Maximum amount
Automated transfers or surrenders: None (except for automated transfers from
CRA's fixed account)
Surrendering your contract
As owner, you may surrender all or part of your contract at any time before
annuity payouts begin by sending a written request or calling IDS Life. For
total surrenders we will compute the value of your contract at the close of
business after we receive your request. We may ask you to return the contract.
You may have to pay surrender charges (see "Surrender charge") and IRS taxes and
penalties (see "Taxes"). No surrenders may be made after annuity payouts begin.
Surrender policies
If you have a balance in more than one account and request a partial surrender,
we will withdraw money from all your accounts in the same proportion as your
value in each account correlates to your total contract value, unless you
request otherwise.
<PAGE>
Receiving payment when you request a surrender
By regular or express mail:
o payable to owner;
o mailed to address of record.
Note: You will be charged a fee if you request express mail delivery.
By wire:
o request that payment be wired to your bank;
o bank account must be in the same ownership as your contract; and
o pre-authorization required. For instructions, contact your financial
advisor.
Payment normally will be sent within seven days after receiving your request.
However, we may postpone the payment if:
- the surrender amount includes a purchase payment check that has not
cleared;
- the NYSE is closed, except for normal holiday and weekend closings;
- trading on the NYSE is restricted, according to SEC rules;
- an emergency, as defined by SEC rules, makes it impractical to sell
securities or value the net assets of the accounts; or
- the SEC permits us to delay payment for the protection of security
holders.
TSA special surrender provisions
Participants in Tax-Sheltered Annuities: The Code imposes certain restrictions
on your right as owner to receive early distributions from a TSA:
o Distributions attributable to salary reduction contributions made after
Dec. 31, 1988, plus the earnings on them, or to transfers or rollovers
of such amounts from other contracts, may be made from the TSA only if:
- you have attained age 59 1/2;
- you have become disabled as defined in the Code;
- you have separated from the service of the employer who
purchased the annuity; or
- the distribution is made to your beneficiary because of your
death.
<PAGE>
o If you encounter a financial hardship (within the meaning of the Code),
you may receive a distribution of all contract values attributable to
salary reduction contributions made after Dec. 31, 1988, but not the
earnings on them.
o Even though a distribution may be permitted under the above rules, it
still may be subject to IRS taxes and penalties. (See "Taxes.")
o The above restrictions on the right to receive a distribution do not
affect the availability of the amount credited to the contract as of
Dec. 31, 1988. The restrictions do not apply to transfers or exchanges
of contract value within the annuity, or to another registered variable
annuity contract or investment vehicle available through the employer.
o If the contract has a loan provision, the right to receive a loan from
your fixed account is described in detail in your contract. You may
borrow from the contract value allocated to the fixed account.
o For certain types of contributions under a TSA contract to be excluded
from taxable income, the employer must comply with certain
nondiscrimination requirements. You should consult your employer to
determine whether the nondiscrimination rules apply to you.
Participants in the Texas Optional Retirement Program: You cannot receive any
distribution before retirement unless you become totally disabled or end your
employment at a Texas college or university.
This restriction affects your right to:
o surrender all or part of your annuity at any time; and
o move up your retirement date.
If you are in the program for only one year, the portion of the purchase
payments made by the state of Texas will be refunded to the state with no
surrender charge. These restrictions are based on an opinion of the Texas
Attorney General interpreting Texas law.
Changing ownership
You may change ownership of your nonqualified annuity at any time by filing a
change of ownership with us at our Minneapolis office. The change will become
binding upon us when we receive and record it. We take no responsibility for the
validity of the change.
If you have a nonqualified annuity, you may lose your tax advantages by
transferring, assigning or pledging any part of it. (See "Taxes.")
<PAGE>
If you have a qualified annuity, you may not sell, assign, transfer, discount or
pledge your contract as collateral for a loan, or as security for the
performance of an obligation or for any other purpose to any person except IDS
Life. However, if the owner is a trust or custodian, or an employer acting in a
similar capacity, ownership of a contract may be transferred to the annuitant.
Benefits in case of death
If you or the annuitant dies (or, for qualified annuities, if the annuitant
dies) before annuity payouts begin, we will pay the beneficiary as follows:
If death occurs before the annuitant's 75th birthday, the beneficiary receives
the greater of:
o the contract value; or
o purchase payments, minus any surrenders.
If death occurs on or after the annuitant's 75th birthday, the beneficiary
receives the contract value.
If your spouse is sole beneficiary under a nonqualified annuity and you die
before the retirement date, your spouse may keep the annuity as owner. To do
this your spouse must, within 60 days after we receive proof of death, give us
written instructions to keep the contract in force.
Under a qualified annuity, if the annuitant dies before the retirement date, and
the spouse is the only beneficiary, the spouse may keep the annuity in force
until the date on which the annuitant would have reached age 70 1/2 or any other
date permitted by the Code. To do this, the spouse must give us written
instructions within 60 days after we receive proof of death.
Payments: We will pay the beneficiary in a single sum unless you have given us
other written instructions, or the beneficiary may receive payouts under any
annuity payout plan available under this contract if:
o the beneficiary asks us in writing within 60 days after we receive
proof of death;
o payouts begin no later than one year after death, or other date as
permitted by the Code; and
o the payout period does not extend beyond the beneficiary's life or life
expectancy.
<PAGE>
When paying the beneficiary, we will determine the contract's value at the next
close of business after our death claim requirements are fulfilled. Interest, if
any, will be paid from the date of death at a rate no less than required by law.
We will mail payment to the beneficiary within seven days after our death claim
requirements are fulfilled. (See "Taxes.")
The annuity payout period
As owner of the contract, you have the right to decide how and to whom annuity
payouts will be made starting at the retirement date. You may select one of the
annuity payout plans outlined below or we will mutually agree on other payout
arrangements. The amount available for payouts under the plan you select is the
contract value on your retirement date. No surrender charges are deducted under
the payout plans listed below.
You also decide whether annuity payouts are to be made on a fixed or variable
basis, or a combination of fixed and variable. Amounts of fixed and variable
payouts depend on:
o the annuity payout plan you select;
o the annuitant's age and, in most cases, sex;
o the annuity table in the contract; and
o the amounts you allocated to the account(s) at settlement.
In addition, for variable payouts only, amounts depend on the investment
performance of the account(s) you select. These payouts will vary from month to
month because the performance of the underlying mutual funds will fluctuate. (In
the case of fixed annuities, payouts remain the same from month to month.)
For information with respect to transfers between accounts after annuity payouts
begin, see "Transfer policies."
Annuity payout plans
You may choose any one of these annuity payout plans by giving us written
instructions at least 30 days before contract values are to be used to purchase
the payout plan.
o Plan A - Life annuity - no refund: Monthly payouts are made until the
annuitant's death. Payouts end with the last payout before the annuitant's
death; no further payouts will be made. This means that if the annuitant dies
after only one monthly payout has been made, no more payouts will be made.
<PAGE>
o Plan B - Life annuity with five, 10 or 15 years certain: Monthly payouts are
made for a guaranteed payout period of five, 10 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 has expired. The guaranteed
payout period is calculated from the retirement date. If the annuitant outlives
the elected guaranteed payout period, payouts will continue until the
annuitant's death.
o Plan C - Life annuity - installment refund: Monthly payouts are made until the
annuitant's death, with our guarantee that payouts will continue for some period
of time. Payouts will be made for at least the number of months determined by
dividing the amount applied under this option by the first monthly payout,
whether or not the annuitant is living.
o Plan D - Joint and last survivor life annuity - no refund: Monthly payouts are
made while both the annuitant and a joint annuitant are living. If either
annuitant dies, monthly payouts continue at the full amount until the death of
the surviving annuitant. Payouts end with the death of the second annuitant.
o Plan E - Payouts for a specified period: Monthly payouts are made for a
specific payout period of 10 to 30 years that you elect. Payouts will be made
only for the number of years specified whether the annuitant is living or not.
Depending on the time period selected, it is foreseeable that an annuitant can
outlive the payout period selected. In addition, a 10% IRS penalty tax could
apply under this payout plan. (See "Taxes.")
Restrictions for some qualified plans: If you purchased a qualified annuity, you
must select a payout plan that provides for payouts:
o over the life of the annuitant;
o over the joint lives of the annuitant and a designated beneficiary;
o for a period not exceeding the life expectancy of the annuitant; or
o for a period not exceeding the joint life expectancies of the annuitant
and a designated beneficiary.
If we do not receive instructions: You must give us written instructions for the
annuity payouts at least 30 days before the annuitant's retirement date. If you
do not, we will make payouts under Plan B, with 120 monthly payouts guaranteed.
If monthly payouts would be less than $20: We will calculate the amount of
monthly payouts at the time the contract value is used to purchase a payout
plan. If the calculations show that monthly payouts would be less than $20, we
have the right to pay the contract value to the owner in a lump sum.
<PAGE>
Death after annuity payouts begin
If you or the annuitant dies after annuity payouts begin, any amount payable to
the beneficiary will be provided in the annuity payout plan in effect.
Taxes
Generally, under current law, any increase in your contract value is taxable to
you only when you receive a payout or surrender. (See detailed discussion
below.) Any portion of the annuity payouts and any surrenders you request that
represent ordinary income are normally taxable. You will receive a 1099 tax
information form for any year in which a taxable distribution was made according
to our records. Roth IRAs may grow tax-free if you meet certain distribution
requirements.
Annuity payouts under nonqualified annuities: A portion of each payout will be
ordinary income and subject to tax, and a portion of each payout will be
considered a return of part of your investment and will not be taxed. All
amounts received after your investment in the annuity is fully recovered will be
subject to tax.
Tax law requires that all nonqualified deferred annuity contracts issued by the
same company to the same owner during a calendar year are to be taxed as a
single, unified contract when distributions are taken from any one of such
contracts.
Annuity payouts under qualified annuities (except Roth IRAs): Under a qualified
annuity, the entire payout generally will be includable as ordinary income and
subject to tax except to the extent that contributions were made with after-tax
dollars. If you or your employer invested in your contract with pre-tax dollars
as part of a qualified retirement plan, such amounts are not considered to be
part of your investment in the contract and will be taxed when paid to you.
Surrenders: If you surrender part or all of your contract before your annuity
payouts begin, your surrender payment will be taxed to the extent that the value
of your contract immediately before the surrender exceeds your investment. You
also may have to pay a 10% IRS penalty for surrenders before reaching age 59
1/2. For qualified annuities, other penalties may apply if you surrender your
annuity before your plan specifies that you can receive payouts.
Death benefits to beneficiaries (except Roth IRAs): The death benefit under an
annuity is not tax-exempt. Any amount received by the beneficiary that
represents previously deferred income earnings within the contract, is taxable
as ordinary income to the beneficiary in the year(s) he or she receives the
payment(s). The death benefit under a Roth IRA generally is not taxable as
ordinary income to the beneficiary.
<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 continue to be tax-deferred.
Penalties: If you receive amounts from your contract before reaching age 59 1/2,
you may have to pay a 10% IRS penalty on the amount includable in your ordinary
income. However, this penalty will not apply to any amount received by you or
your beneficiary:
o because of your death;
o because you become disabled (as defined in the Code);
o if the distribution is part of a series of substantially equal periodic
payments, made at least annually, over your life or life expectancy (or
joint lives or life expectancies of you and your beneficiary); or
o if it is allocable to an investment before Aug. 14, 1982 (except for
qualified annuities).
For a qualified annuity, other penalties or exceptions may apply if you
surrender your annuity before your plan specifies that payouts can be made.
Withholding, generally: If you receive all or part of the contract value from an
annuity, withholding may be imposed against the taxable income portion of the
payout. Any withholding that is done represents a prepayment of your tax due for
the year. You take credit for such amounts on the annual tax return that you
file.
If the payout is part of an annuity payout plan, the amount of withholding
generally is computed using payroll tables. You can provide us with a statement
of how many exemptions to use in calculating the withholding. As long as you've
provided us with a valid Social Security Number or Taxpayer Identification
Number, you can elect not to have any withholding occur.
If the distribution is any other type of payment (such as a partial or full
surrender) withholding is computed using 10% of the taxable portion. Similar to
above, as long as you've provided us with a valid Social Security Number or
Taxpayer Identification Number, you can elect not to have this withholding
occur.
If a distribution is taken from a contract offered under a Section 457 plan
(deferred compensation plan of state and local governments and tax-exempt
organizations), withholding is computed using payroll methods, depending upon
the type of payment.
<PAGE>
Some states also impose withholding requirements similar to the federal
withholding described above. If this should be the case, any payment from which
federal withholding is deducted may also have state withholding deducted.
The withholding requirements may differ if payment is being made to a non-U.S.
citizen or if the payment is being delivered outside the United States.
Withholding from qualified annuities: If you receive directly all or part of the
contract value from a qualified annuity (except an IRA, Roth IRA or SEP),
mandatory 20% income tax withholding generally will be imposed at the time the
payout is made. This mandatory withholding is in place of the elective
withholding discussed above. This mandatory withholding will not be imposed if:
o instead of receiving the distribution check, you elect to have the
distribution rolled over directly to an IRA or another eligible plan;
o the payout is one in a series of substantially equal periodic payouts,
made at least annually, over your life or life expectancy (or the joint
lives or life expectancies of you and your designated beneficiary) or
over a specified period of 10 years or more; or
o the payment is a minimum distribution required under the Code.
Payments made to a surviving spouse instead of being directly rolled over to an
IRA may also be subject to mandatory 20% income tax withholding.
State withholding also may be imposed on taxable distributions.
Transfer of ownership of a nonqualified annuity: If you make such a transfer
without receiving adequate consideration, the transfer is considered a gift and
also may be considered a surrender for federal income tax purposes. If the gift
is a currently taxable event for income tax purposes, the amount of deferred
earnings at the time of the transfer will be taxed to the original owner, who
also may be subject to a 10% IRS penalty as discussed earlier. In this case, the
new owner's investment in the annuity will be the value of the annuity at the
time of the transfer.
Collateral assignment of a nonqualified annuity: If you collaterally assign or
pledge your contract, earnings on purchase payments you made after Aug. 13, 1982
will be taxed to you like a surrender.
Important: Our discussion of federal tax laws is based upon our understanding of
these laws as they are currently interpreted. Federal tax laws or current
interpretations of them may change. For this reason and because tax consequences
are complex and highly individual and cannot always be anticipated, you should
consult a tax advisor if you have any questions about taxation of your contract.
<PAGE>
Tax qualifications: The contract is intended to qualify as an annuity for
federal income tax purposes. To that end, the provisions of the contract are to
be interpreted to ensure or maintain such tax qualification, notwithstanding any
other provisions of the contract. We reserve the right to amend the contract to
reflect any clarifications that may be needed or are appropriate to maintain
such qualification or to conform the contract to any applicable changes in the
tax qualification requirements. We will send you a copy of any such amendment.
Voting rights
As a contract owner with investments in the variable account(s) you may vote on
important mutual fund policies until annuity payouts begin. Once they begin, the
person receiving them has voting rights. We will vote fund shares according to
the instructions of the person with voting rights.
Before annuity payouts begin, the number of votes is determined by applying the
percentage interest in each variable account to the total number of votes
allowed to the account.
After annuity payouts begin, the number of votes is equal to:
o the reserve held in each account for your contract, divided by
o the net asset value of one share of the applicable underlying mutual fund.
As we make annuity payouts, the reserve for the annuity decreases; therefore,
the number of votes also will decrease.
We calculate votes separately for each account not more than 60 days before a
shareholders' meeting. Notice of these meetings, proxy materials and a statement
of the number of votes to which the voter is entitled, will be sent.
We will vote shares for which we have not received instructions in the same
proportion as the votes for which we have received instructions. We also will
vote the shares for which we have voting rights in the same proportion as the
votes for which we have received instructions.
Distribution of the contracts
IDS Life, a registered broker/dealer, is the sole distributor of the contract.
IDS Life pays total commissions of up to 7.0% of the total purchase payments
received on the contracts. A portion of this total commission is paid to
district managers and field vice presidents of the selling representative.
<PAGE>
About IDS Life
The Variable Retirement Annuity and the Combination Retirement Annuity are
issued by IDS Life, a wholly-owned subsidiary of AEFC, which itself is a wholly
owned subsidiary of the American Express Company, a financial services company
headquartered in New York City.
IDS Life is a stock life insurance company organized in 1957 under the laws of
the State of Minnesota and located at IDS Tower 10, Minneapolis, MN 55440-0010.
IDS Life conducts a conventional life insurance business in the District of
Columbia and all states except New York.
American Express Financial Advisors Inc. offers mutual funds, investment
certificates and a broad range of financial management services. IDS Life offers
insurance and annuities.
American Express Financial Advisors Inc. serves individuals and businesses
through its nationwide network of more than 175 offices and more than 8,600
financial advisors.
Other subsidiaries provide investment management and related services for
pension, profit-sharing, employee savings and endowment funds of businesses and
institutions.
Legal proceedings
A number of lawsuits have been filed against life and health insurers in
jurisdictions in which IDS Life and its subsidiaries do business involving
insurers' sales practices, alleged agent misconduct, failure to properly
supervise agents and other matters. In December 1996, an action of this type was
brought against IDS Life and its parent, AEFC. A second action was filed in
March, 1997. The plaintiff's purport to represent a class consisting of all
persons who replaced existing IDS Life policies with new IDS Life policies from
and after January 1, 1985. The complaint puts at issue various alleged sales
practices and misrepresentations, alleged breaches of fiduciary duties and
alleged violations of consumer fraud statues. Plaintiffs seek damages in an
unspecified amount and seek to establish a claims resolution facility for the
determination of individual issues.
IDS Life believes it has meritorious defenses to these and other actions arising
in connection with the conduct of its business activities and intends to defend
them vigorously. IDS Life believes that it is not party to, nor are any of its
properties the subject of, any pending legal proceedings which would have a
material adverse effect on its consolidated financial condition.
<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 the Variable Accounts.
The Variable Accounts have no computer systems of their own but are dependent
upon the systems maintained by AEFC and certain other third parties.
A comprehensive review of AEFC's computer systems and business processes has
been conducted to identify the major systems that could be affected by the Year
2000 issue. Steps are being taken to resolve any potential problems including
modification to existing software and the purchase of new software. These
measures are scheduled to be completed and tested on a timely basis. AEFC's goal
is to complete internal remediation and testing of each system by the end of
1998 and to continue compliance efforts through 1999. The Year 2000 readiness of
other third parties whose system failures could have an impact on the Variable
Account's operations currently is being evaluated. The potential materiality of
any such impact is not known at this time.
Regular and special reports
Services
To help you track and evaluate the performance of your annuity, we provide:
Quarterly statements showing the value of your investment.
Annual reports containing required information on the annuity and its underlying
investments.
A personalized annuity progress report detailing the cumulative return since the
contract was purchased and the average annual rate of return on your
investments. This report, which is unique in the industry, is available upon
request from your financial advisor.
<PAGE>
Table of contents of the Statement of Additional Information
Performance information..................................................... 3
Calculating annuity payouts..................................................6
Rating agencies..............................................................8
Principal underwriter........................................................8
Independent auditors.........................................................8
Prospectus...................................................................9
Financial statements -
.........IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
.........IDS Life Insurance Company
- ------------------------------------------------------------------------------
Please check the appropriate box to receive a copy of the Statement of
Additional Information for:
_____ IDS Life Variable Retirement and Combination Retirement Annuities
_____ IDS Life Retirement Annuity Mutual Funds
Please return this request to:
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
Your name _______________________________________________________
Address _________________________________________________________
City ______________________ State ______________ Zip ___________
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for
VARIABLE RETIREMENT AND COMBINATION RETIREMENT ANNUITIES
IDS LIFE ACCOUNTS F, IZ, JZ, G, H, N, KZ, LZ and MZ
May 1, 1998
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ are separate accounts
established and maintained by IDS Life Insurance Company (IDS Life).
This Statement of Additional Information, dated May 1, 1998, is not a
prospectus. It should be read together with the accounts' prospectus, dated May
1, 1998, which may be obtained from your financial advisor, or by writing or
calling IDS Life at the address or telephone number below.
IDS Life Insurance Company
P10/199
P.O. Box 74
Minneapolis, MN 55440-0074
800-437-0602
<PAGE>
TABLE OF CONTENTS
Performance Information............................................p. 3
Calculating Annuity Payouts........................................p. 6
Rating Agencies....................................................p. 8
Principal Underwriter..............................................p. 8
Independent Auditors...............................................p. 8
Prospectus.........................................................p. 9
Financial Statements
- IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
- IDS Life Insurance Company
<PAGE>
PERFORMANCE INFORMATION
Calculation of yield for Account H
IDS Life Account H which invests in IDS Life Moneyshare Fund, calculates an
annualized simple yield and compound yield based on a seven-day period.
The simple yield is calculated by determining the net change in the value of a
hypothetical account having the balance of one accumulation unit at the
beginning of the seven-day period. (The net change does not include capital
change, but does include a pro rata share of the annual charges, including the
annual contract administrative charge and the mortality and expense risk fee.)
The net change in the account value is divided by the value of the account at
the beginning of the period to obtain the return for the period. That return is
then multiplied by 365/7 to obtain an annualized figure. The value of the
hypothetical account includes the amount of any declared dividends, the value of
any shares purchased with any dividend paid during the period and any dividends
declared for such shares. The variable account's (account) yield does not
include any realized or unrealized gains or losses, nor does it include the
effect of any applicable surrender charge.
The account calculates its compound yield according to the following formula:
Compound Yield = [(return for seven-day period +1) x (365/7)] - 1
Based on the seven-day period ended Dec. 31, 1997, the account's annualized
simple yield was 4.16% and its compound yield was 4.24%.
The rate of return, or yield, on the account's accumulation unit may fluctuate
daily and does not provide a basis for determining future yields. Investors must
consider, when comparing an investment in Account H with fixed annuities, that
fixed annuities often provide an agreed-to or guaranteed fixed yield for a
stated period of time, whereas the variable account's yield fluctuates. In
comparing the yield of Account H to a money market fund, you should consider the
different services that the annuity provides.
Calculation of yield for accounts investing in income funds
Quotations of yield will be based on all investment income earned during a
particular 30-day period, less expenses accrued during the period (net
investment income) and will be computed by dividing net investment income per
accumulation unit by the value of an accumulation unit on the last day of the
period, according to the following formula:
YIELD = 2[(a-b + 1)6 - 1]
cd
<PAGE>
where: a = dividends and investment income earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of accumulation units outstanding during
the period that were entitled to receive dividends.
d = the maximum offering price per accumulation unit on the last day
of the period.
Yield on the account is earned from the increase in the net asset value of
shares of the fund in which the account invests and from dividends declared and
paid by the fund, which are automatically invested in shares of the fund.
Based on the 30-day period ended Dec. 31, 1997, the annualized yield for Account
G was 6.85% for Account KZ was 5.88% and for Account LZ was 8.24%.
Calculation of average annual total return
Quotations of average annual total return for an account will be expressed in
terms of the average annual compounded rate of return of a hypothetical
investment in the annuity contract over a period of one, five and ten years (or,
if less, up to the life of the Account), calculated according to the following
formula:
P(1+T)n = ERV
where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of a hypothetical $1,000
payment made at the beginning of the one, five, or
ten year (or other) period at the end of the one,
five, or ten year (or other) period (or fractional
portion thereof).
<PAGE>
The following performance figures are calculated on the basis of historical
performance of the funds.
Average Annual Total Return For Period Ended: Dec. 31, 1997
Average Annual Total Return with Surrender
<TABLE>
<CAPTION>
Since
Account investing in: 1 Year 5 Year 10 Year Inception
- --------------------
IDS Life
<S> <C> <C> <C> <C>
Aggressive Growth Fund (1/92)* 3.60% 9.99% --% 9.96%
Capital Resource Fund (10/81) 14.18 9.55 13.20 --
International Equity Fund (1/92) -5.53 7.56 -- 6.12
Managed Fund (4/86) 9.92 10.41 12.44 --
Moneyshare Fund (10/81) -3.28 1.77 4.20 --
Special Income Fund (10/81) 0.10 6.80 8.43 --
Growth Dimensions Fund (4/96) 14.38 -- -- 15.28
Global Yield Fund (4/96) -4.50 -- -- 1.37
Income Advantage Fund (4/96) 4.28 -- -- 5.55
Average Annual Total Return without Surrender
Since
Account Investing in: 1 Year 5 Year 10 Year Inception
- --------------------
IDS Life
Aggressive Growth Fund (1/92) 11.40% 11.60% --% 11.11%
Capital Resource Fund (10/81) 22.77 11.15 13.43 --
International Equity Fund (1/92) 1.58 9.13 -- 7.22
Managed Fund (4/86) 18.19 12.03 12.67 --
Moneyshare Fund (10/81) 4.00 3.26 4.41 --
Special Income Fund (10/81) 7.63 8.36 8.65 --
Growth Dimensions Fund (4/96) 22.99 -- -- 20.40
Global Yield Fund (4/96) 2.69 -- -- 5.88
Income Advantage Fund (4/96) 12.13 -- -- 10.25
</TABLE>
* inception dates of the funds are shown in parentheses
Aggregate total return
Aggregate total return represents the cumulative change in the value of an
investment over a specified period of time (reflecting change in an account's
accumulation unit value) and is computed by the following formula:
ERV - P
P
where: P = a hypothetical initial payment of $1,000.
ERV = Ending Redeemable Value of a hypothetical $1,000 payment
made at the beginning of the one, five, or ten year
(or other) period at the end of the one, five, or
ten year (or other) period (or fractional portion
thereof).
<PAGE>
The Securities and Exchange Commission requires that an assumption be made that
the contract owner surrenders the entire contract at the end of the one, five
and ten year periods (or, if less, up to the life of the account) for which
performance is required to be calculated. In addition, performance figures may
be shown without the deduction of a surrender charge.
Total return figures reflect the deduction of all applicable charges including
the contract administrative charge and mortality and expense risk fee.
Performance of the accounts may be quoted or compared to rankings, yields, or
returns, or used in variable annuity accumulation or settlement illustrations as
published or prepared by independent rating or statistical services or
publishers or publications such as The Bank Rate Monitor National Index,
Barron's, Business Week, CDA Technologies, Donoghue's Money Market Fund Report,
Financial Services Week, Financial Times, Financial World, Forbes, Fortune,
Global Investor, Institutional Investor, Investor's Daily, Kiplinger's Personal
Finance, Lipper Analytical Services, Money, Morningstar, Mutual Fund Forecaster,
Newsweek, The New York Times, Personal Investor, Stanger Report, Sylvia Porter's
Personal Finance, USA Today, U.S. News and World Report, The Wall Street Journal
and Wiesenberger Investment Companies Service.
CALCULATING ANNUITY PAYOUTS
The Variable Account
The following calculations are done separately for each of the variable
accounts. The separate monthly payouts, added together, make up your total
variable annuity payout.
Initial Payout: To compute your first monthly payment, we:
o determine the dollar value of your annuity as of the valuation date seven days
before the retirement date and then deduct any applicable premium tax.
o apply the result to the annuity table contained in the contract or another
table at least as favorable. The annuity table shows the amount of the first
monthly payment for each $1,000 of value which depends on factors built into the
table, as described below.
Annuity Units: The value of your account is then converted to annuity units. To
compute the number credited to you, we divide the first monthly payment by the
annuity unit value (see below) on the valuation date on (or next day preceding)
the seventh calendar day before the retirement date. The number of units in your
account is fixed. The value of the units fluctuate with the performance of the
underlying mutual fund.
<PAGE>
Subsequent Payouts: To compute later payouts, we multiply:
o the annuity unit value on the valuation date on or immediately preceding the
seventh calendar day before the payout is due; by
o the fixed number of annuity units credited to you.
Annuity Table: The table shows the amount of the first monthly payment for each
$1,000 of contract value according to the age and, when applicable, the sex of
the annuitant. (Where required by law, we will use a unisex table of settlement
rates.) The table assumes that the contract value is invested at the beginning
of the annuity payout period and earns a 5% rate of return, which is reinvested
and helps to support future payouts.
Substitution of 3.5% Table: If you ask us at least 30 days before the retirement
date, we will substitute an annuity table based on an assumed 3.5% investment
rate for the 5% table in the contract. The assumed investment rate affects both
the amount of the first payout and the extent to which subsequent payouts
increase or decrease. Using the 5% table results in a higher initial payment,
but later payouts will increase more slowly when annuity unit values are rising
and decrease more rapidly when they are declining.
Annuity Unit Values: This value was originally set at $1 for each variable
account. To calculate later values we multiply the last annuity value by the
product of:
o the net investment factor; and
o the neutralizing factor. The purpose of the neutralizing factor is to offset
the effect of the assumed investment rate built into the annuity table. With an
assumed investment rate of 5%, the neutralizing factor is 0.999866 for a one day
valuation period.
Net Investment Factor:
o Determined by adding the underlying mutual fund's current net asset value per
share plus per share amount of any current dividend or capital gain
distribution; then
o dividing that sum by the previous net asset value per
share; and
o subtracting the percentage factor representing the mortality and
expense risk fee from the result.
Because the net asset value of the underlying mutual fund may fluctuate, the net
investment factor may be greater or less than one, and the accumulation unit
value may increase or decrease. You bear this investment risk in a variable
account.
The Fixed Account
Your fixed annuity payout amounts are guaranteed. Once calculated, your payout
will remain the same and never change. To calculate your annuity payouts we:
o take the value of your fixed account at the retirement date or the date you
have selected to begin receiving your annuity payouts; then
<PAGE>
o using an annuity table we apply the value according to the annuity payout plan
you select; and
o the annuity payout table we use will be the one in effect at
the time you choose to begin your annuity payouts. The table will be equal to or
greater than the table in your contract.
RATING AGENCIES
The following chart reflects the ratings given to IDS Life by independent rating
agencies. These agencies evaluate the financial soundness and claims-paying
ability of insurance companies based on a number of different factors. This
information does not relate to the management or performance of the variable
accounts of the annuity. This information relates only to the fixed account and
reflects IDS Life's ability to make annuity payouts and to pay death benefits
and other distributions from the annuity.
Rating agency Rating
A.M. Best A+
(Superior)
Duff & Phelps AAA
Moody's Aa2
PRINCIPAL UNDERWRITER
The principal underwriter for the accounts is IDS Life which offers the variable
annuities on a continuous basis.
Surrender charges received by IDS Life for 1997, 1996 and 1995, aggregated
$14,502,145, $11,956,753 and $10,125,762, respectively. Commissions paid by IDS
Life for 1997, 1996 and 1995, aggregated $17,883,488, $17,247,007 and
$9,019,184, respectively. The surrender charges were applied toward payment of
commissions.
INDEPENDENT AUDITORS
The financial statements of IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
including the statements of net assets as of December 31, 1997, and the related
statements of operations for the year then ended, and the related statements of
changes in net assets for each of the two years in the period ended Dec. 31,
1997, except for IDS Life Accounts KZ, LZ and MZ which are for the year ended
Dec. 31, 1997 and the period April 30, 1996 (commencement of operations) to
December 31, 1996 and the consolidated
<PAGE>
financial statements of IDS Life Insurance Company as of December 31, 1997 and
for each of the three years in the period ended Dec. 31, 1997, appearing in this
SAI, have been audited by Ernst & Young LLP, independent auditors, as stated in
their reports appearing herein.
PROSPECTUS
The prospectus dated May 1, 1998, is hereby incorporated in this Statement of
Additional Information by reference.
<PAGE>
<PAGE>
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 IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ, and MZ as of December
31, 1997, and the related statements of operations for the year then ended, and
the statements of changes in net assets for each of the two years in the period
then ended, except for IDS Life Accounts KZ, LZ and MZ, which are for the year
ended December 31, 1997 and for the period from April 30, 1996 (commencement of
operations) to December 31, 1996. These financial statements are the
responsibility of the management of IDS Life Insurance Company. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned at December 31, 1997 with the affiliated mutual
fund manager. 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 IDS
Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ at December 31, 1997, and the
individual and combined results of their operations and changes in their net
assets for the periods described above, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
Minneapolis, Minnesota
March 13, 1998
<PAGE>
<TABLE>
<CAPTION>
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ, and MZ
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Net Assets Dec. 31, 1997
Segregated Asset Account
-----------------------------------------------------------------------------------------
Assets F IZ JZ G H
- ------------------------------------------------------------------------------------------------------------------------------------
Investments in shares of mutual funds,
at market value:
IDS Life Capital Resource Fund -
160,437,800 shares at net asset value
<S> <C> <C> <C> <C> <C>
of $28.58 per share (cost $3,678,651,426) $ 4,584,683,419 $ - $ - $ - $ -
IDS Life International Equity Fund -
130,686,066 shares at net asset value
of $13.63 per share (cost $1,613,121,841) - 1,781,109,841 - - -
IDS Life Aggressive Growth Fund -
137,156,967 shares at net asset value
of $16.07 per share (cost $1,792,720,995) - - 2,204,202,588 - -
IDS Life Special Income Fund -
141,282,453 shares at net asset value
of $11.80 per share (cost $1,612,063,279) - - - 1,666,436,859 -
IDS Life Moneyshare Fund, Inc. -
215,138,258 shares at net asset value
of $1.00 per share (cost $215,120,122) - - - - 215,120,328
IDS Life Managed Fund, Inc. -
230,299,831 shares at net asset value
of $18.04 per share (cost $3,193,105,944) - - - - -
IDS Life Global Yield Fund -
6,971,024 shares at net asset value
of $10.39 per share (cost $71,568,627) - - - - -
IDS Life Income Advantage Fund -
19,912,683 shares at net asset value
of $10.38 per share (cost $202,033,753) - - - - -
IDS Life Growth Dimensions Fund -
83,118,305 shares at net asset value
of $13.70 per share (cost $962,791,340) - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
4,584,683,419 1,781,109,841 2,204,202,588 1,666,436,859 215,120,328
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends receivable - - - 10,348,791 1,022,824
Accounts receivable from
IDS Life for contract
purchase payments 349,345 188,022 225,771 108,828 5,559,283
Receivable from mutual funds for
share redemptions 4,644,465 1,457,983 2,801,461 304,372 327
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 4,589,677,229 1,782,755,846 2,207,229,820 1,677,198,850 221,702,762
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payable to IDS Life for:
Mortality and expense risk fee 4,154,706 1,619,451 1,993,160 1,513,283 196,340
Contract terminations 4,644,465 1,457,983 2,801,461 304,372 327
Payable to mutual funds for investments
purchased 349,345 188,022 225,771 8,944,363 6,385,768
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 9,148,516 3,265,456 5,020,392 10,762,018 6,582,435
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to contracts in
accumulation period 4,570,911,413 1,777,169,898 2,198,611,830 1,662,313,715 214,938,668
Net assets applicable to contracts in
payment period 9,617,300 2,320,492 3,597,598 4,123,117 181,659
- ------------------------------------------------------------------------------------------------------------------------------------
Total net assets $ 4,580,528,713 $ 1,779,490,390 $ 2,202,209,428 $ 1,666,436,832 $ 215,120,327
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding 556,866,324 1,168,353,202 1,168,829,188 316,788,701 87,255,005
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value per accumulation unit $8.21 $1.52 $1.88 $5.25 $2.46
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ, and MZ
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Net Assets - continued Dec. 31, 1997
Segregrated Asset Account
------------------------------------------------------------------------- Combined
Assets N KZ LZ MZ Variable
Accounts
- ------------------------------------------------------------------------------------------------------------------------------------
Investments in shares of mutual funds,
at market value:
IDS Life Capital Resource Fund -
160,437,800 shares at net asset value
<S> <C> <C> <C> <C> <C>
of $28.58 per share (cost $3,678,651,426) $ - $ - $ - $ - $ 4,584,683,419
IDS Life International Equity Fund -
130,686,066 shares at net asset value
of $13.63 per share (cost $1,613,121,841) - - - - 1,781,109,841
IDS Life Aggressive Growth Fund -
137,156,967 shares at net asset value
of $16.07 per share (cost $1,792,720,995) - - - - 2,204,202,588
IDS Life Special Income Fund -
141,282,453 shares at net asset value
of $11.80 per share (cost $1,612,063,279) - - - - 1,666,436,859
IDS Life Moneyshare Fund, Inc. -
215,138,258 shares at net asset value
of $1.00 per share (cost $215,120,122) - - - - 215,120,328
IDS Life Managed Fund, Inc. -
230,299,831 shares at net asset value
of $18.04 per share (cost $3,193,105,944) 4,154,046,191 - - - 4,154,046,191
IDS Life Global Yield Fund -
6,971,024 shares at net asset value
of $10.39 per share (cost $71,568,627) - 72,415,160 - - 72,415,160
IDS Life Income Advantage Fund -
19,912,683 shares at net asset value
of $10.38 per share (cost $202,033,753) - - 206,790,315 - 206,790,315
IDS Life Growth Dimensions Fund -
83,118,305 shares at net asset value
of $13.70 per share (cost $962,791,340) - - - 1,138,720,608 1,138,720,608
- ------------------------------------------------------------------------------------------------------------------------------------
4,154,046,191 72,415,160 206,790,315 1,138,720,608 16,023,525,309
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends receivable - 383,982 1,514,846 - 13,270,443
Accounts receivable from
IDS Life for contract
purchase payments 337,735 4,853 305,852 1,029,184 8,108,873
Receivable from mutual funds for
share redemptions 931,768 49,818 321 1,502 10,192,017
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets 4,155,315,694 72,853,813 208,611,334 1,139,751,294 16,055,096,642
- ------------------------------------------------------------------------------------------------------------------------------------
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Payable to IDS Life for:
Mortality and expense risk fee 3,757,501 64,967 183,116 1,012,641 14,495,165
Contract terminations 931,768 49,818 321 1,502 10,192,017
Payable to mutual funds for investments
purchased 337,735 323,868 1,637,582 1,029,184 19,421,638
- ------------------------------------------------------------------------------------------------------------------------------------
Total liabilities 5,027,004 438,653 1,821,019 2,043,327 44,108,820
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets applicable to contracts in
accumulation period 4,140,286,625 72,324,955 206,374,719 1,135,319,470 15,978,251,293
Net assets applicable to contracts in
payment period 10,002,065 90,205 415,596 2,388,497 32,736,529
- ------------------------------------------------------------------------------------------------------------------------------------
Total net assets $ 4,150,288,690 $ 72,415,160 $ 206,790,315 $ 1,137,707,967 $ 16,010,987,822
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation units outstanding 1,178,734,680 65,608,959 175,023,644 831,259,213
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value per accumulation unit $3.51 $1.10 $1.18 $1.37
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ, and MZ
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Operations Year ended Dec. 31, 1997
Segregated Asset Account
----------------------------------------------------------------------------------------
Investment income F IZ JZ G H
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dividend income from mutual funds $ 126,502,302 $ 67,130,767 $ 193,435,313 $ 157,493,878 $ 11,494,327
Mortality and expense risk fee 44,568,477 18,423,272 20,668,494 17,084,438 2,286,046
- ------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss) - net 81,933,825 48,707,495 172,766,819 140,409,440 9,208,281
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investments - net
- ------------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on sales
of investments in mutual funds:
Proceeds from sales 550,019,453 154,762,560 116,634,433 227,994,923 227,989,506
Cost of investments sold 480,242,340 134,945,151 91,242,736 217,907,534 227,989,718
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 69,777,113 19,817,409 25,391,697 10,087,389 (212)
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation of investments 748,884,487 (34,561,365) 31,135,686 (23,859,115) (586)
- ------------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 818,661,600 (14,743,956) 56,527,383 (13,771,726) (798)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 900,595,425 $ 33,963,539 $ 229,294,202 $ 126,637,714 $ 9,207,483
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ, and MZ
Statements of Operations - continued Year ended Dec. 31, 1997
Segregated Asset Account
-------------------------------------------------------------------------------- Combined
Investment income N KZ LZ MZ Variable
Accounts
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dividend income from mutual funds $ 416,352,602 $ 2,693,029 $ 12,724,423 $ 7,014,788 $ 994,841,429
Mortality and expense risk fee 39,781,435 530,675 1,377,872 8,113,272 152,833,981
- ------------------------------------------------------------------------------------------------------------------------------------
Investment income (loss) - net 376,571,167 2,162,354 11,346,551 (1,098,484) 842,007,448
- ------------------------------------------------------------------------------------------------------------------------------------
Realized and unrealized gain (loss) on investments - net
- ------------------------------------------------------------------------------------------------------------------------------------
Realized gain (loss) on sales
of investments in mutual funds:
Proceeds from sales 103,684,853 1,443,742 679,825 717,699 1,383,926,994
Cost of investments sold 74,961,930 1,417,139 656,625 612,142 1,229,975,315
- ------------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments 28,722,923 26,603 23,200 105,557 153,951,679
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or
depreciation of investments 246,854,996 88,527 3,906,529 157,444,749 1,129,893,908
- ------------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 275,577,919 115,130 3,929,729 157,550,306 1,283,845,587
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations $ 652,149,086 $ 2,277,484 $ 15,276,280 $ 156,451,822 $ 2,125,853,035
- ------------------------------------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ, and MZ
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets Year ended Dec. 31, 1997
Segregated Asset Account
----------------------------------------------------------------------------------------
Operations F IZ JZ G H
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net $ 81,933,825 $ 48,707,495 $ 172,766,819 $ 140,409,440 $ 9,208,281
Net realized gain (loss) on investments 69,777,113 19,817,409 25,391,697 10,087,389 (212)
Net change in unrealized appreciation or
depreciation of investments 748,884,487 (34,561,365) 31,135,686 (23,859,115) (586)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from operations 900,595,425 33,963,539 229,294,202 126,637,714 9,207,483
- ------------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
Contract purchase payments 134,271,812 78,292,637 87,605,673 49,361,355 26,471,423
Net transfers* (330,558,730) (40,464,119) 30,217,819 (141,589,262) 2,490,728
Transfers for policy loans 6,741,393 2,538,097 2,700,859 1,893,361 415,203
Annuity payments (839,990) (218,797) (325,569) (404,625) (21,359)
Contract charges (4,189,959) (1,744,401) (1,879,204) (1,396,704) (170,801)
Contract terminations:
Surrender benefits (306,180,259) (110,545,864) (118,237,119) (119,861,011) (33,151,710)
Death benefits (20,091,752) (9,311,925) (8,138,343) (15,519,877) (2,393,157)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from
contract transactions (520,847,485) (81,454,372) (8,055,884) (227,516,763) (6,359,673)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at beginning of year 4,200,780,773 1,826,981,223 1,980,971,110 1,767,315,881 212,272,517
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 4,580,528,713 $ 1,779,490,390 $ 2,202,209,428 $ 1,666,436,832 $ 215,120,327
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at beginning of year 628,555,221 1,220,479,990 1,172,792,754 362,167,237 89,644,495
Contract purchase payments 18,318,230 51,062,806 50,910,206 9,842,757 10,978,965
Net transfers* (46,459,818) (25,974,782) 17,204,464 (28,290,096) 1,243,189
Transfers for policy loans 911,718 1,642,862 1,552,061 376,163 172,138
Contract charges (572,335) (1,139,369) (1,087,659) (279,982) (71,845)
Contract terminations:
Surrender benefits (40,932,101) (71,076,097) (67,429,599) (23,650,436) (13,512,157)
Death benefits (2,954,591) (6,642,208) (5,113,039) (3,376,942) (1,199,780)
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at end of year 556,866,324 1,168,353,202 1,168,829,188 316,788,701 87,255,005
- ------------------------------------------------------------------------------------------------------------------------------------
*Includes transfer activity from (to) other accounts and transfers (from) to IDS
Life for conversion from (to) fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ, and MZ
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets - continued Year ended Dec. 31, 1997
Segregated Asset Account
---------------------------------------------------------------------------- Combined
Operations N KZ LZ MZ Variable
Accounts
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net $ 376,571,167 $ 2,162,354 $ 11,346,551 $ (1,098,484) $ 842,007,448
Net realized gain (loss) on investments 28,722,923 26,603 23,200 105,557 153,951,679
Net change in unrealized appreciation or
depreciation of investments 246,854,996 88,527 3,906,529 157,444,749 1,129,893,908
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 652,149,086 2,277,484 15,276,280 156,451,822 2,125,853,035
- ------------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
Contract purchase payments 125,778,517 3,443,369 10,032,844 58,794,952 574,052,582
Net transfers* 72,184,459 42,846,230 125,588,307 572,710,885 333,426,317
Transfers for policy loans 4,673,820 43,334 80,094 1,398,475 20,484,636
Annuity payments (818,698) (7,873) (31,168) (147,303) (2,815,382)
Contract charges (3,418,455) (26,651) (70,043) (632,210) (13,528,428)
Contract terminations:
Surrender benefits (236,462,530) (2,695,820) (6,707,680) (37,984,244) (971,826,237)
Death benefits (25,132,076) (163,126) (464,874) (2,163,641) (83,378,771)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from
contract transactions (63,194,963) 43,439,463 128,427,480 591,976,914 (143,585,283)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at beginning of year 3,561,334,567 26,698,213 63,086,555 389,279,231 14,028,720,070
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 4,150,288,690 $ 72,415,160 $ 206,790,315 $ 1,137,707,967 $ 16,010,987,822
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at beginning of year 1,197,162,300 24,878,248 59,938,791 350,597,571
Contract purchase payments 38,914,736 3,250,861 9,009,695 47,250,516
Net transfers* 23,088,309 40,199,836 112,669,161 465,445,880
Transfers for policy loans 1,423,911 40,853 70,990 1,099,049
Contract charges (1,055,013) (24,882) (62,522) (502,902)
Contract terminations:
Surrender benefits (72,296,420) (2,560,115) (6,187,383) (30,794,587)
Death benefits (8,503,143) (175,842) (415,088) (1,836,314)
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at end of year 1,178,734,680 65,608,959 175,023,644 831,259,213
- ------------------------------------------------------------------------------------------------------------------------------------
*Includes transfer activity from (to) other accounts and transfers (from) to IDS
Life for conversion from (to) fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ, and MZ
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets Year ended Dec. 31, 1996
Segregated Asset Account
------------------------------------------------------------------------------------------------------------
Operations F IZ JZ G H
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net $ 626,663,819 $ 48,620,781 $ 188,771,679 $ 121,009,234 $ 8,463,581
Net realized gain (loss)
on investments 39,842,450 5,627,173 9,280,782 6,148,079 (748)
Net change in unrealized appreciation or
depreciation of investments (394,337,953) 81,683,280 42,813,163 (25,950,503) 825
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 272,168,316 135,931,234 240,865,624 101,206,810 8,463,658
- ------------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
Contract purchase payments 247,034,837 136,590,270 137,497,822 136,598,453 71,251,781
Net transfers** 7,353,251 158,214,068 227,344,754 (130,631,868) (73,493,878)
Transfers for policy loans 6,524,720 2,185,648 2,289,136 1,948,047 542,980
Annuity payments (618,433) (145,076) (211,338) (302,440) (16,311)
Contract charges (4,665,100) (1,844,449) (1,844,915) (1,651,986) (186,455)
Contract terminations:
Surrender benefits (323,487,903) (99,067,158) (97,711,535) (138,993,547) (26,610,434)
Death benefits (19,407,560) (6,956,648) (6,698,818) (13,852,642) (1,119,093)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from
contract transactions (87,266,188) 188,976,655 260,665,106 (146,885,983) (29,631,410)
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at beginning of year 4,015,878,645 1,502,073,334 1,479,440,380 1,812,995,054 233,440,269
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 4,200,780,773 $ 1,826,981,223 $ 1,980,971,110 $ 1,767,315,881 $ 212,272,517
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at beginning of year 641,902,761 1,088,873,599 1,007,975,519 393,696,727 102,567,540
Contract purchase payments 38,493,929 95,677,544 87,429,534 29,931,965 31,461,578
Net transfers** 1,526,639 110,170,298 143,201,245 (28,111,632) (32,033,370)
Transfers for policy loans 1,013,895 1,512,631 1,436,806 419,834 233,492
Contract charges (729,091) (1,286,561) (1,166,154) (358,645) (81,536)
Contract terminations:
Surrender benefits (50,461,665) (69,287,451) (61,605,600) (30,226,184) (11,981,080)
Death benefits (3,191,247) (5,180,070) (4,478,596) (3,184,828) (522,129)
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at end of year 628,555,221 1,220,479,990 1,172,792,754 362,167,237 89,644,495
- ------------------------------------------------------------------------------------------------------------------------------------
**Includes transfer activity from (to) other accounts and transfers (from) to
IDS Life for conversion from (to) fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ, and MZ
- ------------------------------------------------------------------------------------------------------------------------------------
Statements of Changes in Net Assets - continued Year ended Dec. 31, 1996
Segregated Asset Account
------------------------------------------------------------------------------- Combined
Operations N KZ * LZ * MZ * Variable
Accounts
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment income (loss) - net $ 274,337,654 $ 248,565 $ 1,417,383 $ (217,794) $ 1,269,314,902
Net realized gain (loss) on investments 28,800,977 1,196 - 1,551 89,701,460
Net change in unrealized appreciation or
depreciation of investments 191,117,363 758,006 850,033 18,484,519 (84,581,267)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 494,255,994 1,007,767 2,267,416 18,268,276 1,274,435,095
- ------------------------------------------------------------------------------------------------------------------------------------
Contract Transactions
- ------------------------------------------------------------------------------------------------------------------------------------
Contract purchase payments 178,726,120 2,213,183 4,646,202 18,844,441 933,403,109
Net transfers** 11,968,781 23,859,394 57,148,839 358,733,822 640,497,163
Transfers for policy loans 4,253,041 4,127 18,815 208,070 17,974,584
Annuity payments (458,457) (1,456) (4,943) (17,149) (1,775,603)
Contract charges (3,435,971) (4,484) (10,289) (88,337) (13,731,986)
Contract terminations:
Surrender benefits (219,622,814) (377,077) (950,606) (6,499,453) (913,320,527)
Death benefits (15,758,360) (3,241) (28,879) (170,439) (63,995,680)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) from
contract transactions (44,327,660) 25,690,446 60,819,139 371,010,955 599,051,060
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at beginning of year 3,111,406,233 - - - 12,155,233,915
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets at end of year $ 3,561,334,567 $ 26,698,213 $ 63,086,555 $ 389,279,231 $ 14,028,720,070
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Activity
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at beginning of year 1,212,021,386 - - -
Contract purchase payments 67,036,198 2,150,213 4,593,557 17,880,563
Net transfers** 5,024,835 23,110,914 56,411,486 339,165,647
Transfers for policy loans 1,578,243 3,961 18,315 194,231
Contract charges (1,282,363) (4,320) (10,113) (82,302)
Contract terminations:
Surrender benefits (80,844,746) (379,430) (1,045,166) (6,403,548)
Death benefits (6,371,253) (3,090) (29,288) (157,020)
- ------------------------------------------------------------------------------------------------------------------------------------
Units outstanding at end of year 1,197,162,300 24,878,248 59,938,791 350,597,571
- ------------------------------------------------------------------------------------------------------------------------------------
*For the period April 30, 1996 (commencement of operations) to Dec. 31, 1996.
**Includes transfer activity from (to) other accounts and transfers (from) to
IDS Life for conversion from (to) fixed account.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
Notes to Financial Statements
1. Organization
IDS Life Accounts F, G, H and N were established as segregated asset accounts of
IDS Life Insurance Company (IDS Life) under Minnesota law and are registered
collectively as a single unit investment trust under the Investment Company Act
of 1940. Accounts F, G and H were established on May 13, 1981 and commenced
operations on Oct. 13, 1981. Account N was established on April 17, 1985 and
commenced operations on April 30, 1986. Accounts IZ and JZ were established as
segregated asset accounts on Sept. 20, 1991 and commenced operations on Jan. 13,
1992. Accounts KZ, LZ and MZ were established as segregated asset accounts on
April 2, 1996 and commenced operations on April 30, 1996. IDS Life Accounts F,
IZ, JZ, G, H, N, KZ, LZ and MZ are collectively referred to as "the Accounts."
The assets of the Accounts are held for the exclusive benefit of the variable
annuity contract owners and are not chargeable with liabilities arising out of
the business conducted by any other segregated asset accounts or by IDS Life.
Contract owners allocate their variable purchase payments to one or more of the
nine segregated asset accounts. Such funds are then invested in shares of nine
mutual funds organized by IDS Life as the investment vehicles for variable
annuity contracts issued by IDS Life and its subsidiaries.
Each Fund is registered under the Investment Company Act of 1940 as a
diversified, (non-diversified for Global Yield) open-end management investment
company or series of an open-end management company. IDS Life Capital Resource
Fund, IDS Life Special Income Fund and IDS Life Moneyshare Fund, Inc. commenced
operations Oct. 13, 1981. IDS Life Managed Fund, Inc. commenced operations April
30, 1986. IDS Life Aggressive Growth Fund and IDS Life International Equity Fund
commenced operations on Jan. 13, 1992. IDS Life Global Yield Fund, IDS Life
Income Advantage Fund and IDS Life Growth Dimensions Fund commenced operations
on April 30, 1996. Funds allocated to IDS Life Account F are invested in the
shares of IDS Life Capital Resource Fund; IDS Life Account IZ invests in the
shares of IDS Life International Equity Fund; IDS Life Account JZ invests in the
shares of IDS Life Aggressive Growth Fund; IDS Life Account G invests in the
shares of IDS Life Special Income Fund; IDS Life Account H invests in the shares
of IDS Life Moneyshare Fund, Inc.; IDS Life Account N invests in the shares of
IDS Life Managed Fund, Inc.; IDS Life Account KZ invests in the shares of IDS
Life Global Yield Fund; IDS Life Account LZ invests in the shares of IDS Life
Income Advantage Fund and IDS Life Account MZ invests in the shares of IDS Life
Growth Dimensions Fund.
IDS Life serves as investment manager and principal underwriter for the Accounts
and the underlying nine mutual funds. American Express Financial Corporation
(AEFC), an affiliated company, is the investment advisor for each of the funds.
American Express Asset Management International, Inc., an affiliated company, is
the sub-investment advisor for IDS Life International Equity Fund.
2. Summary of Significant Accounting Policies
Investments in Mutual Funds
Investments in shares of the mutual funds are stated at market value, which is
the net asset value per share as determined by the respective funds. Investment
transactions are accounted for on the date the shares are purchased and sold.
The cost of investments sold and redeemed is determined on the average cost
method. Dividend distributions received from the mutual funds are reinvested in
additional shares of the mutual funds and are recorded as income by the Accounts
on the ex-dividend date.
Unrealized appreciation or depreciation of investments in the accompanying
financial statements represents the Accounts' share of the mutual funds'
undistributed net investment income, undistributed realized gain or loss and the
unrealized appreciation or depreciation on their investment securities.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Federal Income Taxes
IDS Life is taxed as a life insurance company. The Accounts are 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
Accounts.
3. Mortality and Expense Risk Fee and Contract Charges
IDS Life makes contractual assurances to the Accounts that possible future
adverse changes in administrative expenses and mortality experience of the
annuitants and beneficiaries will not affect the Accounts. The mortality and
expense risk fee paid to IDS Life is computed daily and is equal, on an annual
basis, to 1 percent of the average daily net assets of the Accounts.
An annual charge of $20 is deducted from the contract value of each Variable
Retirement Annuity contract. An annual charge of $30 is deducted from the
contract value of each Combination Retirement Annuity contract. A quarterly
charge of $125 is deducted from the contract value of each Group Variable
Annuity contract. An annual charge of $30 is deducted from the certificate value
of each Employee Benefit Annuity certificate. A quarterly charge of $6 is
deducted from the contract value of each Flexible Annuity contract. The annual
charges are deducted at contract or certificate year end and the quarterly
charges are deducted at contract quarter end, during the accumulation period,
for administrative services provided to the Accounts by IDS Life.
A contingent deferred sales charge (surrender charge or withdrawal charge) will
be imposed upon:
a) certain Variable Retirement Annuity contract surrenders during
the first seven years,
b) Combination Retirement Annuity contract surrenders during the first seven,
eight or eleven years, depending on type of contract,
c) Group Variable Annuity contract withdrawals during the first seven years,
d) Employee Benefit Annuity certificate surrenders during the first eleven
years, and
e) Flexible Annuity contract surrenders of amounts other than those
representing earnings or those representing purchase payments six contract
years old or more.
Charges by IDS Life for surrenders are not identified on an individual
segregated asset account basis. Charges for all segregated asset accounts
amounted to $14,502,145 in 1997 and $11,956,753 in 1996. Such charges are not
treated as a separate expense of the Accounts. They are ultimately deducted from
contract surrender benefits paid by IDS Life.
4. Investment Transactions
The Accounts' purchases of mutual fund shares, including reinvestment of
dividend distributions, were as follows:
Year ended Dec. 31,
Account Investment 1997 1996
- --------------------------------------------------------------------------------
F IDS Life Capital Resource Fund..... $ 111,547,849 $ 842,940,565
IZ IDS Life International Equity Fund. 122,035,293 295,290,858
JZ IDS Life Aggressive Growth Fund.... 281,608,415 488,497,853
G IDS Life Special Income Fund ...... 140,887,599 175,575,133
H IDS Life Moneyshare Fund, Inc...... 230,838,115 198,361,500
N IDS Life Managed Fund, Inc......... 417,692,561 372,910,559
KZ IDS Life Global Yield Fund ........ 47,045,559 26,031,598*
LZ IDS Life Income Advantage Fund .... 140,453,856 62,236,522*
MZ IDS Life Growth Dimensions Fund ... 592,288,967 371,131,317*
- --------------------------------------------------------------------------------
Combined Variable Account.......... $2,084,398,214 $2,832,975,905
- --------------------------------------------------------------------------------
*For the period April 30, 1996 (commencement of operations)to Dec. 31, 1996.
5. Year 2000 Issue (Unaudited)
The Year 2000 issue is the result of computer programs having been written using
two digits rather than four to define a year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than 2000. This could result in the failure of major systems or miscalculations,
which could have a material impact on the operations of the Variable Accounts.
The Variable Accounts have no computer systems of their own but are dependent
upon the systems maintained by AEFC and certain other third parties.
A comprehensive review of AEFC's computer systems and business processes has
been conducted to identify the major systems that could be affected by the Year
2000 issue. Steps are being taken to resolve any potential problems including
modification to existing software and the purchase of new software. These
measures are scheduled to be completed and tested on a timely basis. AEFC's goal
is to complete internal remediation and testing of each system by the end of
1998 and to continue compliance efforts through 1999.
The Year 2000 readiness of other third parties whose system failures could have
an impact on the Variable Accounts' operations is currently being evaluated. The
potential materiality of any such impact is not known at this time.
<PAGE>
<PAGE>
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company
We have audited the accompanying consolidated balance sheets of IDS Life
Insurance Company (a wholly owned subsidiary of American Express Financial
Corporation) as of December 31, 1997 and 1996 and the related consolidated
statements of income, stockholder's equity and cash flows for each of the three
years in the period ended December 31, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of IDS Life Insurance
Company at December 31, 1997 and 1996, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
Ernst & Young LLP
Minneapolis, Minnesota
February 5, 1998
<PAGE>
IDS Life Financial Information
IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
Dec. 31, Dec. 31,
ASSETS 1997 1996
(thousands)
Investments:
Fixed maturities:
Held to maturity, at amortized cost (Fair value:
1997, $9,743,410; 1996, $10,521,650) $9,315,450 $10,236,379
Available for sale, at fair value (Amortized cost:
1997, $12,515,030; 199, $11,008,622) 12,876,694 11,146,845
Mortgage loans on real estate 3,618,647 3,493,364
Policy loans 498,874 459,902
Other investments 318,591 251,465
Total investments 26,628,256 25,587,955
Cash and cash equivalents 19,686 224,603
Amounts recoverable from reinsurers 205,716 157,722
Amounts due from brokers 8,400 11,047
Other accounts receivable 37,895 44,089
Accrued investment income 357,390 343,313
Deferred policy acquisition costs 2,479,577 2,330,805
Deferred income taxes, net -- 33,923
Other assets 22,700 37,364
Separate account assets 23,214,504 18,535,160
Total assets $52,974,124 $47,305,981
========= =========
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS (continued)
Dec. 31, Dec. 31
LIABILITIES AND STOCKHOLDER'S EQUITY 1997 1996
(thousands)
Liabilities:
Future policy benefits:
Fixed annuities $22,009,747 $21,838,008
Universal life-type insurance 3,280,489 3,177,149
Traditional life insurance 213,676 209,685
Disability income and long-term care insurance 533,124 424,200
Policy claims and other policyholders' funds 68,345 83,634
Deferred income taxes, net 61,582 --
Amounts due to brokers 381,458 261,987
Other liabilities 345,383 332,078
Separate account liabilities 23,214,504 18,535,160
Total liabilities 50,108,308 44,861,901
Stockholder's equity:
Capital stock, $30 par value per share;
100,000 shares authorized, issued and outstanding 3,000 3,000
Additional paid-in capital 290,847 283,615
Net unrealized gain on investments 226,359 86,102
Retained earnings 2,345,610 2,071,363
Total stockholder's equity 2,865,816 2,444,080
Total liabilities and stockholder's equity $52,974,124 $47,305,981
========= =========
See accompanying notes.
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years ended Dec. 31,
1997 1996 1995
(thousands)
<S> <C> <C> <C>
Revenues:
Premiums:
Traditional life insurance $ 52,473 $ 51,403 $ 50,193
Disability income and long-term care insurance 154,021 131,518 111,337
Total premiums 206,494 182,921 161,530
Policyholder and contractholder charges 341,726 302,999 256,454
Management and other fees 340,892 271,342 215,581
Net investment income 1,988,389 1,965,362 1,907,309
Net realized gain (loss) on investments 860 (159) (4,898)
Total revenues 2,878,361 2,722,465 2,535,976
Benefits and expenses:
Death and other benefits:
Traditional life insurance 28,951 26,919 29,528
Universal life-type insurance
and investment contracts 92,814 85,017 71,691
Disability income and
long-term care insurance 22,333 19,185 16,259
Increase (decrease) in liabilities for
future policy benefits:
Traditional life insurance 3,946 1,859 (1,315)
Disability income and
long-term care insurance 63,631 57,230 51,279
Interest credited on universal life-type
insurance and investment contracts 1,386,448 1,370,468 1,315,989
Amortization of deferred policy acquisition costs 322,731 278,605 280,121
Other insurance and operating expenses 276,596 261,468 211,642
Total benefits and expenses 2,197,450 2,100,751 1,975,194
Income before income taxes 680,911 621,714 560,782
Income taxes 206,664 207,138 195,842
Net income $ 474,247 $ 414,576 $ 364,940
======== ======== =======
See accompanying notes.
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
Three years ended Dec. 31, 1997
(thousands)
<TABLE>
<CAPTION>
Additional Net Unrealized
Capital Paid-In Gain (Loss) on Retained
Stock Capital on Investments Earnings Total
<S> <C> <C> <C> <C> <C>
Balance, Dec. 31, 1994 3,000 222,000 (275,708) 1,639,399 1,588,691
Net income -- -- -- 364,940 364,940
Change in net unrealized
gain (loss) on investments -- -- 505,837 -- 505,837
Capital contribution from parent -- 56,814 -- -- 56,814
Loss on reinsurance transaction
with affiliate -- -- -- (4,574) (4,574)
Cash dividends -- -- -- (180,000) (180,000)
Balance, Dec. 31, 1995 3,000 278,814 230,129 1,819,765 2,331,708
Net income -- -- -- 414,576 414,576
Change in net unrealized
gain (loss) on investments -- -- (144,027) -- (144,027)
Capital contribution from parent -- 4,801 -- -- 4,801
Other changes -- -- -- 2,022 2,022
Cash dividends -- -- -- (165,000) (165,000)
Balance, Dec. 31, 1996 $3,000 $283,615 $ 86,102 $2,071,363 $2,444,080
Net income -- -- -- 474,247 474,247
Change in net unrealized
gain (loss) on investments -- -- 140,257 -- 140,257
Capital contribution from parent -- 7,232 -- -- 7,232
Cash dividends -- -- -- (200,000) (200,000)
Balance, Dec. 31, 1997 $3,000 $290,847 $226,359 $2,345,610 $2,865,816
===== ======= ======= ========= ========
See accompanying notes.
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended Dec. 31,
1997 1996 1995
(thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 474,247 $ 414,576 $ 364,940
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Policy loan issuance, excluding universal
life-type insurance (54,665) (49,314) (46,011)
Policy loan repayment, excluding universal
life-type insurance 46,015 41,179 36,416
Change in amounts recoverable from reinsurers (47,994) (43,335) (34,083)
Change in other accounts receivable 6,194 (4,981) 12,231
Change in accrued investment income (14,077) 4,695 (30,498)
Change in deferred policy acquisition
costs, net (156,486) (294,755) (196,963)
Change in liabilities for future policy
benefits for traditional life,
disability income and
long-term care insurance 112,915 97,479 85,575
Change in policy claims and other
policyholders' funds (15,289) 27,311 6,255
Change in deferred income tax provision (benefit) 19,982 (65,609) (33,810)
Change in other liabilities 13,305 46,724 (6,548)
(Accretion of discount)
amortization of premium, net (5,649) (23,032) (22,528)
Net realized (gain) loss on investments (860) 159 4,898
Policyholder and contractholder
charges, non-cash (160,885) (154,286) (140,506)
Other, net 7,161 (10,816) 3,849
Net cash provided by (used in) operating
activities $ 223,914 $ (14,005) $ 3,217
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
<TABLE>
<CAPTION>
Years ended Dec. 31,
1997 1996 1995
(thousands)
<S> <C> <C> <C>
Cash flows from investing activities:
Fixed maturities held to maturity:
Purchases $ (1,996) $ (43,751) $ (1,007,208)
Maturities, sinking fund payments and calls 686,503 759,248 538,219
Sales 236,761 279,506 332,154
Fixed maturities available for sale:
Purchases (3,160,133) (2,299,198) (2,452,181)
Maturities, sinking fund payments and calls 1,206,213 1,270,240 861,545
Sales 457,585 238,905 136,825
Other investments, excluding policy loans:
Purchases (524,521) (904,536) (823,131)
Sales 335,765 236,912 160,521
Change in amounts due from brokers 2,647 (11,047) 7,933
Change in amounts due to brokers 119,471 140,369 (105,119)
Net cash used in investing activities (641,705) (333,352) (2,350,442)
Cash flows from financing activities:
Activity related to universal life-type insurance
and investment contracts:
Considerations received 2,785,758 3,567,586 4,189,525
Surrenders and death benefits (3,736,242) (4,250,294) (3,141,404)
Interest credited to account balances 1,386,448 1,370,468 1,315,989
Universal life-type insurance policy loans:
Issuance (84,835) (86,501) (84,700)
Repayment 54,513 58,753 52,188
Capital contribution from parent 7,232 4,801 --
Dividends paid (200,000) (165,000) (180,000)
Net cash provided by financing activities 212,874 499,813 2,151,598
Net (decrease) increase in cash and
cash equivalents (204,917) 152,456 (195,627)
Cash and cash equivalents at
beginning of year 224,603 72,147 267,774
Cash and cash equivalents at
end of year $ 19,686 $ 224,603 $ 72,147
======= ======== ========
See accompanying notes.
</TABLE>
<PAGE>
IDS LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
($ thousands)
1. Summary of significant accounting policies
------------------------------------------
Nature of business
IDS Life Insurance Company (the Company) is a stock life insurance
company organized under the laws of the State of Minnesota. The
Company is a wholly owned subsidiary of American Express Financial
Corporation (AEFC), which is a wholly owned subsidiary of American
Express Company. The Company serves residents of all states except New
York. IDS Life Insurance Company of New York is a wholly owned
subsidiary of the Company and serves New York State residents. The
Company also wholly owns American Enterprise Life Insurance Company,
American Centurion Life Assurance Company (ACLAC), American Partners
Life Insurance Company and American Express Corporation.
The Company's principal products are deferred annuities and universal
life insurance, which are issued primarily to individuals. It offers
single premium and flexible premium deferred annuities on both a fixed
and variable dollar basis. Immediate annuities are offered as well.
The Company's insurance products include universal life (fixed and
variable), whole life, single premium life and term products (including
waiver of premium and accidental death benefits). The Company also
markets disability income and long-term care insurance.
Basis of presentation
The accompanying consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. All material
intercompany accounts and transactions have been eliminated in
consolidation.
The accompanying consolidated financial statements have been prepared
in conformity with generally accepted accounting principles which vary
in certain respects from reporting practices prescribed or permitted by
state insurance regulatory authorities (see Note 4).
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Investments
Fixed maturities that the Company has both the positive intent and the
ability to hold to maturity are classified as held to maturity and
carried at amortized cost. All other fixed maturities and all
marketable equity securities are classified as available for sale and
carried at fair value. Unrealized gains and losses on securities
classified as available for sale are reported as a separate component
of stockholder's equity, net of deferred taxes.
<PAGE>
Realized investment gain or loss is determined on an identified cost
basis.
Prepayments are anticipated on certain investments in mortgage-backed
securities in determining the constant effective yield used to
recognize interest income. Prepayment estimates are based on
information received from brokers who deal in mortgage-backed
securities.
Mortgage loans on real estate are carried at amortized cost less
reserves for mortgage loan losses. The estimated fair value of the
mortgage loans is determined by a discounted cash flow analysis using
mortgage interest rates currently offered for mortgages of similar
maturities.
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------
Impairment of mortgage loans is measured as the excess of the loan's
recorded investment over its present value of expected principal and
interest payments discounted at the loan's effective interest rate, or
the fair value of collateral. The amount of the impairment is recorded
in a reserve for mortgage loan losses. The reserve for mortgage loans
losses is maintained at a level that management believes is adequate to
absorb estimated losses in the portfolio. The level of the reserve
account is determined based on several factors, including historical
experience, expected future principal and interest payments, estimated
collateral values, and current and anticipated economic and political
conditions. Management regularly evaluates the adequacy of the reserve
for mortgage loan losses.
The Company generally stops accruing interest on mortgage loans for
which interest payments are delinquent more than three months. Based
on management's judgment as to the ultimate collectibility of
principal, interest payments received are either recognized as income
or applied to the recorded investment in the loan.
The cost of interest rate caps and floors is amortized to investment
income over the life of the contracts and payments received as a result
of these agreements are recorded as investment income when realized.
The amortized cost of interest rate caps and floors is included in
other investments. Amounts paid or received under interest rate swap
agreements are recognized as an adjustment to investment income.
During 1997, 1996 and 1995, the Company purchased and wrote index
options to protect against significant declines in fee income as a
result of a decrease in the market value of its managed assets. These
options were marked-to-market through the income statement.
During 1997, the Company purchased and wrote index options to hedge
1998 management fee and other income from separate accounts and the
underlying mutual funds. These index options are carried at market
value and are included in other investments. Gains or losses on these
instruments are deferred and recognized in management and other fees in
the same period as the hedged fee income.
Policy loans are carried at the aggregate of the unpaid loan balances
which do not exceed the cash surrender values of the related policies.
When evidence indicates a decline, which is other than temporary, in
the underlying value or earning power of individual investments, such
investments are written down to the fair value by a charge to income.
Statements of cash flows
The Company considers investments with a maturity at the date of their
acquisition of three months or less to be cash equivalents. These
securities are carried principally at amortized cost, which
approximates fair value.
<PAGE>
Supplementary information to the consolidated statements of cash flows
for the years ended December 31 is summarized as
follows:
1997 1996 1995
---- ---- ----
Cash paid during the year for:
Income taxes $174,472 $317,283 $191,011
Interest on borrowings 8,213 4,119 5,524
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------
Recognition of profits on annuity contracts and insurance policies
Profits on fixed deferred annuities are recognized by the Company over
the lives of the contracts, using primarily the interest method.
Profits represent the excess of investment income earned from
investment of contract considerations over interest credited to
contract owners and other expenses.
The retrospective deposit method is used in accounting for universal
life-type insurance. Under this method, profits are recognized over
the lives of the policies in proportion to the estimated gross profits
expected to be realized.
Premiums on traditional life, disability income and long-term care
insurance policies are recognized as revenue when due, and related
benefits and expenses are associated with premium revenue in a manner
that results in recognition of profits over the lives of the insurance
policies. This association is accomplished by means of the provision
for future policy benefits and the deferral and subsequent amortization
of policy acquisition costs.
Policyholder and contractholder charges include the monthly cost of
insurance charges and issue and administrative fees. These charges
also include the minimum death benefit guarantee fees received from the
variable life insurance separate accounts. Management and other fees
include investment management fees and mortality and expense risk fees
received from the variable annuity and variable life insurance separate
accounts and underlying mutual funds.
Deferred policy acquisition costs
The costs of acquiring new business, principally sales compensation,
policy issue costs, underwriting and certain sales expenses, have been
deferred on insurance and annuity contracts.The deferred acquisition costs
for most single premium deferred annuities and installment annuities are
amortized in relation to accumulation values and surrender charge revenue.
The costs for universal life-type insurance and certain installment
annuities are amortized as a percentage of the estimated gross profits
expected to be realized on the policies. For traditional life, disability
income and long-term care insurance policies, the costs are amortized over
an appropriate period in proportion to premium revenue.
Liabilities for future policy benefits
Liabilities for universal life-type insurance and deferred annuities
are accumulation values.
Liabilities for fixed annuities in a benefit status are based on
established industry mortality tables and interest rates ranging from
5% to 9.5%, depending on year of issue.
<PAGE>
Liabilities for future benefits on traditional life insurance are based
on the net level premium method, using anticipated mortality, policy
persistency and interest earning rates. Anticipated mortality rates
are based on established industry mortality tables. Anticipated policy
persistency rates vary by policy form, issue age and policy duration
with persistency on cash value plans generally anticipated to be better
than persistency on term insurance plans. Anticipated interest rates
range from 4% to 10%, depending on policy form, issue year and policy
duration.
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------
Liabilities for future disability income and long-term care policy
benefits include both policy reserves and claim reserves. Policy
reserves are based on the net level premium method, using anticipated
morbidity, mortality, policy persistency and interest earning rates.
Anticipated morbidity and mortality rates are based on established
industry morbidity and mortality tables. Anticipated policy
persistency rates vary by policy form, issue age, policy duration and,
for disability income policies, occupation class. Anticipated interest
rates for disability income and long-term care policy reserves are 3%
to 9.5% at policy issue and grade to ultimate rates of 5% to 10% over 5
to 10 years.
Claim reserves are calculated based on claim continuance tables and
anticipated interest earnings. Anticipated claim continuance rates are
based on a national survey. Anticipated interest rates for claim
reserves for both disability income and long-term care range from 6% to
8%.
Reinsurance
The maximum amount of life insurance risk retained by the Company on
any one life is $750 of life and waiver of premium benefits plus $50 of
accidental death benefits. The maximum amount of disability income
risk retained by the Company on any one life is $6 of monthly benefit
for benefit periods longer than three years. The excesses are
reinsured with other life insurance companies on a yearly renewable
term basis. Graded premium whole life and long-term care policies are
primarily reinsured on a coinsurance basis.
Federal income taxes
The Company's taxable income is included in the consolidated federal
income tax return of American Express Company. The Company provides
for income taxes on a separate return basis, except that, under an
agreement between AEFC and American Express Company, tax benefit is
recognized for losses to the extent they can be used on the
consolidated tax return. It is the policy of AEFC and its subsidiaries
that AEFC will reimburse subsidiaries for all tax benefits.
Included in other liabilities at December 31, 1997 and 1996 are $12,061
and $33,358, respectively, receivable from American Express Financial
Corporation for federal income taxes.
Separate account business
The separate account assets and liabilities represent funds held for
the exclusive benefit of the variable annuity and variable life
insurance contract owners. The Company receives investment
management fees from the proprietary mutual funds used as investment
options for variable annuities and variable life insurance. The
Company receives mortality and expense risk fees from the separate
accounts.
<PAGE>
1. Summary of significant accounting policies (continued)
------------------------------------------
The Company makes contractual mortality assurances to the variable
annuity contract owners that the net assets of the separate accounts
will not be affected by future variations in the actual life expectancy
experience of the annuitants and the beneficiaries from the mortality
assumptions implicit in the annuity contracts. The Company makes
periodic fund transfers to, or withdrawals from, the separate accounts
for such actuarial adjustments for variable annuities that are in the
benefit payment period. For variable life insurance, the Company
guarantees that the rates at which insurance charges and administrative
fees are deducted from contract funds will not exceed contractual
maximums. The Company also guarantees that the death benefit will
continue payable at the initial level regardless of investment
performance so long as minimum premium payments are made.
Reclassification
Certain 1996 and 1995 amounts have been reclassified to conform to the
1997 presentation.
2. Investments
-----------
Fair values of investments in fixed maturities represent quoted market
prices and estimated values when quoted prices are not available.
Estimated values are determined by established procedures involving,
among other things, review of market indices, price levels of current
offerings of comparable issues, price estimates and market data from
independent brokers and financial files.
The amortized cost, gross unrealized gains and losses and fair values
of investments in fixed maturities and equity securities at December
31, 1997 are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- --------- ---------- ---------- -----
<S> <C> <C> <C> <C>
U.S. Government agency obligations $41,932 $ 2,950 $ -- $ 44,881
State and municipal obligations 9,684 568 -- 10,252
Corporate bonds and obligations 7,280,646 415,700 9,322 7,687,024
Mortgage-backed securities 1,983,188 25,976 7,911 2,001,253
--------- ------ ----- ---------
$9,315,450 $445,194 $17,233 $9,743,410
========= ======= ====== =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
------------------ --------- ---------- ---------- -----
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 65,291 $ 4,154 $ -- $69,445
State and municipal obligations 11,045 1,348 -- 12,393
Corporate bonds and obligations 5,308,129 232,761 30,198 5,510,692
Mortgage-backed securities 7,130,565 160,478 6,879 7,284,164
--------- ------- ----- ---------
Total fixed maturities 12,515,030 398,741 37,077 12,876,694
Equity securities 3,000 361 -- 3,361
---------- ------- ------ ----------
$12,518,030 $399,102 $37,077 $12,880,055
========== ======= ====== ==========
</TABLE>
<PAGE>
2. Investments (continued)
-----------
The amortized cost, gross unrealized gains and losses and fair values
of investments in fixed maturities and equity securities at December
31, 1996 are as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Held to maturity Cost Gains Losses Value
---------------- --------- ---------- ---------- ------
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 44,002 $ 933 $ 1,276 $ 43,659
State and municipal obligations 9,685 412 -- 10,097
Corporate bonds and obligations 8,057,997 356,687 47,639 8,367,045
Mortgage-backed securities 2,124,695 21,577 45,423 2,100,849
---------- ------- ------ ----------
$10,236,379 $379,609 $94,338 $10,521,650
========== ======= ====== ==========
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Available for sale Cost Gains Losses Value
------------------ ---- ----- ------ -----
<S> <C> <C> <C> <C>
U.S. Government agency obligations $ 77,944 $ 2,607 $ 96 $ 80,455
State and municipal obligations 11,032 1,336 -- 12,368
Corporate bonds and obligations 3,701,604 122,559 24,788 3,799,375
Mortgage-backed securities 7,218,042 104,808 68,203 7,254,647
--------- ------- ------ ---------
Total fixed maturities 11,008,622 231,310 93,087 11,146,845
Equity securities 3,000 308 -- 3,308
---------- ------- ------ ----------
$11,011,622 $231,618 $93,087 $11,150,153
========== ======= ====== ==========
</TABLE>
The amortized cost and fair value of investments in fixed maturities at
December 31, 1997 by contractual maturity are shown below. Expected
maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call
or prepayment penalties.
<PAGE>
Amortized Fair
Held to maturity Cost Value
---------------- --------- --------
Due in one year or less $ 356,597 $360,956
Due from one to five years 1,536,239 1,619,875
Due from five to ten years 4,337,547 4,577,552
Due in more than ten years 1,101,879 1,183,774
Mortgage-backed securities 1,983,188 2,001,253
--------- ---------
$9,315,450 $9,743,410
========= =========
Amortized Fair
Available for sale Cost Value
--------- -----
Due in one year or less $ 162,663 $ 164,012
Due from one to five years 633,339 679,561
Due from five to ten years 2,418,162 2,517,098
Due in more than ten years 2,170,301 2,231,859
Mortgage-backed securities 7,130,565 7,284,164
---------- ----------
$12,515,030 $12,876,694
========== ==========
<PAGE>
2. Investments (continued)
-----------
During the years ended December 31, 1997, 1996 and 1995, fixed
maturities classified as held to maturity were sold with amortized cost
of $229,848, $277,527 and $333,508, respectively. Net gains and losses
on these sales were not significant. The sale of these fixed
maturities was due to significant deterioration in the issuers' credit
worthiness.
Fixed maturities available for sale were sold during 1997 with proceeds
of $457,585 and gross realized gains and losses of $6,639 and $7,518,
respectively. Fixed maturities available for sale were sold during
1996 with proceeds of $238,905 and gross realized gains and losses of
$571 and $16,084, respectively. Fixed maturities available for sale
were sold during 1995 with proceeds of $136,825 and gross realized
gains and losses of $nil and $5,781, respectively.
At December 31, 1997, bonds carried at $14,351 were on deposit with
various states as required by law.
At December 31, 1997, investments in fixed maturities comprised 83
percent of the Company's total invested assets. These securities are
rated by Moody's and Standard & Poor's (S&P), except for securities
carried at approximately $2.7 billion which are rated by American
Express Financial Corporation internal analysts using criteria similar
to Moody's and S&P. A summary of investments in fixed maturities, at
amortized cost, by rating on December 31 is as follows:
Rating 1997 1996
--------- --------- ---------
Aaa/AAA $ 9,195,619 $ 9,460,134
Aaa/AA -- 2,870
Aa/AA 232,451 241,914
Aa/A 246,792 192,631
A/A 2,787,936 2,949,895
A/BBB 1,200,345 1,034,661
Baa/BBB 5,226,616 4,531,515
Baa/BB 475,084 768,285
Below investment grade 2,465,637 2,063,096
--------- ---------
$21,830,480 $21,245,001
========== ==========
At December 31, 1997, 95 percent of the securities rated Aaa/AAA are
GNMA, FNMA and FHLMC mortgage-backed securities. No holdings of any
other issuer are greater than one percent of the Company's total
investments in fixed maturities.
At December 31, 1997, approximately 14 percent of the Company's
invested assets were mortgage loans on real estate. Summaries of
mortgage loans by region of the United States and by type of real
estate are as follows:
<PAGE>
December 31, 1997 December 31, 1996
------------------------ -----------------------
On Balance Commitments On Balance Commitments
Region Sheet to Purchase Sheet to Purchase
------------- ---------- ------------ ---------- -----------
East North Central $ 748,372 $ 32,462 $ 777,960 $ 19,358
West North Central 456,934 14,340 389,285 29,620
South Atlantic 922,172 14,619 891,852 35,007
Middle Atlantic 545,601 15,507 553,869 17,959
New England 316,250 2,136 310,177 14,042
Pacific 184,917 3,204 190,770 4,997
West South Central 125,227 -- 105,173 11,246
East South Central 60,274 -- 75,176 --
Mountain 297,545 28,717 236,597 11,401
--------- ------- --------- -------
3,657,292 110,985 3,530,859 143,630
Less allowance for
losses 38,645 -- 37,495 --
--------- ------- --------- -------
$3,618,647 $110,985 $3,493,364 $143,630
========= ======= ========= =======
<PAGE>
2. Investments (continued)
-----------
December 31, 1997 December 31, 1996
------------------------ -------------------------
On Balance Commitments On Balance Commitments
Property type Sheet to Purchase Sheet to Purchase
--------------- ---------- ----------- ---------- -----------
Department/retail
stores $1,189,203 $ 27,314 $1,154,179 $ 68,032
Apartments 1,089,127 16,576 1,119,352 23,246
Office buildings 716,729 34,546 611,395 27,653
Industrial buildings 295,889 21,200 296,944 6,716
Hotels/motels 101,052 -- 97,870 6,257
Medical buildings 99,979 9,748 67,178 8,289
Nursing/retirement
homes 72,359 -- 88,226 1,877
Mixed Use 71,007 -- 73,120 --
Other 21,947 1,601 22,595 1,560
--------- ------- --------- ------
3,657,292 110,985 3,530,859 143,630
Less allowance for
losses 38,645 -- 37,495 --
--------- ------- --------- -------
$3,618,647 $110,985 $3,493,364 $143,630
========= ======= ========= =======
Mortgage loan fundings are restricted by state insurance regulatory
authorities to 80 percent or less of the market value of the real
estate at the time of origination of the loan. The Company holds the
mortgage document, which gives it the right to take possession of the
property if the borrower fails to perform according to the terms of the
agreement. The fair value of the mortgage loans is determined by a
discounted cash flow analysis using mortgage interest rates currently
offered for mortgages of similar maturities. Commitments to purchase
mortgages are made in the ordinary course of business. The fair value
of the mortgage commitments is $nil.
At December 31, 1997 and 1996, the Company's recorded investment in
impaired loans was $45,714 and $79,441, respectively, with allowances
of $9,812 and $16,162, respectively. During 1997 and 1996, the average
recorded investment in impaired loans was $61,870 and $74,338,
respectively.
The Company recognized $2,981, $4,889 and $5,014 of interest income
related to impaired loans for the years ended December 31, 1997, 1996
and 1995 respectively.
<PAGE>
The following table presents changes in the allowance for investment
losses related to all loans:
1997 1996 1995
------ ------ ------
Balance, January 1 $37,495 $37,340 $35,252
Provision for investment losses 8,801 10,005 15,900
Loan payoffs (3,851) (4,700) (11,900)
Foreclosures (3,800) (5,150) (1,350)
Other -- -- (562)
------ ------ -------
Balance, December 31 $38,645 $37,495 $37,340
====== ====== ======
At December 31, 1997, the Company had commitments to purchase
investments other than mortgage loans for $234,485. Commitments to
purchase investments are made in the ordinary course of business. The
fair value of these commitments is $nil.
<PAGE>
2. Investments (continued)
-----------
Net investment income for the years ended December 31 is summarized as
follows:
1997 1996 1995
--------- --------- ---------
Interest on fixed maturities $1,692,481 $1,666,929 $1,656,136
Interest on mortgage loans 305,742 283,830 232,827
Other investment income 25,089 43,283 35,936
Interest on cash equivalents 5,914 5,754 5,363
--------- --------- ---------
2,029,226 1,999,796 1,930,262
Less investment expenses 40,837 34,434 22,953
--------- --------- ---------
$1,988,389 $1,965,362 $1,907,309
========= ========= =========
Net realized gain (loss) on investments for the years ended December 31
is summarized as follows:
1997 1996 1995
------ ----- -----
Fixed maturities $ 16,115 $ 8,736 $ 9,973
Mortgage loans (6,424) (8,745) (13,259)
Other investments (8,831) (150) (1,612)
------- ----- -------
$ 860 $ (159) $ (4,898)
======= ====== ======
Changes in net unrealized appreciation (depreciation) of investments
for the years ended December 31 are summarized as follows:
1997 1996 1995
------- ------- -------
Fixed maturities available
for sale $223,441 $(231,853) $811,649
Equity securities 53 (52) 3,118
3. Income taxes
------------
The Company qualifies as a life insurance company for federal income
tax purposes. As such, the Company is subject to the Internal Revenue
Code provisions applicable to life insurance companies.
The income tax expense consists of the following:
1997 1996 1995
Federal income taxes:
Current $176,879 $260,357 $218,040
Deferred 19,982 (65,609) (33,810)
------- -------- -------
196,861 194,748 184,230
State income taxes-current 9,803 12,390 11,612
------- ------- -------
Income tax expense $206,664 $207,138 $195,842
======= ======= =======
<PAGE>
3. Income taxes (continued)
------------
Increases (decreases) to the federal tax provision applicable to pretax
income based on the statutory rate are attributable to:
<TABLE>
<CAPTION>
1997 1996 1995
---------------- --------------- ---------------
Provision Rate Provision Rate Provision Rate
--------- ---- --------- ---- --------- ----
<S> <C> <C> <C> <C> <C> <C>
Federal income
taxes based on
the statutory rate $238,319 35.0% $217,600 35.0% $196,274 35.0%
Increases (decreases)
are attributable to:
Tax-excluded interest
and dividend income (10,294) (1.5) (9,636) (1.5) (8,524) (1.5)
State Taxes, net of federal
benefit 6,372 0.9 8,053 1.3 7,548 1.3
Low income housing
credits (20,705) (3.0) (5,090) (0.8) (861) (0.2)
Other, net (7,028) (1.0) (3,789) (0.7) 1,405 0.3
------- ----- ------- ---- ------- ----
Federal income taxes $206,664 30.4% $207,138 33.3% $195,842 34.9%
======= ==== ======= ==== ======= ====
</TABLE>
A portion of life insurance company income earned prior to 1984 was not
subject to current taxation but was accumulated, for tax purposes, in a
policyholders' surplus account. At December 31, 1997, the Company had
a policyholders' surplus account balance of $20,114. The
policyholders' surplus account is only taxable if dividends to the
stockholder exceed the stockholder's surplus account or if the Company
is liquidated. Deferred income taxes of $7,040 have not been
established because no distributions of such amounts are contemplated.
Significant components of the Company's deferred tax assets and
liabilities as of December 31 are as follows:
1997 1996
---- ----
Deferred tax assets:
Policy reserves $748,204 $724,412
Life insurance guarantee
fund assessment reserve 20,101 29,854
Other 9,589 2,763
------- -------
Total deferred tax assets 777,894 757,029
------- -------
<PAGE>
Deferred tax
liabilities:
Deferred policy acquisition costs 700,032 665,685
Unrealized gain on investments 121,885 48,486
Investments, other 17,559 8,935
------- -------
Total deferred tax liabilities 839,476 723,106
------- -------
Net deferred tax (liabilities) assets $(61,582) $ 33,923
====== ======
The Company is required to establish a valuation allowance for any
portion of the deferred tax assets that management believes will not be
realized. In the opinion of management, it is more likely than not
that the Company will realize the benefit of the deferred tax assets
and, therefore, no such valuation allowance has been established.
<PAGE>
4. Stockholder's equity
--------------------
Retained earnings available for distribution as dividends to the parent
are limited to the Company's surplus as determined in accordance with
accounting practices prescribed by state insurance regulatory
authorities. Statutory unassigned surplus aggregated $1,468,677 as of
December 31, 1997 and $1,261,592 as of December 31, 1996 (see Note 3
with respect to the income tax effect of certain distributions). In
addition, any dividend distributions in 1998 in excess of approximately
$331,480 would require approval of the Department of Commerce of the
State of Minnesota.
Statutory net income for the years ended December 31 and capital and
surplus as of December 31 are summarized as follows:
1997 1996 1995
---------- ---------- ----------
Statutory net income $ 379,615 $ 365,585 $ 326,799
Statutory capital and surplus 1,765,290 1,565,082 1,398,649
surplus
5. Related party transactions
--------------------------
The Company loans funds to American Express Financial Corporation under
a collateral loan agreement. The balance of the loan was $nil and
$11,800 at December 31, 1997 and 1996, respectively. This loan can be
increased to a maximum of $75,000 and pays interest at a rate equal to
the preceding month's effective new money rate for the Company's
permanent investments. Interest income on related party loans totaled
$103, $780 and $1,371 in 1997, 1996 and 1995, respectively.
The Company purchased a five year secured note from an affiliated
company which was redeemed in 1996. The interest rate on the note was
8.42 percent. Interest income on the above note totaled $1,637 and
$1,937 in 1996 and 1995, respectively.
The Company participates in the American Express Company Retirement
Plan which covers all permanent employees age 21 and over who have met
certain employment requirements. Employer contributions to the plan
are based on participants' age, years of service and total compensation
for the year. Funding of retirement costs for this plan complies with
the applicable minimum funding requirements specified by ERISA. The
Company's share of the total net periodic pension cost was $201, $174
and $155 in 1997, 1996 and 1995, respectively.
The Company also participates in defined contribution pension plans of
American Express Company which cover all employees who have met certain
employment requirements. Company contributions to the plans are a
percent of either each employee's eligible compensation or basic
contributions. Costs of these plans charged to operations in 1997,
1996 and 1995 were $1,245, $990 and $815, respectively.
<PAGE>
The Company participates in defined benefit health care plans of AEFC
that provide health care and life insurance benefits to retired
employees and retired financial advisors. The plans include
participant contributions and service related eligibility
requirements. Upon retirement, such employees are considered to have
been employees of AEFC. AEFC expenses these benefits and allocates the
expenses to its subsidiaries. Accordingly, costs of such benefits to
the Company are included in employee compensation and benefits and
cannot be identified on a separate company basis.
<PAGE>
5. Related party transactions (continued)
--------------------------
Charges by AEFC for use of joint facilities, marketing services and
other services aggregated $414,155, $397,362 and $377,139 for 1997,
1996 and 1995, respectively. Certain of these costs are included in
deferred policy acquisition costs. In addition, the Company rents its
home office space from AEFC on an annual renewable basis.
6. Commitments and contingencies
-----------------------------
At December 31, 1997 and 1996, traditional life insurance and universal
life-type insurance in force aggregated $74,730,720 and $67,274,354,
respectively, of which $4,351,904 and $3,875,921 were reinsured at the
respective year ends. The Company also reinsures a portion of the
risks assumed under disability income and long-term care policies.
Under all reinsurance agreements, premiums ceded to reinsurers amounted
to $60,495, $48,250 and $39,399 and reinsurance recovered from
reinsurers amounted to $19,042, $15,612, and $14,088 for the years
ended December 31, 1997, 1996 and 1995, respectively. Reinsurance
contracts do not relieve the Company from its primary obligation to
policyholders.
A number of lawsuits have been filed against life and health insurers
in jurisdictions in which the Company and its subsidiaries do business
involving insurers' sales practices, alleged agent misconduct, failure
to properly supervise agents, and other matters. In December 1996, an
action of this type was brought against the Company and its parent,
AEFC. A second action was filed in March, 1997. The plaintiffs
purport to represent a class consisting of all persons who replaced
existing Company policies with new Company policies from and after
January 1, 1985. The complaint puts at issue various alleged sales
practices and misrepresentations, alleged breaches of fiduciary duties
and alleged violations of consumer fraud statutes. Plaintiffs seek
damages in an unspecified amount and seek to establish a claims
resolution facility for the determination of individual issues. The
Company and its parent believe they have meritorious defenses to the
claims raised in the lawsuit. The outcome of any litigation cannot be
predicted with certainty. In the opinion of management, however, the
ultimate resolution of the above lawsuit and others filed against the
Company should not have a material adverse effect on the Company's
consolidated financial position.
The IRS routinely examines the Company's federal income tax returns,
and is currently auditing the Company's returns for the 1990 through
1992 tax years. Management does not believe there will be a material
adverse effect on the Company's consolidated financial position as a
result of this audit.
7. Lines of credit
---------------
The Company has an available line of credit with its parent aggregating
$100,000. The rate for the line of credit is the parent's cost of
funds, ranging from 20 to 45 basis points over the established index.
Borrowings outstanding under this agreement were $nil at
December 31, 1997 and 1996.
<PAGE>
8. Derivative financial instruments
--------------------------------
The Company enters into transactions involving derivative financial
instruments to manage its exposure to interest rate risk and equity
market risk, including hedging specific transactions. The Company does
not hold derivative instruments for trading purposes. The Company
manages risks associated with these instruments as described below.
<PAGE>
8. Derivative financial instruments (continued)
--------------------------------
Market risk is the possibility that the value of the derivative
financial instruments will change due to fluctuations in a factor from
which the instrument derives its value, primarily an interest rate or
equity market index. The Company is not impacted by market risk
related to derivatives held for non-trading purposes beyond that
inherent in cash market transactions. Derivatives held for purposes
other than trading are largely used to manage risk and, therefore, the
cash flow and income effects of the derivatives are inverse to the
effects of the underlying transactions.
Credit risk is the possibility that the counterparty will not fulfill
the terms of the contract. The Company monitors credit risk related to
derivative financial instruments through established approval
procedures, including setting concentration limits by counterparty, and
requiring collateral, where appropriate. A vast majority of the
Company's counterparties are rated A or better by Moody's and Standard
& Poor's.
Credit risk related to interest rate caps and floors and index options
is measured by the replacement cost of the contracts. The replacement
cost represents the fair value of the instruments.
The notional or contract amount of a derivative financial instrument is
generally used to calculate the cash flows that are received or paid
over the life of the agreement. Notional amounts are not recorded on
the balance sheet. Notional amounts far exceed the related credit risk.
The Company's holdings of derivative financial instruments are as
follows:
Notional Carrying Fair Total Credit
December 31, 1997 Amount Amount Value Exposure
----------------- -------- -------- ----- ------------
Assets:
Interest rate caps $ 4,600,000 $ 24,963 $ 15,665 $ 15,665
Interest rate floors 1,000,000 1,561 4,551 4,551
Put index options 221,984 11,120 11,120 11,120
Liabilities:
Call index options 221,984 (8,273) (8,273) --
Off balance sheet:
Interest rate swaps 1,267,000 -- (45,799) --
--------- ------ ------ ------
$29,371 $(22,736) $31,336
====== ====== ======
Notional Carrying Fair Total Credit
December 31, 1996 Amount Amount Value Exposure
Assets:
Interest rate caps $4,000,000 $ 16,227 $ 7,439 $ 7,439
Interest rate floors 1,000,000 2,041 4,341 4,341
Off balance sheet:
Interest rate swaps 1,000,000 -- (24,715) --
--------- ------ -------- ------
$18,268 $(12,935) $11,780
====== ====== ======
<PAGE>
The fair values of derivative financial instruments are based on market
values, dealer quotes or pricing models. The interest rate caps and
floors expire on various dates from 1998 to 2003. The interest rate
swaps expire on various dates from 2000 to 2003. All put and call
options expire in 1998.
Interest rate caps, swaps and floors are used principally to manage the
Company's interest rate risk. These instruments are used to protect
the margin between interest rates earned on investments and the
interest rates credited to related annuity contract holders.
<PAGE>
8. Derivative financial instruments (continued)
--------------------------------
Index options are used to manage the equity market risk related to the
fee income that the Company receives from its separate accounts and the
underlying mutual funds. The amount of the fee income received is
based upon the daily market value of the separate account and mutual
fund assets. As a result, the Company's fee income could be impacted
significantly by changing economic conditions in the equity market.
The Company entered into index option collars (combination of puts and
calls) to hedge anticipated fee income for 1998 related to separate
accounts and mutual funds which invest in equity securities. Testing
has demonstrated the impact of these instruments on the income
statement closely correlates with the amount of fee income the Company
realizes. In the event that testing demonstrates that this correlation
no longer exists, or in the event the Company disposes of the index
options collars, the instruments will be marked-to-market through the
income statement. At December 31, 1997, deferred gains on purchased
put index options were $11,120 and deferred losses on written call
index options were $8,273.
9. Fair values of financial instruments
------------------------------------
The Company discloses fair value information for most on- and
off-balance sheet financial instruments for which it is practicable to
estimate that value. Fair values of life insurance obligations and all
non-financial instruments, such as deferred acquisition costs are
excluded. Off-balance sheet intangible assets, such as the value of
the field force, are also excluded. Management believes the value of
excluded assets and liabilities is significant. The fair value of the
Company, therefore, cannot be estimated by aggregating the amounts
presented.
<TABLE>
<CAPTION>
1997 1996
------------------ ---------------------
Carrying Fair Carrying Fair
Financial Assets Amount Value Amount Value
---------------- -------- ------ ------- -----
<S> <C> <C> <C> <C>
Investments:
Fixed maturities (Note 2):
Held to maturity $9,315,450 $9,743,410 $10,236,379 $10,521,650
Available for sale 12,876,694 12,876,694 11,146,845 11,146,845
Mortgage loans on
real estate (Note 2) 3,618,647 3,808,570 3,493,364 3,606,077
Other:
Equity securities (Note 2) 3,361 3,361 3,308 3,308
Derivative financial
instruments (Note 8) 37,644 31,336 18,268 11,780
Other 82,347 85,383 63,993 66,242
Cash and
cash equivalents (Note 1) 19,686 19,686 224,603 224,603
Separate account assets
(Note 1) 23,214,504 23,214,504 18,535,160 18,535,160
<PAGE>
Financial Liabilities
Future policy benefits
for fixed annuities 20,731,052 19,882,302 20,641,986 19,721,968
Derivative financial
instruments (Note 8) (8,273) (54,072) -- (24,715)
Separate account liabilities 21,488,282 20,707,620 17,358,087 16,688,519
</TABLE>
<PAGE>
9. Fair values of financial instruments (continued)
------------------------------------
At December 31, 1997 and 1996, the carrying amount and fair value of
future policy benefits for fixed annuities exclude life
insurance-related contracts carried at $1,185,155 and $1,112,155,
respectively, and policy loans of $93,540 and $83,867, respectively.
The fair value of these benefits is based on the status of the
annuities at December 31, 1997 and 1996. The fair value of deferred
annuities is estimated as the carrying amount less any applicable
surrender charges and related loans. The fair value for annuities in
non-life contingent payout status is estimated as the present value of
projected benefit payments at rates appropriate for contracts issued in
1997 and 1996.
At December 31, 1997 and 1996, the fair value of liabilities related to
separate accounts is estimated as the carrying amount less any
applicable surrender charges and less variable insurance contracts
carried at $1,726,222 and $1,177,073, respectively.
10. Segment information
-------------------
The Company's operations consist of two business segments; first,
individual and group life insurance, disability income and long-term
care insurance, and second, annuity products designed for individuals,
pension plans, small businesses and employer-sponsored groups. The
consolidated condensed statements of income for the years ended
December 31, 1997, 1996 and 1995 and total assets at December 31, 1997,
1996 and 1995 by segment are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Net investment income:
Life, disability income
and long-term care insurance $ 269,874 $ 262,998 $ 256,242
Annuities 1,718,515 1,702,364 1,651,067
--------- --------- ---------
$ 1,988,389 $ 1,965,362 $ 1,907,309
========= ========= =========
Premiums, charges and fees:
Life, disability income
and long-term care insurance $ 514,838 $ 448,389 $ 384,008
Annuities 374,274 308,873 249,557
------- ------- -------
$ 889,112 $ 757,262 $ 633,565
======= ======= =======
Income before income taxes:
Life, disability income
and long-term care insurance $ 178,717 $ 161,115 $ 125,402
Annuities 501,334 460,758 440,278
Net gain (loss) on investments 860 (159) (4,898)
------- ------- -------
$ 680,911 $ 621,714 $ 560,782
======= ======= =======
<PAGE>
Total assets:
Life, disability income
and long-term care insurance $ 8,193,796 $ 7,028,906 $ 6,195,870
Annuities 44,780,328 40,277,075 36,704,208
---------- ---------- ----------
$52,974,124 $47,305,981 $42,900,078
========== ========== ==========
</TABLE>
<PAGE>
Allocations of net investment income and certain general expenses are
based on various assumptions and estimates.
Assets are not individually identifiable by segment and have been
allocated principally based on the amount of future policy benefits by
segment.
Capital expenditures and depreciation expense are not material, and
consequently, are not reported.
11. Year 2000 Issue (unaudited)
---------------
The Year 2000 issue is the result of computer programs having been
written using two digits rather than four to define a year. Any
programs that have time-sensitive software may recognize a date using "00"
as the year 1900 rather than 2000. This could result in the failure of
major systems or miscalculations, which could have a material impact on
the operations of the Company. All of the systems used by the Company are
maintained by AEFC and are utilized by multiple subsidiaries and
affiliates of AEFC. The Company's business is heavily dependent
upon AEFC's computer systems and has significant interactions with
systems of third parties.
A comprehensive review of AEFC's computer systems and business
processes, including those specific to the Company, has been conducted to
identify the major systems that could be affected by the Year 2000
issue. Steps are being taken to resolve any potential problems including
modification to existing software and the purchase of new software. These
measures are scheduled to be completed and tested on a timely basis.
AEFC's goal is to complete internal remediation and testing of each
system by the end of 1998 and to continue compliance efforts through
1999.
AEFC is evaluating the Year 2000 readiness of advisors and other third
parties whose system failures could have an impact on the Company's
operations. The potential materiality of any such impact is not known at
this time.
<PAGE>
PART C.
Item 24. Financial Statements and Exhibits
(a) Financial Statements included in Part B of this Registration Statement:
IDS Life Accounts F,IZ,JZ,G,H,N,KZ,LZ and MZ:
Statements of Net Assets at Dec. 31, 1997.
Statements of Operations for the year ended Dec. 31, 1997.
Statements of Changes in Net Assets for the years ended Dec. 31, 1997
and Dec. 31, 1996.
Notes to Financial Statements.
Report of Independent Auditors dated March 13, 1998.
IDS Life Insurance Company:
Consolidated Balance Sheets at Dec. 31, 1997 and 1996.
Consolidated Statements of Income for the years ended Dec. 31, 1997,
1996, and 1995.
Consolidated Statements of Stockholder's Equity for the years ended
Dec. 31, 1997, 1996 and 1995.
Consolidated Statements of Cash Flows for the years ended Dec. 31,
1997, 1996, and 1995.
Notes to Consolidated Financial Statements.
Report of Independent Auditors dated February 5, 1998.
(b) Exhibits:
1.1 Resolution of the Executive Committee of the Board of Directors of IDS Life
adopted May 13, 1981, filed electronically as Exhibit 1.1 to Post-Effective
Amendment No. 23 to Registration Statement No. 2-73114, is incorporated
herein by reference.
1.2 Resolution of the Executive Committee of the Board of Directors of IDS Life
establishing Account N on April 17, 1985, filed electronically as Exhibit
1.2 to Post-Effective Amendment No. 23 to Registration Statement No.
2-73114, is incorporated herein by reference.
1.3 Resolution of the Board of Directors of IDS Life establishing Accounts IZ
and JZ on Sept. 20, 1991, filed electronically as Exhibit 1.3 to
Post-Effective Amendment No. 23 to Registration Statement No. 2-73114, is
incorporated herein by reference.
1.4 Consent in Writing in Lieu of Board of Directors establishing Accounts MZ,
KZ and LZ on April 2, 1996, filed electronically as Exhibit 1.4 to
Post-Effective Amendment No. 26 to Registration Statement No. 2-73114, is
incorporated herein by reference.
2. Not applicable.
3. Not applicable.
<PAGE>
4.1 Copy of form of Qualified Deferred Annuity Contract (form 30307), filed as
Exhibit 4(a) to Post-Effective Amendment No.20 to Registration Statement
No. 33-4173, is incorporated herein by reference.
4.2 Copy of form of Non-Qualified Deferred Annuity Contract (form 30302), filed
as Exhibit 4(b) to Post-Effective Amendment No. 20 to Registration
Statement No. 33-4173, is incorporated herein by reference.
4.3 Copy of form of Deferred Annuity Contract (IRA) (form 30306), filed
electronically as Exhibit 4.3 to Post-Effective Amendment No. 24 to
Registration Statement No. 2-73114, is incorporated herein by reference.
5.1 Form of Application for IDS Life Deferred Variable Annuity Contract (form
34512), filed as Exhibit 10 to Post-Effective Amendment No. 2 to
Registration Statement 2-73114, is incorporated herein by reference.
5.2 Copy of Form of Application for Variable and Combination Retirement
Annuities Contracts, filed as Exhibit 5(b) to Post-Effective Amendment No.
20 to Registration Statement No. 33-4173, is incorporated herein by
reference.
6.1 Copy of Certificate of Incorporation of IDS Life, filed electronically as
Exhibit 6.1 to Post-Effective Amendment No. 24 to Registration Statement
No. 2-73114, is incorporated herein by reference.
6.2 Copy of Amended By-Laws of IDS Life, filed electronically as Exhibit 6.2 to
Post-Effective Amendment No. 24 to Registration Statement No. 2-73114, is
incorporated herein by reference.
7. Not applicable.
8. Not applicable.
9. Opinion of counsel and consent to its use as to the legality of the
securities being registered, filed electronically herewith.
10. Consent of Independent Auditors, filed electronically herewith.
11. Financial Statement Schedules I, III, IV and V as required by Regulation
S-X: (filed electronically herewith)
Schedule I - Consolidated Summary of Investments Other than
Investments in Related Parties
Schedule III - Supplementary Insurance Information
Schedule IV - Reinsurance
Schedule V - Valuation and Qualifying Accounts
Report of Independent Auditors dated February 5, 1998.
All other schedules to the consolidated financial statements required
by Article 7 of Regulation S-X are not required under the related
instructions or are inapplicable and, therefore, have been omitted.
<PAGE>
12. Not applicable.
13. Schedule for computation of each performance quotation is filed
electronically as Exhibit 13 to Post-Effective Amendment No. 26 to
Registration Statement No. 2-73114, is incorporated herein by reference.
14. Financial Data Schedules, filed electronically herewith.
15.1 Power of Attorney to sign Amendments to this Registration Statement dated
April 9, 1998, filed electronically herewith.
15.2 Power of Attorney to sign Amendments to this Registration Statement dated
August 19, 1997, filed electronically herewith.
Item 25. Directors and Officers of the Depositor (IDS Life Insurance Company)
<TABLE>
<CAPTION>
Positions and Offices with Depositor
Name Principal Business Address
- -------------------------------- ----------------------------------- ---------------------------------------
<S> <C> <C>
Timothy V. Bechtold IDS Tower 10 Executive Vice President-Risk
Minneapolis, MN 55440 Management Products
David J. Berry IDS Tower 10 Vice President
Minneapolis, MN 55440
Mark W. Carter IDS Tower 10 Executive Vice President-Marketing
Minneapolis, MN 55440
Robert M. Elconin IDS Tower 10 Vice President
Minneapolis, MN 55440
Lorraine R. Hart IDS Tower 10 Vice President-Investments
Minneapolis, MN 55440
David R. Hubers IDS Tower 10 Director
Minneapolis, MN 55440
James M. Jensen IDS Tower 10 Vice President-Insurance Product
Minneapolis, MN 55440 Development
Richard W. Kling IDS Tower 10 Director and President
Minneapolis, MN 55440
Paul F. Kolkman IDS Tower 10 Director and Executive Vice President
Minneapolis, MN 55440
Ryan R. Larson IDS Tower 10 Vice President
Minneapolis, MN 55440
James A. Mitchell IDS Tower 10 Director, Chairman of the Board and
Minneapolis, MN 55440 Chief Executive Officer
Pamela J. Moret IDS Tower 10 Executive Vice President-Variable
Minneapolis, MN 55440 Assets
Barry J. Murphy IDS Tower 10 Director and Executive Vice
Minneapolis, MN 55440 President-Client Service
James R. Palmer IDS Tower 10 Vice President-Taxes
Minneapolis, MN 55440
Stuart A. Sedlacek IDS Tower 10 Director and Executive Vice
Minneapolis, MN 55440 President-Assured Assets
F. Dale Simmons IDS Tower 10 Vice President-Real Estate Loan
Minneapolis, MN 55440 Management and Assistant Treasurer
William A. Stoltzmann IDS Tower 10 Vice President, General Counsel and
Minneapolis, MN 55440 Secretary
Philip C. Wentzel IDS Tower 10 Vice President and Controller
Minneapolis, MN 55440
</TABLE>
<PAGE>
Item 26. Persons Controlled by or Under Common Control with the
Depositor or Registrant
IDS Life Insurance Company is a wholly-owned subsidiary of American
Express Financial Corporation. American Express Financial Corporation
is a wholly-owned subsidiary of American Express Company (American
Express).
The following list includes the names of major subsidiaries of
American Express.
<TABLE>
<CAPTION>
<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 Strategies Group Inc. Minnesota
American Centurion Life Assurance Company New York
American Enterprise Investment Services Inc. Minnesota
American Enterprise Life Insurance Company Indiana
American Express Asset Management Group Inc. Minnesota
American Express Asset Management International Inc. Delaware
American Express Asset Management International (Japan) Ltd. Japan
American Express Asset Management Ltd. England
American Express Client Service Corporation Minnesota
American Express Corporation Delaware
American Express Financial Advisors Inc. Delaware
American Express Financial Corporation Minnesota
Delaware
American Express Insurance Agency of Arizona Inc. Arizona
American Express Insurance Agency of Idaho Inc. Idaho
American Express Insurance Agency of Nevada Inc. Nevada
American Express Insurance Agency of Oregon Inc. Oregon
American Express Minnesota Foundation Minnesota
American Express Property Casualty Insurance Agency of Kentucky Inc. Kentucky
American Express Property Casualty Insurance Agency of Maryland Inc. Maryland
American Express Property Casualty Insurance Agency of Pennsylvania Inc. Pennsylvania
American Express Trust Company Minnesota
American Partners Life Insurance Company Arizona
IDS Cable Corporation Minnesota
IDS Cable II Corporation Minnesota
IDS Capital Holdings Inc. Minnesota
IDS Certificate Company Delaware
IDS Futures Corporation Minnesota
IDS Insurance Agency of Alabama Inc. Alabama
IDS Insurance Agency of Arkansas Inc. Arkansas
IDS Insurance Agency of Massachusetts Inc. Massachusetts
IDS Insurance Agency of New Mexico Inc. New Mexico
IDS Insurance Agency of North Carolina Inc. North Carolina
IDS Insurance Agency of Utah Inc. Utah
IDS Insurance Agency of Wyoming Inc. Wyoming
IDS Life Insurance Company Minnesota
IDS Life Insurance Company of New York New York
IDS Management Corporation Minnesota
IDS Partnership Services Corporation Minnesota
IDS Plan Services of California, Inc. Minnesota
IDS Property Casualty Insurance Company Wisconsin
IDS Real Estate Services, Inc. Delaware
IDS Realty Corporation Minnesota
IDS Sales Support Inc. Minnesota
IDS Securities Corporation Delaware
Investors Syndicate Development Corp. Nevada
North Dakota Public Employee Payment Company Minnesota
</TABLE>
Item 27. Number of Contractowners
On February 28, 1998, there were 62,850 contract owners of
qualified Combination Retirement Annuity contracts. There were
2,785 owners of non-qualified contracts.
There were 400 contract owners of qualified Variable Retirement
Annuity contracts. There were 2,500 owners of non-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.
Item 29. Principal Underwriters
(a) IDS Life is the principal underwriter for IDS Life Accounts F,
IZ, JZ, G, H, N, KZ, LZ and MZ, IDS Life Variable Annuity Fund A,
IDS Life Variable Annuity Fund B, IDS Life Account RE, IDS Life
Account MGA, IDS Life Account SBS, IDS Life Variable Account 10,
IDS Life Variable Life Separate Account and IDS Life Variable
Account for Smith Barney.
(b) This table is the same as our response to Item 25 of this
Registration Statement.
(c)
<TABLE>
<CAPTION>
Name of Net Underwriting
Principal Discounts and Compensation on Brokerage
Underwriter Commissions Redemption Commissions Compensation
<S> <C> <C> <C> <C> <C>
IDS Life $17,883,488 $14,502,145 None None
</TABLE>
Item 30. Location of Accounts and Records
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a), (b) & (c) These undertakings were filed with the Registrant's
initial Registration Statements, File No. 2-73114 and
811-3217.
<PAGE>
(d) 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 the requirements of the Securities Act Rule 485(b) for effectiveness of
this Registration Statement and has caused this Registration Statement to be
signed on its behalf in the City of Minneapolis, and State of Minnesota, on this
24th day of April, 1998.
IDS LIFE ACCOUNT F
IDS LIFE ACCOUNT IZ
IDS LIFE ACCOUNT JZ
IDS LIFE ACCOUNT G
IDS LIFE ACCOUNT H
IDS LIFE ACCOUNT N
IDS LIFE ACCOUNT KZ
IDS LIFE ACCOUNT LZ
IDS LIFE ACCOUNT MZ
--------------------
(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 Amendment to the Registration
Statement has been signed below by the following persons in the capacities
indicated on this 24th day of April, 1998.
Signature Title
/s/ James A. Mitchell* Chairman of the Board
James A. Mitchell and Chief Executive Officer
/s/ Richard W. Kling* Director and President
Richard W. Kling
/s/ Jeffrey S. Horton** Vice President and Treasurer
Jeffrey S. Horton
/s/ David R. Hubers* Director
David R. Hubers
/s/ Paul F. Kolkman* Director and Executive Vice
Paul F. Kolkman President
/s/ Barry J. Murphy* Director and Executive Vice
Barry J. Murphy President, Client Service
<PAGE>
Signature Title
/s/ Stuart A. Sedlacek* Director and Executive Vice
Stuart A. Sedlacek President, Assured Assets
/s/ Philip C. Wentzel** Vice President and Controller
Philip C. Wentzel
*Signed pursuant to Power of Attorney dated August 19, 1997, filed
electronically herewith as Exhibit 15.2.
**Signed pursuant to Power of Attorney dated April 9, 1998, filed electronically
herewith as Exhibit 15.1.
- ---------------------------
Mary Ellyn Minenko
<PAGE>
CONTENTS OF REGISTRATION STATEMENT NO. 28
This Amendment to the Registration Statement is comprised of the following
papers and documents:
The Cover Page.
Cross-reference sheet.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Financial Statements.
Part C.
Other Information.
The signatures.
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
Registration No. 2-73114/811-3217
EXHIBIT INDEX
9. Opinion of Counsel
10. Consent of Independent Auditors
11. Financial Statement Schedules
14. Financial Data Schedules
15.1 Power of Attorney, dated April 9, 1998
15.2 Power of Attorney, dated August 19, 1997
April 24, 1998
IDS Life Insurance Company
IDS Tower 10
Minneapolis, MN 55440-0010
RE: Registration Statement on Form N-4
File No.: 2-73114
Ladies and Gentlemen:
I am familiar with the establishment of the IDS Life Accounts F, IZ, JZ, G, H,
N, KZ, LZ and MZ, ("Accounts"), which are separate accounts 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
Accounts 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 Accounts are validly created and existing separate accounts of the
Company and are duly authorized to issue the securities registered.
3. The contracts issued by the Company during the past fiscal year, when
offered and sold in accordance with the prospectus contained in the
Registration Statement and in compliance with applicable law, were legally
issued and represent binding obligations of the Company in accordance with
their terms.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
Mary Ellyn Minenko
Attorney at Law
(612) 671-3678
MEM/EGN/rdh
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Independent Auditors"
and to the use of our reports dated February 5, 1998 on the consolidated
financial statements and schedules of IDS Life Insurance Company and our report
dated March 13, 1998 on the financial statements of IDS Life Accounts F, IZ, JZ,
G, H, N, KZ, LZ and MZ in Post Effective Amendment No. 28 to the Registration
Statement (Form N-4 No. 2-73114) and related Prospectus for the registration of
the Variable Retirement and Combination Retirement Annuities Contracts to be
offered by IDS Life Insurance Company.
Ernst & Young LLP
Minneapolis, Minnesota
April 20, 1998
<PAGE>
Report of Independent Auditors
The Board of Directors
IDS Life Insurance Company
We have audited the consolidated financial statements of IDS Life Insurance
Company as of December 31, 1997 and 1996, and for each of the three years in the
period ended December 31, 1997, and have issued our report thereon dated
February 5, 1998 (included elsewhere in this Registration Statement). Our audits
also included the financial statement schedules listed in the index to financial
statement schedules of this Registration Statement. These schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information set forth therein.
Ernst & Young LLP
Minneapolis, Minnesota
February 5, 1998
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE I - CONSOLIDATED SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN RELATED PARTIES ($ thousands)
AS OF DECEMBER 31, 1997
- -----------------------------------------------------------------------------------------------------
Column A Column B Column C Column D
Type of Investment Cost Value Amount at which
shown in the
balance sheet
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturities:
Held to maturity:
United States Government and
government agencies and
authorities (a) $ 1,829,112 $ 1,846,833 $ 1,829,112
States, municipalities and
political subdivisions 9,684 10,252 9,684
All other corporate bonds (b) 7,476,654 7,886,325 7,476,654
------------ ---------- ----------
Total held to maturity 9,315,450 9,743,410 9,315,450
Available for sale:
United States Government and
government agencies and
authorities (c) 6,798,425 6,944,942 6,944,942
States, municipalities and
political subdivisions 11,045 12,393 12,393
All other corporate bonds (d) 5,705,560 5,919,359 5,919,359
------------ ---------- ----------
Total available for sale 12,515,030 12,876,694 12,876,694
Mortgage loans on real estate 3,618,647 XXXXXXXXX 3,618,647
Policy loans 498,874 XXXXXXXXX 498,874
Other investments 318,591 XXXXXXXXX 318,591
------------ ----------
Total investments $ 26,266,592 $ XXXXXXXXX $ 26,628,256
============ ========== ==========
(a) - Includes mortgage-backed securities with a cost and market value of $1,787,180 and $1,801,952,
respectively.
(b) - Includes mortgage-backed securities with a cost and market value of $196,008 and $199,301,
respectively.
(c) - Includes mortgage-backed securities with a cost and market value of $6,733,134 and $6,875,498,
respectively.
(d) - Includes mortgage-backed securities with a cost and market value of $397,431 and $408,667,
respectively.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($
thousands)
FOR THE YEAR ENDED DECEMBER 31, 1997
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other policy Premium Net Benefits, Amortization Other Premiums
policy policy premiums claims and revenue investment claims, of deferred operating written
acquisition benefits, benefits income losses and policy expenses*
cost losses, payable settlement acquisition
claims and expenses costs
loss
expenses
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $ 1,453,441 $ 22,009,747 $ - $ 35,007 $ - $1,718,515 $ 1,720 $229,729 $262,680 N/A
Life, DI, and
Long-term Care
Insurance 1,026,136 4,027,289 - 33,338 206,494 269,874 209,955 93,002 13,916 N/A
- -----------------------------------------------------------------------------------------------------------------------------------
Total $ 2,479,577 $ 26,037,036 $ - $ 68,345 $ 206,494 $ 1,988,389 $ 211,675 $322,731 $276,596 N/A
- -----------------------------------------------------------------------------------------------------------------------------------
*Allocations of net investment income and other operating expenses are based on various assumptions and estimates.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1996
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other policy Premium Net Benefits, Amortization Other Premiums
policy policy premiums claims and revenue investment claims, of deferred operating written
acquisition benefits, benefits income losses and policy expenses*
cost losses, payable settlement acquisition
claims and expenses costs
loss
expenses
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $ 1,398,025 $ 21,838,008 $ - $ 50,137 $ - $1,702,364 $ 2,724 $ 189,645 $ 180,942 N/A
Life, DI, and
Long-term
Care Insurance 932,780 3,811,034 - 33,497 182,921 262,998 187,486 88,960 80,526 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 2,330,805 $ 25,649,042 $ - $ 83,634 $ 182,921 $1,965,362 $ 190,210 $ 278,605 $ 261,468 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
*Allocations of net investment income and other operating expenses are based on various assumptions and estimates.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION ($ thousands)
FOR THE YEAR ENDED DECEMBER 31, 1995
Column A Column B Column C Column D Column E Column F Column G Column H Column I Column J Column K
Segment Deferred Future Unearned Other policy Premium Net Benefits, Amortization Other Premiums
policy policy premiums claims and revenue investment claims, of deferred operating written
acquisition benefits, benefits income losses and policy expenses*
cost losses, payable settlement acquisition
claims and expenses costs
loss
expenses
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annuities $ 1,227,169 $ 21,404,836 $ - $ 28,191 $ - $1,651,067 $ 2,693 $ 189,626 $ 166,191 N/A
Life, DI,
and Long-term
Care Insurance 798,556 3,613,253 - 28,132 161,530 256,242 164,749 90,495 45,451 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 2,025,725 $ 25,018,089 $ - $ 56,323 $ 161,530 $1,907,309 $ 167,442 $ 280,121 $ 211,642 N/A
- ------------------------------------------------------------------------------------------------------------------------------------
*Allocations of net investment income and other operating expenses are based on various assumptions and estimates.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE IV - REINSURANCE ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- --------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
Gross amount Ceded to other Assumed from Net % of amount
companies other companies Amount assumed to net
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1997
Life insurance in force $ 73,119,122 $ 4,351,904 $ 1,611,596 $ 70,378,814 2.29%
- -------------------------------------------------------------------------------------------
Premiums:
Life insurance $ 55,094 $ 3,124 $ 503 $ 52,473 0.96%
DI & LTC insurance 196,799 42,778 -- 154,021 0.00%
- -------------------------------------------------------------------------------------------
Total premiums $ 251,893 $ 45,902 $ 503 $ 206,494 0.24%
- -------------------------------------------------------------------------------------------
For the year ended
December 31, 1996
Life insurance in force $ 65,571,173 $ 3,875,921 $ 1,703,181 $ 63,398,433 2.69%
- -------------------------------------------------------------------------------------------
Premiums:
Life insurance $ 54,111 $ 3,253 $ 545 $ 51,403 1.06%
DI & LTC insurance 164,561 33,043 -- 131,518 0.00%
- -------------------------------------------------------------------------------------------
Total premiums $ 218,672 $ 36,296 $ 545 $ 182,921 0.30%
- -------------------------------------------------------------------------------------------
For the year ended
December 31, 1995
Life insurance in force $ 57,895,180 $ 3,771,204 $ 1,788,352 $ 55,912,328 3.20%
- -------------------------------------------------------------------------------------------
Premiums:
Life insurance $ 53,089 $ 2,648 $ (248) $ 50,193 -0.49%
DI & LTC insurance 137,016 25,679 -- 111,337 0.00%
- -------------------------------------------------------------------------------------------
Total premiums $ 190,105 $ 28,327 $ (248) $ 161,530 -0.15%
- -------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
IDS LIFE INSURANCE COMPANY
SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS ($ thousands)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- ------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Additions
---------
Balance at Charged to
Description Beginning Charged to Other Accounts- Deductions- Balance at End
of Period Costs & Expenses Describe Describe * of Period
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the year ended
December 31, 1997
- ----------------------------
Reserve for Mortgage Loans $37,495 $8,801 $0 $7,651 $38,645
Reserve for Other Investments $3,963 $2,100 $0 $0 $6,063
For the year ended
December 31, 1996
- ----------------------------
Reserve for Mortgage Loans $37,340 $10,005 $0 $9,850 $37,495
Reserve for Other Investments $4,713 ($750) $0 $0 $3,963
For the year ended
December 31, 1995
- ----------------------------
Reserve for Mortgage Loans $35,252 $15,900 $0 $13,812 $37,340
Reserve for Other Investments $7,515 ($2,802) $0 $0 $4,713
* 1997, 1996 and 1995 amounts represent $7,651, $9,850, and $13,812, respectively, for loan
payoffs and foreclosures.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 13341177327
<INVESTMENTS-AT-VALUE> 16023525309
<RECEIVABLES> 31571333
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 16055096642
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (44108820)
<TOTAL-LIABILITIES> (44108820)
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 5548718916
<SHARES-COMMON-PRIOR> 5106216607
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 16010987822
<DIVIDEND-INCOME> 994841429
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (152833981)
<NET-INVESTMENT-INCOME> 842007448
<REALIZED-GAINS-CURRENT> 153951679
<APPREC-INCREASE-CURRENT> 1129893908
<NET-CHANGE-FROM-OPS> 2125853035
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 906679356
<NUMBER-OF-SHARES-REDEEMED> (464177047)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1982267752
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (152833981)
<AVERAGE-NET-ASSETS> 15019853946
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLAR
<S> <C>
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<PERIOD-TYPE> YEAR
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 12876694
<DEBT-CARRYING-VALUE> 9315450
<DEBT-MARKET-VALUE> 9743410
<EQUITIES> 3361
<MORTGAGE> 3618647
<REAL-ESTATE> 102433
<TOTAL-INVEST> 26628256
<CASH> 19686
<RECOVER-REINSURE> 989
<DEFERRED-ACQUISITION> 2479577
<TOTAL-ASSETS> 52974124
<POLICY-LOSSES> 26037036
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 68345
<NOTES-PAYABLE> 0
<COMMON> 3000
0
0
<OTHER-SE> 2862816
<TOTAL-LIABILITY-AND-EQUITY> 52974124
206494
<INVESTMENT-INCOME> 1988389
<INVESTMENT-GAINS> 860
<OTHER-INCOME> 682618
<BENEFITS> 1598123
<UNDERWRITING-AMORTIZATION> 322731
<UNDERWRITING-OTHER> 276596
<INCOME-PRETAX> 680911
<INCOME-TAX> 206664
<INCOME-CONTINUING> 474247
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 474247
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 26387
<PROVISION-CURRENT> 144098
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 143237
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 27248
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
IDS LIFE INSURANCE COMPANY
POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as principal financial officer and controller,
respectively, of IDS Life Insurance Company on behalf of the below listed
registrants that previously have filed registration statements and amendments
thereto pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 with the Securities and Exchange Commission:
<TABLE>
<CAPTION>
1933 Act 1940 Act
Reg. Number Reg. Number
<S> <C> <C>
IDS Life Variable Account 10
IDS Life Flexible Portfolio Annuity 33-62407 811-07355
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Flexible Annuity 33-4173 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Variable Retirement and Combination
Retirement Annuities 2-73114 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Employee Benefit Annuity 33-52518 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Group Variable Annuity Contract 33-47302 811-3217
IDS Life Insurance Company
IDS Life Group Variable Annuity Contract (Fixed Account) 33-48701 N/A
IDS Life Insurance Company
IDS Life Guaranteed Term Annuity 33-28976 N/A
IDS Life Insurance Company
IDS Life Flexible Payment Market Value Annuity 33-50968 N/A
IDS Life Insurance Company
Portfolio Guaranteed Term Annuity 333-42793 N/A
IDS Life Variable Life Separate Account
Flexible Premium Variable Life Insurance Policy 33-11165 811-4298
IDS Life Variable Life Separate Account
Flexible Premium Survivorship Variable Life
Insurance Policy 33-62457 811-4298
IDS Life Variable Life Separate Account
Single Premium Variable Life Insurance Policy 2-97637 811-4298
IDS Life Variable Account for Smith Barney
Single Premium Variable Life Insurance Policy 33-5210 811-4652
IDS Life Account SBS
Symphony Annuity 33-40779 812-7731
IDS Life Account RE
Real Estate Variable Annuity 33-13375 N/A
IDS Life Variable Annuity Fund A 2-29081 811-1653
IDS Life Variable Annuity Fund B 2-47430 811-1674
</TABLE>
hereby constitutes and appoints William A. Stoltzmann, Mary Ellyn Minenko,
Eileen J. Newhouse, Sherilyn K. Beck, Colin Lancaster, Bruce Kohn and Timothy S.
Meehan or any one of them, as his attorney-in-fact and agent, to sign for him in
his name, place and stead any and all filings, applications (including
applications for exemptive relief), periodic reports, registration statements
for existing or future products of existing separate accounts (with all
<PAGE>
exhibits and other documents required or desirable in connection therewith),
other documents, and amendments thereto and to file such filings, applications,
periodic reports, registration statements, other documents, and amendments
thereto with the Securities and Exchange Commission, and any necessary states,
and grants to any or all of them the full power and authority to do and perform
each and every act required or necessary in connection therewith.
Dated the 9th day of April, 1998.
/s/ Jeffrey S. Horton April 8, 1998
- ------------------------------------
Jeffrey S. Horton
Vice President, Treasurer
and Assistant Secretary
/s/ Philip C. Wentzel April 9, 1998
- ------------------------------------
Philip C. Wentzel
Vice President and Controller
sec-spec\life\fghpoa.rtf
IDS LIFE INSURANCE COMPANY
POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as directors of IDS Life Insurance Company on
behalf of the below listed registrants that previously have filed registration
statements and amendments thereto pursuant to the requirements of the Securities
Act of 1933 and the Investment Company Act of 1940 with the Securities and
Exchange Commission:
<TABLE>
<CAPTION>
1933 Act 1940 Act
Reg. Number Reg. Number
<S> <C> <C>
IDS Life Variable Account 10
IDS Life Flexible Portfolio Annuity 33-62407 811-07355
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Flexible Annuity 33-4173 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Variable Retirement and Combination
Retirement Annuities 2-73114 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Employee Benefit Annuity 33-52518 811-3217
IDS Life Accounts F, IZ, JZ, G, H, N, KZ, LZ and MZ
IDS Life Group Variable Annuity Contract 33-47302 811-3217
IDS Life Insurance Company
IDS Life Group Variable Annuity Contract (Fixed Account) 33-48701 N/A
IDS Life Insurance Company
IDS Life Guaranteed Term Annuity 33-28976 N/A
IDS Life Insurance Company
IDS Life Flexible Payment Market Value Annuity 33-50968 N/A
IDS Life Variable Life Separate Account
Flexible Premium Variable Life Insurance Policy 33-11165 811-4298
IDS Life Variable Life Separate Account
Flexible Premium Survivorship Variable Life
Insurance Policy 33-62457 811-4298
IDS Life Variable Life Separate Account
Single Premium Variable Life Insurance Policy 2-97637 811-4298
IDS Life Variable Account for Smith Barney
Single Premium Variable Life Insurance Policy 33-5210 811-4652
IDS Life Account SBS
Symphony Annuity 33-40779 812-7731
IDS Life Account RE
Real Estate Variable Annuity 33-13375 N/A
IDS Life Variable Annuity Fund A 2-29081 811-1653
IDS Life Variable Annuity Fund B 2-47430 811-1674
</TABLE>
hereby constitutes and appoints William A. Stoltzmann, Mary Ellyn Minenko,
Eileen J. Newhouse, Sherilyn K. Beck, Colin Lancaster, Bruce Kohn and Timothy S.
Meehan or any one of them, as her or his attorney-in-fact and agent, to sign for
her or him in her or his name, place and stead any and all filings, applications
(including applications for exemptive relief), periodic reports, registration
statements for existing or future products of existing separate accounts (with
all exhibits and other documents required or desirable in connection therewith),
other
<PAGE>
documents, and amendments thereto and to file such filings, applications,
periodic reports, registration statements, other documents, and amendments
thereto with the Securities and Exchange Commission, and any necessary states,
and grants to any or all of them the full power and authority to do and perform
each and every act required or necessary in connection therewith.
Dated the 19th day of August, 1997.
/s/ David R. Hubers August 15, 1997
- ------------------------------------
David R. Hubers
Director
/s/ Richard W. Kling August 18, 1997
-----------------------------------
Richard W. Kling
Director and President
/s/ Paul F. Kolkman August 19, 1997
- ------------------------------------
Paul F. Kolkman
Director and Executive Vice
President
/s/ James A. Mitchell August 15, 1997
- ------------------------------------
James A. Mitchell
Director, Chairman of the
Board and Chief Executive Officer
/s/ Barry J. Murphy August 14, 1997
- ------------------------------------
Barry J. Murphy
Director and Executive Vice
President, Client Service
/s/ Stuart A. Sedlacek August 19, 1997
- ------------------------------------
Stuart A. Sedlacek
Director and Executive Vice
President, Assured Assets
/s/ Melinda S. Urion August 14, 1997
- ------------------------------------
Melinda S. Urion
Director, Executive Vice
President and Controller
